Barron's Article by the Very Toothy Cheryl Strauss Einhorn
Much Ado About Little
Big bank pact to boost gold misses mark
By Cheryl Strauss Einhorn
A year ago last week, 15 European Central Banks announced their intention to boost gold prices by limiting official sales. Today, however, gold is down 2% from the date of their announcement, to $277 an ounce. It continues to trade near its lowest level in 20 years.
Nor do the prospects for the yellow metal look much brighter between now and yearend. Jeff Christian, head of CPM, a precious-metals research firm, expects gold to remain lackluster, trading in a range between $270 and $290 an ounce. "There isn't much liquidity in the market," he says. "London bullion trading is down." Indeed, trading volume has correction early 30% in the past year, to 25 million ounces per day.
There are several reasons for gold's continued troubles. To begin with, the European banks' self-imposed five-year sales limit actually exceeds the group's previous level of sales. The banks set a 2,000-metric-ton limit, intending to dispose of their gold in annual 400-ton installments. That's well above the average annual 320-350 metric tons the banks had been selling until now.
Out in the open
Too, by formally announcing their yearly sales limit, the banks legitimized the practice of official gold sales -- something that traditionally has been kept secret, and frowned upon by the gold industry. The 15 banks involved in the pact hold about 45% of the world's gold.
The group's disclosure has introduced an unusual degree of transparency into the gold market, which, in part, is what the Europeans intended. But the revelation also has made it easier for non-signatory banks to gauge the market and sell from their own gold holdings. During the past 12 months central banks in Brazil, Canada, Chile, Jordan and Malaysia, among others, have been selling.
Last year, gold demand hit a record, largely because of Year 2000-related fears. Demand climbed 20% from 1998 levels, which had been depressed because of the Asian crisis. But demand this year has fallen. "The absence of Y2K gold investment has made the market very depressed," says George Milling Stanley, at the World Gold Council.
Until fairly recently, at least, gold prices have suffered because of the strength of the U.S. stock market. As global investors have migrated to U.S. assets, the dollar has rallied. And since gold, like most commodities, is traded in dollars, the greenback's muscle has kept a lid on the metal's price.
The buck tops here
The U.S. dollar recently has been trading near its all-time high against the South African rand and the Australian dollar, both currencies of key gold-producing nations. The dollar also has been hitting highs against the euro and the Indian rupee, currencies of major consuming regions. In fact, India is the world's largest buyer of gold.
Such local-currency weakness often encourages producers to sell their production forward to lock in attractive prices. Conversely, for consumers, the dollar's strength has made gold too expensive. The Australians reportedly have been selling more gold than their South African peers, because it is more politically acceptable Down Under. In South Africa, only Anglogold is hedging, while other producers are afraid to get caught on the wrong side of a price spike. That's what happened last year to Ashanti Gold, in Ghana, which wound up having to unwind its hedge at great cost.
The multi-pronged attack on gold from the international currency markets, coupled with an absence of investor demand, may keep a lid on prices for a while. It might even counteract seasonal factors, which usually make the fourth quarter a strong period for gold sales. So what did the central banks' year-ago pronouncement actually achieve? In hindsight, basically nothing.
Black Blade: The usual drivel. The WA news has been out for a year and this is the best that Cheryl can come up with? What is the problem with the CB's selling gold? Well, they just transfer it to one another. Now if they would just sell to the public so we could get our hands on it, then that would be another story all together. I like these bargain prices. I just slowly acquire more as time goes on.
Makes my heart swell to think GATA & the light of illumination/magnification that Bill & the "TEAM" have shed on the Manipulation Cabal is getting so bright of late, that Rubin & the gang must be very nervous. Pull the curtains boys, but that only keeps you in the dark. We see the light and you're about to be step out into it for good. The heady times of pay-back are near for those who cared eniugh to be part of the solution. Anyone know the words for F. U. G. S. ......... Good-bye crooked Willy, what a sendoff this could be for you.....YGM
"...During the past 12 months central banks in Brazil, Canada, Chile, Jordan and Malaysia, among others, have been selling...."
So this is last year's list of OPG. One must ask the question as to why have these countries sold their gold or some of it? First glance seems to be because they are strong dollar-linked currencies. Is that true for all of them?
A few comments about that article:
1. 45% is not the correct percentage of world's gold held by Central Banks. I believe it is much less than that now, at the most around 25% and probably less now. If memory serves, total gold in the world is estimated at or around 130,000 tons. CB's hold at or around 32,000 tons (before leasing and open sales).
2. She accepts the fact that consumer sales are down, banks are selling in the open (which she notes as unusual) and that the Washington Agreement constitutes a much higher open rate of gold sales, but she fails to delve into why these extraordinary events might actually be happening. Personally, I would think it would be that CB's don't want gold anymore, which is her unwritten assumption, or there was something unusual happening that would break with historical practices. I believe she is being short sighted when she fails to examine the underlying motivations and fails to examine the latter.
3. This is a propaganda piece that fits the negative press camp. It is an indication that the POG is not ready to break out for the buyers of gold continue to accumulate in the shadow of this article. The Gold Buyer's Shadow Index -- the amount of negative gold news stories divided by the number of positive main stream gold stories x 1.00. When the GBSI is negative that will be positive for gold.
"...During the past 12 months central banks in Brazil, Canada, Chile, Jordan and Malaysia, among others, have been selling...."
So this is last year's list of OPG. One must ask the question as to why have these countries sold their gold or some of it? First glance seems to be because they are strong dollar-linked currencies. Is that true for all of them?
A few comments about that article:
1. 45% is not the correct percentage of world's gold held by Central Banks. I believe it is much less than that now, at the most around 25% and probably less now. If memory serves, total gold in the world is estimated at or around 130,000 tons. CB's hold at or around 32,000 tons (before leasing and open sales).
2. She accepts the fact that consumer sales are down, banks are selling in the open (which she notes as unusual) and that the Washington Agreement constitutes a much higher open rate of gold sales, but she fails to delve into why these extraordinary events might actually be happening. Personally, I would think it would be that CB's don't want gold anymore, which is her unwritten assumption, or there was something unusual happening that would break with historical practices. I believe she is being short sighted when she fails to examine the underlying motivations and fails to examine the latter.
3. This is a propaganda piece that fits the negative press camp. It is an indication that the POG is not ready to break out for the buyers of gold continue to accumulate in the shadow of this article. The Gold Buyer's Shadow Index -- the amount of negative gold news stories divided by the number of positive main stream gold stories during a fixed time period. When the GBSI is less than one that will be positive for gold. The longer the time period the less usefull the indicator.
It never fails. Look at this and as you proceed, you here there it isn't.
Everybody expects it.
Gold broke out of the 20 yr down trend a year ago, retraced,
broke back over retracement 7 trading days ago, and now walks the line. Sideways to up, FMOC should raise rates but if they don't matters not cause gold already knows.
When you keep hearing there it isn't, you better pay attention.
Next major crisis which no one expects, NO WATER. Parts of U . S. are in bad shape. Water is going to be a big problem.
Oil and Gas JournalAPI: US refineries running near capacity
~~~~~~~~~~~~~~~~~~
The American Petroleum Institute said Monday that US refineries are running flat out to ensure that consumers have a readily available heating fuel supply this winter. John Felmy, API's policy analysis and statistics director, said while the Clinton administration's release of crude from the Strategic Petroleum Reserve (SPR) may reduce crude and product prices somewhat, it will not necessarily translate to increased production of heating oil. He explained that with the nation's refineries running at near capacity, their ability to process additional crude is limited.
Felmy said, "There is a limit to how hard refineries can run, consistent with providing for the safety of refinery workers." He said US refineries, as of a week ago, were operating at 95% of their capacity, which is higher than last year and well above historic levels. "It may be possible to push production higher for very brief periods, but the decision to do so must be made by individual companies, which will not compromise the safety of workers," said Felmy.
Felmy also said record amounts of gasoline and distillate fuel have been produced this year. Since April, building of heating oil inventories has been substantial, but stocks started at lower levels and remain at historical lows. He said stock building was restrained by the gasoline supply problems in the Midwest earlier in the year, when refiners focused on producing that product. He also said strong current demand for distillates has affected the volumes
available for storage.
Aristotle
Coming from you that is high praise indeed.
Regarding your Shermag response. I have for some years believed that the US was exporting inflation, particularly to Japan who has a massive deflationary problem, and have been printing and publicly spending money in a last ditch Keynesian attempt to stave off the calamity that they are in. Japan has gone from large creditor to massive borrower in 10 years.
Leading up to Y2K, the US gov't printed some pretty huge amounts of cash, in case of trouble. Earlier this year they tried to sop up some of that, and the rate of money growth fell. However, as early as May last year, looking primarily at the money supply numbers, I began to wonder if the US had in fact switched from exporting inflation to importing DEFLATION. Sounds like it should be 6 of one and half a dozen of the other, but it isn't. Deflation is a much meaner beast. I am a bit uncertain because of the noise.
Regarding the switch from exporting inflation to importing deflation, What say you?
Nickle 62
This is strictly positive, no matter how it may sound. As an artist, there is a saying "Plagerism is the sincerest form of flattery". I was thrilled you found it worthwhile to copy and send my efforts to someone else. I also want to thank you for posting the Hathaway piece. I saved it for reread.
RE water. the problem goes very deep (no pun intended)
Increasing salinization of aquafers, rendering them useless, seriously depleted aquafers, and now a drought cycle in parts of US.
Poor Canada can expect changing borders. After suitable posturing and propaganda, they will get invaded to supply water to the US, since they have the worlds largest supply of fresh water.
Dear Trail Guide: Wouldn't the government have to make it worth the gold owners' while to turn in their legal tender gold coins? Wouldn't they have to offer something close to "street value?" Because I'd rather leave my Eagles six feet under the ground than accept a paltry $50 for them.
�� Aug. 10, 2000 �� SolarQuest� iNet News Service �� (This report by Charles T. Maxwell, Senior Energy Analyst (maxwell@weedenco.com) was posted by Ilan Goldman.)
The low natural gas reinjection numbers we have seen so far this spring in the US tell their own tale. We are not on our way to putting three trillion cubic feet of gas, or anything like it, into storage for use next winter. From a low of one trillion cubic feet (and nearly 50 % of that is facility and line "fill", i.e., is not usable), we would be fortunate now to bring stored supplies up to 2.3 Tcf by early next November, the start of the gas consuming season. Given the presumed retreat of the La Ni--a weather pattern, the strong US economy, and the substantial number of new natural-gas-fueled base-load generating plants using combined-cycle technology coming on stream over the next six months, I have had to revise my estimate for peak gas storage down a bit from the 2.5 Tcf number I was using two months ago.
In practical terms, unless the coming winter approaches the highly-unusual, +13% warmer-than usual season we have just passed through, US gas storage numbers are accumulating in a potentially disastrous pattern of insufficient gas to take this country through the full span of cold weather to April of 2001. There is the possibility that we will be forced to allocate gas supplies to private homes, government departments and public institutions, to defense installations and to schools, universities, hospitals, and so on. To the degree that is necessary, gas will have to be allocated away from manufacturing industry.
Hit hardest, in such a period, would be sectors of the economy that use a high proportion of natural gas in their fuel mix such as cement plants, glass works, heat-treating and metal-shaping plants, heavy chemicals, steel, copper and aluminum makers, and so on. Subsequently, problems of insufficient production of component parts and intermediate materials could quickly spread to car and aircraft manufacturers, commercial construction and machine assembly industries. In short, the use of natural gas is so widespread in our manufacturing system that shortages of it for, say, a two month period from late January of 2001 to late March would wreak havoc on many areas of our economy.
It would surely slow national GDP growth, and heavily penalize the profits of many industrial firms. However, all this is theoretical. It really couldn't turn out this way, could it? Yes, it could. And, unless the trends I see in place now of close to 3% incremental natural gas consumption in the US vs. flat or slightly down natural gas production are reversed for some reason I cannot now perceive, the "disaster scenario" outlined above must be considered the most likely one.
Perhaps the most intriguing part of the emerging outlook for a shortfall in gas supplies is not the fact that the crisis has arrived (after all it has been predicted for years, and, up to now, nothing serious has occurred), but rather the point that we are advancing deeper and deeper into this energy problem and no one, other than a few Wall Street analysts, are making any warning noises about it. The media is quiet.
It is either non-believing or unimpressed by the dimensions of what is visible. Government, at all levels, is complacent. There are no public outcries even from executive figures in gas consuming industries that are heavily dependent on the fuel. We are becalmed in a sea of silence on this issue as we pass into summer. The weather is fair, and the "livin� is easy". And, when winter comes? It's just another season, following summer. Nothing to worry about.
However, a few important people in the system quite plainly see the outlines of what is to come. Their traders are bidding up the price of natural gas dramatically (now 100% higher than the last year's $2.10 per mm btu price at this season) in order to secure supplies for storage now - supplies that may not be available next February when many industries could be facing downtime. These gas buyers are doing their homework. And, it is their lead that investors should be following. Still, I am ahead of the story in my surprise that the media has not yet picked up on the coming crisis. For over the years (and I have a good many of them), it has been my experience that there is a repetitive cycle to how these "threats" to the system are understood and acted on by different parts of our society.
In the case of the emerging shortage of natural gas, to take the example before us, the first group to identify it was the industry specialists (apart from many natural gas production company managers who had spotted it years in advance), in particular a small group of Wall Street analysts who were doing their weekly storage sums and saw that behind the fa�ade of last winter's warmth was a highly worrisome picture of an industry failing to convert its greater effort to find supplies (some 650 rigs drilling for gas this year vs. some 380 drilling for gas last year at the same time) into rising output figures. Across the board, analysts in the oil and gas industry are now convinced there is a substantial problem ahead.
This is Stage One, and it is nearly completed.
Stage Two is the tricky one. Analysts must convince their portfolio people that the problem is real, and direct them to what areas of the market to buy and what to avoid to maximize investment returns. But, portfolio managers are resistant to these arguments (they have heard them before). So, only a few comprehend and accept the fundamental story, then take action. But, those brave souls start building upward momentum into the limited group of gas producing stocks that can be bought in size by the institutions (APC-53, BR-45, UCL-38, APA-60, DVN-60, and EOG-32, in order of descending capitalization) . Then, that section of institutional portfolio managers which cannot yet grasp the play itself but which is attuned to moving into stock groups with rising upward momentum in the market (for whatever reason), can be expected to swing onto the story. In this case, the natural gas producing group has recently come up on everyone's charts as being in the lift-off stage.
Finally, the remaining portfolio managers, still not convinced, are forced to act in order to maintain their
performance rankings, and they belatedly enter the game.
We are better than halfway through Stage Two now, as I make it out. The fundamental players are "in", and the momentum players are starting to react. But, as to a general capitulation of portfolio managers to the natural gas shortage concept, that will be reserved for quarter-ending rallies in June and September yet to come, if I am reading the tea leaves correctly.
As I have previously noted, the media have not yet focused on this problem. That will be Stage Three.
There is a substantial story to tell here. Outages in industrial plants across (mainly) the Midwest and Northeast, with tens of thousands of workers staying home, is a major development. When TV reporters, newspapers and magazines eventually pick up the trend, perhaps several months will have passed and the situation may well be seen as more grave. Having professionally worked through the period of Energy Crisis I and II, it would not surprise me if the media termed the new "threat" as Energy Crisis III.
However, I don't think that this natural gas problem will have the public impact of the first two crises. Lack of gasoline (read mobility) and long waiting lines to obtain it may be more effective in influencing the American psyche than 100 industrial plants being shut down. However, Energy Crisis III is a convenient name, and at least it has the advantage of catching people's attention. Stage Three is a big step in the development of a crisis mentality in the market for gas-related stocks. But, we are not yet into this stage.
On the basis of widespread (future) media attention, Stage Four would involve governmental reaction to this, on all levels. By late summer and early autumn, we will be into the late days of the Clinton Administration's time in office. It certainly could be a political problem to admit that something this important had been allowed to develop, unbeknown to all, into a significant threat to the system.
On the other hand, the issue cannot be easily swept under the carpet because its effects are too close to breaking through into public consciousness. Moreover, the Gore-Bush pre-election debates should be in full swing by then, and Bush would be well guided to raise points, such as this, in which he has had some practical experience and for which no anticipatory consideration has been made in the non-existent national energy plan that President Clinton never formulated (nor did any other previous US president). As I see it, the Government will be forced to confirm the size and scope of the gas problem, and will further alarm industry by referring to the possibility of gas allocation on a national, state or local level.
Stage Four could well occur in September and October of this year. Its outcome would logically lead to Stage Five, the final rush to panic and overexposure. This would be the result of heightened media attention, followed by effective governmental confirmation that the problem was real and might not be easily fixed except through significant sacrifices on the part of the public. Stage Five would represent a general recognition that we could be entering a difficult period of fuel shortages and that the effects might be more serious than mere "inconvenience". It should be noted that under any allocation formula, those organizations and industries that could switch from natural gas to propane, butane, heating oil or residual fuel oil would be asked to do so. And, subsequently, these products might themselves run short under the impact of unexpectedly high demand. They might also advance dramatically in price.
Stage Five would also imply a highly visible case for investing in companies that might be best positioned to
assist in solving the natural gas shortage. The final run of small investors� funds into the natural gas producers might represent a "tsunami" of money seeking entry to a play already suffering from limited capitalization, thus forcing gas producer share prices into the "blue yonder".
Stage Five, perhaps occurring in mid-to-late autumn, would, of course, be immediately followed by the actual onset of cold weather. By then, investors would also have full knowledge of the country's three-quarter-filled gas storage position. Early outages might start to occur, for coincidental reasons, in late January of 2001. However, the main weight of the shortfall would be expected to fall when different major storage points in various consuming regions of the country ran out of supplies in February and March of next year. That is when companies, facing closedowns for lack of fuel, should be most pressured to bid for gas to avoid the termination of output and temporary disbandment of their labor forces. So, we have assumed a peak to natural gas prices in February of 2001, probably in the $6.00 - 7.00 per mm btu range following a prolonged period of cold weather.
This could be the high point of fear, when many businesses could be driven to uneconomic decisions just to survive.This would logically be the exit point for experienced investors. With all five stages of the play completed, and the axe of cold weather fallen, this would be the time to collect your chips and leave the game. Conditions will likely not be so desperate or so uncertain again for some time, experience teaches us. Of course, the natural gas problem itself will not suddenly go away. It will take many seasons to find an answer to it. But, we will solve the problem, as we always do. And, as we move through the crisis and consider our options, all kinds of answers will present themselves. Meanwhile, the stock prices of natural gas producers would be expected to start down as early desperation gave way to later resolution.
What will be the eventual answers to the natural gas shortfall? Think about a higher range of prices, application of additional technology, new generations of sophisticated drilling rigs, more LNG receiving terminals, and what can come south from Alaska.
Natural gas (NG), also known as methane is a colorless, odorless, fuel that burns cleaner than other fossil fuels. It is used for heating, cooling, production of electricity, and has many other uses in industry. Increasingly NG is being used in combination with other fuels because of its environmental performance and to decrease pollution. Other hydrocarbon gases are ethane, propane, butane, pentane, hexane, and heptane which are removed from the methane mixture and sold separately from NG.
TYPES OF NATURAL GAS
NG processing gathers, treats, conditions, and delivers over 18 trillion cubic feet (tcf) of NG per year. This is equivalent to about 3 billion barrels of oil. This translates into about 61% of the US petroleum energy production, which emerges into marketable NG, liquefied petroleum gases, motor fuel components, and raw materials for petrochemicals. There are three principal forms of NG: 1) associated gas; 2) non-associated gas; and 3) gas condensate.
Associated gas is found along with crude oil, either dissolved in crude oil, or in conjunction with crude oil deposits. Non-associated gas occurs in reservoirs separate from crude oil. It is commonly referred to as "gas-well gas" or "dry gas." About 75% of today's production is non-associated gas and this includes coal-bed methane and oil shale gas. As with crude oil, there are varying grades of NG. There are varying amounts of heavy components such as propane, butane, pentane, and heavier hydrocarbons. Gas processors describe gas as "rich" (wet) or "lean" (dry) depending on the content of heavy components. NG may also contain water, hydrogen sulfide, carbon dioxide, nitrogen, helium or other components. Therefore all natural gas is processed to some degree to remove the unwanted components. Gas condensates are the heavier hydrocarbon component liquids. The natural gas liquids are part of a family of saturated hydrocarbons called paraffins.
HISTORY OF THE NATURAL GAS INDUSTRY
August 27, 1859 was the date that Col. Edwin Drake (a former railroad conductor) struck oil 69 feet below the surface in Titusville, Pennsylvania. The discovery led to the first NG pipeline system in the United States. The pipeline ran 5.5 miles from the well to the village. Through the rest of the 19th century, NG was used as a source of lighting for city streets. NG producers shifted their focus to the thermal properties of NG, promoting it as fuel for space heating, water heating, and cooking. The NG industry was first regulated by the federal government in 1938 when the Natural Gas Act was passed. The NG industry was considered a "natural monopoly" and the government needed to protect consumers from it. To create incentives for the NG companies to invest large amounts of capital to build a distribution pipeline infrastructure for a given locality, the government offered exclusive licenses for certain regions of service. In 1954, the Supreme Court ruled that wellhead prices could also be regulated. There were shortages in the 1970's that signaled a need to make changes in how the government interacted with the NG industry. The industry began to move away from price regulation in the 1980's and 1990's. The result was increased NG supplies and lower prices. The Clean Air Act Amendments of 1990 increased demand for cleaner fuels in electric generation, industry, and transportation. Newer emerging technologies created new applications for NG. These include NG powered vehicles, and fuel cells. Meanwhile, there were political changes in government that addressed the issue of protecting the environment. These changes included placing many prospective NG exploration targets off-limits. The increasing demand for NG put stress on the NG exploration and production industry, and that is where this story of a developing energy crisis begins.
ENVIRONMENT VS. ENERGY
Acid rain occurs as a result of NO and SO2 emissions that are transformed in the earth's atmosphere and return to earth as dry deposits in rain, snow, or fog. The Clean Air Act Amendments of 1990 require that electric utility power plants reduce their sulfur dioxide emissions by 10 million tons annually and the nitrogen oxide emissions by 2 million tons annually. Coal-fired plants account for over 90% of SO2 emissions. Since NG combustion produces no SO2 and very little NO emissions, electric utilities are anxious to build NG-fired power plants. The dire need for excess electric capacity due to the "New Economy" has created a demand for clean energy. Virtually all new electric power plants will be NG-fired. Nuclear power, though clean and efficient, is politically unviable. Solar and wind are climate dependent and harms wildlife. So NG is going to be the power source of the future no matter what, or at least until a shivering populace in their darkened homes demand relief irregardless of the environmental consequences. The situation becomes more acute because the Clean Air Act Amendments of 1990 impose an absolute cap of 8.9 million tons of SO2 emissions in the utility sector after the year 2000. Another issue is the concern about "global warming" that is proposed by a few scientists, beautiful people (people from the entertainment industry) and the political establishment. They contend that the earth's average temperature has increased by about 0.03 to 0.06 degrees Celsius over the last 100 years. If the temperature is to increase to any real degree (and that is debatable among the more serious scientists), then NG consumption is likely to increase even further, in spite of the fact that NG-fired power contributes to CO2 emissions, the alleged primary source of man-induced "global warming" gases.
THE COMING NATURAL GAS CRISIS
Utilities have warned customers that they can expect higher rates this winter. This is not because of an expected normal or colder than normal winter, but because of tight natural gas supplies. Storage levels are still far below last years levels in spite of having several months of warning. The Clinton-Gore Administration have released 30 million barrels of SPR oil in order to stockpile and refine heating oil for the northeast and midwest. However, most homes are heated with natural gas and no extraordinary precautions have been taken by the government to alleviate the expected shortfall. Of course there is nothing that the government can do. There is no Strategic Natural Gas Reserve. Hydro-Carbon Man is about to get a very cold wake-up call this winter as natural gas utility bills are delivered around the US. Natural gas prices have risen from $2.85 Mbtu earlier this year to a recent $5.40 Mbtu, and expectations are that prices could surpass $8.00 Mbtu this winter as demand increases.
These increased prices are not expected to increase inflation rates as determined by the Bureau of Labor Statistics (BLS) accounting for "seasonality" and other manipulative schemes designed to cheat the elderly and disabled out of their Social Security cost of living adjustments (COLA) and to keep the illusion that all is well with the economy. Businesses will need to continue heating their place of business, and manufacturing companies will still need to have natural gas for production activities. Many businesses are preparing to cut back production if natural gas price get too high, and many are preparing for service interruptions. At some point more and more industrial production could get choked off. NG accounts for as much as a quarter of energy consumption at many steel companies. Because manufacturers need clean-burning fuel for heating and conditioning procedures, they simply can't switch to other fuels when NG becomes expensive.
The situation is so serious that governors from 37 natural gas producing states recently convened the country's first natural gas summit in Columbus, Ohio, promising to study ways of avoiding infrastructure problems in the fields and pipelines that are being blamed for the price shock. Some deluded so-called industry experts still claim that there is enough NG stored in inventory and in the ground to meet the country's energy needs this winter. However, production is running at full capacity at a time when NG utilities are usually building up supplies ahead of the winter season. Part of the problem was the increased use of NG power plants that generated excess electricity this past summer as record electricity was consumed. The electrical grid is under severe distress as the "New Economy" is consuming electricity at an unprecedented pace. Virtually all new power plants are and will likely forever be powered by clean burning NG. EPA regulations make it politically impossible for new coal-fired and nuclear power plants to be built. Solar and wind power plants are economically unviable, climate dependent, and politically incorrect as they use too much open space and threaten wildlife.
CURRENT PRODUCTION AND SUPPLY STATUS
NG producers have been ramping up production all summer, bringing back moth-balled drill rigs and offshore drilling platforms, and increasing exploration budgets. This is too little - too late. Many NG companies got caught with their collective pants down around their ankles. Companies that contract drilling rigs, equipment, and services are reporting soaring rates. In the third week of September, Baker Hughes Inc. (BHI) a Houston based oil and gas services company reported 808 NG drill rigs in operation as compared to 561 at the same time last year. Nevertheless, production is not keeping up with demand. NG companies are unable to find and produce NG fast enough as exploration budgets were cut drastically cut back over the last 2 years. Also as a result, drilling and production companies can't find experience people to replace those that left the industry over the last couple of years. Some companies have resorted to hiring felons and day laborers which has required a lot of training time. In the meantime NG producers are struggling to increase is productive capacity.
The EIA predicts that if this winter is a typical one, families could be spending as much as 40% more on heating because of higher NG prices. Because NG is difficult to transport, most of the gas consumed in the US is produced domestically. Banks are very conservative and it is difficult to get long term financing for NG production. Therefore increased production is likely to increase more slowly than the rising demand. It is expected that there is going to be a lag of at least two years to get the gas production up to levels to meet demand. Meanwhile, injection levels of NG into storage is static at best.
When NG reaches its destination via a pipeline, it is usually stored prior to distribution. This allows companies to withdraw from stores during peak periods to meet customer demand. The problem is that peak demand has stretched from the summer heat waves into the cooling fall temperatures. The stores have not been sufficiently replenished in case of a normal or colder than normal winter. We have been lucky the last few years as temperatures have been warmer than usual. There are more than 400 underground storage sites in 27 states in the US and Canada. There are 3 principal types of underground storage: 1) depleted reservoirs of oil and gas fields; 2) aquifers; and 3) salt cavern formations. Together, all these can hold 3 quads (tfc) of NG. Despite these high numbers, more storage capacity is needed to meet rising demand. Seasonal supply sites are generally filled during the 214 day nonheating season (April through October) and drawn down during the 151 day heating season (November through March). Unfortunately, here we are at the beginning of October and the storage reservoirs are far below last years levels.
NG is not a renewable resource. There is a finite amount of NG trapped in the Earth. However, there is sufficient NG to meet the needs of the US for quite some time, yet NG is being used faster than our ability to find, produce and distribute to the customer. Much of the land that has NG supply is off-limits to the NG industry. The Alaskan gas fields are likely exploitable, and even though the people of the state of Alaska would benefit from NG production, the people of the lower 48 know better what is in the best interest of Alaskans. There are several other off-limits targets as well. The newly designated Escalante Staircase National Monument in southern Utah is a target. The Rocky Mountain Front in Montana, the southern California coast, Florida Gulf coast are also off-limits. Imports from Canada could be restricted as domestic needs in Canada are also increasing. The method of Hydro-fracturing gas-bearing shales for NG is likely to be put on hold as environmentalist have lodged lawsuits in order to ban the practice in Alabama, and may be extended to other parts of the US. There is currently a NG-Boom in the coal-seam methane sources of north-central Wyoming which is coming under the scrutiny of the federal government.
THE "NEW ECONOMY"
There is much discussion about the "New Economy" and that hydrocarbons are not as important to the economy as in the past. This fallacy is about to catch some of these "boy-wonders" with their pants down around their ankles. The financial analysts, government parrots, and media drones continue to rant about the new economy and occasionally attempt to describe how oil is not very important in the world's economies and therefore rising petroleum prices are threat. They even continue to ignore the importance of petroleum when calculating core inflation statistics for the Producer Price Index (PPI) and Consumer price Index (CPI). They even use dishonest measures in these calculations by incorporating dubious valuations derived from "Hedonic" pricing. These buffoons overlook the big picture and the importance of petroleum in the economy (New or Old).
The claims are that Hydro-Carbon Man no longer needs petroleum because now he has communication through the internet and the invention of the computer. In other words, petroleum is not as a big part of the economy as it once was. Recently, the "Holy Site" of the "New Economy" - Silicon Valley was subject to voluntary shutdowns as the power grid was under severe stress during this past summers heat wave. Guess what? Next year isn't going to be much better! Not because I expect another heat wave, though that is possible. The voluntary shutdowns in Silicon Valley exposed a very serious problem. The problem is that even though the electrical power-hungry high tech Holy Site almost suffered a series of rolling black-outs, no one is seriously contemplating building more power plants to alleviate the situation. Nobody wants the unsightly power plant anywhere that they might see it. Their products that they create and build for mass consumption use vast amounts of power. There are ever more computers and peripheral equipment being built into this "New Economy" and it requires a lot of electricity. That electricity is coming from and going to continue to come from Natural Gas.
Obviously, petroleum exploration, production, drillers, and petroleum services company equities are good investments. Utilities are also a good investment. Of course the shortfall in NG production and the NG supply shortage will wear on the economy. The pull back in the economy will eventually be traced to the tight supplies of petroleum and all talk of how petroleum isn't important to the new economy will cease. The coming natural gas crisis will likely signal the beginning of a coming recession and investors will scramble about looking for a safe haven. As stock prices crumble on Wall Street and frightened investors no longer heed the flawed advice of the financial media drones they are likely to look for safe haven. Likely safe havens are hard assets like gold, silver, and platinum. Every postwar recession has been preceded by an oil price shock. This one is going to not only likely to be a temporary price shock but a permanent nuclear-blast in comparison. This could be the double whammy of high price oil and high price electricity. The recent electricity price shocks that hit San Diego, California this past summer are just a taste of what could happen across the US unless we are very lucky and nature cooperates. Precious metals have done well during prolonged recessions in the past. They are likely to very well again. The severe nature of both rapidly rising oil and NG prices bodes well for gold as prices should easily eclipse the $850.00/oz of 1980.
CONCLUSION
The natural gas squeeze is going to be a much more important issue this winter than the current shortfall in heating oil. There is a coming natural gas crisis, not necessarily from a lack of natural gas, but the inability to successfully exploit likely targets and the potentially crippling consequences of a cold winter. The increase in NG-fired power plants due to mandated environmental restrictions coupled with the increasing demands of the "New Economy" are squeezing NG supplies and current NG production. A rapidly expanding economy will add more stress to the NG-fired electrical power grid. A normal or colder than normal winter will lead to sharply higher NG prices as Hydro-Carbon Man either pays up or shivers in the dark. Petroleum price shocks have preceded every postwar recession. We are likely facing a coming energy crisis accompanied by a prolonged economic recession. Investors are likely to search for safe haven investments and some of those investors are likely to search out hard assets such as gold, silver, and platinum.
Re: Black Blade - Barron's article (1st post of the day)
After reading through that article one glaring thing jumped out and caught my eye.
Gold is down ONLY 2% since the Washington Agreement!
Gold has done better than the stock market over the last year.
P.S.
Have a former co-worker who's wife works for Lucent Technologies.
He has more than 10,000 shares of Lucent stock (LU).
I asked him last week how his stock was doing since I told him to sell it over a year ago at $62.
Said he had lost over half it's value (over $100k).
Asked me how my gold investment was. Said it was down in dollar value only about 3 to 5%, better than the stock market.
Devils, details, and where's the gold? @ORO, ANYONE
The devil's in the details, as they say.
Another poster awhile back asked if the CBs actually retained the
physical gold in their vaults, though it was "leased" to the
bullion banks. That is, of the gold leased out by the Central
Banks, how much do they still retain in their vaults (as part of
the "earmarked" gold but still under their control), and how much
was actually loaded on Brinks, etc. trucks and shipped out
somewhere (other than to another CB)?
Same question could be asked of the bullion banks as well: Of the
actual physical gold they sold or leased to others, how much of
it is still physically under their control and how much found
it's way out the door and into the open market?
In other words, who's got the paper and who's got the gold? -- A
very important detail, particularly at this stratospheric level.
Clearly any gold remaining in the CB vaults, well, remember
Roosevelt and 1933 -- they could just steal it by keeping it.
Or is the ASS-u-M[E]tion that ALL leased gold found it's way out
the door and into the open market?
It may be this question was already addressed and I just missed
it. If so could someone direct me to the pertinent post?
First off, you are a true guru, and I am a great admirer of your posts. I can't even try to reply re your discussion concerning pre-Depression banking, etc.
With respect to the POG increasing after the closing of the gold window ("CGW"), just a few points. First, your general point is well-taken. The POG is now about $275-277. Prior to the CGW, it was officially $35 (if my understanding is correct). Thus, the POG has increased notwithstanding non-convertibility.
The counterpoints: The POG may have increased in the period subsequent to CGW because (a) of the releasing of pent-up US demand when gold ownership was made legal, (b) this was the first time no major currency was tied to gold, so therefore people feared the fiat system would crash to be followed by a reversion to the mean - i.e, a gold-based currency - and thus bought gold to prepare for the eventuality; (c) fear of hyperinflation in the $US due to the de facto war economy plus expansion in the welfare state. The big super-spike in the Carter era perhaps arose because people thought the collapse of the fiat dollar was finally about to happen, as evidenced by the inflation/stagflation of the era, and oil prices, etc.
The bottom line: Will gold continue to be a store of value if it does not soon return to its role as the basis of legal tender currency? Perhaps its continued value is an inertia-based, received-wisdom phenomenon, which will evaporate as the older generation passes? In other words, if fiat doesn't collapse soon, can gold survive as a "non-legal tender, non-currency" wealth preservation asset unless it does, or is expected by economic actors to, return to its role as the basis of currency? (My own take, though subject to challenge: gold still has a future, its true value being suppressed by manipulative actors directly or indirectly backed by a or some official players).
Some musings:
Do people still fear the collapse of the fiat dollar system? In 1971/73, etc, the fiat dollar and currency totally divorced from gold was a new situation and concept, so people would feel it would collapse. Therefore, get your gold now! In 1979/80, people could believe that predictions of the end of fiat were true. But we are now in 2000, and the dollar holds it own. Also, we are only in this situation because the dollar "shook off" the direct hit that was CGW, and still carried the day against the rest of the world, so to speak.
There were periods of non-convertibility and non-redeemability in gold - i.e.. the Great Restriction in England flowing from the war with Napoleon. The cumulative effect of the expenses to fight the Cold War and related wars (e.g. Korea and Vietnam) meant that the US was maintaining a war economy for a lengthy period. Could the end of gold convertibility be viewed ion that light? If a genuine period of peace is among us, will we now see a reversion to mean, i.e., a re-embracement of gold in some form, to check monetary growth?
Oro, just throwing stuff out to you and others for possible discussion. I don't have the training or background to produce the big pearls of economic understanding or insight, but perhaps I can be the sand that provokes the creation of the pearls.
You bring up some very good questions and points in your previous post, most notably whether gold will lose it's basis value in preserving assets as the older generation passes the world on to the younger "desensitized" players. We can only hope they will either "discover" the wisdom of ages where gold is concerned, or find something as useful and rare to take it's place rather than depending on the paper push as their wealth basis in the days ahead.
I've often wondered much the same thing. Where will our following generations be 50, 100, or 200 years down the trail ? Will they still be following the better (golden) path, or will they have approached an impassable seaside cliff, unable to move on, having never gained the wisdom to turn around and go back ?
All we can do is hope and teach......Hope that the younger generations will grow to understand the wisdom of the past, and understand from our teachings that the basis of economics is a simple subject, no matter how convoluted or confusing "those in the know" try to make it at times.
Still, the value of gold, as any other substance, is based simply on "perception".....whether or not it is perceived as valuable, useful, rare, common, and so forth. It's "price" will always be exactly what is perceived as the "right price" in the market. If it were perceived as more valuable, sellers would cease selling. If it were perceived as less valuable, the price would come down to a "sellable" level......etc. But when perception comes into play, whatever the "cause" of that perception, whether it be CB selling or manipulation (perception that there is more gold available than is actually the case), the "market price" of that gold remains a matter of the perceived value by the big players. Whether the current perceived value of gold has any basis in reality or not simply doesn't hold much importance to most, even though it is of significant importance to those of us who have experienced these markets in the past and "remember".....and those of us who have the funamental wisdom to understand that if there is no physical (natural) restraint in "money" creation, then eventually it becomes worthless. Which historical form of "money" has proven to have the best track record throughout the history of mankind without being inflated into oblivion ?
Any civilization's "money" at any given point in time has always been considered to be that which is "most liquid"......most "spendable". Right now, that happens to be "fiat" in every nation of the world. Still, gold is an extremely liquid asset, "tradeable" or convertable into fiat cash in almost any place on the globe, while the different fiat currencies may or may not be tradable for other local currencies at any given location. Government action (the printing press) can devalue ANY fiat in short order. Not so with gold. And this is one of the reasons for it being closer to a "universal currency", even in todays hectic and confusing financial world, than anything else available. That speaks volumes for it's continued status as a monetary asset.
The "paper game" continues to be just that....a game. But until paper holders finally understand the importance of having a "wealth basis" in the form of something that cannot be devalued or made worthless by government decree, something that has inherent "value" beyond what a government or corporation says it is "worth", then the dangers of living in a financial house built on a sand foundation continue.
In the end, I think the following generations will understand these values, understand history, and understand the simple basics that have always applied to economic structure. Hopefully, these understandings will come about before the lessons of the self destruction of the pyramid systems now in place rather than after. But as in all of nature, it will ultimately amount to the survival of the fittest and best prepared.
That's an excellent point and one which I wonder about myself. In addition to MK, I know a very large bullion dealer. My friend there reports of many instances where younger clients are selling gold they have inherited from either parents or grandparents etc.
I do believe the time to bring back gold into the mainstream of public and general understanding is now and; better sooner than later for those who have an understanding of matters monetary. Mankind cannot function in a stable macroeconomic context indefinitely without the use of precious gold. We cannot exist in a monetary vacuum defying immutable natural laws. (My .02 for Sunday)
It seems that the question of the value/place of gold is (if I may borrow from FOA) localized to "Western thinking". The rest of the world has no question concerning the place of gold as a store of and demonstration of wealth.
From the beginning of recorded history, gold has held a special place that uniquely made it universally accepted because of its unique properties. I don't think one generation of politicians and economists who have decided, in their folly, to wage war on the noble metal have much chance of success of removing it from its proper place as the constant by which all things monetary are measured. Sure, they will win some battles, driving the perceived value of gold ever lower, but there is a connection between gold and human nature...both are immutable. To wage war on gold is to wage war on our very nature. How can such an effort ever succeed? I believe it is our human nature that actually endows gold with its value and power and neither one is going away any time soon and neither one will be denied.
I have to wonder if the upward valuation in gold that we are all waiting for will really ever occurr until the last western world central bank has sold it's last ounce. I think as long as these financial powers of yesteryear have the surplus in their hands they will continue to rig the price to whatever value most enhances their own interests. The newly emerging central banks of Asia perhaps have a different view toward their reserves but clearly the western worlds central bankers have little apparent interest in their gold reserves except as a means of achieving market manipulation when necessary to achieve other political objectives that they may have. If there is an awareness of the need for the asset that is no one elses obligation it is a seldom expressed sentiment and one which they feel they are still serving since as basically bureaucrats they can not possibly imagine that their contractual obligations with the bullion banks to return the leased gold might not be honored. The question then is how much of their 32,000 tonnes of central bank gold is still left to be disposed of? Is the 12,000 to 14,000 tonnes of leased and sold short gold that we have heard so much about from Frank Veneroso and GATA to be subtracted from this total? How much longer before it is all gone? Is there a correct way to look at the holders and say that a certain portion of the total of 32,000 tonnes will never be leased or sold? Or is that all impossible because of the nature of these things is that the laws will change if the need arises and perhaps it already has. For example has the US who is prohibited from selling it's 8,000 tonnes alread used it in a lease program to effect the same end? We are a talented bunch who have access to much information, academic and corporate as well as the various governmental reporting agencies, what is the current status of the overhang? Any thoughts or suggestions on how to get a feel? Does anyone know how the total purchases of gold for Central Banks is calculated and reported. We all hear endlessly and repeatedly about the sales but very little about the buys.
You'd be surprised how ingenious a group of engineers can be when their project is threatened. Pumps will do wonders to hasten flow when gravity isn't enough.
With the project completed, these pumps can be switched off. In that regard, certain elements (such as the leasing curbs) of the Washington Agreement should come as no surprise now that the euro has enjoyed its own ribbon-cutting ceremony.
I used to heat with oil when I was much younger, and I watched prices closely, filling my tanks in advance when the price was expected to rise. Could it be that in anticipation of a price run-up, sharp oil users have stock-piled "on site" so to speak, and this might blunt the heating oil shortage?
Also many folks in my area have wood-burners. I clued my son into the coming price hikes in natural gas, thanks to you, and he's going to heat mostly with wood this winter. Perhaps such adaptations and others will further blunt the severity of the "crisis." That's how it's supposed to work, afterall!
Rabble-Rouser's Rant Re Reality of Rusty Rose
{This is an excerpt out of an ongoing Le Metropole Cafe chat.}
Sorry Robert, I couldn't stay away as have decided there is more to this issue than academic verbal jousting & poking fun. First the disclaimer- Have never met nor spoken to Bill Murphy so this piece is only my responsibility and not of any other Cafe member. The way we are going Bill & I may eventually meet as Amerikan politikal prisoners. Please bear with me as there is a tendency to exaggerate and have fun while writing on a serious topic.
This rant is in regards to the refusal of the Bush Camp to consider the issues of GATA and the foulness in current metal's market. Rusty Rose is in the political hierarchy of GWB and was the point man for discussing this issue. "Robert" is connected to RR in some way and acting as his apologist. I am an individual acting as an apologist for the GATA cause to bring to light issues that are of grave concern. I will exercise my freedom of speech until am no longer able.
Robert, I believe you are hopelessly blind and/or conflicted and trapped in a maze of CIRCULAR unreasoning. Wish you the best in your gold bullion and shares investments but there are more important aspects to the gold market and it's manipulation than just protecting ourselves and making money. I fear,for Bush's sake, that all his managers are not as dense and "stuck" as Robert and by proxy Rusty Rose. You were given a message that there is serious peril in the gold market and you chose to shoot the messenger because of your arrogance and dislike of some of the terms that were used, such as conspiracy, etc. You would have been wise to look for an element of truth in the message. Are these the type of people, that have the would- be President's ear, that allow semantics and ego to cause a dereliction of duties? Robert, so far we've got you to admit to manipulation, fraud, and "possible collusion", are you passing this along to your friend RR or are you going to stay in the closet. Wouldn't it be nice if W understood that there is possible collusion?
I have no plans to vote for the status quo. Someone besides RR had better take an objective look at this gold issue, and make intelligent appraisals. Don't the Republicans understand that they may soon be responsible for this issue? If not we may be simply choosing the least offensive of two four letter words, Gore and Bush. If W is BAPF {bought and paid for} let's get it out in the open for all to see, the sooner the better.
When looking at people like RR and his elitist ilk I personally see nothing but VOIDS. HEAD-lots of intellect but malfunctions because of arrogance and ego. SOUL- still looking. PRINCIPLES- get out the scanning electron microscope. HEART- cardiac arrest. LOWER LIMBS- only a vacuum present between them. EYES- Myopic. Would love to know PRIOR to election that George W stands for more than Goldman Suchs {typo}, and the current business as usual with our present form of crony capitalism. The rant continues...Robert, do you think you could borrow some cajones and take this message to RR or better yet, a responsible member of the Bush camp? I don't duel so don't bother challenging me, typewriters only. When Midas spoke of RR as an SOB he meant Same Ol Bureaucrat or possibly Same Ol Bill, both of which are more derogatory than what you had in mind. The scary part of RR is that he is a proxy for GWB. Robert Rubin, Rusty Rose, Rich Rulers, Require Repudiation {am starting to feel better already}.
In football terms it's the Raiders vs the Patriots. Time to join a team, get dressed out, and prepare to play. Helmets, jock straps, nor chest protectors are required for the Raiders as there is nothing in those locations to protect.
I'm nearly done and don't bother telling me this is a childish piece. There are huge issues at stake and the "gloves are off" as is appropriate. Robert, please look for this message to come full CIRCLE back to you like a boomerang because it will be posted on multiple internet sites with forwarding requests.
Friends of the internet, we can bring light to dark places. Please take this rant, a result of frustration w the US crony capitalism , and post far and wide. Let's bypass RR and seek out more responsible Republican leaders. Anyone else have access to GWB? A fair gold market is not too much to ask.
Gold Advocates, GATA supporters, fair minded political activists, honest people, & interested parties- Can you help flush some decay out of the gold markets? Support GATA, shun those who shun GATA, & use any influence you may have to force political parties to declare an allegiance to honest markets.
AUSPEC
If you think it would help to show on a graph you could multiply The Crude Oil price by a factor of 10 and the price of Gasoline by a factor of 100. I haven't thought this through completely. Maybe the price change from year to year should be expressed in percentages. If so I will redo this in percentages upon your request or you could do it. I think this would be very informative. Maybe not. What do you think?
http://home.columbus.rr.com/rossl/hbm.htm The first chart is up. It looks like a nice correlation when I multiplied the crude price in dollars by 20, and the gasoline x 500.
I'm not sure why, but doing this reminded me of an old ZZ Top song called "Blue Jean Blues"
I just stumbled across that great exchange in the Hall of Fame
started by your brave posts on "free gold." I re-read the
following, and I finally figured out why it had kept tapping me
on the shoulder during that great series of posts.
((People want to consume or to own now that which they
have not yet saved enough to purchase outright. They
are willing to mortgage their future productivity in
order to have their house today--they seek sources of
loans. Meanwhile, those that already have a quantity of
money are seen to seek a source of income from their
wealth...and banks come to be actively sought and
employed by both sides to act as the middleman.)) -Ari
I believe there is important context missing from the suggestion
that "people want to consume or to own now that which they have
not yet saved enough to purchase outright. They are willing to
mortgage their future productivity in order to have their house
today--"
I financed a car I really wanted when I was 21. I didn't like
the consequences of having to make the payments. The bumper-
sticker "I owe I owe, so off to work I go" became all too true.
I have never financed a car since.
I did finance a condo in Vegas -- and didn't like that either,
but there were extenuating circumstances: I put the money freed
up to good use at the tables, returning, in combination with my
hard work, in excess of 60% return per year.
I have NEVER financed anything else.
What's that have to do with modern Americans, in debt to just
their plastic to the tune of what? An average of $5000? It's my
contention that like marijuana, cocaine, heroin, ecstacy, scotch
and beer, borrowing is an acquired taste.
Psychologically, and I suspect genetically, "owing" is an
uncomfortable situation, and like use of the substances listed
above, it is a habit that must be acquired -- I hate to admit it,
but I _still_ don't understand how anyone can stand the taste of
scotch.
When I was growing up -- yea, I know. That was way back in the
dark ages. When I was growing up, you only borrowed when you
were fairly desperate or to buy something like a house or car
that it would take a long tome to save-up for. Even so, the
practice was somewhat frowned upon.
We certainly wouldn't finance groceries or restaurant meals or
Ninetendo games. And with August's personal spending increase of
.6% in combination with a personal income increase of only .4%,
American's savings is at an all time low since they began keeping
track in 1959. SOMETHING has changed people's natural aversion
to debt, it seems. What?
This has all the earmarks of someone somewhere making huge money
from promoting the practice of borrowing. Kind of like drug
dealers. And once the practice is culturally acceptable, it can
become an epidemic like cigarette smoking. (Relax, I'm not
suggesting legislation or law suits - - - well, no legislation
anyway and no _government_ law suits either - - - as solutions
for any of these problems.)
I can't deny that some people would seek-out scotch on their own,
but many would find both borrowing and scotch unpalatable.
Without the promotion and "pushing," that is. Or perhaps it's
just pandering.
Who's doing the "pushing" or perhaps just "pandering?" Those
middle-men fractional reserve bankers of course.
There is the pump effect of constantly depreciating fiat
currency. You MUST put it in action every year just to overcome
"inflation." You give it to a "professional (you hope) gambler"
middle-man -- like the loan officer at your bank -- to put it in
action for you. The bank MUST loan that money -- since it must
pay you interest and make it's piece of the action as well. The
bank is therefore highly motivated to find ways to loan that
money.
I have a friend who is alcoholic. He doesn't like the hangover,
but he continues to drink. For the longest time, he wouldn't
admit he got hangovers - - - maybe he didn't really know they
came from drinking. Or maybe it was easy to hide it from
himself.
He's now having symptoms that suggest stomach ulcers, which can
be the result of long-term drinking. What are the long-term
results of borrowing? What are the symptoms?
Anyway Ari, I think, for what it's worth, people normally avoid
borrowing and owing, but SOMETHING (or things) in the current
culture have overcome this natural aversion to debt.
Or can everyone just make 60% "interest" in the markets with all
the money they've freed-up by financing their condos rather than
saving for them?
I am waiting by the trail , But I have not seen anyone yet.If it is much later I'll have to get a torch.Does the European Delivery by CPM help keep Eagles out of harms way?Or is that just for Non-residents only? I don't feel that the govt would try to grab our Gold without first disarming the populace ,and that is going to not go down very easy.For anyone that likes to read get "Unintended Consequences" by John Ross a very Compelling novel about Govt.harresment.
http://www.usagold.com Ive been reading about the corruption of the American dollar. Our courts are wretched.
If interested, read Justice Fields dissents in the money cases,knox vs. lee and Julian v.Greenman:
"From the decision of the court I see only evil likely to follow. There have been times within the mmemory of all of us when the legal tender notes of the Unite States were not exchangeable for more than one-half of their nominal value. The possibility of such depreciation will always attend paper money. This inborn infirmity no mere legislative declaration can cure. If Congress has the power to make the notes a legal tender and to pass as money or its equivalent, why should not a suffieient amount be issued to pay the bonds of the United States as they mature? Why pass interest on the millions of dollars of bonds now due, when Congress canin one day make the money to pay the principal?
And why should there be any restraint upon unlimited appropriations by the government for all imaginary schemes of public improvement, if the printing press can furnish the money that is needed for them?-Field,J.
*********************************************************
Every Judge who ever supported these decisions should be impeached for violating his oath to support the constitution. The current Supreme Court and the Congress (for allowing it to continue) are a NATIONAL SHAME.
I remember listening to ZZTOP in the 70's. Thinking back thier music always made me feel cool but I never new why. For that reason I see where you are coming from. Our ZZTOP graph does make me feel cool but I do not know why.
It was over a year ago at the forum that I confessed my ill favor for use of the terms inflation and deflation because they mean different things to different people--a condition that disrupts effective communication between the parties.
I treat the 'flation terms as applying to the supply of something (such as currency), not the price levels of something. In this regard, I certainly agree with you--"Deflation is a much meaner beast." A shrinking money supply tends to wreak certain havoc given our society's propensity to write contracts and to function on the reliable performance of these same contracts.
You indicated--"Leading up to Y2K, the US gov't printed some pretty huge amounts of cash, in case of trouble. Earlier this year they tried to sop up some of that, and the rate of money growth fell."
In truth, the physical money printing did nothing to affect the monetary supply. It simply sat in a vault until it was called upon to serve one-for-one in the place of the intangible yet spendable dollars that existed only as entries on bank ledgers prior to depositor withdrawal. Any growth in the money supply that you've seen would not be a result of this printing operation, but rather from additional borrowing (outpacing loan payback) that was (among other reasons) probably stimulated by the Fed's quick triple reduction of interest rates following the Russian default and LTCM meltdown in late '98.
Then you said--"However, as early as May last year, looking primarily at the money supply numbers, I began to wonder if the US had in fact switched from exporting inflation to importing DEFLATION."
My brain is wired to think this through in terms of supply, so I interpret this as saying that as of May, we might not be shipping our excessive dollars abroad, but are instead doing something that I can't possible get my mind around--that we are bringing in a shrinkage of dollars??? I have a feeling you are referring to price levels, not supply in your current usage of this term "deflation." Care to elaborate?
Since I don't know how long you've been reading here at the forum, to catch you up quickly on my view of all of this is that the trouble comes as the rest of the world turns from being a dollar borrower to a primary loan repayer. The resulting stall in the growth of the dollar supply leads to the climbing external exchange rate currently being seen for the dollar against other currencies--making it ever more difficult for these countries to service their past debts. So what do they do? They strive to roll out of these dollar obligations and into euro obligations instead.
That's all I have time for. I promised my father that we would grill steaks today, and I'm nearly running late to keep that appointment.
Will gold hold it's value if fiat doesn't collapse soon? No problem --- fiat HAS been collapsing, regularly and all around the world.
Even here, in the west. How's the value of the Canadian dollar holding up? Even the mighty ;> U.S. dollar is dropping year after year. 1% to 2% (even admitted by the jiggered official figures) "disinflation" is STILL inflation.
That's the wedge in the door for redeemable digital E-currency on the internet first, then on plastic accepted in every swipe machine on the planet. -Speculation not for investment purposes (thanks Wolavka for the format!)
In the rest of the world -- Korea, Philippines, Thailand, India, Russia, Brazil, Ecuador, etc., people know the dangers of fiat --- and they'll pass it on at least to the next generation. Hyper-inflation is something you don't forget easily -- ask the Germans.
It's only here in the west, and particularly America, that we're so lucky to be stupid about fiat dangers. Unfortunately however, history and current events both strongly suggest that lucky stupidity won't last.
I think you're on to something there regarding the threshold of tolerance to debt. I've been thinking about this lately myself and have concluded that much of this is probably the result of inflation. Couple inflation together with the "modern" attitude of "I deserve an SUV today" and, presto, you've got debt and, by golly, the banks are all too happy to accommodate them.
Inflation has been quietly eroding the purchasing power of many and they don't realize/care that they should adjust their spending/saving habits accordingly. In addition, I'm afraid the majority of the people in this country no longer possess those "old fashioned" requisite character qualities i.e. discipline, humility, common sense, etc. that would otherwise enable them to steer clear of the trap and, consequently, they stumble into the abyss. Certainly, they will be the ones who wail the loudest when they are forced to confront the reality of their circumstances. (Over) spending way up...personal savings at an all time low...yeah, that's real fashionable.
a) The price changes are expressed in constant 1999 US$
b) The price changes are year after year, and not cumulative from 1970
c)We do not get any sort of trend indication here because we are looking at one year at a time rather than over several years.
d) When we are looking at constant dollar prices we are looking at real changes in prices and the truth of what is happening becomes more clear or should I say, much less murky.
Just at first glance I see three facts in particular:
1) The real price of GOLD was much more volatile than crude oil for the first 15 years; then CRUDE OIL became more volatile than GOLD for the next 14 years while the price of gasoline at the us retail pumps was fairly level over the full 29 years. Strange when you look at these constant dollars that the retail price of gasoline in the US appeared to be refined from from something other than crude oil, for the retail price was not violently affected by the wide volatility in the price of crude.
2) Because the chart only shows the real % price change from one year to the next, about the only conclusions we can draw is that the comparative volatilities are distinctly different and that change in the price of CRUDE OIL has only a very small effect on the changes in the price of GASOLINE at the pump. Duh! we already knew that.
Now in my next post I will give the tables which I have been groping for for several months. I promise you that they will be quite revealing and more worthy of Sir RossL's talents than any which have been so far been submitted by me. The tables will follow in the next post.
This is the chart we have been looking for. Much comment can be made upon these facts.
As Abraham spoke unto the LORD, "Sir, behold now, I have taken upon me to speak unto you which am but dust and ashes, oh lord, let thou not be angry with me. Peradventure wilt thou just this last time put up my worthy tables in chart form. Shall not the judge of all the charts and grapths do right?
Of course you will notice if you re-read the account of Abraham's encounter with God, that he had the audacity to come back again with continual requests after intimating that each request would be the last.
Cumulative Real Price % Change Yearly from 1970 to 1999
----------Expressed in constant 1999 US$--------------------
---------POG--Crude Oil-Gasoline
Trail Guide - first, thank you for your compliment the other day regarding my posts. I receive the compliment with genuine humility. Second, you said "we must talk." To this I smiled, and said, "No, more appropriately, I must listen."
Thank you also for taking the time to respond to my inquiries. And as is usually the case, when a question is well answered, it leads to additional questions.
The first comes from one of your foundational posts: FOA (2/28/2000; 10:18:13MT - usagold.com msg#8)
It has to do with the U.S. coming to the understanding that they could effectively use the vast under-valuation of oil as justification to print more dollars. You mention first: "it was obvious they (USA) were pegging dollar printing to oil prosperity," and next: "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!'"
Finally: "In the eyes of our official thinkers then,,,, For the local US economy to mature we needed to get off the gold standard,,,,,,,, get the world to accept fiat dollars backed by oil,,,, and find more oil that could
deliver triple dollar value for every dollar we paid!"
My question is how prevalent was this understanding? Was this something that was at least "kind of" understood in Congress, or was this something that just floated around State? I ask this not out of irrelevant historical curiosity, but because I want to understand if U.S. oil/energy policy had/has any long range purpose, something that, even if only in academic appreciation, transcends the contemporary whims of any given Administration.
First my interest was piqued when I came across a paper by Matthew Simmons (www.simmonsco-intl.com) called The Oil World: 1973 Compared to 2000. In it there was an interesting paragraph regarding a possible acquisition for our SPR:
"This complacency was best illustrated in 1969 when the Shah of Iran visited the United States to attend the funeral of President Eisenhower. After the funeral, he visited with President Nixon who had just assumed office. In this meeting, the Shah proposed that the United States consider creating a strategic petroleum reserve in our depleted salt dome caverns, and offered to sell the United States a 10-year supply of Iranian crude, totaling 1 billion barrels, at a fixed price of $1 per barrel. After a six-month debate, the Nixon Administration decided there was no merit to the idea and politely declined the Shah's offer! How times have changed!"
I will assume the historical accuracy of the statement, as Mr. Simmons is a little more up to speed on oil than I.
If indeed official "thinkingdom" was conscious of its ability to tie dollar expansion to future productivity on the basis of cheap oil, in effect using oil as backing for the currency, was this a) a blunder of gargantuan proportions on the part of our politicians, b) in some intriguing way, a calculated step, c) a decision we were not free to make as others were already calling our shots, or d) none of the above?
To c) I want to add that I think it is important to point out in the political sphere, we are not, and have not been for many years free to make decisions on behalf of our country. "The borrower is servant to the lender." And although we were still a "creditor" nation in 1969, the vast expansion of our dollar caused us to have to tread on eggshells around those who held these dollars. If we did something, albeit in our sovereign best interests, that should cause panic to the holders of these dollars, and bring about a sudden repatriation of them, we would have quite a time on our hands. E.g., I think part of our reluctance to build a strong defense throughout the years of the Cold War was out of fear of scaring or angering the Europeans who were so graciously holding our dollars in their central piggy banks. Europeans who had to live with the bad breath of several hundred thousand Soviet troops breathing down their neck on a daily basis.
If at least in the hallowed halls of the State Department or U.S. Treasury think tanks, we grasp the realities of your assertion, then I would imagine that this has been conveyed to President Clinton. This brings us to the analysis of this Administration's energy policy.
Many say that this is easy - there is no energy policy. I am not so quick to make that assertion. It may be the case. It may not. They may have a policy, and it may be very misguided, or very self-interested. It may be guided by hands outside our government, not in so much a subversive way, but as a result of the very, very real truth that we are not our own; we are servants of our creditors.
My take on Clinton:
He is not stupid. He is very capable of distilling what is essential in a matter, and grasping a working knowledge of complex subjects. He surrounds himself with people who know what is going on. Unfortunately, he is too concerned with himself, and has too many favors to pay back that he cannot operate in the national self-interest. Consequently we have come to where we are now over the past 8 years. He uses his intellect, and charisma to advance short-term goals, chiefly to make Bill Clinton look good. But above all he hates to lose. This legacy stuff is just a smoke screen. He's perfectly willing to let people think that this is what he is concerned with. But he hates losing, and will ultimately do anything to win.
This is part of his success - just when you think you have him cornered, as his only option left is something unthinkable, be careful, if it can be thought, it may very well be done.
On this score, it is important to have some idea of what he knows about dollars, oil, and gold. I suspect, that while not a master of details, he has a working knowledge of the essential matters. I suspect that our energy policy is more or less ad hoc, for no other reason than this type of person does not concern himself with something until he must, because he is quite capable at coming up to speed quickly. Unfortunately, this does not work well at this level. As good a reason as any why he will be viewed in retrospect as a bad President. Ad hoc policy, dictated by a person that cannot lose will result in catastrophe. The important thing here is if he has a good grasp of the inter-workings of some of this, he might pull some incredibly clever maneuvers that outfox his opposition for a little while. This will look good to the masses at home that vote, but will only create a more agonizing destruction in the end.
For instance, I don't think the 30 million barrels are ever going to leave the SPR. Already it is being downplayed, and the timeline is being pushed back until after the election. But the desired effect was achieved: political gain. Did it tick off the Saudis? Perhaps, but I think the message also has gotten through to them that this is political wash. So while the Saudis may be affronted, they are not overly concerned. I feel they too have come to understand the type of man they are dealing with. Again, to see him as a horny old clown building a legacy is foolish, and a recipe for loss if you are a political opponent of his. He will be glad to let you think that. He is intelligent, and ruthless. And he hates losing!
Part of the announcement may have been a "touche" for being backed into a corner on Euro intervention. If there is anything to the assertion that higher fuel prices hurt us less than Europe, and could serve to weaken the Euro by causing some destabilization there politically (blockades, riots, etc.), as I mentioned in my post (9/22/2000; msg#: 37234), then just when things were getting good, the Euro block says: "Ok, if you want to play like this, we will ask you once, politely, 'Please intervene on behalf of the Euro.' They do this while holding a big golden club over our head� sort of like TR's talking softly but carrying a big stick.
Clinton knows he's lost this round, so he opts for intervention. He knows we are ultimately servants to our creditors. But he won't go down without a fight. And remember, Bill Clinton must win (not necessarily the U.S.).
By making the 30 million gallon pronouncement, he pressures the Euroland governments to do the same. Their people say, "see the U.S. did it, why not us also. And by the way, if you don't, how about lowering fuel taxes?" And since people when they start to panic are not likely to really "get" the fact that oil producer supply is not the issue, the desired effect is achieved. The Euro gains a few cents before leveling off, but the political problems of having to explain to your angry constituents why you don't open your SPRs are there for them to wrangle with, especially during the next round of supply shock tremors.
This I believe is a losing game, but the strategy is to discredit the Euro in the eyes of oil producers by destroying it politically on its own turf. The dollar somehow must remain the means of oil settlement. It is one of the last desperate arrows in our quiver, but desperate people do desperate things.
To bring this back around to where we started. I would like your opinion and elaboration on how fully we appreciated what we were doing in "pegging" dollar production to future oil based productivity back then. If it was well-developed strategy (even if very hidden), then it should have passed down in somebody's notebook to the current heads in the thinking rooms today, and would be influencing our Administration's actions. If not, then I fear our energy policy may be even more untethered than has been suggested.
Just opinions� I may be way off base, but it seems plausible to me.
I have other questions, but will ask them at a later time, unless you just say, "who is this guy? I wish he'd just go post at Kitco or something." [no offense, Kitco!]
Currently well below 15.6. Markets appear terribly weak to me. At relatively high valuations, markets cannot tread water; they must move up. If not, action will be down. To me, that's common sense. (That's all the sense I have.)
You are a veritable genius. You have hit the bulls eye.
That chart is worth a million words. I have much to say about it but would be content if our worthy forum contributors beat me to the punch. Gold looks mighty fine against oil and gasoline and I'll bet a host of other "Core of engineer" items.
I was reading an article in "Barron's", July 3, 2000, by Jacqueline Doherty, entitled, "D�j� Vu?"
A comparison was drawn between the current period of Fed tightening, so called, and "the last time the Fed slammed on the economic brakes."
The following is an excerpt from the article:
"Pundits often compare today's market with the 1994-95 period because that's the last time the Fed slammed on the economic brakes. Greenspan & Co. increased the fed-funds rate seven times, pushing it from 3% to 6%, between February, 1994 and February, 1995. Recall that after a lackluster 1.4% gain in 1994, the S&P 500 shot up 37.6% in 1995."
"In the current tightening cycle, the Fed has sent interest rates higher six times, but the moves weren't nearly as dramatic as 1994's. Fed funds rose from 4.75% in 1999 to the current 6.5%. That's a 1.75 percentage-point increase - far less than the three percentage point rise that doubled the fed-funds rate in the mid-1990's."
The whole point of the article was that market pundits expect stocks to take off when the Fed finishes, pointing to the fact that that is just what happened in 1995. Doherty does cover some the basis as she paddles in the water. The point is made that economic conditions are different now than they were then, ie. Inflation was not the threat that it is today, and that this cycle has not caused the pain of an Orange County type bankruptcy or the Mexican crisis.
What the writer fails to point out is that the Mexican crisis and Orange County were not brought on by the Fed but were only coincidental. When governments belly up a lot more is involved than a little tightening by the Fed.
The real important point is that in the 1994-95 scenario the yield curve never even came close to inverting. As we have said before when long-term rates fall below short-term rates, or better said, when short-term rates are forced above long-term rates by Fed action (an anomaly that only happens when the Fed causes it to happen) the end result is economic recession.
During 1994 Long Bonds averaged 7.34% while the Fed Fund rate averaged 4.06% and an average positive spread between these two rates of 3.15% resulted.
During the period of March 22 thru July 13, 2000 this rate spread turned negative and averaged a negative .33%. Political considerations to the contrary, this persistent inversion is ominous. An update on this situation reveals that the average negative spread from March 22 thru Sept. 26 has grown to .48%.
The spread has dropped in the last couple of weeks to the mid-.60% from a peak of the mid-.80% range.
As long as the Fed holds the line in this range and the long rate does not react logically by turning this spread right-side up we have great danger of a recession next year and if this plays out as it seems to be doing with much help from fuel supply problems, etc. stock prices will not "shoot up" as they did in 1995.
Stock prices go down, not up, when those in the know anticipate an economic turn-down. We are on the edge of a cliff and so many factors are coming into play that short of a miracle the US economy is going to plunge over that cliff.
Might want to convert some of that paper into some physical before the critical last two Tuesday's of October.
1) The "REAL" price of Gold has done better than either oil or gasoline during the last 29 years.
2) The price of Oil and Gold go up and down in tandem in the long haul
3) The real significance in the price of gasoline at the retail pump has much more to do with delivery costs and governent imposed taxes on each gallon. Delivery costs, I say, including the cost of refining, inventorying, shipping to the retailer and of course supply and demand timing problems.
After seeing the above link-ed graph, I "dug up" a few eagles for perusal.
Centinnial can help you folks who are still considering accumulation at these bargain basement prices.
TRAIL GUIDE a few thoughts to you from an old philosopher
Trail Guide
I have been very busy in the world of creating genetic probes and medicines.(Selling things worth more than $1 million per ounce, by the way) so I have not read the forum much.
I repost a couple items and then ask you to ponder.....ponder the impact of the digital marketplace....perhaps oneday you might post on the trial how you think those digital thunderclouds will behave...creating floods that destroy...or waters that nourish...
Well, Cavan Man, one of the toughest problems investors have with following the Gold Trail stems from their perception of how our modern dollar money values things in the market place. I, we, all of us have discussed this extensively. Often from a somewhat different view than mine.
From my interaction with people of various far reaching world backgrounds, one thing is clear: Investors and regular workers with a Western slant do not grasp what wealth is. Overwhelmingly they see their currency and paper investment portfolios on an equal footing in value with the same
"real things" that raise our living standards. Yet, in real life, they cannot be equal because these paper assets are only an exercise able future claim on our "real things in life".
In this larger sense, after rereading my post to him,,,,, one can see where the entire dollar world itself has become a "futures pricing arena" that "undervalues" almost every real usable item we function with in daily life. The dollar asset system, as we know it today is used as a value setting
tool even though it,,,, like gold futures,,,, does not entail the removal of real goods from circulation.
Western society and Western influenced investors cannot grasp gold's value because they mentally must denominate it into currency first. To do this they turn to the "market place" as the undisputed tester of values. But, as shown above, our market place uses a currency system that is entering the end of it's timeline and therefore can no longer measure "things" on a simple supply and demand
value basis.
When Joe buys one of five apple from the table of a vendor, he leaves only four apples left on the table to be bid on by the next buyer. This ages old act of "hard trading" demonstrates the whole human interaction with supply, demand, need and emotions. When the next buyer sees that only four apples are left, where there were once five, whether he likes it or not his mind will consider the above supply and demand possibilities. All the while personal need and emotions mix in his brain.
------------------------
When we look at the average Joe....I think that we have to realize that more and more...that average Joe is living in a world where the "market" in anything is "leveled" by the internet (instantaneous digital connectivity). It is absolutely amazing that given the very large level of growth in the internet, that we have not yet seen the real emergence of "cyber cash" (a verified money which can be used anonomously) nor of "cyber currency" (a verified and trustworthy currency which is not a national fiat). My opinion is that Governments all over the world are strongly resisting the emergence of a fully enabled "cyber market".
Now lets look at the brain and emotions of the average Joe....
1. He goes to work and gets his "check"...which is usually a number on a piece of paper....or even an automatic deposit.
2. He wants the relationship between that number and the real things he can buy with it to be stable enough that he can buy what he needs, and save the rest. If the momentum is against him (prices rise) he wants to see a bigger number on his little piece of paper each month.
3. He uses a bank to keep these little numbers in, and wants to use a bank which will either issue him little colored pieces of paper which he can spend anonomously for small things, or will let him write down numbers on a piece of paper which the "sellers" of a good or service will accept because they need these number transfers to run their own businesses.
4. He has noticed over the years that computers move more and more of these numbers...and this is usually convenient.
5. He has never used a gold coin to pay for anything. And if given a gold coin as a "bonus" by his employer, he would probably be happy to sell it for some more numbers.
Now Trailguide..........
It is probably true that the creation of the Euro as a "transnational" money is drastically restructuring the way the global asset game is played.....and I too believe that it can dislocate the dollar....but, as the turmoil begins to settle in, we can begin to expect one thing to happen....
The creation of a trustworthy "cyber currency" by a large pool of corporations who are looking outside the banks for a stable currency to hold assets (the insurance world could be a big part of this). Since the "pooling" of capital always requires the "liquidity" of "ownership change", a "unit" of value is created...and that unit...like freegold..or perhaps even tied with freegold...is able to trade against all other currencies....
Some might think that such a "cyber currency" could reduce the "need" for gold...but perhaps the very fact that this currency could rapidly gain worldwide status (far surpassing dollar and euro) would speak for a major role for gold in the "basket of real goods" that support the cyber currency.
It is my opion that no matter how well thought out the plans of oil dollar gold and Euro are, the power and interests of the masses will be spoken to through the cybersphere......why.....just imagine where the world goes to when most of the highest technologies from computers to modern medicine ask for payment in these new units. We are already almost there......the little shift we need is for people to simply abandon their own currencies....Europeans are being asked to do this officially, and Americans may need to do it soon unofficially.
And just like some folks were there to structure the internet...some will be there to structure the new world capital market.
Trailguide....if you decide to comment on this general issue of cyber influence..please do it on the trail...since I am not at the forum much now.
Look at those neat white crosses and you can see only too well why the leaders thought they should push the continent in another direction - towards harmony, towards ever closer union.
But the fact is that times have changed, memories have dimmed, and people are unwilling to be led.
The greatest message to come out of Denmark is the simplest: the European Union - in all its guises - is perceived to be outside democratic control.
It does things to us that we do not have any obvious way of doing things to it. Very few of us get the chance to make this point in a vote - the Danes seized their opportunity.
I don't think they've harmed the euro and I don't think they've done their own economy much good. But I do think they have done something much more far reaching. They have, in a dramatic fashion, kick-started the debate about who is in charge in Europe. In that they have done us all a service.
I agree that, in some respects, borrowing is an acquired habit, but I'd like to also suggest there are powerful, built-in incentives to borrow rather than save. I take my own example as a case in point.
I was raised in a strict pay-as-you-go family. My parents instilled a strong anti-credit bias in me, and with the exception of some modest college loans, I lived debt-free until I married in 1981. As my income and family situation became more complex, I began paying more attention to tax laws and acting in ways that seemed to be advantageous: I bought a home, financed cars, accumulated credit card debt, all the while writing off the interest on our taxes.
Even though inflation was gradually reduced in the '80's, the rate of inflation still exceeded the pittance in interest we could earn on savings. There was simply no rational incentive to save.
That all changed with the 1986 Tax Reform act. We were suddenly unable to itemize, and it took us years to recover from the sudden reversal of incentives. Already in debt up to what we could reasonably expect to service, we were suddenly, at the stroke of a legislative pen, on the hook for another $12,000 (over the phase-in peroid for the changes) or so we didn't have. There was no way, continuing to work in our (then) current jobs, we could make ends meet.
I eventually quit my job, started a business, and took advantage of the Schedule C in order to get out from under. It took about 5 years, but we eventually got back to being in the black.
My point in all this is that our behavior seemed rational, in light of the various incentives--it wasn't that we WANTED to live life in debt, but government provided the rationale via the tax system. During that period of time, I revisited the study of economics, and realized that this bias toward debt by our government was pure Keynes. He theorized that savings were a "leakage" from the monetary system of "inputs" and "outputs". Money, in Keynes' paradigm, must be spent and re-spent to the maximum, in order for the system to avoid recessions.
I guess the lesson in all this is that, as Tricky Dick said: "We're all Keynesians now". (Caveat: at least Nixon bit the big one before the bills came due!)
Journeyman: I see where you're coming from here. I remember when I was young that my grandfather did the same thing. He would fill his tanks in anticipation of rising prices as winter approached. I am not sure if this has changed over time and I imagine that many, even though warned about heating oil shortages, still put off filling their tanks hoping and praying that all will be well. It is a classic example of Aesop's fable "The Ant and the Grasshopper." That is human nature. The wildcard of course is will it be a warm winter, a normal winter, or a colder winter. We have had a few consecutive warm winters during the El Ni--o years. The El Ni--o cycle has passed, and we could at the very least be facing a normal winter. However, we still may luck out. Irregardless, the heating oil supplies in the New England states are down 45% from last year. The heating oil stores in the rest of the country are also far below last year's levels. The SPR oil is not going to help. First, this is loaned oil that must be swapped with oil plus an additional amount of oil at some future time. The problem isn't a supply of crude oil, it is a refinery capacity problem. Although supplies of crude are tight, the refineries are running flat out and also by delaying scheduled maintenance, this situation becomes even more dire as refinery workers health and safety become issues. Secondly, there is the issue of profit margins. Can a refiner take on the added risk of borrowing oil that is not needed, and refine low margin heating oil as compared to higher margin distillates such as diesel and gasoline? Maybe if the turn around is quicker perhaps. But if that is the case, then why not just refine heating oil from current crude production instead of taking on additional costs and unnecessary risk? I think that we could be in danger of a serious heating oil shortage, but as I have stated before, no one has really picked up on the coming crisis in natural gas. For some reason, natural gas has not shown up on anyone's radar screen as far as being a serious issue. However, look at how NG stocks and energy mutual funds have performed over the last year. The Wall Street pundits and analysts have really missed the party on this one. Everytime they set a price target for petroleum and distillates, the price has soared past. Recently there has been a short reprieve as the gullible accept that the government leaders have it all under control. We have heard that story too many times in the past.
BTW, I always pay in cash. I hate debt. I remember seeing relatives being hounded by debt collectors. I find that to be too humiliating. I buy everything with cash only. I save and invest every week with the philosophy that I get paid first and buy only what I can afford. Besides, I say screw the banks ;-)
I have done this with propane. Also have enough fire wood for two winters. However; I do not believe that such a significant amount of this is being done to have the affect which you suggest. From my observation post the vast majority have no money, no savings, no excess cash to do this and though they are, as you say addicted to borrowing they wouldn't even consider borrowing to beat fuel price increases. They only borrow to satisfy their appetite for goodies. I am afraid they will be begging bread some day.
I am not guessing here. I know a lot of people, a great cross section of them and I know of no one who would borrow money just beat the price increases of fuel. The only folk that I know of in general who have savings are elederly and have been left behind. I can't even have an intelligent conversation with those types, my father included. They cannot bear the possibilities and are in a total state of denial. For what it's worth.
HBM
PS: For those of you who would disagree with me on this and would cite yourself as an example, I would say, that your like me, an exception to the general rule. Exceptions to the general rules do not move markets, they only capitalize on them.
http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B24225696B0041E917?OpenDocumentThose are interesting charts. I don't have access to my data on the POO and POG over the last several years, but I seem to recall that the POG lagged the POO by about 6 months to year, probably as a result of the effects of the higher POO working its way through the economy. Also, the last three recessions were followed by a sharp increase in the the POO, which was good for gold. I have just read a couple of new articles on GE that discuss the POG manipulation. As I look at your graph on perct change, I notice that the POG has broken it's usual pattern with respect to the POO. Interesting. Murphy's GE/GATA article was interesting that it had refreshed in my mind what most of us already know about POG manipulation, but it is well worth reading and setting things into focus. The link above is fromm theminingweb and is a short article on Nick Goodwin's SA Gold picks. Notice that the heaviest weighting is in the unhedged producers. I have a small amount invested in the Old Lexington Goldfund (now Pilgrim - LEXMX). I really did not pay much attention to the fund over the last couple of years since I hold only a modest amount in it. I notice that the largest position is in both unhedged miners and physical gold. It looks as if there may be a trend developing here. When the institutional Gold fund money goes to physical and highly leveraged unhedged miners, maybe - just maybe, we could be ready to experience a run on the POG in the near future. Note that Tocqueville and Vanguard Gold funds have similar equities holdings. Just a thought anyway. Thanks to you and Ross for the graphs.
http://www.stratfor.com/services/giu/subscribe.aspHere is tonight's Stratfor Intelligence report. Despite what they term a few "dark clouds on the horizon" they tend to be endlessly optimistic. I'd appreciate any knowlegeable commentary - especially from our dear friend Trail Guide. Many thanks.
Since petroleum is the key industrial mineral, without which
nothing works, there has been an economic consequence to the recent
rise in prices. The most immediately perceptible consequences,
however, have been political. Oil prices, which caused civil
disobedience in Europe, are now a centerpiece in the American
presidential campaign. Prices raise concerns about Asia's ability
to recover from the 1997 crash.
Embedded in the concern over oil is a deep, dark fear: Will the
rise in prices so disrupt the global economy that it will tumble
out of control and into a general depression? Certainly, higher oil
prices cause pain. But the real fear is whether these oil prices
will be the nail in the coffin in the expanding global economy. In
the back of everyone's mind is this question: Are we about to
experience 1973 all over again?
The 1973 Arab oil embargo created a massive price rise and economic
dislocation, from Tokyo to Paris to Chicago. The explosion in oil
prices ushered in a decade of "stagflation" in which inflation
soared while economies stagnated. By the end of the decade, the
United States experienced double-digit unemployment, double-digit
inflation and double-digit interest rates. For Europe, the
situation was worse. Even Japan, in the early stage of its
economic explosion, experienced derailment.
What few people remember is that the 1973 oil shock did not usher
in the stagflation period. It may have accelerated it and
intensified it, but the slowdown was in the works for quite a
while. President Nixon had imposed price and wage controls before
the 1973 crisis. The United States was in enough economic trouble
for the president to impose unprecedented controls on the economy.
What drove the global economy toward stagflation was a set of deep
structural and cyclical problems. The first of these was
essentially demographic. The global population explosion following
World War II took place as people entered a period of family
formation -- a time when consumption is highest and savings is
lowest. This wave of people created tremendous pressure on
commodity and money markets.
Then came an inevitable cyclical event. The massive post-war
expansion that began in the early 1950s was about a generation old.
By the late 1960s, it was, not surprisingly, out of gas. The time
had come for a cyclical downturn. Coupled with the demographic,
structural reality, a cyclical shift turned into a massive
economic, social and political dislocation.
Deep cyclical and structural patterns magnified the effect of the
oil price rise in 1973. Without these other factors, the prices
would not have had the effect they had. Alternatively, the rise in
oil prices would not have been possible. It could not have occurred
after the 1967 Middle East War. But it could take place in 1973,
because of a general rise in commodity prices; the rise in oil
prices was at most an exaggeration of something that was happening
anyway.
Today, the real issue is not oil - not any more than it was in
1973. The real issues are the structural and cyclical forces that
underpin the economy. By themselves, oil prices are not
definitive. They are merely part of the general operating pattern
of global economies. The structural pattern remains in place, with
positive and negative consequences.
In the case of the former, the same demographic factors that
created stagflation in the 1970s are now creating powerful patterns
of capital formation, particularly in the United States. Much focus
has been on the very narrow measure of savings rates, which are at
a historical low in the United States. This measure ignores
aggregate and personal capital formation rates. The boomers are in
a period of low consumption and massive capital formation, fueling
tremendous growth in the capital markets.
That means that net worth-and even liquid net worth-is rising.
This inevitably depresses savings rates, since saving from current
income while net worth expands dramatically is unlikely.
Now, some ominous long-term clouds are out there. The first is that
the boomers cannot maintain this capital formation for more than
another decade at best. Indeed, they will begin liquidating
holdings at some point. At that point, capital markets will start
imploding, slowly at first and then quite suddenly. But that time
is not now.
The other very real cloud is this: The rest of the world does not
share the American boom. Asia is certainly not participating.
Europe shares in it only fractionally and unevenly. Russia is in a
massive depression. In short, while the aggregate global picture
remains structurally positive, when you break the picture down into
its component parts, you see that American expansion makes up for
much of the world's deep structural problems, which do not yet
parallel those of the 1970s.
However, there are some serious cyclical problems. Many people have
asked, "When will the bull market end?" By most definitions the
bull market ended many months ago. In some cases there were massive
declines. In others, there has been stagnation. But the period in
which all global markets reached new heights has been over for
quite a while.
The stock market is an important element, snapshot and, above all,
an important precursor of the economy. In that sense, there are
clearly cyclical problems.
Consider the following cases:
*United States: The Standard and Poors 500 hits 1553.11 in April
and has moved sideways since then, closing at 1436.51 on Friday,
about six months later, a decline of about 7.5 percent. The Dow
topped out in January, showing a similar pattern and decline.
*Japan: The Nikkei topped out at 20833 in April. It closed on
Friday at 15747, about its low for the year, a decline of nearly 25
percent. It was at nearly 40,000 in 1990.
*Hong Kong: The Hang Seng reached its high for the year in April at
18397.97. It fell below 14000, rallied to just below its high and
then plunged again, closing at 15648 on Friday, a decline of about
15 percent. Unlike other Asian markets, the Hang Seng did recover
from its 1998 lows before beginning the current decline.
*Singapore: The Straits Times Index peaked at 2582.94 in January,
and closed Friday at 1997.03, a decline of about 23 percent.
*Germany: The DAX fell from 8136.16 in March to 6798.12, near the
yearly low. This is a decline of about 8,4 percent, but like the
American markets, coming off historical highs.
*France: The CAC index has gone from an all-time high of 6367.25 in
September to 5944.77 on Friday. This is a decline of 6.6 percent,
but over a very short period of time.
*United Kingdom: The FTSE index peaked in late December at 6930.2,
moving sideways mostly and closing on Friday at 6294.2, a decline
of about 9.2 percent.
An extremely consistent pattern shows itself. Global markets have
begun to move down on a cyclical basis. From a long-term
perspective, this is not a big deal. After all, the American and
European markets, having risen extraordinarily for years, are more
than overdue for rest and regrouping. The Asian markets, however,
save for the Hang Seng, have failed to recover from the 1997
battering. Their structural problems remain untouched.
Thus we see the following three results:
* We are moving into a cyclical downturn on a synchronized
basis. Everyone is going in the same direction pretty much at the
same time. The downturn may be shallow-a mere sideways movement-in
the stronger economies. These cases may simply be a slowdown rather
than a recession.
* The structural de-synchronization remains in place. Asia's
cyclical downturn is a resumption of a long-term downtrend. The
United States cyclical downturn represents an interruption of a
long-term up-trend. The same may be true for Europe.
* Increased oil prices will therefore have disproportionate
effects. More vulnerable, Asia will be hurt more than the United
States. Europe, for social and political reasons will make more
noise than the United States, but still hurt less than Asia.
But the world's cyclical and structural shifts are not coinciding.
We expect, therefore, that oil prices will not affect the world as
they did in 1973, nor will they be sustainable for a decade. They
may participate in a cyclical downturn and some will blame oil
prices for the downturn. But equity prices already reflect this
downturn and have for about half a year on a global basis. Oil
prices will affect the depth and length of a downturn, but are not
the cause.
Instead, a weakening will occur across the globe, one that gives
the United States and Europe a healthy breather, but hits Asia very
hard. Russia will benefit marginally from increased oil prices, but
its deep structural problems are political rather than economic;
Russia will be cast further out of the international system.
In other words, for all the sound and fury, there will be a
slowdown or even a recession, but it will not be the end of the
world. Not for a while, at least.View
Yesterday's Discussion.
Your chart that strikes my fancy is the one that you multiply out gas by 500 and oil by 20 to match gold. It shows that gold has been a leading indicator to oil and gas in all periods from 1971 through 1998. Oddly, 1998 oil would seem to have taken on the leading indicator role (maybe) but we must wait to see if gold will follow oil and whether oil will continue to rise. If it does, the pressure on gold prices would seem to be unbearable and gold will either follow or break. The correlation is so high that it is clear oil and gold are tied at the hip.
It would be interesting to see where the dollar fits in on this chart. That too would be an interesting correlation to make. I suspect that the dollar would follow oil and the divergence would be gas, oil, dollar up, gold lagging.
This is most significant because gold's role as a leading indicator has changed most recently. I suppose one could say that if gold doesn't carry oil, then let oil carry gold. Too early to tell, but my guess is if oil rises, gold will follow. I sense that the charts don't extend into 2000, but if they did the divergence would be even greater. Oil above 40 on the X 20 chart would be a great divergence, and as it is now, at 30+, the oil line would be at 600. The pressure on gold to rise must be tremendous now.
GATA, of course, would probably love to see this chart into 2000 for it would clearly show any anomoly such as "manipulation" or divergence quite clearly.
Mid-1996 by HBM's charts shows where the run on paper gold started. Previously there was a three or so year hiatus on any downward gold prices and oil dipped and rose to match gold. Suddenly in mid-1996, gold started a dive for which there has not been a return. Then in Mid-1999, oil started rising causing an unusual (20-year) divergence whereby gold no longer was the leading oil rise indicator.
This divergence would not have been noticed as a trend until around the end of 1997. It was at that point that Another started posting to Kitco. It was at that point that the LBMA became a more transparent body. It was at that point that the gold investment market went to hell in a handbasket. And it would seem that the oil for gold deal was in serious jeapordy.
Based on HGM's X 20 X 5 chart, $600 gold should be $30/bbl oil. Oil is $30/bbl and gold is stuck at $270/ounce. For gold to hit $10,000 per ounce, oil would have to hit, by his chart, $500/bbl. $60/bbl oil would be $1200/ounce gold though. $60 seems closer than $500.
Let's ask, does the concept -- based on HBM's chart above -- of gold and oil breaking from their last 20-year correlation seem likely over the next two years, if oil levels at $30/bbl? If oil rises to $40/bbl? If oil rises to $60/bbl. What events would likely to occur at each of these levels that might pressure gold higher? At what point would gold not be able to be held back any longer? What event(s) would cause it to become unstuck?
Higher Petroleum, Higher Euro,and Gold just sits there.
Looks like Petroleum is on the move again tonight! The Euro is slightly higher against the dollar. Gold is up only $0.30. S&P Futures are higher +4.70.
I type with one finger so it is very slow. I decided that a missive to you should also be of benefit to the rest of the gang, with some background and more detailed description than you need. I spent all the time (except for the 15 minutes or so needed to discover your post and to pick it up, and an hour or so for lunch, etc.,) till now, composing a reply.
When I say it is somewhere out there in the ether, but not on my computer, I hope you will understand when I say I will get back to you later.
FINANCIAL POST: GOLD BUGS BECOMING AN EXTINCT SPECIES: THERE ARE TOO MANY INVESTING OPTIONS AVAILABLE
Financial Post - Canada, Sep 30, 2000 Any film lover knows that Mafia dons are not keen to keep their money in the bank. They prefer to stash their cash -- often in the form of gold bars -- at the bottom of a deep well. Alas, any mobster holding precious metals for the past 20 years has lost money on his investment.
"Investment demand for precious metals has really dropped," says George Parrill, director of ScotiaMocatta, Scotiabank's precious metals division. "In days gone by, when people heard about a catastrophe around the world, people would come in and buy gold. You don't see that now.
"Times have changed," he adds. "People started to say, 'Why should I buy when I know the price is just going to come down again?' Those that are looking for an investment just to make some money ... obviously, you do it a few times and if it doesn't work, then you don't do it again. There are too many other investment alternatives these days."
Back in 1980, gold prices reached a zenith of US$850 an ounce and silver soared to US$50. Those heady days, when eager bullion buyers lined up outside the main branch of Bank of Nova Scotia in Toronto, are long gone. Ten years ago this month, gold was sold for about US$389, while silver fetched an average of US$4.80. Recently, gold has traded around US$273, and silver at about US$4.90. Nevertheless, metals aficionados are still out there.
"Those who buy bullion certainly don't advertise it," says John Ing, president of Maison Placements Canada Inc. "They buy bullion for investment, security -- some of them store it in safes or safety deposit boxes, some of them bury it in the back yard. But it's not a big group of people."
Adds Mr. Parrill: "Some people feel that gold is better than money. A lot of it is given as gifts, especially in the smaller denominations."
The most popular gold bar sold at the bank is the one-ounce size. The bank also sells five-ounce, 10-ounce and 400-ounce bars. Silver bullion is sold in small denominations but the biggest sellers are 50-ounce and 100-ounce bars. Coins and certificates are also popular.
Despite years of depressed prices, Mr. Ing -- a long-time gold booster -- believes that now is the ideal time to buy. "There is no doubt that we have seen the lows and prices are going to go up," he said. "Gold remains a barometer of investor anxiety, and there has been little anxiety about the North American markets in the last five years."
That will change, he says, because the economic boom in the U.S. is overshadowing the country's heavy debt. When the U.S. dollar suffers an inevitable correction, Mr. Ing contends, "gold will prove to show its intrinsic value again." Then again, some advisors were predicting gold and silver would turn around 10 years ago.
Black Blade: How flattering! To be compared to a Mafia Don or an extinct species. The bottom has to be
"A British millionaire Eurosceptic last night said he would follow up the
Danish "no" campaign by sponsoring a wave of polls across Europe to
give voice to doubts over the single currency.
"Paul Sykes, who recently rejoined the Tory Party, helped to fund the
successful 'no' campaign in the Danish referendum which has sent
shockwaves across Europe.
"Mr Sykes, a Yorkshire tycoon, who paid for full-page advertisements in
the Danish press, called on William Hague to commit the Tories to holding
a referendum if they won the general election.
"He told The Independent on Sunday that he would be paying for polls in
the UK and other European countries on the euro next month, and if the
UK parties failed to provide a referendum, he would consider financing
one himself.
"I am hoping we can settle something. I am moving on and doing polls,
but we cannot leave the euro to the political elite. I want the people to
have a say," he said."
The link that keeps gold and oil together, what is it? How is it managed? What would happen if oil broke the link or that oil was priced out ahead of gold and rose apart from gold? What would the stress point be in the link?
Another Anti-Gold Diatribe/These Things Are To Be Expected
The Financial Post article is not surprising inasmuch as it is the lead newspaper for country which has essentially sold off its gold reserves while its currency tanked and allowed socialism to run rampant through a crumbling economic and social system. I wouldn't suspect the top newspaper in a country with that sort of background to encourage its citizens to own gold for obvious reasons. I would expect precisely what we got -- another anti-gold diatribe.
Mr. Ing tried to set the record straight. He sounded very much like I do during press interviews, or used to, before I realized that most of the press will do to a gold advocate exactly what they did to Mr. Ing -- bury his positive message under the most negative and demeaning headline conjurable. I agree with Mr. Ing that the market for gold is as a portfolio hedge, but this is nothing new. That's always been its primary market. It is the mainstream financial press that tries to position gold as an investment then rant obsessively about the fact that it "hasn't gone anywhere." All with the sole aim of trying to keep the public in paper and out of gold. Take that away from them, as Mr. Ing has tried to do, and they go to one of the major anti-gold trading departments to find a gold trasher. These rants usually ramp up as the financial system labors under great stress -- as it is now -- and that something major in the negative might be brewing.
There was an interesting editorial by Charles Krauthammer publised in the Rocky Mountain News this morning detailing to what extremes the press has slid to the far left. A full 89% of Washington bureau chiefs voted for Clinton in 1992 -- a margin of victory so lopsided, Krauthammer says, it is "rarely seen this side of Syria." He goes on to talk about the New York Times manipulation of the news in the current election, in which that newspaper's bias is so entrenched in favor of Gore, that he called one headline the sort of thing "Pravda used to run for Breshnev's presidential campaigns."
I think we should simply understand what we are up against here, and that just because something appears in blazing headlines doesn't necessarily mean its the truth. My apologies to my Canadian friends. What I have described briefly above is an unfortunate reality.
I wanted to also make a point about the "options" to gold which are essentially currency options, or securities denominated in those currencies.
Which ones would the Financial Post recommend?
Euro denominated?
Dollar denominated?
Aussie dollar denominated?
How about Canadian dollar denominated?
Note that none are mentioned because all those options reduce to one -- the domestic currency competing with gold. Nearly all currencies worldwide are inflating against real good. In other words, they are being debauched.
The world's stock markets have been sideways to down for over a year now, and domestic inflation rates have taken the real rate of return in yield investments to at or below zero in most economies -- and that's using government numbers, not the real numbers. When will the press wake up to what's going on in the equities' markets worldwide? My guess is its not going to happen -- even though the obscure handwriting on the wall sharpens with age and public understanding. I think we should start preparing for some shocks because it appears that evil brew is bubbling that not even the sorcerers in the press can conjure away.
When you strip away the veneer and reduce this thing to a simple reality, the real reasons for diatribes like the Financial Post's become all too clear and that adds up the real reasons for the attacks on gold, gold advocates and gold owners.
Sir, I am unable to give a good response to your posts at this time. Maybe tonite I can respond fully. I would like to disclaim the X20 X5 chart. I do not think that the chart gives us apples with apples. I may be wrong but I must have time to study it. Sir RossL took my tables with real $ numbers and came up with the chart. It is not my chart or numbers. See my post # 37989 where I asked Ross to delete the X 20 X 500 chart. The reason I asked him to delete it was because I was afraid it might not have proper integrity and therefore subject the prior charts to question. The cumulative percentage change chart, the last one put up and the one at the top of the page is the one which, I believe, has integrity and does not in any way distort the facts. I am not saying that Ross's chart does not have integrity, I am just not able, at this time, to give it enough study and thought to give a favorable opinion. Possibly ORO, or someone out there could give an opinion on manipulation of the numbers in that fashion and being able to draw valid conclusions from it.
http://cnnfn.cnn.com/2000/10/02/life/q_checkslong/ From the link: << NEW YORK (CNNfn) - Sharese Long and Storm Mansell have two cars, a third on the way, and a ton of debt as a result. They owe $10,000 on credit cards. The crush of payments is hampering their plans.
"My husband and I are deep in debt, and we are so young," Long, 22, stated. "We're trying to buy a house, but it seems like an impossibility at the moment."
All told, they owe around $58,000. They've financed close to $35,000 on their used Chevrolet Blazer for Mansell and a new Mitsubishi Galant for Long. They have a PT Cruiser on order, which they also plan to finance. They have $10,000 in consumer credit on their plastic.
"Our debt is our main concern," Mansell, 21, admitted.>>
From the article:
" a friend was mugged, an earlier car of theirs was stolen and they've had a stereo taken from their Blazer."
And they want to get a PT Cruiser? There nuts. Buy and old beater car for under $1000 and pay it off.
"At the moment, he is a database developer making around $35,000 at Severn Trent Services. The new degree could boost his income to $50,000-to-$70,000, the couple figures."
Don't you just love their terms here. He is betting on getting a raise but doesn't have it yet and he goes out and buys two NEW cars. Dumb is all I can say about that.
@ Javaman, Journeyman, ALL re: personal debt in America
I've mentioned in months past on this forum a nationally-syndicated radio call-in show hosted by Mr. Dave Ramsey, originating from Nashville, Tennessee. (www.daveramsey.com)
Mr. Ramsey is a financial counselor who advises to "get out of debt".
I seldom have an opportunity to listen to the show, but on almost any day you can hear horror tales about the debt-load some people are carrying that will curl your hair.
Many of the callers are younger, but not many are also "old enough to know better".
It isn't unusual to hear a caller tell of credit-card debt equal to their annual family income.
I have always had an instinctive fear of debt, and that has led me to notice how casually many people seem to regard borrowing.
What I notice most often is an attitude that borrowing for both necessities and luxuries is considered to be a normal, even natural aspect of life. I've often heard the comment that "if you don't borrow, you will never own anything".
Coupled with this is the all-too-common belief that, after years of economic "expansion" and apparent prosperity, it will ALWAYS be that way.
Many seem to believe that after several years of "labor shortage" and the ready availability of jobs, that employment is somehow a certainty.
Younger people in particular seem to feel they are entitled to a certain level of comfort and material wealth. I have known people who borrow for vacations, year after year.
It's my personal belief that this is a natural consequence of inflated fiat currency.
There, but for the grace of God�.
This page is dedicated to exploring the hypothesis that a club of rich international bankers has infiltrated the monetary supply systems of many countries, and through the Federal Reserve banks in the U.S., to promote their own agenda of maximizing their control of worldwide assets. A less conspirational hypothesis contained here is simply the possibility that the Fed has an unnecessarily adverse or constricting effect on the U.S. economy, which could be solved through "money reform" or "alternative money" systems.
These files and links have been painstakingly collected from all over cyberspace in many hours of research and surfing so you don't have to hunt them down yourself. They've also been meticulously reformatted, organized, and summarized so you can find the presentation and angle that is most appealing and makes the most sense to you.
http://www9.pair.com/xpoez/money/money.htmlIf I knew how to capture link from address bar I might not make so many errors when retyping to link bar for forum...
Sorry as usual....YGM.
Unless I've missed the thrust of your efforts and intentions, for a visual comparison there is no harm done by applying a uniform scaling factor to a set of data. Its akin to making separate graphs with vertical axes chosen at various scales to facilitate a reasonable overlay.
http://home.columbus.rr.com/rossl/hbm.htm I believe the POG - Crude x20 - Gasoline x50 chart is valid. All the data reflects prices in 1999 dollars. Using a different scalar for each data set retains the percentage changes in the data. I don't see the need to delete the chart. I believe it shows a good correlation, as SteveH has mentioned.
Do you want to know what evil is? Evil is when you flood the world with dollars so that you may rip off weaker countries and then when they catch on you blame inflation on them.
Evil is when you pretend to extend debt relief and pretend to feel sorry for the weaker people who are actually your victims.
Evil is when you lie so that you can cheat the elderly and the infirm.
If you're using windoze with netscape or explorer, simply right click on the address. It will darken, indicating it has been selected and the standard drop-down menu will give you choices, one of which is "Copy." Choose Copy, and you're off to the races.
If you're using another operating system or browser, naturally, the above may not work.
If I am not mistaken the X 20 / X 50 chart, is based upon the prices expressed in 1999 dollars. The final chart, the cumulative real price chart, was constructed from the same tables with the price changes over the 29 year period expressed in the accumulated percentage of change in constant 1999 dollars rather than digital change in constant 1999 dollars. For this reason I believe that the final chart gives a very accurate picture of the price change relationships between Gold, Crude Oil, and Gasoline. My hunch that the X 20 /X 50 chart does not give an accurate picture is, in my opinion,confirmed by the fact that the picture presented by the graph does not match the graphic picture revealed by the chart with prices expressed in the percentage of price changes in constant 1999 dollars.
Of course my position is based on the premise that the cumulative real price chart is accurate. If that premise is wrong, then of course I would be wrong. If anyone sees a flaw in my premise please point out the flaw either in the numbers or in the reasoning. I am only interested in the truth of the matter. It seems to me to be a critical indicator assuming we can all come to a consensus as to what the chart is telling us.
Look at the indignation we have when we consider that there are foriegn countries trying to influence our elections and then consider what we are openly doing in other countries
"The people" DIDN'T want to abandon gold -- it was propaganda @YGM, Aristotle, T.G., ORO, ALL
http://www9.pair.com/xpoez/money/mcfadden.html "It has been said that the draughtsman who was employed to write
the text of the Fed used a text of the Aldrich bill because that
had been drawn up by lawyers, by acceptance bankers of European
origin in New York. It was a copy, in general a translation of
the statues of the Richsbank and other European central banks.
ONE-HALF MILLION DOLLARS WAS SPENT ON THE PART OF THE PROPAGANDA
ORGANIZED BY THESE BANKERS FOR THE PURPOSE OF MISLEADING PUBLIC
OPINION AND GIVING CONGRESS THE IMPRESSION THAT THERE WAS AN
OVERWHELMING POPULAR DEMAND FOR IT AND THE KIND OF CURRENCY THAT
GOES WITH IT, NAMELY, AN ASSET CURRENCY BASED ON HUMAN DEBTS AND
OBLIGATIONS. Dr. H. Parker Willis had been employed by Wall
Street and propagandists, and when the Aldrich measure failed-he
obtained employment with Carter Glass, to assist in drawing the
banking bill for the Wilson administration. He appropriated the
text of the Aldrich bill. There is no secret about it. The test
of the Federal Reserve Act was tainted from the first."
-Congressman McFadden, remarks to Congress, 1934,
http://www9.pair.com/xpoez/money/mcfadden.html
Regards,
Journeyman
P.S. And thanks to YGM for the link. I normally wouldn't post this because the source is so vague. However, I remember seeing this decades ago with a more convincing pedigree. YGM, if you know these folks, they need to get their sources firmed up -- it's hard enough for modern government-school grads to read (billy-boy just made a speech admitting 45% of them can't), let alone believe the Federal Reserve is an agglommeration of private banks foisted on our ancestors by tactics that make even our billy-boy seem chaste.
Dear HBM: For all the poor, dumb Irishmen among us (present company included), can you tell us what all this charting and scaling business is leading up to? Many thanks...CM
http://home.columbus.rr.com/rossl/hbm.htm The two charts can both be accurate while telling a different story... If a picture of the absolute price relationship is desired, the it would be inaccurate to employ the different scalars on the data. If a picture of the price trend relationships is desired, then the different scalars are called for to try to match the curves.
Statistics. who was it that spoke that famous quote?
I recall the lyrics of a rock song from the 80s(?)..."I'm not sure what it is that I must have, so I guess I'll just take everything." Don't remember the name of the band.
Morals, you say. And where does one learn of these morals today? What is the basis for them? Who/where are the leaders and role models that are living examples of morality?
Look at the example of morality Clinton has set for the country and the world. Look at the example congress has set by failing to convict on his impeachment. It's the economy and the almighty dollar that is worshiped today, my friend. Had the economy turned down prior to his impeachment, he'd be toast. If the economy heads south in the next 4 weeks, Al Gore will be burnt toast.
Whoever wins the election may be appointing three or four Supreme Court jurists and dozens of federal judges. The implications of this could be enormous for our country.
http://home.columbus.rr.com/rossl/hbm.htm You may wish to review the comments by SteveH this morning. The charts quite conclusively show a past positive correlation between the price of oil and gold. This correlation has changed in the last couple years. Feel free to speculate on the importance of this data.
Unfortunately, most of the folks in countries those D.C. criminals mess with don't distinguish us citizens from the eliteist lame-brains who promulgate these things.
"We the people" will bear the brunt of any retaliation. Just as did the at least 200,000 Iraqis killed in lieu of their hated Saddam - - - who probably didn't miss a single meal.
And as did at least 7,000 Serbs in lieu of their hated Slobodan Milosovic.
Etc.
If you've got the stomach, check out the link in the header for the hazards we Americans may face as a result of those who claim to be our leaders meddling in other people's business.
On your post yesterday about general attitudes toward borrowing, I'm sure you'll agree that much evidence attests to the notion that your aversion to taking on debt puts you in the minority. No, you're not old fashioned; just some happy combination of prudent and wise.
On your latest post, I'm still sticking to my guns that the People get what the People want over the course of time. Addressing your comments on the unseemly crafting of the Federal Reserve System, I ask you, why have we not yet seen a successful referendum to abolish the Fed during all these intervening years or a plague of constant attempts to do so?
Also, although it was not his intent to do so, ORO in his Saturday post (usagold.com msg#: 37908) showed indirectly the power of the people to direct the course of action. He wrote--
"It should be no surprise that the manner of operation of the power grubbers would be chaotic and their understanding and knowledge limited. After all, they are in their field of work because they feel unable to compete in the market; where people have the choice of turning them off. There are three major types, the charismatic leader, the machinating social climber, and the professional negotiator and analyst. ...
The charismatic leader says whatever will further his popularity and endow his public persona with the requisite halo, teflon, etc. though within the limitations of deals cut with the machinators and with the help of the analyst and negotiator. What his words mean is something that is often lost on him, these are mere formulae to elicit the desired responses from his surroundings.
Analysts and negotiators may be able to explain to some of two other types what it is they are saying, but will be relegated to subsidiary roles because of this ability. They are perpetual outsiders who do not see the "big picture"; meaning that they DO SEE A PICTURE of consequences and do not view the world through mirrors as does the charismatic, for whom the big picture is his reflection in the crowd's mind, nor through the "brownie points" scores tallied in the political game, where the big picture is which politico controls whom and how much he owes. Because of this, the analytical side is completely disilusioned fairly quickly..."
This was a lesson Tolstoy taught me years ago, and it has been very difficult to shake it off--as with most things that ring with truth. But having said that, the debate remains wide open, my dear friend.
One of the things that bugs me the most is that there is a delay in all things and that Clinton will get credit for the great times, and the next guy will get the fallout. If I borrowed to the hilt and showered all my friends with presents, and then passed that bill on to the next guy in line, who would look the hero to a nearsighted bunch?
Sometimes reality sucks. There must be a spiritual balance in the big picture, or it's all for naught. yes?
From FOA's latest on the Gold Trail -- this is as concise and articulate as you will find anywhere
"Expose a market dynamic that is delivering in your favor by taking more than can be supplied? You don't! You allow the broken system to expose itself first, then you move on. ...
The Washington Agreement was a signal as to what side of gold the ECB was on."
Buying Gold at lower prices over the years is easy and painless when done from a position of understanding. I feel that the trepidation that remains for most people who have gained the requisite understanding is that they lack confidence in their resolve to hold such a "losing position" (as the media is wont to remind them frequently) as is necessary during this time just to ensure you have it through the inevitable turn at the unknowable fateful moment in time. I hope this brief statement helps build both the additional understanding and confidence that some people may have found absent to individually guide them toward prudent portfolio adjustments.
My wife told me this morning of a video originating in the last 24 hours from the Jerusalem area; a 12 year old child was killed while standing next to their parent as it all was captured live; probably on CNN. Meanwhile, the pontificating and politicizing (sorry, spelling) continues.
How does 50K children dying per year in Iraq grab you for starters?
We were both in tears for a mere instant at 8:30 AM.
"So what is ailing the euro? Three things: statistics, perceptions and
propaganda. The main argument for dollar strength and euro weakness is
the perception that the U.S. economy is going from strength to
strength because it is enjoying peerless productivity gains from
vastly superior investments in the new information-technology. We have
seen that the apparent, big technical gap, suggested by the official
statistics, results overwhelmingly from the use of extremely different
yardsticks for computer output and investment. Hedonic price indexing
is grossly exaggerating the rate of U.S. economic growth.
"That' s the underlying fact. But in addition there is something that
plays perhaps the most important role in having created the glowing
perception of unprecedented American economic superiority, and that is
the enormous fuss that American propaganda has made of it. We hasten
to add that the person who has done far more than anybody on Wall
Street in this respect is Mr. Greenspan. While hardly ever mentioning
words like credit, money or debt, his speeches about the U.S. economy
abound with three words: technology, innovation and productivity.
Somebody noted that in his last 10 speeches, he used these words 281
times. In his most recent speech, at the Kansas City Fed's annual
symposium, he explicitly repeated again that Continental Europe has
benefited much less than from the new technology owing to a lower
level of high-tech capital investment and inflexible labor markets."
Rabble-Rouser's Rant Re Reality of Rusty Rose
{This is an excerpt out of an ongoing Le Metropole Cafe chat.}
I couldn't stay away as have decided there is more to this issue than academic verbal jousting & poking fun. First the disclaimer- Have never met nor spoken to Bill Murphy so this piece is only my responsibility and not of any other Cafe member. The way we are going Bill & I may eventually meet as Amerikan politikal prisoners. Please bear with me as there is a tendency to exaggerate and have fun while writing on a serious topic.
This rant is in regards to the refusal of the Bush Camp to consider the issues of GATA and the foulness in current metal's market. Rusty Rose is in the political hierarchy of GWB and was the point man for discussing this issue. I am an individual acting as a supporter {apologist} for the GATA cause to bring to light issues that are of grave concern. I will exercise my freedom of speech until am no longer able.
I believe some are hopelessly blind and/or conflicted regarding overlooking the fraud that has been transpiring for years in the gold and silver markets. Wish them the best in their gold bullion and shares investments but there are more important aspects to the gold market and it's manipulation than just protecting ourselves and making money.What paradise do you hope to live in once you make your fortune, but are stuck in a place no longer worth living. Free markets are becoming an idea of ages past. Bush's man, Rusty Rose- elitist insider, totally dismissed the GATA message of manipulatio, collusion, fraud, & conspiracy in a blatant act of "messenger shooting".For Bush's sake,I hope that all his managers are not as dense, and arrogant as RR proved himself to be. He is completely satisfied with his status quo and not particularly interested in investigating any of his peers. Republicans, RR,you were given a message that there is serious peril in the gold market and you chose to turn a blind eye because of your arrogance and dislike of some of the terms that were used, such as conspiracy, etc. You would have been wise to look for an element of truth in the message. Are these the type of people, that have the would- be President's ear, that allow semantics and ego to cause a dereliction of duties? Wouldn't it be nice if W understood that there is possible collusion? Maybe I'm a hopeless idealist thinking that one party might be interested in cleaning up a mess largely created by their rival political party. Are we that close to the "point of no return" with this once grand exrperiment, the USA? I have no plans to vote for the status quo. Someone besides RR had better take an objective look at this gold issue, and make intelligent appraisals before it becomes too large to masticate and swallow. Don't the Republicans understand that they may soon be responsible for this issue? If not we may be simply choosing the least offensive of two four letter words, Gore and Bush. If W is BAPF {bought and paid for} let's get it out in the open for all to see, the sooner the better.
When looking at people like RR and his elitist ilk I personally see nothing but VOIDS. HEAD-lots of intellect but malfunctions because of arrogance and ego. SOUL- still looking. PRINCIPLES- get out the scanning electron microscope. HEART- cardiac arrest. LOWER LIMBS- only a vacuum present between them. EYES- Myopic. Would love to know PRIOR to election that George W stands for more than Goldman Suchs {typo}, and the current business as usual with our present form of crony capitalism. The rant continues...Anyone able to take this message to RR or better yet, a responsible member of the Bush camp? I don't duel so don't bother challenging me, typewriters only. When Midas spoke of RR as an SOB he meant Same Ol Bureaucrat or possibly Same Ol Bill, both of which are more derogatory than what you had in mind. The scary part of RR is that he is a proxy for GWB. Robert Rubin, Rusty Rose, Rich Rulers, Require Repudiation {am starting to feel better already}.
In football terms it's the Raiders vs the Patriots. Time to join a team, get dressed out, and prepare to play. Helmets, jock straps, nor chest protectors are required for the Raiders as there is nothing in those locations to protect.
I'm nearly done and don't bother telling me this is a childish piece. There are huge issues at stake and the "gloves are off" as is appropriate. RR, please look for this message to come full CIRCLE back to you like a boomerang because it will be posted on multiple internet sites with forwarding requests.
Friends of the internet, we can bring light to dark places. Please take this rant, a result of frustration w the US crony capitalism , and post far and wide. Let's bypass RR and seek out more responsible Republican leaders. Anyone else have access to GWB? A fair gold market is not too much to ask.
Gold Advocates, GATA supporters, fair minded political activists, honest people, & interested parties- Can you help flush some decay out of the gold markets? Support GATA, shun those who shun GATA, & use any influence you may have to force political parties to declare an allegiance to honest markets.
AUSPEC
"Dear HBM: For all the poor, dumb Irishmen among us (present company included), can you tell us what all this charting and scaling business is leading up to? Many thanks...CM"
My response:
From one poor dumb Irishman to another, I am afraid all the commotion has to do with the possible correlation between POG AND POO (Crude) that is. It seems that we have evidence that the price of these two items move in tandem with each other in the long haul. If you click on the above link you will see what we see. RossL has been kind enough to provide the technology to chart and graph certain numbers I dredged up which seem to tell quite a story. SteveH has made several posts concerning the graphs and I hope to respond to them in just a little while. I am afraid I may be out of my league with the cerebrals though. My logic causes me to question the accuracy of one of the graphs. RossL has tried to break through the thickness of my skull but, at this point, to no avail. I may be looking at the forest and missing the trees. I am going to tax myself a bit on this issue before I raise the white flag.
BTW you do not fit the description, "poor dumb Irishman.
....is they are both learned emotions....the babe fresh from the Mother's womb has neither evil nor hatered in he or she's heart....Love and goodness are natural human traits....Sadly many cannot keep these same emotions when innocence is lost. I'm always aware and thankful that love and goodness still abounds among the scribes of these great halls and it is very refreshing to say the least.....YGM
A significant point that the two of you agree upon from reading the graphs is: oil and gold swapped places as the price direction leader. Where gold once led the way we now see oil taking the leadership. One distinct possibility is that the "Gold for Oil", deal put forth by ANOTHER, could have been the cause for the divergence. I am still looking for some sort of validation that what ANOTHER first revealed on this in fact the case. This brings me closer to accepting the "Oil for Gold" scenario as being indeed a solid fact. I am however still looking for more proof. Since we are on the outside looking in, we cannot know of the certainty of secret deals until the Gift-horse smiles.
" Mid-1996 by HBM's charts shows where the run on paper gold started. Previously there was a three or so year hiatus on any downward gold prices and oil dipped and rose to match gold. Suddenly in mid-1996, gold started a dive for which there has not been a return. Then in Mid-1999, oil started rising causing an unusual (20-year) divergence whereby gold no longer was the leading oil rise indicator."
My comment:
The Cumulative Real Price (% change) Graph, the top chart, does not seem to indicate this to me; however I fear that I may not be very adept at reading graphs. When I go to the raw numbers I find your observations to be quite clearly correct. However I do not see how you determine from this information that the "oil for gold" deal was in serious jeopardy. What I thought to be revealed was that the "oil for gold" deal was the cause for the divergence and a bit of solid evidence that there was in fact such a deal struck.
hbm
PS: Please excuse me but could you explain what you meant by, "the run on paper gold".
There must be a good explanation as to why oil has been tied to the hip with gold through mid-1996. FOA now speaks of 1gm per barrel or 32.5 barrels per ounce. Is this the relationship we seek? What and who and how is this value set? $30 per barrel is now equal to $8.30 per barrel in gold plus $21.70 US dollars or (to heck with dollars, just price it in gold) 1 gram of gold = $30 or $975 per ounce of gold, meaning gold really equals $970 currently or the 32.50 barrels of oil is the price of one ounce of gold.
If physical gold then can not fullfill the 1gm for bbl requirement (who sets this and when; how?) then the price of oil in US dollars must rise until a gram of gold can be had that will be delivered for the bbl of oil today. Oil would therefore seem to be rising as a result of a lack of gold to fullfill this requirement (by whom and when?). The less that physical gold is available the higher the dollar price of oil. Or, as long as gold was cheap in dollars, 1 gram of gold could be delivered to contain oil at whatever low price worked for all. When the run on gold began in mid-1996, the race was on. All the noise by the paper gold camp is to shake loose enough gold at low dollar values to contain the price of oil. Oil's rise is a reflection that sufficient quantities of gold are not available in dollars to contain gold. CB's who sell their gold beyond their committed levels will leave them vulnerable to the POO once the new price of a bbl of oil is established in grams per bbl. Oil at $60/bbl will be gold at $1950 per ounce. $200/bbl oil will be $6500 gold. (HBM's charts seem to reflect all of this, eh?)
What this tells us is that physical gold delivered at $275/ounce is at 1/3 its real value in oil currently.
The discounted value of gold today could be measured then by the total number of bbls of oil remaining or 925 billion bbls of oil being consumed at the rate 25 billion bbls per year over 34 years. New gold production is equal to approx. 2500 tons per year or 2.68 billion grams of gold. So in theory 25 bbl barrels of oil can be paid for by 2.68 billion grams of gold (if all were available for oil -- it is not. And what of the four to 10 year hedges?) That leaves a ratio of 9.33 bbls of oil to each gram of gold to pay for it. Or gold is scarcer than oil by 9.33 times on an annual basis (except the pool of oil decreases by 25billion bbls per year), not counting any above ground gold or oil. I will let the math wizards work these numbers and assumptions but it might be worth pursuing all gold available over 34 years to all the oil available to get the proper ratios.
However, what it leaves us is the thought that 1 gram of gold buys one barrel of oil. When oil diverges from gold, that means that oil becomes the catalyst for higher gold. Gold became scarce in 1996 and even more scarce today. The silent buyers are strong hands for a later day. Oil is going higher because gold is leaving the nest much faster than oil can be bought and paid for. They are both finite and both being consumed. The more oil is used the more it costs in gold. One is burned; the other kept for when oil is gone. In the end when 1 bbl of oil remains to sell its cost will be all the gold in the world. So, for the next 34 years (estimated remaining oil supply) every year makes the price of a oil 25 billion grams in gold more costly.
One can only wonder what would the value of gold be, once the oil is gone. What will gold buy if there is no oil?
"Based on HGM's X 20 X 5 chart, $600 gold should be $30/bbl oil. Oil is $30/bbl and gold is stuck at $270/ounce. For gold to hit $10,000 per ounce, oil would have to hit, by his chart, $500/bbl. $60/bbl oil would be $1200/ounce gold though. $60 seems closer than $500."
My comments:
The price of $500 /bbl oil would make plenty of sense to me. Should gold go to the $10,000 level or even the oft suggested $30,000 level, we must remember that the problem lies not in the real price of oil but in the value loss of the US $. This "horrible" price of oil expressed in dollars might not be nearly so bad when expressed in gold, Euros and other currencies. In US dollars the DOW might be $30,000 on a 1:1 par with gold and those holding the $30,000 DOW would be loathe to be holding such paper. All things being considered would not a loaf of bread cost about $50.00, but possibly only 5 Euros. Strange relationships will happen between the dollar and other currencies which will be the real cause of the upheaval, but the relationship between oil, bread, and elbow grease will still make some sense, wouldn't you think.
Your comments have been quite stimulating. Lots of us out here are scratching our heads and trying to see things that you see with ease. You have a good clear mind.
My take on the gold-oil correlation is that those who sell the oil control the gold price. Inversely those who sell gold could control the oil price but since once can't mine without oil, those who control the spiggot ultimately control the price of crude and therefore gold (in other words, paper gold temporarily controlled oil's price, until the price of gold went to production and below and that concerned some oil folks). It would seem that from 1991 and perhaps before, all was well (as could be expected) in that gold was cheap enough in dollars to keep oil flowing for SUV's. Then in 1996 something happened (Asian run for the gold -- paper and physical [per Another] and it became every person for themselves. Paper gold was sold in large quantity subduing (temporarily) the price of oil. Then once these runners were discovered and their purpose determined, the oil interests said, "enough!" That brings us to today. Oil is king. Those who control it (much like the joke of the sphincter muscle who ultimately wins over other body parts) can set their price and it would seem (per FOA) that is 1 gram of gold per bbl of oil in today's market. As more oil is consumed in the future, more gold may be necessary.
Now, the game has shifted to those who control oil have sent the message that 1gm of gold per bbl folks. Since you all have obsconded with the metal, the POO is a goin' up till we shake a bit of that loose.
No reason to apologise, me and exactly 23 other Canadians realize we are living in a socialist s%^&thole. People here honestly puzzle about the low Canadian ruble. Articles like this just reinforce it to the morons.
Simply put, the run on gold that changed the oil for gold relationship may have been and still is an attempt to control the price of oil by controlling the gold. I think we are all finding out that it doesn't work that way. Oil in $ will rise to bring the gold back to equilibrium.
If oil said, "You know, we don't care what the $ is worth. We just want a gram of gold for a bbl of oil," a savvy person could have easily said, "You know, I have got a great idea. We can keep the price of oil down for a long time by setting up a few contracts for produced gold and future gold. We got these computers and we can figure out how to keep oil low in dollars and still get the gram of gold per bbl to the oil folks." This would work as long as gold was not accumulated en masse by any one or more parties. When others caught on to the rules, they changed the rules by accumulating in greater proportions than the oil interests thought prudent. It all makes sense, eh?
"...those who control the spiggot ultimately control the price of crude and therefore gold..."
The great question would be: "Who ultimately controls the spiggot." In the past the international bankers were able to make all the money that counts by supplying the parties they wanted to be in control just enough purchasing power to defeat those they did not want to be in control all the while collecting interest from both sides of the conflict. I doubt very much that the Arabs have ever been truely in control of the spiggots, nor will they ever be.
Mercy, please! @Sierra Madre, Peter Asher, Aristotle, Marius, Java Man, T.G., ET, HBM, many others
I just don't have the keyboard speed to keep up with all the great posts that have been flying by.
Sierra Madre in particular, great answer to those three QUESTIONS OF THE DAY. I've filed that with my CLASSICS!
Sir Peter, you recently used the word "prolific," if I remember correctly. Well, look in the mirror -- so many great posts especially in the last few days.
Marius, ET, Java Man, Aristotle on the borrowing proclivities of modern Americans and related topics -- those all should have responses -- but lack of time & home matters. Maybe some day.
And HBM & RossL --- real eye-opening apparent confirmation of the connection of oil and gold!
I'm sure I missed many others, but, well, let's just say this is a VERY stimulating environment!!
Canada could have been pound for pound the greatest country in the world, certainly the best country in which to live. Roughly 35 to 40 years of mismanagement means it will not be so in my lifetime, if ever.
Under the original contract with Standard Oil Company of California, King Saud received an ounce of gold for every 159.1 barrels of oil (4 gold shillings per barrel, or $0.22 US @ $35 an ounce of gold). Most often, this was traded out for US$ as gold didn't trade as well as currencies. Fwiw.
Question: If gold and oil are so closely linked today, why isn't gold moving up as the US$ devalues against oil?
What perplexes me about the Post story, and MANY of the stories/editorials is the unmistakable left wing bias, in a paper apparently owned/run by one of the last capitalist's
in Canada. Maybe he doesn't read it? Or care? I guess when you realize 3 out of 5 people here are on 'my payroll' they don't want to offend too many.
This is what i was getting at in two posts of mine on 9/22
>>>> It's all a matter of how many ounces of Gold they get for X- number of barrels. If Oil begetting dollars which beget gold works best, then it aint broke.
I have long suspected that the REAL game behind Gold being held down is so the Saudi can accumulate it. That could be why Gold and Oil have gone in opposite directions these last two years.
Remember FOA and or Another pointed out that the Saudis have ONLY this one depleting scource and the only way to store genuine wealth inside their borders is by accumulating Gold.
The question has been raised occasional as to why they would want a constantly declining commodity? Well the answer is they aren't out of Oil yet and are still on the buy side.
Many have pointed out here that no-one ever reports on who buys these gold sales. But they transpire without much price drop every time It is the News ABOUT the sales that drops the price and the manipulators know that news of an impending sale drops the price more that an after-the-fact report and of course creates the better buying opportunity.
It has also been asked often here why some big player doesn't make a buy run and trigger the short squeeze panic to make a killing. My answer is that the BIG players are in it to Buy And Hold! If they pop the price up the "Cat would be out of the bag."
I posted last winter that GS, the Bullion banks and even the Central Banks could be being set up to be the "Fall Guy's." This"Gold hold down" is a very big game and one of these days we are going to see "The Sting" occur! <<<<
...I would suggest that the Saudis possess a far greater wealth than gold within their borders.
And that is...Mecca.
Gold doesn't trade in world commerce like currencies, does it? And before it ever does, we'll see the scourge of war.
Then, and only then, does gold truly trade.
Yes, certainly someone is setting someone up, but who is buying behind the scenes. I have yet to see/read 'non-anecdotal,non-guru' information defining who the purchaser was and the volume. This is obviously EXTREMELY critical data and not to be revealed otherwise it would be reprinted everywhere on these pages, which it never has. Charts showing the sellers are always reprinted with the volumes in tons. Actual data on the buyers would be fairly juicy, don't you think?
Re- "Marius, ET, Java Man, Aristotle on the borrowing proclivities of modern Americans."
I think the majority have come to see purchases as "How much a month does that cost" as much, or more, then the actual price. Least of all is the conscious awareness of the fact that the $30,000 car costs $50,000 and the $300,000 house will come to over a million across the 30 years.
The way things are bought is seen as a function of monthly payments rather than reducing a bank balance.
There are three big "Bubbles" out there. The US Stock Market, Big Float and American consumer debt. This latter is the most likely one to burst, the one AG can do the least to handle, or, if one of the other two pop first, the demise of the credit one will guarantee total disaster.
Does it cost those head manipulators anything to sell the hell out of paper gold?? Especially when they have a hedge by buying the physical. I am getting this from trail guides arena. Why not sell the hell out of paper gold with nothing but dollars, the same things that can then be used for buying cheap gold. The extra leverage of selling gold through futures has created a unique opportunity to depress the POG more then could ever be done in a physical market, I suppose. And to beable to sell GOLD FUTURES WITH PAPER DOLLARS is even more unique. The people that have all the money are able to buy gold for look at what price (Actually soon then they will have near most all the money, they just need a bit more time. The more pysical gold we buy now is the less they will beable to have for pretty much free (they are stealing it)
The bottom has to be "in." Sorry about that. It was on the last line of my "cut, paste, and butcher" job and the word "in" got cut off. The more the financial media gets anti-anything, the more likely that the bottom is "in." The anti-gold article was so geared against gold, I thought that I would post it to illustrate the point that the anti-gold rhetoric can't get much worse, so IMO the end of the gold bear is in. If anything, the gold-bear is about to go extinct as California's Gold-Bear did. Yes, there actually was a Gold Bear that went extinct and now it's profile graces the state flag. The last known living Gold Bear was stuffed and mounted, and now is on display in the capitol building in Sacramento. Besides, I say "What the hell" it's actually a good sign in my perverted way of thinking ;-)
It may well be the only way to SEE this data is the way astronomers �see' the planets around other stars. They measure the gravitational anomalies of the star caused by the planets mass, and from them compute the fact of the planets existence.
Could a study of currency strengths be somewhat useful? If countries who are selling are dropping could not the inverse be 'inferred' for those who happen to be rising? Juxtaposing them against one another,and time, with TradeStation would be interesting. Maybe someone here has done it already?
"The same test was performed later except with cannabis and the
results were withheld from the public. It took a lawsuit and a
court ruling for the video and test results to be released. It
was no wonder that the CHP did not want the results released, as
the driving performance not only did not decline, but rather it
improved! This strange result was attributed to the theory that
the participants were supposed to be paranoid and therefore were
much more careful than they normally would have been. The Swedes
and the Belgians performed similar tests with similar results."
-Black Blade (9/30/2000; 22:22:01MT - usagold.com msg#: 37954)
You wouldn't happen to have specific sources -- or perhaps some
leads -- for this would you?? A libertarian friend of mine is
running for Congress in Iowa with decriminalization as his single
issue. This might actually give him a chance of keeping the LP
on the ballot!!
Thanx for whatever you can come up with,
Journeyman
RE: Journeyman, these are just a few links, but don't have the CHP study or the Belgian study.
http://www.druglibrary.org/schaffer/hemp/general/mjdrive.htmI don't have a specific source for the CHP study, though it may be found somewhere on the net. I recall this was a "flash in the pan" issue at the time. Is was in the early 1980's. It had to be between 1978 and 1986 as I was in the Bay Area at the time. It was almost comical as the real issue seemed to be that the test results had to be extracted through the courts in a lawsuit similar to the "Freedom of Imformation Act" since tax dollars were used. Interestingly no one really seemed to be questioning the test however, and it all quietly went away. I remember references to the european studies over the years and that the results were somewhat similar. I don't think that the government would perform the same tests again after that fiasco. However, the link above outlines a DOT study and some european studies that I was not aware of that have some interesting results, as well as those below. I don't condone using cannibis or driving under it's influence, however, there should be some realistic scientific approach as to how we americans abuse these ridiclous drug laws. I don't think that sending a toker to prison under mandatory sentencing laws and making room for him/her by the early release of a child molestor, rapist or murderer helps anyone.
If your interested, you can check out my friend's website, to which you undoubtedly will have contibuted once I forward your info, by clicking on the link above.
Thanks and regards,
Journeyman
P.S. One of these days I'v gonna have to do a post on these ridiculous drug "laws." They certainly don't befit a so-called free country!
Take another look at the picture and ask yourself, "If that were my son and me in the picture, which side of me would he be on.....the exposed right side?...or on the left next to that substantial looking hunk of metal or concrete, with me doing my best to cover up the rest of him." That guy had 45 minutes to realize that his kid was more exposed than he was.
A tear for the boy...but none for his parents.
When you're looking for world sympathy...dying kids make great stories, ie: Kuwaiti babies being thrown out of incubators (the Kuwaiti woman who started that story later admitted it was a lie to gain sympathy), and Sadam piling Iraqi women and children into military bunkers for cover (not a lie, just a matter of priorities).
Simply Me (10/02/00; 23:40:29MT - usagold.com msg#: 38106)
I had the exact same thought the second time I looked at the photos. Even Clinton just said he thought the father could be doing more to protect the boy.
I tried to rationalize that the object isn't solid concrete, that the father in one photo is looking towards firing coming from a direction that puts the boy a bit behind him, but I shared your observation. It seemed to me he would have tucked the boy into the recess and covered him with his body.
Possibilities:
1) They did not actually think they were in the line of fire, and were just terrified.
2) The father was rendered senseless by fear but that makes no sense because what you and I feel should be happening is instinctive.
If it's possibility 1) I have a hard time thinking about who actually fired those shots!
It is called...Best International Management Practices...or some such
Central banks conducting regular revaluations of gold assets to market value, that is.
Last Friday the ECB remarked the euro-system gold assets to start the latest quarter, and this excerpt from Bridge News shows the Swiss are following that path.
SWISS GOLD: SNB revalues reserves upward
Zurich--Oct. 2--The Swiss National Bank announced Monday it had revalued its gold reserves at 15,245.65 Swiss francs per kilogram at the end of the third quarter. This led to a book profit on the remaining reserves of 201.5 million francs.
Hipplebeck, Trail Guide, HBM Charts and Contest Results?
Hi All, I've been out of town for about a week and trying furiously to catch up on all the "heat and light" this forum has been putting out lately!
Hipplebeck: I hear ya, bud. Although you're probably asleep right now (at least I hope so for your sake), all you said is true but you can't wash the dirty laundry while you're wallowing in it. Wake up fresh and energetic tomorrow and DO something about it. Write to a congressman. Research candidates and then go help the best one you can find get elected. Buy some gold (it'll help if some folks with a conscience are left standing after the S-H-T-F-). And if you can't get up the energy to do anything yet, read something inspiring...like Ghandi leading India to freedom...like Lec Walesa (sp?) leading Polands revolt against communism....like Chile's non-violent overthrow of the cruel dictator General Pinochet. When you realize how much God-given power the people actually do have, you'll realize why the cockroaches in power have to hide their dirty dealings in the dark. Their power is in fear, isolation and ignorance...so fight it, talk to someone, learn something, have some fun!
The great thing about our country is that Barney Frank has the freedom to talk about morals...and I have the freedom to laugh at him for it.
Trail Guide: I don't know whether to be jubilant or scared out of my wits over your promised "October Show-Time". What should I be watching for a signal? A hike in the price of oil? A straight-line on the Kitco graph (sort of a code blue
for the LBMA)? The rise of dollar value? All of the above?
Or another announcement out of the blue, a la The Washington Agreement, only this time about the Euro?
I've been watching HBM's Inversion of Fed Funds vs 30 yr. Note (sure hope I got that right). I noticed it revert to nearly positive after the Euro (actually Dollar) intervention, and watched it jump right back up over -.70 in the week or so after. I remember some mention of doomsday if it ever hit got close to -1.
My head is simply spinning with all the information that's been spread out here lately. I can't even see the game, let alone the ball. There are too many balls in this game to follow unless it's your full-time job to play or report on the game. And I imagine I'm not alone. Notwithstanding all the fine financial minds who post here, folks like me are in the majority in the real world.
Hill Billy Mitchell: Loved the charts. Anything that helps to put oil/gold/dollar in a one-picture perspective is very helpful to those of us trying to get a handle on this situation. As someone who's better with words than numbers, my favorite was the X 20 / X 50 chart because it seemed to show the connection and then divergence of gold and oil so clearly. It also seemed to point to the current true value of gold as $600 US Dollars right now.
Town Crier and ALL: I've been gone for a week and missed the results on two of the three USAGold contests. Can you point me to where I might find out who to congratulate?
Thanks to all! Journeyman, Peter Asher, Oro, CoBra2, Shifty,
Megatron and so many more that I can't remember them all. I seldom have the wit or the time to join the conversation, but I read every post and love it!
simply me
"Gold doesn't trade in world commerce like currencies, does it? And before it ever does, we'll see the scourge of war.
Then, and only then, does gold truly trade."
We offer you this food for thought from The Tower:
The bullion banking system of banks allied throught the LBMA last month cleared, on average, over 600 tonnes of gold in financial operations each and every day. And although that figure may seem staggering (huge) in light of annual global mining of gold that produces only 2,500 tonnes for an entire year, these August values actually represent a low for the LBMA, an association that in the not-too-distant past regularly cleared volumes nearer to 1,000 tonnes of gold per day (for a nominal value of $10 billion per day).
We'll leave it to you to decide if this LBMA-subset of total world gold trading represents anything approaching the "trade in world commerce like currencies" that you were wondering about.
http://www.usagold.com/onlinestore/special.htmlThe official results for contest #2 (the "archery" price contest) was announced on the afternoon of the target settlement date...that being our Birthday, Friday September 22nd. The gold winner was Sir Canuck Gold, with canamami and VanRip each claiming the runnerup silver prize.
The official tally for the longshot Olympic medal contest #3 was announced the next day, Saturday (23rd), when the results were made public. France was the spoiler, but actually nobody came close on the medal count, so the two gold kroners held in reserve will only be going out the door in the conventional way...someone will have to buy them. (see link)
Contest #1 resulted in a collection of entries totaling over 100k in file size. Tasked with the preliminary round of judging, I can tell you I feel like I'm taking a graduate-level literature/composition course in addition to a full work load that always provides many unexpected events which require attention. My goal was to have the announcements prepared for last Friday (a week for entries should allow a week for judging, right?). Or so I thought. A project or two put me off that original pace, so I'm hoping to have the results available later today. There were some excellent entries, and the awards have been extended beyond the original offering of the grand prize quarter-ounce Uruguayan gold coin and the two tenth-ounce gold bullion coins. Some silver eagles have been added to accommodate some honorable mentions. Thanks for your patience.
I went back and looked very closely at all the pictures. It's impossible to tell which side the Israelis are on but the boy is more exposed than the father from any angle, even if the Israeli's are on the father's left. Look at it like a shot on a pool table. Wherever you shoot from around the 180 degree area on that side of the block wall, the child is more vulnerable than the father. Heck, even from over top of the barrel, the child would be hit first. And the father had 45 minutes to figure that out, even if it wasn't an instinctive move.
Your last thought was the most chilling of all. Who fired at the child? Because I think it's entirely possible that either side could have done it. Maybe both sides did. Revenge/hatred...martyrdom/manipulation of world opinion. They ALL had motive.
Thank you, honored TownCrier, for your update on the contest results! My, you're up late! I'll wait as long as it takes, I just didn't want to miss it. Thanks for all your hard work.
Congratulations to Sirs Canuck and VanRip!
"Birthday Contest, Friday September 22nd. The gold winner was Sir Canuck Gold, with canamami and VanRip each claiming the runnerup silver prize."
I consider myself at least a partial winner because at least this time my guess wasn't $0!
simply me
For anyone who might have missed the new book by Peter Bernstien!
This type of lucid and very well argued presentation by a major thinker who has written the seminal texts on derivatives and stock indexing might just wake up even the bubble heads, nah!
Peter L. Bernstein puts most Wall Street economists and money managers to shame.
He's been a proven money maker, managing billions for institutional investors until he sold his firm in 1967 to Sandy Weill and what we know today as Citigroup. He has advised Fortune 500 corporations and the biggest nonprofits on where to invest and how to stay out of trouble. He's a big picture guy at a time when so many analysts are specialists. He's also an independent thinker when many sell-side analysts are in the pockets of the investment bankers and their underwriting clients. He knows his history when most know only last quarter. He lived through the Depression, served in economic intelligence in the CIA's predecessor, the Office of Strategic Services, or OSS, in World War II and has observed numerous bull and bear markets. And most importantly for readers, he can write. Peter has written seven books on economics and finance, including such well-reviewed texts as Against the Gods: The Remarkable Story of Risk and Capital Ideas: The Improbable Origins of Modern Wall Street.
And Bernstein has a new one just out: The Power of Gold: The History of an Obsession. He sat down recently with TheStreet.com's chief markets writer, Brett D. Fromson. In a wide-ranging conversation, they discussed the rise of gold, the role of the dollar as today's gold standard and the scary chance that a sharp decline in the dollar could trigger within five to 10 years the next great financial crisis. You won't want to miss what this wise man of Wall Street has to say.
Brett D. Fromson: Peter, why has gold played such a prominent role in history?
Peter L. Bernstein: It was easy to get out of the water, out of the rivers, or to mine in eras when slavery was commonplace and you had people that would go in and do this really horrible digging process. And because gold is chemically inert, it doesn't ever tarnish, it gives people a sense of being in touch with eternity. I think this is the magic of it. It stands for security and assurance.
Brett D. Fromson: In an impermanent world.
Peter L. Bernstein: And it's also wonderfully beautiful. It's nice to have gold jewelry on. It gives you something. It's also malleable and easy to shape, so even in very primitive times, people made works of art out of it, decorated themselves with it and because of its unusual qualities it conveyed a sense of power to the person wearing it or the statue that was adorned with it. That's why the Egyptian Pharaoh Ptolemy II, every time he went on parade, had a 150-foot phallus made out of gold to march in front of him. This was a really special power.
Brett D. Fromson: Gives new meaning to, "Mine is bigger than yours." Moving on, when did gold become a store of wealth?
Peter L. Bernstein: It was owned originally only by rulers or by the ruling class. And this gave it further value and therefore it became a form of money, where, if you gave it to somebody as a gift or in exchange for something, you were giving that person something that purportedly had some value. It has another quality that's important: It's very dense.
A little bit of it goes a long way, or a little bit of it has a lot of value. So it has naturally lent itself to money. It has survivability. It's hard to tear apart or blow apart or crack. It has the magic associated with it and the density. So starting about the middle of the sixth century B.C., Croesus, the guy who was literally as rich as Croesus, sat by a river full of gold in Eastern Turkey and made the first gold coins.
Brett D. Fromson: He was king of the Lydians, right?
Peter L. Bernstein: Yes. He had a little empire in Eastern Turkey that was on the main trade route between the western Mediterranean and the East. So he was very strategically situated, and when he developed this currency, this kind of money, it was the first money that was acceptable in a number of different countries. Sort of like the euro. It was carefully stamped, so when you got each coin you knew exactly what it was worth. Until people started playing games with it, you didn't even have to weigh the coins. You knew the value right away.
Brett D. Fromson: Of course it was stronger than the euro.
Peter L. Bernstein: (Laughs) It was gold. This is about 550 B.C., very early. And then it was taken up by everybody, the Greeks and the Romans used gold coins throughout their empires. Before the Romans, Alexander went through Asia with gold coins. Most of the gold at that point came from Nubia, in darkest Africa, south of Egypt, although there were deposits throughout Europe and in Turkey. And we're talking about small numbers of people then, so there didn't have to be large amounts of it. The idea of coinage was developed further in the Middle Ages. Silver began to be used for smaller transactions, and gold for larger transactions. You had this kind of two-track monetary system going on.
In the 13th century, after the Dark Ages came to an end, Genoa and Florence and Venice had genoins and ducats and florins, a monetary system more like what we know.
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"And because gold is chemically inert, it doesn't ever tarnish, it gives people a sense of being in touch with eternity."
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Brett D. Fromson: Which is to say what?
Peter L. Bernstein: Well, with these generally accepted monies and growth in international trade, a huge amount of trade was going on both north and south in Europe, and beginning with the East.
Asia is a tremendously important part of the story. Asia had stuff that Europeans wanted, particularly spices, because they were necessary to preserve food, but also textiles and lovely works of art. So developing trade with Asia was very important in those markets. Marco Polo in the 13th century went and came back with all of these fabulous stories, and the Asians have always coveted gold.
There's not a great deal of gold there, although Marco Polo came back and talked about houses in Japan that were roofed with gold, there was so much. Whether there really was, we don't know, but they have always coveted it.
Brett D. Fromson: Even more so than the West?
Peter L. Bernstein: Well, they haven't used it so much as money as kind of a hoard against insecurity. We know still, today, that people in India get their dowries in the form of gold jewelry, and jewelry was a means of keeping gold, and even in Europe, but also in Asia there were literally hoards kept underground. We keep finding them. When archaeologists dig, they find these hoards of gold.
Gold was very acceptable to the Asians, and although the Europeans complained because they had to give up their good gold to the Asians, they were getting something useful in place of it.
Brett D. Fromson: What were they getting?
Peter L. Bernstein: Spices were the most important thing because they preserved food.
Brett D. Fromson: So when did gold segue from coinage to actually being the underpinning of a paper-based monetary system?
Peter L. Bernstein: Nobody planned this. This wasn't something where somebody woke up one day with a vision and said, "Hey, this would be a great way to run the world." It just developed by a series of accidents.
We get now into the 17th century, when you have the real beginning of capitalism -- substantial growth in finance, insurance was beginning to develop very rapidly. Ships and navigation methods were improving and so trade was growing very rapidly. When you think 1688, the Glorious Revolution in England was the turning point of the modern world.
Brett D. Fromson: When the English overthrew James II?
Peter L. Bernstein: Yes. At the end of the 17th century the religious wars had come to an end; we witnessed a lot of technological development during the Renaissance. The scene was really set for 100 years later when the steam engine was developed, and we were really off and running. But, at that time, because gold was expensive and valuable, silver was also very much a part of the monetary system.
If I could digress for just a minute: The Chinese had long since developed paper money. I think it was in the 13th century. They thought it was silly to use stuff you might have some other use for. Why not use paper? And for a long, long time, a number of centuries, they were able to do this without yielding to temptation. It's easier to print paper than mine gold. So paper money was also beginning to circulate. It's important to mention that at the end of the 17th century, money was ceasing to be something that you could bite into. Because trade and finance were developing so rapidly, there were private pieces of paper that were really promissory notes. They were called bills of exchange and were growing very rapidly as people traded not only within their countries but across international borders. The money system now begins to look like that of today's world.
They were moving pieces of paper and pieces of metal rather than computer bits, but the process was very similar to today. But the thing was that a promissory note by me to you is OK if somebody knows who I am or if there's something to suggest that I'm a reliable source. There had to be something that that this paper was convertible into to make the paper acceptable. And so just by usage they began to say, well, it has to be convertible into gold, that somehow it has to be something that you get in the end.
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"Asia had stuff that Europeans wanted, particularly spices, because they were necessary to preserve food, but also textiles and lovely works of art."
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Brett D. Fromson: Other than another piece of paper?
Peter L. Bernstein: Other than another piece of paper. The pieces of paper grew much more rapidly than the pieces of metal.
Brett D. Fromson: So you end up with gold underpinning the paper.
Peter L. Bernstein: Yes, gold underpinning the paper. Also, silver becomes convertible into gold. Gold and silver were competitive, really competitive for a very long time. Can I tell you about Isaac Newton?
Brett D. Fromson: Sure.
Peter L. Bernstein: Late in the 17th century, late in the 1690s, Isaac Newton was the director of the Mint in Britain. Newton had been the world's greatest scientist, who discovered the law of gravity and had been the nerd's nerd teaching at Cambridge. He lectured regularly, yes, even though there was often nobody in the classroom.
Brett D. Fromson: I had professors like that.
Peter L. Bernstein:A totally withdrawn, introverted, strange man who in his rooms was practicing alchemy. He was trying to use chemicals to create synthetic gold. Anyway, he suddenly got interested in politics. He decided he wanted a job in the government, so he gave up science, gave up Cambridge, gave up a celibate life and began to go out with women and became fascinated with economics. He got in the mainstream in London and was made director of the Mint, which was a much more powerful job in those days than being head of the Bureau of Printing and Engraving in Washington is today.
At that point, there seemed to be more gold coming into England than silver. The result was that gold was getting cheaper relative to silver. Part of it was trade, but part was also the relative prices between the two metals. Gold was cheaper in England than in other countries.
Brett D. Fromson: So they would bring silver in and exchange it for gold, and take it out of the country to resell at a profit?
Peter L. Bernstein: It was a real arbitrage process. But this was a concern for the British government, because there was a shortage of silver in England. So they turned to Isaac Newton, and he had studied economics and discovered the law of gravity and knew the answer to everything.
He set a great tradition for economists of the future because he made a famously bad forecast. He said if you just leave things alone, the price of gold will fall and then people won't want it as much any more and after, silver will go up, because it will look more valuable. But what actually happened was that the market, without anybody saying anything, had decided that gold was the standard, not silver. So while it was true that the relative price of gold and silver changed in the way that Newton predicted, it was the price of silver that went up rather than the price of gold that went down. So gold became the standard against which everything else was measured.
In those days, the wealth of a nation -- and I use that expression purposely -- was determined by its gold stock. And because Britain was a very powerful trading nation, they had a lot of gold at that point. It was 100 years later that Adam Smith rose up and said, "This is stupid. What's the point of piling up this useless stuff? That's not wealth. Wealth is what you can eat and wear and enjoy."
Brett D. Fromson: And this was 1776?
Peter L. Bernstein: 1776. And if the wealth of nations is determined by how productive they are, and therefore how much they can get in exchange for what they export, then this is what life is really about, not piling up money.
Let me talk about Europe now. This was where the fixed-rate currency system developed. Your currency was always exchanged at the same rate with other currencies among the major European countries.
The devotion to this fixed-rate system was so great, and the credibility was so great, that if a country got into trouble it would raise interest rates even if it created unemployment. I'm talking about the 19th century world, in which unions were not yet strong and even democracy was not yet fully developed. A ruler did whatever he could to protect the currency, regardless of the human cost involved. So the credibility was very strong.
Consequently, if a country began losing gold -- was having difficulty because they were growing faster than other countries and therefore importing more and gold began to go out -- they could borrow from one another extensively. In fact, speculation at that time was stabilizing rather than destabilizing. If the value of sterling began to go down in the foreign-exchange markets, speculators would buy it because of their conviction that Britain would get its house in order again. That is so unlike today, when a currency that's under pressure from speculation just gets worse. The speculation is self-fulfilling. In the old gold system, speculation was stabilizing.
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"So they turned to Isaac Newton, and he had studied economics and discovered the law of gravity and knew the answer to everything."
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Brett D. Fromson: What was going on in the United States at that time?
Peter L. Bernstein: We were much more democratic than Europe. In addition, the silver lobby was very powerful because they produced silver in addition to the gold found in 1848 in California.
And silver was seen as the money of the common man, the small denomination stuff. Americans distrusted bankers, foreigners, all those kind of people. So we didn't have the kind of credibility the Europeans had. It wasn't that easy for us to borrow in a pinch when gold started to flow out. So if we got into difficulty, and gold began to move out, it moved.
Brett D. Fromson: Let's move to the 20th century.
Peter L. Bernstein: The U.S. came out of World War II with most of the world's gold. But we were very generous to Europe and then Asia. These countries began to get their economies in order and to grow very rapidly and become serious competitors. The gold began to go out.
Brett D. Fromson: What was the mechanism by which it went out? Through trade deficits?
Peter L. Bernstein: Trade deficits were settling in gold. Under Bretton Woods, exchange rates were fixed, but only the U.S. dollar was convertible into gold.
Brett D. Fromson: So it was a dollar-based international monetary system.
Peter L. Bernstein: Yes, much like today, really, except that the rates of the other countries didn't change. We maintained millions of troops outside the U.S. because of the Cold War. We were importing more and more, and we were investing very heavily because Europe and Japan were getting under way now. It was the opposite of today, when everybody wants to invest here.
Foreigners were owning more and more dollars and beginning to cash them into gold. So we were in a real bind, and finally, in 1971, Richard Nixon shut the gold window, which meant the dollar was no longer convertible into gold.
This is the last gasp of the gold system, the gold standard. The issue involved there -- and this went all through the 20th century up to 1971 -- was the same as the issue that William Jennings Bryant was talking about in 1890: Do you tie yourself to the rest of the world in this very fixed way, or are you the master of your own fate?
Brett D. Fromson: We now have a dollar-based floating exchange rate monetary system. Are we any less, are we any more masters of our fate than we were in 1971, when we had the old gold-supported fixed exchange rate system?
Peter L. Bernstein: This is one of those economist questions -- on the one hand, on the other hand. It depends on who you are.
On the one hand, if the United States of America has one set of problems, Malaysia or Thailand or even Brazil has a different set of problems. These smaller countries have had terrible problems of adjustment as it is, but it would have been much more difficult for them without floating exchange rates. We see Asia reviving today, coming back really strong from what happened in 1998, and one of the main reasons is that their currencies were devalued, and therefore their goods are cheaper in world markets. Their goods and services are cheaper in world markets than they were before.
And imports to them are more expensive than they were before. And so the dramatic change in their balance of payments in their international financial relationships is very important. The U.S., in a funny way, doesn't have the same freedom of movement. If the dollar were to become weak, I think we would be in a very frightening situation.
Today, speculation is not stabilizing, but destabilizing. The dollar has an aura of strength in world markets that is valid, but this is where people want to keep their money. But were we to have an inflation rate that's higher than that of the rest of the advanced countries, or if the Europeans and the Japanese ever get their act together ...
Brett D. Fromson: Economically?
Peter L. Bernstein: Economically, and began to develop in the same way that we have in the last five, six, seven, eight years -- technologically and rapid growth and low unemployment and high productivity and all the wonderful things that have happened here for reasons we don't quite understand.
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"So we didn't have the kind of credibility the Europeans had. It wasn't that easy for us to borrow in a pinch when gold started to flow out."
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Brett D. Fromson: The euro and the yen would give the dollar a race?
Peter L. Bernstein: The euro and the yen would give the dollar a race. If the movement were in the opposite direction, it could gather momentum and history suggests there are only two ways to go, so what would be so terrible about that? Suppose this began to happen.
Brett D. Fromson: An incipient flight from the dollar.
Peter L. Bernstein: Yes, if there were flight from the dollar, what would this do to us? Why should we be worried about it?
Only within the last couple of weeks or at least within the last month, [Federal Reserve Chairman Alan] Greenspan himself said this is something that could happen eventually, and that we have to be concerned about. And he's the guy with his hand on the trigger, so it's going to be his job to try to take care of it. It's a very different kind of crisis from the kind he's used to dealing with.
Why should we care? A weak currency is inflationary. Otherwise, it really doesn't matter a hell of a lot, but it means that instead the pound is now $1.40, that instead of an Englishman wanting to import something from the U.S. ... Then he'd get $2 for his pound. So that one pound would be $2 worth of stuff instead of $1.40 worth of stuff. Then we'd see our exports going up, and we'd have to pay $2 for a pound's worth of English merchandise. To go over there to have dinner in London is expensive enough now, but it would be that much -- 50% -- more expensive than it is now.
So, we would be exporting more, and we'd have less import competition. And the consequences would be inflationary. The only way to prevent this is to raise interest rates sky high, and that certainly makes the stock market go down and the bond market go down.
Brett D. Fromson: And the real economy?
Peter L. Bernstein: And then this hits the real economy. And that's really the classical medicine, you see. Then the real economy gets weaker and we don't import so much. Because we're now importing about $30 billion more than we're exporting. That would change.
Brett D. Fromson: Are you concerned about the dollar flight question in the near term?
Peter L. Bernstein: Near term, no. I have a basic philosophy -- I guess because I'm a child of the '30s -- that anything can happen. And that economic conditions change and that good times develop maladjustments and lead to bad times. Bad times can lead to readjustments that lead to better times and this is how the world works, and there's absolutely no reason to believe that's ever going to change. So, while I'm not concerned about this near term, all the necessary ingredients are there for something of that nature to occur.
Brett D. Fromson: Meaning a dollar crisis?
Peter L. Bernstein: Meaning a dollar crisis.
Brett D. Fromson: How important is the federal budget in a currency crisis?
Peter L. Bernstein: In every case where a country's got into currency trouble, the fiscal position is in trouble. They were running into or moving toward the red.
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"But if the surplus begins to shrink, that could be a
Does anyone out there have any feel for the possible impact of US dollar counterfeighting operations on the US money supply? I recall seeing in our local newspapers a few months back that a counterfeighting operation had been busted in the Far East. Intitially I didn't pay much attention to it, till I read further down in the article that the size of the operation was US$500 billion (that's right, US$0.5 trillion!). Since the US GDP is approximately $8 trillion, with money supply of a similar magnitude, I suspect that possible counterfeighting operations, if they do exist on such a large scale, could have an impact. Any comments?
Does anyone out there have any feel for the possible impact of US dollar counterfeighting operations on the US money supply? I recall seeing in our local newspapers a few months back that a counterfeighting operation had been busted in the Far East. Intitially I didn't pay much attention to it, till I read further down in the article that the size of the operation was US$500 billion (that's right, US$0.5 trillion!). Since the US GDP is approximately $8 trillion, with money supply of a similar magnitude, I suspect that possible counterfeighting operations, if they do exist on such a large scale, could have an impact. Any comments?
714 (10/02/00; 20:55:38MT - usagold.com msg#: 38091)
Historical perspective on gold-for-oil trade...
Under the original contract with Standard Oil Company of California, King Saud received an ounce of gold for every 159.1 barrels of oil (4 gold shillings per barrel, or $0.22 US @ $35 an ounce of gold). Most often, this was traded out for US$ as gold didn't trade as well as currencies. Fwiw.
Question: If gold and oil are so closely linked today, why isn't gold moving up as the US$ devalues against oil?
*** My response:
This proves the original oil-for gold deal and the propensity of OIL to want gold in payment for oil. TG spoke of a gram of gold per barrel now. Per my post, I alluded to a diminishing supply of oil would require an increasing supply of gold per barrel. The one gram of gold versus 1/3 or so gram of gold per barrel for above does show this ever increasing gold for oil relationship in the works. Two points a line make, but confirmation of more points is always nice.
ANOTHER spoke of 69.5 tons or he said "20 million ounces per year" of gold for oil since 1991 but that it was greater now.
In order for oil to track as closely to gold as it did, some mechanism must hold it there. This gold-oil gram for bbl concept seems to explain it. Could the major oil companies actually be large players in gold-oil contracts and be involved in paper gold?
To stab an answer at your question about why gold doesn't move up against the $? My opinion is that it can't so long as lease rates and paper gold contracts continue to sell gold naked or short without gold to back it. This is the point of countless discussions here. When will the paper selling end. This is the point of GATA. When will the CABAL as they put stop beating down gold with paper?
GATA doesn't see or want to see the gold-oil relationship. Bill is privy to this information, I know. His focus is on gold, the commodity, should be freely traded and any manipulation is taboo. I don't disagree. Yet, gold, the currency, seems to be open for hunting season, and all the stops are off to contain it -- thus the alleged ESF and BOE involvement. This is the effect of having demonitized it but yet secretly keeping it as a CB reserve and underlying currency. It really is a kind of fraud, to say gold is a commodity but also a currency and money of sort -- the underlying tendancy is to manipulate gold to control currencies, especially the dollar and oil. It is this link that GATA knows, but doesn't tell. It is too hard to explain and prove the link even though all the players know it including Congress. Otherwise, how does one explain Congress's lack of apparent concern over such a large derivatives market in paper gold contracts where all the gold in Fort Knox would be needed to square the deals? The ESF must report monthly their transactions to Congress. They know gold is part of the internation monetary system. That is why they didn't approve the IMF sale of gold recently.
So, the GATA v hedged mines and bullion banks takes place at the commodity demarkation whereas gold as a currency is "don't ask; don't tell."
I again ask the question, when the oil is gone, what of gold? Since the desire of gold by OIL marks gold to oil and all other currencies must vie for dollars for gold, what will be the motivator or the glue that ties currencies to gold when oil is in near depleted status? Remember at current consumption rates, this is only 34 years hence. That will be in many of our lifetimes (or so we hope). This will be a different world in the last 15 years of oil.
Obviously, technology will be relied upon to provide alternative fuel sources and the commodity of oil will likely be rationed to delay the 34 years out much further. Perhaps we are seeing that trend start now. Higher prices encourages less use. Less use stretches the supply lifecycle. But what of gold then? If this big pile of gold sits in a bank or vault(s) and there are no takers, then what? Does gold only have value because of oil's value? If it does then what will sustain that value as well as OIL's desire for gold for oil?
What is now certain, though, is OIL wants gold -- not dollars. The run on gold by other "gold" interests has put the physical gold market in jeapordy and so gold supply is now being controlled by oil supply, thus the rising price of oil -- gold must soon follow under this change.
So many "Conspiracies". Conspiracies to kill JFK, communist conspiracies, conspiracies to fix prices. They've sent people to jail for conspiracies, John Gotti ( sp? ) can tell you about that, he didn't pull the trigger on "Big Paulie" outside the Sparks Steak House but he's doing the time because he conspired to have that trigger pulled. For all the talk of conspiracies I've never seen is what the definition of a "Conspiracy" is; so I think I'll start there as it will be useful to define my terms.
I have a copy of the 1924 edition of the "New Dictionary of the English Language", I got it at the Salvation Army book store for $.25. Ya I'm cheap. In it, it says that a conspiracy is:
1 ) a plot,
2 ) two or more persons engaged together for an unlawful or evil purpose.
There may be more definitions in a newer dictionary but for my purposes these two will do as I think they are descriptive of what is going on in the financial markets today. Note that in 1924 an evil intent was all that it took to label two or more people as conspirators and make their activities a "conspiracy". Back in 1924 the issue of legality was not required, it also recognized that acting with an "evil" intent was not necessary illegal. This is wise if you ask me as what is considered "evil" really is a slippery topic. Ask many liberals in our congress today what is an "evil" person and they would tell you that people who make more money that most and want a tax break is a sure sign of what one Democratic congressman
described as "Nazis with a power tie".
So I do agree that labels in this area should be used with care if for no other reasons but for my own selfish, personal, and possibly "evil" reasons. Also its obvious to me that depending upon who one would ask, certain actions at certain levels of society could either be prudent management of public affaires or an evil conspiracy. In this paper I want to lay out my case of why I think the gold market has been victim of an "evil conspiracy" as opposed to being a beneficiary of the "prudent management of public affaires". I'll
let the legalities of this evil conspiracy to be discussed by lawyers as my opinions are not legal. I also need to go into some political theory and history to make my points, that point being that there is more involved here than just a free market price for gold. I can not do that unless there is historical context for what is going on, so I hope the reader is patient with me.
It has been stated by various members of this forum that to charge the actions of various people, organization, or agencies activities in the gold markets as a "conspiracy" is some how lazy, the easy way out in an attempt to explain what is happening to the price of gold. Well that may or may not be true, but what amazes me is how easily people in the first year of the third millennium discount conspiracies altogether, they would have me believe that a conspiracy is as rare a critter as a blue Maine lobster. Well that is not true, Caesar was not assassinated by ten angry blue Maine lobsters! I would say that the history of mankind reeks with conspiracy if looked from the perspective of the average joe working the fields
or earning his daily bread in honorable commerce. Since man first planted a seed with the expectation of it yielding a crop, there has been the state. And since the state was invented there has been two kinds of people, people who farm the earth and people who farm people.
I want to make a point here, that being that the state has no interest in abiding by the same laws that they apply to the people who they rule over. This is true with any big bureaucracy, any one working in a Fortune 500 company or for a family business can see it. The hourly wage workers must come in on time or get docked some pay, however at a certain point in the organization, one can come in late, be greeted by the CEO or Uncle Ed with a smile and no questions asked. Machiavelli noted this in his famous volume "The Prince", that in fact there are two sets of laws in society, one for State and one for every one else. His reasoning for this is that the peace of the people lays in the fact that they can appeal to the state for justice when wronged, but in the hurly burly of international affaires, who can the state appeal to if wronged by another state except by guile or force. I know that this little snippet from Machiavelli may not apply to Uncle Ed's plumbing supply store, my intent is to establishing the fact that within human society, in either business or government or even in the family, there are degrees of immunity or outright exemptions to the established rules in every organization. There is nothing wrong with this. Just because big brother can come and go as he pleases doesn't mean that little sister can. It does make a difference being in college or being in the eight grade.
However this can pose problems for people who don't have the ability to rise to the top. People being people when given an inch want a foot, this is especially so with gifted people who typically become the privileged few, and in politics or finance this will lead to injustices if not checked. This was recognized in the American Constitution, that being the human urge for more. The desire for more power, more privileges by ambitious people in public office needs to be checked if the individual is to remain free. Hard to believe it today but the American Constitution's intent was to limit the Federal Government power
and the scope of its authority. Read it, there is not one limit on the people, we were to be born free and live with in the context of the English Common Law. The American concept of "liberty" was for the people, not the state. The Founding Fathers of The United States would have answered Machiavelli's point on a dual legal system as follows; that when dealing with foreign matters his point can be true, but when the state is dealing with its own citizens it is absolutely necessary that the law be binding upon it also or a tyranny will result. The lessons of the English Civil War was very much present in the minds of the founders of the United States. To be King or Lord Protector was sweet, to be subject to the King or Lord Protector's decrees could be very bitter.
In the Federalist Papers ( I can't remember which ) it was stated that where the state fears the people, liberty rules, but where the people fear the state, tyranny rules. Ben Franklin when coming out of the constitutional convention was asked what kind of government did you give us, he replied "a republic, IF YOU CAN KEEP IT. ( my emphasis added ) . And what did they talk about so long ago, in that stifling hot, humid room in Philadelphia for weeks on end? In a nut shell, all the different ways the little guy has been screwed by the big and powerful during the course of human history and how they could stop it from
happening to the people in the new country they were inventing: The United States of America. By
today's standards there is a strong case for calling the US Constitution the product of the combined minds of hard core, paranoid, conspiracy theorists. They were so sure the government they were creating would come into the control of "ambitious" people who would make life unbearable for all but the connected few. There are books on the constitutional deliberations, they are well worth the time and effort to read, and in them all the fear of being oppressed by powerful, privileged people who might gain control over a Big Federal Government is the major theme of what they talked about. Their watch word for future Americans was "Eternal Vigilance". Eternal Vigilance from what? Well speaking for myself that is the essence of what the issue of what GATA should be all about.
In one of the Sherlock Holmes novels, Doctor Watson is amazed at how Holmes knew the owner of the house was the murderer; "how did you know Holmes". Sherlock answers " the dog didn't bark". Watson is confused "the dog didn't bark"? Holmes a bit exasperated by his friends inability to see the thing says to Watson "but the dog should have"!
Allow me a little literary liberty to make my point.
In one of the Sherlock Holmes novels Doctor Watson is amazed at how Holmes knew the precious metals markets were manipulated; "how did you know Holmes". Sherlock answers "the prices kept falling". Watson is confused "the prices kept falling"? Holmes a bit exasperated by his friends inability to see the thing says to Watson "but the prices should have risen"!
So why does Sherlock look so smart while Watson came up short? Well Sherlock knew that supply and demand are not theory or learned opinions, they are laws, they apply all the time in every situation when commodities are allowed to be bought and sold in a free market. For prices to appear to defy the laws of supply and demand are by definitions, manipulated prices. Watson knew this too, and in an examination he would have gotten this question correct but could not apply the facts it to the situation at hand. By the way, there are many more Watsons than Sherlocks in the world, sad but true.
Now if your still one of those who is of the mind that gold and silver prices reflect the reality of a free market after years of demand larger than new supply, and with productions deficits to demand by significant amounts, well then my last shot at converting you is to look at how the Bank of England ( BOE ) has been selling its gold, if nothing else this should at least give you pause for thought. Do you think it normal for any central bank to sell gold and not allow the price to be set by the highest bidder? Look at the way the BOE has handled its gold sale, it is my understanding that they do not accept highest but the lowest bid and that sets the price for every ounce of the 25 ton consignment of British gold sold at each auction. Now its more complicated than that and due to space concerns I'm not going to explain the process in detail but in each auction there are parties willing to pay, for example, $310 an ounce for lets say 15 tons. Yet as the bids are screened, if the last gold bar goes for $275 an ounce the BOE then prices the entire consignment of 25 tons of gold at $275 an ounce and it will refuse to take more than the $275 an ounce from people who were willing to pay $315 for 15 tons of it. What am I to make of that? Any bum on the street could get a better price for the English people than what the BOE is getting them for that gold. Yet incredibly from people who would have us believe that they are experts in the gold industry there are no protests or even a single serious question of why have an auction were the highest price is refused.
I hear a dog NOT barking!
But then that is just me an admitted "conspiracy nut". You just know that these "gold experts" would never shout conspiracy as gold is sold too cheap with the whole world watching. Well I'm no "gold expert" so this weird auction force me to be judgmental, and I can only think of two possibilities to explain it, One possibility is that somehow all of these people can somehow control such vast amounts of gold and who boast of such outstanding academic achievements are so stupid that they are incapable of running a proper auction. The second is that the English people are being denied the best price their gold could fetch at auction due to an evil conspiracy with the BOE as a co-conspirator to drive the price of gold down. Is it possible for there to be a third explanation?
If you can think of it don't keep it a secret. I doubt if Christies in London would even allow such an auction to occur at their establishment, like I said my opinion is not legal but I think the possibility of exposing themselves to a legal action could result from such an auction at their establishment. And why not, what owner wants to sell to complete strangers a Picasso or rare Persian carpet at any price but at the best bid which is the highest offered price. I think I made a strong case that the gold market is manipulated. If I'm wrong how? And don't go tossing no rare blue Maine lobsters at us evil conspiracy nuts unless you can answer the questions posed to you from above, because then you'll be the lazy one taking the easy way out.
So the next item to discus about what I think is an undeniable manipulation in the precious metals markets is; is it a result of an "evil" conspiracy, or the prudent management of the public's affaires.
If you're of the "prudent management of public's affaires" school of thought I insist you make your own points as I'm a boy scout at Camp Evil Conspiracy.
As I used my $.25 1924 dictionary to define "conspiracy" I think it wise to do the same with "evil", and remember being "evil" is not the same as being illegal.
Evil:
A ) morally bad, wicked
B ) unfortunate
C ) mischievous
D ) disastrous
E ) worthless
F ) badly
G ) unkind
H ) moral depravity
I ) injury
J ) affliction
Well most of these definitions are "E ) worthless" for my discussion so I'll pick the one I think best fits what I'm trying to say, and that one is "A ) " morally bad, wicked.
I think school yard bullies are morally bad and wicked, the reason for me saying so is that bullies refuse to accept any risk as they go about what one would think a risky business, fighting. Bullies manage their risks by the careful selection of their victims, they select targets that don't have much of a chance to effectively fight back. They also pick the place and time of the fight so that the victim is alone and the bully has his friends with him. Hence the bully experiences all of the pleasure of the encounter while the victim is exposed to all of the risks. That is the point of being a bully; there is no risk to it, only satisfaction. I ask the reader now if you also agree that being a school yard bully is a morally bad, and wicked, which is to say an evil way to treat people? Well no matter what you think, I can form my own opinions and I say that this is evil, and that the bully and his friends are conspirators and by definition, they guilty of an "evil" conspiracy against the victim. Like I said earlier evil conspiracies are not necessary illegal but they are conspiracies none the less.
Now can I apply this to the gold markets? I think I can and thus prove a "conspiracy" in the depressed prices of gold.
I brought up the issue of the avoidance of risk as a key point in my discussion of what an "evil" conspiracy could be. I would say that an "evil" conspiracy would be one where a group of people manipulate a risky financial situation to where they have a total lock on a profitable out come but lay off all of the risk to a third party who is not even aware that he is being exposed to a particular financial risk. That anyone could work hard all of their lives, playing it by the rules to raise a family and only wanting some sense of security, could lose all their material possessions due to no fault of their own but to the irresponsible actions of greedy people can only be described as evil.
Is there anyone that would argue this point and offer a counterpoint that this is somehow acceptable or if in fact this were to happen it would not be an evil conspiracy? Now how could such a thing be accomplished, the shifting risk to one group and the profits to another. I could do it to a small town lets say, with a check book if I could somehow get the town to accept my paper as readily as a Federal Reserve Note. Everyday the town goes to work; farmers are producing food, merchants are bring goods into their stores and all I see is mine for the having, all I have to do is write a check. Remember in this example my signature is money. With enough checks and a twenty five cent ball point pen I can have my fill of the best the town has to offer and still afford to be very generous to the city counsel and chief of police. Gee, I'd be what the major would call "a leading citizen".
Life is good, at least for me it is. You see after a little visit from me to a store, the store owner deposits my check, which for this example is as good as a Federal Reserve Note, in his bank which dilutes the town's wage earners dollars purchasing power. More money in circulation, with fewer goods for them to buy as I got the best of it over at my house. Bless them all, the wage earners are all working more for less and no one blames me, it's the store owners that are raising the prices, right?
Now there are those reading this who recognize that I'm describing how the US money supply works. Well not exactly. How it really works is that Alan Greenspan is the guy who writes the bogus checks that has no funds to back them and no he doesn't buy wine, women and song with it, he buys US Bonds and all the stuff you see published in Barron's each week in their "Federal Reserve Data Bank". He became the Chairman of the Fed in around Aug 1987 since that time his hand has written checks for 305 billion or so for US Bonds. They don't keep it a secret, its been reported in Barron's since the 1920. How do I know?
I spend a lot of time in libraries putting numbers into my spreadsheets. Now when does he do this? Well the key is the Fed Funds interest rate, it is a manipulated interest rate, but still, the law of supply and demand can not be avoided even by the Fed. My description of the following is imperfect but very adequate for the purpose of this discussion. The Fed states a target Fed Funds Rate, and the Fed Funds rate oscillates around it. So lets say Alan Greenspan pegs Fed Funds at 6.5%, the Fed will then monitor the interbank system where the banks will put up their spare cash up for sale to other banks. By looking at the "cost of money" that being the going interest rate for a bank lending to another bank, the Fed will or will not take action. If the Fed Funds rate goes above the Fed Funds target rate the Fed will buy US bonds from a primary bond dealer, who will deposit this new "money" in a bank who will then add the new funds to the interbank system there by adding supply to satisfy the demand for debt at the Fed Funds rate. By the way primary bond dealers and the big NY banks are really one and the same, they are also the bullion banks, its all so convenient. Any problems so far with what I'm saying? This week's Barron's ( 02 Oct 2000 ) it reported that the Fed bought 2.14 billion in US Bonds. That meant that if the Fed Funds targeted interest rate was to be maintained, Alan Greenspan had to write a check for 2.14 billion to add the required "liquidity" to the banking system. OK so what is wrong with this? The same thing that was wrong with someone buying everything in sight in a small town with an endless check book with no funds behind it. People who don't do anything to add to a nations wealth get rich and the people who give value to the money being created by producing something of value to buy get hurt. No banker every gets into any kind of trouble for this but I still think this is evil if not illegal.
The banking system is like one of the old cowboys movies with the gun fights where no one ever ran out of bullets and you could tell who was going to get it and who wont even get a scratch from all the flying lead. The banking system has access to the unlimited credit of the Federal Reserve at the Fed Funds Rate and if your a big NY bank, the system never says no to you as your one of the share holders of the Federal Reserve. Yes the Federal Reserve is a quasi private bank, it is NOT a US Government agency. And its not possible to have a free market when people like you and me are limited in our bidding by how much money we can earn, which is the honest way, are forced to compete with a money machine with unlimited access to credit ( money ) from the Federal Reserve! Do you notice how your working more and getting less?
Also with all of this "money" at their finger tips the big banks have since the creation of the Fed lent money to such worth credit risks Latin American countries in the 20's, 60-70's, 80-90's, the Leverage Buy Out mania of the 80's all of which have come to grief to either investors or the tax payers. I suspect that the "Dot.Com" boom and now bust would not have been possible with out the assistance and cooperation of the Federal Reserve and the banking system with the Internet company's IPO underwriters. Guess who they were? Ross Perot, in 1992 when he was running for office, was talking about the "December Surprise". Well I'm working on rumor here but supposedly the" December Surprise" was that a big New York Bank was insolvent, broke, bankrupt.
That is why Alan Greenspan lowered Fed Funds to near 3% for a few years creating the dollar carry trade where all the banks that had a hang over from the old LBO days with their bridge loans or what ever else ailed them, could "reliquify" in the US Treasury debt markets on the spread between the Fed Funds rate and the long bonds. As the average American does not have access to money at the Fed Funds Rate we were not invited to this party. That retired people were being squeezed by these low interest rates meant nothing to these privilege people who only see money as a game to be played to win.
That is what I have against the big banks, they take these big risky positions where they might make a killing. If it works out they keep the profits, if it goes against them, no matter how bad it gets, they are bailed out at the expense of someone else. And what do they have to offer us in return for us being forced fed their waste? Bad paper money if you ask me. And I see what they are doing as an "evil" conspiracy as in the course of their daily business are taking enormously foolish risks that could very well destroy the world of billions of people.
Their malign fingers touch every continent, no nation escapes their services. They would not do this except that the system provides them with the mean to do this and then protects them when things go wrong. I'm not going to mince words here the whole world is flipping a coin with these guys and its heads they win, tails we lose.
Look at the stock market, the derivative markets, the mortgage markets and yes the gold market. These are all their monstrous bubbles. It's not a if but when will these bubbles will pop, and when they do my friends we shall all be expected pay the bill for a dinner we were never invited to. The investment bank's traders call it "ripping someone's face off". Real cute. I expect a depression bigger than what we had in the 30's. With low interest rates on savings who has much money in a bank? The "roaring" stock market that everyone is in, when it collapses people will
http://www.usagold.com I was reading worldnetdaily this morning. An article entitled "High Court upholds assault weapons ban". Now in fairness to the Court, they did not exactly uphold as assault weapons ban; THEY REFUSED TO HEAR THE CASE. The end result was the same: 2 manufacturers of assault weapons are out of business and I am sure there are some good Americans somewhere with heavy fines or prison sentences for assertint their rights.
I suggest to you that we are no longer a nation of laws. The High Court does the same thing with the money issue. THEY REFUSE TO HEAR THE CASES. Check out Reginalf Howe's site, The Golden Sextant, and his petition for certiori with the Supreme Court to hear the constitutionality of Federal Reserve Notes.PETITON DENIED.
There are other examples too. Did you know that if you are charged with a Federal Crime and the potentia; sentence is less than 6 months, you have NO RIGHT TO A JURY TRIAL. Its true.
Try claiming your 5th amendment right next time you dont want to file an income tax return and see what happens. The right is illusory.
Howabout NAFTA AND GATT treaties which were not ratified by the required 2/3 of the Senate, yet the Courts say thats ok.
What happened to your right to a jury trial in a traffic offence in many of the states?
Time does not permit me to give other examples 'so you feel in the blanks.
The truth is we are no longer a nation of laws. There is a charade going on. And there are none so enslaved as him who falsely believes he is free.
Permit me to tie this to Gold. GATA will never prevail in the courts. Its a stacked deck. When rich and powerful interests (especially the interests of the Banks) collide with the law, the law loses.
Shame on you all for letting this happen without a fight.
After reading your response to my question, I was very inclined to ask you if we could take this to email. I abhor the spotlight, but decided that there was a constituancy at this site to whom I owed a duty, and to whom it would be a useful learning experience. With that in mind, I will probably sound as if I were lecturing, and I certainly will be entering some bits that I know you personally to be familiar with. So on with the (Geraldo???) show. (I don't own a TV and don't expect to.)
You asked "how I got here", so first some personal background, then some definitions, which is the purpose of this post (so we can have a common language, and as I see it, really the subject of your post) and finally an analysis of why I asked the question. And again everything is way oversimplified. Please excuse the typing and spelling errors.
In about 1966 I attended a speech by Dr. Kenneth White who was economic advisor to Kennedy. He was advocating what would become SDR's. (special drawing rights) As usual the polititions picked up on the half of the plan that suited them and left the half that was inconvenient, and would make it actually work. If they had, we certainly would not have had the inflationary and other degradation of the currency that brings us here today.
I had a family, and was fighting my own battles, but as time went by, I noted some of the stupidities that were being perpetrated in an absent minded way. In Febuary 1987, a small newspaper article jiggled the puzzle enough that the gruesome picture became clear. As with all hoary new truths recently discovered, I was sure "the event" would happen tomorrow, or at the very latest the day after. I always had a propensity toward being a goldbug, but within 48 hours I were one.
I started considering what course of action would be the best, and quickly realized that I did not have enough resources (gold, information) to do what I thought necessary.
It is important to remember that in 1987, that derivitives, as we know them today, did not exist. It is also important to know that the smart money viewed the market even at that time as wildly overvalued.
In the 80's I was lucky enough to be a headhunter to some of the more exotic banks such as the then Bankers Trust, and J.P.Morgan, and they were just getting into derivitives in an organized way. A plain vanilla interest rate swap was just being invented, and at the street level, a futures contract was pretty heady stuff. Of course the banks needed people in those fields, and since I was doing a lot of people like FX interbank traders, I got a shot at the new swaps traders. I pretty quickly had to learn what Black Scholes was, how it worked and when it should be used as opposed to say Cocks Ross Robinson so I could determine whether the candidates I was interviewing were real.
The 1987 crash taught me that no matter how good my plan was, it wasn't going to cover all of the eventualities, and in fact covered damned few. Certainly I would have been better off than the average bear, but it didn't go far enough.
In 1989, despite the nice "Glasnost" spin that the USSR government put on it, AND the deliberate misinformation that our own governments put out, I was able to observe the bankrupcy of a superpower. There has never been in recorded history, a war that finished without one or both of the protagonists going broke. It is my opinion that, if you look at Russia today, you will see elements of a milder version of our own situation 8-10 years from now. However the equation has been altered somewhat since that time. (eg oil and progress in the computer chip.) But that is why I was interested in this forum, to get intelligent arguments as to why I might be wrong.
In the early 90's some personal problems screwed up my plans royally, but I was able to continue to observe, albeit somewhat after the fact, the progress of that fall from power.
The Y2K event brought out some short sighted survivalist ideas and thought.
Despite the fact that I taught machine operation and programming for some years, I got out of the computer field, and it was only in the spring of this year that it became necessary to get back in by purchasing a computer. I probably discovered Kitco in June, and made my first posting in Aug., in order to goose the discussion in the general direction I needed to go. It was also probably early in Aug. that I discovered USAgold, and began lurking here.
So that pretty well brings us up to date.
Now to some very oversimplified definitions. I will leave out some very important parts, such as the very important role of the velocity of money in inflation, but I think (or hope) the general gist will will be clear. In order to simplify, I will start by assuming the US system in isolation, which it of course is not.
Money Supply
M1; is essentially cash and cash eqivilents. This is where, if the government "prints money", it shows up. (and it is the only place in the system, other than interest rates, where the government can directly influence the system) In the runup to Y2K the government printed a lot of extra bills, because the common wisdom was that people were supposed to draw out a certain amount of money in case all the computers went down.
In fact it is my understanding that all the bills that they printed up were not stored in a warehouse somewhere, but with some offsetting concessions, were largely handed over to the banks to get the money closer to the people, so that they would be able to react more quickly, if a problem should develop. It is also my understanding that, while the magnitude of the cash withdrawls did not reach the level that was feared, there was indeed some extra withdrawls. Certainly, in the months preceeding Dec. 31, M1 numbers jumped. So M1 represents, crudely, the amount of money in peoples pockets, or easily and legally able to be put in peoples pockets on less than 24 hours notice. It is the cash in the system. Of course Y2K turned out to be a non event.
M3, or 3A, or whatever one you choose, is essentially M1 multiplied by a "fractional banking factor"
M3 and fractional banking is easiest to explain if we go back to days of yore when each village had its own goldsmith, who was in fact acting like a banker, by storing everyones gold because the robbers were having a fair degree success of parting the local citizenry from its holdings of gold, but not much success doing the same thing with the goldsmith. So for safety, people stored their gold with the goldsmith, for a high fee of course.
Lets say the village has a hundred golds in it. (M1) This is all stored with the banker. As time goes on the people come in to get some gold to buy groceries etc., and the grocer deposits his excess gold. The banker has got to keep some gold up front in the till, but the bulk of the gold is never touched. So he keeps 10% or 10 golds in the till (and in peoples pockets) and 90 in a hidey hole.
One day a would be pirate comes along and wants a loan of 90 golds to build a pirate ship. He convinces the greedy banker that they will both get rich. The banker reasons that he never touches the 90 in the hidey hole, and besides, if he doesn't have the 90, it can't be stolen from him. So he makes a loan of 90 to the pirate, also with high fees, now called interest.
Well the pirate buys lumber, and swords, and sails, and pays in gold. (IN THE VILLAGE) The villagers rush to deposit their new gold with the banker.
The banker now has 190 golds on deposit, a loan on the books for 90, 10% or now 19 up front in the till, and 81 in the hidey hole. This is real creative accounting in a system with only 100 golds in it. It is called fractional banking. In theory at least, each loan becomes a deposit. The banker loans out the 81 and it is deposited, and so on until the banker has 100 up front in the till and 900 out in loans. So now there is 1,000 golds in the system. (M3)
So in this case the "fractional banking factor" is 10 times M1 which is the money (golds) in circulation. (or an additional 9 if you prefer.)
Note that as M1 (100 golds) grew to to M3 (1,000 golds) the money supply inflated, and this would be highly inflationary. Spain, when it sent out successful pirate ships, and they brought back tons of gold, was brought to its knees through inflation. Combined with the foolishness of its monarchs (read politicions) and it never was able to regain its former glory.
FLATIONS
INflation is essentially to many dollars chasing to few goods and services. We wind up trading $50,000 cats for $100,000 dogs. Inflation usually arises because; 1) The government prints to much money, (which goes into M1) and of course the bankers, who want to make as much profit as possible, start loaning it out using the fractional banking system, so it multiplies. 2) the bankers get greedy and instead of keeping 10 up front in the till, keep only 9,and lend the extra 1, so the multiplier goes way up. Most jurisdictions have laws to keep the bankers in line, but none to keep the politicians in line.
DEflation is essentially a massive asset destruction. For example, if the stock market crashes from 10,000 to 5,000, a great deal of wealth is destroyed. Sure, individual investors may get out intact, or even make money on the way down, but in total the wealth has been destroyed. This is a deflationary event. It is the stuff 1929 was made of, and currently what is happening in Japan, Russia, etc.
Usually deflation starts with a milder version now known as a recession. But it gets out of control. What happens is that **CONFIDENCE** is destroyed.
Lets look at our average banker. When (s)he makes a loan, the first law of lending is TO GET YOUR MONEY BACK. So when times are good, and jobs are plentiful, both the banker and the borrower are confident that the loan will be repaid. Now things start down. First thing that happens is sales go down, and when sales are down, business cuts back on its labor. If the company wants to stay alive it has to.
Unemployed people who borrow a lot can not make the payments. If it is bad enough they declare bankrupcy. Given enough bankrupcies and the banker starts to wonder whether he will stay solvent, or at least whether the bank will get its money back. So (s)he starts to be more selective about just exactly who gets a loan. Borrowers, too, or at least those who have something to lose, don't want to get in debt because a small thing could wipe out all their other assets, so they don't even approach the bank for a loan. AND they start spending less. Add that to the bunch who are unemployed, and spending is down quite a bit. So are loans. (M3) More people are out on the streets, spending falls, which puts more people are out on the streets etc etc. Bankers are losing confidence, and while fewer loan applications are coming in, as a percentage they are approving less and less. Quite aside from the possiblity that the bank may go under, the banker is relearning the first rule of banking. And they always seem to have to relearn it. Bankers aren't very bright that way.
In the last 50 years, government has learned to borrow some money and start public works programs to get that downward spiral stopped. (from Mr Keynes) However if a trigger event, such as a stock market crash, or an oil crisis comes along, destroying peoples pension plans, etc, it also destroys their confidence to a much greater degree than can be tolerated by the system, and the downward spiral continues. It would be fine if the government borrowed during the lean years and paid back in the good years, but they don't pay back.
At this point, it doesn't matter how much the government prints and gives away money. (M1) If the bankers aren't going to lend the grease that lubricates the economic machine, it is going to grind to a halt.
Now, at last we come to the point of all this, to talk about the question at hand, importing and exporting of inflation and deflation. We will try hard not to, but we're probably going to lose some people here.
The essence of my question to you was; For some years the US has been exporting inflation. In May of last year, after looking at the money supply numbers, I began to wonder if the US was no longer exporting inflation and had begun importing deflation. What say you?
We will use Japan as the example because it is a major player.
First the exporting of inflation. (and M3 has been growing fast enough that we should be showing more signs of inflation)
Japan is in the midst of a deflation. I described it more fully in a previous post, but to recap. On Dec. 31 1989 the Nikki stock average was at 39,000 and change. Say 40,000. Everybody was investing (speculating, gambling) because, they all knew that in the long run the market always went up. (And the long run was getting down to a few hours, or days, at best, in peoples minds.) By mid 1991 the Nikki was down to its nadir of about 12,500. Currently it is mucking about at the 15-16,000 level. This was probably a, or one of, the trigger events above, and it certainly was a massive asset destruction.
But it was not alone. For reasons a bit lengthy for here, recession was setting in, unemployment was up, (even if the government statistics did not show much) and people were not bidding silly amounts for real estate, so house prices fell, Dramatically. Then companies, who had an implicit contract with their workers that they had a job for life, got rid of some of their labor costs by chopping bonuses all across Japan. Bonuses that on average equalled equalled 50% of the annual takehome pay. Banks were underwater on every mortgage in Japan, and as well in nearly every other loan they had out. Everybody who had anything to do with the banking system got super cautious. Every bank in Japan was bankrupt, and nobody had any confidence that loans would be repaid. In short, a massive asset destruction.
Meanwhile the government, which in 1989 had a huge surplus of assets, was being forced to do battle on several fronts. Japan had gotten to be a powerhouse by being a superior trading nation, and its balance of trade was forcing the yen up. This was having a negative effect on jobs because the Japanese were pricing themselves right out of the international marketplace. The government similtaneously started printing money, started some massive public works spending which would get people back to work, and at the same time force the construction industry to go to the banks and take loans, thus raising M3. Their already low interest rates went effectively to zero.
Well it didn't work, because the banks, worried about their own solvency, were not about to make any loans they were not absolutely forced to. Confidence was way down. Zero interest rates meant that they could have piles of cash sitting around with no incentive to get it out and working because it was zero interest rate or no cost.
It didn't take long for the government to go through the accumulated assets because they gave it a massive dose, in hopes of killing deflation fast. Nor was their hoped for result of printing money and having some of that get out onto the international market, thus weakening the yen, effective.
Now they start borrowing. While the following is not true directly, a number of other factors, among which was the yen carry trade, made it so practically. Assume the Japanese government goes to the US banks and borrows US dollars. What does that do from the US perspective? Extra dollars that might have gone towards creating inflation in the US are sopped up. However M3, because it was a loan, stays up. In practice the Japanese were buying US treasuries and sticking them in their Central Bank reserves. But they were buying it from their trade surplus which was already in dollars and not in yen, so all they did practically, was to finance the US spending, with no payback specified. That and keep the US dollar from weakening, which was for them desireable.
BINGO The US is exporting inflation.
Importing deflation.
In the time leading up to May last year, two major events took place, the advent of the Euro and the Japanese ran out of money.
While I would expect that the advent of the Euro would likely have some effect on the system, I haven't been able to detect any. After all, if we have a Chevy and a Toyota, and a Ford, and we start calling them collectively, automobiles, it doesn't really change anything.
As I said, in 1989 the government of Japan was sitting on a pile of assets. Then they started borrowing. By last year(**10** years later) their debt, both on a per capita basis, and as a percentage of GDP, was worse than Canada, and swiftly heading toward that of Italy. It is true they still are on the plus side in terms of a trade surplus, and they do have a sizable pool of funds available in the postal savings accounts, so while they did not have a huge need to borrow internationally, there was a finite limit to how much they could borrow and/or spend. They are still spending large amounts on public works, and they are still buying US treasuries for their CB, but the rate has slowed.
In about May I noticed how quickly the rate of growth of M3 was falling. At that point on a year over year basis, it was pretty close to zero. In fact for the whole year, if you subtract out the Y2K operations part, it is down as much as 1%. M1 on the other hand was banging along at a merry rate, even considering Y2K operations. (which took place largely in the last 6 months of the year) Considering how aggressively the finacial system was marketing loans, in all forms including credit cards, M3 should have been jumping. GDP was growning at a reasonably fast rate so there should have been M3 growth. The stock market, and margin debt were both growing, so M3 should have grown. Everything pointed to M3 growth, but it wasn't growing.
There is a time lag between pumping money into M1 and its appearance in M3. Takes a while to work through the system. By Feb this year, M1 growth had slowed, which I surmise was the government moving to bring the total dollars pumped into the system over the longer term back to a more reasonable rate. (ie. sopping up the massive infusion of cash they made for Y2K purposes by not adding their usual amount.) M3 was growing at, if you disregard Y2K operations, a more usual rate. If you consider Y2K, it was dead in the water.
One possibility is statistical error. M3 and the physical census are about the most accurate statistics we have. Every Wednesday every bank reports their cash and loan balance to the Fed, and they simply add them up. Sure sometimes the postman does not deliver the report by cutoff time, so an adjustment has to be made, but by and large it is pretty accurate. M1 on the other hand is not nearly so accurate because it has some estimates such as seignorage (how much cash has been lost, or eaten by the dog, or whatever) in it.
To my mind, M3 is showing us some pretty massive deflationary forces at work. Either the US is importing deflation, or somebody, and they have to be huge somebodies because the absolute numbers are staggering, are are moving loans out of the US system, which would have the effect of reducing M3.
When the US's dearest friend, and staunchest ally, Taiwan, decided it didn't like the US creditworthyness, and moved 10's of billions of dollars out of the US, (except only that which was needed for day to day FX transactions,) I didn't notice any effect on the money supply numbers. I'm sure it was there but it wasn't glaring.
I am trying to consider, in practical detail how this might play out. Any errors of fact or logic pointed out would be greatly appreciated. So, What say you?
I am doing this by memory because I have stopped reading all those things I used to read on a regular basis for what sounds like a pretty silly reason. When I read these things I think about them, get all uptight, and start to work on a heart attack. So from March or April this year I have not looked at the numbers. I came to the conclusion that all the factors were in place for a negative "event", and mother nature would correct these imbalances in her own time whether I worried about them or not. Still, to plan as to how to avoid landmines in that negative event is smart, so hence the question.
If as I expect, there are a number of questions, I will try to get to them as quickly as possible, but that may not be as quickly as the askers might like. I do have some other obligations like food I have to pay attention to.
Bush to attack Gore over oil in Tonights Debate. How about we have Tipper Gore and Laura Bush get into a cat-fight instead?
By Richard Wolffe in Washington
Published: October 1 2000 20:03GMT | Last Updated: October 2 2000 20:26GMT
George W. Bush, the US Republican presidential candidate, intends to use Tuesday's televised debate to challenge vice-president Al Gore over increasing foreign ownership of the US oil industry. It will be part of a broader attack on the energy policy of the Clinton-Gore administration. A senior Bush campaign official said the Texas governor hoped to respond to Mr Gore's criticism of "big oil" - and Mr Bush's close links with the oil industry - by blaming the administration for allowing "big foreign oil" to control strategic energy assets.
Both campaigns believe the series of televised debates, starting on Tuesday, could prove decisive in what has become the closest presidential race in a generation. The Bush debate strategy aims to develop two lines of attack. One is to paint Mr Gore as a tax-and-spend liberal on issues such as healthcare. The other is to launch a detailed assault on his energy policy, blaming the administration for high fuel prices and questioning its economic competence.
"We hope we get to talk about oil because there have been some mega-mergers under this administration," said a Bush aide. "They have left a lot of our offshore drilling under foreign hands such as Royal Dutch/Shell and BP." In April BP Amoco completed its $28bn acquisition of Atlantic Richfield, making the US its largest territory, after months of fraught negotiations with antitrust officials.
The Bush campaign also hopes to challenge Mr Gore's plans to move towards universal health insurance, starting with coverage for 11m uninsured children and a prescription drugs benefit for senior citizens. Republicans are hoping for a re-run of the argument over President Bill Clinton's ill-fated healthcare plans in 1993, arguing that the Gore proposals would give too much power to bureaucrats.
"If he talks about moving step-by-step towards universal healthcare, we are going to say it's a hop, skip and a jump to nationalised healthcare," said one Bush official.
Mr Gore spent the weekend preparing for the first head-to-head debate in Florida, alongside 12 voters he met on the campaign trail, highlighting his key policy areas. The voters include Winifred Skinner, a 79-year-old who collects cans to make extra money to pay for her prescription drugs.
Black Blade: Tonight's debate has the potential for a lot of comedy as these two buffoons go at each other. Al Gore is likely to make some outrageous claim about creating or inventing something, while George Dubya is likely to lay claim to Daddy Bush's accomplishments. Nader and Buchanan would perfectly round out this circus with just as unusual antics. Instead of an election, why don't we just give them weapons, lock them in an arena, put it on "pay-per-view" and the winner is president. Not only do we clean up the gene pool, but the possibility of a social experiment based on natural selection should be quite entertaining as well ;-)
BTW, the API inventory numbers come out this afternoon. The expectation is that inventories will rise while refinery capacity should drop. They said that last week too.
Picture this: we are cruising at high altitude surrounded by a huge mountain range. so far the trip has been good, but the conditions are getting a rougher. air pockets and wind surges are tossing the plane around. what, it's also begun to snow! now the left engine is sputtering! oh dear, nightfall is approaching. sos, but the radio is dead. In the movie shangri la, this is what happened. what seemed like an idyllic trip turned into a crash, and a struggle for survival among the cruel elements. It is true, a lucky few made it to safety.
are we in a similar situation in terms of the stock market? maybe share prices will soon go into a tailspin? if we look at some factors, there is reason to worry.
1. the price of gold remains low, with the dollar at an incredibly high level, considering the amount of money owed to foreigners.
2. the dollar has risen as $710 billion of foreign money flowed into the US economy in 1999 and an estimated $860 in 2000. Will foreigners continue to believe that us stocks, bonds and the dollar will remain strong forever?
3. euro politicians got a swift kick in the butt last week with the danish euro - no! vote, and may start doing something about their funnymoney. Japanese business confidence is at 3 year high. So all this foreign money could start to flow back home. This spells problems for the buck.
4. share and bond prices have benefitted and remain high. However, after 18 months of stock price churning, investor may be getting nervous about the continuation of the bull market
5. gloom is actually gradually spreading in the new tech world -- with Apple Computer being the latest in a long string of victims.
6. the Fed has to keep interest rates low before the election, even if the latest data points to a growth pick-up, of all things.
7. opec is the big nasty and inflation is simply rising, data-jigging or no such thing.
8. world hot spots: the mid-east peace process in jeopardy, raising the spectre of still higher oil prices, and balkans unstable with a madman still at the Serbian helm.
9. us presidential elections offer a choice between two eminently unispiring "insider" candidates: a stiffnecked detailsman and a howyadoin backslapper. will these politicians be able to keep investors confident the us is still the place for their money?
add this up, and "fear" may begin to vy with "greed" over investor's hearts and minds on wall street. the coming months could prove interesting.
Thanks for your clear and understandable post. As you well know a large part of all posts here is to educate and communicate to others the subtler points of the economic picture and have others begin to understand the dynamics so perhaps the outcome will be altered somewhat. Your piece went a long way toward educating and enlightening this reader. Thanks.
I don't think you need a whole lot of educating, but you seem open minded enough that new ideas or new ways of looking at things seem to be valuable. Hopefully I share that attribute.
Thanks for the kind words.
Steve, that dog not barking has been keeping me up nights. I would love to feed him an antifreeze hotdog.
Sir ted, I firmly believe that there are patriots among us waiting in the wings for the final act. With muskets charged and pans primed, their hats seated firmly upon their weathered brows, and their jaws set with the determination of ages to once again form the skirmish line and defend the Concord bridge. The same command has been given to these men of iron today-"don't fire men, until you see the whites of their eyes.," as was given on that fateful day so few years ago. And still, the call goes forth to all able bodied men to rise and take up arms, just as it did at the beginning. So it does at the end? But maybe not an end. Maybe another beginning. Maybe a picking up of what was once left off. Is it our fate to heed the call our forefathers rallied to? Will the familiar words "Don't tread on me," or "Live free or Die" once again grace our banners? Who knows? Perhaps we may escape the conflagration. But if not, if worst does come to worst the patriots are there- are here. Living in our selves, coursing through our veins, crying out "Who will stand the watch with me, Who will fight for liberty?" Will we answer their call? Will you answer their call? Will I?
"By the rude bridge that arched the flood,
Their flags to April's breeze unfurled.
Here once the embattled farmers stood
And fired the shot heard 'round the world."
(with apologies to that venerable poet whose words I have borrowed)
Trail guide is giving it away. He is giving up major info. The things that one can wonder, he is exposing. USA gold holds contests often to name the catalist for the gold market. Trail Guide asks, " Do you expose a market dynamic that is delivering in your favor?" That would be stupid if you did. that is exactly what he is doing anyhow. Apparently they have put the writing on the wall for us to see. They are ready for the game to be exposed, cause they are exposing it now. He is always talking PHYSICAL, PHYSICAL, PHYSICAL, Now I see why. Then he says that the ones that know are buying gold the "Currency" not gold the commodity. That made it click, now I see. These son of a guns are using junk fiat dollars to sell the heck out of paper gold in order to buy pysical gold for a major discount then it would be otherwise. I cant believe you can sell paper gold with paper currency, in order to buy cheap physical gold. WHAT A SCAM!! I see where this is leading...... If you are to ask why does this 26 year old kid with no education seem to know this? I have something in my heart that is worth more then any education (The FEAR OF JEHOVAH) I wont go there but to tell you I already know that, that is the biggest scam of them all(relgion), and that that will fall to. I just want to give credit where I feel it is due. Thanks to all who post there thoughts here for me to read. You can learn fast here.
Ooopps I forgot to mention that I think now that the catalist is just plain old exposure of what is going on. How will it become exposed?? It already is now, just takes time now. The thing that will set it off is a bit more time. hahaahha (cant go wrong with that anser huh?)
http://216.46.231.211/guest.htmThanks, ET! Repeating your link of last night. Don't miss the rest of the European picture we never get to see...
Isn't it wonderful to live in such "hedonic" times?
(Hmmm, I wonder if I could bill my clients hedonically -- "Yes, I did your tax return on my 500mhz HP rather than the 233 Compaq, so I'm doubling my rate.")
"Today, the ECB can use not only it's excess dollars to buy physical gold sold from other banks, they could use Euros printed outright to buy physical spot delivery. If their currency continues to fall before the dollar begins it's terminal phase, this option
is wide open to them. "
Why should they buy Gold in the open (as I understand "physical spot delivery") when they still have sell programs running?Or did I just answer my question?(in case,big smile)
"Knowledge work is all about how we use one another's time and attention. Given just a few minutes, good leaders can affect how we think, what we decide, and ultimately what we create".
As the business cycle eventually turns down, ie. production falls, I see the markets falling causing inflation as money flows out of paper and into goods and services. This will cause the mass of investors to put their money in gold making the price of gold soar. Objectivists, ie. laissez-faire, or pure/real capitalists, own most of the gold today so they will rise to power since their gold will be worth many times what it is now, overturning the subconsciously envy ridden mediocrities who control the establishment(Big Business and Big Government) and whose power will vanish with the price of it's paper. So Gold will do what junk bonds couldnt, which is overturn the establishment. Milken tried to help true capitalists (Hank Rearden-"scabs") overtake and drive out mediocrities (Orren Boyles & James Taggarts) by using the junk bond as leverage but it only worked relatively/short term and failed absolutely/long term. Gold, not junk bonds, is the only way to drive out ("clear the road"(Galt) the mediocre establishment and replace it with a gold standard overseen by normal/perfect people like John Galt and the strikers. You don't fight paper with paper like Milken tried to do. YOu fight it with gold.
As the business cycle eventually turns down, ie. production falls, I see the markets falling causing inflation as money flows out of paper and into goods and services. This will cause the mass of investors to put their money in gold making the price of gold soar. Objectivists, ie. laissez-faire, or pure/real capitalists, own most of the gold today so they will rise to power since their gold will be worth many times what it is now, overturning the subconsciously envy ridden mediocrities who control the establishment(Big Business and Big Government) and whose power will vanish with the price of it's paper. So Gold will do what junk bonds couldnt, which is overturn the establishment. Milken tried to help true capitalists (Hank Rearden-"scabs") overtake and drive out mediocrities (Orren Boyles & James Taggarts) by using the junk bond as leverage but it only worked relatively/short term and failed absolutely/long term. Gold, not junk bonds, is the only way to drive out ("clear the road"(Galt) the mediocre establishment and replace it with a gold standard overseen by normal/perfect people like John Galt and the strikers. You don't fight paper with paper like Milken tried to do. YOu fight it with gold.
As the business cycle eventually turns down, ie. production falls, I see the markets falling causing inflation as money flows out of paper and into goods and servicesie. consumption rises. This will cause the mass of investors to put their money in gold making the price of gold soar. Objectivists, ie. laissez-faire, or pure/real capitalists, own most of the gold today so they will rise to power since their gold will be worth many times what it is now, overturning the subconsciously envy ridden mediocrities who control the establishment(Big Business and Big Government) and whose power will vanish with the price of it's paper. So Gold will do what junk bonds couldnt, which is overturn the establishment. Milken tried to help true capitalists (Hank Rearden-"scabs") overtake and drive out mediocrities (Orren Boyles & James Taggarts) by using the junk bond as leverage but it only worked relatively/short term and failed absolutely/long term. Gold, not junk bonds, is the only way to drive out ("clear the road"(Galt) the mediocre establishment and replace it with a gold standard overseen by normal/perfect people like John Galt and the strikers. You don't fight paper with paper like Milken tried to do. You fight it with gold.
>>>> Instead of an election, why don't we just
give them weapons, lock them in an arena, put it on "pay-per-view" and the winner is president. Not
only do we clean up the gene pool, but the possibility of a social experiment based on natural
selection should be quite entertaining as well ;-) <<<
It's not for entry into USA Gold Hall of fame but I'm putting it in my private one.
Once in a while a single statment appears on this Forum that gives me the 'chills' because it is so perfect for encapsulating a concept in a sentence or two.
This today was one of those.
SteveH (10/3/2000; 4:12:47MT - usagold.com msg#: 38121)
Repost orginally posted at Kitco by Sharefin
Since man first planted a seed with the expectation
of it yielding a crop, there has been the state. And since the state was invented there has been two kinds of people, people who farm the earth and people who farm people.
Nice "pump and dump" day for the stock markets ! The NAZ dopped like a rock in the last two hours and looks as if the Crystal Ball is even looking more violent after today. SPARKS are shooting around inside it like the Fourth of July fireworks. HOLD on TIGHT to the Yellow.
<;-)
http://www.thespiritof76.com/bigfloat.html Mr. justamereBear, good work! You have the gift of explaining through examples (short stories).
I think I understood most of what you had to say and thought that maybe we have avoided greater price increases in goods and services because we exported dollars. Some countries value our currency above their own. IOUs given out but not yet redeemed. I thought the article in the link might pertain here.
One question please, did the pirate ever repay the goldsmith or did he get bailed out by the Resolution Trust?
Take care of your health! We are occasionally visited here by one Mr. Farfel who sometimes has problems with his blood pressure when he percieves certain economic events that are not favorable toward gold.
Rich
Hi SteveH and everybody else contributing to this forum. Perspective splitting material to say the least these past few days.
SteveH : in your post mentioned above; you say "I again ask the question, when the oil is gone, what of gold? Since the desire of gold by OIL marks gold to oil and all other currencies must vie for dollars for gold, what will be the motivator or the glue that ties currencies to gold when oil is in near depleted status? "
To me, it is always necessary to try and make an idea as simple as possible. All great truths seem to be so simple that they go unnoticed. Although my answer to your question may seem too simple an answer - here goes.
You state : OIL marks gold ("real money") to oil (their country's product sold as an export) and all other currencies (a fiat currency) must vie for dollars (a fiat currency) for GOLD. In other words, from what you are saying - all fiat currencies (the dollar included) vie for GOLD ("real money") in exchange for "final" settlement of a debt.
All fiat currencies, debt instruments, iou's etc are nothing more than a promise to make "final" payment. Originally, a fiat currency bank note reflected a corresponding asset holding in the form of gold held in a bank. You could go and redeem your paper note for it's corresponding weight in gold. i.e. you exchanged "your" assets for title to "another" asset.
Today, the rest of the world is subjected to a "legislated" US dollar reserve currency financial system. The world is in reality exchanging "real" assets (e.g. Oil) for "paper" assets (US dollars). This is obviously a ridiculous situation benefiting the US at the expense of the rest of the world. As such, in terms of exchanging "real" assets - for "real" assets between different countries of the world - the individual countries "paper" assets will have to vie for a "real" asset to settle International trade balances. This real asset will be gold.
Therefore, my simple answer to your question is that the glue that will tie currencies to gold when oil is in near depleted status will be its' use as "final" payment between countries to offset any trade imbalances.
We won't have to wait for oil to near depleted status for this to occur. Once the US dollar is no longer the reserve currency of the world - it will no longer be necessary to maintain the "illusion" that the US dollar is in fact "good" for "final" settlement. Behind the scenes - it is apparent that the US dollar and ALL fiat currencies are not "good" for "final" settlement - hence the necessity for them ALL to vie for gold before "final settlement" takes place between two parties.
From all the thought provoking topics discussed on this forum these past few days, one can but only really watch from the sidelines. Keep it coming.
There is a slightly updated version of BIGfloat right here at USAGOLD at the above URL.
Regards,
Journeyman
P.S. justamereBear, are you the poster that claims to type with one finger? If so, your stuff is too good to be so handicapped! There are now programs that let you do voice input. Check dragon software for one.
Thanks to those "reviewing" some of the Thoughts of ANOTHER. It occurred to me that some of our questions may have been answered in those early wonderings. To everybody who has not read the Thoughts of ANOTHER (myself included - Blush) - it may well be a good thing to do so now.
Since Trail Guide has started taking "bigger steps" - (along with other posters on this forum, and with events unfolding down there in the valley) it certainly seems like a good time to take a careful look at our maps.
Excellent post! Your "importing deflation" corresponds closely to a process that ORO has described here in the past. That process is one where the Euro supplants the dollar in overseas lending and also as a reserve currency.
Follows is a very quick and simplified summary of that process of what happens when outstanding loans denominated in dollars overseas get rolled over into the Euro. If I understand all this, it goes something like this:
Overseas dollar loans being paid off by new Euro borrowing creates a short term demand for dollars and an increased fractional reserve supply of Euros. This causes a short term weakness in the Euro exchange rate. The demand for dollars overseas is then increased because when the dollar loans are terminated, the dollars go to money heaven, reducing the supply. This demand for dollars is what keeps the big float balanced. Meanwhile the FED pumps money domestically to keep the dollar from deflating.
The long term effect after a lot of the dollar loans have been rolled over is: reduced demand for dollars to pay off loans, and nowhere for the current account deficit to go except to come back home. At some time FED has to switch gears and start soaking up money domestically to keep the dollar from inflating.
You stated in msg# 38126:
"While I would expect that the advent of the Euro would likely have some effect on the system, I haven't been able to detect any."
If all this is correct and I haven't misconstrued something that ORO described, the advent of the Euro could very well be the cause of your "importing deflation" scenario. Comments?
While not a strict definition as I'm sure you'll receive from others aplenty, a moral hazard is the condition that exists when an institutional program (usually governmentally sponsored) temporarily undermines the natural forces (such as market discipline) that would otherwise be dictating free choices to be made to the contrary...in a more prudent manner. Existence of a moral hazard generally encourages those who are risk-adverse to participate in risky behavior due to the perception of a "safety net" which is actually of dubious reliability over the long term.
Friend & Mentor, TG, I would humbly like to beg one answer to a question, I've been contemplating for so long.
You are postulating a 30% inflation rate of the US $ vs the world's price structure ( in US $ contractual prices, as I presume), as may be seen in the recent run up of the $ vs other currencies -including the euro - and even in euroland and elsewhere inflation seems "still" begnign?
There are some pieces not falling into place in the old equation of price/wage inflation ... despite, as it is anticipated by AG, exponential productivity growth-apparently in the US only ... as in the R(apidly) C('losing)' of A's of the 20's... or the POO in the 70's, where lessons have been abandonded, before learned!?
* For how long can you fill the gap with exponential growth of monetary aggregates, even being the currency of seignorage reserve status?
* It's a self destructing scheme/scam by corrupt administrations - and is the latest concerted "intervention" on "behalf of the euro" and the POO not designed to aid the $ and its financial markets?
- again to keep the virtual double credit bubble alive and kicking - for the rest of global eco machine to go on ticking - over?
* And finally, for how long can you keep up the pretense
of paper markets, pricing real goods (and services, after 'a' thought), which may be detrimental to your 'health' and to the wealth of the producers of such, my not care about the BS of the BLS for much longer?
* Denmark's referendum - a warning sign - or would you (FOA)rethink your position?
* So How Does A 30% Inflated $ Fit Your Scenario? ...
vs Gold - a currency not accepted by the corrupt -
and the euro another fiat currency, already corrupted
by politics?
Regards - a still s(c)eptic (e-ver-uro-), though eternal
GOLD BUG - Tom, Mix in some proven reserves, as it has payed to shut in some O&G Y not au/ag -cb2
PS: Derivative or paper pricing - ending, unwinding at expexted "soft" landing? ...
"In defending themselves with their firearms, armed citizens kill 2,000 to
3,000 criminals each year, three times the number killed by the police. A
nationwide study by Kates, the constitutional lawyer and criminologist,
found that only 2 percent of civilian shootings involved an innocent person
mistakenly identified as a criminal. The "error rate" for the police,
however, was 11 percent, over five times as high."
I 'cut and pasted' a few posts together this am; they are not necessarily in order but they follow a train of thought on the 'oil-for-gold' deals.
I am following this to a degree; can someone in the know put this together in an easy-to-follow text.
I again go back to FOA's statement (to the effect of) "...the increase in POO had nothing to do with supply and demand..." And again I go back to my statement of the EIA admission that '99 escalations in the POO was a Y2K storage buildup and not a supply/demand deficit.
There IS a middle-east/OPEC/oil situation here. IMHO, oil is putting the screws to the dollar. Is this what it is in a nutshell? Oil is putting the screws to the dollar!!
"Yes, Mister Western Man, your dollar is too high, it is not that our oil is too high... gold is always the same price Mr. Western Man... give me gold, I give you oil, you value your dollar whatever you want."
-----------------------------------------------
Important
All,
My take on the gold-oil correlation is that those who sell the oil control the gold price. Inversely those who sell gold could control the oil price but since once can't mine without oil, those who control the spiggot ultimately control the price of crude and therefore gold (in other words, paper gold temporarily controlled oil's price, until the price of gold went to production and below and that concerned some oil folks). It would seem that from 1991 and perhaps before, all was well (as could be expected) in that gold was cheap enough in dollars to keep oil flowing for SUV's. Then in 1996 something happened (Asian run for the gold -- paper and physical [per Another] and it became every person for themselves. Paper gold was sold in large quantity subduing (temporarily) the price of oil. Then once these runners were discovered and their purpose determined, the oil interests said, "enough!" That brings us to today. Oil is king. Those who control it (much like the joke of the sphincter muscle who ultimately wins over other body parts) can set their price and it would seem (per FOA) that is 1 gram of gold per bbl of oil in today's market. As more oil is consumed in the future, more gold may be necessary.
Now, the game has shifted to those who control oil have sent the message that 1gm of gold per bbl folks. Since you all have obsconded with the metal, the POO is a goin' up till we shake a bit of that loose.
Important
There must be a good explanation as to why oil has been tied to the hip with gold through mid-1996. FOA now speaks of 1gm per barrel or 32.5 barrels per ounce. Is this the relationship we seek? What and who and how is this value set? $30 per barrel is now equal to $8.30 per barrel in gold plus $21.70 US dollars or (to heck with dollars, just price it in gold) 1 gram of gold = $30 or $975 per ounce of gold, meaning gold really equals $970 currently or the 32.50 barrels of oil is the price of one ounce of gold.
If physical gold then can not fullfill the 1gm for bbl requirement (who sets this and when; how?) then the price of oil in US dollars must rise until a gram of gold can be had that will be delivered for the bbl of oil today. Oil would therefore seem to be rising as a result of a lack of gold to fullfill this requirement (by whom and when?). The less that physical gold is available the higher the dollar price of oil. Or, as long as gold was cheap in dollars, 1 gram of gold could be delivered to contain oil at whatever low price worked for all. When the run on gold began in mid-1996, the race was on. All the noise by the paper gold camp is to shake loose enough gold at low dollar values to contain the price of oil. Oil's rise is a reflection that sufficient quantities of gold are not available in dollars to contain gold. CB's who sell their gold beyond their committed levels will leave them vulnerable to the POO once the new price of a bbl of oil is established in grams per bbl. Oil at $60/bbl will be gold at $1950 per ounce. $200/bbl oil will be $6500 gold. (HBM's charts seem to reflect all of this, eh?)
What this tells us is that physical gold delivered at $275/ounce is at 1/3 its real value in oil currently.
The discounted value of gold today could be measured then by the total number of bbls of oil remaining or 925 billion bbls of oil being consumed at the rate 25 billion bbls per year over 34 years. New gold production is equal to approx. 2500 tons per year or 2.68 billion grams of gold. So in theory 25 bbl barrels of oil can be paid for by 2.68 billion grams of gold (if all were available for oil -- it is not. And what of the four to 10 year hedges?) That leaves a ratio of 9.33 bbls of oil to each gram of gold to pay for it. Or gold is scarcer than oil by 9.33 times on an annual basis (except the pool of oil decreases by 25billion bbls per year), not counting any above ground gold or oil. I will let the math wizards work these numbers and assumptions but it might be worth pursuing all gold available over 34 years to all the oil available to get the proper ratios.
However, what it leaves us is the thought that 1 gram of gold buys one barrel of oil. When oil diverges from gold, that means that oil becomes the catalyst for higher gold. Gold became scarce in 1996 and even more scarce today. The silent buyers are strong hands for a later day. Oil is going higher because gold is leaving the nest much faster than oil can be bought and paid for. They are both finite and both being consumed. The more oil is used the more it costs in gold. One is burned; the other kept for when oil is gone. In the end when 1 bbl of oil remains to sell its cost will be all the gold in the world. So, for the next 34 years (estimated remaining oil supply) every year makes the price of a oil 25 billion grams in gold more costly.
One can only wonder what would the value of gold be, once the oil is gone. What will gold buy if there is no oil?
A significant point that the two of you agree upon from reading the graphs is: oil and gold swapped places as the price direction leader. Where gold once led the way we now see oil taking the leadership. One distinct possibility is that the "Gold for Oil", deal put forth by ANOTHER, could have been the cause for the divergence. I am still looking for some sort of validation that what ANOTHER first revealed on this in fact the case. This brings me closer to accepting the "Oil for Gold" scenario as being indeed a solid fact. I am however still looking for more proof. Since we are on the outside looking in, we cannot know of the certainty of secret deals until the Gift-horse smiles.
Mid-1996 by HBM's charts shows where the run on paper gold started. Previously there was a three or so year hiatus on any downward gold prices and oil dipped and rose to match gold. Suddenly in mid-1996, gold started a dive for which there has not been a return. Then in Mid-1999, oil started rising causing an unusual (20-year) divergence whereby gold no longer was the leading oil rise indicator.
This divergence would not have been noticed as a trend until around the end of 1997. It was at that point that Another started posting to Kitco. It was at that point that the LBMA became a more transparent body. It was at that point that the gold investment market went to hell in a handbasket. And it would seem that the oil for gold deal was in serious jeapordy.
Your chart that strikes my fancy is the one that you multiply out gas by 500 and oil by 20 to match gold. It shows that gold has been a leading indicator to oil and gas in all periods from 1971 through 1998. Oddly, 1998 oil would seem to have taken on the leading indicator role (maybe) but we must wait to see if gold will follow oil and whether oil will continue to rise. If it does, the pressure on gold prices would seem to be unbearable and gold will either follow or break. The correlation is so high that it is clear oil and gold are tied at the hip.
It would be interesting to see where the dollar fits in on this chart. That too would be an interesting correlation to make. I suspect that the dollar would follow oil and the divergence would be gas, oil, dollar up, gold lagging.
This is most significant because gold's role as a leading indicator has changed most recently. I suppose one could say that if gold doesn't carry oil, then let oil carry gold. Too early to tell, but my guess is if oil rises, gold will follow. I sense that the charts don't extend into 2000, but if they did the divergence would be even greater. Oil above 40 on the X 20 chart would be a great divergence, and as it is now, at 30+, the oil line would be at 600. The pressure on gold to rise must be tremendous now.
GATA, of course, would probably love to see this chart into 2000 for it would clearly show any anomoly such as "manipulation" or divergence quite clearly.
Cumulative Real Price % Change Yearly from 1970 to 1999
----------Expressed in constant 1999 US$--------------------
---------POG--Crude Oil-Gasoline
"Yes, Mister Western Man, your dollar is too high, it is not that our oil is too high... gold is always the same price Mr. Western Man... give me gold, I give you oil, may we agree on one barrel of oil for one gram of gold,.. you value your dollar whatever you want."
Time to admit to ourselves that we can move discussion to the next level. I ask, do we all agree that HBM's charts show gold tied at the hip to oil? If yes, then even though we do not know the true mechanism of this, it is an a priori.
Next, we know that gold serves two masters: the commodity market and the Central Banks. In its role as a commodity we have the expectation of a fair market based on supply and demand. It is to this that GATA concerns itself. In its role as a money, we have the expectation that governments will, at will, leverage themselves for or against gold. It is this dichotomy or difference that we have a hard time swallowing. The Press world-wide plays on the gold the commodity is being sold story. They ignore gold, the money, is being accumulated in record mass. To admit one and deny the other is the easiest course; yet, as we have come to realize, both are realities for gold.
The dual-face of gold is played well by all players. The CB's, OIL, the bullion banks, all, play the one against the other. The one is visible in the light of day and the other is invisible in the darkness of secret deals. One is openly admitted by all players; the other is only seen by effect as the husband whose dog did not bark but it should have. But they are both real and both comprise gold's dual roles.
From happenstance, gold's role as money is increasing in frequency and intensity. Its role as a commodity is decreasing in intensity and frequency. The light is moving where now the gray-zone of night and day begins to separate the two where before only one could be readily seen.
It is oil that makes this world turn and oil that will raise the sun on gold as money. Gold the commodity has served its purpose for 29 years; its purpose has been served. Let us fool ourselves no longer that gold is but a commodity whose masters have their way and pretend we don't know why. It is time to accept gold is money because oil makes it so, because Asians prize it so, because India worships it so. As money, it can not be a true commodity because one can not be the other and this is GATA's claim. The rules of one don't apply to the other and therein lies the problem. To ask why gold has been allowed both roles is a proper question of all. We believe the answer to be to add lifeline to the dollar (until the Euro is ready) and to
satisfy OIL's desire for gold. It is an unfortunate relationship this dual role of gold -- for only one side can win at any one time. But let us not pretend we don't know gold's dual role, we do. So let's move on the discussion to where this leads us.
Mises speaks to those who think the price of gold as money is too high
At some point last week, an econ. prof. was quoted as saying gold
and the price of producing it was too high. He's not the first
to make the argument. Mises was one of them -- till he looked
closer - - -
"*From the point of view of this insight one may
call wasteful all expenditures incurred for increasing
the quantity of money*. The fact that things which
could render some other useful services are employed as
money and thus withheld from these other employments
appears as a superfluous curtailment of limited
opportunities for want-satisfaction. *It was this idea
that led Adam Smith and Ricardo to the opinion that it
was very beneficial to reduce the cost of producing
money by resorting to the use of paper printed
currency. However, things appear in a different light
to the students of monetary history. If one looks at
the catastrophic consequences of the great paper money
inflations, one must admit that the expensiveness of
gold production is the minor evil*. -Ludwig von Mises,
Human Action A Treatise on Economics, Third Revised
Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 422 -available also from
http://www.mises.org/humanaction.asp]
There are a number of reasons validating an individual's purchase of gold; either the commodity or; the sound, permanent, natural money of 5000 years of recorded history.
POG "the commodity" at current levels is a short timer. POG "the wealth asset" at current price levels is a short timer also. An individual's understanding or lack of same will manifiest itself when POG doubles or triples. It is at that juncture a decision will need making; whether to exchange metal for FRN at that point or, hold on.
Well MK, they're at it again over at GE; accusing you of being FOA and Another. That's a hoot isn't it?
I considered that Thought at one time myself many months ago. That's why I insisted upon meeting you personally.
For those who haven't met Mr. Kosares, he is good as gold. He is very shrewd and very bright but definitely NOT dishonest. As they say, "he's a good man".
Cavan Man. . .I wasn't aware of the GE posts and thanks for bringing them up. . .
With all due respect, Auratl and Pragmatic, you do a disservice to two great thinkers, and shower the undeserving with great flattery, by attempting to attribute FOA and Another's extraordinary analysis to me. It is my duty, not FOA or Another's, to say that I have not been, nor have I ever been, nor will I ever be FOA or Another, and anyone who has carefully read our respective writings would know that. It would be a form of benign intellectual piracy to let such comments go without a response. These speculations serve no good purpose when it is the ideas that need to be considered, debated and understood. What concerns me most about them is what FOA and Another must think of these speculations. I can't just sit back and let them float without a firm denial. Though we are not one and the same, we are good friends fighting the same cause -- the cause of sound money both for the individual/family and the nation state. That friendship drives this post. You see, in a certain sense, I too walk in the footsteps of giants.
Thanks for your flattering words, Auratl and Pragmatic, but you got this one wrong. I hope you see this.
auspec (10/3/2000; 16:19:58MT - usagold.com msg#: 38150)
Moral Hazard
Can anyone help me out with a clear definition of the term "moral hazard". It comes in murky to me. Thanks in advance!
Me: Moral Hazard- that which appears before you, often in the form of thoughts, which appeals to many of mankinds lesser, yet strong desires. Easily countered when you remember this phrase, "Be still and know that I am Lord, and your're not."
A new law of economics. Midas Mulligan's Law. As the Fed go's so go's the price of gold. If it raises rates it raises monetary velocity and thus inflation and thus the price of gold because money flows out of frozen/illiquid stocks and bonds and into hot/liquid cash instruments and vice versa. That's why the outlook is great for gold. The 20 year downtrend in interest rates which is responsible for velocity and thus inflation, and thus the price of gold has reversed like a tether ball in the other direction. The reverse trend will happen comparatively quickly like a volcanic eruption vs. the formation of an iceberg causing the price of gold to soar and with it establishment of a laissez-faire capitalist, free, gold standard bearing new world order to replace the current mediocre old world one. Ayn Rand's prediction in Atlas Shrugged will come true.
A new law of economics. Midas Mulligan's Law. As the Fed go's so go's the price of gold. If it raises rates it raises monetary velocity and thus inflation and thus the price of gold because money flows out of frozen/illiquid stocks and bonds and into hot/liquid cash instruments and vice versa. That's why the outlook is great for gold. The 20 year downtrend in interest rates which is responsible for velocity and thus inflation, and thus the price of gold has reversed like a tether ball in the other direction. The reverse trend will happen comparatively quickly like a volcanic eruption vs. the formation of an iceberg causing the price of gold to soar and with it establishment of a laissez-faire capitalist, free, gold standard bearing new world order to replace the current mediocre old world one. Ayn Rand's prediction in Atlas Shrugged will come true.
Fiscal statism requires monetary statism which economically inflates Wall Street creating a stock and bond market bubble while simultaneously depressing the price of gold. Politically this inflates the power of mediocrity and deflates the power of principle who must live in obscurity investing in gold, ie. in "Galt's Gulch" or "Midas Mulligan's valley" (Atlas Shrugged) waiting to rise up with the price of gold after the markets and establishment fall, and helping to speed up that day by working on enlightening capitalists enslaved to, and thus supportive of, mediocrity and the dollar, to why they, the "Atlases"("scabs") should "shrug" and become goldbugs instead. ("strikers")
references to Atlas Shrugged
Fiscal statism requires monetary statism which economically inflates Wall Street creating a stock and bond market bubble while simultaneously depressing the price of gold. Politically this inflates the power of mediocrity and deflates the power of principle who must live in obscurity investing in gold, ie. in "Galt's Gulch" or "Midas Mulligan's valley" (Atlas Shrugged) waiting to rise up with the price of gold after the markets and establishment fall, and helping to speed up that day by working on enlightening capitalists enslaved to, and thus supportive of, mediocrity and the dollar, to why they, the "Atlases"("scabs") should "shrug" and become goldbugs instead. ("strikers")
references to Atlas Shrugged
Funny you should reference AR, as I was re-reading a chapter in one of her books by none other than Alan Greenspam or Mr Magoo as they call him on SiliconInvestor.
I can see nothing in his behavior that would indicate that he isn't the world's biggest pathological hypocrite. Why bother writing/believing these sorts of statements and then spend decades publicly humiliating yourself. Mumbling and obfuscation are two huge moral red flags to anyone who has a shred of human decency left in their corpse. Why does the man refuse to publicly acknowledge(loudly) and simply the details of his offices machinations with regards to the stock market and gold? Pure lying and deceit.Nothing less.
A scumbag.
While it is a delicate matter (for Greenspan) to yell "Fire!" in a crowded theatre, it is also awkward (and unnecessary) to yell "No fire!" in that same theatre if that happens to be the case.
Assuming I had the ability to have you act as Alan Greenspan's speechwriter for his next public or media address, what words, exactly, would you put in his mouth to "publicly acknowledge(loudly)"?
To clarify, I can see in a general way that you'd like to hear him assure you that the Fed is indeed manipulating the market performance of the stock and Gold markets, but what are the exact words that he must utter in order to "come clean"? Basically, in the clearest manner possible I'm looking for an indication of the SPECIFIC allegations being aimed against the Fed.
http://pub3.ezboard.com/fdownstreamventurespetroleummarkets.showMessage?topicID=1598.topicThe Internet is quite amazing; one never knows where posts will end up. My post following-up the "Rise and Fall of Hydro-Carbon Man" entitled, "Hydro-Carbon Man and Natural Gas" appeared at the link above. This site appears to tackle issues concerning the coming petroleum crunch, so I will have to look over some of these articles. Even USAGOLD is cited in the header.
AUgustUS post#38146 and SteveH: You both bring up some interesting points and show the circular relationship of paper-Gold-Oil. It is a really screwed up game of musical chairs. We all know who loses. Whoever is left holding the paper of a bankrupt nation that has defaulted will wonder what the hell happened when he realizes that his dearly acquired paper is backed by "faith and credit" of the US. OUCH!
Peter: I watched the debates tonight. One quick poll showed Bush 49% and Gore 45% and another showed Gore well ahead. I could only think of the real losers, the American people. Yeah, George Dubya did well on the oil issue, but he completely missed the opportunity to bring on the refinery crunch issue. I think that a severe cold snap before the election and with the increased utility bills arriving around the Nov. 7th election, a lot of tree-hugging Americans could very well say "the hell with ANWAR, lets start drilling." I wasn't really impressed with either one, and Al Gore's incessant sighing made me think that this guy would be a complete disaster in dealing face to face with our adversaries. As I watched these two buffoons I could only think of one other thing: Is this the best the democrats and republicans can come up with?
Today, the FOMC meeting adjourned without an interest rate increase but with an unequivocal statement about the present inflation threat. Wall Street, which had been dancing to the soothing reassurances of Abbey Joseph Cohen all day, suddenly swooned.
What I want to know is this: We here at the Forum have thoroughly discussed the reasons behind the approaching inflation problem for 20 months now. In fact, my first message on the subject was posted in January, 1999 when oil was at $10 a barrel. Meanwhile, Abbey's forecasts (and those of nearly every other economist on Wall Street) have consistently precluded it. So how come she gets the big pay checks whilst we sit here sucking wind in the gold market?
Yeah, I read the article. I mostly agree that the producers are their own worst enemy. I believe that he is wrong about Barrick (ABX) being so smart with their hedges. They are a part of the problem. He cites both these contradictory conclusions in his article and I really don't see how he can conclude that both positions are correct. I think that very highly profitable and unhedged miners such as Harmony (HGMCY), and Goldfields (GOLD), far outperform Barrick without having to destroy their own industry or show a lack of confidence in their product. Shareholders of Barrick are the real losers though as ABX hit a new 52 week low today. The only people making a profit at ABX are the fat-cat managers who give themselves fat bonuses while giving their shareholders the one-finger salute. He claims emphatically that there is no gold conspiracy. I don't know if there is or is not a conspiracy to keep the POG down, but the circumstantial evidence suggests that there very well could be. If Mr. Sinclair has such irrefutable evidence that there is no conspiracy here, then I sure wish that he would share it with the rest of us. Either way, it does not matter as I take advantage of the low POG and acquire physical and shares of profitable miners while these bargains exist. I also play the game on Wall Street and take some of my profits to make my PM purchases. This way, the game on Wall Street helps to subsidize my PM acquisitions. When the market turns I should be well positioned. Also, Mr. Sinclair has admitted to working with the Fed in the past, so maybe, just maybe, he isn't showing all his cards and therefore is not disclosing all his motives for his position. Sometimes you just have to read "between the lines."
Strangely within spitting distance, but no cigar. You'd think Bill, or Bob, or Larry, or Al, or the other Al, or somebody could cough up a measly $18 bil from here or there to make this show a decline. Apparently, mass-propaganda is sufficient for the purposes of aligning mass-perceptions. No need to bother tidying up reality.
At this point, I think we can safely assume that the national debt will never, ever decrease, not by even one FRN.
BOSTON -- Green Party presidential candidate
Ralph Nader, shunned by the presidential debate
commission, scored a ticket to Tuesday's debate
but was turned away at the door.
"It's already been
decided that whether or
not you have a ticket
you are not welcome in
the debate," John
Bezeris, a
representative of the
sponsoring
Commission on
Presidential Debates
told Nader. The
commission's criteria
excluded all but
Democrat Al Gore and
Republican George W.
Bush.
"I didn't expect they
would be so crude and
so stupid," Nader said
afterward. "This is the
kind of creeping tyranny
that has turned away so
many voters from the
electoral process."
Nader had received the
ticket as a gift from Tod
Tavares, a 21-year-old
Northeastern University
student who said he got
it from a roommate.
Bezeris, who was
surrounded by several
police officers at the
debate site at the
University of
Massachusetts-Boston,
told Nader he could not
enter because he was
not an invited guest
View
Yesterday's Discussion.
SPR release receives mixed interest from oil companies
By Matthew Robinson
NEW YORK, Oct 3 (Reuters) - President Bill Clinton may have ordered the release of oil from the nation's strategic reserves but Washington is having mixed results in its effort to sell oil companies the crude. Oil majors such as Royal Dutch/Shell (quote from Yahoo! UK & Ireland: SHEL.L) and Texaco (NYSE:TX) through their U.S. downstream venture Equilon, BP Amoco (quote from Yahoo! UK & Ireland: BP.L)(NYSE:BP ), and Conoco (NYSE:COCa) told Reuters that they have submitted bids for some of the 30 million barrels of oil put on the block. ``We put in a bid for 1.5 million barrels on Friday,'' said Conoco spokesman Carlton Adams. But No. 1 U.S. oil company Exxon Mobil Corp. (NYSE:XOM), Coastal Corp (NYSE:CGP) , and Phillips Petroleum (NYSE:P) said they have begged off placing offers.
Meanwhile U.S No. 2 Chevron Corp (NYSE:CHV) and leading independent refiner Sunoco Inc (NYSE:SUN) which is based in the northeast heating oil consumer hub, declined to comment on whether they had submitted bids.
The U.S. Department of Energy plans to contact energy firms on Wednesday to ensure their bids are ``best and final offers'' for the oil, which Clinton decided last month to release in an effort to prevent a heating oil supply crisis this winter. The public announcement on the winning bidders is scheduled for Friday.
While the government's efforts have helped bring down crude oil prices nearly $5 to around $32 a barrel Tuesday, some refiners say they are already running near capacity and that the extra crude will not result in higher heating oil yields.
``We're currently producing more 10-15 percent distillate fuel than we were last year. Our refiners are running at maximum capacity.'' said a Exxon-Mobil spokeswoman, ``We don't need the oil.'' Other companies which don't have refining capacity in the U.S. Gulf near the underground salt caverns where the SPR is stored, said that they would not likely take part in the bidding process. Crude oil traders continue to say that they have not had trouble finding oil to feed refineries in recent months, especially for sour grades as the Organisation of Petroleum Exporting Countries (OPEC) increases output.
``Our contracts are currently satisfying our crude requirements,'' said a spokesman for Phillips.
In addition, U.S. refining capacity will be greatly diminished during October and early November as refiners shut down units for maintenance, reducing crude requirements. The Clinton administration plan to draw oil from the 571 million barrel reserve has come under fire from Republican Presidential candidate George W. Bush as an election year ploy to bring down oil prices. Since its creation during the oil crisis of the mid-1970s, the stockpile has been tapped only once for an emergency sale during the Gulf crisis. But of the 34 million barrels of crude offered then, only 17 million were taken, DOE officials have said.
Black Blade: As I had predicted. The oil companies don't want the SPR oil. It's a refinery capacity problem first, and a supply of Cheap Oil second. In other words "Oil? Oil? We don't need no steekin oil." Maybe Al Gore's buddies at Occidental Petroleum can bail Al outta this mess, otherwise Al will look pretty stupid.
I know the question wasn't aimed at me, but I think there's an angle to consider here. And first, let me say that my understanding of derivatives is, at best, shakey. So if I've got it right...please, someone with knowledge clarify. And if I'm wrong....please, someone straighten me out!
Sinclair thinks ABX's hedge position is brilliant because it's balanced with calls....BUT that position presupposes that those calls will produce what's called for when it's needed. If the gold market is indeed as oversold as many claim, then when the price explodes due to that outside event he mentioned, who is going to fill those calls? They'll be lucky to get a currency settlement that will be a drop in the bucket compared to the margin calls they'll suffer. He said as much himself when he states, "The real market risk is that there is no market when a fast trading situation occurs."
On the whole, Sullivan is against the producers hedging programs. But, he just seems to think that they're all making the same stupid mistake because they're playing follow the leader with other gold producers. He holds the Central Banks nearly blameless for the state of the gold derivatives market when he states, "The Central Banks with little exception, one Middle East central bank heavily involved in granting derivatives arrangements and the ill conceived British sales mechanism, have performed most professionally. The central bank long history in gold selling has resulted in their activities being handled with care for the market." But it wasn't been the gold producers recently convincing Jordan, Uruguay, and various other countries and large gold holders to place their tonnage with banks who will immediately feed it to the hungry derivatives market. If the Central Banks are on the moral high ground, why are they feeding this beast?
Before I get myself in this too deep, I'll just state that I think Jim Sinclair's post at GATA actually supports FOA and Another's view of the market. The famous "Mr. Gold" sees the problem with gold, but I think he sees only the gold market. He hasn't the height or breadth of vision into the oil, currency and political venues that we get from the views of FOA and Another.
Just my very humble opinion.
Correction and criticism are helpful and welcome.
simply me
Is it crazy to wonder if the "one Middle East central bank heavily involved in granting derivatives arrangements" that Jim Sinclair mentions is hoping to claim a couple of gold mines for it's own in the coming debacle?
A word of warning: I'm going to climb all over a number of your comments with no real agenda other than giving you an indication of areas that I believe could be firmed up in your treatment. (Please catch me if you see me fall.) Despite its contradictory appearance, this is in no way meant to put you on the defensive against a continuing outpouring of your delightful commentary. It's great to see all the new faces here, and I hope we can all hash out a great many things together as time goes on.
YOU: "M1; is essentially cash and cash equivalents. This is where, if the government "prints money", it shows up."
"M3, or 3A, or whatever one you choose, is essentially M1 multiplied by a "fractional banking factor"
ME: It is a common misnomer that the government can simply "print money" out of thin air which would add to our pool of M1 money supply as you've defined it. Here, the distinction may seem subtle, but it's an important one that we mustn't let people fail to recognize.
As we saw prior to Y2K, the government can indeed print the symbolic monetary units (Federal Reserve Notes/Dollars), BUT, and this is a big but, it CANNOT simply print the thing we commonly call the money supply. To be absolutely clear, I'll repeat. Symbolic monetary units (notes) can be simply printed for use as needed, but our modern monetary supply can only be created through BORROWING (not printing).
Much of our M1 exists in digital form as demand/transaction/checking account deposits, and its only connection with the physical stuff that the Bureau of Engraving and Printing makes is that banks must hold 10% of these demand deposits in the form of vault cash. Vault cash is not counted in M1 or any of the other M's--that would be double counting.
Thr fractional lending you speak of, when taking the banking system as a whole, will artificially expand the monetary base, but not as a multiplier of M1 becoming M3 as you've described. It would not be difficult to cite an example in which the expansion could be seen to manifest itself entirely within the M1, in which case the multiplier would be ten--similar to the reasons given in your example. In practice, the multiplier may be much more because all currency that is shifted from cash or checking accounts into M2 savings accounts would have no vault cash requirements. It would be easy to cite an example in which M1 components were minimized in favor of interest-bearing savings accounts in M2, which could facilitate the manifestation of remarkable swelling of the apparent money supply--provided the requisite borrowing were to occur.
M3 commonly distinguishes itself from M2 and grows as pools of this currency is swapped for large ($100,000+) time deposits, or through the creation of RP (repo) liabilites, for example.
And just to cover the bases, one question is begged from the above dialogue: Can the government BORROW from thin air, and thus add to the money supply? Yes, through the miracles of banking they sure can. And they can do it with no more collateral than a simple Treasury Note--itself being an obligation to repay the borrowed funds (plus "interest") upon maturity. To be sure, these Treasury bonds CAN be printed essentially "out of thin air" as the government finds it expedient to do so.
YOU: "INflation is essentially too many dollars chasing too few goods and services."
ME: Under this difficult definition, who's the rocket scientist that is tasked with making the official determination of the number corresponding with "too many" dollars, or deciding which level of goods are "too few"? Is it really that much more difficult to plainly speak in unambiguous terms of money supply that is either experiencing growth or contraction, or of price levels that are rising or falling--whichever scenario happens to be the focus of a particular person's commentary?
YOU: "DEflation is essentially a massive asset destruction. For example, if the stock market crashes from 10,000 to 5,000, a great deal of wealth is destroyed."
ME: In keeping with the theme of clear terms, what do you mean by "wealth"? If wealth is truly destroyed during a stock market crash, could you please indicate where I could look to see the wealth manifested during the period where the stock market is not crashing? Would it not be more proper to say that "confidence" and/or "expectations of purchasing power" are being destroyed?
I only belabor that point for one reason. As the forum has developed and tackled ever more complex issues, clear communication has become vital to efficiently carry forward. Thus far, we have managed to foster a pretty consistent usage/distinction for the terms "currency" (e.g. dollars, pesos, etc), "money" (tangible and tradeable items of wealth), and "wealth" (food, clothing, shelter, energy). Obviously, in this regard, by earlier comments on M1 or M2 should have specified "currency" instead of "money" supply, but for the sake of the standard convention and little chance for misinterpretation I used the term "money."
YOU: "The essence of my question to you was; For some years the US has been exporting inflation. In May of last year, after looking at the money supply numbers, I began to wonder if the US was no longer exporting inflation and had begun importing deflation. What say you?"
ME: Without question, the feedback mechanism of the international standard that treats dollars as suitable reserve assets has provided the U.S. with deficits without tears. Currency that has been borrowed domestically into existence can be spent overseas where it drops off the radar screen of the monetary aggregate measuring devices---M1, M2, or M3. Poof! Gone. M3 does not measure accounts held in foreign banks. In an effort to earn interest on these foreign-held dollars, the international party (central bank) will wire the currency back to a New York bank in exchange for the purchase of U.S. Government Treasuries--thus providing a source of willing funds to accommodate our Government's appetite to borrow beyond taxation for it's bloated plate of federal programs.
YOU: "To my mind, M3 is showing us some pretty massive deflationary forces at work. Either the US is importing deflation, or somebody, and they have to be huge somebodies because the absolute numbers are staggering, are are moving loans out of the US system, which would have the effect of reducing M3."
ME: Again, I'm not sure how "deflation" can be imported, unless you simply mean that the "blessings" of our dollar's current external exchange performance is giving us very cheaply priced imports. M3 could be falling as U.S. funds are sent/taken abroad and not being fed back through the typical purchase of additional bonds. They are either being maintained as currency deposits in foreign banks, are circulating among international parties, and/or are being used to retire international dollar-denominated debt.
As I indicated in my previous post to you, I see the latter option as the principle factor. It also explains to a large extent the dollar's stellar performance vis-a-vis other currencies on the forex counter. I'm certain ORO can give you the numbers necessary to back this up to your satisfaction, and also show that the very limited measuring stick called M3 is not where the whole story is being told.
It's been a pleasure. We'll do this again I'm sure--especially if you must convince me that my comments have landed me hip deep in muck.
I think Mr Gold doesn't say a lot more than he says, Yes? - or more precisely, he speaks of Gold "the commodity" with NO reference to Gold "The World Class Financial Asset".
Be that as it may, when a Gentleman of his standing speaks, it bodes us well to listen.
http://www.afr.com.au/update/20001004/A32037-2000Oct4.htmlFrom the above Link:-
......the standard, developed over six months in consultation with equity investors, analysts, bullion banks, gold producers and regulators - was designed to improve the format and level of disclosure of precious metal and foreign currencies hedging.
The Strong Dollar Policy explained for the first time that I understood it.
10/02 Ed Bugos - Return of the Risk Premium
Return of the Risk Premium
The Equity Risk Premium represents the additional return demanded by an investor to own equity over and above what is considered to be a risk free interest rate. It is used in valuation models as a discount rate to determine the current (present) value of a future stream of earnings.
Wall Street Rediscovers Gravity
Although the ERP is a scientific concept, there are many subjective assumptions that go into its calculation1. Consequently, the debate has centered on whether to use a historical perspective in order to minimize human error in these assumptions or whether to try and achieve the impossible - a forward-looking model. Mr. Greenspan himself discussed the issue in a speech at Jackson Hole Wyoming last year, in which he questioned bullish conclusions that the theoretical ERP has been permanently lowered as a result of a number of factors relating to our technological revolution.
The issue is important because much of the bullish argument underpinning this pricey market (a low ERP), for many years has revolved around the bullish conclusion that various technological advances have contributed to the systematic elimination of the traditional risk associated with equity ownership� believe it or not. So it is perhaps timely to reconsider these assumptions in light of the severity with which Newton's Apples have recently been falling from their tree� If memory serves correct, wasn't Isaac Newton also a renowned speculator? For conceivably, he too was re-thinking his views on the ERP when he discovered gravity?
Looking forward is easy while everyone is mostly right (a typical bull market condition), but it is hard to resist that rearview mirror, I suppose, if all of this is changing and the party was just too much more fun back there. Yet, the brutally painful adjustments in some of the "blue chip" stocks recently has got to attract the attention of even the most bullish of observers. And it is not that new a development. In October 1999, when IBM shares fell by less than 20% in one morning, on an earnings warning I believe, commentators were convinced that it hasn't been in their lifetime, the last time that they have seen blue chip stocks behave like this.
That was 12 months ago and these adjustments have been arising with mounting frequency and degree since then. Of course, one might argue that the market has just begun to adjust the risk premium to account for an oil shock perhaps even starting as early as with IBM, which never did make it to new highs. Well if that is so, the invisible hand (of the free market price mechanism) is not quite finished yet. Indeed, we may soon find that it has a severe case of arthritis for there is nearly an entire market of stocks, which systematically must adjust their equity risk premiums, permanently higher. The reason, it seems, is that earnings aren't all that predictable as was once thought. Apparently, prices of essentials such as oil and gas, as well as those darned confusing floating exchange rates, are volatile.
Who would have thought? The government has worked hard to exclude these volatile influences from most economic data releases, only to have them unexpectedly show up in the bottom line of real businesses. And it gets funnier. Apparently, it has come to our attention that the US has not had any kind of coherent energy policy for over 20 years now... what have they been doing?
I suspect that most of us have been preoccupied with the casino action at Wall Street's virtual slot machines. Duh! So let's get back to reality shall we? And for heaven's sake, please do not take analyst's sudden focus on real fundamentals such as earnings too seriously. If they didn't really matter on the way up, why should they matter on the way down? Especially when we are still sitting in nosebleed territory and even bullishly biased consensus forecasts are for slower profit growth? As we said last week, the trouble is that these stocks, until now at least, have been priced for absolute earnings predictability not for disappointment, last week's GIC.
Therefore, current assumptions about any such eternally lower Equity Risk Premiums ought to be reconsidered� quickly, for it appears that the "invisible hand" is anxious to readjust the ERP all on its own, with or without your help.
Men who make potions in a traveling show2
Commentators on Friday were quick to dismiss the Bad Apple news as company specific. The aim of such a comment is obviously to quell concern over the rest of the stock market (or at least his or her other stock picks) since it conveniently misses the whole point. As I have pointed out, many bullish analysts have been defending these valuations for the better part of the past five years on the basis of their confidence in a few temporary macro assumptions.
Rising productivity, low inflation, and a structural reduction in the equity risk premium, all apparently owing mainly to the US information technology age, have been the basis of the goldilocks economic theme that has been at the driver's seat of this bull market for most of the past decade. Through the better flow of information and a closing gap between the knowledge of both buyers and sellers, the amplitude of the business cycle should not only moderate but the entire spectrum of commerce (including valuation methodologies) was supposed to become increasingly predictable and efficient. Notwithstanding that the quality of information flow has perhaps been overcome by the quantity of information overload, markets are still subjugated to emotions such as greed and fear. I doubt this will change in your or my lifetime.
Another fact that is unlikely to change is that few of these rearview mirror analysts, in particular, may ever understand the influence of any of their assumptions on these topics, I am sorry to say. I won't even bother with productivity because we beat that topic up enough in "A Nation of Storytellers". Moreover, both the OECD and the Deutsche Bank have recently questioned the validity of the US productivity calculation, publicly. I will only say here that the truth on productivity ultimately will not be known until the next downturn ends. Only when we can compare the current cycle peaks and troughs to future ones will we have washed out all of the multi factor variables, which cloud the data at the moment. Only then will the conclusions, including my own, be somewhat scientific. Until then it is every man for him self, I presume.
As for any kind of spin on equity risk premiums, have a look the following charts:
Apple Computer, Inc.
Intel Corporation
Obviously, there were no warnings provided by this supposed efficiency in either of these cases (except perhaps the obvious cheating in Intel's case, but that has nothing to do with technology - see the chart). It is way past the time to question Wall Street's valuation models.
With so much spin, what then is the explanation for this long bull market and historic economic expansion? That is easy - historic consumption excess, an inflationary monetary policy, and a voraciously greedy appetite for an increasingly speculative lending business in the US banking system. So voracious in fact, that it may have put the entire dollar based monetary system in jeopardy. What isn't easy� is for people to accept this truth while the external exchange rate of the dollar continues to rise.
M3 Money Stock NSA; Billions of Dollars
Consumer Credit Outstanding; Millions of Dollars
Please note the approximate date in the above charts where the expansions in money and credit accelerated, and compare this to the chart of the S&P 500 below, over the same time period:
10 Year S&P 500 Index
What does that tell you? The big downward trending red line is the advance/decline line, which proves that for almost the past two years more stocks have been declining than advancing.
This one is gonna hurt...
That was my thought after Apple Computer's news was released on Thursday evening, because that morning the bulls came into the market with some confidence as the week was shaping up without any bad news. They were all over the drug stocks and a few other oversold blue chips, pushing the Dow up some 200 points, and even got some momentum going while charging at the 10,900 barrier. The buying was broad and it was good... good enough to raise my temperature slightly, but then after the market closed Apple delivered its blow to the vulnerable tech sector... the bear has arrived.
After all, does not that kind of thing happen in a bear market? It sure feels like it to me... as if the bear has suddenly become more difficult to slay. By Friday morning, it seemed that currency players had already discounted the Danish no vote for the Euro and with nothing much else surprising equity markets, traders were surprisingly able to keep their cool. It wasn't until the last two hours of Friday's session that it all started to unravel again, when fresh selling pressure appeared and started slamming almost everything in sight.
Technically, the narrow Nasdaq 100's 50day moving average crossed down and over the 200day MA last week for the first time in nearly two years, having lagged the broader composite index in this endeavor by about five weeks. The relentlessly declining breadth and liquidity in speculative issues is beginning to drag down the more liquid blue chips, as is typical at the early stages of a credit contraction. Since many, many more stocks have been declining than rising over the past 12 months, this bearish resolution in the narrow leadership may be seen as an ominous sign, since most blue chip indexes are still near their all time highs. We have been telling people for the better part of the past 18 months that this market has been technically deteriorating from the inside out. Proof? If you have made money over this period of time, and I do not mean by that one profitable trade, you are the exception because most investors (excluding promoters, bankers, and brokers) have not:
Gross Private US Savings; Billions $$
Annual Personal Saving in Billions $$
Notice the decline in the nation's savings pool (chart on the left) throughout 1999. Wasn't that the year that the Nasdaq 100 was up some 80%? It was also the year in which the advance decline line collapsed the broad bull market (see the 10 year chart of the S&P500 above). From there on in, fewer and fewer investors were to make any money.
By the end of the week, bullish analysts were pointing to the productivity implications of the GDP report, while the increasingly confident bears were not budging from their conviction that those numbers are less meaningful (if at all) than data on savings rates as well as a number of other colossal macro imbalances building against this great economic expansion, which are, to be polite, less lagging than they are leading indications of what is likely to come. All in all, the week ended pretty much as expected except for the fact that gold prices gave back their early week rally.
The reason that is odd is that I was looking through my usual list of US industry charts and I noticed that the indexes that ended the week as if there were more selling to be done, were most everything except for most of the commodity (or hard asset) related equity indexes, although the financials and the health care related indexes also put on a little bit of a show. The only other exceptions being the few more extremely oversold numbers. I am placing the utilities index in the hard/commodity asset class because as I said in Wall Street Kisses Goldilocks Goodbye, without an energy crisis there is no play on utilities. Recall,
The Potentially Perfect Negative Correlation
The Dow Transports
The Dow Utilities
Since we have made this observation, a number of things have developed. The US government has declared (for the record) that we have got an energy crisis on our hands, the Dollar/Euro exchange rate destabilized and then stabilized, it has been raining apples and chips on Wall Street, and it seems that the US government has been tossing around all sorts of incentives that might benefit both consumers and these power (utility) companies.
There were plenty of other indexes in this hard asset category that showed some life last week, from the REIT index to the Chemicals index to the Oil/Gas related indexes, and even Paper stocks began to show some life by Friday. As if to confirm our case, the top three performers (out of the only ten that closed up) in the Dow on Friday were Alcoa, Du Pont, and Merck. AT&T came in fourth and McDonalds came in fifth. Still, all four other than Merck have been badly beaten up lately.
All in all, the action has been encouraging to our hypothesis, but the one anomaly that remains is the dollar/gold rate. Even agricultural prices have been making higher lows and higher highs over the past 12 months.
How the world works today
"Leading U.S. drug companies and their trade organizations have spent at least $46 million on political advertising and donations to influence this year's election, according to figures compiled by organizations that track campaign fund-raising..." Bloomberg news, Friday Sept 29.
Here is the rest of it,
"George W. Bush proposed that the National Institutes of Health budget be doubled over five years... to about $67 Billion over ten years... In addition to doubling the NIH budget, Bush said he would push to double by 2003 the budget for the National Cancer Institute, increasing spending for that agency to $5.1 billion... Gore has also made health care a major focus of his race. His campaign said the vice president already has proposed doubling medical research funds; his plan would take effect over a three- year time frame and would boost funding to $29.2 billion in 2003 from $14.6 billion now... Bush said that if he is elected, he would ask Congress to make permanent the Research and Development Tax Credit, at a cost of $24 billion over five years... Gore has proposed a $250 billion, 10-year plan to help all 40 million Medicare recipients pay for prescription drugs, and he has also proposed setting aside $300 billion of the projected $4.6 trillion federal budget surplus over the coming decade as an emergency fund for Medicare... Bush, by contrast, has proposed a prescription drug coverage plan that would cost just $160 billion over the same time period."
These excerpts were taken from Bloomberg news on Sept 23, a week earlier.
Now, I haven't added all of that up, but I have a feeling that it works out to a lot more than the $46 million it cost the drug companies to persuade this platform. Furthermore, I am also certain that anyone with Merck stock options did not spend any of their own money on these unrelated events. So there is where the source of activity in Pharmaceuticals really is, because at 22+ times earnings, already representing a low risk premium in a volatile industry always vulnerable to potential liabilities, there is no other reason to own these things. That is because current multiples have roughly already priced up to 20% growth rates for the entire drug sector.
Amex Biotechnology Index
Dollar Recycling and Inflation
Since inflation is beginning to show up in the dollar, then perhaps it is worth our while to consider what inflation really means, especially since a consensus is developing quickly that the dollar is overvalued. I think that there are fewer people who understand what inflation really is, than you might think at first glance. Mostly, we are taught that it means rising prices. If we get to an intermediate level of economic understanding, we know that inflation is too much money chasing to few goods. But even this might imply that inflation is somehow a function of demand. I beat this topic up in grave detail in Inflation versus Deflation. I will try to sum up my conviction on the topic.
It is simply the loss of purchasing power in a currency. According to Austrian economic thought, this can only happen when you expand the money supply, period. In other words, inflation is just too much money. Once this condition begins, history has shown that it will eventually end the day in currency ruin, and it will result in a permanent loss of purchasing power. Although the prognosis might have been different at each point in history the ultimate diagnosis is as correct today as it was at any other point, with retrospect of course.
Indeed it has little to do with demand. Generally, two factors, the changing relationships between supply and demand, and changes in the general purchasing power of the currency determine prices.
The latter may be viewed as either inflation or deflation. The former, however, is not inflation if the demand for something suddenly outgrows supply and prices rise. In this case, the price mechanism is working properly as it signals producers to produce more products. When I talk of inflation, I talk of the latter factor, the one that causes distortions in the ability of the price mechanism to function properly. Although we have not seen the inflation in the way that we presently understand it to exist, we may observe its existence in the highly visible degree of malinvestment and general credit excess.
As with prices, there are also many variables that influence purchasing power. For instance, historically it has happened with currencies whose marginal utility is too low - most non-luxurious goods fall into this category, which is why Gold is a favorite for currency theorists. In today's global economy where currencies float against one another, purchasing power may rise or fall against the goods priced in another fiat currency. Hence, trade deficits and oil crises. Let me try to explain the concept of purchasing power through the eyes of Ludwig von Mises, the preeminent Austrian economic scholar.
Specifically, Mises showed that, just as the price of any other good was determined by its quantity available and the intensity of consumer demands for that good (based on its marginal utility to the consumers), so the "price" or purchasing power of the money-unit is determined on the market in the very same way.
In the case of money, its demand is a demand for holding in one's cash balance (in one's wallet or in the bank so as to spend it sooner or later on useful goods and services). The marginal utility of the money unit (the dollar, franc, or gold-ounce) determines the intensity of the demand for cash balances; and the interaction between the quantity of money available and the demand for it determines the "price" of the dollar (i.e., how much of other goods the dollar can buy in exchange). Mises agreed with the classical "quantity theory" that an increase in the supply of dollars or gold ounces will lead to a fall in its value or "price" (i.e., a rise in the prices of other goods and services); but he enormously refined this crude approach and integrated it with general economic analysis.
For one thing, he showed that this movement is scarcely proportional; an increase in the supply of money will tend to lower its value, but how much it does, or even if it does at all, depends on what happens to the marginal utility of money and hence the demand of the public to keep its money in cash balances. Furthermore, Mises showed that the "quantity of money" does not increase in a lump sum: the increase is injected at one point in the economic system and prices will only rise as the new money spreads in ripples throughout the economy. If the government prints new money and spends it, say, on paper clips, what happens is not a simple increase in the "price level," as non-Austrian economists would say; what happens is that first the incomes of paperclip producers and prices of paper clips increase, and then the prices of the suppliers of the paper clip industry, and so on. So that an increase in the supply of money changes relative prices at least temporarily, and may result in a permanent change in relative incomes as well.
Mises was also able to show that an early and long forgotten insight of Ricardo and his immediate followers was eminently correct: that, apart from the industrial or consumption uses of gold, an increase in the supply of money confers no social benefit whatsoever. For in contrast to such factors of production as land, labor and capital, the increase of which will bring about greater production and a higher standard of living, an increase in the supply of money can only dilute its purchasing power; it will not increase production.
If everyone's supply of money in his wallet or bank account were magically tripled overnight, society would not improve. But Mises showed that the great attraction of "inflation" (an increase in the quantity of money) is precisely that not everyone gets the new money at once and in the same degree; instead the government and its favored recipients of purchases or subsidies are the first to receive the new money. Their income increases before many prices have gone up; while those unfortunate members of society who receive the new money at the end of the chain (or, as pensioners, receive none of the new money at all) lose because the price of the things they buy go up before they can enjoy an increased income. In short, the attraction of inflation is that the government and other groups in the economy can silently but effectively benefit at the expense of groups of the population lacking political power.
Inflation-an expansion of the money supply-Mises showed, is a process of taxation and redistribution of wealth. In a developing free-market economy unhampered by government-induced increases in the money supply, prices will generally fall as the supply of goods and services expands. And falling prices and costs were indeed the welcome hallmark of industrial expansion during most of the nineteenth century.
-- From the Essential von Mises by Murray N. Rothbard, Libertarian Press, 1980.
Understanding it in this way the diagnosis becomes easy. But it is�
The prognosis, which is difficult
By "persuading" foreign interests to buy new dollars, particularly in enormous quantity since 1995, the US financial sector has been successful at bullying its way to the top of the global financial system by creating all sorts of innovative uses for the rapidly printed dollar, as well as the fueling the delusion that rising fiat exchange rates indicate a true rise in purchasing power. Though this may be more accurately referred to as "Dollar Recycling."
And since inflation is most likely to occur where there is already some price pressure, it is understandable as to why it has shown up in US asset markets as the baby boomer promotion geared up earlier this decade, and why it has suddenly shown up in oil prices.
Putting aside the issue of why most commodities are priced in dollars in the first place, it is important to understand that were it not for the relative size and liquidity of US capital markets (growing in sync with money supply), the condition of so many excess dollars would manifest in many other kinds of more detectable
Awake at the same time on opposite sides of the world and having a conversation...ain't electricity wonderful!
Hi Topaz,
You said, ".....when a Gentleman of his standing speaks, it bodes us well to listen."
So true! My post was not meant to be disrespectful...just questioning and testing his words.
You said Sinclair spoke of Gold..."the commodity" with NO reference to Gold "The World Class Financial Asset".
Hit the nail on the head, again! You said in one sentence what I was chewing over in my post. But I wonder WHY he was speaking of gold only as a commodity when I would think anyone with the title of "Mr. Gold" would know better!
It's almost dawn here...G'day, Topaz. It's time for me to catch a few zzzzzzzzzz's.
simply me
G'day Simply,
Sure is wonderful mate, don't let all this gold gibberish keep you up all night tho .
Just for fun let's call Mr Gold "Mr Cormorant"
Now all the residents of birds-ville are well aware of Mr Cormorants fishing prowess and when he speaks of fishing they all listen, cripes, he's been fishing many years and knows all there is to know about fishing, fish, seaweed, waves etc. The birds an expert!
The limiting factor is (you guessed it) Mr Cormorant's knowledge is limited to the Ocean surface and (say) 15ft below. what happens in the murky depths is as alien to him as it is to any of his band of admirers. Occasionally he may catch a glimpse of activity far below his diving ability but he chooses to ignore it - after all, who's going to dispute him?
What say you?
I would be lying when I said I had never any doubts about the genuineness of this two posters (but I ruled out they are you).Yet,I have read it all carefully,and now ,looking back,I would describe my inital skepsis as the denial phase.I had a short anger stage,but am now in the acceptance phase.I suspect many are still in denial of the ever more possible scenario offered by these two posters.
It is not so a matter of who they are,the important thing:can I see any reasoning in their arguments?I do!
In fact,one must be blind if one cannot see it now.I just don't wanna be right in all my forecasts (Dow down,Gold up ect.) and yet losing as much money as John Q lately does.
The forum gives me something challenging to think about while I do the same ol' boring work at the computer. And like most folks who work at computers, night is my optimum time for concentration and creativity.
I see your point about Mr Cormorant. He may have heard whale-song, but he doesn't know the tune and therefore doesn't sing along. But I think he gives a false report if he doesn't at least say...there are these things called whales. How could he be in the water and not know!
You hit the nail on the head. Any gold "expert" that doesn't discuss or embrace gold's dual role of finanacial asset and commodity is not telling us the true story or the the word expert is not apropos. It is almost as though there is some secret handshake here. We have read again and again that there is no conspiracy. No, folks, I suppose there is not a conspiracy: the whole Central Banking system is using gold as a reserve currency of unofficial standing and buy and sell gold to that end using gold as a commodity to control the price. Is that a conspiracy? Hell no. It is calling a duck a chicken. Got glasses?
One of the points I have been arguing is that there possibly is a "peg" of sorts in the dollar-gold market where long term contracts set a gold price and an interest rate to maturity. The paper gold price behaves according to the dollar market interest rate, rising with the interest rate. The "supporter" of the "peg", however, is not necessarily one country (US), but often the one with the lowest nominal interest rate among the G-7, the one who is exporting big time and accumulating dollars as a result.
This paper touches on the dynamics and modeling of the process of breaking a "peg".
Another set of interesting articles from quantitative international macroeconomics from the team Obstfeld and Rogoff, can be found at Obstfeld's site.
http://emlab.berkeley.edu/users/obstfeld/
Particularly interesting is:
"The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?" with Kenneth Rogoff [PDF]
The model they offer is quite sensible, remarkably simple, and answers some odd questions on the relationship between the current accounts balance, prices, exchange rates, and real interest rates. All is derrived from the inclusion of an estimated "trade cost". The paper is rather techinical and mathematical and may not be to everyone's taste.
The following article, however, maintains focus on practical implications rather than the derivation of the models.
"Perspectives on OECD Economic Integration: Implications for US Current Account Adjustment" with Kenneth Rogoff [PDF]
The following are more technical too.
"New Directions for Stochastic Open Economy Models" with Kenneth Rogoff [PDF]
"Risk and Exchange Rates" with Kenneth Rogoff [Postscript] or [PDF]
Anything below his sphere of influence is irrelevant "there is no whale" (conspiracy) - no Bird can disprove him - Yes? He can't eat a whale so he goes into denial and lives out his days oblivious to all manner of lifeforms not 10 ft away in the depths. Methinks there goes Mr Gold.
On the other hand such a well connected spokesperson, as you concluded, could be a put-up for the Naysayers.
http://www.murenbeeld.com/pdfFiles/CapitalFlows.pdf Try as I might, I can't put my hands on the bookmark I want, however this one has some interesting food for thought. Undoubtedly, as soon as I get off here it will come to light.
R Powell: You certainly got to a point that scares me half to death. What happens when all those IOU's are presented for payment? What happens if they are presented somewhat all togeather? I definitely think the existence of them will be, at minimum, a factor in, and possibly one of the causes of, any financial meltdown.
I read the BIG FLOAT thing, and agree with the general intent, but, as extreme as the view is, there are areas that I don't think goes far enough. One of the things that does not seem to be receiving much attention anywhere is the Euro dollar. And here I go with another oversimplified story.
What is a Euro dollar? The Eurodollar got a big push during the Vietnamese war. The US spent something over 3 Trillion dollars on the Vietnam war, and to be sure, a good deal of that spending was done within the US, so we will just consider the paychecks of the soldiers who were present in Vietnam. And we will use Charlie the drug dealer as our example.
Charlie did quite well, thank you very much. First thing you know, he had these huge piles of cash. US dollar cash. Conditions in a war zone are a bit unstable and unpredictable, so he decides it is best to get it out. A numbered account in Switzerland beckons. So he loads up his Sampan and paddles round to Switzerland.
Of course the Swiss banker has to make some money off this deposit by loaning it out, so he does. Mostly back into the US but also in some trade and investment oriented deals. So what basically is a Euro dollar? It is a dollar (loan) that origionates in Europe, (not the US).
It does not take our devious Swiss banker long to realize that there is going to be nobody coming up to the counter for golds for groceries, and that the up front only needs to be very small. He also realizes that since he is in Switzerland, US rules don't apply. Then it comes to him that, because these are US dollars, the Swiss laws do not apply either. Whoopee!! He can use whatever multiplier he chooses, 10, 100, 1,000, 10,000. And does he ever.
The Eurodollar market is ESTIMATED to be in the TRILLIONS, but nobody has a good handle on it. Trillions starts to get into a goodly percentage of the US GDP. Trillions sloshing around without any control or accounting of any kind. And mostly in the hands of that hairtrigger group referred to in Big Float, the interbank traders, who are trained to react, and move around massive amounts of money at the speed of light, or at least in split seconds.
The interbank traders are the ultimate momentum "investors", assuming that if something is moving, that they may not have information, and having had bitter experience that the momentum is going to continue for a while, and if they hold their position, even with good reason, they are going to lose their shirts, or at a minimum will have, in their terms, a long wait to break even.
What happens if this situation starts to unwind?
Re the Pirate etc. One forum I have seen has a shorthand- LOL meaning Laugh Out Loud, and I did.
Actually, I cribbed the examples from a homework that I did one or two years ago, which dealt with a number of issues I felt were facing mankind today. Included were food, population, disease, hydrocarbon products, etc. It continues the tale of the pirate.
I'm sure the secretary has them on file, and if there is an interest, AND if I can figure out how to cut and paste, I could probably post them near the end of the week. Interested?
I made them up as a series of letters to my mom (who is deceased).(one for each week of the assignment) Her formal education was not as great as mine, but she had several degrees from the school of hard knocks, and was a pretty squinty eyed old biddy.
JOURNEYMAN 38147
Yes I am the one fingered typist. I worked on the origional post about 9 hours, and lost it in the ether. The one you see cost an additional 8 hours. However I am not sure I want to make posting any easier, because I can see this place would be damned addictive for me.
ROSS L 38149
It has been some while since I "studied" economics, just followed my own train of thought. What you posit seems to me to at least, be a factor worth considering. If I saw ORO's posts, they did not register, but then that is why I am here, to get clubbed over the head about my usual stupidities.
This following of money flows is a pretty complex issue, and I can see at least 3 things that make any statement made, at best, a guess, and sometimes downright misleading.
1) The Eurodollar (above)
2) Investment flows
3) The variety and various intents of the central banks, including, or perhaps especially the US, and their postion on the the how and why of inclusion of the Euro in their reserves.
4) The accuracy of the data that is available. Most of what one sees are at best, an estimate. (and often based on some pretty shakey theory) For example, do they or do they not include drug money flows. If you look at some of the published reports on drug busts, I suspect that some of these estimates of the value of the drug seized are more about headlines than about reality.
Finally the field is beyond the capacity of any one person or group to even estimate well, even if you had the details of every single transaction on your computer. In the tax world, say I as an entrepreneur, want to travel to another city to do something personal. And say that something will take 1 "after hours" hour to accomplish. If I arrange a business trip, and I work hard all day at the business, is that trip a legitimate business trip, and if so in what percentage?
Having nattered on, I think your, and what I understand of ORO's line of thought should be pursued, and I intend to spend some time in that regard.
ORO:
Do you have any idea when the posts referred to by Ross L were made? How does one find them? I would like to review them. Thanks
Sorry the BURGOS article keeps getting cut off of the last ten paragraphs they are here below.
The prognosis, which is difficult
By "persuading" foreign interests to buy new dollars, particularly in enormous quantity since 1995, the US financial sector has been successful at bullying its way to the top of the global financial system by creating all sorts of innovative uses for the rapidly printed dollar, as well as the fueling the delusion that rising fiat exchange rates indicate a true rise in purchasing power. Though this may be more accurately referred to as "Dollar Recycling."
And since inflation is most likely to occur where there is already some price pressure, it is understandable as to why it has shown up in US asset markets as the baby boomer promotion geared up earlier this decade, and why it has suddenly shown up in oil prices.
Putting aside the issue of why most commodities are priced in dollars in the first place, it is important to understand that were it not for the relative size and liquidity of US capital markets (growing in sync with money supply), the condition of so many excess dollars would manifest in many other kinds of more detectable inflation. A collapse in capital markets then, could undermine global confidence in the dollar as the preferred global investment medium of exchange.
Iraq has already threatened to price its oil in Euros or whatever. The day that the dollar ceases to function well as a global medium of exchange, the problem of too many dollars will suddenly surface everywhere as (what many people understand to be) inflation. That will be the day when its ability to function as a store of value is compromised. Demand will have little to do with it, just the same as it had little to do with the inflation of the seventies. And it will again be called stagflation, for most analysts will be unable to explain the combination of rising prices and falling demand through their modern (mis) understanding of what inflation is.
It has been shown that the perceptible loss of purchasing power may be delayed until the day that the prevailing use for that currency no longer exists, at least relative to its supply. So far, the US consumer's propensity to spend dollars in foreign countries has made it useful for our foreign interests to invest in, or recycle, those dollars in wonderland. But as I mentioned in the Politics of the Dollar the consumer is the Achilles Heel for this whole dollar buying cycle.
Without trying to figure out which came first, the chicken or the egg, consider how this process works. Consumer A buys a PC in Country B with dollars. Country B has the option to both exchange those dollars for its own currency B, and therefore keep the profits, or to keep those profits invested in dollars. If country B keeps those profits in dollars, central bank A promises to never allow its money (dollar) supply to grow faster than credit demand so that the external exchange rate (which is simply a price for dollars, not a value by the way) of the dollar continues to inflate consumer A's global purchasing power. Consumer A thinks that this is wonderful, and private bank A has learned how to recycle those foreign profits and spin them into not only a further credit expansion, but an asset price spiral, adding to consumer A's purchasing power and encouraging consumers in country A to compete for who has more toys.
As long as this goes on, our foreign interests have a use for the dollar. It enables US consumers to buy their goods and services, historically a process by which they (the countries generating a trade surplus) would accumulate US gold. So what is the price? None in the short run because private banking system A has helped create as many speculative uses for the currency at home as it has created currency, none of which has anything to do with its reserve role as a store of wealth, however.
The Strong Dollar Policy at Work
Let me define the strong dollar policy for you. It is a policy where the US seduces foreign countries to export their excess capital to them or to inflate their own money supply faster than them, in exchange for a national agenda that promotes consumption and maintains the international reserve currency. It seems, however, that consumption has been pushed to the edge, and the nation has abused its privilege as keeper of the international reserve currency.
his is what this bull market has been all about. It is not about productivity gains, which are really still many years away. It is not about a more sophisticated financial community that has been able to apply its technological know-how to create a risk free speculative environment. That will never come. It is not about the success of a central banking system that has cured the world of its inflationary ills� it really hasn't. It is about the success of a global banking system in creating a monetary delusion on a scale heretofore never seen� perhaps unwittingly, but nonetheless certainly. Let us not delude ourselves as to what is at stake here.
www.kitco.comThe below is a repost. Here it says the dollar has "replaced" gold. This is misleading. The dollar is tied to gold vis-a-vis oil. We have seen the charts. To say all is built on the dollar and to stop there or to say as it says below that the "...The dollar plays the same role as gold in all of the rest of the world at this moment, because the dollar is perceived to be as good as gold..." is simply subterfuge because it doesn't acknowledge gold's dual-hatted role. It is nonsense like this (although many valid points are made) that misleads all of us regarding the role of gold. The closet door is being held shut (against its will, I might add) by anaylysts' who fail to see the proper role of gold. If gold is part of every oil purchase either directly or indirectly then this must be factored in to any analysis of gold, both as a commodity and as a money. IMO.
repost:
Date: Wed Oct 04 2000 08:19
gwyz (The Dollar) ID#44161:
Copyright � 2000 gwyz/Kitco Inc. All rights reserved
http://www.thestreet.com/comment/streetsidechat/1104490.html
"Brett D. Fromson: Has the dollar replaced gold? And can any currency ever replace gold in its role as the means of exchange?
Peter L. Bernstein: The dollar has replaced gold vis-a-vis the rest of the world because it's the standard that every other currency is expressed in terms of dollars. The ultimate reserves that other countries hold are dollars. They pay their obligations in dollars. Huge amounts of world trade are denominated in dollars even between country A and country B, where the U.S. doesn't even come into it.
So that, in this instance, the dollar is playing the role of gold. But the dollar is also the currency of the United States of America and its value is subject to what happens in the U.S. economy. Gold stood outside the system. It was a stateless currency. It therefore played a different role from the dollar.
The dollar plays the same role as gold in all of the rest of the world at this moment, because the dollar is perceived to be as good as gold. But the gold standard was a rigidly enforced system of exchange rates that didn't vary, and where speculating against a change in exchange rates would be a losing proposition. I don't think we'll ever go back to such an arrangement. It puts each country in too much of a corset. You crucify the world on a cross of any standard. Each country gives up a certain amount of domestic freedom.
I've noticed that the last refuge of the tech bull is in the biotech stocks. When those break, look out below. You've heard of raining cats and dogs, How about raining bulls?
Bird:-....but Mr Cormorant, what was that strange black long thing we could see far below in the depths. Is it a UFO? (unidentified fishy object)
Mr C:-....thats deep water weed, see! some of it's up on the beach.
Human:-...but Mr NASA, what was that strange disc shaped object in the sky last evening. Was it a UFO?
NASA .....thats a weather balloon, have a nice Day!
Experts are often (a) in denial (b) peddling a position.
Wow, there are times when I get into this kind of discussion that I get the feeling I am swimming in lots deeper water than I intended. But then, masochistic me, that is why I asked you the question, not the local high school economics teacher, not that I probably know as much about economics as (s)he does.
I just noticed your post, having been occupied with the post I made a few minutes ago. While I am going to have to defer responding in detail, two things jump out at me. 1) Some of the words I used are not suitable. 2) Are you argueing that my basic thrust is totally wrong, a little bit off, or what? I will spend some more time thinking about your response and get back.
Plagerism is the sincerest form of flattery-- Gold get you some.
I just loved some of the main points on the Strong Dollar Policy of the US that ED BURGOS makes in his article.
By "persuading" foreign interests to buy new dollars, particularly in enormous quantity since 1995, the US financial sector has been successful at bullying its way to the top of the global financial system by creating all sorts of innovative uses for the rapidly printed dollar, as well as the fueling the delusion that rising fiat exchange rates indicate a true rise in purchasing power.
And since inflation is most likely to occur where there is already some price pressure, it is understandable as to why it has shown up in US asset markets as the baby boomer promotion geared up earlier this decade, and why it has suddenly shown up in oil prices.
it is important to understand that were it not for the relative size and liquidity of US capital markets (growing in sync with money supply), the condition of so many excess dollars would manifest in many other kinds of more detectable inflation.
The day that the dollar ceases to function well as a global medium of exchange, the problem of too many dollars will suddenly surface everywhere as (what many people understand to be) inflation. That will be the day when its ability to function as a store of value is compromised.
Demand will have little to do with it, just the same as it had little to do with the inflation of the seventies.
It has been shown that the perceptible loss of purchasing power may be delayed until the day that the prevailing use for that currency no longer exists, at least relative to its supply. So far, the US consumer's propensity to spend dollars in foreign countries has made it useful for our foreign interests to invest in, or recycle, those dollars in wonderland.
Without trying to figure out which came first, the chicken or the egg, consider how this process works. Consumer A buys a PC in Country B with dollars. Country B has the option to both exchange those dollars for its own currency B, and therefore keep the profits, or to keep those profits invested in dollars. If country B keeps those profits in dollars, central bank A promises to never allow its money (dollar) supply to grow faster than credit demand so that the external exchange rate (which is simply a price for dollars, not a value by the way) of the dollar continues to inflate consumer A's global purchasing power.
I think a clearer way of saying this might be to say that in exchange for keeping your trading gains in the US we have implicitly agreed to keep the dollar steady and appreciating against all currencies, Rubin's Strong Dollar Policy.(Editors note only)
Consumer A (the American Consumer) thinks that this is wonderful, and private bank A (US based mega banks) has learned how to recycle those foreign profits and spin them into not only a further credit expansion, but an asset price spiral, adding to consumer A's purchasing power and encouraging consumers in country A to compete for who has more toys. The idea here is that the flow of money into the US caused by the reinvesting of the Foreign Trade earnings of our trading partners is used to hype the financial market and engage the consumer in a big stock market speculation.
As long as this goes on, our foreign interests have a use for the dollar.
"The Strong Dollar Policy at Work"
Let me define the strong dollar policy for you. It is a policy where the US seduces foreign countries to export their excess capital to them or to inflate their own money supply faster than them, in exchange for a national agenda that promotes consumption and maintains the international reserve currency. It seems, however, that consumption has been pushed to the edge, and the nation has abused its privilege as keeper of the international reserve currency.
"This is what this bull market has been all about. It is not about productivity gains, which are really still many years away. It is not about a more sophisticated financial community that has been able to apply its technological know-how to create a risk free speculative environment. That will never come. It is not about the success of a central banking system that has cured the world of its inflationary ills� it really hasn't. It is about the success of a global banking system in creating a monetary delusion on a scale heretofore never seen� perhaps unwittingly, but nonetheless certainly. Let us not delude ourselves as to what is at stake here."
Isn't it hilarious to hear those guys talk about the budget surplus?
I think it's kind of like if I borrowed everything I could against my house, and then projected my future earnings on that basis. Like I got a hundred thousand this year, so now I can project at least a hundred thousand each year for the next ten years. Yeah, that works, in fact, based on these projections I can probably get a loan for a million next year.
Now if you take all of Ed Burgo's insights and think what would Rubin have to have done to guarantee that the US dollar would continue to appreciate against all major currencies?
You probably have the answer as to why they began to manipulate the gold market! The US Strong Dollar Policy could only work if they could guarantee that there was always a use for whatever amount of money they created in the credit markets. By stating that they would force the US dollar up against gold the benchmark of all currencies they could attest to all the foreign trading partners that reinvest the US dollars you earn in trading with us and we will give you a stock market or bond market that we will orchestrate up because we can control there direction with the unlimited credit we are creating. We can force the interest rates down just as Greenspan had done in the early nineties to bail out the banks. Rubin by implying that that could be done again could attract the foreign money and heip force it down. If that ran out they would then use the budget surplus to buy in the bonds and thus creating more demand for a shrinking supply and now Summers can continue the same game. The demand for US Treasury securities is a function of the size of the Trade deficit and as long as they can assure the trading partners that the US dollar will appreciate they can attract enough foreign US dollars to keep it going. If an individual money manager fights the trend he will be destroyed and lose all his clients so soon the US based managers of bonds have to follow the edicts of the insiders or be destroyed. He becomes a follower of direction determined by those who are controlling the process or he is fired and replaced by someone who asks fewer questions.. THe same is true of the stock markets in the US the direction is set and then the money flows are determined by the manipulators and the "independent" stock managers either follow the trend or they are underperformers and replaced. Momenteum is the only fundamental. THe free markets in bonds and stocks are completely coopeted. And it all starts by the ability to guarantee that the US dollar will continue to appreciate against all major currencies.,Once that is established then the worlds money will flow to the US markets simply because the currency appreciation is so much of a part of the total return of the investment decision for international investors. So the first mover of the rigging of the markets of the last ten years is the ability to control the external value of the US dollar-You have to control the value of gold in terms of dollars and that is why the whole thing starts with GOLD. THat is why Barrick is so smug and why the other producers management don't have the guts to speak out about the situation. They know that they are but a small but crucial sacrefical lamb in a much bigger story.
Pieces of the Puzzle now fall into place. Eureaka If the pieces all fit it just might be correct.
If the insghts in the ED Burgos article are put together and are correct it would also explain why a huge hedge fund with heavey ownership of foreign central banks LTCM Long Term Capital Management would have been short 300 tonnes of gold. They new that that position was a crucial part of the currency rigging. The fact that the Italian Central Bank was a direct investor was nothing compared to the large 30% ownership of the large government influenced national banks that used their ownership to give their traders a "window" into what was going on in the various markets. Of course if you no longer have a free capital market but rather a quasi government rigging of capital flows then it is very important to know where the money is supposed to go. Second it would explain Greenspan's often quoted remark about foreign central banks all around the world would be ready to mobilize their gold reserves to stop any appreciation of the price of gold. Most likely Rubin had had one of his subordinates explain this to Greenspan when he asked the question himself. And this would also explain the reticence on the part of our politician and our regulators to say or do anything. It was too hot to touch.
October -- As Scheduled or Postponed? And Changes. . .
DAILY COMMENTARY
(10/4/00) www.USAGOLD.com . . .Lest one
forget, we have now entered the tenuous
month of October -- the cruelest month for
investment markets. And it seems the Fed
Open Market Committee set something of a
haunting tone yesterday with its warning
about inflation. The equities markets know
all too well that October carries with it
unpleasant events, so those with their hand
at the lever do their best to create a
positive tone. And then there's the
debates: Correct me if I'm wrong, but I
can't recall that the subject of oil came
up once during the proceedings ( I have to
admit I did not pay close attention as I
was starting the latest Clancy), though,
one has to say that both candidates looked
spiffy in their dark suits and reddish
ties. Oil preoccupies the consumer mind,
but fictitious budgets and tax cuts
preoccupy the campaigners. Gold, laboring
under the intense scrutiny of the shorts,
takes note in terms of physical demand but
not the price. As we start the month, one
wonders if October hasn't been put off
until November (after the election of
course) -- at least if some would have
their way -- but then again maybe we should
give this witches' brew a little time.
Anything's possible in the tenth month of
the year. Those looking to add to their
gold holdings might want to do so at the
present price. If October has been delayed,
I would guesstimate its arrival for
sometime in November, but no later than the
winter solstice.
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Peter L. Bernstein: "The dollar plays the same role as gold
in all of the rest of the world at this moment, because the
dollar is perceived to be as good as gold."
I believe Mr. Bernstein has said EXACTLY what he means. Remember awhile back when, T.C. was it?, did a series of posts on deciphering banker/politician speak for what it REALLY means. Kind of Clinton's "it depends on what 'is' is" type of thing.
Can you interpret Bernstein's statement above? From my viewpoint, there is one three-word phrase and one word later that should be CAPITALIZED for emphasis. Anybody else see this?
In Honor of the Denver Gold Show and Ed Burgos article on the Strong US Dollar Policy!
And it all starts by the ability to guarantee that the US dollar will continue to appreciate against all major currencies.,Once that is established then the worlds money will flow to the US markets simply because the currency appreciation is so much of a part of the total return of the investment decision for international investors. So the first mover of the rigging of the markets of the last ten years is the ability to control the external value of the US dollar-You have to control the value of gold in terms of dollars and that is why the whole thing starts with GOLD. THat is why Barrick is so smug and why the other producers management don't have the guts to speak out about the situation. They know that they are but a small but crucial sacrefical lamb in a much bigger story.
The end result of all this manipulation is the confiscation of the value created by ) ID#404252:
Copyright � 2000 hollins/Kitco Inc. All rights reserved
the worlds workers into a financial profit that is allocated in the hundreds of billions to the perpetrators of the manipulation. They use a small portion to support both major candidates in the US election and then continue the game as long as they want. The profits that would have gone to all commodity producers can be effectively stolen by manipulating the market price to whatever level they feel is adequate at the time and then buying the hollowed out industry at cents on the dollar as Barrick is about to do to the gold industry, or you can shift the production of goods to whatever country has the cheapest currency so that the profits that would have gone to the manufacturers and their employees are now sent to the financial markets by moving the price of the currencies of those countries to whatever level they target. It is the use of derivatives to confiscate the value creation of an entire generation. And it is done with the unknowing cooperation of millions of savers who have had their retirement assets used as a tool in the manipulation and will watch them disappear as they are left holding the bay as "long term investors" in a market that has been inflated to two or three times it's normal value while the politicans, regulators, and Allan Greenspan watched. The greatest thieft of all time. Brought to you by the best Presidential office holder and congress money could buy.
Odd how on Sunday, the view of gold changed at the Denver Gold show. Gold the commodity has one set of rules; gold the money has another. Investors play in the former; governments the latter. When the effects of one cross the boundry of the other then the rules of each affect the other. In the case of investors it is gold the money that ruins gold the investment -- only now is the really coming to light, sort of.
Governments would almost (and they do believe they do) have the right to intervene in money affairs and do. In the case of gold, they have, are, and will intevene. Can we blame them? Yes.
Naive investors in COMEX gold who know nothing of gold the money have been led to the water that can't be drunk. This is the experiment with gold from 1976 (perhaps earlier) that has made many fortunes but at the expense of the naive.
The questions of GATA now come to a different light. If governments can legally (since they make the rules) control the price of monetary gold in the commodity market, should it really be a commodity? NO! Unless everybody knows the rules. Since it would seem that only a privledged few have been drinking the water because of the relationship to the "in-the-know" then have these people (not members of government) been given special privledges or immunities for their roles in managing money of gold in the commodity of gold market? GATA believes so. Is this right? NO!
But, one can plainly see, why "hands off" or "too hot to handle" seems to be the nom de jour when it comes to Gold manipulation. It is not that GATA's claims fall upon deaf ears. They fall upon ears who already knew the claims or who were informed upon inquiry into the claims, but whose hands are tied because the ramification of the "dual role of gold" when it is advertised only as a commodity, is just too big.
The paradigm has shifted now. Gold is official money and official commodity and they can't be that unless full disclosure is made. Another has done this dislosure but not officially nor to all. But disclosed it is.
Gold is money. Gold is a commodity. They don't mix because the rules of one supercede the rules of the other. The great gold run for the money is on.
Date: Wed Oct 04 2000 10:14
Netpi (More news from the Denver conference) ID#389193:
Copyright � 2000 Netpi/Kitco Inc. All rights reserved
DENVER, Oct. 4 ( Reuters ) - Is gold a currency, a monetary
standard, a mere commodity, or all three?
That was the question de jour as international mining
companies and investors attending the annual Denver Gold show
plugged gold's historic money role as a key to eventually
restoring the embattled industry's prospects.
But the sad irony is that the once-venerated yellow metal
is behaving too much like a currency -- one that has been
mercilessly devalued in recent years. That means that after a
year of wrenching ups and downs, bullion's fortunes are tied to
the whims of the foreign exchange markets.
"Gold is trading as a currency," Bruce Hansen, chief
financial officer at Denver-based gold Giant Newmont Mining
Corp. ( NYSE:NEM ) , told Reuters as the conference got under way
Sunday. "Fifty to sixty percent of the weakness in gold since
1996 is attributable to the rise in the dollar."
The gold business is a relic of the old economy contending
with a high-tech world of low inflation and, until recently,
booming stock and bond markets. Paper money, specifically the
unsquashable greenback, has supplanted bullion as the backbone
of the financial system and fanned stubborn negative sentiment
toward the metal.
The 325 conferees at the Mining and Investment Forum are
pinning their hopes on an end of the dollar bull run. When the
greenback is inevitably knocked from its perch, they say
wishfully, it is to the rock-hard asset that investors and
governments will again look for security.
"To me the dollar is over-owned right now. It's almost 80
percent of central bank reserves, which strikes me as something
of a high-water mark," said gold fund manager John Hathaway of
Tocqueville Asset Management.
For history-conscious gold bugs, the only certainty is that
good times will come to an end, and that years of euphoria
about the U.S. high-tech economy, low interest rates and the
end of the cold war is certainly overdone.
"Such progress as we have in finance is not cumulative, as
in science, but cyclical," said journalist and market
commentator James Grant, an avowed gold bull and publisher of
Grant's Interest Rate Observer.
"I am a believer in the long-dormant value of gold,
unlocked by monetary monetary developments," he said in a
keynote luncheon address on Monday.
Central bank sales of their low-yielding gold to buy assets
denominated in dollars, euros and yen contributed to the gloom,
which pushed spot bullion prices to two-decade lows last year.
Not only has the strong greenback created an aura of
despondency around dollar-denominated bullion, but it has had
even more measurable consequences for overseas demand.
Spot bullion prices fell to 12-month lows in recent weeks
as the dollar stormed to record highs against the euro.
Also hitting new lows were the currencies of
top-gold-producer South Africa and third-ranked Australia,
where some producers have a reputation for actively managing
their hedge books from both the bullion and currency sides.
The weak Australian dollar, which recently hit its lowest
levels since flotation in 1983, has lifted the Australian gold
price above A$500 an ounce, a level that in the past was seen
as attractive for Australia's mining companies to lock in spot
sales prices for hedges of unmined gold reserves.
The euro has recovered somewhat from record lows two weeks
ago, steadied by concerted intervention by the major central
banks. But by that time, its fall had made the local price of
gold for European jewelry fabricators and investors too
expensive.
The depreciating rupee has also hurt demand in top consumer
India, where a lack of rain has already reduced rural incomes
and seasonal gold hoarding.
"In terms of investments, there is a role ( for gold ) to
play," said Jessica Cross, director of Virtual Metals research.
"You then have to weigh the currency/commodity argument -- Is
it a currency? Is it a commodity? It behaves like both."
Wholeheartedly concur. However, as I am becoming more cynical with age and despte the "high drama" and entails etc., where's the beef? Where's a scap of beef; a tiny morsel?
European Central Bank revalues its gold assets upward
As is always the case now for the first week of each new quarter, the ECB delays the release of its weekly balance sheet from Tuesday until Wednesday to allow for the extra time needed by the euro member CBs to make various quarterly adjustments. Of interest to us here is the quarterly mark-to-market revaluations of the euro-system gold assets.
With that operation now reflected on the books, the ECB balance sheet for the week ending September 29 reveals yet another in a continuing string of upward gold revaluations. This time, the book value for the gold assets were increased by 4.037 billion euros to 124.948 billion as a result.
And in other Euroland news, Bridge reports that the European Commission does not anticipate lower oil prices over the short term, however, the EC is seeking open and permanent dialogue with OPEC countries for the sake of maximum transparency and price stability.
-------
Sir Journeyman, I'm pleased to see you remembered my delivering a lesson long ago on the art of scrutinizing the comments of upper-level officials.
http://www.worldlyinvestor.com/print.cfm?article_id=11966This article provides a good interpretive lesson to accompany yesterday's FOMC statement, which I've reprinted below for the record.
-------
Federal Reserve Press Release, Sept. 3, 2000
The Federal Open Market Committee at its meeting today decided to maintain the existing stance of monetary policy, keeping its target for the federal funds rate at 6-1/2 percent.
Recent data have indicated that the expansion of aggregate demand has moderated to a pace closer to the enhanced rate of growth of the economy's potential to produce. The more rapid advances in productivity also continue to help contain costs and hold down underlying price pressures.
However, the utilization of the pool of available workers remains at an unusually high level. Moreover, the increase in energy prices, though having limited effect on core measures of prices to date, poses a risk of raising inflation expectations. The subdued behavior of those expectations so far has contributed importantly to maintaining an environment conducive to maximum sustainable growth.
Against the background of its long-term goals of price stability and sustainable economic growth and of the information currently available, the Committee believes the risks continue to be weighted mainly toward conditions that may generate heightened inflation pressures in the future.
I have been following your interest in wheat. I am curious about your back ground in grains. I am involved in corn/soybean production and trading. Corn is the only yellow resource working for me at this time.
OPEC Expects 70% Revenue Increase,
But No Output Increases Are Planned
By THADDEUS HERRICK
Staff Reporter of THE WALL STREET JOURNAL
High oil prices are expected to lift OPEC revenue by about 70% this year, but so far, members of the Organization of Petroleum Exporting Countries aren't plowing back the proceeds into increasing production.
Relatively high oil prices and continued strong demand often prompt producers to invest to boost capacity. For OPEC, though, there are only "bits and pieces here and there, but nothing substantial" to increase production in the short term, says Leo Drollas, deputy director of the London-based Centre for Energy Studies.
Join the discussion: Will rising oil prices put the brakes on the global economy?
* * *
Europe Pleads With Russia to Open Its Oil Reserves
A big reason: OPEC member countries aren't as rich as in their heyday 20 years ago. The cartel's expected revenue of about $227 billion this year will be only about 40% of its peak earnings in 1980, after adjusting for inflation, according to the Energy Information Administration, the statistical arm of the U.S. Department of Energy.
Moreover, the economies of several important OPEC members are troubled. Saudi Arabia, OPEC's biggest producer, is crawling out from under a domestic debt of more than $100 billion. Venezuela, the largest oil reserve outside the Middle East, saw its economy shrink by 7% last year as oil prices touched 20-year lows. And other producer countries such as Nigeria and Indonesia are fraught with social and economic ills.
Saudi officials say much of this year's oil-export revenue will go toward hospitals, schools and the like. "The money has not yet started to trickle down" to the oil industry, says one Saudi government official.
To be sure, industry experts expect OPEC, which produces about 40% of the world's oil, to begin substantially boosting production within five years. But in the near term, most of its member nations are pumping as much oil as they can, and even Saudi Arabia's once considerable excess capacity has grown thin. In response to demand, the cartel already has boosted its output three times this year, eating away at reserve capacity.
World oil consumption is expected to rise to 84 million barrels a day in 2005 from the current 75 million barrels a day. While OPEC's production capacity in the short term isn't expected to grow, the Department of Energy's EIA expects OPEC's output to rise by some seven million barrels a day by 2005, roughly maintaining or even increasing its current share of world output. Various exploration and production projects are under way from Kuwait to Venezuela; those projects could add nearly a million barrels a day in the next few years.
This year, Saudi Arabia will see revenue rise by about 76% to some $67 billion, the EIA says. But the country hasn't embarked on a major crude-oil project since it developed the Shayba oil field several years ago.
The nation also must deal with the debt it accumulated as it made weapons and other purchases during years of low oil prices. The Saudis, says Mr. Drollas of the Centre for Energy Studies, spent "more money than they earned on things they didn't need to impress people they didn't like."
They are expected to increase capacity to about 13.6 million barrels a day in 2005 from 11.4 million barrels this year, according to the EIA. The Saudi oil ministry, however, says this year's capacity is lower, at about 10 million barrels a day.
Meanwhile, Venezuela is mired in crisis. Oil-export revenue is expected to jump about 65% this year to $22 billion. But half of Venezuela's work force is unemployed or working in the informal economy, while more than two-thirds of Venezuelans live in poverty.
Venezuela predicts crude-oil capacity will rise to four million barrels a day by year's end and close to six million barrels a day by 2009. Currently, though, industry analysts say, Venezuela produces just under three million barrels a day. The country is betting heavily that foreign oil companies, which are involved in four major projects in the so-called Faja oil belt, will help it build capacity.
But industry analysts, citing the Venezuelan economy, question whether Venezuela can meet its projections. "We think the political demands will be too great," says Eduardo Lopez, a Venezuela expert at Petroleum Finance Co., a Washington consulting firm.
Indeed, President Hugo Chavez cut production at Petroleos de Venezuela, the state-owned oil company. PDVSA planned to produce as much as eight million barrels a day by 2005 under the previous administration, but Mr. Chavez cut production in 1999 and convinced other OPEC nations to follow, largely to drive up oil prices. Today, a sizable chunk of oil revenue goes toward social programs.
A larger supply question may be whether countries such as Saudi Arabia and Kuwait open their borders to oil exploration and production by foreign companies. Saudi Arabia is talking to oil companies about natural-gas projects, but oil remains off limits.
Says John Kingston, global director for oil for Platt's, an oil trade journal: "You have to wonder what spare capacity might be today if, say, Texaco had been able to drill a well in Kuwait five years ago."
Fed Officials Leave Rates Untouched
But Refuse to Set Aside Inflation Fears
By JACOB M. SCHLESINGER
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The economy slowed sufficiently over the summer for the Federal Reserve to leave interest rates alone yet again Tuesday. But rising energy prices and continued tight labor markets prevented officials from formally ending their yearlong anti-inflation vigil.
"The expansion of aggregate demand has moderated to a pace closer ... to the economy's potential," the central bank said in a statement explaining its current outlook, the most definitive declaration to date that policy makers are satisfied that growth is under control.
But while the central bank left its short-term interest-rate target unchanged at 6.5% for the third meeting in a row, Fed Chairman Alan Greenspan and his colleagues declared that they still believe "risks" to the economy are "weighted mainly toward ... heightened inflation." For the first time since oil prices began their rapid ascent a year ago, the Fed cited that trend in its policy statement as a serious threat that could push rates higher.
I found the two stories posted below juxtaposed against one another in today's Wall Street Journal. As frustrating as it is seeing the begrudging way Wall Street is accepting the inflation story, I find it fascinating to watch as the story unfolds.
In 23 years on Wall Street, I don't remember ever seeing so much denial. That goes for the inflation story, of course, but it also applies to the wishful thinking surrounding the Nasdaq. No one on CNBC seems willing to use the words "Bear Market" anymore. (This morning, Al Goldman, chief investment strategest at A.G. Edwards, said we are in a correction that has been way overdone).
Gold is a store of value, or a safe haven for the wealth created by thinkers and producers. If you think and produce you profit and create wealth. You use your profit to consume in order to live and then pay taxes and invest the rest. By paying taxes you are investing in the state at the expense of your personal freedom to think and act/produce for yourself. It's a trap with gold being the only way out. Thinkers and producers should avoid paying taxes by refusing to think, produce, and profit (engage in mindless low pay, thus tax-free, labor if you must support yourself) and invest all of their wealth in gold where it grows in objective, or real, value while falling in subjective, or apparent, value, which is it's price. Only a thinker can buy gold now. Non thinkers, or emotionalists, are turned off by gold's low price and will only buy at the top after gold soars later. Trying to sell gold to them is like trying to pimp Marilyn Monroe to a blind and deaf person. You see it's value because you think, or conceive that gold's worth at least 10,000 an ounce, but they can't because they don't think or conceive, thus they only can perceive it's 270 an ounce and why would they buy something so unpopular. The good news is that they, specifically central bankers, are eager to sell it to you now at 270 and the public will eagerly buy it from you when it's 10,000. In the long run justice prevails by rewarding the absolute mind of a goldbug. Atlas Shrugged, by Ayn Rand, was right on the money!, gold money.
(excuse the grammer errors -- it was a quick note. Also, I believe there is no longer any doubt of the oil-gold-dollar-Euro quad-nova. There may not be a lot of meat to show for it but Sherlock Holmes would be proud of us):
As it turns out gold is linked to oil whereby 1 gram (or so) of gold is guaranteed (in some unknown manner) to a barrel of oil. In this manner, the Arabs don't care what the value of gold or the value of oil is. It appears that there was an agreement to this in 1976 and that is why oil and gold have stayed steady [or gone down]. I saw a chart that showed the last 30 years of gold v oil and they were nearly 100% correlated, whereby each move in gold preceded a turn in oil. This link to oil for gold is the same reason that all the world's Central Banks still have gold in their coffers. It also explains why gold doesn't go up. The G-7 nations don't want it to and so they have invented a series of derivatives designed to hammer gold everytime and I mean everytime gold approached 290. It is this dual role of gold (commodity and money) that is really pissing off the Arabs and others who want gold, the commodity to rise. Two sets of rules are being applied to gold and have been; nobody in the commodity end has been told this, but the cat is out of the bag now. Gold is being treated like money by G-7 and holding it down for the sake of a strong dollar. This is being done to the chagrin of all gold investors world-wide, including the Europeans whose currency is marketed marked to gold quarterly. In other words, should gold go to $800 per ounce the Euro gold in the reserves of the Euro would be marked at the end of that quarter to the value of $800 per ounce or in effect doubling (or more) their reserves.
The above mentioned chart of oil v gold shows a divergence in mid-1996 whereby oil is starting to increase whereas gold was always the first. That means there is a break in the gold-oil relationship that shows that many nations are now running for gold and divesting themselves of the dollar. The reason for all the negative press on gold is meant to keep people focused on gold the commodity and how poor of an investment it is. In the meantime all the gold sales by CBs are going to honor defaulted paper gold contracts to keep the gold market from defauling, lest the whole house of gold comes tumbling down.
The question that one must ask, is if gold has been treated by nations as money and yet traded on commodities, is this an honorable thing? I say not. Many investors who have bought gold have been terribly burned by this. Why? Because they didn't know. www.gata.org has evidence that shows certain special bullion banks have had insider info into this oil v gold v money thing, knowing that gold would never rise as long as the house of gold was held together to keep oil cheap in dollars. In 1996, it seems that the Asians broke with protocol and started a buying spree that sent shock waves through the London Bullion Market Exchange in London. That is why England is selling its gold in open auctions to the cheapest offer.
This is why the US just started talking about paying off the debt and has been serious as of late and is the same reason for the bond yield inversion.
This is true. When dec comex gold broke out on 9-21 and rallied up to 282 by 9-27, they hammered it down and todays close under 274, is negative. We need to see a close tomorrow back over 274.
Unless Europe raises rates tomorrow, more dollars will flood the paper gold market driving down physical price so the scumbags can purchase and force foreclosure in the industry.
I myself never short paper gold, I will take profits as on 9-28 then reenter long side on fast track. The problem with gold has been the worthless dollar being used to corner the gold market.
dec 271 low tonite but pray the europeans put a cap on this.
is www.goldmoney.com created by James Turk the world's number one gold expert, and "Gold and Liberty" by Richard Salsman, the world's best economist. The book is available at 18007296149 from 2nd Renaissance Books. Help me convince Louis Rukeyser to have Mr.Turk on his show as a regular commentator to provide balance. All his commentators are "elves" or paperbugs. I want him to have a "gnome of zurich" or goldbug also. Email him at Rukeyser@pbs.org
Who was responsible for the legalization of Gold ownership
Ayn Rand whom I call Mother Rhea. Greenspan(the rock) was her disciple and was responsible for getting gold legalized to provide those who think (Olympians) a safe haven and a means of justice from those who choose not to.(Cronus-Titans)
A hypothetical discussion with Bill Gates and Warren Buffet
Yall are worth 200 billion dollars on paper but I can show you a way of making much more. Sell all your stocks and buy gold. Your selling will make others sell and thus make the markets fall sharply. When markets fall money flows out of paper and towards the purchase of goods and services. This causes inflation which causes the price of gold to rise. Thus you can make a fortune. You wait till inflation and the price of gold peak and stocks and bonds bottom then you sell your gold high and buy back stocks and bonds low. As a result those who think and really want to live will replace those who don't as rulers of our society.
Which of the following 4 letter words are least offensive: BUSH or GORE??? It is a fairly easy question for me in general but would appreciate an answer as it relates to our common interest- GOLD!!
Have a hard time believing that we can do much worse than recent years with market games/dishonesty and lack of respect for free markets. Am I dreaming? Will things be any better if we change our figurehead? If not......
Thanks.
www.discussfutures.com I've been talking about cotton and corn at the above and at www.cottontrading.com Just click on discussion/forum and share some knowledge with us.
I also left some "golden" thoughts at the above. Alas, they are unbelievers.
Rich
From:
WW Oracle (10/4/2000; 9:32:55MT - usagold.com msg#: 38224)
Odd...
Isn't it just a wee bit strange that the POG is steady at almost exactly ten million euros a tonne?
Many Thank You's Sir Oracle!
Steve, what this also confirms is an ounce of Gold priced in euro's right now is about $310.30!!
If we divide this number by grams in an ounce...31.103 we come up with $10.00 in Euro's will buy one gram of Gold! I thought Sept.22, 2000 there was some correlation between POG and Gold and now we have it.
$10.00 in Euro's=1 gram of Gold=1 barrel of oil!
Coincidence, I think not! Oil and Gold is being priced in Euro's!
Remember the metric system is used in most of the rest of the world.
We watch together.....beesting.
11.00 (AEDT) Prime Minister John Howard today said Australia should hold its nerve on the value of the Australian dollar.
The Prime Minister said it was important to take the long term view of the dollar , and not to react to day to day movements.
He said the current value of the dollar was caused by the strong US Currency, rather than any weakness within the Australian economy.
The one thing that you dont do is you dont react to the level of it from day to day , you have to take a long term view of the Australian dollar, you dont take a short term view " Mr Howard told Adelaide radio 5DN.
The local dollar recovered from yesterdays record low overnight , but still was well below the 54 US cent mark in early trade today . Mr Howard also defennded Australia's floating exchange rate.
If you have a floating exchange rate you allow it to find a level on a day to day basis that the market suggests it ought to have , he said.
You are living through an era where everything American is fashionable with international investment and that is resulting in our dollar falling against the American dollar, not because our dollar is weak , but because the American dollar is ultra strong.
These things come and go .
He said Australia's flexible exchange rate had helped the country through the Asian economic downturn.
You certainly have to hold your nerve , he said .
Congressional Republicans are irate about the Clinton administration's political ploy to draw down 30 million bbl from the Strategic Petroleum Reserve over 30 days, but they clearly are powerless to stop it. Vice-President Albert Gore, the Democratic Party's presidential nominee, had urged that part of the 571-million-bbl stockpile be used to produce more home heating oil and other products. Almost immediately, the administration complied. And this is an administration that previously had steadfastly maintained that the SPR was not to be used to manipulate market prices.
Last week a frustrated Rep. Joe Barton (R-Tex.), the House Energy and Power Subcommittee chairman, demanded
the Clinton administration explain its legal authority to sell the crude. Barton said, "I can find no controlling legal authority that gives them the power to use the reserve." But despite the legal uncertainty, he said he would not file a lawsuit. Barton and other Republicans at a Capitol Hill press conference said the SPR law clearly states that the reserve is meant to be used only in the event of a severe supply interruption, and not as a tool to control market prices. Barton said Clinton's action "was a decision made in a political campaign for political purposes."
Richardson testifies
~~~~~~~~~~~~~~~~~~~~~
Earlier, Energy Sec. Bill Richardson defended the action to a skeptical Sen. Frank Murkowski (R-Alas.), the Senate Energy & Natural Resources Committee chairman. Murkowski said, "The timing of the request from candidate Gore and the announcement by the president cannot be overlooked when one seeks out intentions behind this release." He said selling the SPR crude would do little for consumers because refineries are already operating at or near capacity.
The senator blamed the Clinton administration for recent gasoline and home heating price spikes, and high oil prices. Murkowski said, "The US is in the midst of an energy shortage -- if not an outright crisis -- with US demand outpacing supply in almost every sector. Clearly there is an energy policy train wreck on the horizon." He again predicted that US consumers may suffer natural gas price spikes and shortages this winter, warning Richardson that "There's no SPR for natural gas." Richardson insisted that releasing the SPR crude would have a positive impact on home heating oil and diesel transportation supplies. He stressed the administration's policy has been to let the market dictate prices. He said when the president and cabinet officials decided to draw down the SPR, "We didn't do it for price."
Industry's outlook
~~~~~~~~~~~~~~~~~~~~~
Representatives of US oil and gas associations testified at the hearing that they are more confident about supplies than prices as the winter heating season nears. John Felmy, the American Petroleum Institute's director of policy analysis and statistics, said although distillate stocks were below the historical average at 116.3 million bbl for the week ended Sept. 15, they were still 31.3 million bbl greater than National Petroleum Council's estimate of 85 million bbl for minimum operational inventories. "Time remains for these inventories to build before the beginning of the heating season, and more than 90% of the home heating oil is shipped directly from refineries to consumers -- it does not come from inventories. In addition, the industry has shown it is able to produce substantial amounts of distillate when the need arises. Accordingly summertime distillate inventories are not necessarily a significant indicator of fuel availability once the season begins," he said. Felmy said the industry is producing record or near-record levels of distillate fuel in preparation for winter demands. "Inventory builds have been substantial, but because they started at lower levels, the current level of primary inventories is low by historical standards."
Larry Downes, New Jersey Resources Corp.'s chairman and CEO, testified for the American Gas Association. He said gas utilities will meet their supply contracts this winter. "Utilities traditionally plan to have enough supply available to meet the demand on the coldest winter day and for the duration of the most severe winter season. This winter will be no different." He said utilities do not appear to be having any difficulty in obtaining gas, although prices are higher because supplies are tighter. "National storage figures indicate that although aggregate levels of working gas in storage are about 10% behind the 5-year average, volumes in storage are currently ahead of the pace of the 1996-97 winter heating season. In that year, the pre-winter storage level peaked at 2.725 tcf of working gas relative to a potential 'full' level of 3.294 tcf. AGA believes that storage levels will be adequate again this year."
"4-letter words"(I hope those who may have seen my posting of the following a couple of weeks ago will excuse me for repeating it.)
Sir auspec, I share your sentiments, and offer the follwing quotation:
-------------------------------------------
"When officials abide by the United States Constitution, the vote is our way of selecting the best persons and the best government. But if our officials are breaking Constitutional law, or allowing it to be broken without lifting a finger, your vote is literally their license to steal. You are giving them your permission to take your property and control your life. If you give them that permission, many will take you up on it, because lots of folks enjoy controlling others and amassing property. If you vote for anyone that allows Article 1, Section 10 to be ignored, don't you deserve to be ravaged by inflation?"
F. Tupper Saussy, from the book "Miracle on Main Street" (1980)
-------------------------------------------
I personally don't see any difference between the "choice" we are offered for the upcoming election, and those of elections past, at least in my lifetime.
sir, would you please retract your post about the brave,noble, mis-understood,pro-gold,anti-inflationist free non central controling,money printing crazy banker of gold lovers, Alan Greenspan!!! what possible reason could you have to dishonor him? Please explain.
A model strategy for the ages...gold stays while paper (credit) goes.
Bridge News reports on the reserve assets of the central bank of Turkey:
Ankara--Oct. 4--The Turkish central bank's foreign exchange reserves fell U.S. $72 million to $24.222 billion in the week to Sept. 29, the Anka news agency reported Wednesday. The agency said gold reserves were unchanged at $1.1 billion while the net foreign currency position fell by $679 million to $7.8 billion.
There are 25 billion barrels ...per year of oil consumed. If you took 1 gm of gold per barrel that would be approx. a three year supply of gold. So what part of 25 billion does gold buy?
Simultaneously raising rates and expanding credit is equivalent to one foot on the gas and another (for bipeds, anyway) on the brake. This is an "interesting" driving style, from which one may deduce that either the Fed is extremely nervous or it doesn't know how to drive a vehicle properly (or perhaps a bit of both).
On the one hand, driving with one foot on the brake allows for a quicker stop at a given speed. Grandma used to drive this way, much to the consternation of the other drivers. On the other hand, the brakes may burn out just when most needed, and, depending on the speed, this implies either a very long, unobstructed distance in which to coast safely to a safely reduced speed or a collision will stop the vehicle violently and quickly. Further, the continuous drag on the engine to overcome the friction of the increased braking will lead to premature engine burn out, as if continuously towing a heavy trailer or boat (uphill).
A fast-moving vehicle with no or very worn brakes is dangerous. A vehicle with a broken engine is useless to those that depend on it and very expensive to repair.
Stupid analogy or irrational policy? Is the Fed being overly cautious or is the Fed being reckless with our economy? Can brakes and engines be replaced while in motion? Or maybe certain parties see the vehicle as a rental?
What if the Euro is being linked to gold at e10.00 per gram, or to oil at 1 gram per bbl, or to the dollar at $270 per ounce.
Then why, with things so out of balance, doesn't one purchase undervalued gold with $270 U.S. and trade it for 31.1 bbls of oil valued at +- $933.00 U.S. ?
Sir RS,
Thank you for your kind, but discouraging response. Still, one of the 4 letter words gives me a tiny amount of my favorite 4 letter word- HOPE. Otherwise it is really getting LATE.
Regards
http://www.pronetisp.net/~rbrown/Several postings in recent days have mentioned that 1 gram of gold = 1 barrel of oil. At least 2 postings from today (#38242 and #38249) have said it and postings from previous days as well. And the more something is repeated without challenge, of course, the more it is taken as gospel. But�
1 Troy ounce = 31.10348 metric grams
1 Troy ounce of gold = US $275
1 gram of gold = US $275 divided by 31.10348 = US $8.84
Oil does not sell for US $8.84 per barrel, does it?
Or are we talking about Euros when we say "$10"?
How many US $ per Euro are there? Answer: .87 or thereabouts; one Euro = US $.87
So how many Euros per US $? Answer: 1.15 (the reciprocal of .87; that is, one divided by .87).
Now, if oil was US $8.84 what would the price be in Euros? Answer: 10.17 Euros (8.84 x 1.15 = 10.17).
Does a barrel of oil really sell for 10.17 Euros? Seems like the price should be more like 40 Euros per barrel (US $35 per barrel x 1.15 conversion factor = 40.25).
What's being claimed is that one gram of gold = 1 barrel of oil = US $8.84 = 10.17 Euros.
My arithmetic shows that 3.96 grams of gold = 1 barrel of oil = US $35 = 40.25 Euros.
John Doe (10/04/00; 20:17:09MT - usagold.com msg#: 38260)
"Simultaneously raising rates and expanding credit is" how they increase profits for the Bankers. I's just like Oil; get everyone into needing lots of it to survive and then raise the price. The game will expand until there is no more �blood in the stone' and then it will be either 50 year mortgages @ 2% or a nation of �Banklords' and tenants. Maybe the whole credit card industry will go up in bankruptcy smoke and it will be the dawn of a new age!
"Too much money chasing too few goods"
This pop definition for price rises, or currency depreciation we commonly encounter when we hear the word "inflation" contains more truth and depth of insight than the professional economist would like to admit.
The statement has the operative word "chasing", meaning that there is a process by which some people that have that money are using it to purchase goods rather than something else, say bonds or stocks. Needless to say, the former declining trend in interest rates that ended in 1998 has shown where some of the "too much money" has gone; bonds, and with them stocks. Needless to say, the thing that matters here is that money has been "chasing" these assets, that is the holders of these assets were more reluctant to let go of them than the prospective purchasers were excitedly raising their bids.
Obviously, where there is a seller there is a buyer and the money does not go away. It merely changes hands. Thus we do not put our money "into" a physical or financial asset, but we put it "through" the asset. The money is then free, in the hands of the former holder, to flow elsewhere - to chase after other goods or financial assets.
Another sharp insight of the statement is that "too much money" is the precondition. Though there is no mention of what "enough" money is, the statement recognizes that it was more money than there was before. Which is definitely the correct precondition.
"Too few goods" would indicate that the supply of goods had not risen to the level of the money, meaning that money balances grew more quickly than production capacity, or even more quickly than the accumulated stock of goods clogging our houses, driveways and closets. The lack of an indication of whether productive capacity or the current stock of goods are in too short supply is rather a smart omission. That is so because either would cause prices to rise at a higher rate if the money creation persists at a higher rate than the growth of the marginal utility of the goods and services produced. However, all this is naught compared to the change of spending patterns and money balance preferences implied by "chasing".
So long as money flows towards paper assets, one expects some of the funds to go into investment in productive capacity. So long as productive capacity expands in the directions providing supply to match consumer preferences, prices may rise but slowly. However, the investment itself creates demand for non-specific factors of production that competes with consumer induced demand for producer goods and services. At some point, the markets will raise prices of these common factors of production (particularly labor, natural resources and energy - both "finished" and raw) to the point that consumer demand and investment demand conflict to the point of making further investment unprofitable, since producer goods and services have risen in cost to eat the margin between consumer prices paid and producer costs that we call cash flow. The margin contracts as prior investment commitments result in further capacity coming online. Producer prices climb and with them climbs labor income resulting in further consumer demand. Further capacity ceases to come online some time after the cessation of new investment. However, the money created to fund investment remains in the monetary system. The contraction of margins eliminates profits and lowers the return on stocks while lowering the credit quality of bonds, causing their values to drop, or at least stop rising. At this point, though new investment decisions have ceased in prior areas popularly thought to be attractive, investment demand in out of fashion industries experiencing price rises is limited because of the destruction of prior expertise and capital during the "famine" period before (which made the industries in question unprofitable and unnatractive to investors), and the lack of investor expertise in the newly profitable industries that have the highest potential payoff. Thus we have a condition in which prior investment decisions have created demand for non-specific producer goods and have stoked consumption demand, while eliminating profitability of productive endeavor in general, and putting in place the conditions for both new demand and less supply.
The run from declining assets pushes the investor to prefer spending and tangibles, particularly if monetary authorities attempt to maintain the solvency of the monetary system by injecting excess fresh money to maintain liquidity.
I dredged this up from within the deep recesses of my poor old noggin.
Moral hazard: A danger created when an authority protects individuals or organizations from the consequences of imprudent or risky behavior, resulting in the undertaking of enough of this behavior as to risk a large scale manifestation of the initially avoided consequence, possibly leading to systemic failure.
"Or maybe certain parties see the vehicle as a rental?"
Wall Street's in New Yawk, isn't it? Maybe some of these guys grew up boosting cars for fun and abandoning them on the Cross Bronx after stripping them.
Current approx. POG=$10.00 per gram "Euro"=1 barrel of oil!
Hi Sir Cavan Man,
What POG in Euro's seems to be suggesting is, the "biggest" players at LBMA,who set the daily price of Gold, and who trade in "Large" daily volumes of paper Gold, are also some of the "Same" big players in the paper oil markets. Some of the "Tonnes" of Gold traded maaayyy be being exchanged for paper barrels of oil,priced in grams of Gold.
Hi Steve,
Your post:
SteveH (10/04/00; 20:05:13MT - usagold.com msg#: 38259)
Beesting
There are 25 billion barrels ...
per year of oil consumed. If you took 1 gm of gold per barrel that would be approx. a three year
supply of gold. So what part of 25 billion does gold buy?
I can't answer that question, but remember not every oil producer wants to be paid in Gold, maybe only 10% do, I don't know.
So, if we use the 10% number 2.5 billion barrels may be paid for in Gold, the rest in U.S. Dollars.
If my math is right there are 1000 grams in a kilo-gram and 1000 kilo-grams in a tonne, so that would be 1,000,000 grams in a tonne.If we divide 2.5 billion(barrels of oil) by 1,000,000 grams(one tonne of Gold) we get 2,500 tonnes(of Gold) not an unreasonable figure when we realize it's "paper"Gold.
We watch together.....beesting.
@ Sir Taurus....You're right with all your calculations.
We got the 1 gram of Gold for 1 barrel of oil from FOA on the "Gold Trail" at the top of this page. Message # 40.
FOA:
<exchange rate value of our dollars, but somewhat lower the price of gold in relation to our local
goods prices instead of against oil. This position generated buying at the constantly lower levels this
new ratio generated. Even though gold would later be priced in dollars using oil at 1gm per barrel.>>End.
If you have the time,please try to read all of his words, to more fully understand what "MAY" be happening in the world right now. We Watch and Learn Together....beesting.
That was a nice synopsis of where we have recently been. Thank you for turning a few more lights on to help me see the way through the fog of these interesting times.
I have a request for a clarification. Your last sentence was: "The run from declining assets pushes the investor to prefer spending and tangibles, particularly if monetary authorities attempt to maintain the solvency of the monetary system by injecting excess fresh money to maintain liquidity."
This seems to state the opposite of what we are told to expect from a declining stock market. That is, the inverse wealth effect in which investors, becoming poorer, reign in their spending. What am I not seeing clearly?
ORO, it's definately a matter of semantics--little else
With the goal of effective communication being the pot at the end of the rainbow--and an opportunity for unbiased thinking as a result.
While you did an excellent dissection of the "pop definition" (loved that phrasing) of inflation, my own nit-picking was that the phrase might lead a person to believe that "too much" and "not enough" might be conditions that should be somehow brought to the singular "right" levels through some kind of central planning. A free market shouldn't see things in terms of "too much" or "not enough" because the relative price of one item in terms of the other would simply exist and adjust accordingly.
Futher, this pop definition of inflation hinders the layman's recognition of the growth in money supply that might simply occur in tandem with an expanding economy. Whereas, they will be lead to see that the "right amount" of money continues to trade for the "right amount" of goods under a period of stable prices, they will not be inclined to see that their currency's purchasing power should have increased but was nevertheless sacrificed through the growth (inflation) of the money supply.
I realize it is just a subtle point, but hey, that's what we've come down to now that the rest of the forum has caught on that Gold is and has been in use as "real wealth money" even while it traded in the disguise of a commodity. (I'm not trying to launch a crusade to convince anyone that one definition should be used for a term over another. I'm only trying to raise awareness that certain pitfalls can be avoided in effective communication if the writer lets his phrases carry his meaning in place of certain individual words which can be equivocal and ambiguous.)
As some of you consider oil prices in terms of Gold grams in the past (and projected into the future,) please pause to be aware exactly what is the larger context. Are the Gold gramsthat are being offered and accepted couched within the framework of an expansive bullion banking system, or are they FreeGold grams?
To my mind, at present times, one gram of PAPER Gold per barrel of real oil seems cheap, whereas one gram of solid FreeGold per barrel of oil seems like price gouging by the oil producers. How about one gram of FreeGold for TWENTY barrels of oil---that seems about right to my simple mind.
If I may inject an attempt to your query, I believe it depends on who, i.e., which investors, control the "excess" dollars and what they do to cover their exposure to the potential inflationary effects. In other words, what is the exit plan? IS there an exit plan?
For the really "big" players, inflation finds a good parking place in the stock markets (especially US) or various US$ instruments for these funds, as "inflation" in these areas is deemed "desirable", more or less, regardless of valuation levels, or "benign" at worst. Observe how the Fed, Gov, & Media attempt to invent and propagate whatever bogus rationale is necessary to contain the inflation within this sphere.
Moving the results of inflation to the commodity markets or other competing currencies, as we have seen, is an absolute, obscene no-no. Gold is a double whammy because it is both commodity AND currency. The same trio above will invent any "plausible" reason to keep the results of inflation out of these areas. Perhaps the simplistic reason is that there is a limited supply of physical "things" (hence, highly reflective of inflationary effects), while the supply of stocks, not being physical "things", is infinite -- "virtual" inflation effects as opposed to "real", tangible inflation effects. Furthermore, the "virtual" inflation has the considerable potential of never being made "real", as the exit door is far too small, especially for the vast majority of unconnected players. And the ongoing siphoning-off of capital gains taxes and trading "real" wage gains for "virtual" birds in the bush is a nice kicker, too.
Yet, the little guy, over-exposed to debt as he is, will almost certainly be forced to retrench, if money flees to tangibles. For the "small" players, moving the inflation into residential real estate is apparently encouraged. The local taxing authority certainly prefers this. Japan found this avenue to be most preferable, even extending to commercial real estate and general land values. And, as with the "big" players, but certainly on a lesser scale, the "small" players are urged at every turn to hold whatever residual potential inflation they possess in the form of equity shares.
However, whether by past experience, dumb luck, or over-consumption, on net, the "small" players don't really have ANY asset exposure to inflation. On net, they "own" very few assets and even less cash (exhibit 1, the current negative savings rate, exhibit 2, the very low or negative net worth of a great many US households), and they hold record levels of debt which is more easily serviced with each jump in inflation. The trick is keeping their jobs while all this is going on. And this has pretty much been the case in numerous past inflations. The small players would come out ahead, at least up to a certain level of inflation, providing their wages can keep up with prices. Under massive unionization, as in the 50s and 60s, this was a given. Now, with the decline in unionization, I'm not so sure.
In any event, it's the "big" players and the need to safeguard their net cash and asset positions that will drive and sustain future inflationary effects, if any. They started it, and they will bring it to full fruition if they lose control of it (and that is, perhaps, not a given). The real fun starts when these entities begin to panic in order to save their assets by moving into other currencies and commodities and by exiting the declining US$ and equity markets.
Of course, further and further consolidations of wealth have the potential to allow for an arrangement where this is not necessarily the ultimate outcome. If few enough entities control a large enough slice of the total, US and global pie, they may just stand pat, leading to a general ossification of the whole system in lieu of resolving the imbalances -- sort of like super-duper Japan maybe? In summation, the banks of the big players, and therefore the big players themselves, are more "on the hook", at least in terms of assets, whereas the small participants are essentially at risk for their very livelihoods...a classic, and unfortunately potentially enduring Mexican standoff.
----"While I am going to have to defer responding in detail, two things jump out at me. 1) Some of the words I used are not suitable. 2) Are you argueing that my basic thrust is totally wrong, a little bit off, or what? I will spend some more time thinking about your response and get back."----
In reaction to item one, I hope you take note of my recent post to ORO. It's not that I personally find any particular author's choice of words "unsuitable" per se, but that sometimes the effective conveyance of a message's meaning can suffer unnecessarily thereby. Certain words in ecomomics discussions are atop the list -- having multiple interpretations among different individuals. Some stress the cause, and others the effect.
On item two, please be sure that my earlier post to you was primarily intended to straighten out the explanation of the various money supplies (M1, M2, M3), the mechanism for their expansion, and hint toward the merits of any conclusions that one might attempt to draw from those stats.
And more importantly, I strive to maintain a clear, clinical picture (for myself and others) of the business of modern currency creation and banking (sans the usual accompanying rhetoric on fiat currencies), because anyone who grasps THAT big picture is right on the doorstep of understanding the current situation for Gold.
But back to your point. Don't let my inability to understand your phrase "importing deflation" stand in your way of progress. If, having digested my comments/alterations to your underlying money-supply premise, you are steady in your interpretation, then how about simply continuing onward with describing whatever consequences you then anticipate from this latest importation?
Thanks for your input on the Jim Sinclair article. I also feel my understanding of derivatives is, at best, shaky. I think the thing that was bothering me was his stance on Barrick (ABX) . I was surprised to see that from GATA and could not find the words to be critical of Sinclair and not have it sound like I was being critical of GATA.
G'day Shifty,
Just home from the "coalface"....good timing wot?
If you recall GATA in it's infancy, the JC article would have fitted like a glove. The currency implications are a later crusade and as such JC's article seems a little out of place or more precisely out-of-time on the GATA e-groups board, Yes? View
Yesterday's Discussion.
A quite different perspective from what is usually voiced on this forum. A few excerpts:
Stephen Zarlenga, (ZAR)
"�ZAR: The answer may seem obscure but has bottom line value investors dare not ignore. It's whether money is a power, embodied in a commodity like gold; or a creation of the law. That is, does its value come from its "intrinsic" (commodity) value or from sponsorship or legal requirements of government? Or a combination?
GNL: And your view is?
ZAR: History shows money is an abstract institution of society and government. As far back as 340 BC Aristotle wrote: "Money exists not by nature but by law." He's saying true money is a fiat (decree) of the law. Of course, say fiat to a hard money advocate and it's like waving garlic in front of a vampire.
[Note- It would be interesting to dig up this reference, and what Aristotle's context for "law" was. The alternative theory on the origins of government - "people farming people" appears to have a great deal of scientific validity, as e.g. recent Russian history shows. It's hard to get public funding to study this issue.]
GNL: Are you saying paper money can be real money?
ZAR: Certainly. In 1994, I issued a paper disproving (challenging actually) Carl Menger's "Theory Of The Origin Of Money," the foundation of Austrian Economics hard money philosophy, but try as I might, I can't get them to seriously debate my stand.
"� ZAR: Yes. Take the belief gold is a depression/deflation hedge. That overlooks gold did well in the Great Depression because it was officially money -- and its official value was raised from $20.67 to $35 an ounce by law in 1933; while other commodity prices collapsed. "
[Note- the purest Keynesian doublethink. George Orwell would be proud.]
ZAR: Unless the official price is raised, it'll probably act like a commodity rather than money, and fall. The U.S. price is $44.22. Perhaps more important, the world's largest depository of gold, the Bank for International Settlements in Switzerland, uses $208 per ounce in its accounting which, I think, may prove to be important downside support. It will be the same basic story for silver.
GNL: But what about stagflation or inflationary collapse?
"ZAR: An inflationary depression is theorized to occur when the government rescues banks, with the liquidity created to bail them out causing runaway inflation, but it doesn't have to happen that way.
Panics are caused by fractional reserve banking, where banks create money in the form of bank credits. But these credits aren't the same as money because they depend on the bank's staying liquid. Paper money in hand is more secure. In a crisis this leads to cash runs on banks. Von Mises and the Austrians insist a crash is inevitable, but this conclusion has been out of date since the 1930's when Henry Simon created the 100% Reserve Solution.
GNL: What is the 100% Reserve Solution?
ZAR: It avoids collapse by changing outstanding bank credit into actual cash. First, banks (including the Federal Reserve Banks) are required to establish 100% reserve backing for all deposits. To do this, the US Treasury loans them (at interest) freshly printed US currency to bring their cash reserves up to 100%. Treasury paper held by banks, gets credited against these borrowings; canceling an equal amount. Banks are then confined to lending existing funds.
This elegant reform transforms the private bank credit money created out of thin air for decades, into US legal tender -- real money. All US debt held by the banking system is canceled out by the banks borrowings from the Treasury. Banks become panic proof, with cash to pay all claims.
This reform wouldn't be inflationary or deflationary - it simply makes tangible what had been thought to be the existing money supply. This reform removes the money issuing power from private banks and places it in the US Treasury. [It's] not paper money [that is] immoral; its the private issuing of it. �"
[Whoa! I wonder what having a few extra trillion show up in M1 do to the public perception of price inflation?]
"ZAR: There may be some games being played, for example by the Bank of England (it its strange announcement regarding gold in mid 1999). But much of what appears as a conspiracy - especially the central bank selling - is really a continuing move away from dependence on gold as the sole international monetary reserve toward an eventual demonetization of gold. In retrospect this trend began at the 1922 Genoa Conference and continued at the IMF in 1946, where legally based money became acceptable as international reserves, along with gold. In 1969 the IMF adopted SDR's (special drawing rights) as a kind of "paper gold", though they have only created $21.4 billion, and none since 1981. The IMF gold sales of the 1970's began an actual demonetization of gold. Central bank sales are continuing it."
"�GNL: How does this view differ from the Austrian School?
ZAR: They can't imagine this solution because they view money as a commodity -- or an economic good -- that can't be brought into existence out of thin air. But if you understand money as an abstract legal power, then a nation can successfully create and substitute cash for the already existing and suspect bank credit�."
*****
As one new poster (Christopher?) noticed some time ago, he came to this forum looking for some information about gold, and found how quickly the subject can turn to larger matters of economics, banking, history, politics, philosophy, law and so on. The question of what money is- hard, fiduciary, fiat, commodity, is (or appears to me to be) answered very differently depending on one's view of what government is. Mr. Zarlenga, for example, implies that government is a mostly benign entity striving for the greatest good for the greatest number- the underlying socialist assumption.
This is quite in contrast to the welfare/warfare state so eloquently described by for example, George Orwell ("1984"),
Lew Rockwell,
Joseph R. Stromberg:
http://antiwar.com/stromberg/s-col.html
and M. Rothbard:
http://www.mises.org/easaran/chap3.asp
"The State is almost universally considered an institution of social service. Some theorists venerate the State as the apotheosis of society; others regard it as an amiable, though often inefficient, organization for achieving social ends; but almost all regard it as a necessary means for achieving the goals of mankind, a means to be ranged against the "private sector" and often winning in this competition of resources. With the rise of democracy, the identification of the State with society has been redoubled, until it is common to hear sentiments expressed which violate virtually every tenet of reason and common sense such as, "we are the government."�"
"�The great German sociologist Franz Oppenheimer pointed out that there are two mutually
exclusive ways of acquiring wealth; one, the above way of production and exchange, he called
the "economic means." The other way is simpler in that it does not require productivity; it is the
way of seizure of another's goods or services by the use of force and violence. This is the
method of one-sided confiscation, of theft of the property of others. This is the method which
Oppenheimer termed "the political means" to wealth.
"�We are now in a position to answer more fully the question: what is the State? The State, in the
words of Oppenheimer, is the "organization of the political means"; it is the systematization of the
predatory process over a given territory.[4] For crime, at best, is sporadic and uncertain; the
parasitism is ephemeral, and the coercive, parasitic lifeline may be cut off at any time by the
resistance of the victims. The State provides a legal, orderly, systematic channel for the predation
of private property; it renders certain, secure, and relatively "peaceful" the lifeline of the parasitic
caste in society�."
I think "state-olatry" or "UN-olatry" is like a cherished religious belief or a market mania- held for as long as it appears to produce desired results, and then for a little while longer�.
Does anyone else find it coincidentally perculuar that the A$, the Can$ and the Rand are all in steep decline vis-a-vis the $US now our collective Gold flows have slowed?
From Oz's pos'n these last 5 yr's have seen the CB divest itself of all but a meagre 40 odd tons, and Miners generally forward sold to the Max up to 10 yr's out.
So basically we've been propping up our standard of living with future Gold production and selling reserves to the point of exhaustion. Now our currency is beginning to reflect that fact. Most assuredly some of this future effort has gone to support present US lifestyles also as you guy's provide the "clout" that keeps the wheels on (you scratch my back etc).
This jig is well and truely up now though....where to from here?
@Topaz, there is likely to be a day of reckoning for many Aussie miners.
I used to have a list of Aussie miners and their hedge positions. It listed most as forward-sold about an average 8 years. That was about 3 years ago. I would think that with all the producer selling that the Aussie producers are eating-out their hedge-books. Many are so forward-sold that they don't have proven reserves to cover and are hoping and praying to develop their "inferred" resources. These producers would do well to examine this issue and look to the old Australian mine formerly owned by Pegasus Gold - "Mount Todd." They thought that they had enough gold in resources and the "faith" that there would be more. They believed it so much that they built the mine and facilities without proving it out. They poured in a lot of development capital and hoped and prayed that there would be satellite deposits to carry the mine. Guess what? There were no viable satellite deposits to the main discovery deposit. Guess what? Pegasus Gold doesn't exist anymore, the remnants are owned by the bankers and it is now called Apollo Gold. Yeah, forward sales and the hope of discovering deposits to meet the obligations is a very risky business. I wonder how many other Aussie producers (or any producer) will be fall prey to the bankers like Pegasus Gold. Anyway, gold has outperformed the Aussie and Kiwi pesos, SA Rand and Canadian loony. As a form of currency, gold is better than most nations currencies.
GNL: Are you saying paper money can be real money?
ZAR: Certainly. In 1994, I issued a paper disproving (challenging actually) Carl Menger's "Theory Of The Origin Of Money," the foundation of Austrian Economics hard money philosophy, but try as I might, I can't get them to seriously debate my stand.
---------------
It's no wonder the Austrians won't debate his points. Even I would hesitate to commit the time necessary to try to set Stephen straight, and I genuinely enjoy discussing these issues.
Does anyone think he managed to score a point or two that warrants a legitimate rebuttal--similar to the one I offered to Professor Triffin about week ago? I stand ready at the gate as needed, as I'm sure others here at the forum do, too.
Gold. Get you some additional perspective, Mr.Zarlenga. ---Aristotle
SPR Oil Lease is Earily Similar to the Gold Lease, But Some Players Won't Play Ball!
US to announce winning bidders for oil stockpile
October 4, 2000
By Patrick Connole
WASHINGTON (Reuters) - The U.S. Energy Department will announce, after the New York oil futures market closes on Wednesday, the winning bids for borrowing crude oil from the Strategic Petroleum Reserve, Energy Secretary Bill Richardson said. Richardson, speaking to reporters before delivering a speech at the National Press Club, said the Energy Department would make the announcement at 3:30 p.m. EDT . He declined to provide any details, such as the number of bidders or names of companies who made offers to borrow the crude oil.
The DOE had previously said it would release information about the winning bids on Friday. Last month, the White House ordered the loan of 30 million barrels of oil from the nation's emergency reserve to boost supplies of heating oil and ease prices ahead of the winter heating season. Under the plan, winning bidders must promise to replace the oil borrowed, plus additional barrels, next year when prices are expected to be lower.
The release of the crude oil was blasted by Republicans and their presidential candidate George W. Bush as a political ploy to win votes for the Democrats in key Northeastern states facing tight heating oil supplies. The White House has defended tapping the stockpile as the best way to help consumers, refiners and oil distributors lay in supplies for the winter. Since the administration announced the plan two weeks ago, U.S. crude oil prices have eased from nearly $38 a barrel to $31.50. The reserve holds about 570 million barrels of crude oil in salt caverns on the U.S. Gulf Coast. The stockpile, created by Congress after the oil price shock of the mid-1970s, has been tapped only once for emergency use, during the Gulf War.
A Reuters survey of oil companies showed Royal Dutch/Shell Group, Texaco Inc, BP Amoco Plc, Amerada Hess Corp and Conoco Inc made offers for the stockpiled oil. Exxon Mobil Corp, Coastal Corp and Phillips Petroleum Co said they did not bid.
Chevron Corp, Marathon Oil and Sunoco Inc refused to say whether they participated in the bidding. Earlier Wednesday the world energy watchdog, the International Energy Agency, said global crude supplies were adequate but energy companies should try to squeeze more heating oil into the market. Heating oil inventories in the Northeastern United States are about 70 percent less than one year ago. That region is more heavily dependent on heating oil for warming homes than the rest of the nation.
Black Blade: You don't suppose that Occidental Petroleum bid on the oil do you? They got a good deal on the Naval Reserve oil in S. California under the current administration and the Gore family owns a nice chunk of stock in the company. You don't think that they might give Al a helping hand by bidding on the oil do you? Nah, Al Gore is too ethical for that ;-)
What kind of vitamins you been taking to be alive after so many years?
-- snippet --
ZAR: ... As far back as 340 BC Aristotle wrote: "Money exists not by nature but by law." He's saying true money is a fiat (decree) of the law. Of course, say fiat to a hard money advocate and it's like waving garlic in front of a vampire.
Gidday Simply,
Hope you got enough sleep today - dem birds keep you up?
Just remember:- Park benches the World over are littered with x-experts and Pidgeon's and there but for the grace of God go we.
Night shift suit you?
BB:-
Sterling job of late with the Oil info Mate, I think we've (Oz Gold) been bilked into acceptance of the US$ myth and will come to regret it shortly. "Privatise the pleasure - share the pain around"
Hi Black Blade--we don't talk as much as we should. I enjoy your posts.
Your latest comment caught my eye, so I'll seize the opportunity to float an idea that some may find harder to swallow than others. You said--
"As a form of currency, gold is better than most nations' currencies."
In the interest of peace and harmony, I could easily agree with this and drop the issue, but offering a different perspective may help some people adjust better to what is coming down the pike. The key is to focus for a moment upon what is at issue (namely, currency) and what society's expectations are for their currency.
This is distinctly a different concept than the issue that has seemingly tripped up Stephen Zarlenga who claims that paper can adequately replace Gold as money. It cannot, because "money" involves a definate body of characteristics serving form and function that paper currency units can't fulfill.
"Currency" on the other hand implies a circulating medium that is suitable for facilitating commerce. In this strictest sense, what we are all familiar with in use as modern currency can probably be said to have the edge over Gold as circulating currency.
There are other factors involved that I've covered in depth before with regard to the interaction of the particular currency with the underlying support framework of the banking system that affects its suitability for use, so I won't get into this again here. This same context, however, argues persuasively and conclusively that Gold serves better as a reserve/savings asset than any national currency ever could. International monetary policies and practices are aligning to recognize and fully exploit these natural strengths.
Currency. Earn you some, spend you some.
Gold. Save you some. ---Aristotle
Yup Ari - too true - I must say it's a lot easier to grasp this Wealth/Asset quality of Gold from pretty well ANY other place on the Planet other than the US of A at this point in time.
All physical Au holders of late have seen a marked (tax-free) increase in Asset value (in local currency terms) and the time is nigh for you Guys too I feel.
Apparition? I don't think so.
Aristotle, Thanks for the input. I'll pass along what I find amusing in all this....
I note that the Wall Street crowd and the Financial media deride Gold as a terrible investment, a barbarous relic, a wasting or sterile asset, etc. When we consider Gold as a form of currency (in our view - "money"), then we could look at it in their perspective for a moment. As Gold is generally considered a form of currency (AKA "Money") that pales compared to the USD, then these same individuals are making the claim that the lower valued currencies whether it be the Mighty Brit Slider (Pound), The new-born Euro (fast becoming - "zero" as proposed by a poster on another forum), the Aussie and Kiwi pesos, The Canadian loony and toony, or any number of world currencies are crap compared to the USD and GOLD. That's right, they say that the USD is best and that the barbarous relic, the sterile asset - Gold is still better than the world's other currencies which are crap compared to the USD and the barbarous relic GOLD. An interesting thought. I must get some ZZZZZ for now - cheers, Black Blade
Per FOA (10/02/00; 17:03:27MD - usagold.com msg#40)
Show Time!
"...This past inflation of paper gold would not only produce circumstances that only strengthen the exchange rate value of our dollars, but somewhat lower the price of gold in relation to our local goods prices instead of against oil. This position generated buying at the constantly lower levels this new ratio generated. Even though gold would later be priced in dollars using oil at 1gm per barrel."
Per ANOTHER from the "In the Footsteps of Giants," he said [and I paraphrase] that from 1991 20 million ounces of gold per year from 1991 has been used in gold for oil and now [then] even more. Twenty-million ounces is 62.5 tons. What much more is now, I don't know.
Since we really have no idea what the extent of gold for oil amounts are, we can only go on what is said above or some other more obtuse indicators. We do know that if all oil was bid for gold at 1gm per barrel that would mean too much gold for too little oil or not enough gold can be mined to cover annual oil production for 10 years (fuzzy math). [note: strikingly, some have reported that the gold market is sold forward 10 years in some instances or 14,000 plus tons short.] So, the least amount of gold for oil could be as little as zero. That is a wide expanse. Factoring the 62.5 tons of Another with the 1gm per barrel of FOA, we now have more questions than answers but taking the 62.5 tons as a minimum, that represents 622,069,600 grams of gold or bbls of oil (which is 2.5% of annual oil consumption). Even if we factored Aristotle's (USAGOLD's) 10X factor or as he (or she) put it 1/10th gm per bbl, that would equate to gold for oil amounting to 25% of annual production.
As sketchy as the gold for oil info is, it seems that if what ANOTHER said is accurate and this tonnage speaks to Saudi oil, then we know their oil represents (if memory serves me correctly) 37% of annual world production and this is no the riss to be about 58% by 2008, 62.5 tons of gold (physical) for 9.25 billion bbls of oil per year equates to 0.067 gms of gold per barrel.
So are we to assume that we don't really have a clue how much gold speaks for how much oil. It does seem are range is from 0.067gms of gold per barrel to 1 gm per barrel. It may be that the 14 x difference in values (1/.067) is the relative appreciation in oil or in gold to be expected. One gm per bbl based on the 25 billion bbl per year consumption figure shows there isn't enough gold in the world for the next 10 years and to have this go on for 34 more years or 340 years worth of mine production. Even dividing 340/14 (the lower figure) is 24.2 years of mine production for 34 years of oil consumption.
Our strongest indicator of gold for oil is the HBM charts. The correlation is near perfect. Gold is somehow and in some real quantity bidding for oil and that would seem to be driving the gold-cart. The influence of gold on oil, to be strong as it seems though would have to across boundries and universal in its demand, enough so to power this whole concept. Oro, what is your take? Aristotle, Beasting, others?
Self-employed. Work nights by choice, when the only distractions are the ones I choose. My self-deprecation is not the result of an inferiority complex; my expertise is in areas not covered on this forum. Before I found this site, my interest in economics went no further than balancing the monthly household budget. I'm even surprised at myself for grasping as much of this as I do. I'm simply here to learn, that's why I don't post much. Nothing to teach. But I've found that I learn more if I post occassionally and expose my ignorance! It's a humbling but very rewarding experience.
SteveH--it's not vitamins, but eating garlic that keeps me going! Hah hah!
"History shows money is an abstract institution of society and government. As far back as 340 BC Aristotle wrote: "Money exists not by nature but by law." He's saying true money is a fiat (decree) of the law. Of course, say fiat to a hard money advocate and it's like waving garlic in front of a vampire."
---------------
We need not accept something just because Aristotle says it must be so.
In offering us a view of this post, Turnaround was sharp to question the larger context behind Aristotle's thought. How did he define "law", and more importantly, was his concept of "money" perhaps more similar to the concept for "currency" that I offered in my previous post?
There is no disputing that the desirability of an item is found in it's usage value, and that true monetary usage of an item can naturally develop based on the convenient combination of qualities that include high desirability and ease of circulation. Once this good has been sufficiently elevated to a primary monetary usage through natural selection based on its convience and wide acceptibility, this monetary usage adds further to its desirability, entrenching its value use as money to exceed its value use as anything else. It is at this point that many economists and philosophers become easily confused regarding the true nature of Money--as it seems to take on an arbitrary life of its own at a high value that is disconnected from its obviously lower usage value as a raw material.
Skipping ahead, in a modern context we readily see that a dollar bill in use as money is indeed worth more than its paper usage. And in this modern context, the value witnessed in the circulating currency unit is seen to exist on the basis of the lawful loan contract that added these currency units to the money supply--coupled with the national custom to circulate these units as currency. However, it is a fallacy for contemporary thinkers to take a tempting backwards view in order to draw a conclusion (erroneous) that the original Monetary asset found its high value as a result of similar lawful contracts or by decree. To repeat, its value was found in its suitability for Monetary use, and grew higher from expansion of the custom.
The Fed had attempted in the aftermath of the crash of 29 to reflate the economy by lowering interest rates. But it also increased reserve requirements for banks, which made it impossible for them to make new loans. Without new loans there was no new money with which to make payments on existing loans. The result? Till the election of FDR and his paper money and "peoples republc of the US" brigade was all but certain (which caused an additional massive run on banks as people "hoarded" gold) the US money supply had fallen by 15% and 20% of banks had gone belly up - in 31, by the time FDR confiscated gold, the banks lost 30% of the money supply and perhaps 60% were closed.
This is the condition the Fed desires to avoid. Unlike that time, when most transactions were done by check and cash, today we have most transactions done electronically through credit and debit cards with many - if not most - pay checks going straight into accounts through direct deposits. Anything like that kind of contraction would bring the economy to a complete halt. They would never let that happen.
The run from paper assets to tangibles is a result of monetary base growth (today it effectively includes money markets on top of demand deposits, as shown in "MZM"). The money that bids for the "running" paper seller comes from this monetary expansion. Otherwise, asset prices would have simply crashed as none had enough funds to buy them without the fresh money.
The run from financial assets into tangibles is only possible because of the Fed induced printing of money. Whether it is inevitable that they do so is a different issue. Most likely, the standard reason would apply; asset markets are hedged by large investors with put options and a smallish number of short futures. When the banks that issue them are stressed because of the losses on these options, they will come to the Fed with waving hands demanding "lending of last resort" to avert "disaster"; i.e. trading desk losses, and therefore - no bonus.
The Fed complies, as it ever does, and allows the bankers to borrow up a storm which quickly bids for SP futures, which raise the market back to "acceptable" loss levels at option expiration. The arbitrageurs that arbitrage the futures' "excess" premium into the stock market (and into bonds too) need to borrow heavily during the arbitrage process, and end up paying much mullah in margin interest, which defrays the cost of borrowing from the Fed. So far as I have seen, this is equivalent to having infinite credit behind the stock market. Though the interest rate does not make a difference in this SOaS activity, it does matter to investors seeking comparative returns in bonds and stocks.
The Fed is trying to keep "M9" (M3 + aggregate debt + stock market capitalization) from growing "too rapidly" so that the "wealth effect" is reduced. However, it is not wealth effect that is the main cause for driving funds out of stocks and into spending, it is ESOP maturation, which is not really dependent on 10%-20% moves in the stock market, because the directors allow the holders to "reprice" their options, that is lower the strike price so that the current value of the options is commensurate with the employee's initial expectations and he does not leave for greener pastures. Second, executive suite insiders are selling their stock at record levels in order to get out before the rest of the market beats them to the doors. They are so avid to do so that they have burned bridges to some very important money bags, such as Prince Alwalid (recent private placement from Priceline and a purchase of fetid Apples).
BTW:
What the Fed is trying to do right now (and too late) seems to be focused on twin objectives - keep the system afloat with new money, and raise the quality of new credit by raising the interest rate above the market's rather low risk premium (hence the inverted treasury yield curve).
Just managed to chase Daughter 2 off the machine, whats this world coming to - these days the only way to get a response from your Kids is to say "o-oh" in a high-pitched ICQ mimic (kidding of course)
Most of the stuff here passes well over my head too mate, (I'm in Air-con) kinda like "in the keystrokes of Giants" sometimes - and by jove,(whoever JOVE is) some must be rubbing off.
I am a simple kind of guy. The world works the way it does, and all the whining that this is not honorable or whatever is of little avail. Nickle 62 asked what I view as the key question "Where does all this lead?". Ultimately, I would like to think about "where" on the basis of how it effects the mundane life of the guy on the street.
The forces that act on a given situation, if properly identified, will allow an, at least, somewhat accurate prediction of an outcome.
Certainly manipulation exists (in all areas of life) both as a deliberate collusion, and as similiar interests acting in similiar ways. However if the manipulation acts against the natural forces of the marketplace, sooner or later the pressures generated will overcome the resistance and mother nature will have her way.
Mr. Soros, whatever you may think of his personal traits, was good at identifying, and more importantly predicting the timing of these explosions.
Many of the western governments have, in their own minds, (or perhaps in the minds of some of their subjects) become omnipotent. They seem to feel they can manage economic immortality. In medicine too, we have new tools that make us live longer, but we don't kid ourselves that we are immortal.
It is interesting to note that in the very next post after yours the link posted
www.financialsense.com/series2/gathering.htm
contained a good deal of argument that could be used in our discussion.
I have developed 2 + 2 economic indicators that I pay attention to. Retail sales, with a bit of emphasis on same store sales, and the price of copper. If retail sales start to fall, there will likely be unemployment soon. If copper goes below $1.00 I watch for a construction slowdown. (The copper price one has gotten a bit messed up because of the recent huge, low cost producers in South America coming on line.)
Once both of them go negative, I go to the next 2.
There is a small gift shop located in a downtown office complex. He has been in business for years and years, and certainly knows customers. A goodly percentage of his sales are geared toward the type of gift that you get when Jim marries Jane, and the office takes up a collection for a gift. In good times everybody chips in $10 and my friend has no discounts. In bad times, everybody kicks in $5 and he is running discounts galore. I find it a really good indicator of peoples confidence to watch his sales levels and his levels of discount. The product is so discetionary.
The second is an area of town that is largely marginal, but hard workers. Most are immigrants, with emphasis on mediterranian and eastern europe. Most of these people have, in their lifetime, witnessed poverty and turmoil. Are they ever quick to pull back on their spending if they lose confidence. I just go along a 2 block stretch and count the number of vacant shops and the for rent signs, or go in and ask how their sales are, year over year.
Where is all this leading? Well basically I am arguing that one should look at economic prognostication from the point of view of the job that needs to be done.
To many times we accept a theory or definition, and then try to cram the economic facts into the definition, rather than modifying the definition to fit the facts. On one hand, as the economists say, we have to keep the things the same so that meaningful comparisons can be made. On the other hand the world is changing at its fastest rate ever, and the old ways may not be adequate to describe the new reality.
In my oversimplified example of the goldsmith, I looked at only one force, that of gold as money. It is reasonable to assume, since he was a goldsmith, that he fabricated some of the gold into jewellery. Do we count this jewellery as money or not, because it did reduce the number of golds available for money.
In the modern context, the money market account has many, but not all, of the attributes of a demand deposit account, which is classified as M1. Should it be classified as M1 or what, because it fits nowhere. Unfortunately the modern world is changing fast enough that we are having to recognise these conundrums and we are getting a plethora of Ma's and Mb's and Mc's.
Understand, I am not claiming my over simplistic example was in any way complete.
Starting from the point that the dollar is the worlds ultimate derivitive product, ie that peice of paper represents something that is based on an abstract concept, "The full faith and credit of the US government", the mechanism to make this abstract work could take various forms.
It, as you pointed out, is true to say that the government cannot simply print money. It must be blessed in an appropriate way with due ceremony. The government prints some notes, which are then recognised as having value, by having the treasury, an intregal part of the government machine, issue the government an IOU. (which are issueable at will) Now that is how double entry bookkeeping works. It doesn't matter whether I overpaid or underpaid for an item, we have recognised the value, by making these entries, WHICH IS ASSUMED to be fair value.
In fact the ritual the central banks go through is simply a way to get the bills recognised as value, and into the system. That is its only job. So I do not have a problem with the idea that the government can or cannot simply print money. In an extremely narrow, not even legalistic sense, it cannot. In practice they do whatever they want, and the ritual is simply an exercise in double entry bookkeeping. I think we have been fed a load of propaganda.
Similiarly, M whatever, is simply a definition of a point in the mechanism, which may or may not reflect reality. I chose, in my very oversimplified (and therefore highly suspect) example to mark those particular points in the mechanism as M1 or M3. These points may not necessarily reflect the current politically correct definition, but they do seem in the right ballpark. We do seem to agree that there is a multiplier in the banking system. One might get the impression I don't have a very high regard for the politically correct.
I am quite willing to use your definitions in this debate; admittedly they are much closer to the current wisdom. You will recall my post was about defining some common ground, and this sub debate grew from there. However I must insist on a cavaet that our current methods of cramming the facts into the politically correct theory is putting the cart before the horse. The theory has to fit the facts, not visa versa. And of course there is the question, "What exactly are the facts?" This could go round and round.
Regarding the Flations (which is your word, and I love it)
You post;
You-(now me) Inflation is essentially to many dollars chasing to few goods and services.
ME-(now you) Under this difficult definition, who is the rocket scientist that is tasked with making the official determination of the number corresponding with "to many" dollars, or deciding which level of good are "to few" ETC.
To some extent that is my point. There is no rocket scientist or anyone else, that can accurately name that figure, and if they do, a second later that number is out of date. The point is that the government (and I don't regard them as rocket scientists) DOES try to name/predict and manage, by managing the money supply. (with what I see as an abysmal record) While market forces are far more evident in M3, there is a whole lot more noise, in the form of government "management" intervention in M1, which in turn does influence M3.
However your point is taken; My choice of words was not suitable.
It seems to me that the thrust of government is to reduce its obligations through the debasement of the currency. This debasement has to take place at a rate that is within the tolerance levels of the populace. One way we can increase the level of tolerance is to "prove" that the situation is not as it appears. We take food and energy out of the inflation rate and call it core inflation. It is not as if food and energy were on everyones shopping list. Give me a break.
Your deflation comment shows up the same weakness in my arguement. Bad choice of words. However, strictly as debate, wealth is like beauty, strictly in the eyes of the beholder. To some it is "money" in the bank, others an art collection. Your phrase "expectations of purchasing power" is much more accurate, however I find it a bit more awkward, particularly when used in such a simplistic example.
Regarding deflation being imported.
I do have some half baked ideas on how that might be accomplished, but I suppose the question might have been; What the #@** is going on with M3? Which would have lead us off in another direction. I am not unhappy with the direction this debate has taken.
I have seen reasonably made arguments, and some dimly remembered experience, that money supply need not grow at all to be effective. I'm not sure that I agree totally, but it is food for thought.
I had seen Oro's posts, but somehow they did not register. Since my origional post to you I have had my nose rubbed in them, and I like it. But then that is also one of the major benefits, and goals I had in posting, other lines of thought I had overlooked. I'm now trying to go back on what he has done, if I ever get away from this addictive debating.
Enjoy your thought provoking. Thank you for taking the time to respond, and in such a thorough manner.
In South Africa, we are facing a very real impact from the HIV/Aids pandemic in the near term (say next two years). The pandemic has spread far wider than most people predicted a few years ago. Already, it appears from unofficial sources that infection levels in the at-risk- population are well over 50%. The high levels are probably only applicable to the local context, and are most likely to be both currently and in the future far lower elsewhere in the world. the high levels of infection indicate that in the absence of an effective cure being found, the population could decrease.
From an investment point of view, the issue becomes more than academic, due to both the severity and the short time horizon. Assuming that the economy continues to grow, ie real growth in GDP, the GDP per capita ratio should improve. Consequently, one would expect the upper end of the market to fare relatively better than the bottom end of the economy. There should be a relative switch from Volkswagens to Rolls Royces! Furthermore, labour-intensive industries should be adversely affected by both a relative lack of labour and a fall in productivity. This is probably the conventional view, but I am concerned that markets work at the margin, rather than at the average, which should lead to a relatively higher impact on teh economy. I have studied the effects of the Black Death on the economy of Europe, but the HIV/Aids pandemic is totally different in that it is taking out the most productive people of the economy. These are the same category of child-bearing people who should be the powerhouse of the consumers. Should the disease spread globally, South Africa's exports of commodities could be further impacted, both in volume and price. The potential impact may or may not be positive, depending on the possible extent of the spread. Could the HIV/Aids pandemic be big enough to impact the global financial markets at all?
Re 38179
I heard in passing that Barrick has apparently been working the greed and stupidity of the bankers. It seems that their treasurer/CFO, (Oliphant, as I recall, anyway I have a lot of time for him) was recently quoted to the effect that the majority of their forward contracts now did NOT have the (Ashanti Gold??-- Getting very senior here, or maybe not enough sleep) RISK . They seem to have negotiated contracts with a floor but no risk or upside limits. Such contracts are possible but usually expensive. Apparently he sounded smug. If so this has Very wide ramifications
Do you know the details?
Aristotle 38276
I used unsuitable to say they did not accurately convey to my audience, my intent. (Obviously or you would not have brought it up)
Unfortunately, like the Queen in Alice in Wonderland, my words meant exactly what I meant them to mean, no more no less.
Oro 38267
Loved your analysis. Unfortunately I did not have the benefit of it before I posted my last post
To anyone; Apparently the results for contest one have been released. I am most interested in the winning thinking. Does anyone know where they can be located?
Glad to see that one of our more prolific posters eats garlic ,I have just planted next years crop of elephant garlic. It's easy to grow,good to eat ,and very good for you.Follow the wisdom of Aristotle,on Gold and Garlic.Get you some.
Oilman, you raise an interesting observation. The best records of the middle ages come from England, and indeed, you are correct that the death rate of 30% from the Plague lead to substantial changes in wealth, ownership, travel, social customs, wages, and industry. The most obvious change was in the conversion from grain based agriculture to pastorial. The wool industry became so important that even today, the wool sack is a part of the seal, and the head of Parliament is symbolically seated on a wool pelt.
My own observations in Africa lead me to believe that the threat of HIV/AIDS poses less danger than the inter-tribal conflicts being played out on the continent. After 50 years of intermurals and pre-season, it appears 48 of the 51 countries are about to make a deadly run for the Gold.
I personally have seen sealed CON-EX containers and medical boxes marked UNICEF, opened, to reveal small arms and ammunition.
One can only presume the world's banks are funding more than the financial slughter of the Gold and Mine owners.
Business Week ran a short blurb on the savings rate in the US and mentioned Ricardo's controversial proposition that savings rates decline when governments reduce their outstanding debt.
The article gave the presumed cause to be expectation of a lower future tax burden allowing people to spend the money now.
I think the issues are a little more complex than this. And that the explanation given in the article is, for the most part, off the mark. First, the heavy preference given by congress to equity investing must be considered as partial cause for moving the cash balanc preference away from conventional savings and to bonds and equities (where the reduced capital gains taxes would apply). Second issue is that there is a large chunk of non-wage income from ESOPs that is not reported in the statistics and is not available to offset spending. This way, we lose whatever portion of savings has come out of ESOPs from the statistics.
The lower capital gains rate has also pushed up the stock market so that the US investor has greater incentive to both invest new funds and liquidate older holdigs.
Finally, I think that it is the restraint of government spending that has the direct effect on savings, as is the corresponding decline in debt issuance. First, the government is not competing with the consumer for goods, thus lowering the effective prices for these goods relative to where they would otherwise have been, the consumer responds to the lower prices by purchasing more items - hence the rise in spending. Second point is that government is removed from issuing fresh assets for people to save in. - Since all monetary savings are in the form of debt, it stands to reason that having less fresh debt issued would correspondingly reduce asset volumes in which savings could reside. So, the "surplus" is split between higher spending and less saving.
Globex knew, strength prior to n.y.
ran it up but not enough to set off stops
played it back but not below yesterdays' low .
NOW, you tell me, sucker them in and drop it to stops @ 271
or hold it for inside day?
Oro, I have long felt the best way to insure long term growth would be the elimination of taxation on interest from savings.
If I have followed your observations correctly to a finite conclusion, the world's economy now only works if funds, (actual and borrowed), are immediately spent.
We may have achieved 'spontaneous gratification' with each transaction. I now envision future ATM's with sound effects, when "Enter" is pressed.
http://www.usatoday.com/money/charts.htmWatch the charts today. All the markets get the same boost at the same time. Trying to get some momentum going? This is not normal. It must take a lot of money to get an average up.
I have been meditating. I do not deny the fact that the X20 X50 graph gives fairly good picture of what has happened in the relationship with the POG and the POO. As you say Sir Town Crier we do have a reasonable overlay, however; if we can have a precise graph why would we want to look at something which is only a reasonable approximation. A comparison of the change in prices by percentage is precise. I say that if the precise graph gives a different picture from the reasonable approximation, then the reasonable approximation of necessity has to be distorted. Though the distortion may be minor it is still a distortion and distortions can lead to false conclusions.
I would also like to stress that what we see in the last 12 months or so does not indicate a trend. It could be an anomaly. For example Oil leading the way may be very temporary. Oil has not exactly shot to the moon. If Gold were to shoot to the moon I believe that Oil may very well do so also but as a follower and not the leader. This would establish that the trend we have seen for the last 20 years has not changed but is only temporarily hidden from view.
One other point if I may. Since we are looking at Both Oil and Gold in US$ terms would it not be fair to say that the real price trigger for moon shots is the US$ itself? When the US$ takes a dive then we will see both Gold and Oil go to the moon in terms of the US$. If the US$ does not take a dive then Gold and Oil will not shoot to the moon. My definition of a moon shot is POG somewhere between $6,000and $36,000 in terms of 1999 US$. The POO will not much matter to me because I am not accumulating Crude Oil.
Some interesting facts revealed by comparing the real price of GOLD, CRUDE and GASOLINE:
In 1970 about the time the world began to change drastically 1 Ounce of GOLD would buy:
----------11 barrels of CRUDE and 100 gallons of GASOLINE----------
In 1980 the year when the average real price of GOLD peaked at $1364.05 (1999 US$) and the average real price of GASOLINE PEAKED at $2.78 (1999 US$) 1 Ounce of GOLD would buy:
-----------29 barrels of CRUDE and 490.67 gallons of GASOLINE----------
In 1981 when the average real price of CRUDE peaked at $68.78 (1999 US$) 1 Ounce of GOLD would buy:
-----------13 barrels of CRUDE and 333 gallons of GASOLINE----------
In 1990, the year prior to "Desert Storm", a relatively boring year in economic terms, the average real price in 1999 US$ was $500.14 per ounce of GOLD, $29.17 per barrel of CRUDE, and $1.51 per gallon of GASOLINE, one ounce of GOLD would buy:
-----------17 barrels of CRUDE and 331 gallons of GASOLINE----------
In 1999, by general consensus, a terrible year for GOLD, 1 Ounce of GOLD would buy:
-----------17 barrels of CRUDE and 240 gallons of GASOLINE----------
After we get the facts in and determine how these relationships play out in the year 2000 there are those who will say that the link between Gold and Oil has been broken. I submit that the uppermost graph on the above web link provided by RossL presents the most accurate picture of the trend in the price relationships of GOLD, CRUDE, and GASOLINE.
One year does not a trend make! Two years do not a trend make! Folks, just relax and you will see that the link in the price of GOLD and OIL has not been broken and will endure during the coming upheaval. The upheaval that we are about to endure will not be caused by the break in the link between GOLD and OIL, but rather the break in the link between the US$ and OIL. This is what I have learned by studying these price relationships and by lurking here. USAGOLD has given us the ball and all we have to do is run with it.
The ball is physical possession of GOLD and or OIL and the shunning of the paper dollar holdings at all costs. It is not practical for me to take delivery of or to store PHYSICAL OIL. For this reason I have opted to limit myself to PHYSICAL GOLD. When the "Thunder in the night" does occur it will be much too late to protect one's self. Many posters on this forum have sounded the alarm. Let's get physical!
I have developed a one-page spreadsheet that provides a good clear view of these price relationships. A perusal of the spreadsheet would absolutely blow your mind. I will be faxing the spreadsheet to RossL in hopes that he will be able to make the spreadsheet available to the forum as I lack the technical ability to post this sort of thing and make it appear in the proper format. I will fax the spreadsheet to others upon request. Any one who would like me to provide a copy of the spread sheet via fax at this time can make his or her request and provide a fax number by a posting on this forum
First of all let me try to develop a term that I am sure you might be aware of but may be helpful for all who might be lurking or want to comment or ask questions along this line. When we speak in terms of 1.00 we mean 1%. A dialog along these lines flows more smoothly if we change our description of these fractions of percentage points to 'basis points', ie. 1.00 % = a positive 100 basis points, -.94% = a negative 94 basis points, -.71% = a negative 71 basis points, 1.26% = a positive 126 basis points and so forth. In other words each 1/100th of a percent = 1 basis point. Having said that I will use the term basis points from now on when discussing the interest rate changes and the spreads among the various interest rates.
At the very end of August and into very early September the inverted spread (Fed Funds rate vs. the 30 Yr Treasury Bond) began to hover close to a negative 100 basis points. Then the inversion began to steadily narrow until on September 18th and 19th the inversion dipped to negative 48 basis points, the narrowest negative spread since June 23rd when the spread was negative 47 basis points. After September 20,the spread began to widen again to around negative 72 basis points 9/29. On Monday, Oct 2 the negative spread widened to negative 75 and on Tuesday it narrowed back to negative 52 basis points.
Simply me, you said: "�I've been watching HBM's Inversion of Fed Funds vs 30 yr. Note (sure hope I got that right). I noticed it revert to nearly positive after the Euro (actually Dollar) intervention, and watched it jump right back up over -.70 in the week or so after. I remember some mention of doomsday if it ever hit got close to -1. �"
My comments on this:
Negative 100 basis points do not mean doomsday in my opinion. Negative 300 to 400 for over a month would be scary but I do not think that Greenspan has the guts of a Charles Volker. Negative 100 or more would certainly spell contraction in the economy if the Fed holds it there long enough. I do not even think negative 100 basis points would be needed to cause economic contraction. The of size of the spread coupled with the duration is the key. No one knows what combination of these two factors would cause contraction nor how much contraction would occur nor when it would occur nor how long it would last. Hence we have the debate about Greenspan's ability to engineer a soft landing. It is too big for him and he knows it. He just has this tiger by the tale and can't afford to let it go.
Watching the spread between the 30-year bond and the FF rate is, on a continual basis, very informative in that it reveals the ongoing affects of the Fed actions. There are times when the spread will move significantly in a couple of days and then settle back to where is was and progress in one direction or another slowly scissoring but in a certain direction. The sudden moves for just a few days are a normal part of TEMPORARY liquidity situations AMONG the New York banks. These short-term liquidity situations are readily accommodated by Fed Brake and Peddle actions. The key here is that they are TEMPORARY liquidity needs within the New York banks and do not reflect any change in direction. The money market needs are so complex and hidden from view that we can only see the picture after the fact as to what Greenspan and Co. are doing by watching these spreads.
When the Fed halted the periodic upward tightening moves, apparently for political reasons, we saw a slow narrowing of the inverted spread which I believe will continue slowly until the Fed makes a move in one direction or another.
What happens, I believe, is that when the Fed stays pat over time the inversion will disappear as the general market begins to catch up with the true cash liquidity environment brought on by Fed actions. As long as the inversion persists even though the Fed is standing pat, we still have an abnormal situation. For example for the FF rate to be at 6.50% the long bond should be somewhere between 7.5% and 9.5% not the present 5.80% to 6.00% level. That would give a normal positive spread of 100 to 300 basis points. Again should this abnormal situation persist long enough, there is no doubt in my mind that we will have a recession. The market knows that and will head downward in anticipation of the coming decline in economic activity. There is a time lag between the slow and persistent Fed actions and a time lag between the down turn in the stock market and the ensuing economic contraction. We little people will always be behind the curve in information but the best we can do. This is proven by the fact that the market knows about the coming contraction before we do. I believe our best hope for timely warning lies in watching what the Fed is doing and the best way to do that is to keep a close eye on the Treasury yield curve.
The market will crash before significant economic contraction in my opinion because the market knows what is coming before it finally gets here.
Do we not see that very scenario appearing be for our eyes at this time?
They key to the inversion picture is the completeness of the inversion curve. By completeness I mean that each maturity offered by the Treasury would be inverted against the nearest maturity. Oro commented upon the completeness of the inversion some time back. I believe he said that we reached a "full" inversion of the Treasury rate curve. It may not be fully inverted at this time but is still mostly inverted. There are supply and demand situations on availability of different maturities which cause distortions but generally we can depend on the fact that the curve is still in inversion mode. The 20-year bond rate seems to be a meaningless factor, but comments on this will have to await a future post.
This subject is so complex that once in a while, when he has time to address it, ORO, gives us his thoughts and comments which are more technical but more informative. ORO, would it be possible for you give us a short update on what you see from your perspective?
"�Hill Billy Mitchell: Loved the charts. Anything that helps to put oil/gold/dollar in a one-picture perspective is very helpful to those of us trying to get a handle on this situation. As someone who's better with words than numbers, my favorite was the X 20 / X 50 chart because it seemed to show the connection and then divergence of gold and oil so clearly. It also seemed to point to the current true value of gold as $600 US Dollars right now�"
My response:
I still want to caution all on the reading of the X20 / X50 chart. The uppermost chart on the link is precise (RossL has labeled it "CUMULATIVE REAL PRICE") in my opinion and the X20 / X50 does not match it precisely, therefore the X20 / X50 chart is not precise. At this point I am by myself on this point. RossL and Townie have not concurred with my pickiness on this point.
Also the true value of Gold is not $600. That conclusion is based on at least two premises which are in question. Premise # 1 is that the true value of crude is $30, a very questionable premise. Premise # two is that the X20 / X50 chart is accurate, also a very questionable premise in my opinion only, it seems. If the true value of gold is $600 and the true value of crude is $30, we should all be in paper and we have been mislead by ANOTHER, and a host of other very brilliant folk who post on this forum. I doubt very seriously that very many physical holders of Gold will sell @ $600. I can assure anyone out there that if you do sell at that price I will be one of your buyers because I will still be accumulating by converting each and every one FRN left over after feeding, clothing, and sheltering my family.
I only offer this in concern. I feel very strongly about this. I admit that I could be highly mistaken and certainly do not have the credibility to be followed.
I do hope that what I have said has not appeared mean-spirited or abrasive. If so the cause is my lack of ability to communicate.
Very Respectfully,
hbm
PS: It would helpful for you to see where I am coming from if you had a copy of my one-page spread sheet which I offered to fax in a prior post today.
@ Hill Billy Mitchell (10/05/00; 10:14:06MT - usagold.com msg#: 38320)
re: the link between oil and gold-
Hill Billy, we both know the truth is often simple...
I think your answer contains a great deal of truth.
(Thank you, M.K/USA Gold for this forum, and many thanks to the those here who share so much insight and wisdom. My understanding of monetary truth grows proportionally.)
As I've seen no interest in my inquiries about oil as a reserve currency, I would like to pose the issue in a slightly different way, as perhaps I was not clear regarding my concerns. I believe it is a matter of some importance in how we analyze the events of the coming days, and how we prepare for them (ref. my post: miner49er (10/1/2000; 18:37:14MT - msg#: 37999)).
The basic inquiry revolves around whether the U.S., even at a low and discreet level, was consciously aware of the use of oil as a de facto "reserve currency," or whether the effort was more an ad hoc exploitation of an apparent advantage to be had in a cheap-oil-high-productivity-ratio.
The premise of a deliberate effort would have implied some kind of transferral from the dynamics of the linked gold-dollar standard, and a systematic deployment of the new relationship.
In the gold-dollar link, the convertibility factor provided the foreign banks a check over how we managed our monetary policy, in that their ability to exchange gold and dollars could alter the composition of our reserves. There indeed was a system in this arrangement, and however faulted, provided a framework in which to develop policy.
If such a system could be provided in an oil-dollar link, then, despite the rushing of the waters sideways, hither and yon, in the microcosmic perspective of day-to-day politics, an overall purpose could have at least been worked towards as a defined system would have provided a framework for explicit policy initiatives.
The methods would be different to be sure, in that the gold-dollar standard had differences vis-a-vis an oil-dollar link, e.g., actual above-ground AU reserves vs. future in-ground oil; under-valued and irregular valuation of gold, vs. a regular, basically marked-to-market valuation of oil; and that the reserve itself was, in gold's case, completely under the control of the country whose currency was linked to it, vs. oil wherein it is not (thus an external oversight of the exchange).
It seems that from my understanding of Another/FOAs writings that a system did evolve, and that its current (and last) permutation has become the present state of the paper gold markets.
Without recounting this history, the purpose was essentially to keep gold stable and available, so oil producers could acquire it as partial payment for their oil. In return, they would continue to provide oil inexpensively for payment in U.S. dollars. This would keep the dollar, now unlinked to gold, as a viable world reserve currency until a replacement could be developed.
(Please forgive me for going over the elementary parts of this, but I feel it necessary since a) you don't know if I really have an understanding or not -- in fact, I don't know if I have an understanding oftentimes... and b) new people to the forum can be afforded a brief overview of the discussion, so they can play along at home -- I always appreciated this when I first started my education.)
So, if the U.S. had a part in this (albeit for a different purpose -- not to buy time to build an alternate reserve currency, but hopefully to fix the dollar), then this should be carrying through to the present in some form.
If it is, then the developed interests in such a system would by now be very powerful, and could certainly influence the political actions of the players currently holding office. If not, then, although an awareness of the relationship may be present, the pattern of a pillage/plunder exploitation of the relationship would be the habit, and there would probably be no organized constituency to govern it.
Hence, there would be no policy behind our "public" energy policy, and it, itself, would be haphazard and up to the narrow, politically influenced whims of the current office holders.
This is where the concerns set in. In the scenario involving a conscious policy, this game of chess would be at the point of resignation by the U.S., indeed they would have resigned long ago (although the game would continue to be played so that the viewing public would feel they were getting their money's worth...).
The U.S. would have played along with Europe/Arabs calling the shots, and the course of action would attempt to be in the best interests of all parties concerned. In the tradition of classical diplomacy, stability, not destruction, is the goal, and it is arrived at by first acknowledging the legitimacy of powers and their spheres of control. It does not necessarily mean these powers are in place by just or moral right, but they are for practical purposes "in place." For the sake of stability, an equilibrium among these competing powers is pursued. Conflicts are sought to be mitigated inside of acknowledged boundaries, rather than unrealistally eliminated. Accommodation is sought to promote stability, rather than risk backing a power into a corner where diplomacy might break down, and other undesirable measures taken.
Therefore, it is clearly not in the best interests of Europe, Arabs, China, or anyone to see the U.S. shattered into pieces. TRUE, there are revolutionary forces that do want to see this, both as sovereign entities (Iraq for instance), and parties within the otherwise stable powers. And TRUE, there are cunning self-interested players who wish to exploit the situation big-time for their advantage without regard to anyone else. And TRUE, the U.S. would naturally rebel at this, but it would be constantly brought to bear upon them, that the borrower is servant to the lender, and their debts are being called in. Now, do you want to work with us, or must we pursue these other measures.
The problem, as I see it, is that the longer the struggle hopelessly continues, the more people, parties, powers will ultimately become so aggrieved, that more revolutionary minded forces will gain influence, progressively decreasing the possibility for any semblance of an orderly unwinding of our affairs (and the more entrenched and mature the expoitative self-interested forces become as well -- further aggravating the situation).
These aggrieved powers may be overtly challenged (e.g., Iraq's embargo), voluntarily submitted to (gold holding nations that have chosen to absorb an uneconomic amount of dollars, thereby importing inflation to their countries), or non-voluntarily submitted (3rd world countries having IMF policies thrust upon them to "convince" them it is in their best interests to hold dollars in reserve). All these powers have had their citizenry suffer unnatural hardship by these unnatural policies for a long time.
Europe now says, it's time to move on. If the U.S., absent the controls established by having some sort of articulated oil-as-reserve-currency policy, becomes unpredictable, and only goes down kicking and screaming, then other measures must be taken, because the onward flow of the river must (and will) continue.
Back to the nature of my inquiry, with a different question posed: What measures can Europe take to bring this to as much of a graceful close as possible?
It seems that they chose one, in requesting the U.S. to intervene on behalf of the Euro. Without the selling resistance to this intervention, the Euro would have shot up perhaps to 95(?) to the dollar on this action alone, with gold rising commensurately. Raising Euro rates could have some "mild" effects, but hurts the Euroland economies, and establishes a precedent of linking the Euro unnecessarily to the US Dollar. Buying Euros with Dollars is another one, but temporary and proven to be ineffectual historically -- and also harmful to Europe as well.
Another WA pronouncement could be a financial Hiroshima, and any public outright purchases of physical gold in quantity by Europe, Arabs, or China would be Hiroshima x 1000. Hence it seems to me that there are no mild options left for any diplomatic denouement.
Can anyone make any suggestions here?
I truly do appreciate any of you who have read this in its entirety. If this has been addressed elsewhere in the past, forgive me as there are so many posts, it is hard to catch everything. Offered, genuinely and as always, IMVHO...
I and the Hobbits sincerely appreciate your continuance of the illumination of truths in the attempt to increase the level of knowledge on what is really happining in the art of finance. Hurry up with the book, but then you shall have to send out updates to everyone that purchases one.
<;-)
Sorry == WAY OFF subject --- BUT I could not believe it !
The following article on "dumbing down" appeared on the MSN Homepage for a FEW MINUTES this morning ! -- I could not believe it and copied it, and after saving it away in my slow style, I went back to get the LINK -- and WOWSERS -- IT had been pulled !
Question -- Is this a planned attempt to lead young folks into thinking that a college degree is something of no value and the new cyberworld will take care of everything ? OR, JUST LIKE GOLD is a worthless relic of the past ?
Oh, My oh My, as a older baseball announcer of the "Seattle Mariners" pronounces. (There, that is my off subject items of the year, I promise.)
<;-)
==========
Leaving School Early
Do you really need a college degree?
By Claudine Williams
Bill Gates didn't do it. Neither did William Faulkner, F. Scott Fitzgerald, or Ted Turner. None of these highly successful individuals finished college. You might be wondering if it's worth it. Do you really need to go to a four-year institution to be successful? Well, the answer is � maybe.
-------------------
Companies are looking for people with a baseline of technical knowledge.
-------------------
In 1997, the U.S. Census Bureau reported that the average college graduate earned $40,478. Compare that figure to the $22,895 income of the typical high school graduate and the difference is clear. Grads earn a whopping 76 percent more. However, if you have tenacity and a little technical training under your belt, you could do very well without a degree.
Alternative Success
Even a college degree is no guarantee of success. Scott Lane is CEO of Oxford Lane, a Colorado training center that specializes in networking certification. He claims that many college graduates still need training in order to have a fruitful career. "We have noticed that a lot of the students coming out of college--although they have information system technology degrees--they still need to come in and get certified," he said. "Companies are looking for certification."
A student who may have just graduated from high school, Lane adds, can get into the computer industry by entering a computer certification program. You can get your certification in six months. If you decide to go on to college, not only would you have a job waiting for you, but you may very well be able to go for free. Many technology companies are so eager to hire certified computer specialists that they offer tuition reimbursement.
"With a Cisco networking associate certification," Lane believes, "you can come out of school making about $50,000 a year. If you have no hands-on experience you can make about $40,000." And you don't need any experience for these certification programs. "One thing that's so appealing is that you pay a lot less for the certification," according to Lane. Certification for some Cisco networking programs run about $4,000.
Electric Youth
Current high school graduates are lucky because time is on their side. They are entering the computer industry just when the demand is high and supply is low. The explosive growth of this industry began about four years ago, when companies like Microsoft and Cisco needed to find qualified people who knew their product. These corporations and others came together to start certification programs to fulfill that need, according to Lane.
"Companies are looking for people who have a baseline of technical knowledge," he said. "A lot of times colleges that provide a four-year degree are teaching outdated skills. In the certification program, they are teaching the latest technology that people need."
Cisco system experts administer routers and switches. Any company with more than 30 computers needs to have a router or switch to segment their network. Lane's technical school, which offers hands-on experience and a free internship program, is the largest Cisco training facility in the state of Colorado. "Right now the industry is lucrative for somebody to go out of high school and get a certification to have somebody else pay for their college." Lane is also quick to add that students should get a four-year degree.
"They don't have to," Lane admits, and they'll still make great money. "But there will come a time in about four or five years when the IT industry begins to catch up with itself again with enough workers. Having a college degree will be very important."
A Case in Point
Students who plan to enter liberal arts fields can also find good jobs without a college degree, provided they are hardworking and willing to enroll in a trade school. Chris Watts, a public relations professional who worked in the Washington news bureau of the Associated Press, has a bias against college. He changed his major four times in a single semester at the University of Connecticut.
"After two semesters, I had second thoughts about going to college," he admits. Watts experimented with majors in music education, journalism, music theory, and Middle Eastern studies. "I went to my parents and said there's no reason why we should throw money into this situation and try to fix it. My parents said this made sense." So Watts dropped out of school and, instead, went on a month-long backpacking trip through Europe.
Upon his return, Watts enrolled at a trade school to learn broadcasting. Although he'd changed his major frequently in the past, he discovered that he liked journalism and could make a living at it. He ended up working for two of his hometown radio stations earning about $7 an hour. Watts later tried out for a job at the Associated Press, but failed the writing test.
Determined to pass the exam, Watts studied the AP style manual and retook the test. He passed it the second time and was offered a job in Washington, DC, at $35,000 a year. "I really tried to take in as much as I could," he said. "My dream was to be a correspondent and I worked the White House. I was there and covered the 1996 election, and that was pretty cool."
Watts, now 27, went on to work for a radio news service in Connecticut, where he managed 18 employees, before finding his present job at a small public relations firm. He says that he was successful because he worked hard and learned all he could on the job to move up in his career.
"A lot of companies would not look at you if you don't have a degree," he laments. "Companies are passing up a lot of good hard workers. You don't have to go to college if you have the drive and if you are willing to sacrifice."
Claudine Williams is a full-time freelance writer in metro Atlanta. Her previous work has appeared on Office.com, and she is currently developing a project with Essence magazine.
=====
<;-(
Don't look now ! -- BUT like my Crystal Ball said -- Gold Stocks are --
GETTING KILLED !! This may be the last "fall out of bed" action that means that the start of the GOLD BULL is now VERY NEAR !! -- Hold on tight to the YELLOW !!
<;-)
Did I read you correctly? Did I understand you to have made money as a quant head-hunter?
If so, I'm very curious what the criteria and experience for a good "trader" (lower-level quant?) are. A friend of mine in the gambling business was "rushed" by a school chum for that job maybe seven years ago, specifically because he had experience gambling professionally. (Ultimately he declined the offer.)
At my urging he queried his chum on how one advanced in the business. It amounted to, to over-simplify, "if you're successful with small fundlets (several million dollars) you get to play for bigger stakes." BUT we determined there was little "long-run" in this method -- being lucky was more important than being good in terms of advancing to managing larger capital pools.
I beleive someone, ORO? yesterday posted the equivalent, essentially that even prudent fund managers had to go with the momentum or be replaced. Does this jibe with your experience?
Regards,
Journeyman
P.S. Enjoying your exchanges with Ari and Oro. Don't get TOO caught up in the details though. Yea, I know - - - I have to clamp my hands in a vice at least ten times a day to keep from posting on intriguing but time-consuming subjects!!
When I was quite young, my father had one of the first telephones in our
neighborhood. I remember well the polished, old case fastened to the wall.
The shiny receiver hung on the side of the box.
I was too little to reach the telephone, but used to listen with
fascination when my mother used to talk to it. Then I discovered
that somewhere inside the wonderful device lived an amazing person - her
name was "Information Please" and there was nothing she did not know.
"Information Please" could supply anybody's number and the correct time.
My
first personal experience with this genie-in-the-bottle came one day while
my mother was visiting a neighbor.
Amusing myself at the tool bench in the basement, I whacked my
finger with a hammer. The pain was terrible, but there didn't seem to be
any
reason in crying because there was no one home to give sympathy. I walked
around the house sucking my throbbing finger, finally arriving at the
stairway. The telephone! Quickly, I ran for the foot stool in the parlor
and dragged it to the landing.
Climbing up, I unhooked the receiver in the parlor and held it to my ear.
"Information Please," I said into the mouthpiece just above my head. A
click or two and a small clear voice spoke into my ear.
"Information."
"I hurt my finger..." I wailed into the phone. The tears came readily
enough now that I had an audience.
"Isn't your mother home?" came the question.
"Nobody's home but me," I blubbered. "Are you bleeding?" the voice asked.
"No," I replied. "I hit my finger with the hammer and it hurts."
"Can you open your icebox?" she asked.
I said I could. "Then chip off a little piece of ice and hold it to your
finger,"said the voice.
After that, I called "Information Please" for everything. I asked her
for help with my geography and she told me where Philadelphia was.
She helped me with my math. She told me my pet chipmunk, that I had caught
in the park just the day before, would eat fruit and nuts. Then, there was
the time Petey, our pet canary died. I called "Information Please" and told
her the sad story. She listened, then said the usual things grown ups say
to soothe a child. But I was unconsoled. I asked her, "Why is it that
birds
should sing so beautifully and bring joy to all families, only to end up as
a
heap of feathers on the bottom of a cage?" She must have sensed my deep
concern, for she said quietly, "Paul, always remember that there are other
worlds to sing in." Somehow I felt better. Another day I was on the
telephone. "Information Please." "Information," said the now familiar
voice. "How do you spell fix?" I asked. All this took place in a small
town
in the Pacific Northwest.
When I was nine years old, we moved across the country to Boston. I missed
my friend very much. "Information Please" belonged in that old wooden box
back home and I somehow never thought of trying the tall, shiny new phone
that sat on the table in the hall. As I grew into my teens, the memories
of
those childhood conversations never really left me. Often, in moments of
doubt and perplexity I would recall the
serene sense of security I had then. I appreciated now how patient,
understanding, and kind she was to have spent her time on a little boy.
A few years later, on my way west to college, my plane put down in
Seattle. I had about half-an-hour or so between planes. I spent 15 minutes
or so on the phone with my sister, who lived there now.
Then, without thinking what I was doing, I dialed my hometown
operator and said,"Information Please."
Miraculously, I heard the small, clear voice I knew so well.
"Information."
I hadn't planned this, but I heard myself saying,
"Could you please tell me how to spell fix?"
There was a long pause. Then came the soft spoken answer, "I guess your
finger must have healed by now."
I laughed, "So it's really still you," I said. "I wonder if you have any
idea how much you meant to me during that time."
I wonder," she said, "if you know how much your calls meant to me.
I never had any children and I used to look forward to your calls."
I told her how often I had thought of her over the years and I
asked if I could call her again when I came back to visit my sister.
"Please do," she said. "Just ask for Sally."
Three months later I was back in Seattle. A different voice
answered "Information." I asked for Sally. "Are you a friend?" she said.
"Yes, a very old friend," I answered.
"I'm sorry to have to tell you this," she said.
"Sally had been working part time the last few years because she was
sick. She died five weeks ago."
Before I could hang up she said, "Wait a minute.
Did you say your name was Paul?"
"Yes."
"Well, Sally left a message for you. She wrote it down in case you called.
Let me read it to you.
The note said, "Tell him I still say there are other worlds to sing in.
He'll know what I mean."
I thanked her and hung up. I knew what Sally meant.
Never underestimate the impression you may make on others.
***
The problem, as I see it, is that the longer the struggle hopelessly continues, the more people, parties, powers will ultimately become so aggrieved, that more revolutionary minded forces will gain influence, progressively decreasing the possibility for any semblance of an orderly unwinding of our affairs (and the more entrenched and mature the expoitative self-interested forces become as well -- further aggravating the situation).
***
And that is exactly the process failing large enterprises go through. I have watched closely two medium-to-large enterprises proceed to advanced states of decay as you describe above.
Todays dec gold should have replicated 9-22, tomorrows range should fill that area and first test 279, if broken than 282 which is critical break out282.60 exact.
Oilman - appreciated your ruminations on AIDS. I don't recall that being discussed here, though, like you, I am sure there will be plenty of economic ramifications.
"My definition of a moon shot is POG somewhere between $6,000 and $36,000 in terms of 1999 US$. The POO will not much matter to me because I am not accumulating Crude Oil."
Correction:
I should have said $6,000 and $36,000 in nominal dollars not in terms of 1999 dollars.
Greetings to this fine forum. I do not want to waste too much of anyone's time...so I will be brief. I have lurked for nearly a year now and I have nothing much to add to the going ons here except a thank you to our host and to all those who post here. You have changed my view on everything that transpires or is reported. I can now avoid the verbal diarrehea that is all around me and counter (when required) with facts and with HARD arguments. This forum is a saviour for some of us as the quality and breadth of the discussion is inspiring, educational and admittedly addictive. I have turned on more than a few friends, family and colleagues to you all, and hopefully improved the offtake of physical as well. Again thank you to all!
I believe we are at the point that this battle may turn. A day like today is very disheartening for us all, especially those like myself who invested nearly everything in gold mine shares. That has changed since last September and my slowly increasing physical holdings do keep me positive but I cannot help but feel loss, disappointment and some anger at my situation. I own some "high quality" unhedged firms but they too are getting caught in this downdraft.
A lesson learned (hello FOA / Trail Guide) but one that came too late I guess.
As a Canadian, Quebecer and Montrealer the recent loss of Pierre Elliot Trudeau does not help the present emotions, but his passing and the rememberance of his life (through rose coloured glasses of course) does remind me what values we all should have in our lives and what we can aspire to.
My stash of physical gold reminds me of them as well. Especially my pre 1933 coins...with their inspiring messages like "Gott Mit Uns" or "Fraternite et Liberte"
I hope that the recent market actions are not indicators of a light slowly flickering, as was the case for Trudeau in his final peaceful days in Montreal, instead I hope that these are the days that finally represent the turn that others speak of.
Even it means my losses continue on the paper side.
It is time, I am ready, please deliver us all to the values this world needs more than ever.
Rasbora
I hope our gracious host allows me one comment to Wolavka...I own major shares in GLDR, and have since 1995. Not exactly proud of it these days...however volume today was a whopping 35 times the average...was that you out there? If not who was it?
TG says it is "Showtime"; remember the movie "New York, New York"? I would assume all the insiders are taking positions in order to benefit. In fact, FOA did make that point some time ago. It sure seems like time to fish or cut bait for many. Watching and waiting....
<< Lastly, turning to the oil market, late yesterday the DOE released information about who will receive barrels of oil. The most interesting aspect, besides the fact that more sweet crude was released than was expected, was the fact that Morgan Stanley came away with 2 million barrels -- not that they are in the business of refining it, for it appears this oil will be headed overseas (I am indebted to Joanie for pointing this out). Obviously the SPR, besides being used for political purposes, is now being used for speculative profits. To quote Joanie:
This is infuriating isn't it? Sure, we all like to see lower prices at the pump and in the furnace, but is there anything -- anything whatsoever -- that this current administration hasn't rigged, lied about, twisted, conspired or otherwise made a mockery of? You'll be hard-pressed to come up with anything, so don't get too worked up about it, OK? >>
Greetings to a fellow Canadian. I share your sadness for the loss of a great Canadian. You said:
"I hope that the recent market actions are not indicators of a light slowly flickering, as was the case for Trudeau in his final peaceful days in Montreal, instead I hope that these are the days that finally represent the turn that others speak of."
*********
Slowly flickering (down) is the likely course we follow. But we do so with feelings of anger that on the one hand that these markets are not free, but somewhat relieved too that prosperity is also the result. Ambiguous, yes.
But I think they will keep these markets (and gold too) under control for another year and a bit. Read January, 2002. Manipulation of currencies is rampant on both sides of the pond, and all the big players on these hemisphere stages are in (on) the fix. The markets will flicker and hopefully not falter without our safety net of the EURO to catch us all up. The alternative will be painful and unthinkable. In the meantime we accumulate the yellow and masticate the nails, yes? At least WE know!
Yes I suppose I was a "quant" headhunter, altho I never heard that phrase till recently and am not really sure what it is. If someone roared up to me and announced breathlessly that they were a quant trader, I think I would be pretty suspicious tho.
In every field the real professionals are pretty low key. They know they are good. They don't need mystique and buzzwords and all the other things to impress their friends. The only people they want to impress is themselves, and once in a while, their equals.
Traders are ultimately a personality. One that doesn't get very emotionally involved in their positions, have a good mind, and intuitively calculate probabilities.
Since these qualities probably fit a professional gambler, I'd say it was a good choice.
As far as the junior level traders, there is no real criteria. All the bright types in these financial institutions can imagine how their friends will react when they casually mention that they traded 2 billion dollars today, so they all want in. So it would be unusual for a headhunter to go after a junior, because they are already breaking down the door, and the training can be VERY expensive. I've seen a junior lose 1/2 a million in less than a week. I only ever went after 1 partly trained one, and 2&1/2 years later his new employer shipped him off to London where his first year bonus was 7 figures US. He had all the right stuff.
Particularly in the Foreign Exchange (FX) market, where profits and losses are made on 1/1,000 of a cent move, the pressures are enormous. If you are at risk for 1 or $200 million, you don't sleep well because there is so much that can go wrong overnight. Top of the line FX interbank traders tend to burn out in less than 10 years, not so much in Money market traders, CB traders, and institutional, because the positions are smaller or really -- there is not so much at risk, hanging on a hairtriggers. It is easier to make money, and you can turn off occasionally.
Sticking with the FX interbank traders, because thats where the pressure is, there are 2 basic personalities who reach upper levels. Those who go to Vegas (sp) (the big swinging Dicks) and those who don't. The Vegas boys are compulsive gamblers, and bet on anything as a way of life. Sooner or later everyone of them craps out because their lucky streak ran out.
The ones who don't gamble, plug along, and if they are lucky enough to be in the right place at the right time, they get to advance, same as the rest of us. But thats about the only luck involved.
Your professional gambling friend, if he is professional, does not gamble. In common with money managers of all ilks, he has learned that the first three rules are CUT YOUR LOSSES, CUT YOUR LOSSES, CUT YOUR LOSSES. If you hold bad cards with poor odds of winning, GET OUT. No matter what the other nuts at the table may say, there is no obligation to stay in a losing situation. Your friend also knows he can stand a number of small hits and still come out a winner when things turn in his direction big time. Ultimately it is a 51% game, win 51% of the time.
I'll bet he seldom bluffs either. Just enough to keep the opposition off balance and feeding money into the pot.
Because of the necessary cut your losses, ride your profits nature of the mentality to be a successful trader, the net effect is; huge momentum player, altho I doubt that many of them think of themselves as momentum players.
In short, to the successful ones, it's a job.
Many thanks for the PS's. They have been right on the money. While this has been a worthwhile exercise (I got 1 new angle, and polished an old one) I think I'll have to largely go back to lurking.
That great englishman no doubt was Shakespeare. Another
one you and others might like is: "Our doubts are traitors,
and makes us lose the good we oft might win by fearing to
attempt"
This guy, and I think I know who he is, can't tell Austrian economics from astrology.
One quick example. He claims of the Austrian School that, "They can't imagine this solution because they view money as a commodity -- or an economic
good -- that can't be brought into existence out of thin air. But if you understand money as an
abstract legal power, then a nation can successfully create and substitute cash for the already existing
and suspect bank credit�."
Clearly he hasn't done his home-work. Austrian School economists know ANYTHING can serve as money, just that gold evolved to be the preferred medium of exchange for very good reasons, Adam Smith and David Ricardo not-withstanding:
"*From the point of view of this insight one may
call wasteful all expenditures incurred for increasing
the quantity of money*. The fact that things which
could render some other useful services are employed as
money and thus withheld from these other employments
appears as a superfluous curtailment of limited
opportunities for want-satisfaction. *It was this idea
that led Adam Smith and Ricardo to the opinion that it
was very beneficial to reduce the cost of producing
money by resorting to the use of paper printed
currency. However, things appear in a different light
to the students of monetary history. If one looks at
the catastrophic consequences of the great paper money
inflations, one must admit that the expensiveness of
gold production is the minor evil*. -Ludwig von Mises,
Human Action A Treatise on Economics, Third Revised
Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 422 -available also from
http://www.mises.org/humanaction.asp]
Mises admits elsewhere to once having subscribed to the Ricardian notion himself.
The reason no serious Austrian Economic STUDENT will bother debating him, not to mention anyone with a degree, is simply that he doesn't know what he's talking about. And I'm being kind.
There aren't very many Zarlingas around, and fewer named Stephen. If this is the S. Zarlinga I know of, he ripped off two folks I know quite well, one of them Howie Katz, author of "The Paper Aristocracy" and publisher of "The Gold Bug" many years ago, and the other, one of his backers.
I seem to remember reading somewhere the term "currency" was originally banker lingo for outstanding bank notes that were "currently" redeemable, referring specifically to "REDEEMABLE IN GOLD ON DEMAND" notes the banks had issued. The "ON DEMAND" part is what made them "current."
I find myself wondering from time to time what the attitude toward each other is amongst the nations as they watch the candle growing dimmer with time. Are we all in this together, or will it be "just business" as they say just before one gets a bullet behind the ear?
I too would be interested in hearing what others think about your questions. Perhaps this may shed some light on the question or, at least, jump start the discussions...it's a post from ORO, I believe, from some time ago though I don't have the ID #.
<< The central bank may attempt to slow the rate of damage and extend the "reckoning" to a later date, however, it has not the option of avoiding the damage, nor of preventing the "reckoning" at the end of the process. Failure of debt money systems is structurally assured, what remains uncertain are the timing, the rate of change, and the ultimate degree of damage.
The "near end" in the 70s was not quite as intense a crisis as it had potential to become because of the support granted the dollar on international markets by the central banks of nearly all nations [...] Today, international support on this scale is not available. Like the man at the grocer's who has accumulated too high a credit balance and is asked to pay in cash. "You are my best customer, but you pay off such a small portion of your outstanding bill that keeping your custom is just not enough of a reason to accept your credit. I would do just as well if I closed shop and we were both ruined- because I can't afford you, and you can't afford yourself." >>
Somehow, I just don't see the rest of the world "closing shop" to keep us company...
Rasbora, welcome to the forum Sir. Don't be so quick to rush off...pull a chair up to the Table and stay for a while and make yourself comfortable.
You said "A lesson learned (hello FOA / Trail Guide) but one that came too late I guess." And I say, better late than never! Sometimes, learning about the topics discussed here can instill a sense of urgency to act but I think there is plenty of time to implement a plan of regular acquisition of physical gold over time with "disposable income" of course. I have often found each purchase to be at a better price than the last. So, when the next "installment" comes around, I suspect it may even be at even better prices. No need to rush anything. No stress. Given that gold is at a 20 year low, I can live with that...
Just checked the POO and the POG. The USG has this thing tighter than a drum. Nothing will stir and nothing will seem out of control for a month.
Apres Nov.7 we wait for a murmour. I have a feeling this garbage will continue or it will stop. Kind'a agreeing with Steve H. from a year ago, "... nothing will happen until after the elections..."
WITH MUCH TALK of FOUR LETT. WORDs [LIKE BUSH & GORE] WILL TELL WHAT WENT WELL THIS WEEK. DOES it SEEM you HEAR too MANY FOUR LETT. WORDS of LATE? WELL, HERE GOES....
POLS-
SLIK WILL, GLIB BILL, SOON GONE [HELL YESS!]. HITS ROAD ASAP, WON'T STOP GALS, LUST [HEAD ONLY], or LIES [LOTS MORE]. PLAYS GOLF WITH VERN, WINS WITH FONY CARD. LIVEs AWAY FROM HILL., CALI. C-LEB PROB, WILL CONT. SHOW HIND PART ALOT.
ELEC TIME GAMEs-
BUSH GETS GORE SPAT- BOTH PROB BAPF [BOTT & PAID FORE}. BUSH SAYS GORE MATH POOR, MOST DON'T CARE.
BORE GORE, WITH MANY TALL TALE, SAYS POOR NEED CASH FROM RICH, WILL TAKE AWAY MUCH MORE WHEN ABLE.
DRUG GIVE AWAY RUSH- LOTS CASH GIVE AWAY, CAN'T SWAY VOTE.
GORE PETR.GRAB- NEED MORE OPEC FLOW to WEST, GORE WANT MORE VOTE & SAVE MANY FROM COLD [SURE], PLAN GOES AWRY & WILL BACK FIRE. MANY SAYS ELEC. PROB. LOST CAUS WITH GOVT PAWNs LINK. WON'T TRIM GOVT!
HILL. VERS. RICK-
FORE-CAST: RICK WINS OVER BOOB HILL., FONY KICK BACK LADY GONE BACK HOME, LUCK RUNS COLD. HIDE FROM PAST & HUSB, LIES LIKE BILL ALSO. MORE CUCK-HOLD TIME. GLAD SHE'S AWAY FROM WASH. at LONG LAST!
INTL-
EURO FREE FALL COST LOTS WHEN DOLL SOAR. BUBA COME AWAY FROM COMA WITH FACE LOSS, WARY of WEST BANKs. SUPP COMES VERY LATE. ROBT. R. SLAP in FACE, WON'T PLAY BALL. ROOT of EVIL? IRAQ LIKE EURO, LBMA SETS GOLD COST.
ALAN-
G.MAN OKAY WITH FIAT FREE FLOW, MAKE LOTS MORE DOLL THIS WEEK & NEXT. SOLD AMER. FARM, PROPs STOK MKTS. DEBT GROWS WITH LIES. PLEA: STOP GIVE AWAY SOON!
GATA GAVE GOLD HOPE, ALAN TAKE AWAY SAME. FORT KNOX GOLD GONE NEXT? SOME WANT "FREE" GOLD SOON. DAMN RITE!
IOCC-
JUAN ENDS BEST GAME EVER. GAVE FOOL GOLD AWAY LIKE LBMA.
MKTS-
TECH GOES BEAR, MELT DOWN & FLOP, HURT MANY FOOL in HERD THAT STAY & HOLD LONG TERM, WITH NARY a STOP LOSS. WHAT RISK? WHAT MELT DOWN? WISE STAY WARY. GOLD BULL LUCK GONE, WILL WAIT SOME TIME. SILV. ALSO HELD DOWN.
CAFE NEWS-
BILL SEES ROSE WITH WILT & ODOR. RUSS WON'T HELP, TIED WITH BANK GUYS. BILL CRYD FOUL [FISH]? CAFE SITE GOES MOSH PITT OVER THIS FUSS. MANY RANT & RAVE WITH ZEAL! TUNE in NEXT WEEK.
WILL be GONE FROM SITE for SOME TIME as FOLKs TAKE me on TRIP to DISN. LAND. GONE FOUR DAYS! {HAHA}
ADEU {sp?}
If this statement is true, the SM's are REALLY in a toilet bowl freshly flushed!!
-------------------------------------------------------
"The problem is we have 87 percent of trading controlled by local individuals and many of them bought shares on margin in speculative trades or day trading."
How funny is Mr "Donkey" Clinton?? OK let me see if I can do this into perspective. Donkey Clinton ask OPEC to please give more oil, it is very important for us, as well as OPEC. Then at the same time he is asking congress to pass any bills possible to get our needs off OPEC.
Wolavka keep showing how persistance pays off.. heheheheh
By which I mean tell wealthy producers to quit, "shrug", and invest their wealth in gold. Take a mulligan on their past life. It's in your own, and thus theirs as well as everyone's rational self interest to do so.
Don't follow the PB site anymore but always wondered about the rants about Fannies (not at those bars mind you)and the securitization of debt, creating money in the new economy etc. Well, believe it or not, I finally got it straight! There was an article in a local paper here the other day about Fannie Mae; they are "comin' to town" (just like Santa right?)! Those good times they gonna roll for all kinds of projects that have been impossible to finance. In this economy you would have thunk that anybody who wanted to own would well, hang onto your wallet; they ain't through yet. There is a project being financed by FM that was "TURNED DOWN BY BANK OF AMERICA" among other foibles. This project is in a questionable yet temporarily trendy part of town and "lofts" are the ticket don't you know. Securitization of debt; got it!
Also, true story: I used to do business with a guy who, after many years had gone out on his own, started a small manufacturing company and, after five years, was pretty successful. Trouble was, the hours were terrible. I suggested he sell the business. He did. Got a good price. I spoke to this guy about a year after he sold the business to catch up. Seems he had taken one of those courses on selling puts, options, calls, and all the other financial esoterica (crapola) and was making a fortune. He had made so much money he had forgiven a large part of the debt he had financed for the fellow who bought his business. I hung up thinking what a schmuck I was; 'cause here I am in contrarianville buying all this contrarian stuff and being real cautious. Guess what? Today my friend called. He is looking for a job. He lost a bundle. I am helping him the best I can. Regards....CM
Aussie dollar and NZ issue are at record lows versus USD. The ratio is fundamentally irrelevant--wrong benchmark anyway. What's wrong with this picture?
Oil distribution companies say they are responding to a request from International Trade and Industry Minister, Takeo Hiranuma to release 6m barrels of heating oil to drag down surging crude prices down to US$25 a barrel.
Trade Ministry's oil planning division expects 11 Japanese oil Japanese oil companies to take part in the release.
EURO RISE SET:
The stage is set for the euro to raise its golden club or else world-wide interventions against the $ have to begin�
(singlion) Oct 05, 20:15
Traders believe Treasury profited as G7 drove up single currency.
Money Unlimited Larry Elliott, Economics editor Thursday October 5, 2000.
The Treasury cashed in on Britain' involvement in the concerted G7 intervention to support the euro last month by selling the single currency for an instant profit after it rose on the foreign exchanges, it emerged yesterday.
Official figures detailing Britain's stock of gold and foreign currency reserves reveal that the government bought €85m (about �50m) on September 22 as its part of an agreed rescue bid for the ailing euro,but offloaded large quantities of the single currency later the same day!
Click URL for full story.
Comment:
If these guys(Gorden Brown,and friends)can manipulate currencies so easily,it stands to reason they can also manipulate other forms of value.....GOLD!!!.....beesting.
The Five types of people in this world.. which are you?
1. Saints...common sense,healthy egos, good as gold-hearted but limited minds. emotionally positive mystical martyrs
2. Mediocrities... subconsciously envious of thinkers whom they legally control. small minded power lusters- "Cronus"
3. Sinners... pleasure seekers with clever rationalizing minds, emotionally negative skeptical satyrs-Titan "Prometheus"
4. Thinkers... seek the pleasure of being productive. small ego thus rational martyrs supporting 1,2,3 (non thinkers) Titan "Atlas" or "scabs"
5. Thinkers... same as 4 except healthy ego and thus unwilling to support 1,2,3 thus on strike saying, "why bother?" and investing in gold.
Olympians or "strikers"
We have gone through this before in a number of posts between myself and FOA. I poured some rather acid criticism over the workability of the idea. The approach is monetarist in that monetary expansion is matched to growth in output. The measurement of output in this scheme receives heavy attention in finessing the measures to allow quicker rates of monetary expansion. The monetarist target of some 2% price inflation is met by adjusting Fed interest rates to restrict credit when currency depreciates at a quicker rate, and to lower it when price inflation is near 0 or when the debt markets become stressed.
The productivity of oil was in the low cost of its use relative to coal, its relative ease of refining for production of plastic precursors which permeated our life in everything from styrofoam to PE and PP bottles and other packaging, textiles, car parts, electronics enclosures and casings for parts etc.. You show a PE mixing bowl and a Sevres porcelain serving bowl to a quantitative economist and he could easily classify them as having the same utility, though a consumer would be willing to part with $2 to buy one and would only buy as many as needed for mixing while he would pay $300 for the other bowl and would buy more of them whenever he could. One would go into hiding in a kitchen cupboard and the other would go into a display case and taken out on important occasions. Marginal utility is something they can barely deal with, nor the fact of consumers making subjective decisions, nor with the fact of consumers willing to pay for rarity.
The point here is that the approach to answering "how much money", the question itself being stupid and a false issue, has different answers depending on one's interests. The debtor wants "as much as possible" so long as he doesn't get charged a higher interest rate. The saver wants "as little as possible" so that he can be clear of the fear of losing purchasing power, but not so little so that he can't collect interest. Bankers want "as much as possible for us and our clients, and as little as possible for our competitors and their clients". The quality of money is a lost issue altogether.
In monetizing the productivity of oil, the US Fed and government measured the numbers of plastic bowls produced and allowed bankers to lend $2.02 into existence for each $2 plastic bowl produced in the country. As time went on and it could be claimed that new plastic bowls were "better" because they had some measurable improvement in successive generations of bowls, they allowed the bankers to lend into existence $3 for each $1.50 bowl because it is 2 X "better". The fact that no one will pay more for this "better" bowl than the old "unimproved" bowl struck no one as odd or indicative of a mistake on their part - not only in performing the measurements and understanding of them, but in that they are making the attempt at all. The absurdity of their activity was lost on them.
As usual, bankers got their way in allowing them higher rates of return through expanded volumes of credit at lower outgoing interest rates and higher incoming interest.
The expansion of dollars with oil productivity was one of the more idiotic answers to the stupid question of how much money there should be.
Did the economists and policy makers at Fed and Treasury, not to speak of congress, know of the marking to dollars to "oil productivity"? Not really, they looked at it as "general productivity". That much of it was attributed to oil use was not a direct consideration but an indirect issue. The Arabian oil that was available at $1.80 per bbl of gold dollars and even offered at a political discount to $1 in large quantities was not of interest within the US, where prices were doubled because of the Texas Railroad Commission and the strategic need to keep oil supply sources within the US, or at least within its reach.
The Chinese takeover of the Panama canal may have something to do with this strategic oil from Venezuela and Mexico. Giving the Chinese power of denial of access to it for the US must have been a condition for a concession for the US. Though we can't know what the concession is, I would venture to guess that the status of "protector of oil" and the holder of the commensurate privelege of printing oil backed money in the Persian Gulf was in question, and the Chinese were among the candidates for the role, in competition or together with the French/EU. The US got to keep this role for a while longer in return for "fair" international access to all the oil not within the US. Part of this deal may have been the unloading of China's silver reserve to keep that market liquid. But this is all highly speculative.
There was the question of who pays for the non-economic production of oil where the US can put its hands on it. The answer was "everyone". OPEC share of oil supply went from 35% to 18% through the 70s in order to maintain the global dollar price at a value at which the US could be self-supporting with its own oil, as well as Mexican and Canadian oil. By 1986 US oil imports from OPEC were at 0.
Today, oil from OPEC is some 50% of imports to North America, but only 35% is from OPEC countries other than Venezuela. Which comes out to 22% of consumption and 14% of consumption, respectively.
Europe gets 37% of its oil consumption from OPEC (down from 40% in 98). 16%-20% from X USSR, which should rise within the next 5 years now that the "new" oil fields are available. (I don't believe they are new discoveries but old ones from the days of the old Shell corporation that initially developed them.)
The Pacific Rim, though is very much dependent on OPEC (77% of imports), and has been the great supplier of goods that make US living standards so high. These countries were the target of the dollar-gold-oil deal, it is they who are the holders of the proverbial bag (of dollars).
Since yesterdays comex close, access mkt, dec gold opened @ 273.80, ran down 272.10:
Waiting for new york , employment report excuse to move market.
week end warriors a factor, shorts moved stops down from 282 toward 274 which factor a run towards 279, take it out then 282, then more stops over 282.
I am not sure whether the issue of the cost of crude oil production has been addressed in this forum. It could, however, shed some more light on the debate over the linkage between crude oil and gold.
Although the Middle East is by far the cheapest player in the crude oil game, I suspect the marginal player currently is the West African oil province. The crude oil deposits are mostly located off-shore, in shallow to ultra-deep oil plays. The size of these exploitable deposits lies typically between 20 to 50 million bbls in shallow waters, to over 1 billion bbls in the ultra-deep fields. as a basic rule-of-thumb, it costs US$3 per bbl to find and develop the fields, $3 per bbl to produce the oil, and an additional $3 per bbl for capital reward (say, depreciation). This gives an allin cost of approximately $9 per bbl for a typical West African oil play. However, the costs don't end there, as most crude oil is produced under a production sharing agreement (PSA) with the local government. One can think of the PSA as a substitute for corporation tax, with the government getting its cut in the form of a share in the crude oil output, on some-or-other negotiated basis (highly confidential, of course). Assuming the mathematics is correct, the cost of crude oil from the marginal player should put some floor under the price of crude oil, below which it becomes too risky to invest in the development of crude oil fields. It would appear reasonable to estimate this in the range between possibly $14 to $18 per bbl (my guess!).
The analysis becomes clouded by the issue of the availability of crude oil. If the "Hubbert Curve" is correct, and global crude oil output peaks in this decade, indicating a potential short to medium term tightness in the crude oil market, fundamental oilfield cost analysis becomes irrelevant in determining a reasonable price (as against cost) for crude oil. One is then forced to look at other alternatives, can range from fuel cells and batteries to the production of synthetic fuels from coal, natural gas, oil shales and ultra heavy hydrocarbons. I do not want to be too limiting in determining the range of possibilities.
As an intial start, I include some information about the Sasol synthetic fuel process (wwww.sasol.co.za), which is based on natural gas. Using Sasol's economics, the cash cost of production for a 10 000bbl per day plant is US$10 per bbl of white oil product (note: not crude oil equivalent!). Assuming it costs $250 million to build a 10 000 bpd plant (say 3.3mn bbls of product per year), the capital reward required is approximately $15 per bbl of product, giving a total cost of $25 per bbl white oil product. The equivalent crude oil price should lie in the range $18 to $20 per bbl, before allowing for any quality premiums, transportation costs, etc. The process is fully proven and low risk. Two production plants are under consideration, one in Nigeria (with Chevron as partner) and one in Qatar.
Sasol:
A single module of the Sasol Slurry Phase Distillate plant that converts 100 MMscfd (110 000 mn3/h) of natural gas into 10 000 barrels a day of liquid transport fuels can be built at a capital cost of about US$250-million. This cost equates to a cost per daily barrel of capacity of about US$25 000. This capital cost includes utilities, off-site facilities and infrastructure units.
If priced at US$0.50/MMBtu, the gas amounts to a feedstock cost of US$5 per barrel of product. The fixed and' variable operating costs (including labour, maintenance and catalyst) are estimated at a further US$5 per barrel of product, thereby resulting in a direct cash cost of production of about US$10 a barrel (excluding depreciation). Due to the superior environment-friendly quality of the products emanating from the Sasol Slurry Phase Distillate process, speciality markets could be entered at premium prices, thereby enhancing project economics further.
As with any investment in petrochemical plants economy of scale is critical. A plant with a larger capacity can be built with two or more modules in parallel thereby reducing costs per barrel of capacity and improving economy of scale. Further capital savings are possible if the plant is built alongside or near existing infrastructure.
By virtue of being a new (rather than a mature) technology - and given Sasol's excellent technology development track record - the Sasol Slurry Phase Distillate technology has significant scale-up potential. Sasol has long applied the philosophy of continuous improvement and recognises that extensive process improvements can be achieved as its plant process insights' and experience evolve.
These, and other focused actions, are a further commitment by Sasol to ensure the robustness of the economic viability of the Slurry Phase Distillate process.
ORO, "The absurdity of their activity was lost on them"
Further absurdity lost on them in their qwest to capitilize
all percieved "good", is the complete disregard for the increasing complexities and "costs", to put real food in the improved bowls.
Maybe the hedonist end of the rubber band in no way justifies accounting gimmicks for expansion, but, for sure the costs of societal complexities are stretching the band tight on the other end. SNAP.
The inversion is supposed to prevent bank lending, which is structured as borrow short lend long (and from which arises the need for the lender of last resort function of the Fed, as Antal Fekete's friend pointed out). As we have seen, the markets are seeing bank lending growing at a higher rate than debt securities markets. While the bond market is near comatose at a 5% growth rate, the banks are rushing in at a 9% growth rate.
How can they do this in the face of inversion and not raise interest rates paid on CDs? Well, let's see; (1) Someone is draining Yen from Japan's credit markets pushing up rates from well under 1% to well over. Could it be that the US banks are borrowing there (through Japanese banks)? (2) EU rates are also rising while capital flows are very obviously going state side, also made obvious by the fall of the Euro. Could it be that they are borrowing there? Fannie Mae is, why shouldn't they?
I say yes to both.
The Fed is playing a losing hand in trying to restrict lending this way. If anything, they are raising the driving force for lending out of Japan and Europe into the US. Some American borrowers are being shut out of the markets, but not the consumer, who has the various new capital investments bidding for his labor. For the corporations this high interest rate is a cost which they will eventually have to pass on to the consumer or go broke (i.e. stop operation and reduce supply, which has much the same result).
It should be noted that Yen exchange rates started eroding the minute after intervention "for the Euro". The borrowing simply moved to Yen sources instead of borrowing in Euro.
Korean rates are 7% on the short end. Canadian loonies go for 6%. Australian rates, Aussies being in 80% external debt relative to GDP (US is at just over 20%), are paying 6.25% at the short end. Swissies are up from 1% to 3.6% because of this borrowing (also some local borrowing and a couple of other changes - including removal of gold backing).
So...inversion is not working that well here, and it is getting undone as long rates are rising again.
I don't believe the Fed will do that much more raising for now because of the dangerous default rate in junk bonds nowadays. Banks putting up new loan loss reserves are going to demand a lower discount rate. I would be surprised if they didn't get what they ask for.
--FRANKFURT - The European Central Bank surprised markets Thursday by raising interest rates--------
---'We see no threat to growth'' from this rate increase, Mr. Duisenberg said. He said the euro-zone economy was at ''cruising altitude.''-----------
-----The move stunned economists----------
------''They keep raising rates into a slowing economy, '-----''It is hard to see why they would have done it today other than to try to prop up the euro.''-------------
------The ECB seems intent on crushing any inflation that stems from high crude oil prices and the weak euro. It cannot afford to appear soft on inflation, analysts said, when its own credibility is on trial and the euro under pressure.------
------Still, Mr. Duisenberg said, ''We had the maximum possible degree of consensus on today's decision.'' ------------
==============================
I'll skip the hike this weekend and show up here to discuss and clarify.
www. inquirer.net FOA, our Trail Guide, argues that the dollar is being driven up (vis-a-vis all currencies, and thus the euro) in failure..
Still the G7 and the ECB want to defend the euro.
Why is the dollar not being attacked instead? Agreed, by buying euro the G7 lowered the value of the dollar, but why is Greenspan then not lowering interest rates for example? That would drive up Wall Street? Ah, that's not possible, so can this quandary only be solved by gold?
Or perhaps one should take example from the Bangko Sentral ng Pilipinas. The Philippine Daily Inquirer reports today that the BSP moved yesterday to defend the Philippine peso by raising the reserve requirement on banks by 2 percentage points to mop up excess cash being used by banks to speculate against the peso.
Let's kill all the speculators, those villains who buy when prices are low and sell when prices are high and thereby level prices off.
Oro 38378
Great assembly, analysis and presentation of info.
Oilman 38307
I have been looking into disease, particularily the superbugs and AIDS. Most of the stuff I have found is mostly politically oriented. Sort of; "King X was touched and ordered the court jester to investigate and report back. Meanwhile the opposition...." But I never did see anything with any meat as to what the effect of the plague had on the day to day life of the guy on the street, or WHY the society changed to pastorial. Obviously I am looking in the wrong places. What sort of keywords (library or internet) would you use in that context? Do you have any sources that are apropos. I know for example that the city dweller was far more effected than the rural, because of the concentration of people, rats and pollution.
I think this subject has extremely wide ramifications for humanity over the next decade, and has been largely ignored. Thanks
Nummus Aureus 38311
Last but certainly not least. I have been most anxious to make the aquaintance of someone who has hands on experience with the situation in Northeast Africa, particularly the Lake Victoria area, and while any experience will do, preferably long time, so that a better sense of the changes that are taking place are available and to be able to seperate out the effects of disease from the cultural differences.
If you, or if you know someone who, wouldn't mind having their brains picked, I would be most appreciative. My email is currie@mqcinc.com. I am located in Toronto Canada. 416 410 4716 anytime. This Aids question has, in my mind gigantic ramifications.
I was in touch by phone with a lady (doctor??) with medcin sans frontiers, in Uganda. In the short conversation I garnered that her private estimate of HIV positive people was far and above the official estimates, and that in an area which fights a pretty constant battle with famine, that a good number of farms in the area were lying fallow, because the experienced farmers were dying off, and there was nobody with the skills to do the farming.
Any stories you might have as to the practical effects of disease, (which probably includes the power struggles of war) would be greatly appreciated by me, and I suspect, this forum. In basic terms, what happened (and WHY) to the guy on the street as a result of the "thin disease", how did the authorities react to a declining population base, how do you see this playing out there, and to consider the cultural differences, assuming the same percentage HIV positive, how would you see the scenario playing out in North America.
Finally, where else would you go for information? What aid agencies are operating in the area? What (news agency) reporters are covering thev area?
Sorry this is pretty all encompasing, but as I think I once posted, it is easy for an Eskimo to advise an African on how to deal with a heat wave, however it won't be very realistic. And I don't believe the average North American has any concept of how the average North Afican lived, never mind the effects of such a disease on that lifestyle.
Anxiously awaiting your response, and with thanks.
You are 100% correct in suspecting that the whole issue on HIV/Aids is politically hot. Nevertheless, there is a surprising amount of data available on the internet, on sites such as Aidsline. A search on plagues, such as Black Death, should also bring up a lot of useful information. In South Africa, researchers such as Dr. Alan Whiteside, have been active for many years. Quite often, the data needs to be modified to take into account the very rapid spread of the disease in sub-Saharan Africa. From unofficial sources, I have found that the doubling period is closer to 6 months in sub-Saharan Africa, probably due to the socio-economic conditions prevalent in the area. Consequently, the time between the collection of data and the publishing of it becomes important. Because of the low GDP/capita ratio in sub-Saharan Africa, resources to fight the spread and treatment of the disease are problematic. The latest reports indicate that the life expectancy in the region should drop to below 40 years, making capital formation more difficult. I think it is very positive that the economic implications are starting to receive more attention, in spite of the very short time frame.
AM I wrong in thinking this, in thinking that Banks like to lend people money at low rates, and then make the rates higher so they can forclose on businesses, property, and such.
The recent oil article in the gilded opinion did me good. To see the rise of Hugo Chavez. I see into his mind a bit from that article. Good time to once again go long FEB 29.00 Crude calls. Thanks for such a great place to do research. I am going to go read somemore
Thanks for very stimulating interview with Stephen Zarlenga, Director of the AMERICAN MONETARY INSTITUTE, on the nature of money and the future of gold in a depression.
Zarlenga sounds like the inverse of Wolanchuck, who sees boomtimes as a source of growing demand for gold and much higher gold prices. Zarlenga offers $208 as possible important support in a crisis.
This is the exact opposite of what most of us seem to be expecting. Most think central bank infusion of money to save the financial system will be highly inflationary. This should be true if the economy doesn't sink into another 1930s style "liquidity trap". Now, if the system gets hit with a real financial whammy, gold may need to be pulled into some offical role, resulting in its revaluation, even if commodity prices become severly depressed. This would be the saving grace if Zarlanger is right. He, however, doesn't discuss this option.
Possible conclusion: it may be harder to predict what will in case of a stock market meltdown than goldsters have assumed so far.
Thanks for the enlightening info on the quants, particularly the FX interbank traders. It was indeed an FX position that my friend was being recruited for.
By the way, I'm not applying for a job as a trader!
Companies come along when prospects are good, some languish when the trend turns against them or simply stalls for a period of time, and some fade away into bankruptcy before they may get to capitalize on the return of good prospects.
On the other hand, we've never seen a gold coin go bankrupt. Not even the gold coins of empires and nation-states that are found only in the history books these days. The many political/social/economic organizations and operations of mankind come and go over the ages, but the physical gold that passes through their hands has never failed to maintain its integrity and value in the hands of those that remain to tell the tale.
http://www.usagold.com/onlinestore/special.htmlCOMEX prices rise, and COMEX prices fall, and with them so travels the emotions of many. But for the acquisition-minded, many contract sell-offs is cause for joy. Our physical bullion prices reflect these lowered futures contract prices, and so does our assortment of pre-1933 semi-numismatic gold coins. Call us at (800)869-5115 to discuss the prudent addition of gold to your wealth portfolio.
And when office hours or phone calls don't fit your schedule, feel welcome to stake your own gold claim with our offering of selected coins made available for on-line purchase...24 hrs, 7 days a week.
Let Centennial assist you with all of your precious metals needs. It is your decision to do business with Centennial that makes this website possible. Thanks for your support--past, present, and future.
Oilman - thanks for your information. Always glad to get some different perspectives...
Sounds like this NG derived process for producing a synthetic also addresses one of the problems inherent with natural gas, that being the logistics of transport to distant markets.
Sort of like the American frontier farmer making whiskey out of his grain harvest... although I think I'll pass on doing shots of white oil, thank you.
Do you see an effort to develop this kind of process driven more by the need to do something economic with natural gas that otherwise faces these geographic limitations, or is the incentive more of a race to find crude oil alternatives, and this just happens to be one development that incidentally involves gas?
1) Most if not all of us will never experience such a severe financial catastrophic disaster unfolding as we enter a whole new era. This will be rated as bad as the dark
ages due to careless/reckless credit expansion that
fueled this recent boom. In several years we are faced
with great economic disparities. No politician or government
can stop what is about to take place.
2) The CABAL will try everything in it's power to stop
the carnage. However, they are only exasperating
the problem as time goes on. The markets are manipulated to extreme limits by the Clinton administration. The people
will suffer dearly due to his egotistical policies.
3) Gold may suffer intially as events unfold. The CABAL
will sell into this market every ounce they have to
discourage anyone into GOLD. But, they will fail
miserably when buying overwhelms the market.
4) Keep cash/gold/food/fuel close at hand. Banks will
fail and grocery store shelves will be wiped clean.
No one alive today can say exactly how the out
come will be, but use everyday common sense to
protect yourself. The government will not be there
to help you. Anything you use on an everyday basis
stockpile, because you won't be able to when the
dam does finally break.
5) Don't listen to friends or relatives. They will only
discourage you from protecting yourself and family.
Very few will survive this coming financial debacle.
The public has been trained to believe that nothing
can go wrong. Don't believe it for a minute. Everything
is about to go wrong.
6) Have faith and don't let anyone deter you. In the long
run all of us will be better off. But, we would have paid
a huge price. That's the cost of freedom I'm afraid.
Our country needs a huge awaking, if we our to
continue and survive. Otherwise, we as a people
will fail much worse if we continue on with the current
government.
I HOPE EVERYONE HERE, INCLUDING MYSELF IS
SAVY OR FORTUNATE ENOUGH TO SURVIVE
THE NEW ERA BEING HANDED DOWN TO US.
I DO FEEL LUCKY IN THE SENSE THAT WE ALL
DO HAVE A CHOICE IN INSULATING OURSELVES
BEFORE IT HAPPENS. AS OF TODAY WE STILL
HAVE THAT OPPORTUNITY BEFORE IT'S TOO LATE.
Best of luck to everyone here and I will continue to
value your informative material all of you have to
offer here.
Today's action in the stock market is further validation of a warning which I (among others) gave last Friday in message #37891. We have had more than one "bear market delight" since then, as we have seen one high-tech stock after another slammed. The bellwether high-tech darlings--Cisco, Intel, Microsoft, Micron Technology, etc--are now all below their moving averages. This is very bearish market action. Now add to that another fact which I just learned yesterday from a good client and friend of our firm. He told me that his friends who are in stock mutual funds are receiving notices from the mutual fund companies that they owe taxes on gains which were generated earlier in the year. But now the value is not there. These investors are in the worst of both worlds. They owe taxes on phantom gains. But the value of their portfolios is down, so they will have to sell stocks at a loss just to pay their taxes. Just imagine if this kind of thing is happening nationwide. Here come more redemption notices. Some people are telling me that we are near a bottom in stocks. I disagree. You ain't seen nothing yet--as the colloquial saying goes.
My indicators are still pointing to a major upset in markets before the election takes place. My sources have confirmed this again. Keep a watchful eye out for some type of military event involving U.S. troops over the next 2-3 weeks. From a technical point of view, stocks topped last month on the full moon and have declined ever since. Not even a bounce occurred as we entered the next lunar phase, which happened to coincide with Rosh HaShanah. Instead we have seen a continued slide. Now add to this the political tensions in the Balkans and Israel, especially the strife between Israelis and Arabs. One of our favorite newsletter writers, Adrian Van Eck, has gone on record as saying that a shut-off of Middle East oil to the West (America and Europe) is now imminent. I have posted this same message earlier last month and have told clients on the telephone as well. Oil hit $30 per barrel yesterday and has now bounced up. I believe that $30 is the bottom and we could be looking at $40 per barrel before we see $25 per barrel again. Such an event will further exacerbate the squeeze on stock market profits and raise inflation. Can a major rise in the gold price be far behind? I answer emphatically "YES." And my clients and lurkers at this site tend to agree. Calls are coming in from all over. Prudent minds see the dangers and are now taking action.
Dont blame the politicians. They ride on the backs of the producers using monetary and fiscal force to prod and stimulate them into increasing output because the producers allow them to. Now that energy costs are rising the politicians will simply use legislation to stimulate an increase in productive activity by the producers in order to neutralize and offset these rising costs. Our world is "Beyond Freedom and Dignity"
Hedgers and forward sellers diminishing the mining industry?
http://209.82.62.19/musabb.nsf/Current/8525694F0071AB708525696D007FC2DFI apologize if this article has been posted previously. According to this gentleman, there is no cabal, but a serious problem in the mining industry by selling forward, hedging and the use of derivatives. Comments appreciated.
A snapshot of stockmarket sentiment from Briefing.com 30 minutes prior to market close
15:30 ET Dow -192, Nasdaq -150: [BRIEFING.COM] "It was bearish earlier in the session, it turned ugly and now it is getting scary... This has not been the massive sell off related to a particular event, this is worse... Despite the dramatic declines over the last month, the indices have yet to reach a level low enough to bring investors back into the fray... Over the last two weeks the Dow had remain confined slightly above its 1998/2000 trendline while the Nasdaq slowly began to catch up... Today both of the indices have staged a bearish breakout through their respective trendlines... Volume has been very heavy but there have been no signs of capitulation yet, merely a constructive meltdown... "
---------
Does that sound like a place you'd like to spend your weekend? (As it turned out, at the close the Nasdaq had lost 3.2% while the Dow finished only 1.2% lower. It's October...are the market participants getting jittery?)
It calls to mind a couple of notable quotes:
"It is extraordinary how many emotional storms one may weather in safety if one is balasted with ever so little gold." --William McFee (1881-1945)
"The possession of gold has ruined fewer men than the lack of it." --TB Aldrich
I take it that the WAR is going out into the open. Is that so?
Some mention has been made that Eddie is dumping Euro and that the hedgies got a green light to resume shorting the Euro from the Anglo camp. Does this mean the UK has finally decided to go with the dollar camp after Labour stating for years that the EMU membership is "inevitable"?
Was this presumed turn of events the cause for the escalation?
Is the ECB intent on pulling the rug from under the Euro carry trade into dollars and to spring the debt trap?
The scariest thing is what will happen to Japanese interest rates now that they bear the full brunt of US borrowing. Is a 5% JGB on the horizon? I remember Jimmy Rogers talking of short JGB as one of his top 5 trades for 1999 (indeed was a good one as the JGB tanked with yields jumping from 1% to near 2% and getting ready for another jump as short rates are closing in on the long rate). I imagine that the current Yen weakness is related to renewed strength in Yen Carry as the Euro carry has had the door slammed in its face.
I gather the silence on the Iraqi proposal to take Euro for payment is of the "thundering silence" type. Have you heard anything about higher ups taking positions on the issue? Do you know how strong the Russian commitment is to accepting Euro for their oil and natural gas (near 20% of EU supply)? Is Norway on the EU side? Will the rest of OPEC go along on Euro settlement now that the cat is out of the bag and no big noise was made over it (publicly at least)?
The developing natural gas crisis is going to be the big story this winter should there be an early cold winter. We do not have a Strategic Natural Gas Reserve. The Heating oil shortage is definitely a problem due to a lack of refinery capacity. However, consider that only about 10 million homes are heated with heating oil. There are about 56 million homes heated with natural gas. But there is another issue that has been either ignored or overlooked. That is the lack of natural gas pipeline capacity. The natural gas producers are scrambling to increase their storage. It is a bit late in the year to get sufficient natural gas inventories built up should we have a normal or colder than normal winter in the US. The pipelines will have to pass on natural gas to storage, to current usage, and for electric power generation. On top of all this there is political and environmental opposition to building new pipelines. This whole issue has been overlooked! It shall be an interesting winter.
http://biz.yahoo.com/rb/001006/ce.htmlFrom Reuters:
"Underscoring the fragility of paper riches in new-economy companies, a Buck Consultants study shows Walker has seen the value of his holdings fall to $242 million from $1.17 billion since Sept. 15."
Company executives are seeing their cool oasis of stock options turn into nothing but a shimmering mirage in the heat of the moment. That ought to teach them a lasting lesson about the value of paper promises versus something tangible like gold.
http://biz.yahoo.com/rb/001006/cd.htmlFrom Reuters:
"...government data showing the tightest labor market in 30 years reignited fears that the Federal Reserve's drive to raise interest rates may not be over. A fresh batch of warnings from companies that profits would lag estimates also spooked investors, who fear a combination of high interest rates, firm oil prices and a weak euro could eat into Corporate America's bottom line."
One senior market strategist is quoted in the article saying, "This market is treacherous. You are seeing indiscriminate selling."
Commenting on the fear of the Fed potentially boosting rates higher due to the decline in unemployment figures, together with market rumors that one or more Wall Street firms had taken large junk bond trading losses, another analyst said, "The confluence of both events is just whacking the financials."
Meanwhile, Paul Cox, manager of the Commerce Mid-Cap Fund at Commerce Bank, told Reuters, "You are getting a lot of fear built into this market. There is no bottom in a lot of these technology stocks. They just want them out of the portfolios and they are just selling them."
"Working Group on Financial Markets" is losing it's grip
It appears that the "Working Group on Financial Markets" (AKA PPT) could not keep a lid on Wall Street today. Unemployment dropped to 3.9% even with the loss of over 270,000 manufacturing jobs. Can you say recession? I knew you could! The negative stories on earning continue to dominate the market news. We could very well see the NASDAQ drop below 3000 next week. This could be "Black October." The ridiculous stratospheric valuations of the tech sector are sure to revert to the historical mean for equities, and that means we could see a NASDAQ of about 600 perhaps. Then again, maybe the PPT could pull it together and be cheer-leading with their hypnotic "Buy-The-Dips" mantra as dazed and confused investors go further into debt in their mind numbed state buying equities of companies not likely to ever see a profit.
BTW, William Shatner (Yep, Captain Kirk) sold 39,000 shares of his Priceline.com (PCLN) at $85/share before his spilling the beans on national TV that he never uses the service. Today it closed at $5.50/share. No PE, it doesn't make a profit.
And pipeline capacity is another wonderful story in itself!!
Something we can all read about as we shiver this winter...
Actually, what I was trying to refer to are the limitations on natural gas insofar as its ability to be more than a regionally marketable commodity. I.e., gas found in the bowels of Canada will be marketed in North America because of its transport medium limitations (pipes). Canadian gas is not purchased for use in, say Singapore.
With vast amounts of reserves, they are limited in their traditional markets by, as you mention, pipeline capacity for one, and have no exposure to distant markets hungry for this relatively inexpensive, plenteous energy source because of transport problems.
So if someone can turn gas economically into a synthetic oil product, it should more than offer a crude oil alternative, it could provide vastly larger markets for a valuable resource heretofore somewhat contained by its unique physical properties.
There is a book written in circa 1994 called "Full Disclosure". It is ghost-written by former MI6 agent Dr. John Coleman, but because Dr. Coleman is not a medical doctor it was decided to officially credit the authorship to Dr. Gary Glum .
This book delves into the behind the scenes aspects of the AIDS virus. How it was developed and spread, who is vulnerable, the ways that it can be transmitted.
It is available from:
World in Review
2533 N. Carson St., Suite J-118
Carson City, Nevada 89706
1 800 942 0821
Personally I would think that an AIDS epidemic would be deflationary and in spite of the suffering, those who survive could very well be better off.
Generally speaking, when death rates are high, then usually so too are birth rates. For example during the plagues in Europe, farms were abandoned because of the disease. You could walk right in and take over. So in times of suffering and death there was prosperity for the people who survived it. I guess you could say that this comes from fewer people enjoying the assets of the world, inheriting the whole lot instead of sharing it with siblings, etc.
If I were Bill Gates, or any other wealthy successful producer, what would I do
I would sell the public as much paper stock and bonds as I could via ipo's and then invest in gold with the liquidity raised. I live in Atlanta and thus I'm trying to get as many Atlanta's best and brightest to do what I'd do if I were them since what they do affects me. I'm just a mobile billboard driver who owns a .10 ounce gold eagle coin and 25,500 warrants of Cusac Gold mines which have expired last January, and I just sold 250 shares of Canyon Resources gold co because I needed the 125$ to live off of.
"Internet stocks were blitzed. By now, everybody
knows about William Shatner's PCLN and its death-march
to zero. It fell another 4 percent today. After the
close, a class action shareholder lawsuit was
announced against PCLN. So, it appears Scotty may have
been telling the truth for once when he told Captain
Kirk, "She's breeeakin apart, Kaptin! I can't hold her
together!" Expect a lot more of these type suits, and
unfortunately quite a few of them have a lot of merit,
although I know nothing about the merits of this
particular case. A lot of games have been going on for
quite a while, and we can only hope that the guilty
parties can be found when the dust settles before the
files make their way to the shredder."
"Traders' commitments were released today and continue
to show the commercial traders (the "smart money")
with a record net short position in the spoos,
although down ever so slightly from two weeks ago.
Commercials were also net short the NDX after being
net long two weeks ago. Gold's commitments slipped a
little although commercials are still net long.
Commercials were heavily long every foreign currency
except.... (you guessed it)... the zero, where they
actually increased their net short position. So, that
indicator would argue that a plunge in the euro is
still on the way."
http://ap.tbo.com/ap/breaking/MGAPCAHI0EC.htmlSo let me get this straight...we tap the SPR for 30 million barrels of which 20 million barrels displaces imports from OPEC...and of the 10 million barrels left...we export some unknown amount. This, is unbelievable
From the link: WASHINGTON (AP)- Only about a third of the 30 million barrels of oil being released from the government's emergency reserve will result in additional oil going to refineries, an Energy Department report acknowledged Friday.
The rest will displace 20 million barrels of imported oil that refineries will not buy because of the availability of the government oil, said the winter fuels report issued by the department's Energy Information Administration.
...
Energy Department officials as well as some members of Congress expressed concern that refiners may be exporting heating oil to Europe, where the supply crunch is even more severe and prices are higher.
Mazur said analysts are puzzled why refineries are operating at top capacity but inventories of heating oil is remaining low, and he did not rule out that some heating oil may be being exported.
...
Murkowski, who has been critical of the decision to use the emergency oil, said he was concerned that "we are going to release oil from our (reserve) to provide product for a European market."
Hey CM - congrats on those Cards! Super Bowl and World Series wins in the same year?
Saw your note concerning the government sponsored lenders. You can relax in St. Louis as help has arrived in the nick of time. Old Dickie G still knows how to bring home the bacon. I'm sure the Dems will spare no expense the last few weeks, particularly in the swing states.
I was in the Detroit/Toledo area this week and couldn't fail to notice the lots full of new vehicles at the rail heads. I haven't seen this many cars on the lots in ten years or so.
We actually had a great August following a lousy June and July, but September went right back in the tank. The truck industry isn't showing any signs of recovery yet as equipment prices keep going lower. Truck service is strong but parts sales are weak. It looks like we are setting the stage for a serious shakeout amongst all the players with those with the least debt holding the cards. There are some great buys out there if you've got the green.
"First of all, you may have noticed that New Paradigmers
usually don't discuss profits, choosing instead to focus on
productivity and the notion of "creative destruction." Yet,
profits are THE critical underpinning of capitalist economies.
Profits are the oil that keeps the machine running. Profits are
the mechanism that effectively directs scarce capital and
resources - the foundation for the market pricing
mechanism. Profits, as a proxy for cash flows, provide the
basis for rewarding innovation and sound investment. Profits
are the rewards reaped by astute risk-taking shareholders.
And, importantly, profits are what ensure that an enterprise
will be able to service its debts. Without profits, there is no
sustainable economic prosperity. An economy with its
financial and business sectors intent on rewarding consumers
at the expense of economic profits is destined for a problematic
misallocation of resources, instability, and inevitable
stagnation. Indeed, a system without a profit motive is one of
inevitable financial and economic fragility.
"The fact that McTeer would admit that "economic profits are
temporary at best" is quite remarkable. That this in no way
reduces his sanguine view of future economic prospects is as
unbelievable as it is disconcerting. It certainly indicates an
incredible lack of understanding of the dynamics of capitalism
and economics generally. As such, we doubt the concept of
financial fragility even enters into the minds of the New
Paradigmers. Certainly, we have heard nothing from the likes
of McTeer or Kudlow that lead us to believe they have a clue
as to the root causes of the unsound boom, and certainly not
the dark consequences now unfolding. We are in full
agreement that economic profits are today in most serious
jeopardy. But this is not part of some "New Economy" but is
instead terrible news for our economy and financial system -
the ugly but inevitable consequence of years of runaway credit
excess and reckless overspending. But, then again, this is
precisely why the Federal Reserve was created and given the
momentous responsibility of carefully guarding our credit and
financial system. To be a central banker is to err on the side of
conservatism because the cost of erroneously interpreting a
"New Era" is devastating. The Great Depression was not that
long ago..."
"Dan Topscott, who is chairman of Digital4Sight, a thinktank investigating the ways technology is transforming society and
government, concludes that "Our research at Digital4Sight shows that without fundamental change, the legitimacy, authority,
and role of governments will diminish precipitously."
"The primary reason for this decline is the emergence of a new majority of tech-savvy citizens. Governmental authority will be
undermined because networked technologies make it easier for this digital citizenry to establish their own networks to
represent their interests or resolve issues. These activities will be created outside of - and in spite of - government.
"The creation of products like Napster has fundamentally challenged the authority of governments. Michael Ascroft, RedChip
senior site producer, recently asked the important questions. Can the United States even enforce its own copyright laws,
given that decentralized peer-to-peer technologies make copyright violations possible on a massive scale?
"If a law is unenforceable due to resistance on the part of the governed, will the law have to change? And finally, if citizens of
the United States can easily flaunt the law from their desktops by simply linking to servers based in another country, has
national sovereignty been compromised?"
"The questions alone are enough to warm a libertarian's heart."
Things are heating up in the middle east. 10000 Iranians in the street protesting, Syrian Mob storming US Embassy, and 8 more Palestenian Deaths.Arafat announcing Jersualem will be the Capital of a Palestinian state whether the Jews like it or not. More battles on the Temple Mount.
One thing you can count on is the depravity of human nature. The level of hate is high in the mideast,and personally I dont see a solution. There is a good chance we are seeing the beggining of the next middle east war (I hope not of course).
All of the above being true, I would expect the middle east oil producers to begin using oil as a weapon for blackmail.
The message to the US might be pressure Isreal into giving up the Temple Mount and parts of Jerusalem or the price of oil is going higher. Much higher.
Remember we are not dealing with sane people here. We are dealing with people consumed by hate.
http://www.feer.com/_0010_12/p08.htmlRiady Invites Clinton to Lippo Board
Indonesian tycoon James Riady has invited U.S. President Bill Clinton to join the board of Lippo Group when he steps down from office early next year, according to business people who have met Riady in Jakarta recently. Riady has been telling business contacts in Jakarta that he expects Clinton to accept, even though the U.S. president has been dogged by allegations that Riady funnelled illegal foreign donations to Clinton's 1992 and 1996 election campaigns. A former Lippo Group employee reports that as far back as the mid-1990's Riady was said to be trying to recruit Clinton to the board as soon as he left office. Jakarta police are currently helping the U.S. Justice Department in its investigation of the alleged campaign contributions.
"Can the gold standard be restored? There are considerable political obstacles to overcome; others involve technical issues of
finance that were addressed by Greenspan in a Wall Street Journal essay (Sept. 1, 1981). Given the Fed Chair's remarks, and
the approaching 30th anniversary of Nixon's grievous mistake, it is time to consider a new political agenda for gold that
addresses the prospect of inflation.
"Two schools of economic thought in the 20th Century shunned a role for gold. These were the Keynesians, whose founder,
the British economist John Maynard Keynes, termed gold "a barbrous relic;" and the Chicago school monetarists led by Nobel
laureate Dr. Milton Friedman.
"But intellectual support for a golden role emerges from two schools of economic thought: the venerable 125-year-old
Austrian school of Carl Menger, Eugen B�hm-Bawerk, Nobel laureate Friedrich Hayek, Ludwig Von Mises, and Murray
Rothbard; and the modern supply-siders, who trace their roots to Say's Law, and whose major advocates have been Dr.
Arthur Laffer, former U.S. Rep. Jack Kemp, R-N.Y., author Jude Wanninski (The Way The World Works) and The Journal's
editorial page.
"The supply-siders began to argue in the late 1970s for a gold price rule to stabilize prices. Under a price rule, commodity
prices, including gold, would be stabilized by the Fed within a target range. If commodity prices declined below the range the
Fed would ease monetary policy to bring them within the target. If prices increased above the range the Fed would en to bring
them into the target. Supply-siders contend gold is the most important commodity, a sort of North Star for monetary
authorities to follow. There is some evidence the Fed, under Paul Volcker, used an informal price rule in the early 1980s.
Former FOMC members such as Manuel Johnson have also publicly disclosed they followed commodity prices in setting
monetary policy.
"After Republican Ronald Reagan was elected president in 1980 the supply-siders aggressively promoted a formal gold price
rule. The Fed would have the power to stabilize the dollar, a fiat currency, by fixing the gold price. Dr. Laffer and colleague
Charles Kadlec wrote:
"The purpose of a gold standard is not to turn every dollar bill into a warehouse receipt for an equivalent amount of gold, but
to provide the central bank with an operating rule that will facilitate the maintenance of a stable price level." (Wall Street
Journal, Oct. 13, 1981). Gold could be one of many commodities in a basket index, or even be excluded; one reason the price
rule proposal was not welcomed by Austrians. Nor was it adopted by many Republican politicians in the 1980s; the idea quietly
disappeared from public view. But the gold price rule could reemerge as a policy idea or platform plank within the Republican
Party if inflation returns or the U.S. dollar falls.
"The political obstacles to gold are clear: the classic gold standard, or any variant such as a price rule, are anathema to career
politicians because it restricts their ability to spend taxdollars and engage in wasteful spending. There are no references to
gold in the 2000 Democratic and Republican platforms. This is not surprising given the relative disinflation--falling inflation
rates--of the last two decades. Only the Libertarians formally promote the idea, noting a gold standard would give the
American people veto power over Fed monetary policy by giving them the means to demand the precious metal as redemption
for dollars declining in value. By contrast, the current fiat money system gives central banks and politicians that power."
About a year or so ago, I pointed out that Russia announced a sort of levy of X Euros (a small amount) to be collected with every Bbl of oil sold from Russia into Europe. I asked TG about this and he said it foreshadowed coming events or words to that effect.
1. Head of Homestake Mining mentions Peruvian gold loaned in to market as part of 1000 tons that are outside of ECB control. He considers this gold to be the main detriment to a price rise.
2. Gore openly declares having Rubin as adviser and would seek his advise during financial crises. In his words "We scraped old plan and implemented a new one which brought all prosperity.
3. Rumors of unofficial attack on euro by funds and bank of England.
Interest rate hike. Will it be enough to defend euro?
Since attack against euro comes from Dollar camp it appears that war will be fought between these two camps. Somehow
I think oil and gold will be effected drastically.
Back in 1997 I had some Russian oil dealers visiting Canada. They did oil price calculations using Euro units. I have
no doubt Russians are quite comfortable with Euro.
"Given the recent campaign rhetoric in which both major parties are advocating legislative
programmes that would tap into the ever-growing budget surplus," comments William V. Sullivan
Jr, money-market economist at Morgan Stanley Dean Witter, "most voters would no doubt be
surprised to find out that the federal government's overall debt loan continues to expand.
Indeed, despite huge liquidations of outstanding securities in the secondary market, total
indebtedness remains on an upward trajectory as non-marketable issuance continues to soar."
"The facts are in the public domain. The big government trust funds - notably, the social security
trust fund - currently take in more than they pay out. However, the government relieves them of
this surplus and spends it, courteously leaving behind a marker, the aforementioned
non-marketables. As these claims are not negotiable outside government channels, they
constitute no visible burden on the public markets. Out of sight, out of mind.
"Actually, not quite out of sight. The non-marketable part of the debt, at about $2,600bn, is
almost as big as the marketable portion, at about $3,000bn. Over the past two years, as Mr
Sullivan notes, non-marketables have climbed by more than the marketables have declined: a
$439bn rise versus a $328bn fall. The significance of the cumulative debt, $5,600bn, is that it is a
scant $350bn below the statutory debt ceiling.
"It is not unthinkable, Mr Sullivan goes on, that the next administration may have to ask for a
higher ceiling. It would possibly frame the request in this vein: "In view of the virtual
disappearance of the marketable debt, this country stands on the brink of a fiscal crisis . . . ."
Whither Russia? Russia is a land of many troubles but also a land of many natural resources. That fact would have significance for the future of the EU wouldn't it?
Yes, Cavan Man. I would think value funds would be snapping up the goldminers. Unfortunately, however, the fund industry is presently caught in a bear market with very low levels of cash relative to historical standards. Furthermore, the industry is beginning to experience net redemptions. That doesn't leave many of them in any position to do much of anything other than sell. On top of that, if funds wish to create a loss applicable to tax year 2000, they must unload their dogs before the end of this month. That puts all of this year's poor performers at risk for the next three weeks. Then, after that, of course, you've got public tax-loss selling to contend with.
Of course, if what's going on on Wall Street nowadays succeeds in cracking the dollar, then we've got a whole different situation.
Can you see the St. Louis Arch from where you live?
Hey tedw - it seems to me the Middle East thing is awfully convenient at this time. This 'war' like the Serbian and Iraqi deals seem to be turned on and off at will. More or less Rent-A-Crisis.
I was watching George Dubya giving a campaign speech today. He was criticizing Clinton for cutting the Drug war advisory staff at the White House. Then he went on to explain why we need smaller government. Hmmmmm��. The real losers in this election is the American people.
One candidate, Harry Browne, want to simply end the drug war and free all non-violent drug prisoners.
Ivo
To: LibertyWire subscribers
From: Perry Willis, Campaign Manager
Subj: New "War on Drugs" TV ad
We've just finished a new TV ad. This one deals
with the third of Harry's major issues, "The War
on Drugs." We believe this ad is the most powerful
of the five we've created. It will be our
workhorse ad for the remainder of the campaign.
We've come a long way in persuading people that
drug prohibition is an unmitigated evil. When I
began work in the LP nearly 20 years ago drug
legalization was the main reason people gave for
not supporting us. No longer. Today, millions of
Americans agree with us and millions more are
giving our position serious consideration.
Our new ad gives a human face to the invisible
victims of the drug war. It provides hope for
the millions of Americans who have family members
serving long sentences for non-violent drug offenses.
This is a huge group of people who may be persuaded
to vote for us because of this issue alone. And the
ad also provides an interesting hook for the media
by pointing out the hypocrisy of George Bush and Al
Gore.
But that's all I'll tell you. Go see the
ad for yourself by using the link in the P.S.
below. (You'll need RealPlayer software to view
the ad. If you don't have it you can download it
for free).
Then, if you like what you see, please go to
http://www.harrybrowne2000.org/misc/warning.htm
and make a contribution to help broadcast the ad.
We plan to use funds received from this appeal
to immediately begin buying broadcast time for
this spot. We think you'll be pleased with what
you see.
P.S. -- Since we are anticipating heavy traffic
on the website to view this ad once it is publicized,
we are providing LibertyWire subscribers with a
special advance sneak preview at this address:
http://www.harrybrowne2000.org/com2.htm .
After 12:00 noon EDT Saturday, a link to the ad
will be featured on the home page.
This idea of a war between the Euro and the Dollar is a joke. I mean the European Central Bankers don't want the Euro strong for the time being. They may be somewhat frightened by its precipitous fall and are taking steps to slow the bleeding, however they have done nothing to support the Euro.
There appears to be collusion amongst the world's central bankers to keep the dollar strong. Even with the ECB's meagre �-point rate increase Thursday, the Euro's discount rate is only 4.75% compared to 6.5% in america. There is still a big enough differential to keep the carry-traders in business.
Also, American reports said the rate hike was a surprise move, but in fact it was expected in Europe, and to those who look closely, the puny � point rise was a disappointment in that it was not bigger, and it makes it hard to believe the ECBankers are serious about having a strong currency.
Moreover, america is running a big trade deficit with Europe, but the ECB prefers to purchase and hold billions in US paper than let the dollar fall its course, which is what should happen when countries run big trade deficits. Note that this type of action has been going on for decades regarding Japan and America, with the Japanese Central Bank buying billions of US Treasuries to prevent the dollar from falling to a much lower equilibrium level.
The bankers pretend to be at war, but judge them not by their words, but by their actions.
Just released IEA calculations are for a normal winter with Heating Oil at $1.22/gal., and NG at $8.58 Mbtu. I'm looking for confirmation on this and to get details. I had calculated a price of $8.00 Mbtu a while back, but this is an interesting development.
Price of heat to rise
A 25% leap in heating oil and natural gas prices is expected this winter
October 6, 2000: 1:09 p.m. ET
WASHINGTON (Reuters) - American consumers should brace for at least a 25 percent jump in heating oil and natural gas prices this winter, with an even bigger leap in store if temperatures are colder than usual, the U.S. government said on Friday. The new predictions for the coming winter fuel season were issued two days after the Clinton administration finalized plans to loan 30 million barrels of the government's own stockpiled crude to energy companies. Release of the crude oil from the Strategic Petroleum Reserve is aimed at helping U.S. refiners replenish their inventories and inject more supplies into the market. Republicans have criticized the move as an attempt to influence voters in next month's presidential election.
The White House action will add between three and five million barrels of heating oil stocks to the market, the U.S. Energy Information Administration said in its latest supply estimates. The amount is relatively small compared to total winter demand for heating oil, but it does "improve the buffer" against any demand increases, the EIA said. U.S. government energy experts warned consumers that prices will be higher regardless of what fuel they use to heat their homes.
Natural gas prices paid by consumers will average $8.58 per thousand cubic feet (mcf) this winter, up more than 29 percent from last year, the EIA said. Heating oil will cost an average $1.37 per gallon, compared to $1.18 per gallon last winter, the agency said. And propane, a fuel used by mostly rural American households, will average $1.16 per gallon, up from $1.02 last year. "In contrast to those of previous winters, fuel market supplies cannot be described as adequate to ensure a high probability of supplies meeting the demands of a very cold winter without difficulty," the EIA said.
If winter temperatures are colder than normal, there is "enhanced risk of significant upward price shocks" due to low inventories of heating oil and natural gas, the government said. The government also said it expects U.S. crude oil prices to remain above $28 a barrel for the rest of the year, easing to an average of $25 a barrel in 2001. If achieved next year, that price is squarely in the middle of the range that the Clinton administration and Republican lawmakers have said is a good balance for producing and consuming nations.
U.S. crude prices soared to a 10-year peak of nearly $38 a barrel in late September before the White House announced it would tap the Strategic Petroleum Reserve. Since then, prices have fallen sharply and were trading at about $30.85 a barrel on Friday morning. The stockpile holds a total of 570 million barrels of crude oil, and was created by Congress in the mid-1970s after the first Arab oil embargo.
Russian Oil Sold in US$ - Tax Export Tariff in EUROs
Weak Euro Forces Russia to Adjust Oil Export Tariff
MOSCOW, Oct 5, 2000 -- (Reuters) Russia plans to peg its export tariff on crude oil to changes in the rate of the European currency against the U.S. dollar, a senior trade ministry official told Reuters on Wednesday.
"The oil we export is paid for in dollars, while we collect duties in euros," said Andrei Kushnirenko, the head of the tariff policy department at the ministry.
"The euro has fallen against the dollar by some 25 percent in the last year and a half, so we have to take this into consideration."
He said the government commission for protective measures in foreign trade had to elaborate the new scale within two weeks.
But he did not say when the new scale would become effective.
Currently the export tariff on crude oil is set in euros once in every two months, and its rate is pegged to the price of the Russian Urals crude blend.
Russia will raise crude oil export tariffs from the beginning of November to EUR 34 per ton from the current EUR 27, following an increase in world oil prices.
PGM's back in the news, another developing run on PGMs?
US DLA sees platinum sales later this month; awaits Mint deal
New York--Oct. 6--The U.S. Defense Logistics Agency expects to begin platinum sales sometime later this month after finalizing arrangements with the Mint for the return of 75,000 ounces of platinum. The DLA is exploring the possibility of a paper transfer between the two agencies, but has not yet determined if such an arrangement is possible, a DLA official told BridgeNews Friday.
Black Blade: The Mint to return Pt back to the DLA? Hmmmmm, Also there wasn't much Russian PGM supply this last month even after all the hype about Russian deliveries. There was a 17 day strike at AngloAmerican Platinum in SA. PGM supplies still look very tight.
US DLA sold 2,074.466 oz palladium on Thursday
New York--Oct. 6--The U.S. Defense Logistics Agency sold a total of 2,074.466 troy ounces of palladium from its Web site sales Thursday.
Black Blade: DLA is really scraping out every nook and cranny for Pt! They were still trying to get back Pt and Pd from the bankrupt Englehard refinery last I heard. I don't know if they ever got it back and they are being very quiet about it.
The Libertarian Party and other organizations have tried to place similar ads on the Networks in the past without success. They were denied based on content. It would be interesting if they can get this one placed but I wouldn't hold my breath. The ruling class won't stand for it. A few years ago The Libertarians were told they could participate if they got 50 state ballot access. They did, and the League of Women Voters changed their mind. Afterward some states raised the number of registered voters required to get on the ballot. Some states changed the law stating that registrars could not be paid contractors and they had to be residents of each voting district. The Demopublican Party does not want to upset the status quo. Let's face it, we lost this country to the ruling class long ago. The Sheeple are just too stupid to see it or even care. It's no wonder then that barely half the eligible voters even take the time to vote.
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0 of 1 people found the following review helpful:
The Plague by Albert Camus, September 17, 2000
Reviewer: Your Name from USA
the book was boring because it was the same thing through out the whole book. its just about people dying from a plague. dont read it.
You say, "By 1986 US oil imports from OPEC were at 0."
Huh? Where do you get this info? Are you saying that by 1986, the US was not importing any oil from Saudi Arabia, Iran, Libya, Venezuala, or any other OPEC member? I'd really like to see your source for that figure!
http://www.eia.doe.gov/emeu/aer/eh1999/eh1999.html"To meet demand, crude oil and petroleum products were imported at the rate of 10.5 million barrels per day in 1999, while exports measured 0.9 million barrels per day. Between 1985 (when net imports fell to a post-embargo low) and 1999, net imports of crude oil and petroleum products more than doubled from 4.3 million barrels per day to 9.6 million barrels per day. The share of U.S. net imports that came from OPEC nations reached 72 percent in 1977, subsided to 42 percent in 1985, and climbed back to 50 percent in 1999. Total net imports as a share of petroleum consumption reached a record high of 52 percent in 1998 before declining to 50 percent the following year. The five leading suppliers of petroleum to the United States in 1999 were Saudi Arabia, Venezuela, Canada, Mexico, and Nigeria."
....I stated the other day that in the 1940's, an ounce of gold bought 159.1 barrels of Saudi oil. In reviewing my sources, I realize I was wrong. An ounce of gold paid the royalties on that much oil, which typically ran about 20% of the price. This would indeed put a gold-for-oil price right in FOA's range of 32 barrels per ounce of gold. I find no evidence that gold ever traded for oil, though. Only royalties were paid in gold, or as often as not, gold's exchange rate in US$'s.
I hope to have some of these documents uploaded to a website later this week.
http://www.cato.org/pubs/pas/pa046.html" In 1977 the United States received an average of 28 percent of its oil imports from Persian Gulf countries. Today less than 10 percent comes from those countries (see table below). Most U.S. oil imports come from Mexico, Canada, Venezuela, Great Britain, and Indonesia. The domestic production picture has changed too."
This is from a report written in 1985 by Sheldon Richman. But even this statistic can be misleading as Venezuela and Indonesia are OPEC members. Furthermore, can we look at US oil policy (or monetary policy, for that matter) in isolation, because the oil market is a true world market, yes?
You know, it almost seems the reason it disappeared is because they implemented it without telling anybody and this is what is suppressing the price of gold. Anyway, it shows the US was considering manipulating or controlling commodity prices back then. So who is doing it now?
your comments from previous post: "The purpose of a gold standard is not to turn every dollar bill into a warehouse receipt for an equivalent amount of gold, but to provide the central bank with an operating rule that will facilitate the maintenance of a stable price level." (Wall Street Journal, Oct. 13, 1981). Gold could be one of many commodities in a basket index, or even be excluded; one reason the price rule proposal was not welcomed by Austrians. Nor was it adopted by many Republican politicians in the 1980s; the idea quietly disappeared from public view.
The Rise and Decline of the State
by Martin Van Creveld
$cheap
Editorial Reviews
Book Description
The state, which since the middle of the seventeenth century has been the most important of all modern institutions, is in decline. From Western Europe to Africa, many existing states are either combining into larger communities or falling apart. In the future, Martin van Creveld argues, their functions are likely to be taken over by other organizations. This unique volume traces the history of the state from its beginnings to the present day. It will be invaluable to all who would understand the history of government, and its future.
Date: Sat Oct 07 2000 06:10
Crmblr (In the golden sunset) ID#291250:
Copyright � 2000 Crmblr/Kitco Inc. All rights reserved
Rationalists argue that the demonetisation of gold is approaching a climax. Some 33,000 tonnes of the stuff remain locked away in the vaults of central banks and institutions such as the International Monetary Fund. But can they justify holding an illiquid asset which earns almost nothing, except when it is lent out to borrowers who assume it will fall further in price?
The British Treasury has embarked on a high-profile disposal programme. If many more governments do the same the price at some point must collapse.
Gold bugs see it differently. These days, curiously, their declining numbers are concentrated in the US.
*** Interesting post as it shows the author hasn't read anything at this site and likely nothing at the site it was posted at (Kitco). Yet, there it is, disinforomation. We know the reason for record sales, we know why the CB's aren't selling their gold, OPG (other peoples' gold) is being sold to buyers who quickly stash it away. Where this person sees demonitization we see nothing but a dual-role of gold and one is monetization. We say at some point the price must sky rocket. Same set of facts, opposite conclusions. Is the glass half-empty or half-full? Go figure.
I will start with a simple statement of opposition to a gold standard. I don't believe government's central planning is any more eficacious in chosing the monetary metal than in running a McDonalds. A no-government-standard monetary system is my choice. Gold based? if that turns out to be the prefered market choice, with silver and PGMs? just the same. With stock and bond baskets? OK. Bank notes redeemable in more bank notes? fine. Just that the markets have a chance to make the choices.
The main thrust of popular support for the gold standard being price stability is not a positive. Prices tend to decline in a government imposed gold standard. Prices are more stable in a bimetalic system, though still tend to decline and can be even more stable with free banking on a bimetalic or multimetalic system. In the free banking model, the banks and other actors including corporations, non-profits, municipalities and individuals etc. issue monetary notes or account credits that are discounted at varying rates either at the banks or the shops.
There is no reason to believe that price stability is desirable. Quite the contrary - one would expect prices to vary greatly between different markets and different products at different times. Even general price levels would be expected to jump around as various surplusses and shortages occur. Particularly with the ebb and flow of energy booms and busts which permeate the pricing of everything much more so than was the case during any gold standard period. Oil, NG, Electric, coal and coal derived fuels routinely suffer equal boom and bust cycles that should affect general prices. If in the famine period after a "feast" the energy sectors have suffered from lack of investment, then it would be appropriate to see the prices of all goods and services rise with these since the savings accumulated during the period of no-investment in energy supply must be able to buy less energy and less of everything else with an energy component. Though long term price stability would arise (what fiat money has never provided), some years would be expected to see general price rises and some would be expected to produce declines (which is where fiat does smooth things out some so that prices just rise all the time or remain rather stable from year to year, but not over periods of decades).
The idea that government should have a "policy" regarding money and banking at all is wrong. It should not be subject to centralized judgement on any grounds, whether of popular will or pressures of "special interests".
Black Blade 38442
Bankrupt Englehardt refinery?? Hadn't heard of that one. Do you have any details? This is getting scary. Frightening but a type of development that was probable.
Oro 38452
Thanks for the post. Sounds very much like a treatment I have been looking for.
A 25% leap in heating oil and natural gas prices is expected this winter
October 6, 2000: 1:09 p.m. ET
WASHINGTON (Reuters) - American consumers should brace for at least a 25 percent jump in heating oil and natural gas prices this winter, with an even bigger leap in store if temperatures are colder than usual, the U.S. government said on Friday. The new predictions for the coming winter fuel season were issued two days after the Clinton administration finalized plans to loan 30 million barrels of the government's own stockpiled crude to energy companies. Release of the crude oil from the Strategic Petroleum Reserve is aimed at helping U.S. refiners replenish their inventories and inject more supplies into the market. Republicans have criticized the move as an attempt to influence voters in next month's presidential election.
The White House action will add between three and five million barrels of heating oil stocks to the market, the U.S. Energy Information Administration said in its latest supply estimates. The amount is relatively small compared to total winter demand for heating oil, but it does "improve the buffer" against any demand increases, the EIA said. U.S. government energy experts warned consumers that prices will be higher regardless of what fuel they use to heat their homes.
Natural gas prices paid by consumers will average $8.58 per thousand cubic feet (mcf) this winter, up more than 29 percent from last year, the EIA said. Heating oil will cost an average $1.37 per gallon, compared to $1.18 per gallon last winter, the agency said. And propane, a fuel used by mostly rural American households, will average $1.16 per gallon, up from $1.02 last year. "In contrast to those of previous winters, fuel market supplies cannot be described as adequate to ensure a high probability of supplies meeting the demands of a very cold winter without difficulty," the EIA said.
If winter temperatures are colder than normal, there is "enhanced risk of significant upward price shocks" due to low inventories of heating oil and natural gas, the government said. The government also said it expects U.S. crude oil prices to remain above $28 a barrel for the rest of the year, easing to an average of $25 a barrel in 2001. If achieved next year, that price is squarely in the middle of the range that the Clinton administration and Republican lawmakers have said is a good balance for producing and consuming nations.
U.S. crude prices soared to a 10-year peak of nearly $38 a barrel in late September before the White House announced it would tap the Strategic Petroleum Reserve. Since then, prices have fallen sharply and were trading at about $30.85 a barrel on Friday morning. The stockpile holds a total of 570 million barrels of crude oil, and was created by Congress in the mid-1970s after the first Arab oil embargo.
Sorry, that was Handy and Harmon not Engelhard. That was a few months ago and there was a scandel about some missing gold at one of it's S. American refineries. Oh well it's late and my memory is foggy after a few cold ones ;-)
Think hard about this! Natural gas prices paid by consumers will average $8.58 per thousand cubic feet (mcf) this winter, up more than 29 percent from last year, the EIA said. Heating oil will cost an average $1.37 per gallon, compared to $1.18 per gallon last winter, the agency said. And propane, a fuel used by mostly rural American households, will average $1.16 per gallon, up from $1.02 last year. "In contrast to those of previous winters, fuel market supplies cannot be described as adequate to ensure a high probability of supplies meeting the demands of a very cold winter without difficulty," the EIA said.
On Monday the commodities markets are closed in NY, but the equities markets are open. What will happen? The shares of Natural Gas producers, refiners, pipelines, marketers, drillers and services will probably rocket higher. This is big news as many thought that NG at $6.00Mbtu would be the highest the price of NG would go. The majority of earnings warnings this quarter have been attributed to higher energy costs, closely followed By Euro weakness. Unless the "Working Groups on Financial Markets" (PPT) can pull another rabbit out of their hat, Wall Street will look very ugly next week. The PPT if it really is in the markets, is losing it's grip. With the employment numbers looking strong (wage inflation) and the need to keep foreign investment in dollars, I suspect that Cheeta (or Mr., Magoo - your choice) and his henchmen will begin a series of rate hikes after the election. The announced Japanese release of 6 million barrels of heating oil from their reserves is destined for Asian markets, but look for the financial media drones to play it up big time. At some point, Gold will play it's traditional role as a safe haven. In the meantime, PMs are a screamin� bargain.
Matthew Simmons, of Simmons International, gave a speech to the Energy Institute of the Americas in Oklahoma City this past Monday. He said: "I feared we would face an oil shock. I was wrong. We are now facing a true Energy Crisis��" He went on to say, "Let me be clear. The world has not run out of oil and North America has not run out of natural gas�.. What we have run short of is any way to grow supply of each."
He commented on the increasing decline rates, limited numbers of drill rigs, lack of refinery capacity, lack of tanker capacity, limited pipeline capacity, etc. In effect there are choke points everywhere we look.
Blair has said his 2 cents about there being a European Superpower.
It seems to me that powerful forces are at work to make Europe one country, and that they are determined to succeed. That being the case, all their considerable resources will support the EURO. Europe being such a conglomeration of peoples, languages,and customs it seems to me that the EURO is needed as the mortar to hold all the bricks together. So whatever it takes to have the Euro sucede is what they will do. More interventions even if the US fails to go along.
The target for the Euro rate rise is the treasury yield curve at about 5.9% +/- 0.1%. Which leaves little excess yield. The other myrriad of target rates is substantially higher. Particularly the "marginal" lending rate of 5.75%.
The Euribor rate is 5.1%, leaving a small - but significant margin to LIBOR of 6.75% or so.
The specs are back at hacking at the Euro, but the potential rewards from playing the spreads have fallen substantially. The risk has increased.
Hello! You struck a small nerve when you asked if I could see the Gateway Arch from where I live. Had to get this out before taking the girls to Irish dance.
No, I cannot see the Arch from here but, for many years, there was a building code in the city which preserved the absolutely unique feature (the Arch) of the St. Louis skyline. The Arch stands at about 630 feet or so and no building was permitted to be taller. Also, no new construction (and there was plenty) was permitted to obscure the Arch. Well, guess what? A new Federal Building was completed at great expense which is an architectural monstrosity and it blocks a view of the arch that prevailed here in St louis for over thirty years. To add insult to injury, it is called the "Thomas Eagleton Federal Building". You remember that great American leader TF Eagleton don't you? His family made a fortune selling plumbing parts etc.
September Editorial from World Oil with an interesting political twist
Look out for soaring gas prices
In Houston, as this was written, temperatures were reaching past 100�F, which is completely normal. But prices for natural gas were equally high, reaching $4.50 per Mcf on several occasions, which is completely unusual. At the same time, most Americans are blissfully unaware that the winter just around the corner could hold some major surprises.
In fact, a recent Financial Times (FT) website article noted that the term "energy crisis" has been resurrected by U.S. natural gas company executives, and that there is mounting evidence that the country's energy supply system could have problems meeting demand this winter. At about the same time, API reported that petroleum stocks had fallen to their lowest level in 24 years. This caused world crude oil prices to again zoom past $30 a bbl.
Compounding the bullish outlook for oil was an apparent OPEC view that high oil prices should be maintained despite Saudi Arabia's announcement that it would raise output to moderate prices. Then there was the trip to Iraq last month by President Hugo Chavez of Venezuela, during which Chavez and Saddam Hussein defended current oil price levels. According to the FT, U.S. Energy Secretary Bill Richardson condemned the visit, saying, "It is unhelpful that governments are trying to talk up the price of oil in ways that would harm economic growth." Finally, the International Energy Agency has questioned whether U.S. refining profit margins are sufficient to encourage the heating oil production necessary to meet winter demand.
But we digress - it was the price of natural gas that prompted this discussion. And with lower-than-normal natural gas storage levels, plus a return to a normal winter (the last three have been among the warmest on record), the U.S. natural gas system could be stressed beyond breaking. At a recent meeting in Houston, a representative of an eastern utility cited current, unusually high gas prices, then predicted that they could easily reach $6 per Mcf this winter. In the FT article, Ronald Barone, a natural gas analyst with PaineWebber, said there should be enough gas to go around, assuming a normal winter. But he added that, because of the tight supply situation, "you will see some businesses having to switch to other fuels and you will see some businesses closed." This means business and industrial customers that have interruptible gas supply contracts could see their supplies curtailed if cold weather boosts demand for these limited supplies.
In the Financial Times report, Mr. Barone estimated that natural gas in storage will total 2.6 Tcf on November 1, compared to a "comfort" level of about 3 Tcf. And it is this low storage level that worries analysts, who say there are few possibilities in the short term to boost natural gas deliveries. Like the utility spokesman above, the publication predicts that gas prices could reach $6 per Mcf on the spot market on especially cold days.
Another factor that could significantly impact gas prices in the short run is hurricane season in the Gulf of Mexico. Obviously, a storm entering the Gulf would prompt the shut-in of offshore oil and gas production platforms, which account for a large part of U.S. production. And any hiccups during this critical period, in which storage should be undergoing replenishment, could cause major disruptions later.
Just say no, Al. Because of their respective backgrounds as an independent oil producer and the head of an oilfield service company, we obviously expected candidates George W. Bush and Dick Cheney to be labeled "oily" by the general media. However, what surprised us is the amount of negative attention Ozone Al Gore, the darling of the environmental movement, is getting lately.
In case you missed it, hundreds of protesters marched to the site of the Democratic National Convention and chanted slogans against Occidental Petroleum and the Gore family's investment in the company. They want Occidental to abandon its plans to drill on lands belonging to U'Wa Indians in Colombia. Gore's father served on Occidental's board, owned stock in the company and served as chief executive of a subsidiary before his death. His stock holdings passed to his family.
Vice President Al Gore now controls at estimated $500,000 worth of Occidental stock. The stock came from Armand Hammer, a deceased oilman with communist ties who served for decades as financial benefactor to Mr. Gore and his father, Sen. Albert Gore, Sr. Mr. Hammer was said to have bragged that he kept the elder Gore "in my back pocket."
Since becoming vice president, Mr. Gore appears to have gone out of his way to help Occidental. Between 1995 and 1997, he helped engineer the sale of publicly owned Elk Hills Naval Petroleum Reserve in Bakersfield, Calif., to Occidental. Since 1912, the Navy had zealously guarded Elk Hills as a strategic resource. Congress resisted privatization attempts by Presidents Nixon and Reagan, but relented when President Clinton pushed it through as one of Mr. Gore's "reinventing government" reforms. Bill Sammon of the Washington Times notes that, "The sale of Elk Hills to Occidental was a dramatic departure for an administration that has walled off huge expanses of private land for public preserves."
In addition, Occidental has been paying the vice president $20,000 a year for decades for mineral rights to zinc-rich land the Gore family holds near Carthage, Tenn. Reports say the firm continues to make payments, even though it has never mined the land.
The convention protesters are upset about Occidental's plan to drill on the sacred ancestral Indian land because the tribe is threatening mass suicide if drilling goes forward. Thus far, Mr. Gore has refused to divest from Occidental or use his leverage to block the planned drilling. We certainly agree with him, but likely for different reasons.
First I stand corrected in my analysis that suggested the ECB would probably not raise rates. My thinking was that this would create an unnecessary psychological link between the Euro and USD in the forex. I also felt that the ensuing contraction would be harmful. If I understand what TG is insinuating from his IHT posting (38379), raising rates is an offensive move. From that perspective it seems that the increase does a few things:
1) It pressures us to raise rates. This may be both a move of force and mercy. Force in that any rate rise here will certainly send the markets hurtling. Mercy, in that it is medicine we should have taken years ago, but no one was in a position to compel us.
2) It reduces the spread on the Euro carry, subsequently directing more money for European capital formation, rather than USD speculation.
3) It does indeed cause a contraction in the Euro money supply, that while I questioned this wisdom, I see now that cheaper oil through imminent Euro settlement in economic proportions will more than offset this.
Second, my other suggestion that the 30 million barrel SPR release might never actually see the light of day, looks to be wrong. The thinking was that there was no need to actually "play" this move and glut the markets when the desired political goal was already achieved. How foolish of me to not have considered the profit motive: this oil will find its way to higher bidders overseas, and the conduits for these transactions will be entities who are owed something, or entities from which this President wishes to procure future favors.
I love the game of Chess but am an atrociously lousy player. It does seem to me as we look on here that the development of this one has matured to end game. This is why I have gone on about the sophistication of the U.S. perspective on an oil-as-de-facto-reserve-currency link. It is certainly not the most important thing, but it is another window in which we can look and analyze the strategy, and mindset of the players.
If such were deliberate, and hence systematic, there would be a constituency of kibbitzers with big bets on the game, who would be giving some arm-twisting advice. Absent such, the kibbitzing would be more a raucous crowd, each with his own interests, but little cohesion, hence leverage to apply to the player.
If such were deliberate, there would be a thread of cohesion in the play of the game, and whether the game was well played or no, there would at least be method. Otherwise, the play is likely to be haphazard at best, and reckless at worst.
This is where the current U.S. player's personal make-up is important. As I profiled in an earlier post, Clinton is intelligent and ruthless, and above all he hates losing. Bill Clinton is out for Bill Clinton. As such, where the President should view the game board and see the people to be guarded as the King, and our resources, treasures, and liberties treated as our second row pieces, all have instead become pawns, and the man playing the game has vested himself as King.
I mentioned also that one of the strategems he uses is surprise, as manifest in his unscrupulous ruthlessness. He allows himself to be capable of anything, and hopefully catches his opponents off-guard as they say, "Surely he wouldn't do THAT..."
Chess being as much a game of mathematical calculation, as it is the more subjective arts, surprise tactics do not work well in the long run, and especially in the end game. With few pieces left, there become only so many possible moves to make. Surprise is no longer... surprising.
I fear that when the next player takes his seat at the board in January, there will be little left for him to do except run the King around the board until the sinking thud of, "checkmate!" utters forth from the mouth of his opponent.
The main reason we have seen joint intervention and a �-point ECB rate hike was to prevent the Euro from free-falling in face of the no-vote in Denmark's referendum to decide whether or not to join the Euro. The euro is designed to create a federal europe, and a socialist one at that.
If there hadn't been intervention, the euro could have easily lost 10% last week. This would be a big embarrassment to euro-pushers like England Prime Minister Tony Blair who is desperately trying to lock England into the federal Europe by adopting the euro. Also a 10% drop would give certain confirmation to the Danes that they were right.
Moreover, Germany and other nations seeing the Danes have the freedom to vote themselves out of the euro, would pressure their politicians to opt out. Surely the Germans and the French must wonder with disgust why they have never been offered a referendum to decide their fate.
ORO (10/7/2000; 4:47:01MT - usagold.com msg#: 38454)
SteveH and ET - monetary gold
"I will start with a simple statement of opposition to a gold standard. I don't believe government's
central planning is any more efficacious in choosing the monetary metal than in running a
McDonalds. A no-government-standard monetary system is my choice. Gold based? if that turns
out to be the preferred market choice, with silver and PGMs? just the same. With stock and bond
baskets? OK. Bank notes redeemable in more bank notes? fine. Just that the markets have a chance
to make the choices."
An apropos, short interview, excerpted below, with a lot of fascinating historical details:
"Few people have worked in and on the money system in as many different capacities as Bernard
Lietaer. He spent five years at the Central Bank in Belgium, where his first project was the design
and implementation of the single European currency system.", etc.
BERNARD: "�While economic textbooks claim that people and corporations are
competing for markets and resources, I claim that in reality they are competing for money -
using markets and resources to do so. So designing new money systems really amounts to
redesigning the target that orients much human effort.
Furthermore, I believe that greed and competition are not a result of immutable human
temperament; I have come to the conclusion that greed and fear of scarcity are in fact being
continuously created and amplified as a direct result of the kind of money we are using.
For example, we can produce more than enough food to feed everybody, and there is
definitely enough work for everybody in the world, but there is clearly not enough money to pay
for it all. The scarcity is in our national currencies. In fact, the job of central banks is to create
and maintain that currency scarcity. The direct consequence is that we have to fight with each
other in order to survive�."
SARAH: So some people have to lose in order for others to win? Some have to default on their
loan in order for others to get the money needed to pay off that interest?
BERNARD: That's right. All the banks are doing the same thing when they lend money into
existence. That is why the decisions made by central banks, like the Federal Reserve in the US,
are so important - increased interest costs automatically determine a larger proportion of
necessary bankruptcies.
So when the bank verifies your "creditworthiness," it is really checking whether you are
capable of competing and winning against other players - able to extract the second $100,000
that was never created. And if you fail in that game, you lose your house or whatever other
collateral you had to put up."
BERNARD: For one thing, power has shifted irrevocably away from governments toward the
financial markets. When a government does something not to the liking of the market - like the
British in '91, the French in '94 or the Mexicans in '95 - nobody sits down at the table and says
"you shouldn't do this." A monetary crisis simply manifests in that currency. So a few hundred
people, who are not elected by anybody and have no collective responsibility whatsoever,
decide what your pension fund is worth - among other things.
�
BERNARD: Yes, I see it now as about a 50/50 chance over the next five or 10 years [writing in 1997].
Many people say it's 100 percent, and with a much shorter time horizon. George Soros, who's made
part of his living doing what I used to do - speculating in currencies - concluded, "Instability is
cumulative, so that eventual breakdown of freely floating exchanges is virtually assured."
Joel Kurtzman, ex-editor at the Harvard Business Review, entitles his latest book: The
Death of Money and forecasts an imminent collapse due to speculative frenzy.
Just to see how this could happen: all the OECD Central Banks' reserves together represent
about $640 billion. So in a crisis situation, if all the Central Banks were to agree to work
together (which they never do) and if they were to use all their reserves (which is another thing
that never happens) they have the funds to control only half the volume of a normal day of
trading. In a crisis day, that volume could easily double or triple, and the total Central Bank
reserves would last two or three hours.
SARAH: And the outcome would be?
BERNARD: If that happens, we would suddenly be in a very different world. In 1929, the
stock market crashed, but the gold standard held. The monetary system held. Here, we are
dealing with something that's more fundamental. The only precedent I know of is the Roman
Empire collapse, which ended Roman currency. That was, of course, at a time when it took
about a century and a half for the breakdown to spread through the empire; now it would take a
few hours.
�
BERNARD: The biggest issues that I believe humanity faces today are sustainability and the
inequalities and breakdown in community, which create tensions that result in violence and wars.
We can address both these issues with the same tool, by consciously creating currency systems
that will enhance community and sustainability.
�
I propose that we choose to develop money systems that will enable us to attain sustainability
and community healing on a local and global scale. These objectives are in our grasp within less
than one generation's time. Whether we materialize them or not will depend on our capacity to
cooperate with each other to consciously reinvent our money."
****
ORO: "�The idea that government should have a "policy" regarding money and banking at all is
wrong. It should not be subject to centralized judgement on any grounds, whether of popular will
or pressures of "special interests"."
Perhaps, in a few hours, monetary policy will go the way of the Roman Empire.
A fine analogy, to be sure, but what if the time clock that the players punch is not representative of the time Clinton is in office but, rather, the time he has as a player in general? If this is the case, then all which is going on now is just a gambit in a bigger game.
You said "As I profiled in an earlier post, Clinton is intelligent and ruthless, and above all he hates losing. Bill Clinton is out for Bill Clinton. As such, where the President should view the game board and see the people to be guarded as the King, and our resources, treasures, and liberties treated as our second row pieces, all have instead become pawns, and the man playing the game has vested himself as King."
You left out American citizens...they, too, would be considered as pawns.
Does this sound like someone who would be content to resign his position "at the board" to another telling himself that he has played the game well only to fade away into obscurity? I say, not if he is, in fact, who you profile.
You also said "I mentioned also that one of the strategems he uses is surprise, as manifest in his unscrupulous ruthlessness. He allows himself to be capable of anything, and hopefully catches his opponents off-guard as they say, "Surely he wouldn't do THAT...""
This thought may turn out to have far-reaching implications as the "pawns" in this country who expect/hope for him to go away quietly will assume that "Surely he wouldn't do THAT..."
http://home.columbus.rr.com/rossl/gold.htmI was surprised to see that the Ponzi Index is not at its lowest point since Shifty first presented us with it. Just had this feeling (uncomfirmed by the facts)that the latest losses had brought on a new low.
Please remember - the Ponzi index gets its name from fraud and manipulation. The underlying indexes will always be changed in order to scam more dollars from uninformed persons. Loser stocks in the index will be discarded for the latest hot stock.
Everyone, please remember, the Ponzi index is all in fun to mock the Wall Street CNBC MSNBC types.
"Soon, gold will rise "with the dollar", then the maker of your money will force this currency down in a effort to stop it from coming home" - 6/29/98 ANOTHER (THOUGHTS!)
I've been wondering where you have been but I see you are as sharp as ever. Congratulations are in order as I missed that completely and I think your observation is as succinct and profound a post with the greatest of implications as I have seen in a long time! Well done. While our Trail Guide may be speaking in biblical terms... none the less, I enthusiastically nominate your post for the HOF.
Thanks for the compliment! I'm laughing in a grateful way! Nobody in this family thinks Mom is especially profound, so it's nice to come here, write two sentences, and get nominated for the HOF!
The Ponzi is no joke to me. I used to watch the directional changes in the Dow and Long Bond to get a glimpse of rotation from stocks to bonds and vice versa.
I have felt that we get a similar type of reading when we watch the Ponzi, ie when money flows from the Dow to the Nasdaq or from the Nasdaz to the Dow, we have a good idea not only as to the direction of money flows but also the extent of the flows. In other words when the Ponzi moves low enough and the 30 yr rate moves high enough we will have a good notion that money flows have moved out of both areas. When this happens if the money is not in cash (ORO will probably let us know if this happens)then we will have confirmation in the fact that both the dollar will be falling and PM's will be on the rise. So being a lame brain, technically, I watch the ponzi, the yield curve, the US$, the Euro/German mark/Yen and of course PM's diligently.
I depend on ORO mainly for technical information and various others on the forum for wisdom and interpretation. What you said, "The Ponzi is only for fun", I will give this considerable thought, as I have a high regard for your opinion; however I am slow to move when my gut tells me I have something which seems to be logical.
Any further thoughts from you or anyone else on this would be greatly appreciated as I do not want to waste my time watching erroneous stuff.
First, the Dow is weighted much higher in percentage terms than the Nasdaq index. This means a big decline in the Nasdaq can be offset by a fair gain in one Dow stock.
Second, as I alluded to before, the manipulators of these indices remove the losers and bring in hot prospects at frequent intervals. This is somewhat how a free market works, but not exactly.
If Trail Guide were speaking in Biblical terms, he would mean the collapse will happen a few thousand years from now, since "one day is like unto a thousand years." Somehow I don't think he's using Biblical terms!
Spent this week packing the freezer and buying firewood. I had hoped to have the house redecorated before things got nasty, but that's taking much longer than we ever thought. (Even a financial collapse is doable with a clean, redecorated house, right?)
Thanks for the last update, one of the best definitions of the dollar "scheme" I've heard.
How much is the dollar to be inflated?I am canadian so I expect the same or worse here. How can a situation as this be repaired? I read through ANOTHER'S THOUGHTS today, and he mentioned "draconian measures", but I just can't envision this "hyperinflation". I've tried to research countries that went through it, but none can be compared to the west as it is today!
What a wake up call this will be!
Perhaps that book should be titled, "The Rise and Fall of the Nation StateS", or "The Rise of the Global State and the Fall of the Nation States".
The demise of the nation-state will not necessarily bring the world to greater freedom and economic well-being. The destruction of the nation-state is a prerequisite of the global state. And, as I've opined previously, the concept and implementation of a global state monopoly is pretty much a recipe for disaster, for a host of reasons.
If I were part of a group assigned the task of implementing global government, I'd do everything possible to discredit, economically entangle, and generally hamstring every nation-state on the planet. I'd start with the smaller nations first, then the middle tier, and conclude with the G7. I'd hasten the implementation of any technology that would help achieve these ends and I'd foster any economic regime that would hurtle the concept of local, sustainable economic autonomy onto the dust heap.
Rees-mogg and Davidson can be read in two ways: as socioeconomic-techno-visionaries or as globalist toadies. One of tha two authors reeks much more of toadyism than the other, but I can't recall which. Their teaming seems to be for the purpose of helping to balance and soften their overt views and (possibly) covert agenda.
miner49er:
From one analogy junkie to another, that is one GREAT analogy. But I see WJC as just the latest (and worstest) opposition player in a long-running game, going back at least to the Wilson Administration.
The Middle-East is heating up again. Ariel Sharon and several soldiers went into Nabulah in an effort to stir up passions between the Jews and Palestinians and to scuttle the peace process. It looks as if he may have succeeded. So far several Palestinians have died, mostly those caught in the cross-fire. Today three Israeli soldiers were captured by Hezbollah forces in Southern Lebanon in response to the killing of a child by Israeli forces (their words). PM Barak says that he is holding Syria and Lebanon responsible for their safety. Today PM Barak of Israel gave an ultimatum to Chairman Yasser Arafat to end the violence within 48 hours or the peace accords are dead. This situation is rapidly deteriorating and the Middle-East powder keg is set to explode. Now Iran and Iraq are saber rattling over this issue as well. Iraq has recently been accusing Kuwait of sniping oil from across the border, and the Kuwaitis are now making similar claims against Iraq. Saudi is trying to develop better relations with Iran and with semi-incapacitated King Fahd likely having to yield power to his half brother Crown Prince Abdullah who sides with Iraq the situation looks even more grim. And all of this at a time when a steady supply of cheap oil is in doubt and the New economy (and Old Economy) is under severe pressure. What pray tell is a US President to do? Side with the oil or secure Hillary the Jewish vote in her bid for the senate in New York? All this started with the idiot Ariel Sharon's antics. It couldn't have happened at a worse time as the Western nations are facing an energy crisis. Shades of 1973 all over again? Perhaps. Bubba is likely to side with Israel and that will put more pressure on the Middle-Eastern OPEC nations to respond in a way to "punish America", maybe by using oil as a weapon, just like 1973. We do live in interesting times.
From your last hike: "We do not expect the world to fail...". What if you're wrong; shrug like Atlas? That's not terribly comforting from my small timer perspective.
Having read and re-read so much of what you have written and, having reflected for many hours upon your themes so well expostulated; theoretically, this very average person is in complete agreement with your analyses. So, "showtime" is it? Very well. As Francis Bacon was heard to say before the ax fell upon his frail neck, "What are you waiting for? Strike man strike!" We've all been in tougher spots before (well, many of us have anyway).
As you are an American, myself being an American; I must ask you how you feel about this whole business. I mean, how do you really feel? Know what I mean?
I bear you no malice or ill will rather, just simple thanks for all of your tireless efforts here these many months.
I wasn't going to add anything to the trail today, but we decided it was time to begin placing things in clear terms. It looks like our political posturing is leaving the "let's talk about this behind the door stage" and entering the "show us your cards stage". This is not just predicated on the recent ECB rate hike alone. Some other things are in the works and with this new climate, it won't be long before we see it on the news.
Certainly, we must talk about SteveH's recent posts. He has made a real effort in trying to unravel the gold value question. In addition ORO has some good reasoning that must be addressed. So before I begin:
Hello Hermit Club, and welcome!
I fully well know just how hard it is to see the prospects of US dollar price inflation right now. Unless one has been following this trail for a long time the present economic momentum seems like an object in motion that must stay in motion. But as I tried to present in the Showtime post, the US domestic price structure is already primed to show it's price inflation dynamic. For the first time we have placed ourselves in an unretractable situation. The dollar is terribly strong from this currency competition that it was forced into. If the Federal reserve tries to raise rates to slow our runaway expansion the dollar will only get more overvalued. That process alone will drive our deficit to the
moon. They will not are not going to allow this much longer. Yet, the fed has little choice but to stand pat or even lower rates in the face of any perceived slowdown. With the current debt and derivative stress built into the dollar system, their only card is currency exchange intervention to
lower the dollar. But we will always hear this as supporting some other currency.
As Giovanni Dioro said in #38437, " but judge them not by their words, but by their actions".
Hello GD, we do judge them by their actions. Just because the Western press, official press releases and various traders say the recent intervention is for the Euro doesn't mean it's true! On one side of the equator the drain water swirls one way while on the other side it goes the other, no? So if the Euro is up the dollar is down? Or is it if the Euro is down the dollar is up? Which perception is right?
We watch the actual local buying power relative to the local currencies to judge which way the water flows. Not only is Euro purchasing power relatively stable, it's basic across the board interest rates are lower than the US. The ECB could just as easily raise their rates to par with the US and the Euro would spike well above the dollar without any intervention at all. But making the Euro "as strong as the dollar right now is not their plan. The dynamic is to lower our over stressed dollar back to a "strong Euro level"! Now that's a different picture when one sees the Euro where it is with it's low financing rates. Rates that are building a solid foundation under their markets. In time here is where we will see who has the power!
But Euro weakness is not and never was the problem. The ball is squarely in the US court for them to lower the dollar to save their economy busting trade deficit from blowing them sky high. That will require the US to buy Euros or lower their rates and both those actions will greatly expose the
current built in weakness within the US structure. Yes, indeed, everyone is following the Euro weakness ball, but we are watching the entire dollar game. And that tells us that the recent action is part of a larger gameplan to unseat the dollar.
So, take the strong dollar position if you will, but doing so will place your bet in the right direction, but on the wrong horse. Just like trying to leverage a gold market position using a paper dynamic; good bet, wrong horse.
To ALL , Oilman 383452 Giovanni Dioro 38404 & 437 Hi-Hat 38404
Hi-Hat re www.dieoff.org Shees, and I thought I was negative!
Giovanni Dioro
38404; Thanks, I will follow up.
38437; Re weak Euro. (and conspiracy) (IMHO) while there is a downside, generally I would suggest that the Europeans want a lower Euro because it strengthens the trade position. But politically they have to appear to be doing the opposite. The US has other motivations; They are terrified that a weakening dollar will unravel all that confidence that keeps their borrowing and power so strong. Politically, they to, have to "support" the weakening Euro, but behind the scenes ??? No formal conspiracy, but the effect is there.
Oilman 38382
Ageis.com, Aidsline, and Dr Alan Whiteside, are much more in the direction that I want to go. (I would suspect your thinking is along the lines that I want to go.) I suppose one might label it "behavioral science" or possibly "the ripple effect". (as follows)
TO ALL (comment invited)
It is fine to be a goldbug, and I agree by being one, BUT, while I believe gold has a definite place, stopping at that, I believe, is shortsighted.
I will start by posing an old French riddle, which I posted someplace. (but not here, as I recall.)
There is a lilypond , and on day one there is one lilypad in that pond.
On day 2 there are 2 lilypads in the pond, and on day 3, there are 4 lilypads in the pond. And so it goes, with the number of lilypads doubling each day, until on the 30th day the pond is full.
Question- On which day is the pond exactly half full?
The point is, that on the 26th day, when the pond is 1/16 full it is not easy to see that it will be full in the very short time of 4 more days. Only on the 28th day when it is � full, or on the 29th day, when it is � full, is it easier to see that it will be full soon.
This is a geometric progression.
Worldwide, the opinion as to the starting date of AIDs, varies somewhat. Generally there is agreement by everyone I have seen, that there was no possibility it may have started before 1975. Many stories I have heard put the date when the first human was infected as being in the early 80's but generally not later than 1984. I have arbitrarily picked a date of 1982. (and I must apologize for using HIV infection, and the term AIDs somewhat interchangeably because the infection of others seems to be possible in either state.)
Recently, I read that, I think it was for 1998, the estimated HIV positive population of the world was either 85 or 185 million. Not that it matters much when you consider the lily pond and that this started initially with one person. THIS IS A GEOMETRIC PROGRESSION. Without all the rocket science math, it appears to me that about 1/6 or 1/7 of the HIV infected population dies each year. That means that upon infection the average life expectancy is 6 or 7 years. It also appears that each infected person infects, on average, slightly more than 2 other people each year. Each HIV/AIDs infected person is probably infecting more than 15 others in his lifetime, who are each in turn infecting 15 others during their lifetime, (15X15) who each in turn�.. You do the math. Theoretically, when does the entire population of the earth become infected?
Happily, theory will not be strictly equal to practice, because some people will, for example, be monogamous. Also happily about 3% of the HIV positive population seems to be AIDs immune. Unfortunately, it appears that well in excess of 50% of the North American population is now infected with one or another of the STD's. (implications re morality) Most commonly, with human papilloma (sp) which is fairly benign, since it only has an implied connection with cervical cancer. Also unfortunately, the highest incidence appears to be in the younger, child bearing agegroup.
Leaving AIDs for a moment and skipping nimbly over to behavioral science with an example using oil.
Behavioral science teaches that humans, when faced with a major negative, go through several phases which include; Denial, Anger, Acceptance of the fact. (and roughly, I concur)
In the early 70's, peoples noses were rubbed in the fact that we had a FINITE supply of hydrocarbons. The price went up. California produced emission standards. New horizontal drilling and injection methods, etc were developed. 10, 20 or maybe even more years were added to the recoverable oil reserves. In a world that is concentrating on nano and femto seconds, 20 years is forever. It is not. But, mankind had collectively decided that mankind had always muddled through, and always would, and so, collectively they shrugged and went on to other things such as phosphorous in soap and Y2K. They were concerned. Oh Yeah. They were also in denial about oil.
In the denial phase, mankind started to proudly measure the state of societies advancement by how much energy was consumed. More advanced societies consumed more. The trend to lesser use of energy was derailed by the fashionable growth of such things as the gas guzzling "offroad" SUV. I will wager that 90% of the offroad vehicles in use today have never been on a dirt road, never mind no road. The use of hydrocarbons as throw away plastic packaging and other items grew like topsy. Conspicuous consumption was the norm.
Suddenly oil is on the radar screens again. And we have a great deal less of it. Much of North Americas lifestyle and society is built predicated on the consumption of energy. What do you think will happen, what IS happening, when Joe six pack is denied or limited in his "right" to climb in his gas guzzler and hit the road for the wide open spaces, for no other reason than he wants to.
Anger phase time.
This situation, and this phase was totally predictable, probably back in the seventies, and certainly in the 80's. I know. I predicted it, and was concerned.
Why are goldbugs so up in arms? They are, in my mind, are accurately predicting an event, and nobody will listen to them. Neither did anyone listen to me and my oil or other predictions. (and mostly they still don't)
Like in a game of chess, the guy who does not predict the next move is going to lose to the guy who does. The guy who sees the game several moves out is going to win over the guy who sees only one move out. I want to think about more than 1 move out. I would like to look at ALL the forces that will produce the next event, determine what forces that that event will produce, and thereby predict the event after the next one. I think that many goldbugs are narrowly focused on only one part of the picture, and as the AIDs example hopefully shows, there are other, major forces at work in our society today.
So in this row of dominoes, and I say row of dominoes, because, if the population starts to fall, where will government get the tax money to throw at an AIDs cure, and if AIDs is not cured, the population, and therefore the tax base, WILL fall. I see the major forces as being A)A probable implosion of the financial system, B)Disease, C)Population, D)The carrying capacity of the earth, E)Pollution, F)Naturally occurring cycles(such as weather) G)Mental attitude eg the unpreparedness of the North American population for negative change. H)Technology. I)Reliance on finite, but diminishing resources such as oil. J)Diminishing arable land. K)Specialization. L)Communications.
Not all of these items are negative, and some such as communications, are a two edged sword. They have potential to do very much good, but for example, they could erroneously spread fear.
However, the thrust of this missive is to look toward a method of predicting, and to attempt to garner ideas which will allow us to be better prepared for eventualities.
Let us assume that we do have a fiat currency crisis. What is going to be the possible reactions of government? Well, they are likely to be fighting desperately to save the treasury, since in the world as it exists today, from the treasury flows all power. He who pays the piper calls the tune. One thing they have always run to is a cooling off period. So that means a bank holiday.
Now take Joe six pack, teamster. How might he react to the closing of the banks? Well for starters, nobody is going to get a paycheck, no credit cards can be used, no bank machines because the banks are closed by law. The teamsters have learned that they need only tie up traffic, or at most, go on strike, and government will cave. How will Joe react if he finds his will no longer take this pretty toilet tissue in exchange for food?
If Joe sixpack ceases to carry goods, what is Mrs. 12 pack going to do when there is no milk coming into the city for her baby?
Anybody out there with an theory or prediction as to how this might unfold, or some forces I have not thought of, or any comments of any kind?
As a point of trivia: did you know that back in the early to mid 70s a Mcf of top tier (that's heavy) natural gas sold as high as $9.50!! That's when an old friend of mine that owned the Woodlands (in Houston) started cracking it into liquids. FWIW
http://www.worldoil.com/WO_RESEARCH/Research/whitepaper.pdfIf you read anything about the coming energy crisis - read this one. It's a large file (pdf) so better if you print it, read it study it, then it will become clear. It is well worth the read. I strongly urge all to read this paper. Hydro-Carbon Man is in for a world of hurt. The author Matthew Simmons lays it all out in an easy to understand format. Go For It!
It would not surprise me. It seems that condensates are also very desirable and easy to refine. I was told that some condesates could go directly into the tank of an auto without refining (though not recommended) ;-)
You have done a yeoman's effort in gathering facts regarding the AIDs epidemic and it is, no doubt, certainly an issue to be addressed. What would you say is the most significant reason for its epidemic proportions?
The film "Three Kings" is on HBO tonight and since I have access to HBO tonight, I think I'll watch it It seems that MK recommended this movie when it came out. Going for the gold during the Desert Storm event. Should be interesting oil, gold and Middle-East theme - how appropriate and timely.
Simmons is a recognized authority with a excellent professional pedigree. Although my timing was poor in following his suggestions due to '98 Asian crisis, log term, I think he's on the mark.
Buy gold and hold. That's a better long term plan.
Would someone settle a discussion as to whether Canada confiscated gold at any time in the past as was done in the U.S. If possible where would I find documentation of same.
Thanks in advance
Ranger
ORO (10/6/2000; 14:54:46MT - usagold.com msg#: 38403)
Trail Guide - ECB rate hike
I take it that the WAR is going out into the open. Is that so?
Hello ORO and thank you for your time here. Your ongoing breakdown of economics is to say the least, expansive! (smile)
Yes, the war is heating up now. There is simply no time left for negotiations. Officials are definitely beginning to play their cards before the betting even comes around. Don't be surprised if the US strongly stomps on the dollar at the same time they lower rates. This will smash the carry markets and probably crunch the dow. Whether they can wait until after the election is now very iffy??
All the posturing in the ME for accepting Euros for oil is having an effect and the higher the oil price goes the greater this effect is becoming. I said in the spring that $45 a barrel was coming and now $30 looks like the bottom. If we allow such a settlement proposition to go by without some action against the dollar to head it off, the eventual drop in dollar strength could be incredible. Let's face it,
the only difference between the dollar and Euros right now is world settlement support for all goods. With our trade deficit where it is, selling dollars for even third tier currencies would crash it.
-----------
your post:
Some mention has been made that Eddie is dumping Euro and that the hedgies got a green light to resume shorting the Euro from the Anglo camp. Does this mean the UK has finally decided to go with the dollar camp after Labour stating for years that the EMU membership is "inevitable"? Was this presumed turn of events the cause for the escalation?
No possible way, ORO! That's another example of trader posturing. These guys have been shorting the Euro and Yen from the get go and don't know what's waiting for them. You said it all later in your post "Euro carry has had the door slammed in its face"! Their positions makes good talk, but in reality they are just providing hedge material (making a deep market) for legitimate trade financing in Euros. The shorts are in it for a trade while the big finance is done for many years. If you finance in Euros your risk is in a rising currency, so these shorts create the derivative for you to throw off to them, your risk. Once the perception changes, these billions in shorts will not have a market to cover in. The big international positions will just keep the shorts capitol and then some!
UK is sliding right into EMU whether they like it or not. How can they not? The dollar has hit it's final timeline top and the US fed will see to it it's downhill from here on out. The only escape for the UK is to jump into the relatively closed trading markets in the Euro zone. The EMU group trades with themselves a lot more than with anyone else so being within them during a free for all in the
dollar will prove irresistible. I sold my pounds a long time ago and know they will belong to me once again in the form of Euros. (smile)
-------------------
Further to comment to your post:
I think we have only begun to hear this talk about Euro oil settlement. Some of it is shifting right now and not saying anything about it. The Russians are selling so little of anything they are a non event right now. But wait, they will follow the leader, especially as we see more of an active stance from the US bringing down the dollar.
justamereBear RE: The smart @ssed answer is human nature, People like sex.
Yes...that is a smart @ssed answer. But don't blame this disaster on human nature. People have liked sex from the beginning of time. The correct answer is some people are perverted and like perverted sex. And something recently has been introduced that makes this a behavior with major consequences. And poor souls like Arthur Asher, to name just one, are victims of it. But we are clearly off topic.
"The dollar has hit it's final timeline top and the US fed will see to it it's downhill from here on out."
Now THAT doesn't sound good. Please, Trail Guide, for the common man, would you care to expand on "the US fed will see to it it's downhill from here on out"?
It seems since Sept. 22,2000 the up and down movements of the paper Gold markets close-ly follow the up and down movements of the Euro value on the FOREX markets. Is this movement a coincidence or is there some sort of correlation going on between the(perceived) price of Gold and the value of the Euro?
Thank You in Advance, and for all your postings and time spent here......beesting.
Hey FOA - thanks for all you bring to this board. I'll bet you are a fine storyteller when the grandchildren are about!
I have a question regarding how you and your friends see this hyperinflation manifesting itself. Do you see more or less a slow degradation similar to the 1970's or more of a credit collapse without the benefit of a 'lender of last resort'? The so-called 'stagflation' scenario seems to make the most sense to me but would require at least some competitiveness on the dollar's part versus the Euro. I'm having an increasingly difficult time believing the dollar is capable of this. Given the severe overhang and trade position the entire American economy appears poorly structured to weather this collapse in credit.
If I remember correctly, Another addressed the problem of getting this change completed without unduly softening demand for oil or slowing the world economy dramatically. Since the US uses a significant percentage of world output, are the players involved attempting to what I'll call 'keep the show rolling' while at the same time wresting control from the US?
What do you want to bet that Trail Guide's "downhill" comment was in reference to the dollar's exchange rate? That's my take on it. Contrast this with the sense of "uphill" that you might currently get when you look at the chart from Usul's post and link earlier today (10/07/00; 14:38:15MT - usagold.com msg#: 38476).
I wonder if by "the Downhill", he meant "downfall". If not, "downhill" could only be referring to the fall of the dollar against other currencies. No more strong dollar in other words but instead an ever weaking dollar. I would prefer a slow fall. Would that be possible? I think not.
Just as we may not have a stock market crash, it could be a slow grinding bear market that takes years to complete. But on the other hand, things "currency" might be behave differently.
I just wanted to express one reason that a person should think over their strategy IF they happen to be waiting for signs of a stock market downturn (as expressed throught the indices, for example) as their cue to start buying Gold.
Picture, if you can, a generic but suitable valuation for such corporations as Cisco or IBM. Got it? OK, our example is almost over. Now, try to picture what appropriate dollar price should be quoted for these stocks if the dollar's perceived value starts to slide as fast or faster than the generally perceived valuation of these companies.
I would call that an invisible crash, and it is probably the version that the government and monetary officials would favor because the banking system at least would have a prayer of surviving. But "bye-bye" to the value of cash savings and bond holdings.
JavaMan, I think the operative part of the phrase was *from here on out*
By the way (for Black Blade) --Three Kings-- I enjoyed it well enough to buy it on DVD. It conveys a very positive message about the power of Gold when all is said and done.
Given the dollar's position as the key currency, "bye-bye" to the value of the dollar and bond holdings (as expressed in that post) would translate into "bye-bye to bullion banking" in the resulting scramble for Gold.
Because the Dollar System has a symbiotic relationship with the bullion banking system such that, as long as the dollar appears strong, and Gold appears weak, both systems will survive and support the other. But if either side of this delicate balance were to get rattled...
The fact that the Euro System has built a symbiotic relationship with a Free Market Gold System should send you a clear message as to which currency system (dollar or euro) is fundamentally built for longterm survival and harmonious existence with the ways of human nature.
Aristotle, this may be my only chance to correct you...
so I am going to jump on it...you...Sir...are no simple thinker.
You said "I just wanted to express one reason that a person should think over their strategy IF they happen to be waiting for signs of a stock market downturn (as expressed throught the indices, for example) as their cue to start buying Gold."
You do have a gift for understatement. When Intel dumped to 49, I called my friend who I know to be in the markets and he said "it's a buying opportunity" and he bought more. Now INTC is struggling at 40.
Your preaching to the choir, but I say bring it on brother!
Hey Aristotle - nice sentiments. You wrote in part;
"I would call that an invisible crash, and it is probably the version that the government and monetary
officials would favor because the banking system at least would have a prayer of surviving. But
"bye-bye" to the value of cash savings and bond holdings."
I happened to be in a home improvement place here in Lawrence today and was stunned by the huge inventory reduction. The store literally seemed to have half as much stuff as last March (including employees). Considering this store has always been well-stocked it has been quite a sudden change. I'd say they are victims of the invisible crash as you describe it.
Also unsaid, but it similarly follows from my msg #38513
Just as a declining dollar valuation could effectively mask a stock market downturn as a purely numerical exercise, so also could an declining valuation of paper Gold equivalents effectively mask an UPTURN in the underlying fundamental value of physical Gold. Think about it.
However, it must be said that whereas a weaker dollar could forever conceal, numerically speaking, a stock market collapse, the production of excess and devalued paper Gold only results in a temporary masking at best, as it further aggravates and propels an inevitable run on the bullion banks.
SteveH, what can I say, you have written so much recently I have a hard time covering it all. Because my system comes on in auto mode and copies the forum at random times,,,,, or someone does it for me,,,,, I don't always catch all the imput. So, I'll try to comment on some of your thrust.
Just looking at 714's post #38448 today one can see that oil prices in gold go way back. It's no secret that in a broad term of valuations 1 gram brought a barrel of oil. We mentioned something to that effect long ago. Truth be told that is where Bunker Hunt got the angle when silver was in the $20 range in the late 70s. Then silver was hitting the old dollar gold targets that gave 1 gram gold for a barrel. He went on and on how one ounce of silver was equal to a barrel of oil.
Well, so much for then. Some producers are striving for a pricing gauge that can peg the value of oil in a modern society. A gauge that is not corrupted by currency inflation (I'm talking about the expansion of currencies not the general price levels such an expansion produces).
If someone is going to print some derivative,,,,, hand it to you in exchange for a finite commodity,,,,,, that's fine as long as you immediately lend it back to them or spend it for something. The problem today is that lending derivatives only brings in more derivatives and that process is made irreversible if the nation you deal with runs a permanent trade deficit. That's because the remedy to said trade deficit, when it is eventually deployed destroys the actual derivative (paper money) you are lending. It doesn't take a nuclear scientist to understand how this will end and how
it will affect your long term wealth. On the other hand, spending the money on something has it's limits when you are trying to build a self-sustaining economy. One that allows your citizens to market their abilities to the world. Neither can you trade your paper dollar wealth for gold wealth if the rest of the world gets wind of it?
In the end you are left to selling some portion of your oil for gold. No it doesn't happen the way our trader boys delight in degrading it; "some truck loaded with gold backs up and dumps bullion bars on the ground as the main man tells his worker bee to turn the valve"! No the oil is turned into bookkeeping currency digits in some bank's computer. Then those digits are traded for the ownership or rights to gold. When someone posted what Another said the figures were, I think that that 20 million of actual bullion in retention represented the tally over some ten years (and was growing).
You see, gold like any currency is also spent. Even Cavan Man (smile) can add up all his pay receipts over ten years and that doesn't equal his savings. That would be nice CMan but it doesn't work that way, does it? The main reason they don't take gold outright, 1 gm per barrel is that "noone" wants to bust the digital system completely. As much as everyone thinks our paper money is all bad, it really works fairly well. I think oil producers are like everyone else and only want a more fair control on the print press. As it is right now, the dollar is done and we are just witnessing
the management of it's transition away from reserve status.
To that end, oil has played the gold paper game with the best of them. No, they don't expect all their paper to return physical gold. But they do expect the gold they now have and a portion that will be sent to them (settling paper) to take over any lost wealth that occurs as the dollar grinds down. Needless to say, gold will have to jump a great deal to do this. It will. In doing this gold's
dollar value will represent all the incoming domestic US price inflation on the horizon plus all the currency inflation left over after the dollar hype's out. Again, that will be a lot. Much, much higher than anyone with Western eyes can now see.
But selling (inflating) paper gold to keep the price down (so oil can flow) had it's draw backs for the dollar system. Yes, it creates a two tier paper market that will send gold to the most favored first (in case of failure). But the left over contracts (held by hedgers both large and small) will have a huge disproportionate impact on the financial structure. Not only will no gold be delivered because
enough doesn't exist, but the price rise of physical against such paper will drain the books of many major financial houses. And at the price levels we are talking about, official intervention will be an absolute. At least until the wipe out is done, then gold will come to the forefront. Further, in today's world of molecular speed trading, all of this initial crisis will happen in a heartbeat. Blink,,,, it's done!
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Steve, like I offered in an earlier post today, what perception of value is true? With all the dollars and their derivatives that are around today (80 trillion??) how can we know where the worth of oil is to our modern society? The continuos printing of dollar derivatives and gold derivatives makes the whole question a joke. Even supply and demand cannot answer the question when our supply and demand use dollars to create both sides of the equation. This is where physical gold comes in. It's the only denominator that is money in and of itself and no one can inflate it. We say, OK, one gram per barrel is where we are going. What currency price per barrel will that be? Who can tell? Will that much gold flow in to cover all the barrels produced? Of course not, all of us have bills. But some small portion will be retained and it's that portion that has become the ticking time bomb for the paper gold world!
This is the reason Another said they would eventually burn the paper markets. His implication was if the Euro failed at birth and later if the Euro succeeded. Once the Europeans began their withdrawal in 1999, it would be left to the US to act in it's own best interest. Just as they did in 71,
they will print paper gold currency until it's trading market values it at zero. Going back in time, I remember when the pre 71 dollar was being sold (inter CB trade) for 1/10 it's gold backing because everyone began to expect that no gold would be delivered to settle international trade
balances. I suspect that our present gold markets will do the same thing.
The Europeans have tried to structure their new currency to be prominently displayed as all this unfolds. Any breakdown in the dollar paper gold system will drive people away from dollars and into Euros and physical gold. Because the ECB / BIS is committed to a FreeGold market, the sky will be the limit in dollar terms. I fully expect the ECB to begin it's assault now because as Mr. D has said, our Euro is now mature and can walk into battle. We shall see!
"From her perch below a poster that depicts a miracle of Christian faith,
Sandra Iannamico is performing a little wonder of her own. She is doubling people's money.
"One by one, each of the half-dozen clients lined up at her table in the courtyard of a 15th-century
palazzo steps up and surrenders a handful of Italian lire. In return, Ms. Iannamico gives them a
multicolored sheaf of a new currency called the simec, at an exchange rate of 1-to-1.
"In most places, the simec wouldn't be worth the paper it's printed on. But in the bustling shoe store
next door, and at about 40 other merchants in this mountaintop town of 12,000 overlooking Italy's
Adriatic coast, one simec can buy two lire's worth of goods.
"A simec
"The simec, whose name is the Italian acronym for "econometric symbol of inducted value," is the
brainchild of Giacinto Auriti, a wealthy local academic. This past summer, the 76-year-old retired
law professor spent much of his fortune to finance the simec in an effort to prove his eccentric
theory about money and a vast banking conspiracy. So far, his experiment has produced a frenzy of
consumption in Guardiagrele, a rupture in the local business community, a rebuke from the Bank of
Italy and a legal victory for Prof. Auriti, who hopes to convince the world that central bankers are
the biggest con artists in modern history.
"His main thesis: For centuries, central banks have been robbing the common man by the way they
put new money in circulation. Rather than divide the new cash among the people, they lend it
through the banking system, at interest. This practice, he argues, makes the central banks the
money's owners and makes everyone else their debtors. He goes on to conclude that this debt-based
money has roughly half the purchasing power it would have if it were issued directly to the populace,
free.
"Initially, Prof. Auriti tried to challenge his own nation's monetary policy through the courts. But
Italian judges have thwarted his efforts to sue both Bank of Italy Gov. Antonio Fazio and former
Gov. Carlo Azeglio Ciampi for alleged fraud and a slew of other offenses, including incitement to
suicide. So, Prof. Auriti conceived another way to make his case."
It seems that full blown war is looming on the horizon, as Palestinians, Hezbollas, and Israelis square off. A very sad situation to be sure, and I am regretful of it.
The problem with Giacinto Auriti's simec or Lincoln's Greenbacks
If you were the owner or producer of real wealth--such as shoes or food--would you part with your wealth in exchange for paper that the government were freely distributing to the people, and even creating for its very own use?
Why part with your wealth to obtain this free and easy (no-interest) paper when you could just as easily (and more prudently) keep your wealth for yourself, and simply stand in line for your own handout of this paper?
Gotta run. JavaMan, ET, thanks for the comments.
Trail Guide, you're the best. Must be something in the wind tonight. Truly enjoyed your walk down the Gold Trail today. Excellent delivery!
JavaMan - Perhaps he will consider what condition the game is in, before getting up� who can say anymore? And actually I was specifically referring to the American citizen when I referred to the "people to be guarded."
John Doe - thanks�
Aristotle, re: Simple thought - simply put, simply excellent�
"What accounts for the external deficit of the United States?
Drawing on a detailed and econometric analysis, we show that the US trade deficit depends on the household savings rate, the dollar's trade-weighted exchange rate and, to a lesser extent, the cyclical position of the US economy in relation to rest of the world. This implies that the deficit can be cut via a real depreciation of the dollar or by a rise in US savings. A return to more homogenous global growth would have a smaller impact."
Well, the US savings rate chart looks like it just fell off a cliff (negative savings rate), many people are in debt up to their eyeballs, and the trade deficit is huge. If the paper markets collapse in bear mode, those who thought their worth was safe in equities and thought nothing of saving cash, will have no way of recreating savings. Indeed, I would expect the savings habit to return only after a long period of economic hardship has re-taught lessons such as were learned in the 1930s. Therefore, and bearing in mind the above summary analysis, we can expect on balance of probabilities a "real depreciation of the dollar".
http://207.238.152.36/PRESS/mannpr.htm"One possible response in the short run is a decline of perhaps 25 percent in the value of the dollar. Such a decline could be readily absorbed, by both the United States and the world economy, if it occurs gradually in a context of faster economic growth in Europe and Japan. It could cause severe disruptions, however, if it were to transpire precipitously under present economic conditions: inflationary pressures would be generated and interest rates would be pushed up in the United States, and the nascent recovery abroad would be significantly retarded..."
September 14, 1999 - Institute for International Economics
Recent weakness in the euro area, and continuing weakness in the economies of East Asia, suggests that the likely path for the dollar is weighted towards the more pessimistic of the scenarios outlined by the above. And there is also the inflationary pressure from oil, whose price has risen considerably since the above was written.
Thanks miner, after re-reading your post I see that you did, sheesh, I even quoted it. I guess I just have a tough time believing Clinton sees us as "people to be guarded."
Now THAT doesn't sound good. Please, Trail Guide, for the common man, would you care to expand on "the US fed will see to it it's downhill from here on out"?
JavaMan, Hello!
Well, the US economy is going full blast now even as the dollar is at it's peak. In the past, at this stage the dollar would have already rolled over from the effects of fed / treasury / government intervention to slow the boom. In fact, contrary to everything we read and hear, they have been trying to slow this thing down for some time. We only hear it as; "it's the new computer, highly productive, new wave, next economy that's driving all the money into the US and their markets"! But, in reality something was out there driving the dollar higher even as the brakes were being
applied.
Now the government is in a box it's never been in before. It they raise rates or slow reserve creation this will just drive the dollar ever higher while at the top of a boom phase. The explosion in deficit trade balances would at some point cause a crack up from where there is no escape
(deflation?). They can only play the intervention card to lower the dollar and that (because we are the dollar creating entity) will cause an inflationary run. Further, in conjunction with intervention, they could also lower rates. This will have the same effect in this overheated marketplace. Either way, the dollar is going to drop to the level of the Euro.
Note: again, I ask how are we going to know that? It will spin as "the Euro finally rose to dollar par"!
Then and only then will we all have a look at our respective US and European financial structures on a relative even basis. I expect to see the Euro Zone taking off with some price inflation and a declining trade surplus heading toward deficit. All the while the US goes hyper with mountains of
dollars coming home. And I don't mean coming home for investment. I mean coming home to exercise delivery against real US produced goods. I expect that before this is over, we (US) might be forced to use our gold card to help devalue the dollar. That would involve a forced restructuring of. the gold markets so as to make gold rise. A few political heads would roll if this takes place. Believe it!
So, will this all begin before the elections? The fuel certainly is in place. We shall see.
Americans have been putting their money in stocks, savings have disappeared, and all kinds of credit sources have been drawn upon. How many people are now looking upon the savaging of popular (formerly) high flying stocks with horror?
Alan Newman comments on current stock market participation at
http://www.cross-currents.net/charts.htm:
"... participants are trading at a clip more than 4.4 times as high as in 1968, just about the peak of the broadest advance of the prior secular bull market and in precise alignment with the prior peak in investor exposure to stocks. At that time, approximately 45% of household assets had made their way into equities, a record that stood until only recently. Household assets in equities are now 50%. The increase in participant's exposure is highlighted most dramatically in the margin debt numbers, showing an acceptance of risk on an unparalleled scale since perhaps 1929. Measured in this manner, risk is four times as high as in 1987, when the stock market crashed. However, given the ready availability of home equity loans and second mortgages, we can easily make the case that much more borrowed money has found its way into the stock market. Worst case: 1929 all over again..."
It seems since Sept. 22,2000 the up and down movements of the paper Gold markets close-ly follow the up and down movements of the Euro value on the FOREX markets. Is this movement a coincidence or is there some sort of correlation going on between the (perceived) price of Gold and the value of the Euro?
Hello beasting,
I know that somewhere,,,,,, out there,,,,,,, some smart brains are starting to put a relative value on the Euro using it's relationship to gold. It's only just starting, but it's almost like using Euros in place of what Gold stocks used to be. Indeed, if the Euro becomes established as the premier settlement currency and fully allows gold to price out to whatever level,,,,,, then in dollar terms Euros will return an awful lot. Just look at it like a native holding dollars during one of the Asian meltdowns?
As time goes by gold and Euros will most likely run together. Again, we shall see.
Thanks for your thoughts on the undesirability of price stability. I recalled, from my reading of Mises, Hayek, Rothbard, et al years ago, that the seeds of our economic destruction lay in government pursuit of the contradictory goals of full employment and price stability. In particular, price stability is only desired by:
a.) consumers who are ignorant of economics
b.) politicians who pander to them
Government enforced price stability is a sure formula for crisis.
One possible scenario/playbook was a book called 'The Great Reckoning' by Davidson and Rees-Moog. Very logical well thoughtout. If your here you've probably read it. I love refering to it. It's truly a work of art. But not pro-gold, although not anti-gold either.
Your question about oil and it's continued use in this unfolding drama is a whole chapter's worth of replies. Oil will some day be priced very cheaply and this will make an end run around fuel cell technology and what have you. It's not the supply of oil that's been a problem, rather how we pay for it in real money.
9.45 (AEDT Democrats leader Meg lees has called for a round table economic summit to look at issues relating to the collapsing dollar.
She also called for Government to stop cutting funding to pay off government debt and to provide funding for education and research and development.
" I would call on this government to actually get togeather a national economic summit to look at the issues
relating to our dollar" Senator Lees told channel seven.
She said the economic rationalist policies pursued in Australia in the past had not worked for Australia in the past.
" weve been there before and done that, the Labor government before this government went through the process of reducing tarriffs , privatisation." . " This Government's gone further down the road, reform the tax system, looked at workplace relations and the list goes on and on basically leaving it to the market.
" that isnt working , I think it is about time we really did sit down and do some planning beyond the next 18 months or so in the electoral cycle, but actually some long term planning as to where we want Australia to head".
She suggested a new look at household savings through superanuation , research and development investment and spending on education.
The current budget surplus should be put towards investment in the future rather than paying off debt.
"Our party room has discussed these issues over the last week or so and I think it is getting to the point where we do need something done at a federal level to drive this.
Just curious ? . As some of you may know Australia has introduced a GST ( Goods and Services Tax ).
Apon frequenting a local mint lately , I was asked to sign a form apon purchase that in essence stipulated that I would not charge the said people of whom the said bullion was purchased from a GST should I decide to sell the same back to them ?.
I remember an icecream on sale that had lollies in it, and of which my two then young daughters would squabble over each accusing/complaining that the other was taking out the royalty thereof.
So to serttle matters one would divide out two bowls and the other would have first pick.
All things being equal I wonder no suspect for no apparent reason whatsoever ... Why is his so ?. Loopholes anybody ?. regards.
Israel, Oil and the Middle East--Response to Black Blade
A comment on your earlier post about the "idiot" Ariel Sharon's actions to stir up passions on the Temple Mount. In the BIG picture, there are no accidents in life especially in the Middle East. What we are witnessing is the fulfillment of Bible prophecy. War is imminent, whether next week or next month or next year. No other person could have inflamed passions like this man. For those readers who don't know this man's resume, he was defense minister in 1982 when Israel went into southern Lebanon and established a buffer zone as protection from rocket attacks by Hezbollah guerillas. He was particularly efficient at his job, and was heard often referring to Palestinians as "cockroaches." Even though he is no longer connected with any government position, his mere presence on the Temple Mount as he led a group of Jewish nationalists opposed to the peace process was enough to stir things up. But, as the saying goes, it takes two to tango and the Palestinians willingly obliged him.
News reports on Saturday from around the Middle East show widespread sympathy with the Palestinian cause. Arabs in Iraq and Syria burned Israeli flags and vowed their support to fight against Israel. Some even wanted to travel there and enlist in the ranks if it were possible. Even Pakistanis who are far removed from the conflict are incensed because they are Moslems and they feel comraderie with their Islamic brethen in Palestine. As if tensions were not high enough already, Israeli Prime Minister Barak raised them higher by announcing his ultimatum to Yasser Arafat: Curb the violence in 48 hours or else the full force of the Israeli Defense Force will be applied. By my calculations, this means sometime Monday afternoon, Israeli time.
Unfortunately, I don't see an abatement of tensions but rather escalation. And all of this is happening during the Jewish holy days. As Black Blade pointed out, we are looking at shades of 1973. But it could be a replay of 1973 in more ways than just one (i.e. oil). The last Arab-Israeli war occured on Yom Kippur in 1973. In the year 2000, Yom Kippur begins today at sundown Sunday evening, October 8th and we could see a second Yom Kippur war begin at this time. I might point out that tensions started on Rosh HaShanah (September 29/30) which marked the beginning of the Jewish holy days. I assume that the Arabs will once again use oil as their weapon against Israel and anyone who sides with her, i.e. the U.S. and possibly Britain. Europe, especially France, is pro-Palestinian/pro-Arab and anti-Israel. Witness France's alliance with Russia this week to snuggle up to Saddam Hussein and lift the sanctions against Iraq.
So it is a foregone conclusion that the U.S. will support Israel and that the Arab nations will use the oil weapon--whether next week, next month or next year. We better get used to higher oil and gas prices, higher inflation and--yes--HIGHER GOLD PRICES. Could the recent plunge in stock prices be telling us the same thing? We don't have long to wait.View
Yesterday's Discussion.
"Alcohol, water and Yeast", good on there own, explosive togeather!
Whilst I am on a roll of talking to myself and a frequenter of the US etc patent office. I just wonder again friends.
To try and attempt to understand everything , I mean to see the whole picture from quantum mechanics to infinity re: oil Ag , Pd, Au, Pt , and wherewithal the said comes from and who has what and who loves and why and on and on in our technological age why dont we further our discussions to the other elements in the periodic table ?. For example iridium and osmium ? Why are the stat"s on the net so scant? lets face it we need Platinum to crack oil and other incredible metals. We need through complicated processes high temp shit to extract the Platinum,. shouldnt we be broadining our minds a little ?. Water and Vacuums in nuclear reactors, or are we pandering to the sheeple on such a basic level we are only hopeing the truth will transpire by democratic belief ?. I love you all but I cant help wanting to move on at times .
Your information on condesates was dead on. My uncle was a
gager for Conoco in the Burkburnette oil fields in the vacinity of Wichita Falls Texas, during and prior to the 1940s. The gas was called Cason Head gas and was a problem.
It collected in elbows and perhaps traps, I was about 11 or 12 and don't remember all the details. The condesate had to be periodically drained, and at certain times of the year there was a considerable amount produced. The octane level was pretty high, it had a very destintive smell,and was very suitable as a motor fuel. Getting rid of the stuff was a real problem, and although either federal law or company policy forbid its use, it was winked at. The gas was collected in 55 gallon drums and delivered to friends and fellow employees. I don't remember if the gas was used in company cars or not, but my uncle always drove late model Chevrolets, with four in line fuel filters. It seems to me that the water content was pretty high, but because it settled to the bottom of the barrel, was easy to seperate.
I agree! The battle lines are being drawn. The are elements on both sides that want war in order to fulfill what they consider to be their destiny. Tonight Saddam is making noise about going to war with Israel, The US abstained in a vote at the UN condemning Israel's actions, which means that the US position is not "officially" in agreement with the resolution, but "unofficially" we are not opposed to the resolution. There are more steps taken toward war as we pass these thoughts among ourselves. The Hezbollah are shelling Israel along the Lebanon border and Israeli troops are massing near the border. The situation is getting out of control. Perhaps the best thing for the US is to "wash our hands" of this whole mess, and encourage them to just do it, finish it, get it over with and let the survivors bury the dead. Of course there really are no winners if the Arabs and israelis duke it out to the finish. But after several millenia it's probably the only solution. Bummer!
UN Condemns Middle East Violence -- U.S. Abstains
UNITED NATIONS (Reuters) - With the United States abstaining, the U.N. Security Council adopted a resolution on Saturday that condemns the ``excessive use of force'' against Palestinians, who suffered some 80 casualties. The other 14 council members voted in favor of the hotly-contested resolution, which followed days of marathon negotiations between U.S. envoys and Palestinian supporters. The final draft was sent to both President Clinton and Palestinian leader Yasser Arafat, diplomats reported. The resolution condemns the ``excessive use of force against the Palestinians, resulting in injury and loss of human life.''
It indirectly blames Israeli opposition leader Ariel Sharon, for provoking the week-long rioting after his Sept. 28 visit to a shrine in Jerusalem's Old City, holy to both Muslims and Jews. Neither Israel nor Sharon are mentioned by name, a concession to the United States, but its implication is clear and one reason Washington abstained, diplomats said. ``The United States does not think it was a very good resolution, to put it mildly,'' U.S. Ambassador Richard Holbrooke told reporters after the vote. ``We decided in the end, because of certain changes and improvements in it, that it was no longer clearly in veto land. We were prepared to veto it,'' he said. ``It was one-sided. It did not reflect the fact that Israelis had been killed and wounded, that this is not spontaneous and many of the things going on have a deliberateness about them,'' Holbrooke said. The document, initiated by the Palestinians, also called for an immediate resumption of Israeli-Palestinian peace talks and supported ``a speedy and objective inquiry'' into the violence, without saying who should conduct the probe.
Fears mounted that a U.S. veto on the resolution would only exacerbate the violence among the Palestinians and their supporters in Lebanon and elsewhere. But Nasser al-Kidwa, the Palestinian U.N. observer, said ''We think that the resolution contains extremely important elements. It could help alleviate the gravity on the ground and hopefully help bring the situation under control.'' Israel's ambassador, Yehuda Lancry, disagreed, saying: ``We indeed consider that this resolution does not reflect strictly the complexity of the reality on the ground.'' But he said it was less one-sided than earlier versions, thanks to American efforts.
The Palestinians say the violence was sparked by Sharon's presence on a plateau known by Muslims as al-Haram al-Sharif, on which are located the al-Aqsa mosque, Islam's third-holiest shrine, and the Dome of the Rock mosque. The same site is revered by Jews as the Temple Mount, on which stood the First and Second Temples of biblical times. Israel says Sharon's visit was only the pretext for Palestinian violence, which began earlier with the killing of an Israeli soldier and a policeman. Holbrooke said he would have preferred the equivalent of a line-item veto but one sponsor of the resolution, presumably Malaysia, would not allow it. Other sponsors were Bangladesh, Jamaica, Mali, Namibia, Tunisia and Ukraine.
President Clinton intervened during the night, having telephoned Israeli Prime Minister Ehud Barak and Palestinian President Yasser Arafat to try and break the impasse as new clashes broke out with the pro-Iranian Hizbollah group seizing three Israeli soldiers on the Lebanese border. Council members belonging to the 114-member Non-Aligned Movement of developing nations had been pressing for condemnation of Israel for the past week at the urging of Palestinian U.N. observer Nasser al-Kidwa. The United States had tried to head off the resolution, saying council action would interfere with efforts to try to end the bloodshed and salvage the Middle East peace process.
The resolution also says Israel should ``abide scrupulously'' by its obligations under the 1949 Fourth Geneva Convention, which deals with protection of civilians in time of war. But it no longer specifies that the convention is applicable to all the territories occupied by Israel since 1967. Israel captured East Jerusalem and the West Bank from Jordan and the Gaza Strip from Egypt during the 1967 Middle East war.
The United States had balked at earlier versions of the text that specified the convention applied to all the captured areas, because this would underline East Jerusalem's status as an occupied territory.
I just finished watching the movie Three Kings. But there were four of them?! At the end of the movie it said that the Kuwaitis got back their gold, but claimed that some was missing. I could only think that I know of 79 tons that they won't be getting back ;-)
Note: Now israeli citizens are being evacuated from populations centers along the borders and borders along the West Bank and Gaza are being sealed off. Starting to look more perilous. Meanwhile, Bubba is running out of time to establish a legacy. No legacy of peace in the ME, and probably no legacy of a strong economy the way things are shaping up. Only a legacy of debauchery!
Yeah my fathers sentiments by the first paragraph exactly , (bummer!)_Your sence of humour as dry as it may well be at times cracks me up my friend .
Perhaps one may feel better when one has given up hope !?. I wonder is it in the blood . Sad but what does one do after the umpire of reason cant sort this out after thousands years of genetic beliefs have transpired. Go fishing !. .... definately hitting the farter :)
L E B A N O N, Tenn. � A 61-year-old man was shot to death by police while his wife was handcuffed in another room during a drug raid on the wrong house. Police admitted their mistake, saying faulty information from a drug informant contributed to the death of John Adams Wednesday night. They intended to raid the home next door. The two officers, 25-year-old Kyle Shedran and 24-year-old Greg Day, were placed on administrative leave with pay.
"They need to get rid of those men, boys with toys," said Adams� 70-year-old widow, Loraine. John Adams was watching television when his wife heard pounding on the door. Police claim they identified themselves and wore police jackets. Loraine Adams said she had no indication the men were police. "I thought it was a home invasion. I said �Baby, get your gun!," she said, sitting amid friends and relatives gathered at her home to cook and prepare for Sunday's funeral.
Resident Fired First
Police say her husband fired first with a sawed-off shotgun and they responded. He was shot at least three times and died later at Vanderbilt University Medical Center in Nashville. Loraine Adams said she was handcuffed and thrown to her knees in another room when the shooting began. "I said, �Y�all have got the wrong person, you've got the wrong place. What are you looking for?"� "We did the best surveillance we could do, and a mistake was made," Lebanon Police Chief Billy Weeks said. "It's a very severe mistake, a costly mistake. It makes us look at our own policies and procedures to make sure this never occurs again." He said, however, the two policemen were not at fault.
The Tennessee Bureau of Investigation is investigating. NAACP officials said they are monitoring the case. Adams was black. The two policemen are white. Family members did not consider race a factor and Weeks agreed, but said the shooting will be "a major setback" for police relations with the black community. "We know that, we hope to do everything we can to heal it," Weeks said. Johnny Crudup, a local NAACP official, said the organization wanted to make sure and would investigate on its own. Weeks said he has turned the search warrant and all other evidence over to the bureau of investigation and District Attorney General Tommy Thompson. A command officer must now review all search warrants.
Black Blade: The part that says: "We did the best surveillance we could do, and a mistake was made," just about says it all. This is what happens when the Keystone cops are allowed to run amuck!
It's looking more like a possible war in the making as some Arab countries are making counter-threats. Now Israeli centurion tanks are taking up positions in and around Jerusalem. I go off to sleep now, but I wonder what kind of world I will wake up to.
"..I expect that before this is over, we (US) might be forced to use our gold card to help devalue the dollar. That would involve a forced restructuring of the gold markets so as to make gold rise. A few political heads would roll if this takes place. Believe it!"..
Sounds like higher paperGoldprices are possible?Comments?
"I fully expect the ECB to begin it's assault now because as Mr. D has said, our Euro is now mature and can walk into battle. We shall see!"
"Some other things are in the works and with this new climate, it won't be long before we see it on the news."
It seems there is not much time left for buying physical.Somehow sad.All the best for you,especially the americans!
Money is, indeed, a measure of value and a value of measure in the same time, since every unit of measure is determined by the corresponding quality of what it can measure. If the metre is characterised by the quality of length because it measures length, money has got the quality of value because it measures value.
Therefore, even if money is a collective good it is also a good of individual private property, that is a good of the bearer, since "the value of the measure" is an induced value (and not a credit one) which is incorporated into the symbol.
The monetary value, which is not created by who issues symbols but by who accepts them, has no cost.
It has no cost because the value is generated by the simple expectation of the other people's behaviour, as a condition for his own behaviour. Everyone is, indeed, willing to accept money against goods, because he expects to give money against goods. This means that money has a value because we conventionally decide that it must have it.
The monetary value is not created by who issues symbols but by who accepts them, that is the parties of the convention. Therefore, money, at the issue's act, must be considered a national collective property and not a central bank one, as it happens today. When money was made out of gold the bearer was the owner. With the nominal money (born in 1694 with the foundation of the bank of England) the bearer has become the debtor, that is "temporary owner" as long as the loan lasts.
In order to understand this fundamental changment, let us examine a simple example. Some times ago, the person who found a golden nugget, embezzled it without any debt with the mine. Today, instead of the mine we have the central bank; instead of the nugget a piece of paper, instead of the property, the debt.
Therefore, the substitution of golden money with nominal money has not been the simple changment of the marketing nature of the symbol, but a deep and substantial juridical innovation: peoples have been surreptitiously transformed from owners to debtors of their money, because the bank issues money only through loans.
The monetary circulation is, therefore, a circulation of real goods of induced value, which are burdened by loans at 100% to the central bank.
"You shall hear of wars & rumors of wars..."('Manufacturers Handbook'). Welcome to the 'Last Days' right? 2001 is going to be a good old fashioned shakeup with the markets continuing to reel like they have been punched by the new upcoming heavyweight boxing champ David Tua.....interesting days ahead....hang on!
BRITAIN has registered a record number of HIV cases, the highest since the disease was discovered 20 years ago.
Figures being compiled by the Public Health Laboratory Service are forecast to show that more than 3,300 people were diagnosed last year.
"We expect it will be the highest ever," said Dr Barry Evans, head of the HIV unit at the PHLS. "The next highest [3,200] was in 1985, and that was high only because we had a big backlog as a result of the first test then becoming available." In the 1990s, the average number of new cases a year was 1,500.
It is estimated that a further 10,000 people in Britain have HIV but have not yet been diagnosed.
Doctors are concerned that HIV has become almost a forgotten disease, especially among young people. The incidence of other sexually transmitted diseases is also rising sharply - clear evidence that the message to practise safe sex, so loudly trumpeted in the late 1980s and early 1990s - is being ignored or forgotten by today's younger generation.
"I am worried about the trend, especially the trend in the outer markers - the other sexually transmitted diseases," said Evans.
New figures on gonorrhoea echo the increase in HIV. In the second half of the 1990s the rate of the disease among 19-year-old men more than doubled. In women of the same age it went up by 50% and overall it rose by 31%.
Health professionals fear that there is now a popular misconception that HIV and Aids are easily treatable, and that fears about Creutzfeldt-Jakob disease, the human equivalent of "mad cow" disease, have relegated HIV's impact as a health threat.
"There is a perception that it is not the serious disease it used to be," said Evans. "HIV is more treatable but it is still an incurable infection and we don't know when resistance to the drugs will kick in.
"Although treatments are showing very real benefits, the drugs are toxic and not pleasant to take. It is not like taking a couple of antibiotics, and you need to take them for a long period of time. They are also expensive - about �15,000 a year per patient."
Evans estimates that there are about 20,000 people with HIV in Britain - at least half of whom are not even aware that they are infected. Since the disease was first diagnosed, 15,000 people have died of Aids in the UK. Last year, for the first time, the majority of people diagnosed had acquired HIV heterosexually. Between a quarter and a third of the cases are women.
A spokesman for the Terrence Higgins Trust said: "We estimated that in five years the number of people living with HIV will have increased by 50%."
http://www.tv-wings.com/money/italy/lire-1e.htmProf. Auriti makes the legal argument to "correct" the lack of legal definition of money in Italy, and in any of the treaties of the EMU. He states the obvious and sees the consequences, even the banker's political conspiracy, but he attempts to replace this system with a pure cash fiat, i.e. a nominal money issued without counterweight in debt.
The good part is that he points to debt-money creation as a legalized expropriation. In the process, a bank (backed by a central bank commitment to issue unspecified quantities of banknotes or electronic credits, as necessary) simultaneously creates a debt and an asset (the money). The asset, however, does not yet have value. The value is provided to the money by the acceptance of the borrower, who in turn accepted the money (and the obligation to repay) only because he expects others to accept it in return for goods which he intends to purchase.
Auriti claims that the bank makes two expropriations. First, it produces a current expropriation of the purchasing power value of the debt-money issued, for which no cost was incurred. And then the banking system expropriates the same nominal value once again in demanding a payment of interest with money that does not yet exist.
Though the analysis is correct on the face of it, and is definitely so in legal terms, the practical matter is that since governments everywhere have eliminated the fixed caps on the interest rates that deposits at banks can get, the bank does not earn the full interest charged, but only the margin between its own interest costs and interest revenue. Thus the created debt-money does cost the bank a certain amount, resulting from the deposits created by the spending of the loan (the bank's asset is the loan) bearing interest.
Auriti also claims that bankers have created artificial scarcities of money in Europe during the 18th and 19th centuries in order (among other things) to push people into the Americas, where they had created a commensurate artificial abundance of money. He also claims that the debt disaster in emerging economies was an orchestrated event intended to induce immigration into Europe and the US, where the same bankers are pressing an artificial expansion.
Edgar Allen Poe, slipped into the future and liberated himself from the Newtonian universe with his :
"All that we see or seem, is but a dream within a dream".
I guess it was in the natural flow of this that Banksters would cover their end of this equation, and have transpire:
All that we see or seem, is but a debt within a debt.
You said, "Then those digits are traded for the ownership or rights to gold. When someone posted what Another said the figures were, I think that that 20 million of actual bullion in retention represented the tally over some ten years (and was growing)."
Twas I who posted 20 million, but it was 20 million ounces per year since 1991 and much more recently.
GATA lives in a commodity world, trying to influence a money universe. The commodity world is regulated by government; the money world is regulated by nations. GATA's basis is collusion of nations and key bullion banks; yet, it is clear from this perspective that GATA's claims, although reasonably true, cross the commodity-money boundry where government isn't much interested in regulation against nations whose currencies are at risk. The GATA claim of collusion is but a smaller complaint against a much large systemic problem -- gold's apparent hidden role in a dollar-based universe that has little incentive to admit gold's role. For nations to admit gold's role as money would be to accomplish a run-for-gold that would only further (at least in their minds) exascerbate the dollar's role as money. In short, government looks the other way as gold trades on COMEX (and LBMA) with unlimited paper, because some Nations require it so.
Is GATA's role diminished or left chasing windmills with a wooden spear? No, but I wonder if GATA is to be successful, if they must first admit and refocus on gold as both commodity and money? It is the bullion banks who live in both worlds: they are windmills and dragons both.
I have an offbeat theory that I have never heard anywhere.
Back in the 50's someone got to wondering why the animal population went up and down, as opposed to finding a stable level and staying there.
In 2 experiments deer on one island, and wolves on another were studied. Similiar results on both so I will deal with the deer.
The theory was that since the deer were on an island that there would be no external forces to disrupt the experiment. There were also no preditors on the island.
At the start of the cycle, the population was low in relation to the food supply, and the deer population grew. After a few years the deer started to show signs of stress. By now the population was at or over the long term carrying capacity for the island. Still the population grew. Then a strange diease would roar through the population, and knock the numbers way down.
Being a farm boy from the foothills of the Rockies, I could relate to that. The rabbit population had about a 7 year cycle. the rabbit population would grow and grow, and about every 7 years the rabbit population would die off.
That year you had to watch, because the preditors, whose staple diet was the rabbits, were hungry enough that they would come down from the mountains, and they would take a calf, or a sheep easily. Sometimes they would try for a cow. I recall one year, I shot a lynx every single day for 3 weeks straight. Normally we would never see a lynx.
Autopsies were done on the dead deer. The only slightly abnormal finding was that all of them had enlarged adrenal glands, indicating and confirming the observation that the deer were under some kind of stress. As soon as the population died down, adrenal glands of autopsied animals returned to normal.
I don't remember where (this experiment is well known to people in the field even to this day) but they decided to move the experiments inside using rats..
Rats are unusual in that they have a very rigid social structure. There is little fighting among particularly, adult rats. The female is very caring of the young, and makes a very neat nest. Their mating rituals are very patterned, with the male nipping at the tail of the female, and they race around, until the female eventually retreats to her burrow. The male stands around at the entrance to the burrow, hopping from foot to foot. If she comes out and sniffs at him, they go back in and mate. If she does not, eventually he goes away.
The experiment was simplicity itself. They simply provided the rats with a very large cage, all the food, water and bedding they wanted, and sat back to watch.
At first things went as normal, but at a certain stage in the population growth the social structure began to break down. The tails of attractive females were bitten until bone showed. Males no longer waited at the burrow entrance, but went diectly in and mated. Gangs of adolescent rats formed, terrorizing the populace. Males began to mount males. Females no longer made careful nests. Nests often consisted of a few straws scattered about. Females would decide to move the nest, and half way through, while carrying a kit, something else would catch their attention, and they would drop the kit and wander off. Infantacide grew. Autopsies showed enlarged adrenal glands.
Then, along came a strange disease. The population would die back by 90 to 97%. The origional social structure would reappear. The population would begin to grow again.
Interestingly, they found they could dramatically increase the absolute numbers of the rat colony before the breakdown came, by the simple expedient of providing what for a normal rat, were very small high rise apartments. They simply piled orange ceramic drain tiles up into a stack. That area was much smaller than the rat normally used as a den, but it seemed as long as the rats had a personal space they did not become as stressed.
Think about it. Normally if you and I are talking, and there is no sexual significance to the conversation, we will maintain a fairly constant distance between us. There are minor differences between cultures, and depending on how interesting the conversation is and how comfortable with each other the parties are. But the personal space zone is quite well defined. If I move in by 6 to 10 inches, you will become uncomfortable and either try to move away, or object. If you are in a crowded elevator, you will stand at rigid attention, saying with your body language, "I am not touching you because I want to, but because the situation forces it".
The question has crossed my mind; Has humanity found its strange disease?
@ STEVE H -- MR AG - Confirms "Gold is Money" by threats of leasing
From GM "Teetmyer" Thank YouSteve - I think this post from GM some what supports your earlier post - Agreed Gold is MONEY when free or imprisoned from the masses. "S"
Greenspan Faux Pas�
(Teetmyer) Oct 08, 06:40
"Central Banks stand ready to lease gold..."
��
"Central Banks stand ready to lease gold in increasing quantities should the price rise"
"Central Banks stand ready to lease gold in increasing quantities should the price rise"
There is NO ambiguity here... no nebulous nor esoteric terms. No obscure nor vague inferences. In fact it is totally devoid of arcane and/or secret meanings.
Fed chairman in an extremely rare plain talk says, "Central Banks stand ready to lease gold in increasing quantities should the price rise" Please pronounce each word slowly and methodically to savor the essence and spirit of this very meaningful statement:
������������������
"Central-- Banks-- stand-- ready-- to-- lease-- gold--in-- increasing-- quantities--should-- the-- price--rise"
This is monumentally significant for the following reason. The Fed, the US Treasury and countless Wall street lackeys have carped and harped for years that GOLD is NOT money, but rather is just another commodity, subject to normal supply/demand dynamics. OK, OK. Let's accept that precept: that GOLD is indeed a traded commodity - no more nor less... simply a traded
commodity like COPPER!!!!!!
Recall many months ago the U.S. Attorney General of the Department of Justice announced on national TV that two drug companies have been found guilty of PRICE-FIXING. Furthermore, just a few days later it was also announced on national TV that Merrill Lynch is being formally accused of PRICE-FIXING collusion related to the Sumitomo Copper Caper fiasco perpetrated just a few years ago (I believe about 1995).
Fast forward again to Fed Chairman's comment about the COMMODITY CALLED GOLD:
"Central Banks stand ready to lease gold in increasing
quantities should the price rise"
Should not the US Department of Justice, the CFTC and the SEC interpret AND ENFORCE the same applicable laws, when considering the relevance and poignant significance of"Central Banks stand ready to lease gold in increasing quantities should the price rise?"
I confess I am NOT versed in the law. Nevertheless, I cannot rectify how PRICE-FIXING LAWS may apply to drugs and copper, but NOT to GOLD - because to the Fed and the US Treasury, GOLD is indeed a COMMODITY.
Would someone at the forum more versed in the law help me clear up my "ignorance?"
I'm ordinarily a lurker at this forum. Your post #38491, however, has prodded me to respond.
You said, "Anybody out there with an theory or prediction as to how this might unfold�?" Also, "�the thrust of this missive is to� garner ideas which will allow us to be better prepared for eventualities."
As to what comes next, allow me to quote from the book referenced in the above link:
"Life has no guarantees. And, because there are no guarantees, we need a portfolio that will protect us in all situations � runaway inflation, deflationary depression, even war.
"If nature takes its course, it appears that the logical sequence we face is (1) increasing inflation, followed at some point by (2) wage and price controls, followed at some point by (3) deflationary depression. Of course, a major debt default (by a third world country unable to pay its bills, for example) could leapfrog the normal course of events and plunge us directly into depression. In fact, the next thing on the horizon could be inflation OR depression OR both � and in either order. In simple fact, no-one knows what's coming next. No-one.
"And if a war starts, all bets are off. War is as likely as any other scenario because it allows politicians to rally support in the face of failed policies, consolidate power, impose controls, and shift blame. War � rallying �round the flag � is a great blessing to a faltering leader."
And so, justamereBear, what's coming next? Darned if I know. (Though I am holding my breath to see what happens on the stock market tomorrow.) But there ARE ways to protect oneself regardless. What's the best way? (Aside from sitting at the right hand of God, that is.) What's the best thing to have in your portfolio? Stocks? Bonds? Real estate? Gold? Tangible assets? Baseball cards?
On a coffee break not long ago I actually heard a man bragging to his friends about how his baseball card collection was his retirement fund. His baseball card collection was his leg up on the rest of us. I chose not to engage him in debate.
No doubt most of us went through some Y2K planning. And a decade or two ago we went through some "survivalist" planning when runaway inflation appeared imminent. Hopefully we have outgrown the paranoia of living in a bomb shelter, patrolling our property with rottweilers, and arming our children with assault rifles against the dreaded Russian invasion.
But the future does NOT look promising. AIDS; germ warfare; Muslim hatred of the West; terrorism; the breakup of the USSR with the result that Hershey bars can be swapped for atomic bombs; good old fashioned racial bigotry; the fact that we're losing the war on drugs; the fact that crack babies will grow up looking like everybody else and think nothing of ripping off a few rounds in drive-by shootings; et cetera� Oh yes. Let's throw in a few wild-card, certified crazies as international government leaders. Not just folks out to line their own pockets. CRAZIES!
Not to worry, you say? The U.S. government has everything under control, you say? Let me again quote the book in the above link. "As the punch line of a dirty joke has it, �Be ye not a wee bit old to be believin� in leprechauns?�"
But to the point. How can we be better prepared? How can we rest easy at night, knowing we have done all we can do? What tangible steps can we take to help both ourselves and our loved ones? Bottom line, what SHOULD our "portfolio" consist of?
The answer, I believe, goes a step beyond stocks and bonds and real estate. Even a step beyond gold. The best thing with which to arm oneself is KNOWLEDGE.
Knowledge can be carried across international boundaries with impunity. Not taxed, not confiscated, not detected. No metal detector, no sniffing dog, no customs inspector can find it. Knowledge is ageless, priceless, irreplaceable. Knowledge will allow you to earn a living and survive in any corner of the world.
What kind of knowledge? ALL kinds. How to drive a car, how to swim, how to speak a second language, how to ride a bicycle, how to grade rare coins, how to calculate standard deviation and statistical process control, how to type, how to program a computer, how to grow a garden and do home canning, how to deliver a baby, how to pilot a plane, how to double-clutch an 18-wheeler, how to speak in public, how to play bridge and golf and dance and other social graces, how to fish and hunt and trap and butcher animals, how to do oxy-acetylene welding and set-up a metal lathe, how to start a fire with flint and steel, how to change the oil on your car, how to haggle in a public market, how to make a 12-gauge shotgun from 3/4-inch pipe�
Knowledge will enrich your life, make you feel more competent and better able to cope, and help ensure your future survival in this world.
Sign up for some adult education classes. Learn something useful. To prepare for the trying times that surely lie ahead, learn a craft or skill that will bring people to your door seeking what it is that you know and that they lack. Be the first in your neighborhood to throw an atlatl. Be the first to make colloidal silver. Be the first to eat the edible mushrooms that grow wild in your area. In short, "Get thee a copper kettle�" (Those are the opening lines in a classic on building your own whiskey still.)
You're already a free-thinker or you wouldn't be reading this forum� And your greatest wealth, your greatest resource, is KNOWLEDGE.
AND while you're at it, stash a few gold coins. Maybe at home. Maybe in a safe deposit box in a foreign country. (Many millions of Americans live but a few hours drive from Canada or Mexico or a quick hop from the Bahamas.) And maybe not in a bank at all. Maybe place those coins in the safekeeping of a personal friend or relative in a foreign country. Hey! If the Swiss can vote themselves off the gold standard then anything is possible, yes?
Replies & thots Megatron Oro WAC Aristotle Journeyman
Megatron 38531
Yes "The great reckoning" is something of a bible. I have an autographed copy, and subscribed to their newsletter for a time. Eventually found it a bit strident and obsessed, and quit. Have you tried "the axmakers gift" by R Burke? Similiar conclusion but a slightly different attack point.
A look at history.
Oro 38550
One thought- not that I disagree with the general direction of your thesis. There is a debt. It is to prof Auriti, and it is his guarentee that he will exchange back to lira, on demand, that people are relying on.
WAC 38549
That is tame to what Africa and some parts of Southeast Asia, particularly Thailand, are experiencing. In those cultures that do not actively promote monogamy the rates are soaring. Russian rates of infection over the past 10 years have been rising dramatically as people increasingly feel they have little left to lose, and increasingly, women are forced toward prostitution to survive.
Aristotle 38511
Loved your invisible crash. It is a question I have been struggling with in several areas for some time. Unfortuately I lack your facility with words, and there is no doubt that, in the process of accurately describing a situation, one is forced to think about the problem much more clearly.
One of the problems is, we lack any experience with which to relate, so it is hard to imagine, to start with, an invisible crash. How does one go about explaining "red" to a blind person?
Journeyman
One thing that is apropos our discussion about traders and this forum. There is an adage; "(commercial) Bank" traders cannot go head to head with the central banks, and central banks cannot go head to head with the market.
http://www.usagold.com The situation in the Middle East appears to be worse than previous posters are portraying.
1) Isreal has launched jet attacks against Lebanon in retalitation for the capture of 3 Isreali soldiers by Hizbollah.
2)Syria has said Hizbollah was "justified".
3) Barak has issued a 48 hour ulitmatimum to Arafat to stop the violence or peace prospects are over.
4) Palestenian spokesman have rejected the 48 hour ultimatimum
5) Iraq is calling for a holy war to liberate Jerusalem.
6) Opinin polls show 2/3 of arabs want war with Isreal.
7) Isreal appears to be in the process of forming a unity government.
8) UN resolution (US abstaining) condemen Isreal for excessive violence againt Palestinians.
----------------------------------------------------------
The Middle East is on the brink of war.I think it is likely that the Arabs may attack Isreal from all sides. I think it is also likely that Isreal will respong this time with the use of NUCLEAR WEAPONS and eliminate 100's of millions of Arabs. Her back is up against the wall and in order to survive she will have to do it. She has the means and the will.
From the link: "Mr Jacques Santer, former president of the European Commission, has called on Gulf Arab oil exporters to price their crude in the euro rather than the US dollar as a means to stabilise the oil market."
RE your post 38554, studies were ade of the relative wolf
and moose populations on Isle Royale National Park at
Michigan, of which each waxed and waned successfully for
years, until some helpful environmentalists brought along
with them some poodles or somesuch and the wolves had a
major dieoff from canine distemper. Thomas Malthus's
theories about human populations being limited from time to
time by war, disease, famine, etc were set back by advances
in food production, some disease elimination etc. but I
think we are not exempt from nature despite mankind
spending most of their efforts to supplant it. Something
noteworthy debilitating will invariably come along. The
nature of it is that human beings have multiplied with
abandon to such an extent all over the world that a goodly
percentage of other species have to die out. From habitat
destruction on land to widening ozone holes killing things
we don't see like plankton, we may yet have to cope with
limiting our population (most people will not volunteer as
well as myself). Wars and disease are useful for that.
Was it Einstein who when asked how the world might end said
it probably would not go out with a bang but with a
whimper?
There is a striking parallel to be found between your gold market and your 'spiritual market'. You are living in a time period where extreme materialism is prevailing and where spiritual substitutes have been accepted and been considered as adequate and the real thing for a long, long time now. By the same token as it takes a lot of faith to keep the Bible's ideas and thoughts close to heart and in general "keep the faith" as it is called, it takes a great amount of faith to keep and hold on to one's physical gold in these days. This applies whether you are a small guy and the owner of one little gold coin or a central banker with a vault full of gold bars!
The Church, Christianity, religion and Christian faith has never been attacked so viciously and from so many sides as it is to day, with the Church and thereby the believers in God and Jesus being ridiculed and persecuted and even burned at the stake to entertain the public's lust for blood (Waco). Your government and the powers that be had no guilt in this instance, they said so themselves, and then it must be true, mustn't it? And all of you watching it all from your comfortable armchairs were equally innocent; after all they were a bunch of fanatics and weirdoes and had it coming! But come to think of it: What about Jesus and His disciples, weren't they a bunch of wandering hippies and dropouts as well? Sorry to digress like this, but this episode carried great importance and marked the beginning of the End of the World as you know it now!
Anyway, back to the gold market: I propose that a familiar attitude that results in the burning of Christians at the stake is prevalent in the world of finance. There are believers in the lie; read: fiat currency, paper gold, and other papers, and you have believers in the real thing, the truth: real gold and actual, real, valuable commodities. The believers in the lie are in a solid majority; the majority seems somehow for a number of reasons to always be wrong. And sad to say, they are not satisfied being wrong themselves, they seek to persuade the undecided and the ignorant to come their way, and having done short work of them, they proceed to cover their own wrong choices and wrong-doing by ridiculing and persecuting the minority that holds to the truth with the hope of eventually getting rid of them altogether. The lie cannot coexist with the truth anymore than light can coexist with darkness. One side must win in the end. Real and sound money, if allowed to exist, will eventually drive out the lie that paper money is and be replaced with, yes, you all guessed right, gold and silver and even coppers for the smaller denominations. - What is new under the sun? (I am aware of the fact that it has been suggested on this forum that they can indeed exist and live happily side by side, but as one writer had said, time will prove all things, also that idea! A lot will be left for free men and free nations to decide and we will all continue to learn as we go.)
I am here only as an observer, on a time travel back from the future, and it is very interesting to see how the thoughts of men are developing and helping shape the future that I am already occupying. You forum writers are truly the avante garde of the economists of your day! Having served the Manufacturer in my time on Earth, I am now part of the maintenance crew if you will. Although I have to admit it came as a shock to me the awesome responsibility that has been laid on my frail shoulders. But we work in team works with plenty of safeguards and have at our disposal the wisdom of all ages and all the help we need from the place you call Beyond, but which we call Home! The World is a different place than it was during "your" days, even if some of you survived the devastation of the final days of horror, and are still there. Others of you that at one time or another had received the gift of Salvation or accepted Jesus in any way, shape or form, are now with us here in the Heavenly City. You couldn't take your gold with you, but you realized soon you did not need it as this place is to some extent made out of gold and that of a superior kind of gold than you were used to! You also realized that the debate about gold versus paper was only a tool that had been allowed to help people choose the truth instead of lies!
The World is a better place now: There is no more war, the physical environment of the South and East has remained mostly intact and untouched by the horrible devastation of the North. The evil monstrous cities has been destroyed and the survivors have been resettled in the countryside where they once again farm the land and have had to learn from them that stayed loyal to the soil. Not only are the cities destroyed, man himself realizing the damage they did, have banned them forever. Most people are producing their own meager and simple needs for food, clothing and shelter, and what they cannot produce they trade and barter with others that can, from each according to his ability and to each according to his need. They that will not work, don't eat either! There is no more welfare or social security for the lazy and the slothful!
Since the love of money had become the root of all evil in your past generations, there is no longer any filthy lucre to pollute the economy. People are now exchanging commodities of real value, gold and silver of course included; and: it just had to be done: nobody is any longer allowed to accumulate more than his share. And none are permitted to suffer for lack of it.
The cities gone, small towns and villages are the order of the day. They are better than they of the past; beautiful, well-planned and wisely organized; small circular towns with roads radiating out into the surrounding farms and countryside. No more gigantic smoke-belching Earth polluting factories and industries, no more roaring, self-destructive forms of rapid transportation which killed even more than even the evil diseases of your wicked civilization. This took a bit of time to implement; the old being gradually phased out through a mere lack of production of new vehicles and spare parts. Car factories were turned into assembly lines for farm wagons and carts and carriages and buggies.
It helps to realize that the age you are now experiencing is but a twinkling of an eye; for thousands of years camel trains and wagon trains were occupying the roads, and sailing ships were gracefully plowing the seas. The fast hell-bent, destructive speed-that-kills of the past has been slowed down to a peaceful pace that your mind and body can better endure and survive and enjoy at a rate that gives you time to think and pray and observe the beauties of God's creation as you pass slowly by, and absorb the clean fresh air of an unpolluted atmosphere that you can breathe deeply and freely with plenty of time, instead of the nervous haste and reckless driving of the past and all its human carnage and vehicular wreckage. The wild world of past civilizations are gone!
The Southern part of the World are again learning to shift for themselves, with their powerful, cruel northern neighbors gone. They had been seduced and persuaded into industrializing and borrowing billions that the rich north knew they were never going to be able to repay, but had only served to make them slaves and servants of the Northern lenders who literally owned those countries and told them how to run their affairs. Finally the South refused to pay and this had helped bring on the Great Crash of the North. The North eventually did themselves in through their own wars and the judgments of the Manufacturer culminating in the Great Battle also called (Armageddon). The South is now free, the Pharaohs of the North being gone forever.
I am painting a picture of sheer and pure bliss here, but men are men, and all will not behave no matter how perfect the conditions are, so for the sake of the record; there are still rebels even in this perfect day and age. But all in all, this is Heaven on Earth; man is now free of disease, sickness, hurts, pain and early death, and if you can believe it; you even walk easier as gravity is lighter than in your day! The atmosphere is healed and there is full protection against the ultra violet rays from the Sun as well as cosmic rays. It may come as a surprise to you that what you called natural disasters were not natural at all; there are no more calamities like torrential rains, storms, hurricanes, volcanoes erupting, earthquakes, floods etc. The climate is perfect and temperate over most of the Earth where the majority of the people live. A lot was changed when the earth's axis had its angle corrected. The former polar regions are no longer frozen, barren wastes, but are temperate zones being populated and farmed! The deserts are long gone and are green and lush and flourishing! The trees are again bearing such abundant fruit that you can get most of your food from the trees, thus almost eliminating the hard work of tilling the land, except for diehard vegetarians! It is the Garden of Eden revisited!
Well, dear forum friends; this is what has become of the World that you were so worried about and thought were too far gone! And I don't blame you one bit; I must admit things were looking quite bleak for a while. I too had my doubts and was about to throw in the towel a few times, but it just goes to show never to give up hope and to keep looking for that silver lining of those storm clouds. Tomorrow is wonderful, I can assure you, I am there already! You will not be disappointed, the future is everything you could ever hope for and more! What more can I say, except keep the faith, or get you some! Ha! And yes, since this is a forum for people seeking a certain amount of physical security in holding a bit of gold for a rainy day; yes, gold is God's ordained wealth storage, untamperable, enduring. We here wouldn't use the expression eternal, as that is reserved for the real goodies! Get you some, but just not too much! As it would be sad to end up with a heap when it's time to go and no pocket to put it in! Besides being the perfect money and a royal metal it is meant for a buffer in a tight situation. When my Big Brother, who was once a little weak Child, had to seek refuge abroad, my fellows made sure that his parents had some gold to tide them over till it was safe to return to their home land. In the same manner it can be a help to many of you when the Crash hits. As many of you are becoming aware, there will soon come a period when the Wicked One will demand that no one can buy or sell except they have his mark or his number in their hand or forehead. In that day a few brave souls will ignore his threats and use gold and silver as a means of exchange. In the same manner as the Truth is esteemed of low value and trodden under foot of men, so is gold; the two go hand in hand. But the day will soon come that both are honored and recognized for what their real value is!
Signing off, but will continue to work from this side towards a liberation of gold from the stranglehold of the greedy manipulators. However, our hands are tied just now and we can only do so much, the rest is up to you, we can only work through yielded human vessels. So get your signals straight and you won't go wrong. Your decisions and actions is what will tip the scales of balance in due time. Spread the Word: the dollar is doomed, the Crash is here, the Euro will take over and gold is still the yard stick! Show time is now! This year is the year of change!
The Wiz just returned to the TableRound from more battles with the Orcs to catchup with the happenings of the last two days. In reading Saturday's comments, I began to see the truth through inadvertent and unconscious statements !
<;-)
=====
Cavan Man (10/07/00; 16:32:24MT - usagold.com msg#: 38489)
Hello Trail Guide
As you are an American, myself being an American; I must ask you how you feel about this whole business. I mean, how do you really feel? Know what I mean?
====
THEN, directly followed by: <;-)
---
Trail Guide (10/07/00; 16:53:08MT - usagold.com msg#: 38490)
Comment
Hell everyone,
+++++++
Enough said !!! <;-)
totalamateur (10/8/2000; 10:29:05MT - usagold.com msg#: 38563)
Gold and Truth!
Gold and Truth! Is there a connection?
<>
totolamature, by not responding to your post I would be indicating approval. Some of your ideas would seem the truth to those who are like minded. However this is a worldwide forum and some of your statements would be offensive to people in other religious cultures.
Many cultures and religions have the same goals and feelings about gold and the financial markets but not necessarily from your religious perspective.
Please be aware of their views as you talk of golden things.
I know of what you speak!
-Just Government...(not a democracy)....a Monarchy...a KING!....ruling from where you say?.....Jerusalem!!.....I pray for the Peace of Jerusalem, (even though I am not Jewish).
-And perfect/balanced weather!......must be a beautiful sight that canopy......especially the sunrises! and the sounds! I can hardily wait.
"...this is a worldwide forum and some of your statements would be offensive to people in other religious cultures...
Many cultures and religions have the same goals and feelings about gold and the financial markets but not necessarily from your religious perspective. Please be aware of their views as you talk of golden things."
May I say, we are seeking truth on this forum. Truth is absolute. We are not running for political office here and our opinions need not be suppressed. 'Other religions and cultures' have the privilege of addressing their grievances and giving their opinions as to the truth here expressed. I for one do not want Totalamateur, Buena Fe, or anyone else censured on this forum.
A MODEST PROPOSAL FOR PREVENTING THE CHILDREN OF POOR PEOPLE IN IRELAND FROM BEING A BURDEN TO THEIR PARENTS OR COUNTRY, AND FOR MAKING THEM BENEFICIAL TO THE PUBLIC
It is a melancholy object to those who walk through this great town or travel in the country, when they see the streets, the roads, and cabin doors, crowded with beggars of the female sex, followed by three, four, or six children, all in rags and importuning every passenger for an alms. These mothers, instead of being able to work for their honest livelihood, are forced to employ all their time in strolling to beg sustenance for their helpless infants: who as they grow up either turn thieves for want of work, or leave their dear native country to fight for the Pretender in Spain, or sell themselves to the Barbadoes.
I think it is agreed by all parties that this prodigious number of children in the arms, or on the backs, or at the heels of their mothers, and frequently of their fathers, is in the present deplorable state of the kingdom a very great additional grievance; and, therefore, whoever could find out a fair, cheap, and easy method of making these children sound, useful members of the commonwealth, would deserve so well of the public as to have his statue set up for a preserver of the nation.
But my intention is very far from being confined to provide only for the children of professed beggars; it is of a much greater extent, and shall take in the whole number of infants at a certain age who are born of parents in effect as little able to support them as those who demand our charity in the streets.
As to my own part, having turned my thoughts for many years upon this important subject, and maturely weighed the several schemes of other projectors, I have always found them grossly mistaken in the computation. It is true, a child just dropped from its dam may be supported by her milk for a solar year, with little other nourishment; at most not above the value of 2s., which the mother may certainly get, or the value in scraps, by her lawful occupation of begging; and it is exactly at one year old that I propose to provide for them in such a manner as instead of being a charge upon their parents or the parish, or wanting food and raiment for the rest of their lives, they shall on the contrary contribute to the feeding, and partly to the clothing, of many thousands.
There is likewise another great advantage in my scheme, that it will prevent those voluntary abortions, and that horrid practice of women murdering their bastard children, alas! too frequent among us! sacrificing the poor innocent babes I doubt more to avoid the expense than the shame, which would move tears and pity in the most savage and inhuman breast.
The number of souls in this kingdom being usually reckoned one million and a half, of these I calculate there may be about two hundred thousand couple whose wives are breeders; from which number I subtract thirty thousand couples who are able to maintain their own children, although I apprehend there cannot be so many, under the present distresses of the kingdom; but this being granted, there will remain an hundred and seventy thousand breeders. I again subtract fifty thousand for those women who miscarry, or whose children die by accident or disease within the year. There only remains one hundred and twenty thousand children of poor parents annually born: the question therefore is, how this number shall be reared and provided for, which, as I have already said, under the present situation of affairs, is utterly impossible by all the methods hitherto proposed. For we can neither employ them in handicraft or agriculture; we neither build houses (I mean in the country) nor cultivate land: they can very seldom pick up a livelihood by stealing, till they arrive at six years old, except where they are of towardly parts, although I confess they learn the rudiments much earlier, during which time, they can however be properly looked upon only as probationers, as I have been informed by a principal gentleman in the county of Cavan, who protested to me that he never knew above one or two instances under the age of six, even in a part of the kingdom so renowned for the quickest proficiency in that art.
I am assured by our merchants, that a boy or a girl before twelve years old is no salable commodity; and even when they come to this age they will not yield above three pounds, or three pounds and half-a-crown at most on the exchange; which cannot turn to account either to the parents or kingdom, the charge of nutriment and rags having been at least four times that value.
I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection.
I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee or a ragout.
I do therefore humbly offer it to public consideration that of the hundred and twenty thousand children already computed, twenty thousand may be reserved for breed, whereof only one-fourth part to be males; which is more than we allow to sheep, black cattle or swine; and my reason is, that these children are seldom the fruits of marriage, a circumstance not much regarded by our savages, therefore one male will be sufficient to serve four females. That the remaining hundred thousand may, at a year old, be offered in the sale to the persons of quality and fortune through the kingdom; always advising the mother to let them suck plentifully in the last month, so as to render them plump and fat for a good table. A child will make two dishes at an entertainment for friends; and when the family dines alone, the fore or hind quarter will make a reasonable dish, and seasoned with a little pepper or salt will be very good boiled on the fourth day, especially in winter.
I have reckoned upon a medium that a child just born will weigh 12 pounds, and in a solar year, if tolerably nursed, increaseth to 28 pounds.
I grant this food will be somewhat dear, and therefore very proper for landlords, who, as they have already devoured most of the parents, seem to have the best title to the children.
Infant's flesh will be in season throughout the year, but more plentiful in March, and a little before and after; for we are told by a grave author, an eminent French physician, that fish being a prolific diet, there are more children born in Roman Catholic countries about nine months after Lent than at any other season; therefore, reckoning a year after Lent, the markets will be more glutted than usual, because the number of popish infants is at least three to one in this kingdom: and therefore it will have one other collateral advantage, by lessening the number of papists among us.
I have already computed the charge of nursing a beggar's child (in which list I reckon all cottagers, laborers, and four-fifths of the farmers) to be about two shillings per annum, rags included; and I believe no gentleman would repine to give ten shillings for the carcass of a good fat child, which, as I have said, will make four dishes of excellent nutritive meat, when he hath only some particular friend or his own family to dine with him. Thus the squire will learn to be a good landlord, and grow popular among his tenants; the mother will have eight shillings net profit, and be fit for work till she produces another child.
Those who are more thrifty (as I must confess the times require) may flay the carcass; the skin of which artificially dressed will make admirable gloves for ladies, and summer boots for fine gentlemen.
As to our city of Dublin, shambles may be appointed for this purpose in the most convenient parts of it, and butchers we may be assured will not be wanting; although I rather recommend buying the children alive, and dressing them hot from the knife, as we do roasting pigs.
A very worthy person, a true lover of his country, and whose virtues I highly esteem, was lately pleased in discoursing on this matter to offer a refinement upon my scheme. He said that many gentlemen of this kingdom, having of late destroyed their deer, he conceived that the want of venison might be well supplied by the bodies of young lads and maidens, not exceeding fourteen years of age nor under twelve; so great a number of both sexes in every country being now ready to starve for want of work and service; and these to be disposed of by their parents, if alive, or otherwise by their nearest relations. But with due deference to so excellent a friend and so deserving a patriot, I cannot be altogether in his sentiments; for as to the males, my American acquaintance assured me, from frequent experience, that their flesh was generally tough and lean,
like that of our schoolboys by continual exercise, and their taste disagreeable; and to fatten them would not answer the charge. Then as to the females, it would, I think, with humble submission be a loss to the public, because they soon would become breeders themselves; and besides, it is not improbable that some scrupulous people might be apt to censure such a practice (although indeed very unjustly), as a little bordering upon cruelty; which, I confess, hath always been with me the strongest objection against any project, however so well intended.
But in order to justify my friend, he confessed that this expedient was put into his head by the famous Psalmanazar, a native of the island Formosa, who came from thence to London above twenty years ago, and in conversation told my friend, that in his country when any young person happened to be put to death, the executioner sold the carcass to persons of quality as a prime dainty; and that in his time the body of a plump girl of fifteen, who was crucified for an attempt to poison the emperor, was sold to his imperial majesty's prime minister of state, and other great mandarins of the court, in joints from the gibbet, at four hundred crowns. Neither indeed can I deny, that if the same use were made of several plump young girls in this town, who without one single groat to their fortunes cannot stir abroad without a chair, and appear at playhouse and assemblies in foreign fineries which they never will pay for, the kingdom would not be the worse.
Some persons of a desponding spirit are in great concern about that vast number of poor people, who are aged, diseased, or maimed, and I have been desired to employ my thoughts what course may be taken to ease the nation of so grievous an encumbrance. But I am not in the least pain upon that matter, because it is very well known that they are every day dying and rotting by cold and famine, and filth and vermin, as fast as can be reasonably expected. And as to the young laborers, they are now in as hopeful a condition; they cannot get work, and consequently pine away for want of nourishment, to a degree that if at any time they are accidentally hired to common labor, they have not strength to perform it; and thus the country and themselves are happily delivered from the evils to come.
I have too long digressed, and therefore shall return to my subject. I think the advantages by the proposal which I have made are obvious and many, as well as of the highest importance.
For first, as I have already observed, it would greatly lessen the number of papists, with whom we are yearly overrun, being the principal breeders of the nation as well as our most dangerous enemies; and who stay at home on purpose with a design to deliver the kingdom to the Pretender, hoping to take their advantage by the absence of so many good protestants, who have chosen rather to leave their country than stay at home and pay tithes against their conscience to an Episcopal curate.
Secondly, The poorer tenants will have something valuable of their own, which by law may be made liable to distress and help to pay their landlord's rent, their corn and cattle being already seized, and money a thing unknown.
Thirdly, Whereas the maintenance of an hundred thousand children, from two years old and upward, cannot be computed at less than ten shillings a-piece per annum, the nation's stock will be thereby increased fifty thousand pounds per annum, beside the profit of a new dish introduced to the tables of all gentlemen of fortune in the kingdom who have any refinement in taste. And the money will circulate among ourselves, the goods being entirely of our own growth and manufacture.
Fourthly, The constant breeders, beside the gain of eight shillings sterling per annum by the sale of their children, will be rid of the charge of maintaining them after the first year. Fifthly, This food would likewise bring great custom to taverns; where the vintners will certainly be so prudent as to procure the best receipts for dressing it to perfection, and consequently have their houses frequented by all the fine gentlemen, who justly value themselves upon their knowledge in good eating: and a skilful cook, who understands how to oblige his guests, will contrive to make it as expensive as they please.
Sixthly, This would be a great inducement to marriage, which all wise nations have either encouraged by rewards or enforced by laws and penalties. It would increase the care and tenderness of mothers toward their children, when they were sure of a settlement for life to the poor babes, provided in some sort by the public, to their annual profit instead of expense. We should see an honest emulation among the married women, which of them could bring the fattest child to the market. Men would become as fond of their wives during the time of their pregnancy as they are now of their mares in foal, their cows in calf, their sows when they are ready to farrow; nor offer to beat or kick them (as is too frequent a practice) for fear of a miscarriage.
Many other advantages might be enumerated. For instance, the addition of some thousand carcasses in our exportation of barreled beef, the propagation of swine's flesh, and improvement in the art of making good bacon, so much wanted among us by the great destruction of pigs, too frequent at our tables; which are no way comparable in taste or magnificence to a well-grown, fat, yearling child, which roasted whole will make a considerable figure at a lord mayor's feast or any other public entertainment. But this and many others I omit, being studious of brevity.
Supposing that one thousand families in this city would be constant customers for infants flesh, besides others who might have it at merry meetings, particularly weddings and christenings: I compute that Dublin would take off annually about twenty thousand carcasses, and the rest of the kingdom (where probably they will be sold somewhat cheaper) the remaining eighty thousand.
I can think of no one that will possibly be raised against this propasal, unless it should be urged that the number of people will be thereby much lessened in the kingdom. This I freely own, and it was indeed one principal design in offering it to the world. I desire the reader will observe, that I calculated my remedy for this one individual Kingdom of Ireland, and for no other that ever was, is, or, I think, ever can be upon earth. Therefore let no man talk to me of other expedients: Of taxing our absentees at five shillings a pound: Of using neither clothes, nor household furniture, except what is our own growth and manufacture: Of utterly rejecting the materials and instruments that promote foriegn luxury: Of curing the expensiveness of pride, vanity, idleness, and gaming in our women: Of introducing a vein of parsimony, prudence, and temperance: Of learning to love our country, wherein we differ even from Laplanders, and the inhabitants of Tompinamboo: Of quitting our animosities and factions, nor act any longe like the Jews, who were murdering one another at the very moment their city was taken: Of being a little cautious not to sell our country and consciences for nothing: Of teaching landlords to have at least one degree of mercy towards their tenants. Lastly, of putting a spirit of honesty, industry, into our shopkeepers, who, if a resolution could now be taken to buy only our native goods, would immediately unite to cheat and exact upon us in the price, the measure and goodness, nor could ever yet be brought to make one fair propasal of just dealing, though often and ernestly invited to it.
Therefore I repeat, let no man talk to me of these and the likes expedients, till he hath at least a glimpse of hope that there will ever be some hearty and sincere attempt to put them in practice. But as to myself, having been wearied out for many years with offering vain, idle, visionary thoughts, and at length utterly dispairing of success, I fortunately fell upon this propasal, which as it is wholly new, so it hath something solid and real, of no expense and little trouble, full in our own power, and whereby we can incur no danger in disobliging England. For this kind of commodity will not bear exportation, the flesh being of too tender a consistence to admit a long continuance in salt, although perhaps I could name a country that would be glad to eat up our whole nation without it.
After all, I am not so violently bent upon my own opinion as to reject any offer proposed by wise men, which shall be found equally innocent, cheap, easy, and effectual. But before something of that kind shall be advanced in contradiction to my scheme, and offering a better, I desire the author or authors will be pleased maturely to consider two points. First, as things now stand, how they will be able to find food and raiment for an hundred thousand useless mouths and backs. And secondly, there being a round million of creatures in human figure throughout this kingdom, whose whole subsistence put into a common stock would leave them in debt two millions of pounds sterling, adding those who are beggars by profession to the bulk of farmers, cottagers, and laborers, with their wives and children who are beggars in effect: I desire those politicians who dislike my overture, and may perhaps be so bold as to attempt an answer, that they will first ask the parents of these mortals, whether they would not at this day think it a great happiness to have been sold for food, at a year old in the manner I prescribe, and thereby have avoided such a perpetual scene of misfortunes as they have since gone through by the oppression of landlords, the impossibility of paying rent without money or trade, the want of common sustenance, with neither house nor clothes to cover them from the inclemencies of the weather, and the most inevitable prospect of entailing the like or greater miseries upon their breed for ever.
I profess, in the sincerity of my heart, that I have not the least personal interest in endeavoring to promote this necessary work, having no other motive than the public good of my country, by advancing our trade, providing for infants, relieving the poor, and giving some pleasure to the rich. I have no children by which I can propose to get a single penny; the youngest being nine years old, and my wife past child-bearing. (1729) THE END
What is happening now in the Mideast is not war (although that could develop) but a massacre of unarmed Palestinians by heavily armed Israel troops. Rocks against tanks and machine guns is not a war but murder plain and simple.
This will not help gold at all BTW -- rather the US dollar.
ORGY OF VIOLENCE AND DEATH LOOMS
"If the Arab world is heading for war
there is nothing (we) can do."
Shimon Peres - today
MID-EAST REALITIES - www.MiddleEast.Org - Washington - 10?07 - 3:30pm
Clinton canceled his Midwest fundraisers today to return to the White
House
and the Middle East crisis. The Israeli Cabinet is meeting in emergency
session
this evening at the Defense Ministry in Tel Aviv. The Lebanese
government has
been warned Beirut will be bombed, and Syria too has been put on notice.
Meanwhile
the Palestinians have finally thrown the Israelis completely out of
Nablus, making
the Israelis fear, and rightly so, that Hebron and Gaza are next...and
then....
And just in the last few hours Barak has given Arafat a public ultimatum
--
end the violence within 48-hours or else!
The "or else" may well be a "national unity government", Ariel Sharon
as
Defense Minister, and a new wave of violent repression, the unleashing of
Israel's
military even more in the occupied territories and again Lebanon. If this
is
what the Israelis are now considering, then it is likely sooner rather
than later
because in the midst of an election now just 4 weeks away American
politicians
can be counted on not only to rally to Israel's side but to box themselves
in
so that post-election they will have little choice but to keep playing by
Israel's
rules.
With emotions so raw a growing orgy of violence may be ahead, maybe
quite
soon. The Arab world remains too weak, scared, divided, and compromised,
to
actually take Israel on directly. The Arab "client regimes" -- mostly
comprised
of persons only marginally competents with far too many thugs and cowards
--
leaves that to the Palestinian "Children of the Stones". But a great many
political
fires can break out in various locations if today's situation escalates
still
further; and some of them may not be easily extinguished.
As for the Israelis, one Minister actually had the chutzpah to today
roar
at the Lebanese "return our kids" -- referring to the 3 soldiers captured
by
Hezbollah earlier today. This while the Israelis are still wantonly
killing
Palestinian kids, with Israeli snipers shooting in cold blood. Other
Israeli
officials have condemned as
"kidnapping" Hezbollah's actions...apparently obvious that they did in
fact kidnap
Hezbollah leaders years ago who are still in Israeli prisons, including
Sheik
Obeid. Plus Mordechai Vanunu, one of their own, lured from London and
kidnapped
from Rome. And still other Israelis have publicly insisted that Lebanon
enforced
U.N. Security Council Resolution 425, the very resolution they defied for
20
years, not to mention so many other Security Council resolutions they
continue
to defy to this day.
HEZBOLLAH WARNS ISRAEL
BEIRUT, Lebanon, Oct. 7 (UPI 11:18 ET) -- The Hezbollah movement warned
Israel
Saturday of any "foolish action" against Lebanon to try to gain the
freedom
of three of its soldiers who were captured earlier by the Muslim
guerrillas
on the Lebanese-Israeli border.
"Any aggression on Lebanon under any pretext will be a foolish action and
will be reciprocated by targeting (Israeli) soldiers and settlers," said a
Hezbollah statement released in Beirut. "And soldier-prisoners will remain
in our hands until achieving the goals. The enemy (Israel) has no other
option."
Hezbollah was responding to reported threats made by Israel against
Lebanon if its soldiers who were captured by Hezbollah earlier Saturday
were
not freed.
"It is time the Zionists learn that Lebanon is the grave of invaders and
the (Hezbollah) resistance is not terrorized by threats," the statement
said.
Hezbollah-run "Al Manar" television station said hundreds of the group's
followers were gathering in Beirut's eastern suburbs for a demonstration
"of
joy" for the detention of the Israeli soldiers.
The soldiers were seized during clashes between Hezbollah guerrillas and
Israeli troops across the border that followed the killing of two
Palestinian demonstrators by Israeli fire on the Lebanese-Israeli border.
About 20 other Palestinians were injured. The nearly 1,800 Palestinian
demonstrators, who came from various refugee camps in Beirut and south
Lebanon, were protesting the Israeli "massacres" against the Palestinians
in
the West Bank and Gaza Strip.
Rolf Knutsson, personal representative of U.N. Secretary-General Kofi
Annan, expressed "grave concern" for the cross-border exchange of fire and
appealed on all concerned parties to exert "maximum restraint, especially
at
this time of unrest and tension in the occupied (Palestinian)
territories."
Knutsson, in a statement released in Beirut, said Lebanese Prime Minister
Selim Hoss assured him that the Beirut government "would take action with
a
view to bringing the situation under control."
The U.N. envoy said he told Hoss during a telephone contact that the
Lebanese authorities should not "lose time in asserying their full and
effective control of the liberated area of south Lebanon, particularly
along
the Blue Line" that was set by the U.N. to confirm Israeli pullout "in
order
to avoid further tragic events."
Hoss said Saturday's violence "is extremely regretful and constitutes a
condemnation to Israel for firing at unarmed civilians, keeping Lebanese
detainees and still occupying Lebanese land in the Shabaa farms."
"As for Jerusalem, everybody knows that it will remain a source of
instability in the whole region until rights are restored and the holy
city
regains its Arab identity," he said in a statement. "We repeatedly said
that
Jerusalem is not the cause of the Palestinian people only but is an Arab
cause which concern all Arabs, Muslims and Christians."
Hoss said it was time for the international community "to realize these
realities and the big countries to pressure Israel to restraint it from
further aggressions and injustice."
Earlier, a Hezbollah statement said its guerrillas attacked several
Israeli positions in the Shabaa farms, which was not evacuated by Israel
when it pulled out its troops from south Lebanon on May 24 ending 22 years
of occupation.
"They captured many Zionist soldiers and succeeded in evacuating them
from
the area of operations to a safe place," said the statement. It later
confirmed that three Israeli soldiers were seized.
The Hezbollah statement said the group "offers this operation to all
Jerusalem martyrs," including the 12-year old Palestinian boy, Mohammed
Durra, who was killed in his father's embrace by Israeli soldiers in Gaza
last Saturday.
The statement said it also came "to fulfill Hezbollah promises to
liberate
all (Lebanese) detainees, every inch of occupied Lebanese territories and
to
show solidarity with the Palestinian people." It pledged to continue the
"Jihad" (armed struggle) until the liberation of Jerusalem.
Earlier, Israeli forces and Hezbollah guerrillas exchanged bombardment
across the Lebanese-Israeli border in a first such and most dangerous
incident since the Israeli withdrawal.
Security sources reported "fierce clashes" between the two parties in the
border area of the Shabaa farms.
Israeli forces fired shells on the Lebanese side of the Shabaa farms and
the outskirts of the village of Kfar Shouba, prompting Hezbollah
guerrillas
to fire back with mortars, Katyusha rockets and rocket-propelled grenades
on
Israeli posts on the other side of the fence.
The sources said Hezbollah-Israeli clashes continued "with all kind of
weapons" and Lebanese inhabitants of Shabaa sought refuge in basements and
shelters.
ISRAEL WARNS LEBANON, SYRIA
By JOSHUA BRILLIANT
TEL AVIV, Israel, Oct. 7 (UPI - 14:39ET) - Israel has launched an
intensive
diplomatic effort to secure the release of three soldiers taken Saturday
afternoon while its helicopters carried sorties across the border and
airlifted troops to the front.
The Israeli cabinet is scheduled to hold an emergency session at 9 p.m.
at
the Defense Ministry in Tel Aviv to decide on its next steps.
Prime Minister Ehud Barak warned Lebanon "to immediately cease all
hostile
activities on Israel's northern border, and impose its authority upon all
the organizations operating along the border."
Deputy Defense Minister Ephraim Sneh said Israel considers Syria to bear
prime responsibility.
"The Syrian regime is the dominant and responsible force in Lebanon. It
is
the one who makes decision and we shall treat it accordingly," he said.
The warning was issued after Hezbollah gunmen ambushed an Israeli patrol
and took three soldiers hostage. The Qatari television station Al-Jezirra
said Hezbollah forces killed other soldiers in the patrol, but the Israel
Defense Forces spokesman denied the report.
Second Channel TV and Israel Radio said the gunmen fired mortars at
several IDF positions in the area and the soldiers drove to the border to
check it. Hezbollah gunmen, who had parked their car just across the
border,
opened fire, crossed the border fence, took the soldiers, and sped away.
Last May, Israel withdrew its troops from Lebanon to a line the United
Nations determined. Since then, the border has been quiet except for
stoning
incidents. An Israeli general recently told UPI the air force has also
ceased intelligence sorties over Lebanon.
Barak's warning was not explicit as it was issued before the IDF
confirmed
the news of the seized soldiers.
Reports from Lebanon said Israel threatened to bomb Beirut unless the
soldiers are returned within a given deadline but Sneh said, "We haven't
set
an ultimatum."
The Foreign Ministry said that acting Foreign Minister Shlomo Ben-Ami
talked to U.S. National Security advisor Samuel (Sandy) Berger, Secretary
of
State Madeleine Albright, and the U.S. Ambassador to the United Nations
Richard Holbrooke. He asked Washington to relay its messages to Beirut and
Damascus.
Cabinet Secretary Yaakov Herzog told UPI that Israel has been in touch
also with United Nations Secretary General Kofi Annan and the
International
Red Cross demanding the soldiers' release.
The acting Foreign Minister has instructed the Israeli representatives at
the United Nations to sharply protest the attack.
The Foreign Ministry's spokesman said, "Lebanon is responsible for
maintaining quiet along the northern border, and the actions today
represent
a blatant violation of U.N. Security Council Resolution 425, and an act of
provocation."
The spokesman's statement called upon the Security Council to condemn the
attack and "oblige Lebanon to adhere to international law."
The army statement that eventually reported the missing soldiers said,
"Three soldiers in operational activity along Israel's northern border
fence
were kidnapped this afternoon by a Lebanese group, in all likelihood the
Hezbollah."
The incident occurred in the Mount Dov area in the northern Golan Heights
near the Lebanese border, the statement said.
"The IDF will make every effort to track the kidnapped soldiers and bring
them home safely," the statement added.
The Air Force has sent attack helicopters into the area in an apparent
bid
to track the Hezbollah men and the Israeli soldiers. CH-53 helicopters
have
been airlifting troops to the Mount Dov area in preparation for a possible
cross-border operation.
Hezbollah, in a statement issued in Beirut, warned Israel that, "Any
aggression on Lebanon under any pretext will be a foolish action and will
be
reciprocated by targeting (Israeli) soldiers and settlers."
The Israeli statement said the government "intends to take decisive
action
in order to ensure the safety is Israel's northern towns and villages."
Israel said it views "with the utmost severity any violation of the calm
that has existed on the northern border since the IDF's withdrawal from
Lebanon."
Former Prime Minister and Nobel Peace laureate Shimon Peres, who has
often
been optimistic over the peace process said Saturday night: "If the Arab
world is heading for war there is nothing (we) can do."
I see that Sir RossL has updated the Ponzi chart. Thank you
Hill Billy Mitchell : I too thought we may have seen a dip to a new Ponzi low on Friday , but a quick check told me not yet.
When I stopped posting the ponzi on a daily basis I got into the habit of doing it on Sunday's to refresh everyone for the next week of market mayhem.
Tomorrow is a Holiday in the USA, but will the rest of the world be trading tonight? I think so.
I did not get to read any of yesterdays posts till late last night. I read till 4:00 am EST. Wow this place was busy.
Lots of great posts.
I have to run to Daytona for an hour or so. Hope to find more good stuff here when I get back.
WOW!!! Happily I have inadvertently been practicing a good deal of what of what you preach, but have never expressed it so thoughtfully and eloquently. Add my voice to that of yours and Hi-Hat immediately following. Knowledge is power. But then, that was part of the reason I was posting, to promote a bit of a "WHAT IF" game and thus gain (for myself and others) knowledge.
Lots of food for thought which demands I give it the time and attention it deserves. Saved it.
Thank you.
PS also got a real chuckle out of some of your phraseology.
PPS Not sure how strongly I would recommend valuables in any bank vault AFTER a financial meltdown. Some of my research suggests that occasionally the individual custodian of the other key to the bank vault, feels he has a "partnership feeling" toward you, and wants a cut of whatever is in there, like 50%.
At a Gulf-Euro conference in Dubai, the former president of the European Commission, Jacques Santer, urged the Gulf oil exporters to price crude in euros as a means of stabilizing the oil market and reducing effects from US foreign policy. He remind his listeners that Europe was the world's biggest oil importer, and also said, "Trust and partnership spirit between the Union and the GCC could well increase if we were to consider trading the barrel in the euro" (instead of the dollar). Against the euro's recent track record on the foreign exchange market, Mr. Santer offered, "My contention is that the euro will move again toward parity with the US dollar, even if it may take some time, by gradual extension of the euro in international transactions."
These are important "political" rumblings that go well beyond the recent announcements by Iraq which might otherwise tend to be dismissed in the mainstream as little more than anti-U.S. posturing by a noisy nation.
http://www.financialsense.com/series2/gathering.htmTo all friends on the forum - WOW things are really hotting up. Multiple eventsoccurring simultaneously in every sensitive area that could quickly shatter euphoria :-
# Body slams on US indexes
# Mid East on brink of war
# Oil crisis
# Credit crisis
# Dollar crisis
# A 7.3 quake in Japan (100 injured - miraculously no
deaths)
Does anyone remember ORO's credit priming machine? Well there's a very comprehensive Bubble Flow Chart at the above link - I'm sure most of us could speak for a considerable time (with varying levels of expertise!) on this as every part of the equation is brought in. One glaring ommission is gold. Although one could argue that, at this point in time, it is off the radar and completely dormant.
The financial storm articles at the link, for those who haven't read them, are well worth a read.
For those friends of Israel there is an excellent site giving the conservative picture to the violence at
http://www.gamla.org.il/english/index.htm
Like how did all the stones get to the mosque on the first - well they were all conveniently stacked in heaps ready for stoning the Jews at the wailing wall. Arafats no 2 has carefully orchestrated in person the various actions.
And then there is the tragic shooting of the little boy Mohammed. Who did it? - there are a number of questions raised on the net as to whether it was the IDF eg see
When the euro came out the ECB decided to set it at a very low interest rate. They have set a course to let the euro slide in currency markets. It is my opinion that insiders must have known they would set a weak euro policy and it has likely been exploited in the carry-trade. As has been pointed out to me, the rise in rates of the euro has minimalised the effectual advantages of the rate differential, but nevertheless the ECB has been running a weak euro policy.
I believe I read that european central banks hold around $300 billion in US financial instruments. This would go beyond normal reserves and gives credence to the weak euro/strong dollar policy that has unfolded in the past couple of years now.
As to the dollar, it is fundamentally weak and the turnaround may very well be near. Trail Guide said yesterday that Greenspan wants a weaker dollar to get the trade deficit to a more reasonable level. Well he should very well get a weaker dollar exactly because of the trade deficit. America has rung up a total of roughly $1 Trillion dollars in its trade deficit over the past 3 years. There will be repercussions from this, which is of course a much weaker dollar in the years to come.
http://home.columbus.rr.com/rossl/hbm.htmI think it would be of interest to all if you could take each point in time and convert oil, using the dollar price at that time, into grams of gold, and plot oil vs gold directly. This would remove the value of the dollar from the equation, for a true value of oil in terms of gold.
A chart I would be very interested in seeing.
Back to being a real lurker.
RAP
I will give your request some serious consideration. I am still trying to sell the brains on this forum with the notion that the top chart,"CUMULATIVE REAL PRICE " is very precise in giving the relationship between Oil and Gold prices. The whole point of using constant 1999 dollart is to remove the change in the value of the dollar distortion from the equation.Of course we have the premise that the change in the value of the dollar pulled from consumer price indices over the last 20 years is correct. That premise could very well be wrong, simply because the numbers generate from a lying, stealing, cheating government.
Maybe your suggestion would be an improvement. It certainly would be interesting to compare such a chart with the "CUMULATIVE REAL PRICE" chart and the "X 20 / X 500 chart.
My wife is calling me to a true commitment and I must go.
Will see.
Gold market "time bomb" theory blasted by South African
http://m1.mny.co.za/MGGold.nsf/Current/4225685F0043D1B24225697000538DC5?OpenDocumentThe author, Daan Joubert, an independent technical analyst in South Africa, has responded to "Mr Gold's" article (Jim Sinclair) in a point by point style. The comments in italics are, therefore, key extracts from Jim Sinclair's article which theMiningweb.com headlined: "Gold Market Sitting On A Time Bomb" and are followed by Daan Joubert's replies. Enjoy: At the URL above
Just caught your post from yesterday and I need to correct a few matters:
First, Aramco's royalties to the Saudi king and his government were pegged to gold, but not always paid in gold. In fact, it appears that the Saudi government preferred dollars over gold for their royalties when it began to insist on royalty payments in US$ in 1940 at the dollar/gold exchange rate to be had in Jedda, which was twice as high as that in NY, largely due to the war and subsequent closure of the London gold market. This became an ongoing issue until settled in the late 40's.
Second, once the royalty was paid by Aramco to the Saudi government, the oil belonged to Aramco, which at that time was owned by Standard Oil of Texas and Standard Oil of California, and undoubtably it was sold, at full market value, for currency, not gold, with the proceeds flowing to American oil company coffers. Of course, today Aramco is largely owned by the Saudis and can no longer really be considered an American oil company.
Third, I only meant to imply that IF oil was sold for gold, it would be in that range you spoke of. I'm finding no evidence whatsoever that gold ever bought oil. It only paid the royalties...sometimes.
I'll have this material uploaded in the next few days as I'm working out a couple of problems with a web server provider.
CB's vs. the market according to Greenspan @justamereBear msg#: 38559
justamere,
Your adage, "'(commercial) Bank' traders cannot go head to head with the central banks, and central banks cannot go head to head with the market" reminded me of an A. Greenspan quote:
"That we, meaning the monetary authorities, the Fed and
the Treasury, can somehow alter the value of a currency
in a significant manner when fundamentals are going in
the opposite direction is an illusion. We cannot." -Alan
Greenspan, Semi-annual Humphrey-Hawkins Testimony to US
House, July 22, 1998, 12:52 PM EDT
Journeyman would you rather have money that is a commodity being tangible and valuable or would you rather have money that is intrinsically worthless and whose value is subject to the manipulations and machinations of those who print it and set the interest rate thereof?
I PREFER free banking and believe this would inevitably lead back to a defacto gold standard, with other types of private debt circulating, down to and including Uncle Joe's IOU written on the back of that envelope, most discounted based on the expectations of delivery unique to each author of each IOU.
As Austrian economists will tell you, except for fiat currencies, things traditionally (pre 1933) used as money had other uses as well. Thus they served all their several uses, use as a medium of exchange only one of them.
Of course, it could be argued that fiat also has other uses --- as wall (and another kind of) paper for example.
I believe the conclusion to be drawn from gm of gold v oil is that the price of gold has been kept OR the price of oil has been kept to within a very narrow range of one to the other such that the correlation is quite high. Any statisticians may want to give us a correlation of oil to gold and a standard deviation on the grams to gold thing.
Which controls the other I believe depends on who has fallen behind. Gold does seem to be the leading indicator. Oil is leading now though.
Bottom line. OIL can buy gold anytime and in any market as the market is kept such that 1gm (approx.) of gold buys 1 barrel. How convenient.
www.kitco.comOur currency may not be officially backed by gold but it is valued to gold which is valued to oil. The below only shows a partial picture -- oh so misleading, eh?
Date: Sun Oct 08 2000 20:52
sharefin (Could this be true?) ID#284255:
Copyright � 2000 sharefin/Kitco Inc. All rights reserved
In the past, people have invested in precious metals as a method for storing value when a currency was losing its value. But today, our currency is no longer backed by gold per se. It is backed by the gross domestic production of the nation. Now there are many other reasons people have for investing in precious metals. For the last several years, the consumption of gold, silver, platinum and palladium has far exceeded its production. This is coupled by the fact that the market price of these precious metals has been kept relatively low by the selling of gold reserves by central banks. In addition to this, rich foreign investors from developing countries have been increasingly looking for an investment to store away their personal wealth. They are moving out of their governments, which are often in the hands of corrupt politicians. It would take a global recession to slow the demand for gold and other such precious metals. Precious metals have long been looked to as the repositories of ***absolute value*** -- not the relative value of paper currency.
Your post about learning and knowledge was refreshing although I'm sure we both know very 'smart' people who don't know their ass from a hole in the ground. Let me add that any 'learning' is almost useless unless it's attached to a rational mind. Other wise it's just mis-appropriated energy.
BAGHDAD (AFP) - - Iraq's central bank has begun to buy
european currencies, following Baghdad's decision to
stop using the dollar, the INA agency reported.
The central bank said in a statement Sunday that it was "disposed to buying european currencies against their
equivalent in American dollars".
...
The statement said that "the currencies which will be
bought are the French franc, the German mark, the
Austrian schilling, the pound sterling, the Dutch florin and
the Italian lira".
Hey there, Turnaround. It's good to know that Iraq has kept its humor while taking an important and symbolic first step.
The statement said that "the currencies which will be bought are the French franc, the German mark, the Austrian schilling, the pound sterling, the Dutch florin and the Italian lira".
The translation---
The statement said that "the currencies which will be bought are the euro, the euro, the euro, the pound sterling, the euro and the euro".
Simply grand. A policy statement that offers the display of diplomacy and comedy all rolled into one!
Israeli feared kidnapped in West Bank said to be VP candidate Lieberman's cousin
Source: Ha'aretz Services Hillel Lieberman, a missing Jewish settler feared kidnapped and killed by Palestinians, is a cousin of U.S. Democratic Vice-Presidential Candidate Joseph Lieberman, according to sources in the Jewish settler movement in the West Bank. The senator has been apprised of his cousin's disappearance and is closely following efforts to secure his release, the sources said Sunday. Israeli security forces have opened a widespread search for Lieberman, 36, a resident of Elon Moreh in the West Bank and a father of eight, who has been missing since Friday night. Israeli media have said he was was last seen en route to a demonstration against the Israeli army's evacuation of the Joseph's Tomb shrine in Nablus. Hillel Lieberman's father, a rabbi, is a first cousin of the senator. There was no independent confirmation of the Palestinian Television report of his abduction and killing.
Black Blade: Wae for sure. Eye for an eye, tooth for a tooth.....
Israeli feared kidnapped in West Bank said to be VP candidate Lieberman's cousin
Source: Ha'aretz Services Hillel Lieberman, a missing Jewish settler feared kidnapped and killed by Palestinians, is a cousin of U.S. Democratic Vice-Presidential Candidate Joseph Lieberman, according to sources in the Jewish settler movement in the West Bank. The senator has been apprised of his cousin's disappearance and is closely following efforts to secure his release, the sources said Sunday. Israeli security forces have opened a widespread search for Lieberman, 36, a resident of Elon Moreh in the West Bank and a father of eight, who has been missing since Friday night. Israeli media have said he was was last seen en route to a demonstration against the Israeli army's evacuation of the Joseph's Tomb shrine in Nablus. Hillel Lieberman's father, a rabbi, is a first cousin of the senator. There was no independent confirmation of the Palestinian Television report of his abduction and killing.
Black Blade: War for sure. Eye for an eye, tooth for a tooth.....
http://home.columbus.rr.com/rossl/hbm.htm SteveH, I changed the chart. Previously, I was using HBM's inflation adjusted data. I decided to ues real prices in dollars instead.
The gold price is divided by 31.104 to arrive at the dollar price for 1 gram of gold. The dollar price of crude oil is divided by the gold gram price. The result is what you see.
The final segment in red is an estimate of where we are today. It is not based on HBM's annual averages like the rest of the data is, so it may be misleading.
IDF troops discovered a man's body at the southern entrance to Nablus at about 7 P.M. on Sunday. The IDF is examining the possibility that the man is Hillel Lieberman, a settler from Elon Moreh who has been missing since Friday night.
The body has been transfered to the center of forensic medicine at Abu Kabir.
Hillel Lieberman is a relative of the U.S. vice presidential candidate Joseph Lieberman, according to sources in the Yesha Council of Jewish Settlements.
On Saturday, Israeli security forces opened a widespread search for Lieberman, 36, a resident of Elon Moreh in the West Bank and a father of eight. According to Israeli media, Lieberman was was last seen Friday, en route to a demonstration against the IDF's evacuation of Joseph's Tomb in Nablus.
Also, the 1gm of gold per bbl of oil obviously tracks, except we have broken out in 2000 from the standard deviation, which is obviusly an anomoly driven by an unusual market event, which I suspect to be the higher price of oil and gold's inability (for the moment) to track with it. This is as much an indication of unusual market event and supports circumstantially the manipulation of gold and/or oil.
It also tells us for the relationship to hold, gold and oil must rise together in lock-step. We can't have (under normal macro market conditions) a rising price of gold without a rising price of oil. Oil is now rising, creating this divergence from the norm. Gold will therefore sustain tremendous pressures the further the break out in oil. Whatever pressures of the past kept oil and gold in synch will be working against gold's divergent behavior. I suspect the greater the divergence, the greater the upward pressure on gold (or downward pressure on oil). This points back to the theory that oil and or gold can be driven by those who control oil and or gold. Either can be used as pressure on the other. Most of the time, gold appears to lead oil. It is different this time: oil leads gold.
I have been following the 1 gm. gold/ 1 bbl oil discussion the last week or so.
Thanks for the comments; most interesting.
It appears that you guys have identified the disparity of late and the apparent role reversal; that is oil leading gold.
I have a couple thoughts and if I may pose a question.
Does it not seem possible that oil should lead gold during the economic cycle. As oil rises during robust times it then in turn causes inflation, economic peaking and finally a rise in POG?
Money chases investment yielding highest ROI, yes? Currency traders have bet the farm on the US$. It can be debated that the dollar is overbought, overvalued. Are oil producers simply aware that the dollars value is too high, consequently the POO has been racketed up to reflect this? Oil (let's call it a 'currency' for a moment) is inflated to match the dollar?
I recall FOA's recent statement, something along the line of, "... the rising POO has never been a supply/demand problem; it is recognition by oil producers of an inflated dollar.."
Hear ye! Hear ye! A select group of posters are invited to step forward to claim their precious metal!
The passing of this recent fortnight has seen The Tower actively engaged in many projects, certainly the most challenging of which was the process to review and distill the wide field of exceptional contest entries to those few recognized here. As a reminder of the stake, Centennial Precious Metals offered a quarter-ounce Uruguayan 5-peso gold coin as the grand prize, and tenth ounce gold bullion coins for the two runners up in this contest to celebrate the Forum's second birthday. The task to you, our visitors, was to either name the one specific development or event that would break gold out of its current price range, or else indicate the reason that you return to this Forum time and time again.
The difficulty of picking only three prize winners out of many, many insightful posts proved too great a challenge, so Centennial generously threw open its vault for the provision of additional prize metal for those that most closely contended for the gold. The big moment has arrived...
With the benefit of hindsight, we can now see that the contest for the grand prize was over as soon as it began. We are happy to announce that the Uruguayan gold coin is awarded to Sir JavaMan, who boldly offered the very first entry to the contest. In the final analysis, those of us judging this affair are all quite human here in The Tower, and Sir JavaMan's post appealed to our frail human emotions, allowing us to feel appreciated for our efforts involved in providing this website. Can you blame us? Just read these excerpts...
*****JavaMan (9/17/2000; 17:18:36MT - usagold.com msg#: 36853)
I, a USAGOLD "poster", keep returning to this Forum for many reasons. Among them are:
The fellow knights and ladies...who unselfishly share their wisdom and knowledge at the forum, and with an attitude of politeness befitting knights and ladies of the Table Round. Also, many of the values and views expressed at the Table are consistent with mine so there is a certain level of "like mindedness" to be enjoyed. Often, the discussions are an intellectually challenging experience and it is not uncommon to encounter a post that requires more than a casual or one-time read.
The Management and Staff...who have consistently demonstrated a high level of integrity in terms of how the forum is monitored. We have thirty words or more to articulate our reasons, but if I was limited to only one word, it would be "class". USAGold has class, which, first and foremost, is a reflection of the Management and Staff. As a result, visitors who recognize and appreciate this particular quality, find their chair at the Table to be a comfortable and rewarding one. Furthermore, they too offer an unselfish sharing of their time, knowledge, genuine concern, and accommodation both at the forum and behind the scenes - through email, for instance.
And now for some bullets:
The Web Site itself...there are no annoying advertising (especially animated graphics).
The twenty-four hour format...one hit provides access to all of the posts since the previous midnight.
The On-Line Offerings...where one can conveniently participate as their circumstances permit.
The Trail...the efforts of our Trail Guide / FOA do not go un-appreciated. Who IS that guy?
The Hall Of Fame...where the classic writings of such as ORO, Aristotle, and all the others can be easily navigated.
In summary, I would offer that USAGold (cyberspace gold) mirrors many of the qualities of physical gold: i.e. integrity, honesty, value, consistency, reliability, etc., etc.. Just as physical gold ownership provides a sense of confidence and peace of mind, USAGold and those who sit at the Table provide a similar experience by sharing knowledge, insight, and opinion that, likewise, promotes a sense of confidence and peace of mind. As physical gold is a true store of wealth, USAGold is a true store of informational and intellectual wealth. And its more than that, its a relationship.
These are the reasons I keep returning to the USAGold forum. Happy Birthday, USAGold and many happy returns!
----------------------------------
Thank you, Sir JavaMan, for making it all worthwhile. Our first runner up, Sir Tate, was awarded a tenth ounce gold bullion coin for his succinct yet entirely suitable and insightful commentary on the development that would break gold out of its price range. His post shows the key to be the physical market repercussions arising from mainstream exposure to the realities of the outstanding paper.
*****Tate (09/18/00; 20:31:12MT - usagold.com msg#: 36911)
... the one specific development or event that would break gold out of this price range, it would be run on physical metal. I call it HUNGER FOR GOLD that spreads around, caused by slowly rising worldwide inflation induced by currencies devaluation and meltdown that in turn would make impossible for FED and associated parties to continue POG manipulation.
[Now, check out this next portion of the post...a sound-bite statement that EVERYONE can understand...]
US Dollar inflation was already revealed in several ways.
Inflated US stock bubble revealed monstrous float of paper.
Rising price of Black Gold (oil) revealed falling paper value.
----------------------------------
Thank you, Sir Tate. Our second runner up prize of a tenth ounce gold bullion coin is awarded to Sir nickel62 for his important point reminding us to watch the international scene, and the powerful forces ultimately wielded by the masses beyond U.S. borders.
*****nickel62 (9/19/2000; 9:43:22MT - usagold.com msg#: 36953)
... the one specific development or event that would break gold out of this price range, it would be the realization that the value of the currencies of the European nations will be irreparably damaged by the continued acquiescence of their governments to the manipulation of the US dollar. This will be sparked by a resounding defeat of the referendum of the Danish people to accept the Euro and the realization that 300 million average Europeans do care about the value of their currencies being maintained even if their bankers and politicians do not. Politics will lead to changes in the movements of markets which will cause unforeseen events to undercut the ability of the US trading firms' computer models to continue to manipulate the game. Like all house of cards the game will then unravel in ways that no one can predict.
----------------------------------
Thank you, Sir nickel62. Honorable mention and a U.S. silver Eagle is awarded to Sir canamami for his insightful post along these same lines, though focused more upon the governmental side of international forces. An excerpt:
*****canamami (9/21/2000; 23:31:29MT - usagold.com msg#: 37161)
... the one specific development or event that would break gold out of this price range, it would be a material change in the embracement of gold by the official sectors (i.e., governments/central banks) of significant countries. In particular, this could be achieved by (a) a modest actual change coupled with a public announcement of the government's/central bank's new policy towards gold, or (b) a much more significant actual change, if that change were unannounced. For example, if the parties to the Washington Agreement announced that there now would be no further sales from those central banks, or if they announced the winding down of all leasing activities, this would greatly impact on the POG. The initial change in actual activity would be modest, but the psychological effect of the announcement would be significant. In a somewhat different vein, if the Chinese central bank started dumping massive amounts of dollars, said dollars being used to buy gold, but without an announcement of this new policy, the effect of the actual market activities would probably knock the POG out of its price range. ... In short, the official sector's policies and actions are the fulcrum upon which the POG turns.
----------------------------------
Thank you, Sir canamami. In this light, the very public Dollar-selling action of Iraq takes on special significance. Shifting gears again to the reasons we return to the Forum, we award a silver Eagle to Lady Leigh for a fine expression of the camaraderie we have all come to enjoy here at the "Round Table". A sample...
*****Leigh (09/20/00; 20:21:13MT - usagold.com msg#: 37075)
Why do I keep returning to USAGOLD? Because we're not afraid to take on hard topics here. In my day to day life, as I watch and talk with other people, I feel that they're living in a dream world that's about to collapse. I want to warn them, but I know my warnings will go unheeded (at best) or that I will be turned upon. I feel that I'm living in two worlds. One is the surface world of good times and buying and spending. I can function in it, but my mind is almost always elsewhere.
I crave the company of people who are living life in earnest. I want to sit at the feet of those more knowledgeable than I and understand why things are the way they are and whether there is a better way. At USAGOLD I find fellow searchers. The instant camaraderie we share is invigorating, and such a relief! At last I feel that I'm on terra firma, and the ironic thing is that the terra firma is in cyberspace! ... I always feel that I'm among friends here. Though some people would say we're only cyber-friends, we are all flesh and blood people only separated by the happenstance of life. Truly, our inner selves can shine through because we don't have to make allowance for our often clumsy exteriors.
Thank you, USAGOLD, for providing this lifeline to truth, wisdom, and friendship. This is far, far more than a gold site. It is an outpouring of people's hearts and souls.
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Thanks for the outpouring of heart and soul, fair Lady. We concur with your assessment. We also concur philosophically with the importance of the quest for education as expressed next by Sir Perplexed...education being the very essence of the Forum. For this, another silver Eagle is awarded as honorable mention. Some excerpts...
*****Perplexed (09/20/00; 01:27:18MT - usagold.com msg#: 37014)
I, a USAGOLD poster , , keep returning to this Forum because:
In my view, the beings created in the image and after likeness of God, were created to the role of information gatherer by means of experiences. In order to fulfill my function and advancement in the plan, I consider it my obligation to acquire the competence to, (as infallibly as possible) recognize truth. In a word-- EDUCATION.
We are literally awash in a sea of information, some correct, some erroneous, some erroneous by intent. For anyone with a true desire to know the answer to any question, the only requirements are an open mind and the willingness to invest the necessary time reading, compiling, analyzing, and correlating this glut of information. They must also be willing to examine, dissect, and if necessary, unlearn previous "truth". ... Because I recognize the limits on my time as well as education, and am not too proud to accept help from any of my present day fellow travelers, this Forum draws me like a bee to a honeysuckle vine, and a pirate to the Spanish plate fleet.
Because we have all acquired information, in a different, manner, under different circumstances, and even as different genders and nationalities, I am assured of acquiring a treasure trove of varying-- sometimes conflicting, (though not necessarily wrong) opinions, from which I may further my eternal goal. YOU GUYS AND GALS MAKE IT EASY. ... My heart felt thanks to all my friends on this Forum, especially to Michael and all the staff of Centennial. And to all you lurkers? They say that a stranger is just a friend that we haven't met. Looking forward to meeting you on the Forum.
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Thanks for your contribution, Sir Perplexed. This subject of education makes for a smooth segue to our final honorable mention award of a silver Eagle going to Sir Phoenix. Not only did his helpful lecture caution us about the proper valuation for a limited and depleting asset, it did so in a manner that was a joy to read. A sample...
*****Phoenix (09/20/00; 17:34:56MT - usagold.com msg#: 37062)
... the one specific development or event that would break gold out of this price range, it would be "DEPLETION." After a brief introduction, I will regale you with my theory. ... Myself, I remain a yeoman in many of life's intricacies as I find wisdom everywhere and from everyone I listen. I prefer it that way actually. Makes for an interesting walk. My history is of education in the oil patch as an engineer working for an independent oil and gas company in the shadows of the Rockies. However, there's not a day I don't enjoy getting my hands dirty, wielding a current day mace, a.k.a "Pipe Wrench" in one hand and a pair of "Channel Locks" in the other. If Arthur had used such tools, the grail may not have tickled his fancy so much, but I digress.
Since petroleum put coins in my bag, I study the future quite closely and come into contact with sources that garner keen insight on the true workings of the industry. In years past (i.e. pre oil-for-gold), I have always felt that the Middle Eastern countries were absolutely idiotic for not charging more for their finite supply of natural resources. This led me to the musings of ANOTHER at USAGold. The pieces of the proverbial puzzle finally made sense. Whilst we don't know if oil-for-gold is cast in stone, it remains the most logical and sensible conclusion. One a businessman like myself could appreciate. Since then, I've lurked for years on the board never truly needing to contribute. In that regard, the Black Blade is my compatriot in this castle as he does a robust job supplying energy news for consumption.
... Many of learned folks here know that a newly discovered oil field is a fixed size based on nature's whimsy. What you may not appreciate is that from the first day a well is drilled in an existing field or a new field, it's rate will decline from 2%/year to as high as 20%/year. That causes a well/field producing 1,000 bbls/day to drop to 980 bbls/day (2%) or 800 bbls/day (20%) a year later. That percentage is called the "decline rate," but the loss of the 20 bbls/day to 200 bbls/day is termed DEPLETION. (Take an average percentage and start multiplying the rates out a few years, and you can really see the dramatic impacts in even a few short years.) .... Most of the giant oil fields are fully developed in terms of wells and additional recovery methods. Their production rates are falling faster than even 10 years ago.
Onto today and tomorrow, now factor in crude demand growth of 2%/year from 76 MMBOPD to 92 MMBOPD in 2010. Then match it against 98% of current capacity utilized. Oh, and throw in the DEPLETION kicker of 2% to 20% loss for all existing oil production. The difference between demand and DEPLETION needs to be discovered and developed. Don't let your chariot hear these numbers, else its gas tank will gasp in terror.
... It's understandable why OPEC doesn't want the consuming world to know that the cupboard is bare in the future (they say it's a 800-billion bbl 80-year supply.) It's not in their current best interest or their long-term best interest to tell the truth regarding their oil. Simply wait till oil gets reset at a true equilibrium price. ... This "new reality" won't really hit until OPEC visibly starts losing production year over year at 2% to 20% ... This recognition of DEPLETION will dramatically revalue gold to its true equilibrium price (it will be well on its way by then.)
The gold price manipulation will end eventually as we wake up in a world without the oil to match our lifestyles and lacking the replacement energy resources. Time is on your side and DEPLETION is your silent companion on the journey.
----------------------------------
Thank you, Sir Phoenix, for reminding us that we can fool ourselves economically in the short term, but we can't fool Mother Nature in the long term. (And on a personal note, thanks for the Colorado School of Mines flashback. Go Orediggers!)
In conclusion, thanks again to all participants for making this event an overwhelming success! We're glad to have the archives stand in permanent testimony to the excellence of ALL the entries!!
For a final housekeeping note, prize winners are encouraged to e-mail Marie ( marie@usagold.com ) to ensure that we have the proper address for shipment of your gold and silver. And also, a final reminder goes to all first-time posters who submitted an entry for this contest. As promised in the contest rules, the first-time posters will get a Silver Eagle for exhibiting the bravery to break the ice. To claim your Eagle you MUST e-mail Marie with the Message Number for your post so that we can verify that this was indeed your first post at USAGOLD Forum. (Please no shenanigans on this. We'll be checking.) To qualify, the post must have been made during the duration of this contest...ending Friday, Sept. 22, 2000 at 5 p.m.
This is a slightly long story, but well worth reading through, as it almost defies any form of logic that so many bad things could happen to what is being billed as a sound part of Clinton/Gore's energy plans.
There seems to have been a screw-up in the recently announced SPR oil plan. If it is just a screw-up, it is of major importance. It could also become a realtime political scandal beyond any aspect of Whitewater. Since the tale is relatively complex, it may or may not ever get picked up by the national media. In my opinion, it certainly should.
In summary, here is what seemed to have happened:
A program to release 30 million barrels of SPR oil was announced on 9/22. The aim of this emergency program, as first announced, had no political overtones. It was a necessary act to prevent high heating oil prices in the Northeast. The decision to release these SPR barrels of oil was apparently made the previous Saturday afternoon at the White House. According to a story in the New York Times, Clinton was starting to get very worried about the high price of crude and the remarkably short levels of heating oil with only six weeks to go before the heating season began and also six weeks until the elections were held
(As the NYT story mentioned, Clinton might have been as worried about the impact on a heating oil problem for hurting Hillary in upstate NY as its impact on Gore.) A carefully coordinated plan to cool off the price rise of crude oil and heating oil was quickly figured out: SPR oil would be dumped on the market. But it now seems the only planning with any professionalism was how to choreograph this release to maximize its political gain, while also keeping the price of both oil and heating oil supressed at least through 11/7!
Within 24 hours of the plan being announced, various industry people realized it was extremely flawed in its ability to make a dent of furnishing extra heating oil. Our refineries are operating at effectively 100%. All the pipelines to take either crude or finished products are jammed full. There are no spare tankers or barges to get SPR oil or heating oil into the Northeast.
And the time it would take, even if these bottlenecks did not exist. to deliver extra heating oil to the Northeast would not occur until late November at best and the delay could last through sometime in January.
But all the bottlenecks are real, so the actual delay would be even longer. To counter these skeptics, the DOE announced they were speeding up the time when the contracts would be announced. (I do not believe the deadline of 10/4 to make the awards was part of the first announcement. But I might be wrong.)
There was also a growing skepticism throughout the industry that not enough industry players would even tender for this oil, though its terms were intriguing. If you got an award, there is no money to put up. All you have to do is give oil back next fall. And the 'best deal' would be decided by how much extra oil you agreed to give back.
Even on the morning of when the awards would be announced, the markets were filled with gossip that Richardson would end up with egg on his face when they could not find enough parties to even take free oil, since the system was so full it could not really address the problem of heating oil In the meantime, the heating oil problem was not getting better. It was getting increasingly severe. The heating oil problem which Clinton et al were wringing their hands about on Saturday, Sept. 16th was all bout low primary heating oil stocks.
In the entire East Coast were only 24 million barrels in primary stocks with no earthly idea what the stock levels were further down the delivery chain to the 7 million homes which need this for winter heat. (This number is for the reporting period ending 9/8/00 which would have been the latest information available when the White House meeting was held. ) This was a genuine heating oil crisis level by this date, as there were so few weeks left to get supplies in place before cold weather arrived in the Northeast. Once furnaces are turned on, heating oil stocks begin to decline.
Three weeks later, stocks have actually fallen by 500,000 barrels to only 23.5 million barrels on the East Coast compared with 48.5 million at same time last year. Winter weather is now too close by for there to be any way for heating oil stocks to get rebuilt before cold weather sets in. And worse, cold weather is now arriving in the Northeast. Various cities will see below freezing temperatures this weekend.
Back to the SPR plan. Despite all the rumors to the contrary, a beaming Bill Richardson announced on Wed. afternoon that all 30 million barrels of heating oil had been awarded. He did caution that heating oil was not "out of the woods yet, but there were lots of backs being patted that oil prices had retreated by $7 since the Clinton/Gore team devised this great plan.
On Thursday, the names of the 11 parties who got the government oil were released. The list included industry heavy weights like BP and Marathon. But it also names three entities totally unknown to any industry player.
The names were Lance Stround Enterprises, Burhany Energy Enterprises and Euell Energy Resources. Together, these three firms had been awarded the ability to take away from our SPR $300 million dollars, or 10 million barrels of oil. Moreover, they all got the high value sweet oil. In fact, they got about half of the sweet. A front energy story at Plattes Oilgram yesterday broke the first news of who these guys were. "Who are the saviors who will be turning oil into life-saving heat, the Platt's story asked.
Answer: three tiny firms with no apparent financial resources nor any experience in figuring out what companies like Exxon could not do. How to convert SPR oil into heating oil. (After all, remember that it was a heating oil problem which required our government to declare an emergency and decide to use 5% of our national insurance policy SPR oil in the first place.) A description of the three firms follows:
Lance Stround Enterprises is a one man firm located in the Harlem section of Manhattan. When Plattes called to interview Mr. Stroud, his mother answered the phone and said he was out "shopping for a letter of credit" for his new oil. He works as a grain dealer. This is his first experience in handling an energy deal. Nevertheless, he is now the proud owner of 4 million barrels of oil, assuming he can come up with a satisfactory letter of credit by next Wed.
According to the D&B on the firm, he expected total revenues for his grain trading of between $100,000 and $300,000 this year. With his new SPR contract, revenues will obviously soar!
Burhany Enterprises is also a small firm based on Cool Emerald Drive in Tallahasse, Florida. Like Stroud, there is only one employee, Ronald Peek. The only thing Plattes could find out about Mr. Peek is that he testified in 1998 at a Federal Reserve Hearing on behalf of a Florida Black business development advocate group. Burhany is now the proud awardee of 3 million barrels of our national security oil.
The final winner is Euell Energy Resources, located in Aurora, Colorado. Euell got the final 3 million barrels worth over $90 million. The company's website lists its business activities as "an integrated energy services company with operations that include natural gas and power marketing, diverse pipeline installations and construction management."
Mr. Euell spoke to both Platts and Oil Daily. He will apparently refine his SPR oil in "some of the refineries he holds stock in." He also said that his goal is to service the shortage of fuel oil for the East and the West Coast. (The DOE has failed to tell anyone that we might have a heating oil shortage on the other side of our country. I did not think this region even used heating oil.)
When Mr. Euell spoke with Oil Daily, he seemed to be changing his mind, as he said, "most of his oil would be turned into jet fuel or sold the electric utilities. (Perhaps this turned out to be what the refineries he is a stockholder in decided they wanted to do.)
These three firms now have contracts to begin receiving over $300 million of US government oil. They still have to post letters of credit by the end of business this Wednesday. Since a DOE contracting officer has to have made a "determination of responsibility" before the oil was awarded, I hope the same person is not assigned to check out the letters of credit.
The letters of credit will be tricky to create. Why? Because no body knows what oil will be selling for next fall, nor is there any assurance that these three individuals will even find someway to buy 10 million barrels, let alone get them back to the SPR. As to the financial ability of any of these firms, nothing is known from simply reading the Dunn and Bradstreet reports on all three.
The D&B on Mr. Euell does note that he went through personal bankruptcy in 1985 but also notes that all creditors were paid in full a year later. While Euell Energy is not Big Oil, is it 12 times bigger than the other two firms. It's D&B lists the firm as having 12 employees.
President Clinton told the press late Thursday that he was going to watch the heating oil situation like a hawk as it was critical to get this oil to the Northeast were it was needed. But early Friday evening, the Associated Press reported that Mark Mazur, acting head of the Energy Information Agency, announced that only about a third of the 30 million barrels of SPR oil will go to U.S. refineries.
The rest is apparently going to be sold into foreign markets, but Mazur said that they will "displace" 20 million barrels that refineries will not buy elsewhere. (I am not sure I understand this logic. Is the revised goal of the SPR to help lower our balance of payments or ease the logistics manager of a refineries job in lining up crude?)
If delivering only 10 million barrels of SPR crude to U.S. refineries becomes the final chapter of what was originally meant to save a heating oil crisis, it is worth noting that 10 million barrels of crude only translates into 800,000 to 900,000 barrels of high sulfur heating oil. On a cold day in the Northeast. this lasts about 12 hours or less.
It seems like someone has gone to alot of work and considerable security risk, given that these are SPR barrels, let alone financial risk that we never see a return of these swapped barrels, for a miniscule amount of heating oil that will show up to late anyway. The last part of this sordid story is "Thanks but No Thanks."
This was an article that was printed in the Oil Daily on the same day that Gore first suggested we should use SPR oil to solve a heating oil problem. According to the Oil Daily, a delegation from PDVSA, the national oil company of Venezuela travelled at their own expense to the Department of Energy just two days before Gore made this official first leak of what Clinton did the next day. They had been encouraged to make this trip by a democratic congressman from Massachusetts. They offered the DOE some of their storage terminals in the Bahamas to store heating oil which they would also supply from their refineries. (They were talking about real heating oil, and once it is in the Bahamas, it is only three or four days by tanker from ports in Portland, Boston, Providence or New York. How did the Department of Energy respond?
Thanks but no thanks. Our government believes that heating oil supply should be left to the private sector. (Did they mean the Big Three Oil firms: Stroud, Burhany and Euell?) This whole fiasco raises a laundry list of questions. Some need to be raised before our nation selects our next leader. The country will have to sort through a genuine energy crisis as the new Administration gets underway. A fiasco like this does not give me alot of comfort that Gore would leave us in really solid energy hands. I might be too harsh. Maybe a logical explanation for what now looks so weird will emerge. But it is time to start asking alot of questions and receiving alot of real answers. The story takes awhile to tell, but is worth hearing about."
Congratulations on your very well-deserved win! Hearty congratulations to all the other winners, and a big thank-you to USAGOLD for the many valuable prizes so freely given today!
The fact that most if not all of the SPR oil is not going to the US heating oil reserves was a no-brainer. There is no possible way for it to make it into the market. Bottle-necks are at every turn. The oil analyst continue to spout off that there is plenty of oil. These bozos just don't get it! It is first a capacity problem, and secondly a lack of "cheap" oil problem. When the majority of the SPR oil hits European markets, you can bet that some will splash onto Al Gore. Most interesting about this fiasco is that not all successful bidders are in the oil industry, but rather in the investment industry. And Bubba? - Good Bye Legacy!
Lady Liegh 38612, (a winner and obviously one with a way with words) said it all and well. So I will plagiarize (and plagiarism is the sincerest form of flattery)
Congratulations Javaman on your very well deserved win, and to all the others who shared their thoughts. Thanks to USAgold for all the prizes, service, and ideas. Happy birthday.
And now I am largely gone for a week or so, altho hopefully I will find an opportunity to lurk.
Yeah, Paula Jones would rather disrobe for the whole world before she would in front of Bubba! So much for that legacy too! God's gift to women? I think not! ;-)
Congrats Java Man, Leigh, Pheonix, Perplexed, Nickel62 (Mr. INCO?), Tate, and Canamami! Whew, I think that's all of them. Thanks to all at castle for a fun time and a long stream of enlightening posts.
The NASDAQ is getting slaughtered this morning (down -87, and S&P down 10) with a few unhappy tech analysts getting all over the slow down in computer makers (IBM, Compaq, HP, etc.), and chip stocks (Intel, Advanced Micro, etc.). We could just slip below 3000 today, I expected before Friday, but who knows? Oil drillers and services moving up nicely right along with oil, this is a good sign as PMs are sure to follow, in spite of some nutcase analyst who actually said that metals would decline due to expected rising interest rates! HUH?
Some Monday Morning Comedy from the people who predicyed $5.00/bbl oil!
Oil predicted to fall sharply to $22
By Diane Coyle, Economics Editor
9 October 2000
The price of oil is likely to fall sharply, boosting world economic growth, according to a report published this morning. The recent climb in prices to a 10-year high of $37.20 late last month was due to speculation, say economists at ING Barings. They predict a decline to $22 a barrel and below next year. Last week saw a significant fall in prices as the United States began to release oil from its Strategic Petroleum Reserve. The benchmark Brent price was close to $30 on Friday. Many analysts expect further falls, but there remains a good deal of nervousness about the effect of increased winter demand if the weather turns out to be cold. The lack of spare refining capacity is a particular worry, as increased crude supplies will not make any difference to such bottlenecks. However, Mark Cliffe, chief economist at ING Barings, predicts in his report: "The oil 'bubble' will burst, with a sharp downward correction in prices to $22 a barrel. The underlying supply/demand balance is moving firmly in favour of lower prices." He estimates that the oil price would have had to climb above $50 before the threat to the economy became as serious as the 1970s crises. As it is, the expected fall in the price will kick-start growth once again. "If this analysis is correct, then this promises a substantial improvement in the global economic environment," the report concludes. Lower oil prices would boost growth and profits and reduce inflation.
Black Blade: What ever it is that their smoking, it must be some good s!%#
Gore said tap the emergency reserve to show he takes the side of the little guy. Bush yelled, "Pander!" But can a pander also be smart policy?
BY ERIC POOLEY
To hear Al Gore tell it, George W. Bush and Dick Cheney are the oil-industry candidates, the men with Texas crude flowing through their veins. But in reality it is the Democrats who have the clout to meddle in the petroleum market. Last Thursday, Gore proposed that the U.S. control rising oil prices by tapping a small portion of the national Strategic Petroleum Reserve. A day later the Clinton Administration announced that it was releasing 30 million of the 570 million bbl. now stockpiled in salt caves along the Gulf Coast of Texas and Louisiana. The idea, said Energy Secretary Bill Richardson, is to correct extreme shortages in the heating-oil supply. "This is not political," he said. "The President wants to help the American people...have enough heat in their homes."
Six weeks before a presidential election, nothing that happens in official Washington is not political. And though many news reports have called this the first peacetime release of oil from the strategic reserve, it is not. The Clinton Administration has played election-year politics with the SPR before. In the spring of 1996, as Clinton was running for re-election against Bob Dole, gasoline prices shot up 20% in some states. Dole proposed repealing Clinton's 1993 gas-tax increase, and three days later the President responded. He seized on an obscure part of a bipartisan deficit-reduction bill and spun it as a relief measure for motorists. On a campaign trip to Florida, a state he had lost in 1992, the President announced that he had ordered the sale of 12 million bbl. from the SPR because the "rise in the price of gasoline...affects the take-home pay of working people who have to commute."
Sound familiar? Maybe SPR stands for Strategic Political Reserve. Clinton used it to inoculate himself against Dole. And Gore has used it to inoculate himself against Bush, who for months has been hammering Clinton-Gore for having no coherent energy policy. But unlike the one in 1996, this year's release was not something that fell into the Democrats' lap. It was debated for months--and initially Gore and Clinton were opposed.
Richardson began talking about the idea last January, and Gore let it be known during the primaries that he thought it was an ineffective way to lower prices. But as oil prices continued to climb, the Vice President's policy team became deeply involved in a months-long White House debate about tapping the reserve. Treasury Secretary Lawrence Summers opposed the release in a much publicized Sept. 13 memo, but a week before he wrote it, sources tell TIME, Clinton was already telling Saudi Crown Prince Abdullah that he was strongly considering tapping the reserve. They met in a suite at the Waldorf-Astoria in New York City during the U.N. Millennium Summit. Clinton's "objective was to get quiet support from the Saudis," says a source close to the talks. A few days later the President dispatched Richardson to Los Angeles to brief Prince Saud al-Faisal, the Saudi Foreign Minister. It couldn't have been a surprise to Clinton when Gore called him from the campaign trail last Tuesday and said he was going to come out in favor of an SPR release. Clinton was happy to let Gore propose the idea first so the Vice President could get a tactical boost just as Bush seemed to be regaining his balance.
And so the question is not whether the oil release is a pander but whether the pander is a good one or bad one--an effective policy that also wins votes or just a hollow gesture. The answer depends on whether this is a true oil emergency--and whether 30 million bbl. will help solve it. Anyone who has paid for a tank of home heating oil recently knows the problem is real. Heating oil now costs 67% more than it did a year ago; depleted inventories and high worldwide demand, along with forecasts of a colder than average winter, are expected to boost prices even higher. Last week 111 members of Congress--Democrats and Republicans, mostly from the Northeast and the Midwest--sent a letter to Clinton asking him to deploy the SPR. To dramatize the problem Friday, Gore held an event in Pittsburgh that featured a number of people battered by rising oil prices, including an elderly woman named Annie Young who said she didn't know how she was going to pay for heating oil since she already couldn't pay for her prescription drugs. "These prices are skyrocketing," said Gore. "It's hurting those on a fixed income, it's hurting young families... I want to reject the agenda of Big Oil and stand up to the apologists for Big Oil."
As soon as Gore came out for the oil release, Bush pounced on him for "playing politics." A Bush adviser calls Gore's position "manna from heaven" because it reinforces the claim that the Vice President will say and do anything to get elected. "The strategic reserve should not be used as an attempt to drive down oil prices right before an election," Bush said. "It should not be used for short-term political gain at the cost of long-term national security."
Bush's national-security point seems strained, since the reserve oil isn't being sold but "swapped"--the deal requires buyers to replenish the reserve. But that's not the only reason Gore and his advisers were delighted with Bush's response. Their fear had been that as temperatures dropped and the election approached, Bush would draw blood with his criticism of a Clinton-Gore "do-nothing" energy policy. Most people who heat their homes with oil live in New England, which is solidly for Gore, but a great many also live in battleground states like Pennsylvania and Ohio. Gore had only to think back to Jimmy Carter's 1980 re-election campaign for a time when high oil prices helped defeat a Democrat. By getting ahead on the issue, Gore could defuse the threat while burnishing his image as a fighter for the little guy. And when his opponent attacked the move, Gore could again paint Bush and Cheney as a ticket "of Big Oil, by Big Oil and for Big Oil." When Bush and Cheney stressed their plan to increase domestic oil production by opening the Arctic National Wildlife Refuge in Alaska to drilling, the Gore team was even happier. They quickly reminded reporters that Cheney's former firm, Halliburton, would reap windfall profits from such a move.
Even so, the issue is by no means risk-free for Gore. It reinforces his image as a malleable pol, so it's worth examining why he claims to have changed his mind. In February, when Bill Bradley, his primary opponent, proposed tapping the reserve to aid homeowners, Gore said the move wouldn't help boost supply, because if oil-producing countries retaliated by cutting production, "they'd wipe out any impact from releasing oil from that reserve." Gore now argues that circumstances have changed. The OPEC nations, he said last week, "pledged to increase oil production, and they have not." But the Clinton Administration says OPEC is now producing 3.5 million bbl. a day more than it did last March.
Gore's claim that Big Oil is guilty of "profiteering" may have more basis in reality. The heating-oil-supply problem stems in part from the fact that domestic refineries spent the summer making gasoline, because doing so ensured high profits. They didn't refine much heating oil because they didn't want to be stuck with large, high-cost inventories if the price dropped before winter. That didn't happen. Crude oil now costs about $10 per bbl. more than it did a year ago, and the domestic heating-oil supply remains dangerously low. So Gore found himself embracing a solution he didn't trust seven months ago.
Voters may forgive these second thoughts. But they might have a harder time reconciling his election-eve push for cheaper oil with a political career in which he has argued that high oil prices are a good thing because they help reduce consumption. In 1993 he pushed for a broad-based tax on energy consumption--the so-called BTU tax, which was killed by the Senate Finance Committee. Where is Mr.BTU Tax today?
There's also some hypocrisy in Bush's rhetoric. He spent last week complaining that for seven years, Clinton and Gore have had "no comprehensive energy policy," and yet it is Bush who has no long-term plan. The Bush website offers detailed positions on 23 different issues, from abstinence to taxes, but not a word on oil or gas. (Bush has scheduled a speech on the subject for this week.)
The timing of Richardson's announcement was geared not only to domestic politics but also to global energy politics. This week the OPEC heads of state are scheduled to meet in Caracas, Venezuela--their first such meeting in 25 years. Analysts don't expect much serious policy discussion at the meeting, but the Administration wanted its plan in play beforehand--with quiet support lined up from the Saudis as a way to help mute criticism from such OPEC members as Iran. The move is bound to displease those members who want and need high oil prices--countries such as Indonesia that could, as Gore warned last winter, reduce output in response. So the U.S. is treading carefully, describing its plan as a "temporary, precautionary, internal transfer of oil." Clinton and Gore hope that diplomacy has now succeeded in preventing an OPEC backlash, while also sending the signal that America is prepared to take concrete action to lower the price of oil. On Saturday the Venezuelan oil minister, Ali Rodriguez, the current OPEC president, spoke in support of the release. But will it work? In essence, the play is more about psychology than about supply and demand. By itself, a million barrels a day for 30 days is not enough to change the market equation drastically. Coupled with the threat of additional releases, however, it might be. But easing the burden requires more than a change in the spot price of crude. Domestic refineries are running at about 95% of capacity, and Richardson's estimate that the release could translate into an additional 3 million to 5 million bbls. of heating oil this winter seems optimistic. Since it will take 40 days or more for the oil to work its way from salt cave to refinery to peoples' homes, no one will know how effective the release was until after the election. In that sense, at least, it's a perfect pander for Gore.
--REPORTED BY JAY BRANEGAN, JAMES CARNEY AND ADAM ZAGORIN/WASHINGTON AND TAMALA M. EDWARDS WITH GORE
THE INDEPENDENT, London: "Raw material costs pushed up by crude oil price rise" by Andrea Babbington. 'A rise in the price of crude oil helped push up raw materials costs to industry last month, according to new official figures. Seasonally adjusted Office for National Statistics figures show raw material costs in September rose by 2.8 per cent, to stand 14.5 per cent higher than a year ago - the biggest year-on-year increase for 18 years. Oil costs were up 17.1 per cent to leave the price of a barrel of crude 71.5 per cent higher than it was 12 months ago. Despite the pressure of rising oil prices, factory gate inflation remained flat, with the annual rate of increase of goods leaving the factory gate unchanged from August at 2.5 per cent.'
Black Blade: Where oil goes, gold must follow. Think inflation - New Economy or Old Economy, Petrochemicals are so pervasive in manufactured goods and agriculture that increases will be passed along to the consumer.
INDEPENDENT, Asia: "US petroleum journalists say: Gas, oil to play key role in energy sector in 21st century.." by Faruque Ahmed back from US. 'US petroleum journalists have hold divergent views on the future use of gas and felt that oil and gas would continue to play a key role in the energy sector in the 21st century instead of being replaced soon by alternative energy sources. "I really believe that gas is going to play a growing role in the energy sector; oil will also remain a key player for longer time, said Cathy Landry, Washington Correspondent of Platt's Oilgram News...'
Black Blade: Of course! There really are no other alternatives! It was "CHEAP" petroleum that fueled this past Bull Market. BTW, Max Ansbacher this morning recommended that investors bail out of the stock market.
Mobil, BP Amoco and Royal Dutch/Shell have taken up about 60% of the Sinopec global offer of 16.78m shares...'
BOSTON GLOBE: "Bracing for oil price jump, N.E. rethinks its reliance" by Beth Daley. 'New Englanders have been warned before. Ever since the energy crisis of the 1970s, energy specialists said it was risky for them to rely so much on heating oil to stay warm. It's almost all imported, they said, and vulnerable to sudden price increases. Yet, as residents brace for a second straight winter of high oil prices, New England remains more dependent on heating oil than almost anywhere else in the United States. The six states have less than 5 percent of the nation's population, but consume a whopping 25 percent of the heating oil that is used in the United States�.
Black Blade: Many record lows east of the Mississippi last night! Heating oil on the rise!
WASHINGTON TIMES: "Oil demand boosts U.S. dependence on foreign exports" by Patrice Hill. 'The extra 800,000 barrels of crude oil that OPEC has started pumping is a mere trickle in a world that consumes 76 million barrels a day. Americans are particularly thirsty for oil, sucking up a quarter of what the world produces and relying on oil for 40 percent of the booming economy's energy needs. Though the typical American grouses about paying near-record-high prices of around $1.55 for a gallon of regular unleaded gasoline, it costs less than bottled water and is downright cheap compared with the $3 or more many urban dwellers pay for a cup of Starbucks coffee...'
Black Blade: A national security issue to be sure and places the US at a severe risk!
So where does this all lead? - CYA! Get prepared and be ready as inflation and recession is already in the cards! If it doesn't hit before Bubba leaves office, pity the man who follows. He will end up with the same legacy as Herbert Hoover. But you can do something for yourself and your families. Get out of debt, get food stores and necessitiues, and get portfolio insurance - hard assets - Gold, Silver, and PGMs!
Wind turbines could be cranking up to fight higher
energy prices
The Associated Press
10/7/00 6:05 PM
PORTLAND, Ore. (AP) -- Soaring energy prices have brought new attention to a marginalized source of power:
the wind.
While wind-driven turbines aren't close to replacing traditional energy sources like natural gas, coal and
hydroelectricity, they could soon account for much more than the 1 percent of the power supplied to the Pacific
Northwest.
Utility executives and industry experts say wind could potentially supply up to 20 percent of the region's energy,
The Sunday Oregonian reported. Already a number of new wind-farm projects are under way:
-- A California company has proposed a new wind project in north-central Oregon near Condon. The project
would have 26 to 41 turbines and supply enough power to run more than 5,000 homes.
-- A Florida company wants to expand the Vansycle Ridge wind farm near Pendleton, as well as build a new
operation across the Columbia River in Washington. About 450 turbines will be located on dry-land wheat
fields and grazing lands, supplying enough power to run 70,000 households.
-- A Wyoming wind farm that delivers power to the Northwest through PacifiCorp and the Eugene Water &
Electric Board is undergoing its fourth expansion. The addition will supply power to 4,500 new households.
-- A Montana project in the Blackfeet Indian Reservation will create power for 6,000 households.
Wind turbines currently supply enough power to run 21,000 households, and that capacity will increase to
90,000 by winter 2001, according to the Renewable Northwest Project, a Portland-based group.
"This won't solve all of our energy problems, but it's clearly ready now to play a larger role, and it's at least a
partial answer to some serious environmental concerns," said Stel Walker, assistant professor of mechanical
engineering at Oregon State University and director of the Wind Research Cooperative.
Oregon State has been doing wind research since 1971, when it was one of two U.S. universities to study wind
as an energy alternative. But the 1986 Columbia River Gorge Scenic Area Act limited opportunities to expand
use of the technology. At 150 to 200 feet tall and with 35-foot-long blades, the turbines do clutter the landscape.
And low-cost power, available from federal hydroelectric dams in the Columbia Basin, also removed much of
the motivation to develop wind power.
The motivation returned, however, when the wholesale price of natural gas tripled over the past three years.
And uncertainty about hydropower, which supplies 54 percent of the region's energy, has grown amid
questions about whether to remove dams to help salmon.
The cost of wind power also has dropped, from 10 to 15 cents a kilowatt hour in the early 1980s to 3 to 5 cents,
because of advances in technology and government incentives. It's still more expensive than traditional forms of
energy, but experts think the price of wind power will continue to drop.
Congratulations to all the winners in the recent contest.
A tough task to grade. Each of you recognized completely deserved it. I saw many others that could also have qualified.
Thanks Townie & USAGOLD for letting me bring up the rear on the list. I am honored to be mentioned with such stalwarts in the keep of golden justice. And a hearty thank you for lighting the torches and keeping the mead glasses full around here. Methinks this little stone castle will become quite famous when the paper world burns.
Reminds me of a clause in the US treaties with the American Indians: "as long as wind blow - water flow" Cost of wind-generated power at operating wind farms is still higher cost. Wind is also politically incorrect with many enviromentalist as birds get beat up pretty bad as they fly into the blades (those blades can really get some rotation too!). They also require lots of open space to be of much use. The wind farm on Altamonte Pass in the East-Bay (N. California)is quite huge and is visible over thousands of acres. It really upsets some of those people. I guess these is one under construction in W. Texas as well. It should be interesting to see where it leads. Of course in the NW these were calls to tear down the dams along the Columbia and Snake Rivers because of the salmon runs. That's an interesting story as well - naturw in motion with a bit of help from man. The salmon go into Puget Sound and then hit the dam - Bingo! smorgasboard for the seals, of cource the concentration of that many seals in one location and - Bingo! smorgasboard for the Orcas. Then these are the native american indians drooling over the prospect of whale meat and Greenpeace chasing them off with their boats and ship "The Rainbow Warrior". Oh well, almost full circle ;-)
About the Food-Chain (Fish story) - I might be mistaken, that probably wasn't the "Rainbow Warrior", it may have been the "Sea Shepard", the French sank the "Rainbow Warrior" in New Zealand I think. BTW, the indians drilled a whale (not sure what kind) on the last day of the hunt. Really was quite funny seeing grown Greenpeacers balling their eyes out and indians ceremonously praying and dancing atop the carcass and firing up the bonfires.
Reading my energy newsletters today and a couple of things popped out.
From the Wildcatter Weekly (ipams.org):
HEADLINE: INCREASED DEMAND FOR NATURAL GAS IN THE ROCKIES AND THE WEST COAST WILL REQUIRE AN INVESTMENT OF $123 B-B-B-BILLION IN PIPELINE INFRASTRUCTURE OVER THE NEXT 10 YEARS.
So said Blaise Pool, manager of strategy and business development for El Paso Energy, speaking at the International Association of Drilling Contractors annual conferenc last week in Houston. 33%, or most of the growth in gas supply in the next decade, will come from the Gulf of Mexico with another 11% in Canadian imports. But gas from the Rockies, where coalbed methane fields are booming, will be up 14% percent and liquified natural gas imports will increase 6%. Pipelines have to follow the loads at electric generating power plants, Blaise said. He estimated the US would need 38,000 miles of new transmission pipeline, 255,000 miles of new distribution mains, more than 800 Bcf of working storage capacity, and 30 Bcf of interregional pipeline capacity.
My comments: B-B-B-B-B-Ble-ble, that's all folks. Cash out the market cap of Yahoo! and Dell and you've almost got it. Black Blade has alluded to it before, but natural gas is the critical heating resource, not heating oil. 53 million households use gas, while 7 million use heating oil. The future needs this infrastructure, yet it is being built ever so slowly due to EIS's, bureaucratic red tape, treehugger opposition, and low margins.
HEADLINE: A GROUP OF MORE THAN 500 GLASS, STEEL, AND CERAMIC FACTORIES IN MEXICO HAVE SAID THE RISING PRICE OF NATURAL GAS MAY FORCE THEM TO LAYOFF A TOTAL OF 250,000 WORKERS.
The Canacintra industrial group blames state-run oil company Pemex's monopolization for the increase in natural gas prices. Pemex defended itself, sayi8ng rising demand forced prices up. Pemex is looking forward to major profits this year from Mexican oil and gas production.
My comments: Man, NAFTA really stinks, it keeps exporting US jobs to Mexico where the costs are lower. Oops, I goofed. The article said it was MEXICO with the lowest cost of production in North America that may be having serious energy inflation in manufacturing. Whew!! I'm glad the American government is keeping citizens and companies up to date with *accurate* inflation numbers.
Headline: TRENDS IN THE US OIL MARKET PLAYED A MAJOR ROLE IN HIKING OIL PRICES THIS PAST YEAR.
All analysts agree a major change has taken place in the way the US industry buys oil, which has contributed to the threat of a shortage. Intensified financial competition in the nergy sector has resulted in the widespread adoption of "just-in-time" techniques, which allow companies to greatly reduce costs by reducing how much they pay in carrying fees. Joe Stanislaw of Cambridge Energy Research Associates says, "In one sense, we have gone from just-in-time (JIT) to almost not enough." Because companies are carrying only what is absolutely necessary, there is virtually NO CUSHION OF EXCESS INVENTORY TO DEAL WITH UNEXPECTED EVENTS. Exacerbating the problem in the US is the failure of Congress to take into account the effect of newly imposed regulatory changes on the commercial structure of the industry. Environmental regulations have also added to the problem by delaying the construction of necessary new transportation capacity.
My comments: If you read nothing else I write for the next 2 months, consider this carefully. The much talked about API inventory numbers will not be increasing any time soon. You see, the whole game of refining has changed completely in the last 6 months, and it's why even though there's ample crude (for today) on the water and in the system that inventories are not building. Refineries used to have 30, 60 or more days of raw crude at their facilites waiting to refine it. According to a major oil company executive I know, he recently said his company is now only keeping a bare minimum of oil on hand and buying it as they need it. Crude is so expensive anymore that no one wants to buy mass quantities (unless you're one-man shop buying SPR oil). Their company is now running under 30 days of supply and in the teens and they're AVERAGE in comparison to some. He mentioned one refinery in the Rockies, that is now has only 5 days of stock on hand!! 5 freaking days of quantity!! That's taking JIT to the extreme and creating a severe price spike possibility if supplies are interrupted for even a short time.
Israeli Ultimatum just Passed, and Arabs are United. We'll See if Barak is just blowing Hot Air or if he's Gonna do it.
DUBAI, United Arab Emirates (Reuters) - Saudi
Arabia warned on Monday that it and other Arab states would not stand idle if Israeli Prime Minister Ehud Barak acted against Lebanon and Syria. ``Barak has to think before taking any step...and nobody should think that the Kingdom of Saudi Arabia and the whole Arab and Islamic nation would just watch with their hands tied,'' Saudi Crown Prince Abdullah said. He was responding to a question by the official Saudi Press Agency (SPA) on the kingdom's position if Israel acted on its threats against Lebanon and Syria. Barak has threatened ``decisive action'' unless Lebanon and its political mentor Syria rein in the Iranian-backed Hizbollah group which on Saturday captured three Israeli soldiers and wants to swap them with Arab prisoners in Israeli jails. The crown prince did not specify what action would be taken by Saudi Arabia, the world's largest oil exporter and a key player in regional politics. The tensions between Lebanon and Israel erupted amid a wave of violence between Palestinians and Israelis that has killed at least 89 people, mostly Palestinians, and threatened to end the Middle East peace process. Crown Prince Abdullah said Saudi Arabia would attend an Arab summit in Cairo later this month to discuss the violence:
``We are with every Arab and Muslim stand that will strengthen the position of our brothers in occupied Palestine.'' He said Israel and other states involved in the peace process, an apparent reference to the United States, must see that Arabs and Muslims would not compromise on their rights in Jerusalem and its al-Aqsa mosque, Islam's third holiest site. ``We have a historic and legal right and a just cause...It is time for the Israeli side and to all who are involved in the peace process to realize what al-Aqsa means for us as Arabs and Muslims...There is no compromise on that,'' he said. The crown prince made his comments after visiting five wounded Palestinians evacuated to a hospital in Riyadh. SPA said he had also discussed the Israeli-Palestinian violence by telephone with Egyptian President Hosni Mubarak. Saudi Arabia's cabinet reiterated its condemnation of Israel's treatment of the Palestinians and said it would support any Arab action to help the Palestinians, SPA said. It had earlier reported that King Fahd had donated 30 million riyals ($8 million) to help the Palestinian people while crown Prince Abdullah had donated 10 million riyals.
WASHINGTON (Reuters) - When scientists think about energy resources, combustion -- and fire -- are often part of the equation. But ice? Fire and ice may seem like strange bedfellows, but a growing number of scientists believe the greatest store of clean-burning fuel available to future generations may lie frozen in combustible ice crystals below the ocean floor. This resource, known as gas or methane hydrates, is thought to exist in vast deposits below the world's continental margins where organic sediments have been trapped for many millions of years by pressure and cold. Preliminary evidence suggests these reserves may dwarf oil, coal and natural gas combined.
Charles Paull, chief scientist on a recent expedition to explore the Blake Ridge off the Carolina coast, said that formation alone may hold enough methane to meet U.S. natural gas needs for 105 years. ``Gas hydrates may make up about 5 percent'' of the sediment in this huge outcropping some 2,800 feet below the surface of the Atlantic Ocean on the margins of the North American continental shelf. Paull, a senior scientist at the Monterey Bay Aquarium Research Institute in Moss Landing, California, was co-chief scientist on a recent expedition of the Ocean Drilling Program, a 15-year-old international partnership to explore the mysterious world below the ocean floor managed by the Joint Oceanographic Institutions and funded in part by the National Science Foundation.
The largest international Earth science research project in the world, the ODP has seven international Partners representing more than 20 nations, including European countries, Australia, China and Japan. The program's drill ship JOIDES Resolution is arguably the world's most sophisticated floating laboratory, capable of extracting core samples from hundreds of yards below the deep sea floor and bringing them intact to the surface.
Gone Before You Look
That is essential, Paull said in a phone interview, ''because humans and gas hydrates are normally incompatible. They decompose very quickly in conditions where we are comfortable viewing them. It's only by accident that we even see any gas hydrates in nature. By the time you look at them the thing you're looking for is gone.''
Methane hydrates were first discovered below the Arctic permafrost by oil companies at the end of the 19th century, and it may well be in the Arctic that exploitation first becomes commercially feasible. That is because they are formed by a combination of relatively low temperatures and high pressures. ``At temperatures around 40 degrees below zero centigrade (-44 F), they can be found near the surface,'' said Paull. At 20 degrees centigrade (70 F), though, you have to look nearly two miles (3 km) below the ocean surface to find them.
Paull and John Farrell, acting director of the ODP, said the first commercial use of methane hydrates may be as a ``flood gas'' to increase efficiency of oil and gas extraction in existing wells in the Arctic, especially around Prudhoe Bay. ``A lot would depend on the price of natural gas,'' Farrell told Reuters in an interview. ``As with any natural resource, the feasibility of extraction is to a great extent controlled by price. If demand is high, then 15 years may be a reasonable goal'' for commercial extraction.'' Ann Trehu, co-chief scientist of the next gas hydrate leg of the ODP, thinks they may be found in even greater concentrations off the Oregon coast, where her team will drill into a formation aptly dubbed Hydrate Ridge, in August 2002.
``It's unique because massive concentrations of hydrates have been found on the ocean floor'' around this formation, she said in a phone interview. Hydrate Ridge differs from Blake Ridge because it is ``an accretionary complex ... (where) one tectonic plate is being subducted under another. In general, subduction zones appear to be rich in sediments'' and gas hydrates. Excitement Is Building While research is at an early stage -- just compiling a round inventory of hydrate formations around the world will take decades -- excitement is building and some scientists, including officials at the U.S. Energy Department, believe large-scale commercial exploitation could begin by 2015.
If oil and gas prices remain high over the next few years, the timetable could be accelerated. But huge environmental and technical obstacles remain. While methane is by far the cleanest-burning fossil fuel, when released unburned into the atmosphere it is a potent greenhouse gas with far-reaching implications for global climate, and the oceans themselves. Art Johnson, a senior scientist with Chevron Corp. in New Orleans, cautioned that commercial exploitation of this vast potential resource is ``years away and there are a lot of unknowns right now.'' But he added: ``The potential is so huge it's hard to walk away from it. With gas prices heading upward ... certainly there will be more interest in this. Right now, we're really just characterizing the resource. Is it massive? Is it finely disseminated crystals? Is it in the pore space of sand grains where it might be able to flow to a well bore? Is it even extractable? We don't really know yet.''
That may change within the next few years. The Japanese, who have few fossil fuel resources on land but potentially vast gas hydrate resources within their territorial waters, are pushing forward with research into extraction, Johnson said. ``Apparently their approach is to use hot water to try to disassociate the hydrates,'' releasing the gas into pools that can then be tapped using conventional methods, he said. ``If you drill well below where the hydrates are and find sand with geothermally heated water in it, you might be able to inject that into the zone where the hydrates are.''
Potential Worldwide Energy Source
Ocean surface water may be warm enough to dissolve the hydrates in some formations. And evidence suggests natural gas deposits underlie some hydrate formations, in which case it might be possible to drill down into the deposit, releasing the gas and reducing the pressure on the methane ice crystals. Reduced pressure alone might be enough to dissolve the crystals and release the gas. Joint Oceanographic Institutions former president Adm. James Watkins told a recent National Press Club luncheon he thinks methane hydrates ``have the potential to become a major worldwide energy resource.'' But he cautioned it is not yet clear whether the gas in these formations can be ``harvested in an environmentally safe way without releasing the gas that would become greenhouse gas'' or destabilizing continental margins, possibly triggering undersea landslides and potentially cataclysmic tsunami waves.
There is evidence that massive naturally occurring releases of these gases in the past have contributed to abrupt changes in the Earth's climate, as well as towering tsunami waves like one that wreaked havoc in northern Europe 8,000 years ago. And there is a further danger associated with existing undersea oil and gas lines: They may raise the temperature of the surrounding sea floor and trigger a release of gases that could create huge potholes in the ocean floor, thus rupturing those lines and leading to hugely destructive undersea spills. So whether this resource ever lives up to its potential as an energy source, ODP scientists figure they have little choice but to keep probing the ocean floors to learn as much as they can about the mysterious burning ice, which could prove either a great boon or a great bane to mankind -- or both. (NYSE:CHV).
Black Blade: Not quite feasible yet, This has been looked at and studied for many years and no one has quite figured out how to extract it. I was not aware of methane solids under the Juan de Fuca Plate though. How convenient - right off the coast of Oregon. Nevertheless, the technological obstacles are tremendous, like trying to catch a wisp of smoke in a gale. As I have said before, we plenty of hydrocarbons, it's just that the cheap hydrocarbons are fast becoming depleted.
BTW, record low temperatures across the US today as we wonder this will be a colder than normal winter with 24 year low inventories of oil and lower than normal NG storage. It could be shaping up to be an energy crunch of epic proportions!
http://home.columbus.rr.com/rossl/hbm.htm SteveH, I changed the x20 x500 chart. Extrapolations are of the current prices changed by a -3% fudge factor to convert to 1999 dollars. This is not a highly scientific process, and the results may vary...
The final segments in different colors are estimates of where we are today. They are not based on annual averages like the rest of the data.
Well, I just got home from work and saw the good news! I had hoped to be in the running but didn't imagine I would win the contest for two reasons. First, the competition was strong with many great people submitting great entries. Secondly, it seemed almost too easy as I simply considered many of the things I like about USAGold and the observations just kept coming and coming so I felt the winning entry would certainly require a greater investment of mental energy.
Congratulations also to the other winners and to all of you at USAGold...you're the real winners!
Andy Smith the alledged gold analyst tried to convince fellow Goldbugs at the GE forum to ditch gold and go long the NASDAQ in the middle of this Tech Bear Market. He was posting under the handle "Guru Brad" and Gold bear Ted Arnold posed as his wife with the handle "Galileo" and he/she was extolling the virtues of his superior intellect. Another poster with the handle "Klondike" couldn't deal with it any longer and while in the throes of temporary insanity and hallucinary angst made various accusations and promptly disappeared into the ether.
Of course that's all speculation on my part and I could be wrong ;-)
Is the explosion in the amount of new currency an exaggeration? A few
current examples of currency creation, outside the Fed, help illustrate how
easy it is to "make money."
1. On July 24, Deutch Telecom announced the $50 billion buy-out of Voice
Stream (a Seattle-based American company). A $50 billion deal in America is
a 200 billion mark deal in Germany, where the size shocked the Germans.
Fifteen months earlier, Voice Stream did not exist as a public company, and its
net loss for the first quarter of 1999 ($77.2 million) exceeded its revenue ($66.8
million). It seems even the Germans are betting the never-ending financial
bubble will go on forever - or that huge new debt will be wiped out by even
more rapid inflation.
2. Then consider the "insiders" at a company called SPYGLASS (NASDAQ).
These people who founded the company, invested early in venture capital, or
work for the company, sold $19.7 million of stock "into the market" between
8/99 and 7/00. Insiders paid as little as one cent a share, and as much as $11.10,
and sold it as high as $91.37 a share. One founder acquired his initial stock at a
penny a share, and sold 50,000 shared (a tiny part of his total stock ownership)
for $11.38 a share. His creation of "new money" was $568,250 realized from his
earlier cash investment of $500. This is how the money game works - huge
monetary rewards for risk! There are thousands of companies like SPYGLASS,
some giants like CISCO (where the stock appreciation in a decade was six
cents a share to $60 a share), and some small or smaller like SPYGLASS.
3. Investment News (8/14/2000) wrote: "Corvis Corp appears to be defying
gravity...but that may be an optical illusion. The company has unproven technology,
no revenues, and only three prospective customers, but it has a market
capitalization close to that of General Motors." A July 2000 IPO, Corvis "caught
up" financially in its total "market cap" with all of the stock outstanding in
General Motors....in a month and a half of trading on NASDAQ the company
has no sales or earnings.
4. Reuters/CGES (8/24/2000) wrote: "This year's oil revenues for ten OPEC
member countries are expected to rise by 62 percent according to the
London-based Center for Global Energy Studies. The Center's chief economist,
Leo Drollas, said the 10 countries would earn $201 billion compared to about $124
billion in 1999."
Now think! How would you feel about selling a year's production of your
depleting oil for $201 billion, as you saw Germany's largest telephone company
pay $50 billion for a dream company with no earnings?"
"Does an OPEC country continue to sell its depleting real oil reserves
at last year's price? Or, when a Venezuelan oil minister sees rich
nations creating new trillions of dollars in buying power overnight in
new digital high-tech currency, does he raise the price? When South
Africa and Russia, two near-bankrupt nations, see more money
everywhere except where they live, will they raise the prices on their
depleting asset that has increasing need in the technological world -
platinum? They do control the market! And if this begins a
domino-effect in price increases for all raw materials where either
basic reserves or production facilities are limited, isn't a rapid
increase in inflation sure to follow? Yes!"
http://www.plata.com.mx/plata/salinas9.htm Probably the two spookiest things I learned here at USAGOLD were FOA/Another's prediction that "the dollar and gold will rise together" as the dollar prepares for its hyperinflationary burn, and ORO's explanations of currency collapses as dollar support mechanisms- the death throes of Bretton Woods.
*******
December 23, 1997
Hugo Salinas Price
The spectres of Bretton Woods [excerpted]
The fascinating articles which have appeared in the last few months in the financial newspapers,dealing with the crises in Southeast Asia, Korea and Japan, provoke a suspicion that the debacle we are witnessing is nothing less than a long-run consequence of the Bretton Woods agreements of 1944, which were drawn up, essentially, by two men: [the Fabian-socialistic one-worlder con artist Lord] John Maynard Keynes and Harry Dexter White. Out of their two minds was hatched our present world, in which the U.S. Dollar is the primary reserve currency for all Central Banks.
Consider the following line of reasoning:
� The precarious stability of all currencies outside the U.S. depends on the amount of U.S. Dollar reserves owned by the corresponding issuing Central Banks.
�.No Central Bank can accumulate a growing stock of U.S. Dollar reserves, if its country does not export more than it imports.
� Thus, the world over, national economies have been oriented to exports - always in exchange for Dollars - as the mainstay for the respective national currencies and banking systems.
�.As soon as exports of any one country seem to fade, the speculative sharks begin to circle. The
currency is deemed "overvalued". A devaluation is at hand.
�The Central Bank will raise interest rates drastically, to stem the Dollar hemorrhage and retain or bring in Dollars. The devaluation will wreck savings, and the high interest rates will devastate the productive structure. The Central Bank will continue to invest its Dollar balances in U.S. Treasury Bills paying less than 6%. Thus even the most severely afflicted countries are financing the U.S. Government, at a cost to themselves.
[Here he assuming correctly that the principle will never be repaid.]
�All countries in the world are in competition for U.S. Dollars, which they must obtain at all costs, for failure to obtain Dollars means devaluation, ruination of savings and financial havoc. Further, devaluations are contagious, for devaluation in one country will likely mean devaluation by others, as each strives to hold on to its exports and indispensable Dollar inflows.
�Everywhere, exporting has become the central economic activity. National economies are sacrificed for the benefit of exporters. Wage rates are depressed by devaluation, and savings are destroyed, so that exporters may export.
[WHEN the dollar devalues it will almost surely lead to external competitive devaluations, see for example:
http://www.mises.org/humanaction/chap31sec4.asp
"�If one looks at devaluation not with the eyes of an apologist of government and union policies, but with the eyes of an economist, one must first of all stress the point that all its alleged blessings are temporary only. Moreover, they depend on the condition that only one country devalues while the other countries abstain from devaluing their own currencies. If the other countries devalue in the same proportion, no changes in foreign trade appear. If they devalue to a greater extent, all these transitory blessings, whatever they may be, favor them exclusively. A general acceptance of the principles of the flexible standard must therefore result in a race between the nations to outbid one another. At the end of this competition is the complete destruction of all nations' monetary systems."]
The economic centre of gravity of all countries has been thrust outside their borders, placing them all in a condition of chronic instability. Since Dollars are the objective, the U.S. has to be the buyer, and the U.S. must run trade deficits to supply the world with export surpluses. How else are the Dollars to flow to the world�s Central Banks? Some analysts speculate that the U.S. trade deficit may reach $300 billion a year, and fear that whole areas of U.S. economic activity may be wiped out by the desperate export efforts of the rest of the world.
[This of course has now occurred, and then some.]
�Such is the prevailing condition in the world�s economy. Clearly, it is unsound for the world to depend on exports to the U.S. for national stability. And it is profoundly unsound for the U.S., to place itself in the position of buyer of last resort to the world.
�When economic collapse comes about, as in Malaysia, the globalists call for pulling down barriers to the flow of capital. However, their diagnosis of the problem lacks depth; the problem is not "free flow of capital"; it is not even, fundamentally, overexpansion of credit or other unsound banking practices, but rather, in the last analysis, the Bretton Woods system of Dollar reserves, that skews every economy in the world towards the objective of Dollars via exports, over everything else.
�Our very odd world monetary and financial system, built on the ruins of Bretton Woods, has produced an unstable world economy, and is headed for a serious conflict with nationalist sentiments the world over. Picture yourself playing "Monopoly" against a player that owns the "Bank"!
�If the world is out of joint because of the Dollar reserve system instituted by Bretton Woods, then clearly, what the world requires is a system where national currencies do not depend on Dollar reserves. And that can only mean one thing: gold reserves, and their corollary, currencies convertible into gold. Either that, or we shall be treated to the spectacle of a crumbling world economy, and virulent nationalistic reactions.
******
[Alternatively, we may be treated to the spectacle of one-world government- a large crime syndicate composed of member crime syndicates, similar to the structure of the American Empire and of the Federal Reserve System.]
"Aristotle was a Greek philosopher, born in 322 B.C. He was a student of Plato. He became enshrined as an authority on all things great and small: ��one of the greatest thinkers and scientific investigators the world has ever seen.� So says the encyclopedia�
"�so it is no wonder that Aristotle was interested in the� nature of money� Of course in his day, �money� meant nothing more nor less than coined metal. The printing press was 1.7 thousand years in the future.
"According to Aristotle, the properties of good money are these:
"(1) It should be durable� Nothing surpasses gold in this respect�
"(2) It needs to be divisible. Gold, of course�
"(3) It needs to be portable� As a physical asset, probably only diamonds offer a more concentrated form of wealth [than gold].
"(4) It needs to be consistent. Grain can very in moisture content (and be heavy or light as a result). Gem stones have a wide range of flaws, colors, and sizes. Gold in its pure state is very uniform by comparison. But when you allow it, dilute it, adulterate it, and pass it off as pure, gold stumbles a bit.
"(5) It needs to have intrinsic value. And here, I believe, Aristotle was mistaken. On the contrary, it needs to have ZERO intrinsic value; ZERO utilitarian, commodity value. The more value a commodity has as a commodity, the LESS value it has as money because its supply can be disrupted by outside events. Until the era of modern-day electronics, gold was admirable in this respect. You couldn't eat it, wear it, or burn it as fuel. It had ho practical, day-to-day value.
"But who am I to question the wisdom of Aristotle? This is the man, after all, who brought you the fact that heavy objects fall faster than light objects as proven by the observation that rocks fall faster than feathers. ["Our" Aristotle is not being referred to here. Let us be clear on that.]
"As a schoolboy, I remember several classroom discussions of money. We compared barter to a primitive money system as well as to our own, modern, paper money system. The primitive money we discussed was always the wampum of the American Indian.
"Wampum was fascinating. Beads made of clam shell. Little cylinders an eighth of an inch in diameter and a quarter inch long with a tiny hole drilled down the center. How do you DO that? And how could ANYONE be persuaded to trade an item of real value (food or a canoe or a prized bow) for pieces of clam shell? Of what earthly use was it? And if it had no USE, how could it POSSIBLY have been regarded as an item of value?
"But before my contemplations (rudely referred to as �daydreams�) carried me to the point of asking the same questions about gold, the teacher invariably interrupted with a quiz for which I was invariably ill prepared.
"One text describes gold coin as �full-bodied� money �whose value as a commodity for nonmonetary uses is equal to its value as money�. When the U.S. was on a gold standard, we had in circulation a mixture of full-bodied money and �representative� money wherein paper certificates served as a substitute or proxy for gold.
"With full-bodied money the commodity itself, rather than a paper substitute, passed from hand to hand. Isn't it ironic that we used as a standard of value something that HAD no value? Full-bodied money is supposed to contain its own value within itself. But gold is useless; it has no value other than ornamental. In that respect, gold is the same as wampum. Something that DID have value would not work as the basis of money (as Chapter One sought to illustrate using wheat as an example)�"
So, the point seems to be that gold is useful because it's useless. It's useful (as money) because it's useless (for anything else). It's usefulness as money is inversely proportional to its usefulness as a commodity. That's why gold makes better money than silver. Silver can be USED for things; real, utilitarian things � photographic and X-ray film, for example.
Any thoughts from the Golden Knights at the Table Round?
"The newest chart is using the same inflation adjusted values. If you believe this approach is in error, then let me know."
My response:
Just got back from certain family commitments. Need time to digest and study before giving an opinion. May be a few days.
I was planning to produce information for a chart similar to the one I have been touting, only comparing real % price change comparisons over the 20 yr period between Gold, Silver, and Platinum, and possibly crude and or pladium. Only I was not going to do that until we had established a consensus of opinion as to which chart was the most accruate.
In the next few days I will come up with my readings on the best, in my opinion, chart and why it is the best. What the charts tell us is valuable only if what they tell us is very accruate.
I feel like a bumbling fool for being so persistent on this when I have not given much in the way of coherent reasons for my conclusions. Believe me I have good coherent reasons, I think(ha!) but haven't been able to come up with the time to present my reasons clearly to this forum. I hope to be able to do this before the week is out.
Sir RAP
Thanks for your interest. I get a funny feeling about the direction we are taking on this. I fear that if we are not careful we will come up with the wrong answer to the right question. Please be patient with me. It seems that things move so quickly on this site that by the time I get around to any conclusions on this grams of gold per barrel question that your answer may be here for you from RossL and others before I can get to it. So far what I have seen, the chart from RossL will require more time from my slow mind before I can get off the pot.
Aristotle (10/09/00; 00:59:58MT - usagold.com msg#: 38595)
"Hey there, Turnaround. It's good to know that Iraq has kept its humor while taking an important and symbolic first step.
The statement said that "the currencies which will be bought are the French franc, the German mark, the Austrian schilling, the pound sterling, the Dutch florin and the Italian lira".
The translation---
The statement said that "the currencies which will be bought are the euro, the euro, the euro, the pound sterling, the euro and the euro".
Simply grand. A policy statement that offers the display of diplomacy and comedy all rolled into one!
Gold. Get you some. ---Aristotle"
******
I did find that sentence puzzling- cannot a CB retain the individual currencies, perhaps as a hedge against a potential Euro ("Zero" in some circles) collapse? I don't know for sure, but Iraq's principal customers may be the aforementioned countries. Mentioning the pound is curious too, hmmm? I wonder what took them so long to stumble onto this idea- maybe our Trail Guide knows.
If black gold is dying, will gold gold leap to the throne again?
www.RunningOnEmpty.orgI moderate another 350-person egroup forum that researches and discusses the world's oil reserves and other energy matters.
Since starting in March, we have posted over 3,000 emails.
Although gold may be low at present, imminent severe shortages of oil that the public is yet unware of, may sharply increase demand for the traditional security of gold.
The gist of it is, the global supply of oil is about decline at a rate of about 3% per year, from about 2009 onward. The impact on every economy will be very, very severe. For example, there are presently 722 million cars in the world, 11,000 aircraft, and over a million decked fishing boats. There are 500,000 byproducts of oil.
Our investigation of alternative energy reveal that they will be grossly inadequate in energy quantity, and conversions themselves require large amounts of energy and some years to implement them.
In the expected chaos of hyper inflation as oil consuming countries flood their money out to the oil vending countries, I would like to ask fellow members whether you think gold may suddenly return to favour as the best security.
A more detailed explanation and authoritative evidence are available at www.RunningOnEmpty.org
Comments welcome.
Bruce Thomson
Moderator
www.egroups.com/group/RunningOnEmpty
Good solid food for thought post, but I doubt such a complex philosophical matter is going to get a fast reply, if for no other reason than is is weighty, and requires thinking time.
One thing I did not see addressed re money; relative scarcety and/or difficult to obtain.
"Seven Reasons why the Fed is in an Inflation Trap
Reason #1; "The Sponge"
In order to avoid inflation and actually have deflation, the Fed is going to have to soak up all the excess dollars whose
speculative utility suddenly evaporates, but whose residual liabilities do not. I don't think that many people really understand
the implications for interest rates under a project with such magnitude as that. A recession would not be enough to prevent
inflation; the project would require a forced depression. The reason is that a recession would likely bring with it some form of what
conventional economics calls stagflation, the onset of which would probably arise from a weak exchange rate. The Fed would be
required to give up trying to balance growth with monetary discipline entirely, and get tough enough to do what Paul Volcker
eventually had to do.
Right. From man of the year to the bum who threw out the Plaza Accord, all in the span of maybe one term? it takes quite the
character to do the right thing while every man, woman and child in the country say he is wrong to take their livelihood away from
them? even if it was illusory to begin with. So before you accept that this kind of resolve exists, consider that Mr. Greenspan's
anecdotal assurances of structural productivity gains are conveniently supportive of the Fed's easy money policies. That being said,
anything less than pure "resolve" will result in a weak currency and continue to manifest in dollar inflation.
It is conceivable that had the Fed any aspiration for accountability (facing a similar predicament in 1971) when Nixon broke the
dollar/gold link, the Bretton Woods system possibly could have survived. Instead, they chose to let the dollar float, which
astonished populists who actually thought it would rise in value, vis-�-vis the gold price."
It is what I thought. The divergence is quite apparent. Gold is undervalued by a factor approaching 2 to 3 times. Can you run the numbers of the Grams v oil chart for up to three standard deviations and give us the mode, median, and mean? Lots of work but the info will prove helpful.
Any stat jockies out that there that can comment on the amount of monetary momentum required to create such a divergence in oil v gold and why oil would all of a sudden sky rocket without gold. The traditional mechanism that glued these at the hip is broke. What is it folks?
The two paragraphs from the author you quoted below are very close to being the ravings of an ignoramus!
>>>>"(5) It needs to have intrinsic value. And here, I believe, Aristotle was mistaken. On the
contrary, it needs to have ZERO intrinsic value; ZERO utilitarian, commodity value. The more
value a commodity has as a commodity, the LESS value it has as money because its supply can
be disrupted by outside events. Until the era of modern-day electronics, gold was admirable in
this respect. You couldn't eat it, wear it, or burn it as fuel. It had no practical, day-to-day value.<<<<
He said WHAT? "You can't wear it." He must live on the Moon and no astronaut ever visited wearing jewelry. Speaking of which, he then says:
>>>>"Wampum was fascinating. Beads made of clam shell. Little cylinders an eighth of an inch in diameter and a quarter inch long with a tiny hole drilled down the center. How do you DO that? And how could ANYONE be persuaded to trade an item of real value (food or a canoe or a prized bow) for pieces of clam shell? Of what earthly use was it? And if it had no USE, how could it POSSIBLY have been regarded as an item of value?<<<<
The true data is there in his own words. The creation of these beads was the zenith of their craftsmanship technology. It was admired BECAUSE of the difficulty in creating it. It was their jewelry and their art. This is like saying a Rembrandt is only worth the �value' of a square of canvas and the paint.
Gold and wampum, each in their respective culture were �Precious'! The whole thrust of "Asset Money" is that it always has a value no matter what may transpire within society regarding the �value' of "Credit Money"; which is purely and simply some form of "Entitlement Chit" and therefore subject to default.
As to "the LESS value it has as money because its supply can be disrupted by outside events."
That is the one problem with Gold as money that does exist. But compared to what can happen to Currency when "disrupted by outside events" it is minuscule: And eventually balances out over time.
I await the commentary from OUR Aristotle regarding this nonsesnse!
Is the explosion in the amount of new currency an exaggeration? A few
current examples of currency creation, outside the Fed, help illustrate how
easy it is to "make money."<<<<<<,
To be correct it should read:
*****The TRANSFER of Currency outside the Fed
Is the explosion of the transfer of Currency via stock certificates an exaggeration? A few current examples illustrate how easy it is to obtain "Other Peoples Money" via the "Market Mania" of the moment.****
Per my "There's No Such Thing as Money "In" The Market " (Link above), and -- ORO (10/04/00; 21:02:16MT - usagold.com msg#: 38267) below
>>>>Obviously, where there is a seller there is a buyer and the money does not go away. It merely changes hands. Thus we do not put our money "into" a physical or financial asset, but we put it "through" the asset. The money is then free, in the hands of the former holder, to flow elsewhere- to chase after other goods or financial assets.<<<<<<
No money is "Created" when these stocks are sold at massive profit ratios. A multitude of new shareholders dollars now belong to the sellers of those shares.
The pressure is still building as a developing energy crisis looms over the horizon, the Middle-East is on the brink of war, the world's equities markets are coming under ever more pressure as companies distribute earnings warnings almost daily, the GDP rises month after month, etc., and yet gold still languishes around $270.00 per ounce. When gold is allowed to rise, the run-up will be fast and furious. We have had 2 very minor previews so far. The first being the WA announcement were gold rocketed upwards toward $330.00 per ounce within a couple of days. Second, when Placer Dome Gold Inc. (PDG) announced that they would discontinue forward sales, gold shot up toward $320.00 per ounce and was still moving in an upward direction until hedge-fund Barrick Gold (ABX) announced that they would not only continue forward sales, but would increase them.
But the world is an uncertain place, and now the "oil card" comes into play as there is a severe shortage of heating oil and natural gas as we head into winter in the northern hemisphere. The manipulation of the CPI and PPI inflation indicators will not fool the average American as he/she gets the utility bill. Americans are fond of blaming someone whether it be the Big Bad Oil Company or OPEC. They tend to think of oil companies as charities whose only function is to bear the cost and give them "cheap oil". Sorry, but those days are over. It doesn't stop there either.
As the soccer moms in their SUV's cart around their spawn down to the park, to school, the store, etc. they inevitably must stop at the gasoline station. Again the manipulated CPI and PPI numbers become meaningless as they pay over $100.00 to fill both tanks. But then the food at the grocery store is also much more expensive as it had to be delivered by trucks powered by diesel, and the petrochemicals that were used for fertilizer and pesticides. It isn't just the food either. It is also the styro-foam and plastic wrappers made from petrochemicals. This is turning into one expensive daily excursion. That's still not all. Hubby is having similar episodes of sticker shock as he goes to work and home again. I guess that core rate number makes one feel much better now, right?
As Hubby and Soccer Momma put the spawn away for the night, they sit down and go over their portfolio of 401K and IRA statements. They feel really smug right now and are confident that they will enjoy an early retirement once the spawn go away to college. They chit-chat and sit down to the computer to reconcile the bank accounts, investment statements and bills as it has been a rather hectic week and they finally have time to catch up. They fire-up that computer made of petrochemical by-products and sucking electricity outta that socket in the wall. They click onto the internet and open up their online Quicken spreadsheet. Hubby starts gasping for breath while clutching his chest and Soccer Momma promptly faints away! In the next scene, the ambulance rolls up to the hospital emergency entrance and the attendants roll out the gurney with Hubby jerking about like a Mexican Jumping Bean everytime the EMT's spark him up with a few AMPS. No, this is not the e-trade commercial where Hubby has money coming out the Wazzoo! Turns out that Hubby's gonna be OK, he just got vapor-lock when he saw that retirement would have to be put off because the market had been tanking all week long and his high-tech portfolio went from $800,000 to $160,000 because one of his securities missed the whisper number by a penny. Now this "rocket-scientist" begins to consider Day Trading with the remaining $160,000! Sanity prevails because he realizes that these are retirements funds and there would be a 10% withdrawal penalty.
As the markets take a toll on families retire plans across America, people search for a safe haven. By this time, hard assets are gaining favor. Most are still skeptical about gold, but a few of the gold-kooks they know have been buying up what their brokers have always told them were sterile assets and don't produce an income. What to do? Must do something! The portfolio continues to flounder and decreases in value. Meanwhile inflation is now impossible to deny even as Hubby and Soccer Momma watch Ron Insana on CNBC interview Larry Kudlow and Bill Wolman about the deteriorating situation in the world markets. Ron turns to Larry and says "Larry, how high will the inflation rate go?" Larry responds "Come on Ron, there is no inflation because gold is essentially flat." Ron turns to Bill and says, "OK Bill, I just asked Larry about gold�" Bill is foaming at the mouth like a rabid chipmunk "I TOLD YOU NEVER TO MENTION THAT WORD AROUND ME!!!!" Hubby and Soccer Momma turn off the TV and are now really worried. What to do? They shrug their shoulders, eat dinner, stare at their spawn, and don't say a word.
The next day war breaks out in the Middle-East and OPEC cuts off oil from the west in an attempt to prevent the west from coming to Israel's aid. It isn't gonna happen anyway as the American politicians have completely drained the SPR oil in order to cap the price of oil and to keep Americans in the northeast cozy and warm during one of the coldest winters experienced yet. Gold explodes upward in price to the tune of $1000.00 per ounce, then $2000,00, etc. and it's only 10 AM eastern. They turn on the television and find out that the stock market is closed limit down. They notice Ron Insana talking to Maria Bartiromo, so they turn up the volumne. They are in shock as they listen to them talking about beautiful and heavy gold is as they each fumble with a stack of American Eagles while joking about the newly bankrupt Barrick Gold. They notice that the ticker is not running with stock tickers, but with tickers for Eagles, Maple Leafs, Krugerands, Philharmonics, etc. Then a news flash appears on the screen that says Gold at $30,000 spot. Hubby and Soccer Momma's jaws hit the floor with a thud! The next scene on the television is a news cast showing an ox cart with Eddie George and Tony Blair wearing big white dunce caps being pulled toward Hyde Park while angry Brits throw rotten vegetables at them. Suddenly the doorbell rings! Soccer Momma answers the door and a letter is delivered by courier. She hands it to Hubby and he opens it. He clutches his chest and dies on the spot. A hysterical Soccer Momma picks up the letter and sees that it is the hospital bill for 1 ounce of gold! No, that's not money coming out the wazzoo!
Thanks, I was in one of my bored outta my skull moods. Au is slowly dropping in Asia but but all the peices of the puzzle are in place. Like a balloon in a swimming pool, the powers that be keep applying more pressure on the balloon and sink it to further depths. When those same constraining powers can no longer keep control and lose their grip - POG should rocket violently upward. Time to catch some ZZZZZZ
Hi Black Blade. I sure enjoyed your long narrative.
I can even see it happening--everything except CNBC rolling with the punches so smoothly.
A question, if I might, on your recent post, particularly about the comment--
"Like a balloon in a swimming pool, the powers that be keep applying more pressure on the balloon and sink it to further depths. When those same constraining powers can no longer keep control and lose their grip - POG should rocket violently upward."
Would you completely rule out this alternative proposal?:
Like a balloon in a swimming pool, the powers that be keep releasing pressure on the balloon (by selling supplies of paper Gold instruments into the demand as they deem necessary) to keep or sink it to further depths. Only when those constraining powers are revealed to leave the physical market and demand for Gold metal unsatiated will the price of metal rocket violently upward as the paper-influenced means of price discovery is abandoned. The metal is the key to the future.
On a separate note, congratulations to all who increased their precious metal position through well-earned awards for their efforts in the forum's birthday challenge.
http://www.usagold.com/cpmforum/archives/7200010/default.htmlTo all the weekday visitors who might typically skip the weekends, you definately missed a fine day of info on Saturday, including some good commentary by Trail Guide in the evening. Check it out.
Taurus and Peter Asher, I'll take a look into money issues that I see you've been discussing. Give me a moment.
"...and ye shall hear of Wars and rumours of wars: see that ye be not troubled: for all these things must come to pass, but the end is not yet" (Matthew 24:6)
Mr Black Blade (38634) - Re: Fish story. You are correct Sir, it was the 'Rainbow Warrior' that the French secret service sank in Auckland NZ. Incidently (some educational trivia) with the loss of one life of a sleeping crew member while tied at dock. The culprit's (well 2 of at least 3) were caught after a massive manhunt (without equal) but then only served a partial prison term before political intervention caused an early release. The two concerned were later given commendations back in France.
Mr Wolavaka - I don't think the M/East will burn just yet buddy, a good chance to go short though very soon in a selected markets.
There testing the Litmus on the Aussie $ again , sad to say but wooo hoo ! Kiwi $ getting hammered again .
I ask why in Gods precious name are self sufficient countries ,reactor suffice , oil, gold , vanadium, iridium, diamond high tech/knowledge etc , energy giving countries feeling the pinch , and not the predator economies. i.e no material wealth ?.
Is it stupid politicians or implicated politicians or clever ones ?.
Leigh good to see you back again ,I am going back to HK looking for that needle in a haystack that the Japanese were supposed to have left , I went before but got nothing around Feb/March ( crazy huh ) hehe I have a litle story to tell you I used to go to the beaches in the early morning and afternoon and never more doing 4 hours in a stint you know so there are not so many people around but one day I went to Seko beach and it was crammed packed and I found as I dont miss anying of worth under 5$ or 10$ HK by ear ignoring the dross ( wrong pitch) that people were throwing money behind me , obviously I am turning around and picking up the booty , but as fast as I could bend over and pick it up it was there for the taking. Imagine that people trying to throw money in the sand in the one spot to keep me by them. The beautiful HK people were so curious in this device . hehe imagine that .... as fast as I can bend over and pick up money I did . Only the body stops me in the end :), after all I am now 40 :). Professional begging I humourously call it . hehe . Its so reassuring to be able to live freely around the world and do that which one Loves at the same time . Infinite Bliss !. Gold , get yeah some :).
The starting year for the HIV/Aids pandemic is an interesting point. The issue can be addressed by plotting a log-normal distribution, with time on the horizontal, and the level of infection on the normal. The distribution should plot as a stright line, curving over at the top end of the scale. If we assume that the global population was say +-3.5 billion in 1972, then we should achieve an infection level of one in 3.5 billion.
I am not sure whether my previous correspondence on crude oil was published. I was working fairly late at night here, and the message might have gone missing. In short, there is a case from a fundamental point of view for determing the price of crude oil, based on the concept of economic return. If the economic rent is too low, no invests in crude oil production, and vice-versa. Typically, for a West African oil play (the current marginal oil play?), the economics pan out at a cash operating cost of $3/bbl, Exploration cost of $3/bbl and Capital reward of $3/bbl, giving an all in cost of $9/bbl. You can check these calculations by examining the financial statements of EnergyAfrica.com. The fundamental analysis is complicated by the costs of Production Sharing Agreements (PSA) or the corporation tax levied. My estimate is that to offset risk as well, crude oil prices need to be above $14/bbl, to make oil exploration and production attractive in the West African environment.
Another way to approach the issue of fair and reasonable crude oil prices, is from the question of alternatives. One potential alternative is synthetic fuel. Sasol (www.Sasol.com) does give useful information in this regard. Assuming a fully economic project, based on inexpensive remote natural gas, the cost of white oil produced is approximately $25/bbl, or between approximately $18 to $20 crude oil equivalent. One can than equate this fundamentally-derived crude oil price to a gold price of $306 to $340 per oz, depending on the gold/oil multiplier and the validity of the approach.
However, if crude oil output is peaking or close to peaking, as indicated by the Hubbert curve, and the crude oil market is tight, then a fundamental approach probably has limited utility in the short- to medium-term. Hope it helps!
The industrial commodities; Rodium, palladium, Platinum and silver get yeah a hellover sight more :). Easy pickings on the beaches in wonderful Japan :) esp the Platinum rings
but yeah we all know ... ! doing this hoo huh its not the Pt-Au we are always after its the rocks in them :). but its not the money or the love of money is it ?. its beauty ! for beauty sake in the end . All ficticious money really is as about as useless as balls on a priest . Black Blade keep up the middle east yarns mate I , look forward to em every evening :).... thanks all :). ZZZZZZZZZZZZZZZZZ
I'm not sure the statistical evaluations would be worth doing on the annual data. It would be interesting to see on a monthly or weekly data set from 1970 to the current time.
I never did a test 38666 ? message pal and you have the number because i reapeatedly tryed to send out is it ?. I dont give a rats arse-umption the people here know me by my speech that has at least 20 phyciatric reports to back that up ....... match that pal :). and welcome if ya prepared to argue in an honorable and orderly fashion a relevant point .
Friends are a plenty here :). ZZZZZZZZZZZZZZZ
At a minimum, the standard deviation and the average grams per gold would be most helpful. I would do it but don't have the raw data. Knowing the standard deviation will support my theory that we are in the 2nd deviation now and approaching three. It would be just nice to see where that lies. Just from looking at the chart, it appears that the mean grams v oil is around 1.75 per bbl. That is eyeballing it.
THE Aristotle on money--a promised follow up to Taurus and Peter Asher
Some of the comments I'll offer are essentially a reworking of those that I offered during a Thursday post on another comment of Aristotle's as used in a wider body of nonsense by author Stephen Zarlenga who tried to build this sad case--
"History shows money is an abstract institution of society and government. As far back as 340 BC Aristotle wrote: 'Money exists not by nature but by law.' He's saying true money is a fiat (decree) of the law."
In response, I said "We need not accept something just because Aristotle says it must be so. " and then went on to suggest that Zarlenga's interpretation of Aristotle's comment might actually be suitable for what we all know as modern paper CURRENCY units, but it is distinctly not appropriate for MONEY in Full (unit of account, medium of exchange, store of wealth).
Moving on to Taurus's post, this other author gives a better and broader glimpse into Aristotle's good grasp on the characteristics of "Money in full." He recounts--
"According to Aristotle, the properties of good money are these:
(1) It should be durable� Nothing surpasses gold in this respect�
(2) It needs to be divisible. Gold, of course�
(3) It needs to be portable� As a physical asset, probably only diamonds offer a more concentrated form of wealth [than gold].
(4) It needs to be consistent. Grain can very in moisture content (and be heavy or light as a result). Gem stones have a wide range of flaws, colors, and sizes. Gold in its pure state is very uniform by comparison. But when you allow it, dilute it, adulterate it, and pass it off as pure, gold stumbles a bit.
(5) It needs to have intrinsic value."
Unfortunately, it is here that the author promptly falls flat on his face when he departs from the Great Thinker, speaking his own mind as thus regarding item #5 (intrinsic value), saying--
"And here, I believe, Aristotle was mistaken. On the contrary, it needs to have ZERO intrinsic value; ZERO utilitarian, commodity value. The more value a commodity has as a commodity, the LESS value it has as money because its supply can be disrupted by outside events. Until the era of modern-day electronics, gold was admirable in this respect. You couldn't eat it, wear it, or burn it as fuel. It had no practical, day-to-day value."
Let's back up in time and build on basics to take this step-by-step to show where the author went horribly wrong.
To my mind, there is no disputing that the desirability of an item (any item) is found in it's usage value. If it is useless, it has no value. If we can agree that is self-evident, then it should not be difficult to follow how it is that a true monetary usage of a particular commodity item can naturally develop over time based on its uniquely convenient combination of qualities that include widespread desirability and ease of both divisibility and transfer--very much as we see expressed by THE Aristotle and listed above. Once this commodity has been sufficiently elevated to a primary monetary usage through natural marketplace selection based on its convenience and universal acceptibility, this currency usage adds further to its original desirability, entrenching its usage value as money at a level that exceeds its usage value for anything else.
It is at THIS point that many economists and philosophers become easily confused regarding the true nature and value of Money, believing that such monetary usage of the commodity is somehow artificial whereas any other type of usage for the commodity is not. Sheeeeeesh. Gimme a break. They fail to grasp how this unique suitablity and use of a particular commodity to perform a full monetary role naturally endows it with a high desirability and usage value that is disconnected from its obviously lower usage value as perceived when viewed (with blinders on) only in serving functions as a non-monetary raw material.
BB,
That was a wonderful story, I am still wiping my eyes over it. Thank you sir.
Keeping in line with TG's posting Saturday where he speaks about the paper price of gold decending to near zero, I have a question. Is the common thread of thinking here that the paper price will actually reach zero before the game is up? Surely the game will end before it does. I imagine that the paper market will lock up ala Paladium style before the paper price gets too much lower. Is the cabal stupid enough to allow people to purchase gold for $50.00 an OZ (Secretly, I do hope so. That would be Christmas come early for me.) I have a feeling that the price couldn't get much lower than, say around $200.00/oz before the system threw the final bearing. I wonder how our good host M.K. would be able to survive an extended stay below $200.00/oz.
How low can it go before it stops?
SAN JOSE -- Cisco Systems, the second-most valuable company in America, paid no federal income taxes for its latest fiscal year thanks to a little-known corporate tax break on employee stock options.
Microsoft, which ranks No. 4 in market value, did not pay any federal taxes either, it seems.
Like many high-tech firms, Cisco and Microsoft are allowed to take a tax deduction for money their employees earn when they ``exercise'' options and buy stock in the company at a preset price.
These options have become an increasingly popular way for businesses to reward employees, but they also have huge benefits to the companies themselves.
The tax break was established decades ago, when companies doled out stock options to only a handful of top executives and the tax benefit they generated was minimal.
But now that many companies -- including Cisco, Microsoft and most other new-economy firms -- give options to everyone, the tax break is becoming enormous.
In Cisco's case, this benefit wiped out $1.8 billion in federal taxes, and probably more than twice that for Microsoft.
Some people, even those who oppose taxes, think it is unfair that wealthy companies paid none to Uncle Sam.
For the fiscal year ended July 31, Cisco had $23 billion in sales last year, $2.7 billion in net income, and its almost $400 billion market value is exceeded only by General Electric's.
``For a company that makes that kind of money not to pay taxes raises serious tax-equity questions,'' said Jon Coupal, president of the Howard Jarvis Taxpayers Association.
He also said he believes it is ``hypocritical'' for Cisco to take this ``massive tax break'' and at the same time support Proposition 39, which would make it easier to raise property taxes on California homeowners. Prop 39 would allow local school bonds to be approved by a vote of 55 percent instead of the current two-thirds.
ENTITLED TO DEDUCTION
Cisco is entitled to a deduction for stock option income because ``in reality, that's compensation,'' and tax law has always treated employee compensation as a deductible expense, said Dennis Powell, Cisco's corporate controller.
When an employee exercises an option to buy stock, the difference between the strike price (what the employee pays) and the market price (which is almost always higher) becomes taxable income for the employee and a tax deduction for the employer.
Most Americans do not realize how enormous this tax break has become, because companies do not deduct employee stock options from the earnings they report to shareholders and the public. In fact, American companies fought long and hard to prevent employee stock options from showing up as an expense on their income statements, although they are happy to consider them as an expense for income tax purposes.
Cisco's and Microsoft's annual reports make it appear as if they had paid billions of dollars in income taxes.
Cisco's income statement for fiscal 2000, which was published about a week ago, shows net income before taxes of $4.34 billion, and a provision for income taxes of $1.67 billion.
That number includes federal, state, foreign and deferred taxes. The firm's actual federal tax liability, buried deep in the report, was $1.8 billion.
But in reality, the San Jose maker of computer networking gear paid no federal income taxes for fiscal 2000.
That is because its employees earned more than $7 billion exercising stock options in fiscal 2000. That $7-plus billion deduction generated a $2.5 billion tax benefit for Cisco, which wiped out its entire federal tax liability. The benefit shows up on Cisco's cash flow statement.
STOCK OPTIONS EXERCISED
Cisco employees exercised ``an unusually large number'' of stock options during fiscal 2000, mainly because the company's stock price more than doubled, said Cisco's Powell.
By comparison, Cisco's tax benefit from employee stock options was only $837 million in 1999 and $422 million in 1998.
Unlike Cisco, which acknowledges that it paid no federal income taxes, a Microsoft spokeswoman would not say whether that firm did or not.
But its annual report for fiscal 2000, which ended June 30, shows stock option income tax benefits of $5.5 billion, exceeding its $4.85 billion provision for income taxes. (Its actual federal and state tax liability for 2000 was $4.74 billion.)
``I'd say their federal income tax was next to nothing or probably nothing,'' said Robert Willens, a tax and accounting analyst with Lehman Brothers in New York.
A very heart felt congratulations to one of the best forum members of the best forum on the web. Thanks again to Micheal, the crew and staff, for not only providing a meeting place of the mind,-- thus allowing those of us of the not so brilliant,(especially me) to rub shoulders with, and learn from the truly brilliant--- but an opportunity to really reflect upon, and articulate our reasons, purposes, and goals. Perhaps we have not solved the worlds problems but many of them have certainly been laid bare. To even be considered a contender is quite an honor. CONGRATS AGAIN
CAVAN MAN.
Thanks Centennial, may you have many more posperious years.
The article doesn't specify if "Exercising" those options was calling in the stock and becoming shareholders, or simultaneously selling the shares for the profit.
If the shares are sold, the tax on the difference between the vested price and the sale is paid by the employee/momentary shareholder out of the funds that came from the subsequent share purchaser. If the company had sold the shares directly, the company would have paid the tax out of those same funds that came from the subsequent share holder. The tax has not been avoided as such, either way it gets paid from the same source. The company is in fact worse off then if it had not issued the options but had instead sold those newly created shares themselves and acquired the after tax profit.
So we have here another example of a Reporter telling a partial truth in order to rabble-rouse the citizens into righteous indignation over a nonexistent wrong. The company who issued the options now has a larger number of shares outstanding but it's �Value' at that moment is no different. Ergo the tax which WAS paid results in diluted share value to that company.
HOWEVER! If the options are exercised only on the buy side and the employee holds the stock, then we have an interesting phenomena possible. If the price of the shares falls to the level of the exercise price and the shares are still held by the employee, then no tax was paid on the temporary paper profit BUT the company still had the tax write off on it.
Bottom line; Company shareholders score one, Government, zero!
The bear market in the Nasdaq continues its relentless decline. The Nasdaq is now trading below 3300 and is approaching critical levels around 3200. Today's "bear market delight" is Cisco Systems--the darling of darlings. Even though the stock is only down 2 points to around 53, the volume is a monstrous 46 million shares so far and it is still early in the trading day. This stock trades on average only 46 million shares each day. Hmm. I wonder which mutual fund is dumping this morning? The chart looks bearish as the price action has rolled over to the downside and now we see the pattern of lower highs and lower lows. There is some support around 50 and then blue sky below. All I can say is "Anchors away" for this stock!
Gold and silver have popped up this morning, as the petroleum complex got a jolt from tensions in the Middle East. Crude oil is up $1.00, heating oil up almost 3 cents, and unleaded gasoline up about 2 cents. I watched as much as possible yesterday about the developing situation in Israel. The best program by far was Nightline with Ted Koppel. Tonight's program promises to be even better when he hosts a town hall meeting from Jerusalem with both Israelis and Palestinians who will take part.
Aristotle #38660: You proposed the following: Like a balloon in a swimming pool, the powers that be keep releasing pressure on the balloon (by selling supplies of paper Gold instruments into the demand as they deem necessary) to keep or sink it to further depths. Only when those constraining powers are revealed to leave the physical market and demand for Gold metal unsatiated will the price of metal rocket violently upward as the paper-influenced means of price discovery is abandoned. The metal is the key to the future.
Black Blade (reply): Sure , why not, when you consider the transparent BOE auctions, BB gold leasing, and some of the monkey business in the gold market from the producer end, aren't these efforts designed for the sole purpose of capping the POG? Once they pull the plug either by ending the BOE auctions (or even the non-transparent Swiss sales through the BIS), tightening back on the amount of gold available for lease (a second WA agreement?), or the major hedgers (like Barrick or AngloGold) suddenly deliver into the leases rather than roll them over. The market would be sure to notice and the true supply deficit in relation to demand becomes obvious. Any of those possibilities could result in a rapid rise in the POG. Imagine how explosive a rise in the POG would be if all these possibilities occurred simultaneously. Obviously this could go on for a long time. BTW, I heard that an official investigation into the BOE auctions was very critical of the process. I'm not sure who was doing the investigation or if there is any recourse that could be taken as a result. I haven't heard anything more on that for a week or so.
Netking #38663: I remember that the sinking of the ship occurred in port and took the life of a crew member. The "Rainbow Warrior" and her crew were in involved in disrupting some French nuclear weapons tests. The French frogmen (no pun intended) were apparently French military special forces types.
Christopher #38664: I think that FOA/TG may be right about the paper trade markets in light of the recent palladium default on the TOCOM and margin requirement changes on the NYMEX. The current production of physical gold supply is in deficit to physical demand. This is satisfied by gold leases (sales) and some BB/CB sales (most of BB/CB sales are from one bankers account to another).When gold prices had shot upward in price at the WA announcement, many brokers/clients were told that they has to settle at market. There was a squeeze on and delivery or settlement at the "listed" price was not going to happen. As the POG declined, some contracts were settled at the lower price. If the paper price declines as you suggest, I would think that paper and physical would diverge into two markets with two different pricing schemes. No company can survive for long selling below the cost of production. I'm not sure if that was what you were alluding to, but that's my take on it.
Hi Sir Taurus,
I have to make a remark about this part of your message #38646.
Part of Your Post:
< "Wampum was fascinating. Beads made of clam shell. Little cylinders an eighth of an inch in diameter and a quarter inch long with a tiny hole drilled down the center. How do you DO that? And how could ANYONE be persuaded to trade an item of real value (food or a canoe or a prized bow) for pieces of clam shell? Of what earthly use was it? And if it had no USE,how could it POSSIBLY have been regarded as an item of value?>>
My Comment:
I think the author fails to take into account the time and labor involved in digging the clam shells,drilling tiny holes in them and stringing them.
So we could say the value was a measure of time involved to create the finished product, not so much unlike the finished peices of Gold we gleefully fondle now-a-days.
So it would seem the clam shells(Really called quahaugs,right Leigh?) were a STORE of wealth to not only use for barter but also use for payment of services rendered. How else could someone pay for, say a haircut, in those days?
Looks like a small upward spike in Gold at this hour!
Thanks for reading.....beesting.
To Al Fulchino regarding (09/29/00; 17:20:01MT - usagold.com msg#: 37884), yes I'm still out here. I've been having problems with my link to the internet. Hopefully this will make it through...
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If I can't afford it, I'll deny you it
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Black Blade wrote in (9/13/2000; 0:17:33MT - usagold.com msg#: 36574), "Ps. Hey Brits! You're doing it all wrong. You don't block the refineries, you go on down to the shipyards and dump tea in the harbor. Trust me, we did this once before and look what happened. Why hell, it worked for us in the colonies. Cheers ;-)"
Well, you chaps do call the stuff Texas Tea, don't you?
Oh, what an unmitigated mess this has been. I recall some years back watching on the telly when a section of Los Angeles turned into a war zone. What struck me as particularly counterproductive was that the rioters were destroying their own surroundings. Romans, Goths, Vikings and Conquistadors all had the sense to visit someone else's neighbourhood before going berserk, but not those lads in L.A. Of course, the French have had a rowdy element ever since the Revolution, though to-day they have for the most part foregone beheadings for the eminently more intellectual pursuit of covering the roadways with rotting crops.
And in past weeks the nonsense finally found its way to centre. What in the world did those short-sighted fools think they'd accomplish by preventing extant supplies of petrol from reaching customers? Of course it's more expensive to-day than it had been two years ago. Two years ago, petrol was as cheap as it had been in decades. Why it had gotten so cheap is something of a mystery, given that many present-day motorists will still be around when the last OPEC well runs dry. It's an insult to intelligence that these hooligans were complaining about prices which, in reality, are only returning to nearer their norms of a decade ago. What they've yet to get through their heads is that the price will unavoidably go higher yet as the next decade progresses.
That price rise may be temporarily masked by a concurrent reduction in duties and other surcharges, but in time the raw price from any irrecoverably depleting commodity must rise to the sky. The price of broad plank old growth mahogany is drastically higher than that of dimensional pine, simply because no-one was husbanding the good forests for future generations. Likewise, fifty years hence when the Amazon basin is a dust bowl, our children will wish someone had had the foresight to restrain the clear cutters. Of course, the one positive outcome from the ultimate depletion of petrochemicals will be that our planet's atmosphere will finally be given a chance to recover. Unless of course we replace our petrol addiction with something even more noxious.
And as far as emergency measures go, I'm pleased that the government's words and deeds turned more towards clearing off the obstacle-makers rather than towards caving in to their demands. At some point long after order is restored, it might be prudent to begin lowering the duty per litre, but not in such a way as to legitimise mob rule.
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Where are we bound?
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As a microcosm of the world economy, the EU economy (Euroland plus those of us not yet part of EMU) is likely to remain a patchwork of successes and failures. The core Euroland countries (Germany, France, Italy) appear to be benefiting from EMU, as are their satellites such as BeNeLux. Ireland, by contrast, is growing at a much faster rate than the core but is hamstrung by its participation in the euro and so is unable to take the steps necessary to prevent its local economy being savaged.
The equally booming UK economy remains healthy at present due largely to its not yet having adopted the euro. On this issue, I find I'm torn between the desire for the UK to join Euroland in all haste so as to relieve our neighbours, versus holding back until we can incur the least possible damage to ourselves.
Each of us face the same challenge every time we approach an escalator. Prior to stepping onto it, we're in balance. Once well aboard, we're in balance. But the transition from the one to the other is often quite unbalancing. What Parliament, BoE, LBMA, and every other acronym in The City are attempting is to make the UK's passage from monetary sovereignty into monetary union as non-jarring as possible, the effect of which is of a man hesitating at the threshold to the escalator trying to time his jump onto it.
To extend the metaphor, what we in the UK have done to Ireland is that we have held her hand whilst she stepped onto the escalator, only to carry on holding though we have not followed her.
But as viewed within Euroland, there is the expressed belief that the strong countries (France, Germany, Italy) will remain securely strapped into the euro's driver seat whilst the smaller members will be tossed about untethered in the back. Certainly to look at Ireland's recent history, that would seem to be the case.
However, this is also the case within the United States. The dollar is tuned to maintain New York, Washington DC and, on occasion, California. As recently demonstrated with Chicago's higher petrol prices, the second-tier states tend to get tossed about somewhat more violently than the first-tier. And those states at the bottom of the heap (Mississippi, West Virginia, etc.) have little alternative but to export citizens to happier climes.
The ugly truth of EMU is that some nations which willing adopted the euro were, whether they realised or not, committing themselves to becoming Europe's West Virginia. Again, this is the core reason why the UK held out. We want to be the EU's equivalent of New York. Nothing less will do. It is perhaps not as neighbourly a deed as might ideally be hoped for, but it remains Parliament's responsibility to do what best serves UK citizens, not necessarily what best endears us to the Continent.
Because the states of the United States have been reduced to administrative subdivisions, and because most Statesiders speak the same language, there's only been one occasion in two hundred years when the disparities between the various states resulted in disunion. Instead, disparity is dealt with by migration. Upon realising that Arkansas is poorer than Kansas, disgruntled Arkansans pack up their belongings and become Kansans.
By contrast, the situation in the EU is not at all that of a federal government able to dictate to its subdivisions, nor is it practical for an Irishman to abruptly go to work in Frankfurt am Main. Economic pressures which can be beneficially diverted by the U.S.'s structure are perfectly able to blow the EMU structure apart. We came uncomfortably close to witnessing that recently when (finally) intervention was undertaken to alleviate the stress.
But that was only a temporary fix, and it merely forestalls, rather than avoids, the problem. I think it increasingly possible that, in the absence of true repairs, we may see abandonment of the euro by those Euroland nations presently being injured. The odds that this may come to pass were materially improved by Denmark's no vote on EMU last week. In effect, 53% of Danes were saying they had no desire to follow in Ireland's footsteps. Conversely, many Irish have since begun to wonder if it isn't still possible to repent and depart the euro system.
There is every reason to believe that Germany, France and Italy will remain united under the euro, but unless dramatic improvement is made very soon, that industrial core may soon be all that's left of EMU 1999. Under that scenario, I think the UK and many of the nations which depart Euroland would patiently wait at the sidelines to again attempt monetary union under more favourable conditions.
Of course, it's always possible the present union may be held together, either through financial remedies or through political will. In any event, it's clearly a very fluid situation. And that's all the more reason for those of us in and near Euroland to remain diversified in forms of wealth other than those of our various fiat currencies.
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There's no place like dome
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Someone here recently posted that, "Blowing up Israel and the Jews will, according to the Koran, assure him [Saddam] a place in paradise..."
Actually, blowing up Jerusalem would be almost as offensive to Allah as would be blowing up Medina or Mecca. Jews are People of the Book. They share common heritage with Islam, only they haven't yet had the wisdom to accept the final chapters of the Book. Likewise, Christians are People of the Book, even though they've accepted a different set of final chapters. A good Muslim regards Jews and Christians as confused but well-intentioned children who yet possess the ability to someday see clearly. A good Muslim bears them no ill will, either in thought or in deed. The act of raining down fire upon the city of Moses would be that of a madman, not a Muslim.
And while we're on the subject of religious tolerance, I should remind you that, in Muslim-governed Spain, Jews and Christians were respected as good citizens and trusted neighbours. The Christian barbarians like El Cid who laid waste to civilized Spain tolerated the remaining Jews just long enough to get them to translate back into Latin all of the Greco-Roman history and science which Christian Europe had forgotten. Then, as an odd way of expressing their gratitude, those same Christian invaders trod the Jews underfoot as enemies of the faith.
Having said that, I do find myself wishing that the survivers of Hitler would refrain from taking similar actions against the people they forcibly displaced half a century ago. Will we never learn?
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Bridge Over Troubled Water
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When I see futures enthusiasts and various of the physical faithful going at one another over price discovery, the image that comes to mind is of two civil engineers arguing over a bridge. The futurist is saying that the bridge has to date served well in its intended function and that, all else being equal, it ought to carry on serving well for many generations to come. The physicals are saying that the name of the bridge might be Tacoma Narrows, and that bridge builders and bridge users alike should never forget that Nature enjoys surprising the complacent. http://www.civeng.carleton.ca/Exhibits/Tacoma_Narrows/DSmith/photos.html
My old reference to the paper money issued during the U.S. Civil War remains applicable here. Union greenbacks were, for all practical purposes, futures contracts. They were promises that the U.S. government would exchange them at face value for metal coin at some stage following cessation of hostilities. During the early years of the war when consumer confidence remained high, the price of any item was the same in paper dollars as in physical (coin) dollars. But as the war ground on towards what seemed the end of civilisation, consumer confidence eroded and paper began to diverge from physical.
One day, a merchant might sell an item at five dollars in coin but require six dollars if paid in paper. The next day, that same merchant might require a seventh paper dollar because he'd just heard word from the front that things weren't going well. The day afterward, good news from the front might bring his prices back to parity.
goldhunter makes a very valid point that the chart lines of Spot gold and the various Future golds closely mirror one another, and that the price differences between them are a consistently applied discount against the future value of money. This is an accurate description of a very well-architected bridge under normal conditions.
Aristotle and Asher by contrast make an equally valid point that it's the assumptions you do not realise you're making which lead you into the worst trouble. Just because the bridge is beautiful, state of the art, well watched and has served without incident for a century does not mean it cannot begin to collapse this afternoon.
The palladium market over the past year has very closely resembled the greenbacks/coin relationship I described above. The price of a one-ounce coin of physical palladium from day to day jumps around in only loose proportion to either the official spot or various future prices of market-traded palladium. History is replete with instances of the value of promises becoming suddenly and drastically different from the value of delivered goods. These instances are seldom long-lived but, like mere wind, they can destroy in moments what it took whole lifetimes to build.
Most of us here is not at all that the official Spot POG may someday diverge radically from the near-term futures POGs. What motivates the hoarder of Krugerrands or Sovereigns is that there may again come a day when having a 210% profit in a contract somewhere in New York will be irrelevant compared to the value of having coin in hand on the ground right then. It's the difference between speculating on the future stock value of a pharmaceuticals company versus purchasing a first aid kit. Both are valid pursuits, but neither is a substitute for the other.
Some drivers began noticing the Tacoma Narrows oscillations weeks before steel supports began snapping. These early adopters of caution equate to those of us here who acquire physical PMs and avoid futures markets. Some of us here not only avoid the bridge but attempt to warn others of the risk. They do this even though, here now in the early stages, some may occasionally mistake them for Chicken Little (the sky is falling). From their point of view, the desire to guide innocent people out of harm's way far outweighs any risk of embarrassment they might incur.
At the opposing extreme, of course, are those drivers who enjoy the exhilaration of riding a roller coaster and yet remain confident they'll be able to dismount before the bottom drops out.
WILL the bottom drop out? Of course. With the exception of the pyramids, nothing manmade has ever remained in place forever. The value of gold in hand has, on countless occasions throughout the centuries, gone from commonplace to unbelievably scarce in all-too-brief a time, and then rather quickly right back down to commonplace again.
Even with the vast overhang of central bank gold looming above us, it would take months to mobilise London Good Delivery bars into new Sovereigns to fill frightened citizens' hands. A lot can happen in a month's time. The wagontrain to the stars in 1979-1980 caught everyone by surprise, except for the wise who bet that governments could not move quickly.
Mind you, those same wise also moved back out of gold in 1980 because they bet that, once governments did get going, they then could not stop quickly.
Precisely the same thing is currently happening in the palladium market. Russian ineptitude cannot quickly be worked around, but it makes it all the more certain that, come 2005 or so, palladium will be no more expensive than aluminium because by then everyone will have retooled away from it.
WHEN will the bottom drop out on the gold vs. fiat struggle? It could start tomorrow, but it's just as possible that fiat might stay intact until 2800 AD. It's also quite possible that, after 20 years of cultural dumbing down, a currency crisis would elevate the trade value of bluejeans more than that of gold. There's simply no way to know until it happens.
That's why I've been acquiring some physical gold in recent years: because the last time gold was this inexpensive by contrast with other forms of wealth was around 1919.
But I also own paper monies and I own stocks (both mining and otherwise). If the pound/gold ratio goes from 190:1 to 20000:1, I for one fully expect to begin selling my Sovereigns in hand to the highest bidder, and to be completely sold out before the top falls back into the market. For the present, however, and until such a catastrophic shock might occur, my paper forms of wealth steadily generate enough additional paper to allow me to pay my bills.
You will note that I do not regard any of my holdings as gambles, but rather as a judicious allocation of my possessions to places where, at any given moment, their sum total is not at great risk. It is, as you can see, quite the reverse of gambling.
Indeed, I regard the futures markets as little different from a casino and so I avoid them utterly. Were I a miner or a jeweller, I would use those markets to hedge my future activities, but as a third party I have no desire to pursue "unlimited upward potential" at the risk of unlimited downward potential. That's not to say that such gambles have no place in any person's portfolio. Clearly they do provide a value to certain people, else they would be so rare as to not be a topic for discussion. I simply prefer a less disquieting set of holdings. Ask not for whom the bridge tolls.
It's time to buy stocks and bonds again now that the annual early fall correction is over and the annual late fall and winter rally is set to begin. After the election ends the Fed will lower rates to give the economy a needed boost and this will revive the bull market and depress the price of gold further driving you goldbugs into submission to the will of the collective and it's rule by mediocrity. After 20 years of decline in the price of gold it's finally time for you goldbugs, and all you wimpy, nerdy, pathetically lame capitalists like Gates, Buffet, Welch, Perot, etc..etc. ad nauseum learn who's boss.
Tony Blair's Nanny State doesn't like a free press very much! BBC told to cow tow or else!
In a typical bleat from our new masters Tony Blair's government tells BBC to shove off if they think they are going to have any independence in this once great nation.
UK clips BBC governors' wings
By James Harding, Media Editor
Published: October 5 2000 20:40GMT | Last Updated: October 6 2000 16:35GMT
The UK government is to strip the governors of the state-owned British Broadcasting Corporation of their regulatory powers after their decision to move the time of the main evening news broadcast in defiance of Chris Smith, the culture secretary.
Government officials said the current system, whereby the BBC is regulated by its governors and commercial broadcasters are regulated by the Independent Television Commission, had become "indefensible" following the row over the nightly news. "The governors signed their own death warrant this week," one government official said.
The governors decided on Monday to move the BBC news from 9pm to to 10pm in two weeks' time in an effort to pre-empt ITV, which is moving its own broadcast from 11pm back to the previous time of 10pm.
Mr Smith had signalled his misgivings about seeing both of the UK's biggest broadcasters screening the news at 10pm, thereby reducing the choice for viewers.
Those concerns were ignored by the BBC. When the decision on the evening news was announced earlier this week, Sir Christopher Bland, the BBC chairman, dismissed Mr Smith as just another "licence fee-payer . . . entitled to his point of view". The BBC is financed by a annual licence fee of �104 ($152) on all owners of television sets.
However, the decision - and the comments by Sir Christopher - came just as the government is finalising the communications white paper, its plans for the future of media regulation.
The government has now decided that the BBC can no longer justify being regulated by its own governors. They are likely to remain, but will operate more like a company's board of directors. Their responsibilities will be reduced to oversee internal performance, to make top appointments and ensure that the Corporation fulfills its remit.
External regulation will be handled by a separate authority responsible for the entire broadcasting industry.
Ministers have yet to decide on the final regulatory structure. One critical choice is whether to introduce a single regulator covering both communications systems and media content, or to separate responsibility for carriage and content regulation into two authorities.
Another Whitehall official said Sir Christopher's comments had been "arrogant", but did not influence the government's thinking.
Instead, the official noted that the ITC had been lobbying for the return of News at Ten for more than a year on the grounds that it was in the best interests of viewers. The governors had then moved the BBC's news to 10pm on the same grounds.
The result of this "indefensible duplication" was that viewers had ended up with less choice, he said.
The Golden Question -- to be settled personally by each individual for himself
If you can't bring yourself to buy Gold now, while it's obtainable within $15 of its lowest price seen in Twenty-one YEARS, and within an economic climate where the stock market is looking vulnerable and while political tensions are flaring, then WHEN CAN YOU bring yourself to buy Gold????
Midas Mulligan : I just got in and saw your post. If in your last post you are serious, all I can say to you sir is " Don't let the drawbridge hit you in the ass on the way out!
Well put, Ari. The question really couldn't be put any better. We could just post that on the USAGOLD homepage and end the whole discussion right there, couldn't we, almost?
Beesting I beg to differ with your prior post on Wampum!
Being origionally from the area around Cape Cod and Narragansett Bay where quahogs are found, I think you have mistaken them for mussel shells that are plentiful in the same area. The wampum was made from the blue interior of the mussel shell I believe and not the grey interior of the local clam variety, quahogs.
Great Essay. A Brisk wind from across the Atlantic, blowing away the clouds of confusion and setting forth the issues in brilliant sunlight.
Off Bluejeans, Bridges and the Bottoming of the Euro
>>>>>>It's also quite possible that, after 20 years of cultural dumbing down, a currency crisis would elevate the trade value of bluejeans more than that of gold.<<<<
Bluejeans have been international currency and my own experience of this reminds me of a forgotten tale of survival via Gold and Silver.
The year was 1954 and I was fortunate enough to given a partial Wanderjahr at age 20 to peruse the ski-slopes of Switzerland. I became friends with an older man who was a ski shop owner and private instructor. Somewhat intimidated by the wealthy, aristocratic social environment of Davos, I would often spend evenings helping out in the shop, installing bindings etc and listening to tales of the recent past. Martin had been a"Four Event Man" before WWII (Downhill, slalom, cross-country and jumping). He had acquired a mass of trophies in Gold Silver and Bronze (Apparently they were the real thing, not plated, in those days). An alpine village had virtually no commerce during the war, other than the feeding and housing escaped allied prisoners who had to be, per the accords interned until the war was over. Martin lived for 5 years or so by slowly selling off his collection for it's metallic value.
Oh yes, the bluejeans. He took some of mine in trade and said whenever you come here pack as many lee's or levi's as you can, labels off and washed once, they will not charge you duty then and the exchange will be a substantial premium over the dollar/franc ratio of your purchase price.
He also set me up for a trip to Italy by selling me the then one and only metal skiis, American brand "Head" which were very cheap in Switzerland but Import-taxed highly in Italy. He had an old racing comrade from the thirties who likewise was a shop owner and instructor in Cervina who would then buy them.
So, this leads right into your superb rundown of the Euro dilemma. The disparities in value due to duty and currency fluctuation could actually be something that, having been removed by the Euro, dampened some of the enthusiasm for self-serving productivity that seems necessary for Homo-sapiens to operate efficiently at this point of evolution. You have, of course, "nailed it" when you say >>>nor is it practical for an Irishman to abruptly go to work in Frankfurt am Main.<<<
Back in Decmber of �98 I took the unpopular, even on the Forum, position that this allegedly �New Paradigm' currency was going to challenge the dollar and get gold airborne again.
>>>>Much has been said about the potential of this "composite" currency to compete with the dollar. However, what quacks like the mark and the franc, also quacks like the lira and the peso. The Euro is, by packaging the Common Market, a currency equaling the dollar in its scope. But, the strength of the major currencies converting into it could be weakened by the historical vagaries of the other components. Therefore, the fact of UNPREDICTABILITY could actually drive assets INTO the dollar, and this could even be negative for Gold.<<<<<
What seems to have occurred is that the Euro has made the participating nations somewhat of a �Collective', and this is an anathema to the free-enterprise yearnings of man. The combination of this along with the aspect the welfare-state makes the desirability of the Euro as a storage of value a bit shaky.
One other aspect of the Dollar- Euro difference could be the underlying, privately held, non- residential real estate quantities of the two systems. If the holders of reserve currency do decide to "Bring them home to roost" I believe our "Spacious skies and amber waves of grain" have a far large inventory quotient than the Continent. All the better to collateralize the float.
Lastly the Great Bridge Collapse:
Anyone who has trouble conceiving of the �Unbelievable' might benefit from accessing an old black-and- white news-reel of the bridge in action. Can you conjure up an image of two kids playing jump-rope with a cut inner tube?
The parallel of structural engineering to monetary engineering is intriguing. As I understand it. The bridge designers never factored in the wind effect on the solid bridge railing. When strong, pulsating gusts allowed back and forth movement, a rhythm got going, fed on itself and eventually overcame the underlying support forces and there was total failure. Supposedly, if they had designed an open grid railing, the wind could have passed through and not caused the disaster. I'm sure there is a message here for Mr. Greenspan!
One other thing regarding you post:
To quote �our' Aristotle regarding my HOFer , If and post deserves a nomination into the Hall of Fame, it is this one."
Shifty, i'm dead serious. What I want to do is get the Fed to lower rates so the markets rally. When the markets rally that pushes down the price of gold because it becomes less attractive relative to paper assets. Then I hope to get my fellow statists to buy up all the gold available while its cheap and then hoard it to control it's price and keep you goldbugs from ever making any money off your stashes by selling it when the price rises and stimulating the economy to keep aggregate supply of goods and services high and thus inflation and the price of gold low, and goldbugs like yourself, downtrodden. The key is to keep the wimpy, nerdy, lame, ego-less, capitalists like Gates, Welch, McGuirk, Ellison, Buffet, Perot, etc... etc... under control. It's time all know who the man is, who's boss. spread the word!
... As I'm still in moving mode, I can't keep as close a track to the forum as I may be wishing. Your latest essay, though kept me glued to really read - instead of skim - and therefor I would like to thank you for a balanced, witty and great post - sincere regards cb2
2) missing word >>> Back in Decmber of �98 I took the unpopular, even on the Forum, position that this allegedly
�New Paradigm' currency was NOT going to challenge the dollar and get gold airborne again. <<<
"What I want to do is get the Fed to lower rates so the markets rally."
Under water, heh? Well, us bugs are used to that! -- join the club. Wishing that Greenie can lower rates to stimulate the markets may just be a waste of time though...lower rates will kill the dollar at this point, and a lower dollar means foreign money pulls out.
Kind of a sticky situation, if you ask me...but that's what happens when you allow an equities bubble to form.
Ugly, Ugly numbers. Of course, we know the reasons --
refining capacity limits, shipping capacity limits, less exploration over the past few years because of abnormally low prices (gold is getting there too!), and of course the BIGGEE...demand, demand, demand.
Americans are sucking up energy and so are the Chinese. When your people go from bicycles to autos -- now, that's a usage spike! Add in factories springing up like there's no tomorrow to take advantage of China's cheap labor and there's no wonder world demand is skyrocketting.
And one more thing...I would not be surprised if the Chinese weren't spending excess dollars to stockpile oil -- just makes sense under the circumstances (Taiwan issue and an overvalued U.S. currency).
Snow already here in parts of New Hampshire...could be a long (and pricey) winter.
I was made aware of that some of you missed my posting, so here we go again:
There is a striking parallel to be found between your gold market and your 'spiritual market'. You are living in a time period where extreme materialism is prevailing and where spiritual substitutes have been accepted and been considered as adequate and the real thing for a long, long time now. By the same token as it takes a lot of faith to keep the Bible's ideas and thoughts close to heart and in general "keep the faith" as it is called, it takes a great amount of faith to keep and hold on to one's physical gold in these days. This applies whether you are a small guy and the owner of one little gold coin or a central banker with a vault full of gold bars!
The Church, Christianity, religion and Christian faith has never been attacked so viciously and from so many sides as it is to day, with the Church and thereby the believers in God and Jesus being ridiculed and persecuted and even burned at the stake to entertain the public's lust for blood (Waco). Your government and the powers that be had no guilt in this instance, they said so themselves, and then it must be true, mustn't it? And all of you watching it all from your comfortable armchairs were equally innocent; after all they were a bunch of fanatics and weirdoes and had it coming! But come to think of it: What about Jesus and His disciples, weren't they a bunch of wandering hippies and dropouts as well? And Muhammed and his followers? Moses and his? Noah and his family, definitely off theirs! Etc etc etc... Sorry to digress like this, but this episode carried great importance and marked the beginning of the End of the World as you know it now!
Anyway, back to the gold market: I propose that a familiar attitude that results in the burning of Christians at the stake is prevalent in the world of finance. There are believers in the lie; read: fiat currency, paper gold, and other papers, and you have believers in the real thing, the truth: real gold and actual, real, valuable commodities. The believers in the lie are in a solid majority; the majority seems somehow for a number of reasons to always be wrong. And sad to say, they are not satisfied being wrong themselves, they seek to persuade the undecided and the ignorant to come their way, and having done short work of them, they proceed to cover their own wrong choices and wrong-doing by ridiculing and persecuting the minority that holds to the truth with the hope of eventually getting rid of them altogether. The lie cannot coexist with the truth anymore than light can coexist with darkness. One side must win in the end. Real and sound money, if allowed to exist, will eventually drive out the lie that paper money is and be replaced with, yes, you all guessed right, gold and silver and even coppers for the smaller denominations. - What is new under the sun? (I am aware of the fact that it has been suggested on this forum that they can indeed exist and live happily side by side, but as one writer had said, time will prove all things, also that idea! A lot will be left for free men and free nations to decide and we will all continue to learn as we go.)
I am here only as an observer, on a time travel back from the future, and it is very interesting to see how the thoughts of men are developing and helping shape the future where I already live. You forum writers are truly the avante garde of the economists of your day! Having served the Manufacturer in my time on Earth, I am now part of the 'maintenance crew' if you will. Although I have to admit it came as a shock to me the awesome responsibility that has been laid on my frail shoulders. But we work in team works with plenty of safeguards and have at our disposal the wisdom of all ages and all the help we need both from the folks that survived the cataclysmic End-time and are now inhabiting the New World and from the place you call Beyond, but which we call Home! The World is a different place than it was during "your" days, even if quite a few of you survived the devastation of the final days of horror, and are still there. Others of you that at one time or another had received the gift of Salvation or accepted Jesus in any way, shape or form, did even better than that and are now with us here in the Heavenly City. You couldn't take your gold with you, but you realized soon you did not need it as this place is to some extent made out of gold and that of a superior kind of gold than you were used to! You also realized that the debate about gold versus paper was only a tool that had been allowed to help people choose the truth instead of lies!
The World is a much better place now: There is no more war, the physical environment of the South and East has remained mostly intact and untouched by the horrible devastation of the North. The evil monstrous cities has been destroyed and the survivors have been resettled in the countryside where they once again farm the land and have had to learn from them that stayed loyal to the soil. Not only are the cities destroyed, man himself realizing the damage they did, have banned them forever. Most people are producing their own meager and simple needs for food, clothing and shelter, and what they cannot produce they trade and barter with others that can, from each according to his ability and to each according to his need. They that will not work, don't eat either! There is no more welfare or social security for the lazy and the slothful!
Since the love of money had become the root of all evil in your past generations, there is no longer any filthy lucre to pollute the economy. People are now exchanging commodities of real value, gold and silver of course included; and: it just had to be done: nobody is any longer allowed to accumulate more than his share. And none are permitted to suffer for lack of it.
The cities gone, small towns and villages are the order of the day. They are better than they of the past; beautiful, well-planned and wisely organized; small circular towns with roads radiating out into the surrounding farms and countryside. No more gigantic smoke-belching Earth polluting factories and industries, no more roaring, self-destructive forms of rapid transportation which killed even more than even the evil diseases of your wicked civilization. This took a bit of time to implement; the old being gradually phased out through a mere lack of production of new vehicles and spare parts. Car factories were turned into assembly lines for farm wagons and carts and carriages and buggies.
It helps to realize that the age you are now experiencing is but a twinkling of an eye; for thousands of years camel trains and wagon trains were occupying the roads, and sailing ships were gracefully plowing the seas. The fast hell-bent, destructive speed-that-kills of the past has been slowed down to a peaceful pace that your mind and body can better endure and survive and enjoy at a rate that gives you time to think and pray and observe the beauties of God's creation as you pass slowly by, and absorb the clean fresh air of an unpolluted atmosphere that you can breathe deeply and freely with plenty of time, instead of the nervous haste and reckless driving of the past and all its human carnage and vehicular wreckage. The wild world of past civilizations are gone!
The Southern part of the World are again learning to shift for themselves, with their powerful, cruel northern neighbors gone. They had been seduced and persuaded into industrializing and borrowing billions that the rich north knew they were never going to be able to repay, but had only served to make them slaves and servants of the Northern lenders who literally owned those countries and told them how to run their affairs. Finally the South refused to pay and this had helped bring on the Great Crash of the North. The North eventually did themselves in through their own wars and the judgments of the Manufacturer culminating in the Great Battle also called (Armageddon). The South is now free, the Pharaohs of the North being gone forever.
I am painting a picture of sheer and pure bliss here, but men are men, and all will not behave no matter how perfect the conditions are, so for the sake of the record; there are still rebels even in this almost perfect day and age. But all in all, this is Heaven on Earth; man is now free of disease, sickness, hurts, pain and early death, and if you can believe it; you even walk easier as gravity is lighter than in your day! The atmosphere is healed and there is full protection against the ultra violet rays from the Sun as well as cosmic rays. It may come as a surprise to you that what you called natural disasters were not natural at all; there are no more calamities like torrential rains, storms, hurricanes, volcanoes erupting, earthquakes, floods etc. The climate is perfect and temperate over most of the Earth where the majority of the people live. A lot was changed when the earth's axis had its angle corrected. The former polar regions are no longer frozen, barren wastes, but are temperate zones being populated and farmed! The deserts are long gone and are green and lush and flourishing! The trees are again bearing such abundant fruit that you can get most of your food from the trees, thus almost eliminating the hard work of tilling the land, except for diehard vegetarians! It is the Garden of Eden revisited!
Well, dear forum friends; this is what has become of the World that you were so worried about and thought were too far gone! And I don't blame you one bit; I must admit things were looking quite bleak for a while. I too had my doubts and was about to throw in the towel a few times, but it just goes to show never to give up hope and to keep looking for that silver lining of those storm clouds. Tomorrow is wonderful, I can assure you, I am there already! You will not be disappointed, the future is everything you could ever hope for and more! What more can I say, except keep the faith, or get you some! Ha! And yes, since this is a forum for people seeking a certain amount of physical security in holding a bit of gold for a rainy day; yes, gold is God's ordained wealth storage, untamperable, enduring. We here wouldn't use the expression eternal, as that is reserved for the real goodies! Get you some, but just not too much! As it would be sad to end up with a heap when it's time to go and no pocket to put it in! Besides being the perfect money and a royal metal it is meant for a buffer in a tight situation. When my Big Brother, who was once a little weak Child, had to seek refuge abroad, my fellows made sure that his parents had some gold to tide them over till it was safe to return to their home land. In the same manner it can be a help to many of you when the Crash hits. As many of you are becoming aware, there will soon come a period when the Wicked One will demand that no one can buy or sell except they have his mark or his number in their hand or forehead. In that day a few brave souls will ignore his threats and use gold and silver as a means of exchange. In the same manner as the Truth is esteemed of low value and trodden under foot of men, so is gold; the two go hand in hand. But the day will soon come that both are honored and recognized for what their real value is!
Signing off, but will continue to work from this side towards a liberation of gold from the stranglehold of the greedy manipulators. However, our hands are tied just now and we can only do so much, the rest is up to you, our work is largely limited to working through yielded human vessels. So get your signals straight and you won't go wrong. Your decisions and actions is what will tip the scales of balance in due time. Spread the Word: The Dollar is doomed, the Crash is here, the Euro will take over and gold is still the yard stick! Show time! This year, the year of change!
Hmm. Paper & physical diverging? TPTB can't allow the "official" price of gold to rise as long as it's possible for "them" to prevent it -- it would serve as a red flag signalling dollar inflation in a way only the completely blind could miss. This in turn would clearly have the potential to precipitate Bigfloat home.
On the other hand, they don't want to drive the paper price too low either -- they know that divergence is back-door to the same thing -- and it COULD cost them, potentially, a lot of gold bought by savvy outsiders.
Their trick must be a proper balancing act, to the degree they're able, husbanding the physical resources they are willing and able to expend in the game and keep the balloon submerged just below the surface (at a stable price) as long as possible. As long as the demand for physical keeps rising, this is analogous to more and more air inflating the balloon. The "force" (amount of gold) necessary to keep the balloon just below the surface increases with the demand.
The end game from this viewpoint would indeed be using paper to keep the official gold price down as long as possible because even when divergence occurs, this will still continue to disrupt the traditional price discovery. The gold prices quoted for quite awhile, even after there is no gold available for delivery, will still be these official prices. Until new markets evolve, this will dis-orient most traders and certainly the public and has the potential to disrupt the inflation "barometer" function of gold for some additional time period.
If this is a correct analysis, then it suggests that this is the path things will indeed take.
Nickel62...Quahogs,Quahaugs...both spellings are right.
Sir, we may know each other or been neighbors, long ago. I also grew up in that same area of the Northeast, I have dug Quahaugs with a home made "clam" rake, and pried mussels from rocks at low tide. My reference is from memory only but mussels have a thin brittle shell not suitable for long term use, IMHO. Whereas some of the larger Quahaugs have a deep blue to purple section on the interior of their extremely hard, thick, mostly white inner shell, very suitable for long term use, and almost as durable as rock.As a boy we were told the Narragansett Indians used this shell as "Wampum".Since "Wampum" seems to be well known in other areas also I would imagine it was also made out of other kinds of shells.
Looks like today could be a turn around day for the price of Gold. Thanks for the input Nickel62, we'll watch these worldly developments together.....beesting.
So that posts (long ones in particular) need not be often reposted for the sake of anyone who may have missed them upon their birth, we provide an archive that is accessible at any hour of the day. Referring the interested party to the day and post number is not only effective and efficient, it is also the kindest way to assist our various daily visitors who have slow modems.
You remind me of a movie I saw a long time ago " The Mouse that Roared". All you need is a canoe and a bow and arrow. You and your friends can declare war, attack the USA , only in your case you lose, then collect aid, and corner the market on dot coms.
What I really gotta see is the repeat of last Oct.16. Anyone have a guess as to when Mr. Magoo will submit to the acute political pressure and open the spigots? They WILL NOT let er' go below 3000. Watch the phoniness between tommorow and friday! It will be palpable, the fear and scumbaggery as furious phone calls are made to Alan'JohnSteinbeck' Greenspan begging for the latest magic bullet. This is pure comedy!
From my work back in 1991, I have found that if you juxtapose the EPS divided be the US short term interest rate (eg fed funds rate) versus the DJ index in real terms, you get a pretty good correlation. The process works also well for the SP500, although at current levels, the index is clearly overvalued. It appearts that Greenspan has been using the same approach since 1996.
Well Beesting I think maybe you are right now that you mention it there is a blue inside color to the shell.
Quahogs were always very special knowledge to those of us who had experience digging quahogs in the little inlets surrounding the bays of RI. I bow to higher knowledge. I am from a little town called Westerly, RI in the extreme western corner of RI. Best wishes to you. What part of the area are you from specifically? I always loved the fact that no one else in college understood the jokes about Quequeg in "Moby Dick" quahog-quequeg seems to have been a sound alike for Melville as well.
Your right, it's hysterical until you realize that this is the rare 1% investor that actually maybe did SOME research
and knows about 'a' stock. What about the millions of people with mutual funds that don't even know 'what' the NASDAQ is?
The goings on in the middle east are the least of anyone's problems here, with this kind of stupidity.
Dear wolavka: I miss Tolerant, too! I sent Bart an e-mail begging him to reconsider his decision to banish Tolly. It isn't right that one or two malcontents should have the power to force him off Kitco. Tolerant fans, unite -- and let Bart know how you feel!
Shifty, you and all your lame goldbugs are barbarian relics from the prehistoric keynesian past
YOu don't seem to realize that Marty Zweig was right, "Don't fight the Fed". The Fed's going to lower rates after the election and further inflate the equities and bonds bubble and crush yall like the squirmy, shifty, bugs, goldbugs that is, yall are. Don't mess with Mr.Greenspan or yo'll pay the price once again. Sooner or later yall will be forced "to give in" and we will then buy up your gold and you'll finally know who "the man", the boss, is.
I was a member of the Thunderbolts in athletics. Team mate to "Snooky" Trafficante(SP) if you knew of him. What a small world.
Kindest Regards....beesting.
You are probably right on the 1st account about GreenScum inflating, since that's all he's done for 5 years. But you could be mistaken assuming 'goldbugs' will be 'crushed' due to the fact that most people who post here(not me) hold physical gold/silver and relish lower prices in order to buy more. Maybe your being funny, I dunno.
Shifty, you and your goldbugs will give in to "the force"
that's against you, the force of "the man", the boss that yall foolishly oppose. As the phrase that pays says,"dont fight the fed". Big Al going to lower rates and that's good for inflating equity/bond bubble and deflating gold price. Greenspan and us bulls aren't "mice that roar" we're the man and our plan is to make you give in, "Gore you", if you will, by selling your gold to us.
Shifty, and megatron, I like to play the role of devil's advocate for fun
So remember, vote for Gore because even though you think he is a bore and a special interest whore at least in the end, when your a victim of poverty and pollution, he'll be your friend.
Shifty, and megatron, I like to play the role of devil's advocate for fun
So remember, vote for Gore because even though you think he is a bore and a special interest whore at least in the end, when your polluted and poor, he'll be your friend, need I say anymore.
Jouneyman, you asked about the Aladdin Hotel. It is beautiful you really have to see it. One of many here that defy discription. Sort of like the stock market they don"t care if you win or lose just so they get their percentage of the action. Was gone for a week to Georgia to visit our daughter and visited the Jeykll Island hunting and fishing club where in 1913 the Federal reserve was spawned. The tour guide spoke as if that was an honor or something. It is quite a place and you can see what big money really was in those days. If Greenspan had a lamp he could rub and call out the Genie to save the day, What would the Genie do? From all that I*can see we are heading for rough times. I am ready but most average people haven't a clue to whats coming. White Hills, By the way I have a place in Arizona located, where else, in the White Hills! It is 28 miles east of Hooveer Dam in striking distance of Las Vegas.
How are you my man, long time no hear! Here's one I found that might prove interesting; inflation at 27%.
-------------------------------------------------
"But if there never is a crash that can't quickly be fixed by the "Greenspand Fed" � what does the ever-expanding creation of currency mean to you and me as we struggle to invest our "savings" in some real "store of value." Most people will not chose to speculate with their entire life savings, so each day it will become more obvious to people worldwide: when currency becomes a commodity, commodities (especially those with limited supply) become money.
An index of the raw materials that we use and consume in our daily lives, like Jim Rogers Raw Materials Index, may become a more important inflation (and currency dilution) indicator than the government's monthly CPI figures. For the year 2000, the Rogers Index is up 27.53% for the first eight months of the year. This index of the raw materials that are used in our daily lives compares to the 2.5-3% annual increase in the CPI reported by our government (and applied to COLA's that affect Social Security and government workers pay and pensions).
Conclusion:
As people begin to recognize the real inflation and our inability to use any saved "money" (now currency) as a "store of value," there may be a move and then a rush to reposition financial assets that have been saved into real stores of value."
--------------------------------------------------------
End clip.
Also interesting is the author's quote "...when a currency
becomes a commodity and when a commodity becomes a currency.."
http://www.lemetropolecafe.comBoy, it's good to have Bill Murphy back in action writing his Midas columns again! I was going through Midas withdrawal over the weekend. There's a good new article by Ed Bugos, too.
Tuesday, October 28, 1997 - Nasdaq bottoms
Thursday, October 8, 1998 - Nasdaq bottoms
Wednesday, October 6, 1999 - Nasdaq bottoms
We are within inches of the May low...after the Lucent warning tonight, I wouldn't be surprised to see a panic type day tomorrow with support at 3000...then the mother of all short covering rallies as the dipsters try to avoid "missing the next bull move." Maybe, maybe not. Maybe it just spirals out of control.
My guess (that's all it is) is that we'll see a sharp, short market rally before the market crashes below real support at 2600 (the SuperBull trendline from 1995 I spoke of several months ago). This line is doomed to fail -- the conditions of low commodity prices, excessive monetary growth, and foreigners rushing to the U.S. for safety no longer exist.
The next long term support line for the Nasdaq is right around 1500.
Sure, Greenie can lower rates...just like Japan tried to do 10+ years ago in a very similar situation. Didn't work for them and won't work for us.
The Grim Reaper is getting very close. Selling in tech land is simply breathtaking -- but it is CONTROLLED...for now, anyway.
Well, it looks like tomorrow morning is going to be another tough opening for technology investors. Shortly after the market closed today, Lucent warned they won't even hit earnings forecasts which had already been reduced. Now they say earnings will actually be down this year over last.
Wow. This was supposed to be a premier networking company in an era where that was the ideal place to be. Such news cannot bode well for Cisco, either, a competitor with a PE still absurdly clinging to 150 or thereabouts. In response to the Lucent news, Cisco fell some 3 points or so in after-hours trading, breaking below $50. No one can deny this was an important support level for Cisco. Much of the company's growth, of course, has depended upon using overvalued stock to roll up cheap acquisitions. A serious decline in this widely loved bellweather will thus strip the company of it's "stock in trade", making a self-fulfilling prophecy of the bottom line. Furthermore, with such an important tech holdout now breaking down, serious doubt is cast over whether the Nasdaq itself can hold above 3000 this time around. I am betting it won't.
As if the Lucent news were not trouble enough for tomorrow's opening, both Yahoo and Motorola announced, after the close, earnings which may have been in line with estimates, but were nonetheless disappointing to those who care about revenues. Yahoo was down another $7.00 or so in after-hours trading. Motorola fell a similar amount.
This all brings me to why I come here to the Forum. It just amazes me how much of what has been forecast here in the past two years has actually come to pass. I daresay, I have found no other place on the net which has offered as much in the way of accurate investment insight as this place has. And the heck of it is...It's Free!
Still, we wait for the biggie, of course, which is a thunderous upward adjustment in the price of gold. Now that even the sacred cows of technology have been discredited and energy stocks have assumed a role of leadership on Wall Street, can a serious reversal in dollar/gold be very far away? I wouldn't think so.
Steve H. - I LOVE IT when you call out higher gold prices. Just seeing your handle cheers me. Please keep it up!
Journeyman, you are right ,I'm not a goldbug, nor a goldbug swatter
so i'm a flop at either role. All I am is a normal person who is bored with life because I'm not free. I'm 32 years old and I have been waiting, killing time, since I was 4 for the markets to fall and gold to rise so I could live free without restraints by mediocri tee.(Cronee(us)) I'm not a Giant, nor a Titan, I'm an Olympian waiting to live on the standard of gold and make a mulligan out of all of history.
Canuck - obviously I was typing when you posted to me. Thanks for the message and for the salutations. Good to see you, too.
Lamprey - Sorry to appear to contradict your effort so soon after it was made. We'll see what happens. Tomorrow will be interesting at least, that's for sure.
No problem. Hey, after losing out on thousands in possible gains when I sold my speculative techs/i-net plays last year-September only to watch Greenie open the spigots for Y2K...
I can say the markets are HUMBLING. Oh, yeah...throw in the last year of a dead gold market too!
We're way behind in this sell-off, it's been brewing since the Spring of '98. Greenie has delayed it twice.
We're in uncharted waters. As we're fond of saying here on USA Gold...
Believe it or not, I think we are saying the much same thing but in different words.
The only commodity-cum-industrial usage that I know of for gold is to plate the gold "fingers" in electronic circuit boards. This is done for purposes of corrosion resistance on the male plug-in portion of the board. There are a lot of circuit boards in the world. Probably 99% do NOT have gold plating of any kind. And, of the 1% that do, the gold plating is only about 30 millionths of an inch thick; it takes an X-ray machine to measure it. It will be a long time before all above-ground gold is consumed in circuit board manufacture.
Prior to the circuit board era, gold had NO industrial value. Only ornamental value. To coat the dome of a mosque with gold leaf or grace the neck of an Indian woman with a high-caret necklace. "Conspicuous consumption" if ever there was such. A phrase coined by Thorston Veblen in 1899 in "The Theory of the Leisure Class". Assigned reading when I was a freshman in college. PLEASE don't ask me what year that was.
(EDITORIAL ASIDE: Is it not peculiar that I, a white American male who places a high value on gold, have more in common, in this respect, with a Hindu woman in India than I have with my next-door neighbor or with most of my relatives? Just a passing thought�)
Silver, as opposed to gold, has many industrial uses �- photographic film and X-ray film most readily come to mind. Silver has been a monetary metal but has also been an industrial metal for 150 years (e.g. Civil War photos).
As a commodity, the value of silver can be manipulated or impacted by commodity-related events. Say, for sake of argument, we have a monetary system based on silver (and not gold). If, in such a world, all the Chinese (20% of the earth's population) suddenly achieved permanent most-favored-nation trading status (could this HAPPEN? they've been the Enemy as long as I can remember) and became rich and purchased cameras and bought silver-based film, just THINK of what would happen to the price of silver� UP!
And what would happen to the value of our silver-backed currency?
Again, for the sake of argument, what would happen if someone invented a digital camera and put silver-based film makers out of business. What would happen to the price of silver then? DOWN! And what would happen to the value of our silver-backed money?
In one scenario, the value of silver (the backing for our money) goes UP. In another scenario it goes DOWN. And our money, backed by silver, is whipsawed as a result.
Point is that the more value a commodity has as an industrial commodity, the LESS value it has as money. Why? Because it can be influenced by commodity-related events. Conversely, the less value it has as a commodity, the MORE value it has as money. ESPECIALLY if coupled with other characteristics such as long shelf life, divisibility, portability, etc.
GOLD fits the bill, far moreso than silver or anything else. Isn't that what YOU were saying? I really think we're saying much the same thing in different words.
I will not argue the point further. But I do urge you to be not so defensive. Do we seek truth? Or do we seek vindication of the preconceived notions which we bring to the Table Round?
Allow me, Sir Aristotle, to challenge you with an idea. Post 38672: Aristotle -- "To my mind, there is no disputing that the desirability of an item (any item) is found in it's usage value. If it is useless, it has no value. If we can agree that is self-evident�"
Taurus (this post, here and now) -- I do NOT agree that it is self-evident.
(But I do have to admit that you sound like me� ah� er� 40 years ago, give or take.)
I once interviewed for a job in a casket factory. They made beautiful caskets. Exquisite. Walnut, cherry, mahogany, teak. Hand carved. Or, if not hand carved, at least carved by a laser in Chicago. Big bucks.
OK. Form, fit, and function. What's your definition of quality? These things cost megabucks and were destined to rot in the ground, unseen. So what is a casket's "usage value" when its destiny is to decay, invisible, in Mother Earth? And if it is useless, it has no value. That is self-evident, according to one line of thinking�
This is not an academic question. The paradox is that people pay thousands of dollars, every day, for these things. Many people. Many thousands. WHY? Functionally, mahogany has no greater "usage value" to a dead man than pine. Similarly, why do people place a value on gold? As a building-material-type commodity (with the singular exception of circuit boards) it is useless� Its useLESSness as a commodity is the singular feature that makes it so very useFUL as money.
when I was a lad of 12 years I lived in Quonset Point Naval Air Station and late in Newport. I used to spend my days digging Quahogs (about a 5 gal bucket) and fish for flounder. Boy do I miss steamed quahogs and butter, and fish and chips with malt vinegar. That brings back a lot of good memories. Thanks! BTW, I used to make a few bucks digging fiddler crabs for the local bait shops.
"The only commodity-cum-industrial usage that I know of for gold is to plate the gold "fingers" in electronic circuit boards. This is done for purposes of corrosion resistance on the male
plug-in portion of the board. There are a lot of circuit boards in the world. Probably 99% do NOT have gold plating of any kind. And, of the 1% that do, the gold plating is only about 30
millionths of an inch thick; it takes an X-ray machine to measure it. It will be a long time before all above-ground gold is consumed in circuit board manufacture.
Prior to the circuit board era, gold had NO industrial value. "
Sir Taurus,
I must respectfully disagree with this. Gold would make a much better ballast for a fin keel sailboat than lead, for example. It would make better corrosion-proof fittings and hull coatings, too. I would like to have all my house and motor wiring made of gold or silver, rather than copper or aluminum, as they are both more conductive. Many of the applications for bronze, copper, tin, lead, bismuth, etc. would be better served by gold. It is only due to its rarity that we do not have gold cans instead of 'tin' cans.
I have been lurking at this forum for several months. I've just begun to post myself. YOUR post, however, was by far the best I have read to date.
I have time to respond to just one section � "There's no place like dome." In it, you address the bigotry so evident in Jewish-Muslim relations.
You said: "Actually, blowing up Jerusalem would be almost as offensive to Allah as would be blowing up Medina or Mecca. Jews are People of the Book. They share common heritage with Islam� A good Muslim regards Jews and Christians as confused but well-intentioned children who yet possess the ability to someday see clearly. A good Muslim bears them no ill will, either in thought or in deed. The act of raining down fire upon the city of Moses would be that of a madman, not a Muslim."
I concur fully, WASP though I may be. Mohammed lived circa 600 A.D., The Qur�an (or Koran, if you will) says (Surah II, Verse 62): "Surely those who believe, and those who are Jews, and the Christians, and the Sabians, whoever believes in God and the Last day and does good, they shall have their reward from their Lord, and there is no fear for them, nor shall they grieve."
And that's not all by any means. The same theme is repeated over and over: If you believe in God, and do good, then you have nothing to fear from God nor His judgment.
That's a far different picture of Muslim belief than we see on CNN news (or ABC, CBS, NBC, Fox, NY Times, et Al.) with militant, crazed Muslims blasting automatic weapons into the sky for kicks. Which gives one pause for thought� Who controls the mass media in this country? Who would present such a biased image? (The uncensored Internet is great, isn't it?)
In 1998 and again in 1999 I spent several months in Malaysia for my company. Malaysia has an official state religion. It is a MUSLIM country. Your passport will be stamped with a notice that drug trafficking is punishable by DEATH. (Not to mention that your son, if caught scratching up expensive cars, will be whipped in public.)
I was more than an little apprehensive about the trip. Damned worried, if the truth be known. And I found, to my amazement, that these were the sweetest, gentlest, most honest and trustworthy people I had ever known. The makeup of their country is 30% Chinese, 30% Indian (Hindu), 30% Malay (mostly Muslim, not all), and 10% Christian. I was AMAZED at the smooth race relations and the tolerance and sense of humor and goodwill exhibited towards people of differing colors and beliefs. AMAZED! We TALK about New York City being a melting pot. We talk. They DO IT.
We need to get off our high horse and learn something about the rest of the world. THANK YOU, Holtzman, for the EXCELLENT, EXCELLENT post.
Petroleum News! Bullish! Onslaught of Inflation to Follow!
Rep. Hyde calls for FTC natural gas investigation
US Rep. Henry Hyde (R-Ill.) Tuesday asked the US Federal Trade Commission (FTC) to undertake an investigation of expected high natural gas prices this winter to determine if they are the result of collusion in the market. "I don't know what he means given the competitiveness of the industry," said R. Skip Horvath, president of the Natural Gas Supply Association. Horvath noted there are 8,000 producers in the industry. "If you took the top five, they only have a 17% market share, Horvath says. "That's a very low concentration."
In his letter to FTC Chairman Robert Pitofsky, Hyde writes, "Last year when prices were lower, producers cut their production. That production cut has led to the current shortage with corresponding higher prices. Such production cuts could be a legitimate response to market forces. On the other hand, if they were done collusively, they could violate antitrust laws."
Hyde said consumers need to know whether or not producers and utility companies deliberately diminished reserves of natural gas in order to drive the price up. "Industry sources are hinting in press reports that natural gas used to heat millions of homes may skyrocket as much as 90% in the month ahead, and I think we must move quickly to find out if and why that is true," Hyde said. Horvath said Hyde is correct in that prices are higher due, in part, to cuts in production after the industry received low price signals in 1998 and 1999. The good news is that higher prices are drawing more producers into the market to get more gas to market, Horvath said.
For the week ended Oct. 6, the number of natural gas rigs working in the US and Canada rose to 833, up 27 over the previous week and 234 over the same period a year ago, according to the Baker Hughes rig count. "Producers of natural gas are individually working as hard as they can to bring more natural gas to the market. In fact, there are twice as many rigs today as there were in April 1999, when prices and rigs were at their lowest in recent history, indicating a tremendous response by producers," Mike Johnson, vice-president and general manager of Conoco Inc. explained earlier this year in testimony before the Senate Energy and Natural Resources Committee.
Hyde said an FTC investigation of natural gas prices will send an important signal to producers and utilities that federal regulators are monitoring activity that might be considered anticompetitive.
Black Blade: Rep. Hyde is an idiot. He and his henchmen have done more to destroy the energy industry and make it unprofitable. Now that market forces assert themselves he cry''s "foul!" They also had 27 years to persue a self-sufficient energy policy and they didn't even though they knew that this day was coming.
THE LATEST API NUMBERS
API Review: Crude, distillate up as inventories dip unexpectedly
--API: US crude stocks down 3.926 mln barrels in latest week
--API: US gasoline stocks down 936,000 barrels in latest week
--API: US refineries operate at 93.9% in latest wk vs 94.4%
--API: US distillate stocks down 3.31 mln barrels in latest week
--APIs imply US gasoline demand 8.23 mln bpd vs 8.25 mln
--APIs imply US distillate demand 4.30 mln bpd vs 4.06 mln
New York--Oct. 10--American Petroleum Institute data showing domestic crude oil inventories unexpectedly fell nearly 4 million barrels last week pushed crude futures sharply higher Tuesday. The data also showed stocks of distillate fuels dropped 3.3 million barrels as refinery use dipped. At 1717 ET, NYMEX Nov crude was up 72 cents at $33.90 per barrel. They were "unexpected draws," said Tom Bentz, broker at BNP Paribas. The report is "bullish" for oil futures, although more than half of the crude inventory decline was on the West Coast, which typically does not represent overall U.S. supply and demand trends. Brokers and analysts had expected stocks of crude to rise more than 1.5 million barrels and modest distillate and gasoline inventory increases. The data shows crude stocks are 16.5 million barrels below year ago levels. Supplies of heating oil, which are a type of distillate, held steady on the East Coast and remain more than 50% below year ago levels. U.S. refinery utilization rates fell 0.5 percentage points of capacity as companies continued to enter fall maintenance programs. Gasoline stocks fell 936,000 barrels as demand was only slightly lower. Nov heating oil was up 249 points to $1.0220 per gallon, while Nov gasoline rose 169 points at 93.10 cents per gallon, both extending gains from Tuesday's floor session.
--API: US distillate stocks down 3.310 mln barrels in latest week
Black Blade: Obviously we need to release a lot more SPR oil! At least that is what we could expect to hear from Al Gore. Maybe we should draw some more oil to refine into heating oil? But wait��
--API: US crude stocks down 3.926 mln barrels in latest week
Black Blade: Well maybe that's not a good idea since crude oil reserves are so low. We could just cram more oil through the refineries and use the SPR oil, then we could ���But wait��.
--API: US refineries operate at 93.9% in latest wk vs 94.4%
Black Blade: Refineries are still running at near full capacity. Still gotta do some maintenance work and do it soon because it has been put off for a long time now in order to take advantage of higher margins for distillates.
--APIs imply US distillate demand 4.30 mln bpd vs 4.06 mln
Black Blade: Demand is up and winter is coming. This week many areas of the US had record low temperatures - so much for global warming. Looks as if petroleum prices are destined to rise.
--APIs imply US gasoline demand 8.23 mln bpd vs 8.25 mln
Black Blade: No surprise here. There is a slight decrease in demand. Could this be because "driving season" is over? Driving season refers to the summers months when the pundits and analysts claim that more gasoline is used because people are on vacation. I not going to touch that one!
--API: US PADD 1 reformulated gasoline stocks +1.0 mln bbls
--API: US gasoline stocks down 936,000 barrels in latest week
Black Blade: Here is a potential disaster in the making. With limited numbers of refineries and a lack of refinery capacity, we still cling to the stupid idea that we need various grades and mixtures of gasoline to meet EPA mandated clean air policies. Clean air is nice and desirable, but there is no universal standard where supplies can be brought from region to another to mitigate shortages. One mixture of reformulated gas in one area is not necessarily acceptable in another area. Last summer's gasoline crisis in Chicago resulted from a pipeline explosion and production problems directly related to a particular grade of reformulated gasoline mixed for Chicago drivers. Congress was going to investigate oil company collusion and price-fixing here too. When congress goes on break from session, no one can claim that there is a brain-drain in Washington. In short, look for higher - maybe much higher petroleum prices going forward. This has to show up in inflation - CPI/PPI notwithstanding.
BTW, tonight petroleum prices are advancing with NY Crude up another $0.62 at $33.80/bbl - on top of a sharp rise in price today. Heating oil is up $0.0254 at $1.0225, and NG up $0.06 at $5.20 Mbtu.
Special to TheStreet.comWill Strategic Petroleum Reserve Oil Make You Warm? Maybe Not
By Christopher Edmonds
When the U.S. Department of Energy revealed the "winners" of the Strategic Petroleum Reserve lottery last week, you might have expected the list to read like a Who's Who of petroleum refiners. After all, the whole reason for releasing the 30 million barrels of crude is to make sure all Americans stay warm this winter, especially those using heating oil, manufactured from refined crude. "The temporary infusion of 30 million barrels of oil into the market will likely add an additional 3 million to 5 million barrels of heating oil this winter, if refineries could match higher runs and yields seen in the past," said Secretary of Energy Bill Richardson in announcing the plan to release oil from the Strategic Petroleum Reserve, or SPR.
This column has noted the challenges refiners face in transforming the crude into distillate products. Now, however, there appears no guarantee that the SPR oil will ever make it to domestic refiners. Most of the companies receiving SPR crude aren't refiners or even directly related to them.
Take a look at the winning bidders:
Company
Marathon Ashland Petroleum, LLC - 3.9 Million Barrels (MMB),
Euell Energy ---------------------3.0 MMB
BP Oil Supply Company-------------6.0 MM
Elf Trading, Inc. ----------------1.0 MMB
Equiva Trading, Inc. ------------2.5 MMB
Morgan Stanley Dean Witter -------2.05 MMB
Vitol, S.A. ----------------------1.60 MMB
Valero Marketing and Supply ------1.0 MMB
Burhany Energy Enterprises -------4.0 MMB
Lance Stroud Enterprises ---------4.0 MMB
Hess Energy Trading --------------1.0 MMB
Source: U.S. Dept. of Energy
While a couple of refiners are getting a piece of the action, a significant amount of oil is going to energy trading firms to be put to work in their general trading efforts. As it turns out, almost half is going to neophyte, possibly wannabe oil tycoons with little, if any, experience in the energy business. Take Lance Stroud Enterprises. According to Platt's Oilgram, an oil trade publication, the company has one employee, Lance Stroud, and is located in a residential section of New York's Harlem district. When Platt called to inquire about the company's bid, the mother of the former army intelligence officer answered the phone. Stoud, who has worked as a grain wholesaler and has never been involved in the energy business until now, was out shopping for a Letter of Credit (LC). Each winning bidder has until Monday to present an LC to the Department of Energy.
Platts reported that Stroud has an LC offer from Banque Paribas. Interestingly, Paribas is the same bank that energy marketers say refused to stand behind an LC it provided to the Power Company of America, or PCA, a now-defunct power trading and marketing company that contributed to a near meltdown of the wholesale power markets in 1998. "This sounds way too familiar and ominous," says an energy trading executive familiar with PCA's blackout.
Two other winners of SPR oil are also unconventional: Burhany Energy Enterprises is located in Tallhasee, Fla. Burhany also appears to be a sole proprietorship, with Ronald Peek listed as the company's only employee. And, Euell Energy Resources is a Colorado company with "operations that include natural gas and power marketing, diverse pipeline installations and construction management," according to its Web site. Neither Burhany or Euell could be reached for comment. However, a check of filings at the Federal Energy Regulatory Commission, or FERC, show no filings by Stroud, Burhany or Euell. And while there would be no requirement to register with the FERC to receive oil from the SPR, most "legitimate" energy trading operations "have regular dealings with FERC and would appear in occasional filings" says the trading executive.
Together the three companies are scheduled to receive 10 million barrels of crude from the release, over 40% of the total. At the same time, bids from refiners like Conoco (COC:NYSE), Texaco (TX:NYSE) and Royal Dutch Shell were turned down. "A prudent operator would not sell to these [lesser known] types of organizations," says one oil analyst. "There is just too much risk. It's almost like the government is selling the oil to itself," suggesting the winning bidders will ultimately not qualify. If winning bidders cannot provide an LC by Monday, the Department of Energy is likely to "go down the list" to other bidders, according to the analyst. However, that will delay the process even longer.
Only four of the 11 recipients -- Marathon (MRO:NYSE), British Petroleum (BP:NYSE ADR ), Valero (VLO:NYSE) and Vitol -- appear to have direct links to refiners. Even Morgan Stanley Dean Witter (MSD:NYSE ) received 2 million barrels from the SPR. Dipping into the SPR puts more oil into the market but there's no guarantee it will be turned into heating oil and no assurance it will even be put to use in the U.S. As this column noted last week, it's quite possible that an unintended consequence of the policy will actually be to reduce domestic inventories as refiners feel pressure to increase exports to boost profit margins. In fact, while a waiver from the Department of Commerce would be required, the SPR does not require that the petroleum released be sold, either in it's original or refined state, in the U.S. And, since following the barrels from marketer to trader to refiner would be nearly impossible, there's no guarantee the oil will even be refined in domestic markets, let alone see its way as heating oil to the Northeast.
And a final rub: Each of the recipients of SPR oil had to agree to replace the oil between August and November of next year -- a period that is prime time for building heating oil reserves for next winter. So, at the very moment supply will be needed most, more than 30 million barrels of oil will be removed from the system, a move that could simply postpone the supply quagmire until next year, well after the presidential election. "The policy is troubling," says a former Department of Energy staffer who worked with the SPR. "You have to question the purpose of the SPR." In a statement last week, Secretary Richardson disagreed. "Through this exchange, we can help alleviate tight oil and heating oil supplies, help make certain that Americans can heat their homes this winter, and add to the nation's national oil insurance policy, all at the same time. That's a good 'rate of exchange' for taxpayers, consumers, and the nation." For everyone, probably not. But for Lance Stroud and Morgan Stanley, it's a heck of a deal.
http://www.piraz.com/wmre.htmMr Moto, formerly of Bearforum and a commentator at Prudent Bear's site, researches and writes well on topics of our mutual interest...
Of a total $2 trillion in large business loans this year, 3.3
percent, or $63 billion, were considered troubled - up from 2.0
percent in 1999 and 1.3 percent in 1998, the lowest level of the
decade. View
Yesterday's Discussion.
Taurus -- I didn't realize you shared the author's opinion, otherwise I would have been more diplomatic expressing my opposing viewpoint
A lesson for me learned the hard way--I shouldn't have said the author fell on his face at the point where his own view differed from the Greek scholar. To say he was simply wrong would have been more tactful.
You suggested that you and I are perhaps actually saying the same thing but in different words. My perception to that is a definate "no". If you were left with that impression from my (10/10/2000; msg#: 38672), then I apologize for the ambiguity in my poorly crafted post.
I don't know where to begin in showing the difference in our positions, so I'll just start with the first point of yours and work through your post to voice my differences wherever it seems most effective to do so. But at the very least, I encourage you to scroll down to my original post for yet a second honest attempt at deciphering my unusually succinct commentary.
You said ----"Prior to the circuit board era, gold had NO industrial value. Only ornamental value. To coat the dome of a mosque with gold leaf ... 'Conspicuous consumption' if ever there was such."-----
Why do you focus on "industrial" use in determining what the old "commodity usage value" for Gold might have been? Gold was valued for its use in dentistry long before circuit boards came along. And this aside, if Gold had no old world practical usage as you imply, then why would the gilding of a mosque be characterized by yourself as "conspicuous consumption"?? Since when is it conspicuous to find an outlet for a pile of unwanted inventory? Surely it isn't conspicuous consumption to cover a roof with shingles, or to cover a wall with paint. Wouldn't you admit that Gold would in this old world sense enjoy, at a minimum, the same type of "industrial" valuation as shingles and paint? And at this point, I would also encourage you to reevaluate your penchant to discount the "ornamental/jewelry" usage value of Gold. Just because it may seem impractical or frivolous to you does nothing to alter the motivations and real courses taken in our human history.
After drawing attention to my premise where I said, "To my mind, there is no disputing that the desirability of an item (any item) is found in it's usage value. If it is useless, it has no value," you emphatically indicated that you did not agree that this was self-evident. Your casket analogy did not make your case. Nobody reading this forum would think for a second that a burial casket was as useless as you try to imply that it is. I have yet to attend a funeral without one in regrettably full use. You seem to have overemphasized the inevitable and focused only on the fact that after the funeral is over and forgotten, the casket would *become* useless. That is a different matter entirely, and is not what the family is paying for when they buy the casket. Given this after-the-fact mindset, wouldn't you also say that the food you are about to buy for lunch is also useless, inducing a paradox that people are actually willing to pay for the "inevitable sewage"?
It is important that you come to an understanding of this premise because it is fundamental in understanding the evolution of monetary usage during the development of human civilization.
Putting that issue aside, I believe the core issue you are trying to convey is articulated in your words -----"Point is that the more value a commodity has as an industrial commodity, the LESS value it has as money. Why? Because it can be influenced by commodity-related events. Conversely, the less value it has as a commodity, the MORE value it has as money. ESPECIALLY if coupled with other characteristics such as long shelf life, divisibility, portability, etc."
Let's consider soapscum, or to make this more interesting, lets consider the residual froth that clings to the interior of your pint glass after enjoying a Guinness Extra Stout. Either of these are about as useless as a commodity can get. In fact, they are SOOOOO worthless that I would think, according to your premise, that they would enjoy tremendous value as money, especially after being scraped free and conveniently collected into little jars for portability and divisibility. But no. Anyone who followed my earlier writings would know that these commodities would never be brought into serious evolutionary contention for monetary usage by the marketplace.
On the first portion of your point, you will also want to give consideration to the merits of the notion I expressed in my earlier post whereby the entrenched utility of a commodity in use as money by a highly developed marketplace becomes so much more highly-valued for that usage than for its function in any other usage that any subsequent commodity effects (which would in this case be true examples of "conspicuous consuption"--using Money for decoration or industrial plating) would be greatly muted. This disparity in usage values seems to be the primary source of your specious conclusions about money and its underlying value. In a modern sense, does the occassional commodity use of our currency for such "conspicuously consumptive" use as bathroom wallpaper affect its monetary value? If you think about it, whether we talk about monetary Gold or dollars, putting a quantity into "industrial use" would appear to the marketplace as indistinguishable from putting that same quantity into savings.
On a final note, I'm puzzled by your comment-------"I will not argue the point further. But I do urge you to be not so defensive. Do we seek truth? Or do we seek vindication of the preconceived notions which we bring to the Table Round?"-------
As I'm sure many long-time visitors here will attest, I have gone to such lengths to shine light on "truth" that I have frequently taken unpopular stands that argue at length AGAINST some of the popular preconceived notions of the "typical Goldbug." However, I'm confident that everyone who has troubled themselves to read any small number of my posts has come to understand that when I take such postions, it does not mean that I am anti-Gold, but rather attempting to facilitate a more fundamentally grounded understanding of Gold's uniquely important role within the monetary context of economic affairs.
I am almost getting the impression that they are engineering a slide in the equities markets to aid George the Third to get into the white house.
As we know a deteriorating stock market and economy can make the general public disgruntled towards the incumbent party, and the NASDAQ's big drop over the past month or so may very well be having this effect of decreasing the support for Gore, and in turn increasing the support for George the Third.
I have thought for many months now that they would put a conservative in the white house, crash the markets, and then as a result, america would be begging for a left wing radical commie democrat for the next election. A little modern day Herbert Hoover to Franklin Day-Lah-no Roosevelt, if you think history will repeat itself.
And if that is the case, who will be the FDR of the 21st Century?
A quick check of the ponzi shows 6,882.47 for Tuesday 10/10/00. That's still 68.94 ponzi points higher than it was on 4/14/00 when it dipped to 6,813.53.
I think its going to hit a new low today.
:)
Is that a fat lady I hear warming up in the distance?
Pay No Attention to that Barrel Behind the Curtain
Black Blade (10/10/00; 22:35:18MT - usagold.com msg#: 38751)
"--API: US distillate stocks down 3.310 mln barrels in latest week
--API: US PADD 1 reformulated gasoline stocks +1.0 mln bbls
--API: US gasoline stocks down 936,000 barrels in latest week
�
Black Blade: Here is a potential disaster in the making. With limited numbers of refineries and a lack of refinery capacity, we still cling to the stupid idea that we need various grades and
mixtures of gasoline to meet EPA mandated clean air policies. �
In short, look for higher - maybe much higher petroleum
prices going forward. This has to show up in inflation - CPI/PPI notwithstanding."
Well now, Sir Black Blade, this depends on what the definition of "is" is.
Aren't you neglecting the incredible advances in barrel technology, particularly in the past few years? Cutting-edge barrels, using the latest in high-tech materials, coupled with the acceleration of productivity gains at barrel-fabs deliver end-to-end functionalities while maximizing compelling convergences that embrace scalable metrics for deploying turn-key supply-chains. Increased labor productivity has directly limited the rise of unit barrel costs. This good inflation performance, reinforced also by falling barrel prices, in turn has fostered further declines in inflation expectations over recent years that bode well for pressures on costs and prices going forward. More intriguing was the remarkable surge in barrel technology investment after 1993, which suggested a marked increase in the hedonic barrel deflator rates of return on the newer technologies.
The acceleration in barrel productivity owes importantly to new information technologies. Prior to this IT
revolution, most of twentieth-century business decisionmaking had been hampered by limited
information. Owing to the paucity of timely knowledge of customers' needs, the location of
inventories, and the status of material flows throughout complex production systems, barrel businesses
built in substantial redundancies.
The global village has been an ever-shrinking community of fellow-travelers, especially since I invented the internet. As the peoples of the world grow closer and engage one-to-one supply-chains, distances get smaller, which means less gasoline and diesel is needed to travel from one place to another.
Forward sales of benchmark 10-year T-Barrels on the books of the Strategic Barrel Trust Fund will reinvent mission-critical relationships for our children's heating ands transportation needs, assuming they engineer transparent relationships and have their proper papers in order.
These developments have created a broad range of potential innovations that have granted firms
greater ability to profitably displace costly factors of barrel production whenever profit margins have
been threatened. Moreover, the accelerating use of newer technologies has markedly enhanced
the flexibility of our barrel productive facilities
This has confirmed the earlier indications of an underlying improvement in rates of return on the newer barrel technologies and their profitable synergies which generate dynamic metrics and deploy leading-edge deliverables with the existing capital stock of barrels.
Looking at the M3 Money Stock chart at the above link, I see several inflection points at which the rate of acceleration increases from <= 0 to > 0 (2nd derivative turns positive). At those points, the curve starts to behave like the points in a parabolic curve on their way to going near vertical. It looks like the 2nd derivative always turns negative (rate of acceleration slows or turns negative), but the inflection points appear to be followed by segments of increasing length in which the rate of acceleration remains positive.
When the M3 chart goes near vertical, we are in uncontrolled hyperinflation, no?
Many of us have our wealth safely stored in physical gold. But it is natural to ask when the POG will explode. (I sure do need the POG to go to $30,000!) So, I ask myself when that will be. The M3 chart may provide clues.
It's easy to see that a major change took place near Jan 1995 (Robert Rubin at the Treasury?). The curve, overall, is not necessarily parabolic. However, the further the curve is traversed, the more it acts like a parabola, the steeper its slope, and the more frequent its inflection points that result in longer and longer segments in which the acceleration is positive. I cannot tell from the chart, but it appears that inflection points previously occurred more frequently, but resulted in shorter segments in which the rate of acceleration was increasing. Perhaps that indicates some efforts to suppress natural behaviors that later self correct?
Making a rough guess as to when the POG will take off (go above, say $2000 or higher), and pegging the big POG increase to US hyperinflation (which would show on the M3 chart as near vertical), it looks to me like it's going to happen by late spring 2002 at the latest, and quite possibly before that.
Many thanks my friend and infinite blessings for taking this initiative. Such a spontainious email , warms the heart ! .
You trumped for me the pick of aussie inviting passwords and I am confidentialy smileing from ear to ear . Cheer's.
Taurus - To strengthen Aristotle's already strong explanation
All goods and services are given value by their consumers. The subjective values that are placed on these items of commerce result in prices being set so that those supplying product and those consuming it are both satisfied sufficiently to engage the trade. Those consumers who value the item less than the market price are shut out of the market and constitute an unsatisfied potential demand. Those suppliers that value their product at a higher price than that currently set in the market are potential suppliers (it does not matter in this discussion why it is that producers may value their supply above the market - production costs - expectation of better future prices - whatever).
No industrial/producer good can have any value at all without the consumer's desire to obtain the goods that are produced from it. Characteristics of gold that make it desirable to its consumer include rarity. This puts gold (and silver) in the same category as art works and other collector's items, which constitute the more permanent components of wealth, the items whose main consumer use is possession. Whereas the money usage makes gold a measure of wealth, it should also be understood that it IS wealth. Concept monies are only possible measures of wealth and contain no intrinsic value in the eye of their consumers. Values of concept money are completely derived from the value of that which may be purchased with them, or of the security put up against the loan that created a credit money. The market value of concept money is completely derived from consumer preferences for things that are not concept money.
The value of gold as an industrial commodity results from the same consumer choices as to the desirability of the products that use it as does the direct holding of gold.
Some items have no direct use for the consumer but are necessary for the production of consumer goods. It is the consumer's demand for the product/service using this item that provides it with value.
As to industrial uses; prior to the invention of stainless steel and the discovery of the other noble metals, gold was the only material known to man which would not change in appearance or in composition over time. This made it useful in industry well before people knew to call their productive activity by that word. When an item was made for beauty, gold was applied to the surface in order to preserve the efforts of workmanship and art. Then gold was applied to items of lesser permanence in order to make them appear valuable or of quality.
Gold became the preferred material for jewelry because of its resistance to chemical damage as well as for its color. But most of all it was because it was rare and therefore an emblem of wealth. Much of the essence of jewelry is the display of wealth. Even after decades of synthetic stones of superior beauty being available, natural stones command a substantial premium. It is the mark of discriminating taste that the bright and sparklig substitutes are rejected in favor of rarity in the appeal of a jewel.
Taurus, the point of your message was a distinct rejection of the valuations of the individuals that consitute the market place. You are rejecting their preferences in favor of your own narrow view from among the cogs of the machine that makes the goods/services that people want. Yet it is these preferences that have caused the machine to be built, and that induce value into the various commodities you do seem to value.
If gold is "useless" other than its use as money or as a plating material, so are all of our personal choices as to what to consume and how much to pay for it, and so we all are "useless".
http://www.gold-eagle.com/gold_digest_00/droke101100.htmlThe futures are down across the board. The S&P Futures are down -3.30, but the NASDAQ Futures are down -47.00 (well below fair value) after being down as much as -75.00. Lucent came out with lower than expected earnings, but other companies met targets. That is not good other as the expected analysts earnings are for us peons, and there is another number called the whisper number which is some "secret" expected earnings number that isn't for the crude, rude and uncouth peons. Unbelievably, most analysts still claim that the NASDAQ is in a corection phase - OH REALLY?. Anyway this looks to be an interesting open on Wall Street. Oil prices are still well over $33.00/bbl after bouncing under $34.00/bbl overnight. The API inventory numbers really show a very critical shortage of distillate supplies and also there now is a very real possibility that the only way to conserve enough supply to get through the winter months is by sharply raising prices. The IEA report earlier this week predicted record high prices for heating oil and natural gas. Obviously this is the government's way of saying this is "fair warning." Gold is steadily gaining ground and is up +$1.40 at $273.30. The worldwide markets were awash in "red" and we can definitely expect the same on the US side of the pond. Most currencies have also gained on the USD expect the Canadian Loony which can't seem to get in gear when everyone else is off and running.
The link posted above is a good write up that covers the reasons for the debacle on Wall Street. This Tech bear market (yes it is a bear market!) is not a unique occurrence. The drones says it is different this time - BS, it is more of the same! Once it was "Radio." The New Economy" stocks prior to 1929 were radio stocks led by the Grand Daddy - RCA. Don't remember the others? I don't either but then you can't blame me, they haven't existed for nearly 70 years. In the 1960's it was "Tronics" or "Onics" as a pre-fix to the stocks of the day. Most of these "New Economy" stocks were electronics stocks. But that's not all - Oh No! There were also the "Nifty Fifty" stocks. These hot stocks of the "New Economy" were the 50 best growth stocks of the day that would be around forever and always be profitable. Yeah, you know them - stocks like Polaroid!!!! The only thing that will be different this time is the severity of the crash and the number of small investors that get burned - make cremated! - Black Blade
Global oil supplies remain "stretched", leaving the northern hemisphere vulnerable to a winter fuel shortage, the industrialised world's energy watchdog warned on Tuesday. The International Energy Agency said increased output from producer nations and the release of 30m barrels from US strategic reserves would not be fully absorbed by the market until the new year. The system is strained and running hard just to keep even," said the organisation's monthly report on the oil market. The IEA is the energy security arm of the Organisation for Economic Co-operation and Development. The report, combined with mounting concern at political tension in the Middle East, the world's most important oil-producing region, set a bullish tone in the oil market on Tuesday. November Brent Crude, London's benchmark futures contract, climbed 61 cents to $31.37.
The IEA said global stocks remained "extremely low" and the market was "fragile", suggesting that oil prices - which reached 10-year highs of $38 last month - were unlikely to weaken significantly in the short term. "The global energy market is coming to grips with the reality that there are physical limits on what can be accomplished before the winter," it said. The distribution system was "stretched and lacks flexibility", resulting in a lag between an increase in crude output and an easing in consumer supplies.
"Forcing more crude into a capacity constrained system won't correct [the] situation . . . overnight," it said. Refineries in key markets, such as the US, were working close to full capacity, pipelines were full and the world fleet of oil tankers was in high demand. "If everything runs smoothly then we will get through the winter without major disruptions and all the nervousness and anxiety will be for naught. But for the moment the market remains on edge, and prices are responding accordingly," it said. But the report said supplies would be eased in the first quarter of next year when the effects of increased output begin to kick in. Analysts forecast that the price per barrel could fall to $27 in the medium term and $20 by the middle of next year.
http://www.halcyon.com/jim/ussliberty/Is Israel capable of defending itself against it's Arab neighbors without our help? The link suggest that they can. Note the Govenor Clinton proclamation at the site. Strange! The following link is eyewitness testimony of the attack.
If I got this right from the discussion between goldhunter and Aristotele:futures will always run together with physical Gold'says goldhunter.Aristotele disagrees.Well,lets make an example with an event I expect in the not too distant future:
ECB announces a new free physical Gold market.Paper POG shoots up 40$ to 310$ in anticipation of higher prices.New old market opens,first paid prices are reported with 350euros (1$=1euro assumption).Paper market readjusts also to 350$.Good.Hunter is right.BUT,IF,
new Gold market reports paid prices on first day at certainly possible 500-600euros???Comex goes limit(!) up to 385$.Next day,new market bids 777euros,Comex again,"only" limit up to 460$.This paper-pogdog is way behind!
FreeGold does not know limit up (as I understand it)'so we have diverging prices inherent.Comex changes rules?During the game ?Guaranteed?Certainity/credibility?
The Differences and Similarities between 1913-1930 & 1983-2000
They were both periods of credit expansion by the Fed which fueled technological booms and paper asset bubbles, but the 1913-1930 boom and bubble was essentially inflated by margin credit (a hot air bubble) and thus when it bust and burst it created a deflationary vacuum (what Keynes called a "liquidity trap"). Today's boom and bubble is inflated by actual fiat paper which when steadily deflated, and not burst so there's no crash, will create an inflationary flood ("liquidity trap release/escape") and thus an eruption in the price of gold.
Aristotle and ORO: both of you made the case for the value of gold most succinctly. I once bought a stick pin with a gold nugget attached for $40. Upon turning it over I discovered that the "good" side (that which "looked" like a nugget) hid the pin attachment side which turned out to be the base of a pair of gold crystals. The "value" as a museum specimen was many multiples (100s)of the relatively lower end jewelry value. However, this mineralogical niche market, although an order of magnitude smaller than the jewelry trade, would require an effort on my part to find a buyer.
Parsifal: I for one (as I am sure is the case for others on this forum) am not looking forward to $30,000 gold. I for one (as I am sure is the case for others on this forum) am not looking forward to the time I will have to pay $100 for a cup of restaurant coffee. That is, if I can even find a restaurant still in business in this possible end game environment.
This article begins with a very interesting observation: "You wouldn't think that the Australian dollar gold price was at a record two-year high if you were using share prices and the ASX's Australian Gold Index as a guide."
Following the numbers reveals that in Australia, gold was recently quoted at A$507, a two-year high and up 11.5% over the lows seen in August. This is in telling contrast to the performance of the mining stock, with the Australian Gold index falling from 757.6 in August to 692.1.
Producers are down 8.6 percent while their product is up almost 12 percent.
New York, New York, center of financial power. Until it isn't. Mobilize that peasant labor --> faith/belief in system --> tax money --> pools of fiat contracts to fight the POG, while you accumulate personal stashes (of what?)
How DID those Pharaohs get their subjects/slaves to build all those pyramids? That's a lotta late nights away from the kids.
Wolavka, you're influencing my thinking/writing. Is this Russian, Polish or Czech humor?
The European Union's Taxation Commissioner Frits Bolkestein said in a speech recently that there is little need for region-wide coordination of national policies on direct taxes, even though a a high degree of harmonisation was necessary (and already significantly accomplished) in Euroland on indirect taxes. He explained that the reason as follows... "within the Single Market, Member States are required to eliminate tax obstacles facing private individuals and businesses who wish to work and operate freely in the Internal Market. After all this is what the European Union is about. It is intended to ensure the free movement of goods, services, persons and capital."
Contrasting this position between indirect and the direct taxations policies of member states, while speaking Monday in Barcelona, he said, "There is, for example, no compelling need to harmonise the personal income taxes of member states unless they entail discrimination, double taxation or unintended non-taxation in cross-border situations. Harmonisation would in any event be difficult since such taxes are deeply rooted in social and political preferences and traditions. Such taxes can generally, therefore, be left to member states even when the European Union achieves a higher level of integration than at present."
He elaborated further later in his speech:
"Tax competition can be very healthy. It can act as a brake on a government's capacity to appropriate and spend resources. It obliges governments to offer the best possible services at the lowest possible price in terms of taxation and therefore leads to better public management.
But tax competition can become harmful if it undermines Member States' capacity to finance essential public services. It is possible for enterprises and individuals to arrange their affairs so as to benefit from low-tax jurisdictions for taxation purposes and high tax jurisdictions for the purposes of receiving public services. This so- called "free-riding" leads to a race to the bottom in taxation and in the provision of public services and in the end all countries are worse off.
...Member States agreed that co-operation against harmful tax competition was preferable to continuing the race to the bottom and the increased use of retaliatory measures against each other. The result was the tax package agreed in December 1997."
Sorry to offend you (and any others) with my cheering for $30,000 gold. Actually, I'm not so sure of how offensive that is, but you have my apologies just the same. I certainly feel reprimanded.
About the difficulties associated with hyperinflation, yes, those will probably be terrible. If hyperinflation is to come, it's best to prepare, especially if the rest of your extended family is not prepared. Many thousands of people have put their faith in weak financial instruments that do not offer the safety of gold.
Did you look at the M3 chart? Do you have any comments on that chart or on the things I stated about its trend?
Thanks for your example and interest. It is my contention that futures/physical will be neck and neck at your 460 level...
I will grant you, though, that Comex limits of 75 per day can restrict the price increase for that day...in your example, the Comex contract may need a few days to "catch up"...it often happens in pork bellies...both ways!!!
I will also offer that gold trades world wide, and there are professional traders that certainly trade differences between spot and futures (arbs) and most likely woul seek to keep any difference to a reasonable? level, whatever that might be.
Here is hoping to see you at 460 and compare the difference.
Cheers! for $460!
Offense???If you took my statements as somewhat aggressive in tone, it is I that should be delivering the apology. Dry words on a page are not always a suitable medium for expressing tone.
My intent in my not so much a rebuttal to your post, as to try to place in context what a $30,000/oz physical gold price would mean to our living standards. Perhaps we who store our wealth in gold will best muddle through should this come to past, but what a murky, depressing place for the rest of humanity! We would, of course, have to live in this space along with them. (With all those guns around too!)
Peace and best wishes to you kind sir or madam....
George Dubya asks Algore " If you can tell me how many chickens I have in this sack I'll give you both of them. Al thinks hard and takes a guess. " 5?"
Today's stock market has served up two tasty '"bear market delights" for the hungry bear: Lucent Technologies and Motorola. Lucent's earnings were subpar and investors knocked the stuffing out of it--down about 8 points to 21 per share. Motorola's cellular business is slowing (along with all of its competition) and this stock dropped 5 points on that news. Both of these have dragged the stock averages down. Dow Jones was down earlier 143 points, Nasdaq is down 50 points and the S&P 500 is down about 19 points. The slow and steady erosion of stock values day after day (with only brief intermittent rallies) is the true hallmark of a bear market. As Richard Russell, one of my favorite newsletter writers, likes to say: This is a "stealth" bear market and we are just in phase one!
WASHINGTON, Oct 11 (Reuters) - Pipeline company Euell Energy is demanding an investigation into alleged collusion by oil companies which the firm's chief executive on Wednesday claimed has stopped Euell completing its deal to lift crude oil from the U.S. Strategic Petroleum Reserve (SPR).
Renard Euell, chief executive of Euell Energy Resources in Aurora, Colo., told Reuters that oil companies had backed away from preliminary deals to take Euell's three million barrels of SPR crude which meant the company could now not secure the financial letters of credit needed to lift the oil.
"On Friday we had commitments for a letter of credit. By Tuesday those same folks decided they are not going to do that", Euell said.
"We are calling for an investigation and for the three million barrels to be put in limbo until we have (Attorney General) Janet Reno investigate the anti-trust and collusion that took place. I will give the names of the refineries and people to her," Euell said.
The Department of Energy (DOE), at the direction of President Bill Clinton, loaned or swapped 30 million barrels of crude oil from the 570-million SPR to ease possible supply shortages for home heating oil along the East Coast this winter.
Most of the oil was allocated to well-known market players such as BP Amoco Plc and Valero Energy Corp but the DOE has come under criticism for swapping one-third of the crude oil to a trio of companies, including Euell, with little or no experience in the oil market.
Euell said oil companies had shied away from buying Euell's crude when prices started to move higher because of rising tensions in the Middle East.
A Department of Energy spokesman declined comment on specific financial discussions but said that Euell's three million barrels of crude would remain in the SPR if no letter of credit emerged by close of business on Thursday. The DOE could choose to reoffer the oil later, he added.
Lance Stroud, who runs Lance Stroud Enterprises from his New York apartment and was awarded 4 million barrels from the SPR swap, remains hopeful that he would obtain his letter of credit by the Thursday deadline.
Stroud said that the oil industry was a close knit group, making it difficult for smaller outsiders to obtain the necessary backing, but made no claims to collusion.
"It's a close knit family, the oil industry is a close knit family," Stroud said.
Euell, an African-American businessman, said that discrimination has also played a part in blocking his firm's deal for the crude.
"We don't believe there is one white company in the U.S. that could bring 115 percent of collateral and not be able to get an irrevocable letter of credit, especially when they have three million barrels sitting there," Euell said.
The SPR release has been criticised by Republicans as an attempt to drive down prices and win votes in the November election.
http://quote.yahoo.com/m5?a=1&s=XAU&t=EURIt looks like every share market in the world has gone down in the last 24 hours, and in the U.S. with very heavy volume.
Also on the FOREX it looks like most currencies worldwide lost value in relation to the U.S. dollar, "EXCEPT" the British Pound!
Question, why not the British Pound??
The POG in Euro's = $312.07...steady as she goes.....one gram of Gold = about $10.00 in Euro's!
Something big worldwide may be happening in the financial paper markets????....If you have U.S. dollars to spend for Gold, think about getting some ASAP, while exchange rates are in your favor!!! Not meant for financial advice......beesting.
What would hapen to the POG if a nation declared it would adopt the gold standard? Would it be feasible?
What if a country decided to peg its currency to the Euro? Isn't that in a way also like going on the gold standard? At least by 15%?
Would the OPEC countries get away with declaring that from a certain date the Euro and the Dollar were on an equal basis when it comes to paying for oil?
Journeyman, your (10/10/00; usagold.com msg#: 38711) is exactly what I was driving at in a post to Black Blade
You provided a clear description worthy of a second look--
------"Paper & physical diverging? TPTB can't allow the 'official' price of gold to rise as long as it's possible for "them" to prevent it -- it would serve as a red flag signalling dollar inflation in a way only the completely blind could miss. This in turn would clearly have the potential to precipitate Bigfloat home.
On the other hand, they don't want to drive the paper price too low either...
...As long as the demand for physical keeps rising, this is analogous to more and more air inflating the balloon. The "force" (amount of gold [or rather, Paper Gold!]) necessary to keep the balloon just below the surface increases with the demand.
The end game from this viewpoint would indeed be using paper to keep the official gold price down as long as possible because even when divergence occurs, this will still continue to disrupt the traditional price discovery. The gold prices quoted for quite awhile, even after there is no gold available for delivery, will still be these official prices. Until new markets evolve, this will dis-orient most traders and certainly the public and has the potential to disrupt the inflation "barometer" function of gold for some additional time period."------
Someone who had an appreciation for this line of reasoning had asked a few days ago whether it was likely that the price could fall absurdly low. As you and I have tried to show, those with a vested shorting interest could be content to simply create paper supply as needed to stifle the price in this "comfortable" range.
It must be said, however, that a scenario is not too difficult to envision where the market participants catch on--and Wolavka gives up his optimistic regard for these instruments--and no buyers step forward to bid on the available supply of Gold futures. Theoretically, the price could fall to zero on this complete absence of "buying" interest. (I say "buying" interest because the players are not actually buying anything, they are simply putting down a margin to participate in the wagering process.) But, we all know that that won't likely happen because the shorts would simply seize that opportunity to close out their positions. And at this point, the Gold futures market would be dry-docked.
But as we await the inevitable, the potential certainly exists for considerable volitility (up but mostly down), depending on the the steadiness and resolve of the shorts who are calling the tune on paper Gold and therefore price discovery. And to reinforce the important part of this point, rising premiums will adjust the "take home" price of physical Gold to reflect the demand stresses on the physical market during such a time as the paper prices do not and can not reflect metal liquidity crunches.
First let me define the term "gold standard". That is when there is no central bank and all paper currency can be directly exchanged for gold at private banks, thus providing self regulation of the banking system. The best book on the gold standard is Richard Salsman's "Gold and Liberty" available at 2nd Renaissance Books (18007296149). A true gold standard can not be legislated. A pseudo, or state legislated gold standard, existed during much of the 1800's throughout much of the world and gave the world relative price stability and prosperity but because it wss only relative and not absolute it failed in violation of Gresham's law and paved the way for central banking. The only way to establish a gold standard is to allow and catalze, the opposite of a gold standard, a centralized economy, run it's course to inflationary failure which will naturally establish gold as the standard. So when the markets eventually fall and cause the price of gold to rise in response to inflation gold becomes the standard and those who are intelligent and wise enough to own it become the gold standard bearers or rulers/legislators.
1) "What would hapen to the POG if a nation declared it would adopt the gold standard?"
Let's say this arbitrary country used a currency called the "Papre." If they went on a traditional Gold standard, then the monetary authority of the nation would effectively lock the "Price of Gold" unwaiveringly to some fixed amount of Papres that seemed suitable at the time. The official and effective POG would become XXX Papre, where XXX represents some fixed number like our own old Gold standard where the "Price of Gold" was fixed at 35 dollars.
2) "Would it be feasible?"
Is it doable? Yes. Is it sustainable? History says no. It is doubtful that the management of and adherence to the rules of the system would survive far beyond the novelty phase. Ultimately, that would be determined by the nature of that nation's economic interaction with international markets.
3) "What if a country decided to peg its currency to the Euro? Isn't that in a way also like going on the gold standard? At least by 15%?"
Pegging to the Euro (or any other currency unit outside of the nation's creative/administrative jurisdiction) would be fundamentally similar to a return to a Gold standard as we discussed above. In this case, the local "Price of Euros" would become fixed at XX Papre. Fifteen percent? No. In for a penny, in for a pound.
4) "Would the OPEC countries get away with declaring that from a certain date the Euro and the Dollar were on an equal basis when it comes to paying for oil?"
The producer of a good can get away with charging whatever a willing marketplace will bear. Does your "equal basis" mean that the price in each currency would be the same? If so, then international forex traders would seize the arbitrage opportunity to bring the currencies to parity. If "equal basis" means that both would be readily accepted at the buyer's choice, an extension of thought from Gresham's law would predict that dollars primarily would be offered for oil, even as the price sailed away, taking all other dollar prices with it.
That is why Gold is from now forward a vital component to viable savings.
To refresh a few memories on how the BIS values the U.S. dollar to Gold!
http:www.bis.org/about/index.htm <fine gold, which is identical with the gold parity of the Swiss franc from
the foundation of the BIS in 1930 until September 1936, when the Swiss
franc's gold parity was suspended. The BIS employs the gold franc solely
as a unit of account for balance sheet purposes, with assets and liabilities
in US dollars being converted into gold francs at the fixed rate of US$
208 per ounce of fine gold (equivalent to 1 gold franc = US$ 1.94) and
all other items in currencies being converted into gold francs on the basis
of market rates against the US dollar.>>
On a clear day like today you can see forever and never, ever forget to buy the dips - after all it was only Motorola
dipping 19%, while Lucent and Yahoo continued dipping in solidarity and, of course on profit concerns. In the meantime GE's 3rd. Q. earnings have been up 20% - on "real" energy systems vs. virtual "inter-tech" non-profitability!
Gee! GE, a former old economy co. is at long last making some real 'money" again - virtually intriguing? No? - So, how do you rate a stock, trading at 57 P/E and making real? profits? ... What a dilemma! future price discovery of about 90% of the main indices will be tied to the potential of virtually sub-zero earnings potential. Another great way to subsidize the virtual federal budget surplus - in full view of the twin deficits and the historical sub-zero US savings rate - "It's going to be a real freezing winter", say's Uncle Scrooge - before settling down to contemplate the "virtual" liberty to vote for or against another TV talking head... telling you about the great new discovery of current account and trade balances being negative - IS POSITIVE - for your $'s HEALTH!
As I'm far from being anyplace near your Surgeon General, I don't wann'a beat about the Bush - though I personally hope he'll qualify, though as a drawback, GWB did not invent the INTERNET - which may come in handy as the Naz-Duck's getting more Gory with the day - ... and "cut it out" may becoming 'dernier cri' ...
Still, wishful thinking, while indices do the same and POP.G (price of Paper Gold) gets bashed -virtually! ...
Try to bash physical - if you've got some left in the vault's - or POO before POG'in' - as it does'nt really matter how or why you default - again, does it? - cb2
Why not call the standard (gold, silver, etc.) what it really is -- true money...with paper just being the representation of that true money?
For instance, 1 Dollar = 10 grams of silver (or 1/10 gram of gold)....just examples off the top of my head, but I think you get the idea.
Wasn't a dollar ORIGINALLY DEFINED, way back in the 1700's, as .7736 ounces of silver? As I see it, as long as coins were produced of silver or gold, it all made sense. Once paper money began to be used, however, the government started to get cute with things (like a fractional representation...didn't have to have XXX ounces on hand to print more "dollars") and that is what killed the standard.
Many of the founding fathers were fervently opposed to ANY thought of fiat currency. They had first hand experience of the after effects from the paper currency (fiat) floated during the Revolutionary War. That's why they "fixed" the dollar to a set amount of silver.
If I remember correctly, the idea was even floated that anyone who proposed a fiat (paper) currency should be shot! (Sounds like a Patrick Henry idea!).
From 1796-1964, all dimes, quarters, half dollars and dollar coins were 90% silver.
I am in a good mood today.
Watching the gold price being constantly pushed down during US trading is extremely funny.
Like watching a game of tug-o-war.
I just hope the price stays down until I can get the 100 ounces I am trying to accumulate. Only have about 15 ore to go.
I was getting worried yesterday when the POG went up. Was afraid I wouldn't be able to convert this coming friday's paycheck into gold at such a low price. The lower the $ price, the higher the physical pay raise. Yeehaw!
Come on gold cabal. Keep the price down until after Friday!
"� The acceleration in productivity owes importantly to new information technologies. Prior to this IT
revolution, most of twentieth-century business decisionmaking had been hampered by limited
information. Owing to the paucity of timely knowledge of customers' needs, the location of
inventories, and the status of material flows throughout complex production systems, businesses
built in substantial redundancies. �"--AG
Contrast this little thought with your "Hydrocarbon Man" series, or with the gold market. I wonder which is correct, hmmm?
Then a few New Economy phrases were sprinkled in, mostly from:
http://www.dack.com/web/bullshit.html
Stuff like "disintermediate front-end markets".
See? Anyone can be a government or Fed spokesperson. Which reminds me- I wonder if our beloved maximum leader Alan Greenspan uses a computerized speech generator? Most of his droning has that robotic sound and feel to it.
WOWJust watched the space shuttle go up from my front yard. The best looking one I have ever seen. The nearly full moon and that tower of smoke and flames with the sun turning the trailing smoke various shades of crimson.
Now if only gold would be allowed to do that. WOW!
1. Step back in time to "the good ol' days" (c. 1900) when America was on a traditional Gold standard and ALL banks were effectively bullion banks. If reliable research led you to the early conclusion that the bank holding your deposits was overextended and borderline insolvent, would you:
a) act to leverage this position by investing your available banknotes and bank deposits into ownership of that same bank's corporate stock? --or--
b) avoid the inevitable bank run by being among the first individuals to calmly exchange your bank notes and withdraw your bank deposits in the form of Gold coinage?
ECONOMICS
2. You find yourself in modern times within a country in which your research reveals that conditions are ripe for a financial crisis and potentially severe devaluation of the national currency. Would you:
a) invest your available currency savings and portfolio assets in the "safety" of moderate-yielding government bonds, and also seek various "less economically informed" counterparties with which to contractually arrange a leveraged wager on the extent of the expected devalution in order to potentially increase your legal claim on future gross holdings of the same national currency? --or--
b) eliminate your exposure to the risk of currency devaluation and to counterpary default by acting early to spend/exchange your tenuous national currency for tangible items of wealth, such as Gold?
COMMON SENSE
3. You are sitting at your computer in October of the year 2000, reflecting on your life's acheivements and the vastness of the numbers within the paper portfolio you've accumulated during these heady economic boom years---accumulated both through hard work and traditional investments coupled with good luck/timing. Research reveals that bullion banking (see question #1) still exists in an international scope, operating in tandem with our common fiat currency system of banking. Research also indicates the warning signs of overextension and potential insolvency of the bullion banking System. Although you are not a bullion banking depositor or account holder, prudence and opportunity inspire you to:
a) reallocate currency and portfolio holdings into bullion banking stock and the stock of their various account holders (e.g. hedge funds and mining companies), and seek these same customers of the bullion banks as your trusty counterparty in various financial contracts designed to leverage your exposure to to the inevitable collapse? --or--
b) reallocate a prudent portion of your currency and portfolio holdings into physical holdings of the single item which, through its relative scarcity and contractual unavailability, will facilitate the banking collapse as it becomes the most vigorously sought-after financial asset in the history of human endeavor?
I forget the name of the person that tracks the POG up after 4:00pm eastern and down after 8:30am EST. The POG has been knocked about in N.Y. alot the last few weeks. The 'stats' would show the 'management' quite clearly now I am sure.
Question: Why are the PM stocks beaten unmercifully during this greater equity downturn?
You're right on top of it, lampry_65 -- with one small step to the right
This is good ----"As I see it, as long as coins were produced of silver or gold, it all made sense. Once paper money began to be used, however, the government started to get cute with things (like a fractional representation...didn't have to have XXX ounces on hand to print more "dollars") and that is what killed the standard."
But more to the point that is all important, as much grief as we all rightfully heap upon the effects of fractional reserve lending, there is no possible way (within banking as we have all come to know it) for "full reserve banking" to exist where the "Reserves" and the "Currency" are the same thing. As soon as a bank makes the tiniest little loan to a hopeful borrower (such as a farmer or an entrepreneur), the bank's reserves of hard deposits experience a measure of depletion as the borrowed currency is put into use.
You offered as a potential solution---"Why not call the standard (gold, silver, etc.) what it really is -- true money...with paper just being the representation of that true money? For instance, 1 Dollar = 1/10 gram of gold..."
Given the inability of governments to constrain themselves to playing within the "Rules of the Game," and given the natural expansionary effects of private/commercial banking on the apparent money supply, I see the advantages of an alternative proposal to yours.
Would you rather stand by your suggestion to find yourself holding many many tenth-grams of gold of which the government proclaims the value to be fixed at One Dollar per each tenth and issues paper bills to that effect;
--OR--
would you rather find yourself holding many many tenth-grams of Gold over which the government has NO say, but rather the Free Market decides what value is held by each tenth?
Under this second alternative, as the banking system naturally expands the currency, or as the government cheats at the rules, the Free Market valuation compensates the Gold holder accordingly. The Free Market takes the handcuffs off of fair (high!!) Gold valuation that a government/banking/GoldStandard can only manage to inhibit in the interim.
NEW YORK, N.Y., October 11, 2000 - The New York Mercantile Exchange will raise the margins on its October 2000 platinum futures contract as of the close of business today to $3,600 from $1,600 for clearing members; to $3,960 from $1,760 for members; and to $4,860 from $2,160 for customers.
===
OR --- Hold physical and do not worry about "margins" !!
<;-)
The definition of dollar in the dictionary should be: 1/xxx an ounce of silver (or gold).
Kind of like saying 1 troy ounce=480 grains=20 pennyweights. "Dollar" is reduced to nothing more than a more convenient way to say, "1/xxx of an ounce." -- nothing more, nothing less.
Gold's destined to be a standard and a cheap commodity
Once the stock and bond market bubbles eventually deflate creating inflation the price of gold will, in reference to Shifty's comment, takeoff like the space shuttle Atlantis. Those who own gold will sell to the public at the top which I'm predicting to be between 10,000 and 15,000. That will end the "God" (In God we trust), ie., the arbitrary or subjective dollar standard, and put the world on the gold, the fixed or objective dollar standard, and from that time on the price of gold will fall sharply and the value of the dollar will soar as production explodes as the mind of the individual is free from any and all atatist controls. When gold plummets it will then be used as an industrial commodity as well as a monetary standard because it'll be so cheap and as other commentators here have said, it's the best conductor of electricity etc....etc... And if you've ever wanted to experience the feeling of exhiliration that a person aboard the space shuttle feels as it blasts off into outer space, buy gold or gold stocks etc... and feel the thrill of it's price soaring.
Over and over in this forum and elsewhere I here the comment that American's don't save enough. They in fact save way too much. Today's paper asset bubbles were built by American's saving in 401k's, mutual funds, and pension funds. They save so much because they were educated to believe that death and taxes were the only certainties in life. This oversaving inverts the money multiplier or stifles the velocity of money which causes disinflation and depresses the price of gold and the relative spirits of gold investors, though it pleases the absolute spirit due to the opportunity for dollar cost averaging. The true certainties in life however are life and gold, not death and taxes, and when the market bubbles burst and slowly and steadily deflate sending the price of gold sky high in response to inflation, then they will learn happily that they were wrong, but will pay a very high tuition expense which will be the price they buy gold at after it's risen from those who owned it before the rise
Canuck let me take a try at your question as to why the Precious Metal stocks get kicked down in a down market.
Well I think that all of us here are fairly familar with the fact that there is not a lot of other people out there who might become supporters of gold or gold stocks as long as they are not going up. The modern market is largely composed of momenteum followers who will literally buy whatever is moving. The last thing the powers that be want is these slavish purchasers to have the notion that perhaps the new leadership is in the precious metals. Oil stocks maybe if they have to have something because we really can't control them anyways but the gold stocks would lead to a flow of funds into the very thing they have been depressing and make their cost of continuing to hold it down very great indeed. The thing that few have grasped is that this entire charade is based on Rubin's astute awareness as a Wall Street trader that almost all investment "professionals" are really gutless trendfollowers who will quickly fall into line behind whatever leadership they think will save there ass. The absolute last think the powers want is the syphoning off of the money flow to other areas. NOT only because they are not benefiting from it if they do but also because they would then have to begin to cover their sizable shorts. Gold stocks I am sorry to say will only go when it is clear that they have totally lost control. And then if they are still in business only the unhedged miners will go.
For 3 years I've been waiting for a'sign', telling me that yes, this has gone too far. P/E's over 200 don't do it for me. Vapour stocks didn't faze me. MonkeyDEX was cool. But in the Oct.2000 issue of, what else, OnLine Investor, is a new piece of software called WIZETrade. It's simplicity itself. Type in the stock symbol and press go. If the button flashes 'green' you buy, if it flashes 'red' you sell! The interface even looks like a slot machine. This is the most insane f^%$^^$ing thing I've ever seen. I couldn't laugh anymore, I'm near death! I'm phonin' the guy with the monkey and tellin' him 'It's over pal'! From this point on any investment advise is pure worthless bulls$#,
because now I have witnessed the 'Real' thing, the Fifth Horseman,perpetual motion, thermodymanics has been conquered, it's all true Aaaaaaa. Run away very quickly!
Reply to total amateur :the world is on the gold standard as it's always been
Gold is the always the standard it's just that the world lives against it since it lives against reality, ie. is irrational. So the question is when will the world live for ,and not against, gold,reality, and thus themselves. When they live against it they depress it's price relative to the price of assets denominated in dollars while raising it's value relative to the value of assets denominated in dollars. When the live for it, vice versa. They will live for gold, reality, and themselves when they can perceive that gold is the best investment, which will be when it's at it's peak price.
My wife's on-line account added a new feature a couple weeks ago; it was a rating of the stock from 1 to 5, 1 being 'strong buy' and 5 'strong sell'. I typed in a few tickers and got 'buys'(1.6 & 1.7) and PCA.TO got a strong buy (1.4). I punched in a few more and a few more and the worst I could get was a 'buy'. Finally I typed in some ultra-loser stocks that no one would buy and still got 'buys'. I inputed every ticker that I know and NEVER received anything lower than BUY. I guess it's safe to buy any piece of crap company.
If I recall correctly ,you are north of the border? Recall the horrific scandel with the large bank in Canada this summer? That's a hint with the on-line broker.
Generally speaking the savings rate declines as interest rates drop, and people borrow more at the lower rates. Relatedly, lower interest rates generally give rise to higher asset prices, which creates a wealth effect and in turn leads to even more borrowing and spending. All this leads to a lower savings rate.
The savings rate is simply found by subtracting spending from earnings. And paper gains in stock portfolios (asset bubble), do not contribute to the savings rate. If anything it shows how much markets have been leveraged, as high asset prices are used to secure more loans.
So in fact, it is the asset bubble that has made a major impact on the decline of america's savings rate by encouraging people to borrow and spend more.
There has been some discussion on the forum regarding $30,000 gold and inflation that I can't seem to get my mind around.
Perhaps someone out there is a history buff.
If we go back to the US civil war, can anyone tell me what the Confederate dollar was worth in the aftermath of the war? Was there any provision for exchange into the currency of the North? How did the changeover from South to North currency play out?
To my mind there are similiarities between that scenerio and a failure of fiat currency, except that I doubt there will be an interested, or a benign group, who will, or will be able to, take the fiat in exchange for real money.
If that is the case, I suppose you might call the result inflation, all the way to infinity, because the paper will be worth zero.
I stand corrected, savings RATE, as opposed to savings amount, is low but I think that's because, IN ADDITION, they overborrow as much as they oversave. Together this means they underconsume relative to the amount they save, borrow and invest, and that's what inflated the dollar denominated asset bubble and deflated the price of gold. The public has been taught to believe that perfection is impossible ("nobody's perfect") and thus they ignore, and invest against gold, which is perfect money, and live for the dollar, which is imperfect money, and on the standard of "in god we trust"(feelings) versus "in gold we trust"(fact). They have it backwards.
You said >>>>>Today's paper asset bubbles were built by American's
saving in 401k's, mutual funds, and pension funds.<<<<<
That is not �Saving', That is �Spending'!
The money is spent on acquiring shares of corporations. There is no obligation to those shareholders to give them back a single dime of that money they have parted with. They have only an asset that they �Hope' to sell to someone else for more then they paid for it.
Unless in cash or Gold/Silver, �Savings' are really funds �Lent' to the bank and carrying an obligation to be returned on demand or at a specified time.
And while on the subject of the negative savings rate, consider that one of the factors lessening the demand for gold, is that buying it is really a saving activity as opposed to investment. Saving is "out of favor" these days and therefore that aspect of gold acquisition has vanished.
The key to savings is that instead of spending on consumption, savings are plowed back into the economy to be used in the capital formation of machinery, factories, and equipment. High savings ratios and high standards of living go hand in hand. On the contrary low savings rates ultimately leads to lower standards of living.
Differentiate a nation's savings going into the capital formation of plants, property and equipment from that of a nation playing a game of greater fools, throwing money at some 100 P/E company that has very little capital formation.
From BBC NEWS - Iraq say they will hold back oil production unless its accounts are converted from USD. into Euros.where in future all payments are to be made in Euros.
Dollar dangerously close to all time low
From AAP
12oct00
5:31pm (AEDT) RISING oil
prices, ambiguous employment
data and an injured New
Zealand dollar conspired today
to bring the dollar perilously
close to its all-time low.
Early today, the currency
appeared to be holding its own
despite oil-driven falls in the
euro overnight, but its legs
were swept out from under it
just a few hours into the local
session.
"It was $US0.5349 very early
this morning, before 8.30, and
we've been to $US0.5292 on
the downside," said Macquarie
Bank trader Kevin Tuckey.
"It doesn't feel like a spike low
so I guess it can try lower."
Late last week, the dollar
crashed to its record low of
$US0.5280.
At 1700 AEDT today, the
currency was just hanging on,
at $US0.5296/5301, from 0.5335/40 at yesterday's close.
"When you see the all-time low recently and we're now only a few
points away from that," Mr Tuckey said.
The domestic unit stood firm overnight as the euro lost value amid
rising tensions between Israel and the Palestinians, which pushed up
oil prices.
"Overnight we saw the euro go down on oil prices and Middle East
concerns, and everybody has been trading the Aussie on the back of
the euro and the yen," Mr Tuckey said.
"The Aussie fell (in local trade) this morning and then the
employment figures came in."
Total employment fell 30,500 to 9.111 million, seasonally adjusted, in
September, but the Australian Bureau of Statistics found
unemployment had pulled back to 6.3 per cent, from 6.4 in August.
It was the first fall in employment since January and a sharp pullback
from the 24,100 new jobs recorded in August and 75,800 in July.
Few economists had expected a fall at all and none a fall of more
than 20,000 jobs.
A median of economists' forecasts collected by AAP was for 15,000
new jobs in the month, with the most optimistic expectation coming
in at a rise of 70,000.
"The figures didn't really help, but they didn't really hurt either -
employment's gone down but full-time employment's gone up and the
unemployment rate's gone down," said Mr Tuckey.
Further hardship for the dollar came in the form of a failed acquisition
in New Zealand.
"This afternoon when the commerce department in New Zealand
blocked the Shell takeover of Fletcher Challenge Energy, the Kiwi fell
from $US0.4045 to 0.3967, so the Aussie followed that," Mr Tuckey
said.
"The Aussie-Kiwi's gone up but that's why we're currently sitting
around 53 US cents."
At 1700 AEDT, the New Zealand dollar had recovered slightly to
$US0.3988/93.
The dollar closed at 1.3307/36 New Zealand dollars, from 1.3196/224
at the local close yesterday.
It closed at 57.11/19 yen from 57.62/70, 0.6103/08 euro from
0.6113/18 and at 0.3619/25 British pounds from 0.3659/65.
The short-term prognosis for the battling currency is not optimistic.
"I imagine we could have a spurt lower," Mr Tuckey said.
"I think it's now a matter of looking to see what the euro does, so if
the euro goes down to $US0.8580 or something like that then the
Aussie will come off, but if the euro goes up then the Aussie
probably will as well."
Locally, the US dollar closed at 107.83/88 yen from 108.00/05.
At the end of the local session the euro was at $US0.8674/79 from
$US0.8728/33 at yesterday's close and at 93.53/58 yen from
94.27/32.
On the Reserve Bank of Australia's Trade Weighted Index at 1600
AEDT the dollar was at 49.0 points from 49.2 at yesterday's close.
That low it scored a seat on the cabal's board of directors.
and as for the Kiwi $ , thats a basket case ! Men satisfied on the dole , fearing child support , feminist and land rights activists cornering the media at hysterical levels.
But let me say this, please I have dispite what else is said on the international front , if I was some high flying international tycoon and saw the lies the populace has been fed , just on the basis of Integrety alone , Would I blame them for pulling the finger from he dyke ?.
1. Is it me, or did I not see the inverted yield curve of the 10 and 30 back to normal? Normal being where the 30-year yield is higher than the 10-year.
2. Rise in Platinum's October Margin is significant as this is what TOCOM did when they couldn't deliver on all deliveries. (Thanks Gandalf) Is this stating that Platinum is close to a default? Don't know.
3. S&P, Nasdaq, and Dow futures are being pushed significantly higher today, I believe, in order to prevent, if possible, a fall through the March low that stood at around 3162. Psychologically, falling below this March low would present a moral hazard for the markets as it would be a technical sell signal and indicate lower stops in the near future. So, who is pushing up the futures?
I like the Rhody's Logic & clarity - Thank You - RhodyDate: Thu Oct 12 2000 07:11
rhody (LEASE RATES: short term lease rates for silver are now) ID#410367:
Copyright � 2000 rhody/Kitco Inc. All rights reserved
as low as rates for gold. This would suggest that there is
scads of silver hanging over the market. Since leases are
a function of paper trades, just the opposite is the case.
Just like the rise of the USD is not a sign of strength, the
drop in the lease rates for gold and silver is not a sign of
excess liquidity. Not any more. What we see here is
a lease market full of fear. Nobody wishes to borrow metal
at 50 year lows for gold and 600 year lows for silver.
So the illusion is created that silver is cheap ( to borrow ) ,
and cheap in the real world. Tell that to the guy in
Germany where banks charge $7.90 for bullion wafers. Tell that
to the investor in Switzerland who can't find silver bullion at
all, at any price, in any bank. The real market price for
bullion is beginning to disconnect from the paper price as
displayed on COMEX, LBMA, and lease markets.
The paper price will continue to decline, and all pm
mines forced to sell at the paper price ( just about all of
them ) will be bankrupted. Got physical? FWIW, Rhody
Just on the news. A suicide boat rammed a US Naval ship off the coast of Yemen. There was an explosion. Several US servicemen injured and as many as 4 dead. This Middle-East situation is getting out of hand.
Further info, it was Aegis class destroyer, believe named USS Cole. Four confirmed dead, as many as 30 injured. It was a terrorist attack by a black rubber (Zodiac) boat. It appears that it was a suicide mission. It struck or rammed the stern (rear) of the ship and exploded knocking a 30plus foot in the hull at the waterline, CNN reports.
The Ship was in port in Yeman during a routine fueling stop.
This attacked turned the Petroleum contracts right around and moving strongly into record territory. The sudden price advance is obviously tied to this suicide attack.
SteveH: Interesting approach. They had to be completely caught flat-footed as there Plananx defense system should have been able drop em like flies. They could of been in port perhaps.
At least four sailors have been killed in what US officials are describing as a suicide attack on a US Navy destroyer in Yemen. An American spokesman said a small inflatable craft packed with explosives had rammed the destroyer, the USS Cole, in the port of Aden. At least 31 people have been injured. "There's a 20-40 foot hole on the port side on the waterline," said Lieutenant Commander Daren Pelkie from the US Fifth Fleet headquarters in Bahrain. "The flooding has been contained. No fire reported. The ship is listing four degrees to port," he said. There has been no comment from the Yemeni authorities.
Gulf mission
The USS Cole is a Arleigh Burke class destroyer, with a a crew of 350. She was heading to the Gulf to join the US-led maritime interception operations in support of UN sanctions against Iraq. It went through the Suez Canal on 9 October, down the Red Sea and called into Aden for refuelling.
The Israelis (Alledged Allies) and Now Arab Terrorists
http://www.halcyon.com/jim/ussliberty/Yesterday I posted a URL to the USS Liberty Memorial site. Captain McGonagle was awarded the Congressional Medal of Honor. Unfortunately it was awarded in secret and not at the Whitehouse as is customary so as not to "offend" the Israelis! What the hell do they got over us? They don't even have any oil. Should wash our hands of all of them and let them duke it out - winner takes all!
It looks as if three of the bidders for SPR oil were not able to acquire the necessary "letters of credit" and those bids may be withdrawn, the oil may perhaps be submitted again at a later date. These "players" were unknown by anyone in the petroleum industry. That probably should have been a clue, however, when those in charge of the auction attempted to contact one of the individuals at his home in Harlem - his mom answered. That should of been a red flag, but they have yet to withdraw the bids. Hmmmmmm���.
You asked about gold stocks. I own NEM, HGMCY, and GOLD; all are under water for me. I am hanging in there hoping they recover to my buy levels and then I will sell. Gold stocks carry a lot of potential leverage but they are poor proxies for investment in PM and are terribly volatile. Gold stocks are for gamblers (like me) and professional investors (like Stranger). Gold stocks are a "whore's dream".
I do in fact believe they will all recover to my point. If my gold stocks weeren't well hedged I'd be worried.
Even Today There are Some Comedians on Wall Street
A petroleum analysts was interviewed on Bloomberg this morning. He said that if oil went to $50.00/bbl, then everyone would have to add oil to their portfolios. This rocket scientist is a bit late to the party as usual.
LONDON, Oct 12 (Reuters) - OPEC member Iraq wants customers lifting its U.N.-supervised crude oil exports to pay in euros starting in November, an oil official said on Thursday. Baghdad, which accounts for five percent of internationally traded crude, is consulting the United Nations about the possiblility of making the switch from dollar payments, the official added by telephone. "Iraq this month has asked the U.N. to open another separate euro account in addition to the present dollar account," the official contacted in Baghdad said. "From November all letters of credit for the exports must be opened in euros and payment made in euros," the official said.
A Western diplomat said he did not anticipate any objections to the setting up of a euro account for Iraq, whose revenues from an oil-for-food deal with the United Nations are deposited in a dollar U.N. escrow account in a French bank in New York. "If it's just a case of setting up a new account, I don't see why there would be a problem," he said. A major lifter of Iraqi crude oil said the potential euro payment switch "shouldn't create a problem for anyone. They will just have to define the conversion rate." The Iraqi oil official said he knew nothing about any plan to halt oil exports if the United Nations declined to cooperate.
Abdulillah Putrus, deputy governor of the Iraqi Central Bank, was quoted by the weekly al-Zawra as saying Baghdad might halt oil exports unless a bank account holding its U.N.- monitored revenues was changed from dollars into euros. The reported statement runs counter to an announcement by Iraqi Vice-president Taha Yassin Ramadan at an OPEC summit in Caracas on September 28 that Baghdad would not hold back its crude from the world oil market. Asked what would happen if the United Nations declined to arrange euro payments, the Iraqi oil official in Baghdad replied: "This is not my domain."
The official said a clause stipulating payment in euros would be included in sale contracts for November loading crudes. "We are still talking about November prices now. We have not notified our customers about anything directly," he said, adding: "We do not anticipate any problems with our customers paying in euros." "We are talking with the U.N. about this now." U.N. sources said in May that the Banque Nationale de Paris account had a record $7.8 billion from proceeds of Iraqi oil sales under the U.N. humanitarian oil exchange. Iraq exports of 2.2 million barrels per day at current prices earn about $57 million a day. The oil deal allows Iraq to sell oil over a six month period on a renewal basis to buy food, medicine and other humanitarian goods for the Iraqi people reeling under stringent U.N. sanctions imposed for Baghdad's 1990 invasion of Kuwait.
The Iraqi government decided late last month to halt trading with the dollar and replace it with the euro or any other currency. A statement by the Iraqi government after a September 14 cabinet meeting which originated dropping the dollar said the move was to confront the "daily American-Zionist aggression."
A gentle rebuttleI emphatically do not disaggree with Rhody's analysis of the supply shortage in above ground silver or the ludicrous short position. But it should also be stated that while the shortage undoubtably exists, part of the European bullion availability is a function of form not substance. A major proportion of European silver (some 60% of silver supplies over that of N. American) is in the form of granular silver. This silver would obviously be held in lower esteme than solid bullion.
At least this is my understanding, and the information may, of course, be disinformation from a Cabal spokesperson.
NEW YORK (AP) - The Dow Jones
industrial average plunged more
than 300 points in early trading
Thursday as an earnings warning
from home improvement retailer
Home Depot added to fears that the market has yet to bottom out.
ATLANTA (AP) - Shares of Home Depot plunged 26 percent
after the home improvement retailer warned that its third-quarter
and full-year earnings will fall short of expectations, primarily
***because of price deflation*** in lumber and building materials.
He'll probably say: "Well, oil was cheap that year"
XXX DRUDGE REPORT XXX DEC. 7, 1997 XXX
"The most vulnerable part of the Earth's
environment is the very thin layer of air
clinging near to the surface of the planet, that
we are now so carelessly filling with gaseous
wastes that we are actually altering the
relationship between the Earth and the Sun - by
trapping more solar radiation under this growing
blanket of pollution that envelops the entire
world," Vice President Gore told the U.N. Global
Warming conference of 159 nations this morning
in Koyto, Japan.
In what was one the most dramatic speeches in
recent memory, Gore announced to world leaders:
"Whether we recognize it or not, we are now
engaged in an epic battle to right the balance
of our Earth, and the tide of this battle will
turn on when the majority of people in the world
become sufficiently aroused by shared sense of
urgent danger to join an all-out effort." ----
--- The message is serious. So serious in
fact, the DRUDGE REPORT has calculated that Vice
President Al Gore is burning more than 439,500
pounds of fuel, or 65,600 gallons, at a cost of
more than $131,000 on his 16,000 mile daytrip --
just to deliver the warning!
Peter - This Home Depot story makes me wonder if guys who build decks should be rejoicing over the cheaper materials or worrying about a slowdown. I hope the lower prices are all that's troubling Home Depot, but I doubt it. With consumer debt where it is, you'd think home improvement is in for a skid. I'll bet you have some thoughts on this.
By the way, this was not in the news release, but Morgan Stanley said this morning that Home Depot's margins are also under pressure due to higher wage demands.
*****
I called USAGOLD this morning to see about buying a gold coin as a Christmas present, but I was told they have a ten ounce minimum. Rats. Does anybody know, is that because of delivery costs?
Reply to Giovanni and Asher about Savings comments yesterday
When you own stock regardless of how "irrationally exuberant" it's priced you still own a share of the company and thus are invested in it's physical capital. All this talk about the need to own physical gold is silly because a share in a mining company is backed by the gold reserves in the ground, equipment, etc... and it will rise even higher than the price of gold due to the p.e multiplier effect, by which I mean that the paper asset bubble will switch from non gold stocks to rationally exuberant gold stocks. Contrary to most I see a financial meltdown as a positive liberating occurence like the end of the movie Total Recall or the book Atlas Shrugged, except I expect it (bubble deflation) to be smooth and controlled and not a panic ridden hysterical crisis like has always occured in the past. Greenspan will not let things unravel out of control.
http://biz.yahoo.com/rf/001011/n11404937.htmlRather gross intervention it seems. Someone must be in trouble with puts issued at what appeared to be juicy margins during the selloff in Apr-May. Time to make those puts worthless again.
Note news of Morgan Stanley difficulty with the junk debt they had on their books. Rumors of a bailout.
Well, I just read my first report from a Wall Street Analyst who actually understands a small measure of the oil business and supply demand issues. In a CIBC report by Rubin dated October 4,2000 called "The Wall," they elaborate on the Hubbert Curve as the primary reason why oil prices will coninue rising next year staying between $30-$40 and probably moving to $50 soon after. The era of cheap oil is over according to them. It's what Black Blade, myself and many others here have been saying.
They also talk about oil production decreasing with time from these giant Middle East deposits, i.e. depletion. ;-) They also predict that demand growth of 1.5%/year (10 year average) will cause us to max out supply in 2 years, or they predict if demand slows (due to high prices) to 0.5%/year that it will take 6 years to max out supply. After that oil prices will reset at their true market value.
A very good report. If you have access to it, it is very informative.
BAGHDAD, Oct 12 (AFP via energy24.com) - Iraq could suspend oil exports if the United Nations fails to convert to euros billions of Iraqi dollars blocked in special account, according to the deputy governor of the country's central bank.
"Iraq may suspend crude exports if the United Nations refuses to reply favourably to its request to convert into euros its account at the French bank BNP," deputy governor Abdel al-Ilah Boutros told Al-Zawra.
Iraqi Finance Minister Hekmat Ibrahim al-Azzawi announced last month a decision to ditch the dollar in foreign trade transactions.
"The dollar is the currency of an enemy state, and must be abandoned for other currencies, including the euro," Azzawi said.
The central bank announced Sunday it had begun to buy European currencies.
Since December 1996 the United Nations has allowed Iraq to sell oil to pay for imports of food and medicine. Under the decade-old sanctions regime none of the revenue is allowed to pass through Iraqi government hands.
Instead, it is paid into an escrow account at BNP-Paribas, which is paid a fee for operating the account.
My comments: Black Gold leads Gold Gold. It's coming people...even higher oil prices, a reserve currency switch, a hyper-inflated dollar, and a much, much higher gold price.
Home Depot blaming declining lumber prices is a crock. They have always used lumber as a loss leader and it never was a profit center to begin with. They have resorted to the Intel way of explaining away a disaster in earnings. The truth probably lies in customers refinancing going sour, and credit card debt at maximum levels.More ominous is how addicted they are to fund inflows, and how vulnerable they will be to a slowdown. Wickes Lumber's bankruptcy in the 1970's shook down all the major players; their receivables were only a fraction of what vendors float to Depot. don't underestimate this stock as a harbinger of bad things to come on Wall Street. (and main street)
Good g-ddam! I'm finally making some money, after YEARS of "rational calmness", on my BEARX. Now buyer's remorse sets in. ("Wish I'd'a bought more.) Don't let this happen to you with you-know-what when you-know-what happens!
Of course, my procrastination has served me well, to keep me from buying $30,000 of puts in that time, instead of only $10,000. (I'm just trying to use up my capital loss carryover, honest, officer.)
The relationship has to do with both economic conditions and the monetary policy reactions.
Gold ups are related to expansionary monetary reaction to the decline in stocks and the economic damage associated with this decline. Funds that had moved to bonds would then react with inflationary fears as a result of the monetary injections and would move to gold.
you said:
I called USAGOLD this morning to see about buying a gold coin as a Christmas present, but I was told they have a ten ounce minimum. Rats. Does anybody know, is that because of delivery costs?
me: My lovely wife would just find nine other people to give gold coins to!
Re
>>>>Reply to Giovanni and Asher about Savings comments yesterday When you own stock regardless of how "irrationally exuberant" it's priced you still own a share of the
company and thus are invested in it's physical capital<<<<
Qualitatively correct but, quantitatively, what % of that "irrationally exuberant price" do you suppose represents that "physical capital??
Sure will take 460.Would be very healthy to my mining shares.If we only could test this discussion soon....
I hope so,putting together FOA "restructuring of Goldmarket in the US" and Don_L.'s cube with the weakening of the 330 and bullish signs into next year.I would expect 350 soon.
But what beyond?I have seen what happened in the Pd market.It did not build up confidence.And Veneroso revised his forecast to 2000$/oz.One should not take this guy lightly.Do you expect Comex still in healthy operation at 2000 POG?
http://www.usagold.com/onlinestore/special.htmlBeleive it or not, there are minimum requirements for withdrawal at the vault where the gold is kept secure by our agents prior to packaging and shipping.
No promises on the outcome of this angle, but we suggest you flex a little muscle and make sure whomever you talk to at Centennial (800)869-5115 is aware that you are a poster. Strings can sometimes be pulled and special arrangements made.
Also, there's no minimum order when done for the selected coins offered through the on-line page.
Stranger: Per Hoople's post, Home Depot caters mostly to Do-it-yourselfers. I haven't seen any local indication of a contractor slowdown, either in the coastal market or the Improvenet lead flows from Portland. Two weeks ago, coastal lumber prices were spiking up. My call on home depot is that their DYI customers have maxed out their credit cards. Though their sales gross is up, as Hoople points out, they may be making their volume on the low margin products, I don't believe the re-fi budgets go there. Very little of overall contractor volume goes through Home Depot. Mainly small jobs and they don't have the product line to service the high end.
We got two Improvenet leads for major remodel-expansion plans in the last 24 hours.
"Yesterday I posted a URL to the USS Liberty Memorial
site. Captain McGonagle was awarded the Congressional
Medal of Honor. Unfortunately it was awarded in secret
and not at the Whitehouse as is customary so as not to
"offend" the Israelis! *What the hell do they got over
us? They don't even have any oil. Should wash our hands
of all of them and let them duke it out - winner takes
all!*" -Black Blade msg#: 38840
Political and disinformation influence is "what the hell they got
over us." Social security may be the "third rail of politics;
touch it and you're dead," but Israel is the OTHER third rail of
politics.
The pro-Israel lobby is well organized and EXTREMELY well
financed. Beleivable rumors have it that at least one Moussad
death squad is active in the U.S. No politician in his right
incumbent mind would ever challenge Israel. As a result, despite
its small size and realative wealth, Israel gets more U.S.
foreign aid than any other country in the world, and if you
question Israel's "right" to this massive foreign aid, ADL, etc.
will officially declare you "anti semitic." At least in part
this explains why, despite "fiscal responsibility" and "budget
cutting" having been the catch phrases of the moment, one of Mr.
Clinton's first official acts as President was to reassure Israel
that it's foreign aid was secure.
Lose - lose:
Research shows that it takes four to five positives to offset one
negative. So the equation is this: Country A and country B are
fighting each other. Country C helps Country A once. This
equals 1 perceived plus point for country C from the viewpoint of
country A - - - but at least 4 negative points _against_ Country
C from the viewpoint of Country B. Net score for busy-body
Country C: +1 -4
Let's assume Country C is attempting to be "even-handed" and so
_also_ aids Country B once to keep things even. Now the equation
for that one aid to Country B: From the viewpoint of Country B,
plus 1; from the viewpoint of Country A, minus 4.
Net result for both acts of aid by busy-body Country C are as
follows: From the viewipoint of Country A; plus 1 and minus 4 =
minus 3. Same applies from viewpoint of Country B.
Thus the composite score of busy-body Country C is minus 3 and
minus 3, a total for Country C of minus 6. At least in times of
conflict, Murphy's Law of politics is no well intentioned act
shall go unpunished.
The lesson is clear: MIND YOUR OWN BUSINESS, or in the words of
G. Washington in his Farwell Address, "avoid foreign
entanglements."
Clarifying, on re-fi I meant primarily the 120% equity loans so popular the last several years, they would take excess and remodel (or buy stocks). Those loans are drying up. Your other points are all valid. Nobody prior to Depot ever brought such incredible leverage to this industry. They,along with Lowes, have very little margin for error.Combined they are opening a new store every 48 hrs I believe. When the funds rocket fuel runs out the wheels can come off quickly. Combined with extreme wage pressures and stock options vaporizing it is a very ugly possibility.
When buying shares from another does not add to net savings
Mr. Asher,
When you buy shares in a company, someone else sells you those shares. So for you, you are considered to be saving whereas for the seller, he is dissaving. But this is a wash with a net-saving of Zero. The exception is if you are talking of a new share issuance or some sort of venture capital project.
Savings generally refer to income that is saved by lodging it into a bank which in turn loans the money out for capital formation which in turn produces more income.
But what is most troubling in america is the massive spending on consumption. Today America piles on debt and consumes like there is no tomorrow. But tomorrow they will have to pay. We know that the trade deficit has risen to extremely dangerous levels, and this will ultimately have a seriously negative effect on the dollar.
The Israel Lobby has two major components, the largest being the fundumentalist Christian support which is not loud but very effectively catered to on the Republican side and considered by the Democrats as well. The smaller portion, and the louder one, is the Israeli and Jewish lobby that you are referring to.
Despite the political and funding pressure applied on this side, the State Department has had a most anti-Israel approach that started in 1936 with the takeover of oil activity in Saudi by US oil companies. Only after the expropriation of oil fields by the Gulf states in the 50s was the attitude softened slightly and roles reversed with the Soviets (who were Israel supporters before). The unreliability of Arab sentiments was only then considered a problem and Israel was viewed (being a Western democracy) as a counterweight to the Arabian militancy which had finally moved to seeing the US as just another collonist just like the Brits and French (who were anti Arab and actively pro-Israel at the time).
In the US, it had only been in that time that actual anti-semitism had peaked. The Jewish vote came into play as a solidly recognizable and organized block only at the end of the 50s when Jews started voting together with blacks and Catholics to whomever seemed most inclined to help them in their struggle against bigotry.
The Arab belligerency towards the West in general and Israel in particular was very visible in the West, and Israel won much support from both Europe and the US, while the Arab states turned into Soviet clients, while the oil states played the two sides against each other.
Anti-Israel attitudes rebounded in the US State Department and in Europe during the first oil crissis in 1973-4. The Israeli victory in the October war was tempered by US and European pressure not to anihilate the Egyptian and Syrian military forces because of the Saudi and other oil state's threats to stop oil supply to Europe as well as the US, and the US' general insolvency reducing its leverage with both parties. Soviet threats at the time were sufficiently frightening to have the US decide to halt the Israeli advance.
The US State Department has continued its anti-Israel bias despite countless occasions on which Arabs have shown utter enmity to the US. Their stance relative the oil states could be somewhat understood, however, support for the PLO is an utter mystery outside of the fashionable support they have received from the Soviets and their remaining dregs in the socialist and social democratic parties and intelligentsia. It is a fact that PLO and Palestinians have been poison to anyone who embraced them, be it Lebanon which they destroyed completely, or Jordan which responded with a ruthless uprooting of the PLO complete with wide scale massacres, or Kuwait and Saudi, where Palestinian rabble looted and cheered as Kuwait was overtaken and Saudi shook in fear, and now Israel and its suicidal leftist peace movement. Despite this, they have enjoyed support from Western socialists, which I expect will be the next victims.
As far as your arithmatic, reactions from Israel to assistance to Egypt and Saudi/Kuwait were not at all negative, but raised the hope of peace and cooperation with both. On the Palestinian side you can see the reaction to assistance to them as -1 to -2 and assistance to Israel as a -6. Fortunately, the Palestinians, having shot their friends and their feet so many times in the past have nothing to offer anyone but to stop their violence. Though that may seem like something, the violent reaction on their side to what was a minor provocation by Sharon, demonstrates their unreliability and prove Sharon's point that peace with this group is not worth the paper it is written on.
The monetary pressures on the US by Arab oil and Europe (attempting to deliver on old promises to oil) had forced Bush, and then Clinton, to balance the budget and to engage Israel and the Palestinians with a distasteful peace which the Palestinians never wanted at a popular level. The stated position and the popular sentiment of Palestinians has been that they still desire the anihilation of Israel. The peace process was just another step on the way there.
The Palestinian problem is that of the Arabs, and it is a conceptual misunderstanding of the West that is completely inside their heads. Symptomatic of the problem was yesterday's interview with X Israeli PM Netanyahu and with a Palestinian official. The Palestinian response to Netanyahu's words was a dismissal of Netanyahu as a "deposed" leader who is powerless and can be dismissed out of hand. What this demonstrates is the traditional disbelief of Arabs in both the sanctity of contract and the possibility of voluntary cooperation. This has brought them to miss the revolution of private property rights and freedom (all limited, of course) which underlay the economic success of the West and the running of international trade.
Arab oil nations still don't understand that the value of their oil is not physically intrinsic to the oil
but is derived from the great number of consumer items made from it that satisfy consumer wants and needs. If reliable oil supplies are not to be had from Saudi and friends, then producers will do their best to satisfy consumers with energy and chemical precursors other than oil. Once the infrastructure for alternatives is in place, they will lose pricing power for oil forever. Much of the decline in inflation adjusted oil prices since 1980 is attributable to the fall in its relative importance to electric generation, which is now dominated by coal and natural gas. Which, in turn, was a result of the 70s oil crises.
Many of the junk bonds have gone "no bid" according to a knowledgable source .
I don't want to over emphasize the importance of the "no bid" situation in the junk market, but it does illustrate that the junk market is currently not liquid and that is generally a crisis situation in many areas of the investment business when you can't sell what you have in order to get money to meet redemptions etc. It is the literal freeze up of that market that means literally that at this moment at least there is no market price at all for certain low quality bonds. Very interesting. It should throw some interesting monkey wrenches into some of those computer dynamic hedging models of the "Masters of the Universe".
One of my favourite columnist's take on mideast "peace" process.
Charles Krauthammer (The Washington Post)
October 7, 2000
Fighting has broken out in the Middle East, we read. This use of passive phrasing, almost universal in media reports on the violence in Israel, is a way of deliberately expressing agnosticism about the cause of the fighting. It is a scandal. It is akin to writing that on Sept. 1, 1939, war "broke out" on the German-Polish frontier.
Few wars break out spontaneously. And certainly not this one. Does anyone believe that Ehud Barak, who went to Camp David and offered the Palestinians peace terms of breathtaking generosity, would be starting a war? Does anyone believe that the most dovish government in Israeli history, feeling itself just inches away from concluding a permanent peace, would initiate gun battles?
The plain fact is that Yasser Arafat, thrown on the diplomatic defensive by rejecting Barak's offer (to the astonishment and dismay of the American mediators), has done what he has always done: resort to violence to regain the initiative and, most important, mint new underage martyrs--on world television--to regain the international sympathy he had forfeited by turning down peace at Camp David.
His pretext was that the Sept. 28 visit to the Temple Mount by Israel's leader of the opposition so offended Islam that the faithful erupted in violence. The audacity of this claim is astonishing. Yes, the Temple Mount is the third-holiest place in Islam. But it happens to be the single most holy place for Jews. Why does the Muslim claim so trump all others that Jews may not set foot on their most sacred site, their Mecca?
The war that followed was as spontaneous as a Havana demonstration. The preacher at the al-Aqsa mosque called at Friday prayers to "eradicate the Jews from Palestine." Official Palestinian television began playing over and over archival footage of the Palestinian intifada of 1987-1993 showing young people out in the streets throwing stones.
In case one still didn't get the message, Voice of Palestine radio began playing patriotic war songs. Arafat then closed the schools and declared a general strike, causing everyone to go out into the street. With Arafat's chief political lieutenant on the West Bank orchestrating the militias, war then "broke out."
The doves are stunned. Avraham Burg, speaker of the Israeli parliament and one of the architects of the Labor government's bend-over-backward peace proposals, writes perplexedly, pathetically: "Do we really understand what is going on? After everything was given, there are still demands on the other side."
"Suddenly we discovered," he continues plaintively, "that what we mean by peace--which is mutual reconciliation--is not being met by the other side."
Suddenly? Where has he been for seven years? Seven years during which Arafat built his "police force" into a 40,000-man army now unleashed on Israel. Seven years during which Arafat repeatedly said that the peace process was one option and that if he did not get everything he wanted there was another. Seven years during which his state-controlled television, radio, newspapers and now children's textbooks inculcated in his people an antisemitism and anti-Zionism so virulent that it has succeeded in producing a new generation bred on reflexive hostility to Israel.
Seven years during which he repeatedly called for "jihad" for Jerusalem. Well, it has now arrived. That is the meaning of the current fighting.
This is, as the Palestinians openly call it, a war for Jerusalem. Not, as the world press has reported endlessly and fatuously, an expression of Palestinian "frustration." Frustration with what? Israeli occupation? It ended years ago; 99 percent of Palestinians live under the rule of Yasser Arafat. Over territory? Barak has conceded virtually the entire West Bank. Over political subordination? Barak offered full recognition of the first independent Palestinian state in history.
The Palestinians are less frustrated than emboldened. Emboldened by an Israeli government so desperate for peace it has given up "everything," as Burg admitted. Emboldened by the fecklessness of Burg and his colleagues, so impervious for so long to empirical evidence of Palestinian implacability that in this moment of supreme crisis they admit openly to disorientation.
Emboldened by an American administration so craven that it refuses to condemn Arafat for cynically starting this war, indeed for repeatedly violating his single obligation under Oslo: the renunciation of violence.
"After everything was given," laments Burg. Yes everything, except one last thing: the Temple Mount. Why, Barak went wobbly even on that. He offered to relinquish sovereignty over Judaism's holiest site and internationalize it under the U.N. Security Council.
Arafat refused. He demands ownership--the audacity is breathtaking--of Judaism's holy of holies. Hence this war.
It is not spontaneous. And it is not without direction. Arafat knows what he wants, and he is prepared to sacrifice as many of his own people as it takes to get it. Preferably on television.
I happened to catch George Will on a Sunday morning TV talk show and, essentially, he supported Krauthammer's assertions regarding Israel going the extra mile for peace.
Thanks for the post...its about time we saw a perspective that shows, more accurately, what is going on in the Middle East.
Oh yeah, he also responded to Paul Begalis (sp?) who was defending Gore's propensity to "exaggerate". George Will stopped him cold and said: "Wait a minute. If I go fishing and catch a fish that is eighteen inches long and claim it was twenty inches long...that's an exaggeration. But if I claim the fish was twenty inches long and I never even went fishing...then that, Sir, is a lie."
Good points, Sir ! It is amazing to me how many simply don't understand how much market valuation is based on "fantasy". If a stock in Company-X (for example) rises from $10 per share to $20 per share, there is no increase in "capitalization" for that company unless and until the company holds it's own stock AND sells such stock into the higher market price. In the case of the outstanding stock, only the outstanding share holders actually "profit", and again, ONLY if they sell into the higher price. Of course, splits, new issues, etc. can effect the overall game, but the basics are really quite simple. Rising prices or falling prices matter little until you take advantage of the play to increase your position. Just as with gold, there is no "profit" in holding physical if you consider more gold to be your definition of "profit". Only when you sell do you realize a "profit" (increase in fiat).....in the meantime, 100 ounces remains 100 ounces. But then, isn't that one of the characteristics of "real money".....something that actually EARNS NO INTEREST ? If it is truly "liquid" (readily available for use), it can earn no interest. If it is earning interest, someone other than youself has control of it and it becomes no longer "liquid" to you.
As the late Sam Walton was fond of saying......."It's all just paper". All except the GOLD, that is !
What Abbey Joseph Cohen has claimed, and Yardeni confirmed as to the stock market (and the corporate bond market) was that there was an unusual reduction in risk premiums over the last few years. The reason for this was the growth of popular participation in the equity market. The popular view is that this is a money market account with a better interest rate. As such, the "lack of savings" in the US is actually more the function of monetizing stocks in people's minds. Though investors are intellectually prepared for the possibility of loss, they neither think it would hold long term (i.e. over 1 year) so that stocks will recover, nor do they have the emotional experience of stocks falling and not getting up.
The Fed assistance to the markets at all major crashes has created moral hazzard both on the popular level and the commercial level, with derivatives blowups being swept away by recurring flows of Fed liquidity, and even low interest rates. These banks have found the reliable Fed assistance made the issue of equity index puts a profitable endeavor that assisted them in the core business of selling the latest flavor IPO and floating the most absurd of loans into the markets based on "enterprise value" (i.e. the expected market value of the company in the bubbly stock market).
The result has been the effective use of popular investment vehicles in stocks being used by the public as part of their cash balance- my "M9". Executives, who should have known better, borrowed against their stock holdings in order to avoid the sure tax loss with a possible market loss. Since this habit effectively made the stocks into money, it was just a matter of time till those more knowledgeable would catch this crowded trade and shake out its weak players. Now, the Fed must decide (once again), whether its policy of market support must be used in order to make good on people's expectations. If they do, the inflation of money supply required will take your breath away. At 10% annual M3 growth rate it has not brought the decline to a stop. I expect it will continue to expand till the market does respond.
Re your : " Now, the Fed must decide (once again), whether its policy of market support must be used in order to make good on people's expectations. If they do, the inflation of money supply required will take your breath away."
Is there any doubt THIS Fed will succomb to this temptation? (Or any other Fed for that matter?) Else wise, what's the point of having fiat money?
Your mention of "Enterprise Value" reminds me of the story of an old man walking along the trail when he happens upon a young lad sitting and gazing off into the trees.
"Whatcha doin' there, sonny ?" the old man asks the lad.
"Oh, just looking at my property" he replies.
"This is all yours ?" asks the old man.
"Yep, all 100 acres of it" continues the lad. "Bought it just last week, and I think it has alot of potential."
"Sorry to burst your bubble, sonny, but this piece of land has no potential at all !" barked the old man.
"Huh ?" responded the youngster, half in surprise and half in anger.....
"Nope..." said the old man. "Only potential 'round here is sitting on his butt 'wishin' ..... !
(Just a sneak peak at your first paragraph before a run to catch the Post Office closing:)
For the innumerate (economics- and math-challenged) American consumer of equities, those newspaper ads touting 1-year, 5-year, and 10-year mutual fund returns look pretty much like those funny percentage-thingies the banks advertise in their CD-rate ads, only much higher, don't they? Sheesh!
This is a very dangerous situation. I believe this part of the Middle East saga will prove to be extremely important.
Four are dead, 12 missing and another 30 injured. This terrorist attack is very, very large. I'm sure US intelligence is aware of those responsible. In a day or two this may become public knowledge; imagine Iraq related?
Gold Up, Oil Up, and Middle-East Powder Keg Explodes!
It is good to see gold perform under these conditions. Gold is thought of as a safe haven when the markets take a dive. There have been unseen powers that have worked to constrain the POG in spite of uncertainty in the markets. Today's $5.80 rise in gold is a start, and gold is up another 60 cents in the Asian markets.
Journeyman: It is quite funny isn't it? Moses takes his flock and bumbles around the desert for 40 years. Next morning he gathers his people and says - "Here it is" Of course he chooses the only place in the Middle-East without any oil. Bummer.
Pheonix: Oil up $2.81. Tonight I heard an oil analyst discuss the end of cheap oil. Damn near fell off the chair. Really think they might be catching on? This morning another one said that he's a buyer at $50.00/bbl. HUH? Not only is he late to the party, he's going to buy high in order to sell higher? I know oil is going much higher, but the drones that watch over this business are definitely not going to be accused of being America's best and brightest. ;-)
The bears were out in full force today, feasting on many stocks. The bears should have eaten enough for their winter hibernation. What a blood bath, a wholesale rout with the Dow Jones Industrial Average down 375 points on huge volume. For all of you novices out there, this is just phase one! Wait until the DOW drops decisively below 10,000 and then watch the panic set in. That sound you hear coming from down the hall is the sound of your mutual fund managers puking in the bathroom stalls. They will be forced to sell stocks just to meet the redemption notices, as middle class America realizes that it has been had by Wall Street and its spin doctors, CNBC "talking heads" et al. Chart-wise, the DOW could drop to the 7500 area where is was back in 1997/1998. A drop of this magnitude would match the 38% drop so far in the NASDAQ. I expect it to happen sooner than you think. Why? Because there have been hundreds of billions of dollars of market capitalization lost in the past week. Poof! Gone to money heaven. Selling begets more selling like the proverbial snowball rolling down the mountain.
With events in the Middle East spinning out of control, the phones were ringing constantly today. People wanted to do IRA rollovers and partial transfers into gold--just to name a couple--and it is not even the season for IRAs. But it is the season for GOLD! On a different topic: One client suggested the following to me: Isn't it a bit strange that a U.S. warship pulls into a Yemeni port unannounced for a six-hour re-fueling operation and then in that brief time it is attacked? Would it not make more sense that SOMEONE knew in advance it was coming and then prepared the rubber boat with the explosives? Would this not point to an inside job a la Mission Impossible type operatives? It would sure make President Clinton look more presidential and maybe boost Al Gore's ratings. Hmm. Just a thought.
Finally, GOLD jumped $6.00 per ounce on all of the news referred to above. As the saying goes: You ain't seen nothing yet! I fully expect to see days where gold jumps $15-20 in a single session. Tomorrow's PPI is already considered by Wall Street to be a non-event. But tomorrow's figure is ancient history. IF crude stays where it is and even goes higher (which I expect shortly), then next month's PPI and December's PPI will show big inflation even at the core rate. With crumbling stock prices and rising energy prices, smart investor are now turning to gold for safety. Soon the word gold will be on the lips of investors at parties. Now is the time to buy your gold or add to your positions.
CNBC reporters repeatedly characterized today's rally in the gold market as a flight to quality, typical of what happens when peace is threatened. One even said that gold is in decline these days and that the activity was, therefore, likely just a one day bounce.
Now, it always strikes me as funny when some naive JOURNALIST steps beyond her purview with such authority to make facile pronouncements about the markets. But surely, anyone who has been around the last fifteen years knows it has been a long time since gold has been used as a refuge from international crises. In fact, the stolid metal has pretty much ignored every international confrontation I can recall, and I am 52 years old.
Call me a cockeyed optimist, but I think something else may have been at work in the gold market today. All of us here at the Forum, have been aware of the great money supply inflation of recent years. All of us knew there was going to be a day of reckoning for the explosion in credit, which, among other extravagances, had put an SUV in nearly every American garage. All of us knew the Dollar was up to it's armpits in gasoline. What we had awaited these many months was a spark, something to set that gasoline off and wake everybody up.
One expert after another has reassured us for the last two years that there was NO INFLATION in the United States. Yes, oil prices were up, but that was surely temporary, and, in any event, oil doesn't really matter like it used to. Well, I think what happened in the oil markets today may have been the spark that made people start to wonder. Maybe all those financial geniuses didn't know what they were talking about after all.
Oh, today was a flight to quality, alright. It was a flight to the real stuff.
I don't think the talking heads have put one over on anybody. They, like the common sense public that listens to them, simply does not know how to conceptualize, ie. think. No panicky crash just a smooth controlled market deflation landing by master pilot Greenspan.
It's starting again. Phillipines financial system is in trouble in face of govt scandal
"Manila, Oct. 12 (Bloomberg) -- The Philippines raised key interest rates by 4 percentage points, the biggest jump since the Asian financial crisis three years ago, as the peso plunged on a political crisis that threatened to bring down the president...Still, concern about contagion to the rest of the region should be slight as ``concerns stem from an isolated political problem...Making matters worse, the government today cut its growth target for next year and raised its forecast for inflation. At the same time, it acknowledged its budget deficit this year is likely to be about a third larger than the target set for the nation by the International Monetary Fund."
"IMF officials are in Manila this week to review the country's economic performance and are in ``more or less continuous contact'' with Philippine government officials, according to fund spokesman Thomas Dawson."
http://www.bloomberg.com/bbn/topworld.html?s=AOeYX0BTvUGhpbGlw
Well, it looks like I have been banned from my SECOND gold forum, as critical comments I made concerning gold investors recently caused revocation of my posting rights at Gold-Eagle.
Moreover, I was accused of making ad hominem comments aimed at one poster (true!) however my only defence is that they were in response to ad hominem comments directed toward me. If you are going to dish them out, you best be prepared to receive them, and, as someone who lost millions in this gold market ON THE LONG SIDE, I do not appreciate anybody who suggests I ever shorted gold (there are many times I wish I did though).
So, Michael, you get me back by default, and I look forward to the day when you pull the plug on me as well :-).
Unfortunately, I am NOT the old gold cheerleader I used to be because I cannot suffer the endless abuse dished out to gold investors by the gold mining companies themselves. I do not accept the status quo in the gold mining industry, one which decimates and defrauds its shareholders on a daily basis, one which harms the environment at the expense of a higher quality of life, one which promotes gold in public whilst shorting it into the ground behind shareholders' backs.
Finally I cannot suffer the daily abuse that gold investors serve up to each other as they merrily trash each others' gold investments, (thereby providing ample ammunition to the gold shorts), when the real enemy (bullion banks and their overhedged gold producer partners in crime) watches from the sidelines, laughing at the disunity they have sown amongst gold longs. I am sick of the interminable stupid gold debates (numismatic vs. bullion, N. American vs. S. African, paper gold vs. physical gold, etc.).
We are NOT the enemy, the enemy is NOT us! THEY are! STOP
warring with each other over nonsense.
If I am guilty for being hard on goldbugs, well tough!
If I make them mad, great, GET MAD! ,
STOP tolerating this masochistic status quo in the gold business, this "businesss as usual" attitude.
DON'T be satisfied with a lousy 6.00 gain in the gold price today, it is a puny little obscene joke, it is an outrage, given all the upheaval occurring today, the gold price should have jumped 50.00, and the XAU should have climbed at least 20 points.
DEMAND more, ASK for more, RATTLE cages, GO out and GET it!
But the main thing is to create an alliance of perspective because otherwise the united enemy always will defeat you.
http://www.bloomberg.com/bbn/topworld.html?s=AOeYX0BTvUGhpbGlwYou'd think that if the Phillipines had a sound economy then political scandal wouldn't make that much of a difference. Anyhow their Central Bank raised rates 4 full percentage points to try to stop its currency from falling in value (inflating).
Have you ever considered that you may be carrying a little too much baggage to be obective on this sector?
As a fellow banished G-E poster, thought I'd be the one to ask. ;-)
Lamprey
P.S. - Doesn't take much for Vronsky to pull the plug...I didn't last 24 hours, yet I've seen others hang on for weeks after REALLY disrupting his establishment. Kind of a moody fellow.
Ah, Gresham's Law in action. I will ask the armorer to buff the nicks from your blade and shield on the morrow. We will wish to hear more of your golden travels.
I'm glad to see you still have fire in your gut and spirit in your words. Perhaps long gold while short the S+P might be the ticket now. Welcome back.
Rich
http://www.bobbrinker.com/summaries/102000.aspFor those who may not know of Bob, he has quite a following and is one of the few market commentators I truly respect.
He advised his listeners to bail in January and also was able to make a nice trade on the June-August Nasdaq bounce.
He is looking for a long, painful bear market in stocks.
HOWEVER,
His expertise is the equity markets, not commodities. I've noticed that very, very few people are knowledgeable in both areas. The provided link is to last week's summaries -- they are worth a listen...including the one on gold.
A hint...same old arguments, but he has no ax to grind -- just doesn't know this arcane sector, imo.
Also, by being bearish on gold for the past 18 years, he's missed several very important rallies.
I told a friend yesterday that it would be like the Nasdaq falling to 1500 (very possible) and then rallying to 2900 within ten years, only to have someone say they are bearish on the market because it was still down from its high of 5000!
I have no direct ax to grind -- I'm neither Arab nor Israelie --
and so far only anti semitic in that I heartily disapprove of
foreign aid to Israel, or for that matter, anyone else. But when
I perceive bias, deception, and mis-direction, it really ticks me
off.
As observed in 1917 by Senator Hiram Johnson, "The first casualty
when war comes is truth."
A few examples might suffice. As observed by several Palastinian
spokesmen when asked by CNN talking heads what Arafat would do to
end the violence, they correctly observed that the violence was
being carried out in Palastinian territory by armed Israelie
soldiers against Palastinian civilians, and that the request to
end the violence should be addressed to the Israelie leaders.
They continued that Palastinians weren't rioting in Israel or in
Israelie cities, nor occupying them with armed Palastinian
soldiers, nor bombing Israelie civilians from Apache gun ships.
Prof. Ashwary (sp.?) further observed that anyone, Arab, Jew or
Christian is free to _visit_ the temple mount at any time, but
Sharon was it? came with 200 armed soldiers with another 3000
waiting outside. "That's not a visit," she observed, "It's an
armed incursion." This interpretation, and that it was a
deliberate instigation because of internal Israelie political
factors was supported by many analyists.
Reports that armed Israelie fundamentalist "vigilantes" are
running Palastinians out of their houses has received scant
coverage, as has the fact that the Israelies bombed the radio and
TV stations. Given the habit of Israel to bulldoze Palastinian
homes, often with no other provication than that some settlers
want to live there and the Palastinians haven't kept the paper-
work up to date, the vigilante story rings true.
It has been reported, twice now that I've been able to document,
that the two Israelie soldiers killed by the mob were captured in
an area completely policed by Palestinian police. The Israelie
soldiers didn't just stumble blindly into this area. They were
dressed in civilian garb and armed. This is the signature of
Israelie commando special ops units that infiltrate behind
civilian demonstrations and, in the chaos, assasinate key
demonstrators. Not to knock the Israelies; all governments
engage in similarly henious operations (Waco, Ruby Ridge, etc.)
As far as manufacturing martyrs, the Palastinian martyr-makers
can retire early -- the Israelie troops, possibly including the
two just mentioned, are doing their work for them. The Israelies
have created, at the last count I had, well over eighty. (The
count was 8 Israelies and 92 Palastinians dead.) Or did the
Palestinians perhaps kill all 92 of their own themselves in hopes
of gaining world opinion for their cause?
If Israelie spokes people could manage it, they'd be hyping just
this explanation. I watched in fascination during the Gulf
Massacre as the true meaning of chutzpah was demonstrated. The
apex was when Israel demanded monetary compensation from the U.S.
because their fighters, not properly equipped electronically to
avoid "friendly fire," could not participate in the action
against Iraq.
That is, the Israelies demanded to be paid for the privilige of
being defended free by American lives and at the expense of
American taxpayers. It was during this conflict, during which I
taped and monitored hundreds of hours of TV news coverage
(including footage of Israelie spokesman -- official and in deep
cover in American media,) that it became clear to me the Israelie
machine had integrated news control into their operational
package much better than had even the U.S. establishment.
It's clear from the questions that American media asks, how they
ask them, what they choose to cover and what they don't -- and
the slant -- that there is a definite anti-Palastinian, pro
Israelie media bias, official or not. Israelie spokesmen,
obviously having studied the "talking points," emphasise how
terrible it was that the two Israelie soldiers were killed. And
it was -- if they weren't on a mission of asassination. But as
one Palastinian spokesman managed to get in, refering to the 92
to 8 kill record, "Is an Israelie life worth more than a
Palastinian life?"
Again, "The first casualty when war comes is truth." I'm quite
sure the Palastinians will lie too - - - in some of the rare
instances when they get a chance to be heard at all. There are
few Palastinians in the U.S. media establishment, etc., but there
are plenty of Jewish persuasion -- Ralph Beglighter, Wolf
Blitzer, etc. -- and Mad Albright recently became "naturalized."
So I think I'm safe in saying the _most_ "first casualties" will
come from the Israelie-American axis.
Regards,
Journeyman
P.S. Java Man, the show where George Will made his trout analogy was ABC
THIS WEEK. I often disagree with Krauthammer, but rarely with
ORO or George Will. None the less, sometimes I do.
Just heard on CNBC; 6 dead, 11 missing, 35 injured many critically.
Intelligence busy to find who is responsible. The 'small boat' with 2 men hit the ship where the lower deck mess hall is driving up to the top deck.
Stranger/Black Blade,
Tomorrow, 8:30am will define gold's rise today; I am afraid to be hopeful.
Farfel,
Your banishment from G-E was not caused by the defense of which you took; it was from the filthy verbal 'chicken dare' offense you directed towards Dr. Vronsky's website. Why don't you go back and look at your post and envision it from a third party standpoint? There is three sides to every
story, and in this case it's yours, the other poster and the truth.
Greetings fellow mad man. You may have to eventually start your own site! Lots of small investors are and have been upset for years {and tears}, yet it needs to be focused anger with a purpose. Properly applied pressure can be quite effective as we need to be ready to jump down the throats of anti-gold actions of the anti-gold establishment, especially the producers that are supposedly accountable to shareholders. It's time to name the names, call the hedge funds - hedge funds, demand support for GATA, expose those that decline to support GATA, promote those that support GATA, and generally WAKE UP & ACTIVATE!
Overly hedged companies have taken some lumps that shows the pressure can achieve results. If we have to, the producers can be loaned some cajones {cash or physical only} and be forced to come to the plate.
You have more courage than I do as have been unable to bring myself to add up how much I've flushed in these markets. It just makes me more determined. Looking forward to your regular posts!
Your banishment from G-E was not caused by the defense of which you took; it was from the filthy verbal
'chicken dare' offense you directed towards Dr. Vronsky's website. Why don't you go back and look at your
post and envision it from a third party standpoint? There is three sides to every
story, and in this case it's yours, the other poster and the truth.
---
Tell me, sir, what was "filthy" about my offense? What foul language did I use? What was "chicken dare" about it?
Filthy in whose eyes? I guess in your eyes, and if you determine that what I wrote is "filthy," then you must certainly be a hyper-sensitive prude.
I find it very odd that, as somebody who DONATED several essays/speeches for publication at GE at the persistent request of the website leader, I must turn on my computer to discover I am tossed off GE without so much as a word of personal explanation written my way by the illustrious Dr. V. I am repelled by the rudeness of the expulsion, I thought the man had, for lack of a better word, class.
Yet somehow, he sees fit to allow postings by a fellow who goes by the handle of ADOLPH HITLER, and that is OK. Old Adolph can post at GE until the cows come home, but Farfel gets the old heave-ho for daring to ask hard questions of a gold industry hell bent on self-destruction.
Very well, I am happy to have nothing to do with GE, and happy to have nothing to do with you.
I'm getting too tired to figure this out, but any math whiz out their caring to take this on. If 1.75 grams of gold = 1 barrel of crude oil, how much does gold go up in price per ounce for every dollar rise in the price of crude? Any takers? What is the price of gold corrected to the above ratio of gold to oil?
I excerpt what's below from the Heard on the Street column in today's Wall Street Journal. There is quite a bit more, too much to post here, I am afraid. But this gives you the gist of it. Once again, things discussed here at the Forum months ago only now enter the public conciousness.
USAGOLD, WHERE TOMORROW'S NEWS IS OPEN FOR DISCUSSION TODAY!
Plunge in Tech Shares Hurts
Earnings From Portfolio Sales
By GREG IP and CASSELL BRYAN-LOW
Staff Reporters of THE WALL STREET JOURNAL
Intel may be the world's best-known seller of microprocessors, but some of its smartest sales this year have been of stocks, not chips.
In February, it filed to sell 250,000 shares of Red Hat Software at $63.87 each, to rake in $16 million. A little later, it filed to sell more than 30 million shares of Micron Technology. At prices averaging more than $70 a share, the sales brought in more than $2 billion, helping propel Intel's "investment and other income" in the second quarter to a staggering $2.3 billion, compared with the $2.4 billion it made from operations.
It will be an awfully tough performance to repeat. Red Hat stock has since fallen 80% and Micron about 50%, along with a broad plunge in technology shares (including Intel's). For Intel and other companies with big portfolios of investments in other concerns, the handsome profits that came from selling those stakes are going to be much slimmer in coming quarters, and the narrower gains run the risk of further undermining investors' faith in tech shares.
Coupled with that are growing concerns that some technology companies may have trouble collecting on loans they made to customers to buy their products, a concern heightened by Lucent Technologies' disclosure late Tuesday that it would take a hit on such loans.
Making money through portfolio investments was easy until this year. Companies ranging from Intel, Microsoft and Cisco Systems to General Electric and Chase Manhattan Bank made many such investments at rock-bottom prices before companies went public, and were able to sell at handsome mark-ups during the mania that took the Nasdaq Composite over the 5000 level earlier this year. While many of the stocks are still above what the companies paid for them even after the Nasdaq's 37% decline from its March peak, it will be much harder for Intel and the other investors to book the handsome profits they once did.
Intel is probably the most prominent example. It owns stakes in 450 companies, primarily through its Intel Capital arm, a spokeswoman says. The portfolio's value stood at $7.5 billion July 1 compared with $10.8 billion April 1, and with the Nasdaq's 20% decline since then, that value has almost certainly dropped further.
"What we are seeing now is the risk associated with that strategy," said Drew Peck, an analyst at S.G. Cowen. "When stocks were benefiting from the irrational exuberance, Intel took that into effect and managed to fill in holes in its earnings. ... Investors are discovering those were ephemeral at best. Now you're going to see the other side of the same coin. Just when they need to augment their earnings they are going to discover that they're no longer there."...
Sir SteveH ... the multiplier you're looking for is 17.773
Every dollar rise to crude in your hypothesized scenario would translate into a $17.77 rise in gold, were the relationship you've expressed to be put into effect. Similarly, under such a scheme, the POG could at any given time be quoted by multiplying the total crude price by this multiplier.
Giovanni Dioro (10/12/00; 14:02:00MT - usagold.com msg#: 38876)
You said >>>>>When buying shares from another does not add to net savings
Mr. Asher, ----Savings generally refer to income that is saved by lodging it into a bank which in turn loans the money out for capital formation which in turn produces more income.<<<<<
Which seemed to be in response to my -- "Unless in cash or Gold/Silver, �Savings' are really funds �Lent' to the bank and carrying an obligation to be returned on demand or at a specified time." � So, I am confused. Did you mean to address that comment to Midas M.??
Now, in regard to your >>>When you buy shares in a company, someone else sells you those shares. So for you, you are considered to be saving whereas for the seller, he is dissaving. But this is a wash with a net-saving of Zero. The exception is if you are talking of a new share issuance or some sort of venture capital project.<<<<
To repeat from msg#: 38824 "That is not �Saving', That is �Spending'! The money is spent on acquiring shares of corporations. There is no obligation to those shareholders to give them back a single dime of that money they have parted with. They have an asset that they �Hope' to sell to someone else for more then they paid for it."
When you say "You are considered to be saving", tell me, by whom? I see that the stock purchasers consider themselves to be saving, but they are not. Their money is GONE! Re-the stock seller, he is not "dissaving" He is acquiring cash!
He might save it or spend it, invest it or lend it: but if back into stock, as cash that will end it!
Goldman's chirpy Abby Joseph Cohen and Morgan Stanley's consistently sanguine internet analyst, Mary Meeker were both dropped from their number one rankings by Institutional Investor Magazine, yesterday.
All heavy weight bull markets that a worth investing
in take forever to develop. When gold reaches it's
climactic high evaluations, it will be trading for several
thousand dollars an ounce. By 2003, I expect this to be
the case. If it was legal I would stake my life on it.
With my life savings on gold maybe that's good enough.
So my point is making 10 fold on your money was never
easy in a few short years. It's extremely rare, if not
unheard of for these kinds of returns in such a short period
of time. If you are not in, you won't make any money.
Forget about the tech boom and the returns investors
had or didn't have. Most, if not all, will never live to
see their money because it's already up in smoke.
The fire is still burning and will continue to burn
until these people are broke. Gold on the other
hand will never burn and has stood the test of
time. Gold is as solid as GOLD it's just this generation
has taken longer to wise up. With a shortage of
energy and inflation rearing it's ugly head, the public
still doesn't get it. But they will, and by then gold will
be up several hundred dollars, if not thousands. Then
gold will be ready to collapse, just as they start buying.
These are the same suckers in the stock market
now, not in 82. when the bull began. The public
has completely sold out gold, and I'm a major buyer.
WHEN WILL YOU GET THE MESSAGE ??????
Answer: Like everyone else, after it's already gone
up. More people wait and see, but most all of them
will never get in. Only when it's time to sell. The record
speaks for itself " Most investors lose money, buy
at the top and sell out at the bottom". It's all about
patience. Have a good night and I always enjoy
your commentary. You are an extremely bright person
and there is no reason why you can't enjoy this once
in a lifetime experience in one of the greatest gold bull
markets in history. FACT: THERE IS NOTHING LIKE
"GOLD FEVER".
This table represents the 30 year relations of gold to oil as presented by RossL and discussed by Hill Billy Mitchell. In 1996 the traditional relationship of gold to oil changed. You can see this in the current price of oil at $36 and the actual price of gold at $275.00, whereas it should be at $639 or so, had the relationship held since 1996.
There is no anti-establishment conspiracy against Gold, it only appears that way. In reality no one understands it's value except the rare conceptualizing person, like an IFR pilot, with an eagle eye. All others see is what, like a VFR pilot, they perceive ("perception is reality") and what they perceive is something which has steadily fallen in price for the last 20 years, something which does not pay interest, and something which wastes an opportunity for capital gains in paper asset investments. Gold producers only know how to mine the metal, and sell short only to raise cash needed to operate.
For the last 18 years we've been in a downward spiral of falling interest rates, falling inflation, and a falling gold price resulting in soaring stock and bond prices. But now the spiral has been reversed upward as interest rates, inflation, and the price of gold are soaring and the prices of stocks and bonds are falling. This reversal however, should take less than a year to unwind as opposed to the 18 years it took to wind up, and will be like a volcano eruption or a space shuttle Atlantis takeoff. In the next year control of the money supply will simply shift from those who know gold because they know how to think to those who don't.
Yall keep on saying that investors are seeing their money "go up in smoke" etc...when the markets fall but it aint true. They are only selling and turning frozen liquidity into cash holdings. Cash holdings are not smoke but a source of purchasing power for goods and services. Finally people are going to spend and live instead of save in preparation for death. "Carpe Diem!"
Midas, dear fellow, you are forgetting. Only some investors sell when the market goes down. Most just sit in anguish and watch their net worth vanish into thin air.
Hello soldier,
Can see you're getting quite a rise out of the USA GOLD troops, very unlike you. With enough persuasion you will be able to convince all to THINK as you do, soon. Have you gotten used to posting anonymously yet? Did you see the movie- An Officer & a gentleman?
Regards.
Wow! Oil is through the roof, gold shows signs of waking up, the Middle East is about to erupt, AND FARFEL'S BACK!!!
I'm going to have to put on a Sam Kinison tape just to throttle back for sleep--maybe his rant on the 100 days war.
Oh, OHHHHHH!!!
They are already pounding it down tonight. I'll bet by morning it will be down, and then sold down all day long.
Why would this time be any different than the last two years. I bought physical at $290.00/oz and i still can't even break even??? FARFEL i agree with you 100% Gold is being held down, it's so Goddam obvious it hurts! P.S i Love your posts man, they are great! Keep it up.
When the NUKES start flying over the Middle East Gold should rise $15-$20/oz. That rally?? would last about one week. Just enough time to sell???
G.T
Re Steve's >>>how much does gold go up in price per ounce for every dollar rise in the price of crude?<<<
Today, Gold was up $5.80 and Crude $2.75 therefore under the influence of a month long crude crises and a week long war coming to a head today Gold moves $2.00 per dollar of crude price rise. If crude breaks $40, then the fear of the effects that will create would probably see Gold @Over $300. So another $4.00 on crude might move Gold another $24.00 say, that would be 5:1.
There is no rule or �lock' that "makes Gold trade at a specific multiple and there are two reasons for this.
1) ME nations converting dollars to Gold will only be doing that out of "Discretionary income," Much of what they receive goes in one bank window and out the other. After all, everyone needs food, clothing and fighter-bombers just to survive!
2) Any Gold-for- Oil ratios considered to be ideal will be irrelevant in any volatile Gold market that has major global factors in play.
My personal opinion of the Gold/Oil phenomena is that it is only a historical statistic and forecasting any future occurrence by that history is pure numerology.
Watch for the BB's to sell unlimited amounts of paper certificates (IOU Gold)to drive down the POG. I am sure that they are happy to see a small rally so that they can sell a lot of paper for say - $275, then continue selling until the price drops to $270 or less. Then the investors bail out, giving the BB's a profit in addition to the profit they are making on leasing gold from the central banks.
The only way investors can beat this manipulation is to get a safe deposit box (or other safe storage), and buy only coins or bars.
As predicted Gold is now down 10cents? I guess everyone that bought today is selling tonight?
I just don't think so, I say it's time to break out the GUNS and start a WAR and shoot the S.O.B's who are keeping gold down. You know who you are and soon we will to!!!!!!!
Keep up your little games for now, for your time is growing short.
I know you don't read other's commentary because you've said so explicitly but just in case you've changed your mind...
I don't care if you're a Jew, Christian or Muslim.
I don't care if you are a goldheart or not.
I don't care if you went to harvard or yale.
I certainly don't care if you are a successful Hollywood vendor or not (I think Hwood s%$#*)!
I DO care if you don't post your comments here. I, for one, am very interested in your thoughts. Know thyself!
By Gonzalo Solano, Associated Press, 10/12/2000 14:24
QUITO, Ecuador (AP) Colombian rebels seized a helicopter from an oil field in the Amazon jungle early Thursday, kidnapping 10 foreigners aboard, military officials said. Six Americans, a Chilean, an Argentine and the two Frenchmen piloting the plane were taken hostage at gunpoint at 4 a.m. in the El Coca region, 150 miles northeast of the capital, military officials said.
Vice President Pedro Pinto said the Revolutionary Armed Forces of Colombia, Colombia's largest guerrilla group, claimed responsibility, calling it ''reprisal for Plan Colombia.'' Plan Colombia is an anti-narcotics initiative backed by a $1.3 billion U.S. aid package. However, Pinto listed the hostages as two pilots and seven passengers, one of them believed to be Ecuadorean. The differing reports could not be reconciled immediately. A spokesman for the rebel group refused to confirm or deny the reported claim.
The oil field, operated by Spanish energy giant Repsol YPF SA, lies in Ecuador's northern territory bordering Colombia's largest cocaine-producing region. Radio reports speculated that the helicopter, seized just 60 miles from the border, was flown to Colombia after being commandeered. Rebels and paramilitaries are vying for control of vast coca fields and millions of dollars in ''tax'' proceeds for whichever armed group controls the area. Last September, another armed group seized eight oil workers eight Canadians, three Spaniards and an American from an oil-rich jungle area north of Thursday's kidnapping site. The last of those hostages were freed months later, but it was never confirmed if a ransom was paid and the kidnappers were not identified.
Black Blade: Another stunning success from the Drug War chronicles. With the vast petroleum fields in S America, we could see a lot more of this. Of course if it were legalized, these "revolutionaries" are unemployed as would be Barry McCaffrey.
The numbers are appropriate for the situation: rioters with stones sticks burning tires and fire-bombs vs. an armed military force. Clearly, casualties would be disproportional. Consider that the side with the arms has alternatives as to how strongly to react and how far it moves forwards or retreats. (1) Holding ground: (1a) If the soldiers stand by during riots like these, the rioters will advance towards them and hand to hand combat would ensue, casualties would be high on both sides. The trained military personnel would still elicit a ratio favorable to the well armed side. (1b) Realistically, allowing the rioters to come forward close to contact would require the soldiers to open fire against anyone within a certain distance, even if unarmed, just in order to avoid the danger of hand to hand combat. Casualties are highest under these circumstances on the civilian side, and high on the armed side. (1c) The actual choice for maintaining distance between belligerent violent rioters and armed forces with a mission of containment is outside the range of a stone's throw. How do you enforce this distance? By using both lethal and non-lethal arms against any who enter. If non-lethal means are not enough, you use lethal ones. Casualties on the civilian side are minimized, but bystanders get hurt often. On the military side casualties are minor.
Containment is normally the goal so that the rioters are contained in a limited space and do not damage areas outside their own. The violence would eventually subside, at least somewhat.
(2) Advancing. In a rescue operation, or to reach a target that constitutes a long range threat. Advances are very bloody relative to containment. (2a) Advance without use of arms results in great casualties on both sides. (2b) Starting the advance before space is cleared in front puts you in danger of having to engage in hand to hand combat or forces you to shoot at great numbers of people who might pose a threat. Again, this condition results in many more casualties because the people who constitute danger and those that do not are nearly indistinguishable. (2c) Advance while maintaining a frontal space which is cleared with non-lethal means and with lethal means when necessary. The casualties are much higher than they are in containment, particularly higher on the military side. But they are much lower than 2b, the main reason is that the bulk of the rioters are not interested in actually doing harm or in being harmed, only the ones that run forward would actually be a threat, and conditions allow for some exercise of judgement - without this space, all that are within a stone's distance are considered dangerous.
(3) Retreat. (3a) Retreat under conditions such as 1a and 2a result in heavy casualties to both sides, more so for the military than in either 1a or 2a. (3b) Retreat under 2b and 1b conditions results in higher casualties on the military side, but may have fewer casualties among the rioters. (3c) Maintaining the "safety" distance ends up lowering the number of casualties on the military side and on the civilian side.
The question of how many lives of your avowed enemies who threaten you with destruction daily are worth one of your own side? I dare say it is "many more". For most situations of this type, it is a number that does not matter much to the military side facing an occupied civilian enemy. It does matter to Israel, which is why the proportion is 20:1 injured to dead, only slightly higher than it is in police control of riots, not the 3:1 ratio of military policing operations.
The practicalities of the matter are such that at a minimum containment is necessary in order to prevent attacks on your civilians by an angry and violent mob. If left unchecked, it would be your street and your house that you would recognize on CNN just a moment before the mob breaks down your door and bludgeons you and your familly to death. If you doubt that is what would happen, just look at the reality of the Israeli Arab riots in Acre, Jaffa and elsewhere where the mob destroyed Jewish owned businesses and appartments and attempted to set fire to synagogues during Yom Kippur prayers. Fortunately for the Israelis praying inside, the buildings are built of masonry so that the fire did not catch.
I am not in the know as to how many people, military or civilian were in Sharon's retinue. I assume there were enough military to protect the civilians in case the "visit" turned into an incident. By all clear law on the matter, both Israeli and Palestinian, and according to the agreements, Sharon had the right (like that of any Jew or Moslem) to go to the El Akza/Temple Mount. The military, when allerted to his going there would be cornered into having to provide armed escort because Sharon's presence would be provocative enough. This left the Palestinian authorities with two choices; restrain your people, or call them out to fight the "invading force". Doing nothing would have been equivalent to restraint. Krauthammer gave the details of the reaction.
The US media was leaning towards the Palestinian side, which is attractive target for sympathy because they are an occupied and impoverished people (compared to Israelis, not so if compared to Egyptians or Syrians, or even Jordanians). They have had their eyes opened of late, as have the Israeli "doves" who also sympathize with the Palestinians and their plight. That their plight is partially a result of their own leadership's attempts at over-reaching is another issue. Palestinians have been the play thing of the other Arab countries, used in order to score points against Israel in a fight they don't want to engage in themselves. The Palestinian hope to gain all of Israel was never abandoned.
The European media have an even higher percentage of socialists than the US, and have been pro Palestinian to the extreme. It has become a standing joke that a Palestinian Molotov cocktail is called a "peaceful protest" and the Israeli containment of the mob is called a "massacre". Surely the day on which the mob is not contained and Israelis are butchered en-masse would gain Israelis the same degree of sympathy. I rather expect Israel would not forgo self-defense in order to avoid hurting their attackers.
Think through the possibilities and subject them to critical thinking, you will find that the choices are few so long as the Palestinian side is unwilling to forgo the destruction of Israel and drop the mentality of raw power.
A small explosive was tossed over the wall around the Brit embassy in Yemen. No injuries or deaths. Looks like it got their attention though. No new details yet.
The US had come to an agreement with the Arab side as to how far they can go in attacking Iraq. The one principle of Arab solidarity is that invasion of Arab land by a non-Arab would bring the whole of the "Arab nation" upon the attacker. That is why Iraqi land was never invaded by land forces and taken over (of course other causes abound - and yes, there was a land invasion, but it was followed by a retreat).
Among the conditions for the continuation of the coalition was the exclusion of Israel from any attack on Iraq. The US was threatened with breakup of the coalition if Israel retaliated for the scud attacks. Israel had squadrons in the air twice after scuds landed. The US made threats against Israel if it were to attack, it would have been a great spending of political capital, whereas refraining from attack would be viewed as a great favor to the . This was despite the US acknowledgement that Israel would be within its rights to retaliate. Furthermore, the "friend or foe" issue was a veiled threat by the US and UK side who were unwilling to get out of the way in the target areas. The choices facing Israel were to attack and risk attacking UK planes and being attacked by them and lose much favor with the US State and Defence departments, as well as the Bush administration. Or, to refrain and rely on foreigners for defense and hope that Patriot missile batteries would do the trick. This had the negative aspects of damaging Israel's power of intimidation against other Arab countries and the Palestinians - particularly the image of one who does not shrink from a fight, which is the main deterent against attack. It also sent a signal to politicos that Israel can be "pushed around". Furthermore, it made Israel appear to "owe" the US for this one and rile up people such as yourself.
I can't tell today, as I could not do at the time, whether this was the correct choice. I tend to think it was wrong because it created a precedent of allowing dependence on an external factor for defence. This, in turn, made suggestions of "impartial" peacekeeping forces difficult to argue against in future negotiations for peace.
http://www.prudentbear.com/international.htmOn the issue of supporting the stock markets and using government funds to support the use of stocks as money savings/balances, which Auerback discusses in this article.
There is a well known case in Israel during its hyper-inflationary period. The large banks in Israel promised their shareholders that they will keep their stocks indexed to the dollar, as a proxy for price inflation. As prices rose rapidly, the banks bought their stock back on the market by printing money. The funds they printed in order to support the stock were their liabilities. As credit quality deteriorated during the price explosion, defaults rose and the banks were faced with the need to sell their stock in order to raise cash for settlement of normal withdrawals. Their shareholders, however, were not aware of these difficulties because the banks cooked their books. Finally, the day came when they were all broke and the central bank did not allow them further "sweetheart" deals because of the further moral hazard and the political conditions of the time (each bank had some political faction associated with it). The bankruptcy and resulting crash in the bank stocks led to a popular demand that the government take over the bank obligations to maintain the price of the shares as they would any other bank account. The government obliged and exchanged stock for dollar denominated CDs with a few year's duration. The banks were re-capitalized and sold into the markets and to some financiers.
As I had pointed out, stocks had historically been used as substitutes for cash savings on a number of occasions -explicitly, as in Israel, or implicitly, as in the US, Hong Kong, Taiwan, Malaysia, Japan... The common line there is the government's contribution to creating the initial bubble that brought in the naive investors (by allowing unlimited credit expansion to favored banks and their clients), and then having the system implode after the investments made by favored (re- crony) bank clients were proven to be "non-profits" or even "dis-profits", and consequently could not service their loans, or just had the whole of their margins absorbed into interest payments.
Moral hazard had turned the stock markets there into cash substitutes rather than investments, and the result was that in order to prevent total chaos, the central banks had to support the stock market so that a "floor" beneath the markets was perceived and further liquidity problems and solvency issues had to be avoided
My God even Bloomberg is starting to sound like USA GOLD!!!!!
3 Wall Street Truths you Can't Trust
A look inside these truisms reveals some sobering realities about your personal investing
By Maggie Mahar Bloomberg Personal Finance November 2000
uy a good company, hold it, and over time, you'll make money." "You can't time the market." "Over the long haul, U.S. equities outperform all other investments." These are the truisms of investing in today's market, the conventional wisdom that has stood us in good stead for nearly two decades. What we forget is that conventional wisdom is, by definition, grounded in the experience and customs (or "conventions") of a particular time and place. At each point in time, such truths seem self-evident. So in the late '60s, as inflation began to rise, "everyone knew" that stocks were the best hedge against rising prices. Unfortunately, the opposite proved true--corporate expenses outstripped earnings, leading to the worst bear market since 1929. From 1968 to 1982, the real yield on the Standard & Poor's 500 Stock Index (adjusted for inflation) was negative: -0.76 percent. By the late '70s, "the death of equities" was the phrase on everyone's lips. The new conventional wisdom said that real estate was the best hedge against inflation. And, for a time, that would be true.
As fickle as fashion, conventional wisdom masquerades as eternal truth. And we accept it as such. Particularly in an era of sound bites, bromides easily become slogans, and the more often we repeat them, the less we think about them. The consensus provides confidence, conviction, and a sense of community. But while the popular wisdom of any era is true to the reality of the recent past, when you test it against empirical data over a longer period of time, it often falls apart. Conventional wisdom won't stand the test of time: There is no rule that works in all markets. Or as Steve Leuthold, head of the Minneapolis-based Leuthold Group, an investment research organization, puts it: "Long-term investment success isn't that simple." If it were, there would be many more 60-year-olds on Wall Street.
The absolute gold value chart is meant to show what the price of gold would be in absolute terms based on a 30-year historic average of the grams of gold to barrel of oil chart posted by RossL. Its purpose is not to predict the price of gold but to show the deviation from the norm the gold market has enterred and show the break from the traditional relations gold and oil have had. It may also serve as a stress test on the price of gold as oil drives higher whilst gold drops or languishes at its present value.
You are clearly correct in that the past is not a predicter of the future, however, the gram of gold to bbl of oil chart does show how a traditional relationship is now broke and should serve to warn us of this problem and the pressure that must be (in some fashion) coming to bear on the gold market by the rise in crude oil.
I read on a board this morning that gold never did bid for oil on the open market. That is not the issue. I believe we have accepted (some anyway) that this relationship of gold and oil has maintained a 1 to 3 gram of gold to barrel of oil (1.75 + or - mean) over a course of many years and that gold was or used to be a leading indicator for oil. That is now changed. What is clear is the strong correlation. What is not clear is the mechanism that used to hold gold and oil together other than a market that made this happen. Why it happened one can only guess.
Mid-east intrigues and hierarchist errors @ORO, ALL
Hi ORO!
I guess we're having our first substantive disagreement. I
really appreciate your effort to enlighten me, and as usual
you've succeeded in that endeavour on many points. (I've also
corrected my spelling! (blush of embarrassment.)
However, I'm sorry this issue has moved you to spend so much time
on it -- me too for that matter. I freely admit I'm hopelessly
predisposed to favor the underdog, and that clearly means the
Palestinians, and I doubt you will dislodge my emotionally based
bias in this direction. Yes, I know, if ALL the Arab nations
gang up on Israel, it _might_ be the underdog. However I can't
help but see the Palestinians as "patriots with inferior
weapons." And I could be off and running.
Instead, (and I'm NOT a mid-east expert, so take this observation
the same as you would an investment tip from an amature analyst)
I'd like to point out a basic mistake I think the Israelis are
making.
As Brent Skowcroft pointed out, the anti-Israeli sentiment
clearly involves mob violence, and historically it is difficult
or impossible to "control" a previously subjugated population
that is willing to express their frustration, hate, etc. in large
numbers in such a manner. For example, when Robespierre got out
of sync with the French Revolution, he ended up donating his head
to the cause right along with Marie Antoinette, etc. The large
number of suicide bombers is an indication that there is _some_
grass roots (NGO) anti-Israeli sentiment in the region don't you
think?
I don't necessarily mean to suggest the Palestinians are
subjugated chiefly by Israel either, but typically rather by
their own government. Governments are used to dealing chiefly
with other governments and not directly with their nominally
subjugated but now radicallized populace. Dealing with
governments is much easier -- bullies understand each other and
their counter-parts' games and the Machiavellian rules quite
well. This is not the way, however, to deal with an activated
enemy horde. Further, expecting anything from the nominal
Palestinian government, expected to be "in control" is also a big
mistake. Arafat not only understands crowds -- how else would
such a wierd look'n dude stay in power -- he knows his ex-
henchmen only too well, and doubtless doesn't wish to join ranks
with Robespierre.
Israeli hierarchists are making the same mistake the U.S.
hierarchists have made in most of the last few bombing attacks on
foreigners, namely that holding the subjugated population
implicitly responsible (or for that matter explicitly, as some
U.S. spokesmen have [**1*]) for what "their" government does (by,
say, bombing it) only drives the population closer to said
government, at least for the duration. This was true in both
Serbia and Iraq. And it wasn't the bombing that finally unseated
Milosevic either --- he was massively unpopular well _before_ it
started. It may have been that he, defacto, _surrendered_ to the
bombing that was his ultimate undoing.
Luckily so far, the u.S. is insulated from these mistakes by
Canada, Mexico and a couple of oceans. Israel doesn't have that
luxury and its hierarchists should think twice about radicalizing
even more potential suicide bombers - - - or is it already too
late?
An aside:
Hezbollah, etc. have lots of active "cells" here in the U.S., and
it's clear they have many "poor-man's nukes" such as anthrax,
etc. available for use. U.S. "authorities" undoubtedly know of
the danger -- they were predicting a biological attack against a
major American city "sometime within the next five years." And
that was about two years ago. Is this why the U.S. in a nearly
unprecedented move failed to veto the Security Council resolution
condemning Israel's actions? Or could it be the threat Iraq may
get aid in unsheathing "BIG Float: The American [sword of]
Damoclese?" (The last time the U.S. failed to support an ally
with a SC veto was during the Falklands war.)
Regards,
Journeyman
NOTES:
1. This mistake would not likely be made by someone living in a
dictatorship -- which is what makes pseudo-democratic forms of
government such as we have in the U.S. -- so attractive to would-
be controllers.
P.S. ORO, I implicitly knew "the state" police apparatus makes
the life-and-death calculations as you spelled out. But they
always plan to make them come out in _their_ favor. This
perception may be quite useful to remember should some readers
here find themselves in the position of deciding to "hit the
streets" for some worthy cause or another.
P.P.S. While on the subject of the mid east - - - don't worry
T.C., this will _almost_ certainly be my last time spent on this
- - - the bombing of the Cole doesn't look like a bin Laden
operation -- unless he's gained a great deal of sophistication.
Clearly this kind of damage wasn't accomplished by the typical
"low-explosive" anfo type explosive; one expert suggested semtech
-- and lots of it. Also inside info was clearly involved.
Another poster suggested it might have been another "Gulf of
Tonkin" or "Pearl Harbor" type event, designed to radicallize the
U.S. population into support for involvement in the area. The
timing _was_ just right. But what about the two suicides "riding
the wave?" That normally would be an Arabic signature. Could it
be a trumped-up part of the report? Could they have been
mannequins? If not, WHY WERE THEY SALUTING? Could they have been
saluting allies that, regrettably, must also die in a worthy
cause?
P.P.P.S. You may call suicide bombings lots of names, but the one
thing you can't call them and still retain even a shred of
credibility with any thinking person is "cowardly." U.S. Sec. of
Defense Cohen and Bill Clinton, take note!
A ratio of 1 to 3 grams per barrel, over time, seems like a rather random statistic. What is the ratio between a dollar and a loaf of bread or a gallon of milk, "over a course of many years?
Decades ago there was a cartoon of two rats in a cage with a lever and a food slot inside. Outside the cage was the stereotype, bearded psychiatrist. One rat was pressing the lever and a food pellet was coming out of the slot. He was saying to the other rat. "See, we have him conditioned; every time we press the lever, he gives us food."
I missed all the fun yesterday as I was on the road. Thats just the way things go for me. Sit and watch gold for years and the only time it goes up is when I cant watch it. In the spring when we had about a $10. pop I was up here in Georgia doing some prospecting for a week. Well I will be away for most of the day today so gold should fly because I cant watch. I cant spend as much time on this computer as I am staying with friends . I scaned yesterdays page and it looked like a good read.
U.S. prices, sales surge Produce price index, retail sales both jump 0.9% in September
NEW YORK (CNNfn) - Wholesale prices in the United States and retail sales both surged in September, mainly reflecting higher prices for oil and gasoline, two government reports released Friday showed. Prices at the wholesale level jumped 0.9 percent last month, the Labor Department said, above the 0.5 percent gain expected by economists polled by Briefing.com. Excluding more-volatile food and energy costs, producer prices gained 0.3 percent, above the 0.1 percent gain expected. Separately, the Commerce Department reported retail sales rose 0.9 percent last month, more than the 0.6 percent increase expected by economists. Excluding auto sales, which account for a large portion of the monthly tally, sales gained 0.7 percent, Commerce said.
CNBC talking heads are always gushing over the stocks from the prior days plunge being up the next morning.
It is natural to have the specialist sell at a marked up price the "inventory" of stock he was forced to buy the day before when the world was ending. One of the main tools that the market provides is the extension of unlimited easy credit to buy the flood of stock that hits the specialist when there is a cascade of sell orders. It is the normal course of business for the credit to be extended to these specialists so that as they let the price fall to buy the excess shares at a lower price they can then the next day with the help of spin from the movie star analysts and the talking heads on the tube they lift the price and make a profit from the inventory they absorbed the prior day. It is therefore very important to have the availability of cheap credit from the banks and the FED if necessary to allow this little game of markup to be done profitably. It also needs the continued cooperation of the sheep both in the public and in the institutional money management business. This will continue as long as they are still able to provide it since to not do it would leave them with no direction. It is important to understand that this isn't manipulation in the sense we talk about here but rather the normal historical course of this aspect of the business. It is why specialists have always had a unique situation in the market place.
It is interesting to listen to Maria Bartiromo blatantly mouth the positives of certain sectors.
You can bet that she has been fed by the trading desks the information that they want diseminated. It is always how well the "financials are doing in early trading or the demand that is showing up in the high techs." It is really Maria as an "independent mouthpiece" talking the book of the trading desks to move whatever is still left of the public into a purchase of a few of the shares that they need to get out of their inventory. What did you think they were going to do sell them to you lower than they bought them. Of course they are up. That is so they can make up for their losses when they were forced to buy them yesterday doing their responsibiilty of providing an orderly market. Maria is so perfect for her job since she is so clueless that she may not even be aware of the function that she performs. Nobody could be that clueless? Listen to her closely when she is talking without a script.
I almost posted the other day, but I don't have the inside knowledge of the equities markets I seem to remember you do. Early on, it seemed to me, they were setting up Cisco for PPT action. In particular Gail Dudac (sp?) set the stage. She said everyone should watch to see if Cisco, "the international darling of tech investors," dipped and stayed below 50 or came back and remained over 50, which indicated the markets would recover.
The CNBC talking heads preset for Dudac and reprised the Cisco mantra early and often afterwards.
Cisco dutifully dipped briefly below 50 then ramained above that completely arbitrary level the rest of the day, ultimately closing somewhere around 53. In fact, they used that theme in summing up the day's action.
Is it possible that that was indeed a PPT set-up, involving established analyst Dudac? Or am I reading too much into all this?
Observing the US equity markets during the last 24 hours I am drawn to the incontrovertible conclusion that, these markets don't make any sense at all.
Also, watching the action in NEM, I am confident in saying that when the POG rises, gold share prices will rise and, that inflation indicators matter not a whit. 2 cents plain...CM
This is one of the quietest morgues I've ever visited! Whad'ya think, POG $450 today? Come on now, we have an election right around the corner. Now get back to suffering patiently, save some more "chips", and cheer up dammit {while you are mad as Hell}!
When I see the comments of some of my fellow forum visitors expressing a clear angst over the prompt price retreats after Gold has staged a small gain, I almost feel like offering an apology that I have been doing nothing to prop up these prices at these times.
Can you fault me for doing nothing to prop up prices? Unlike some others that are splashing around in this arena, I, for one, DO NOT stand ready to buy the paper Gold offered by the commercial institutions to influence prices. To do so would only be pissin' into the wind.
You see, I only buy physical Gold, and therefore my buying actions this week have done NOTHING to drive prices higher.
However, it can be said that I AM doing my part to immediately aggravate the stresses on the physical market, to drive up the premiums accordingly, and ultimately hasten the demise of the Gold derivatives markets.
For those of you who like to think of these Gold market issues (higher versus lower prices) in terms of "War" between good and evil, then my advice is to gather intelligence and then take the ONLY action that will materially bring about a lasting "victory" for Gold. Buy the metal! The provision of cheaper Gold is like having your "enemies" (the bullion banks and derivative marketeers) subsidize your war efforts, and as they yield in full retreat you are gaining ownership of all the prime property--even as their propaganda tries to tell the countryside that you are losing the war. HA! We'll gladly fight with this strategy for as long as the prime property remains, marching from shore to shore.
When the markets selloff money doesn't vanish, it simply flows from stocks and/or bonds to cash/money markets. That's because this bubble is a water, or real cash bubble, like in late 20's Germany, not a hot air, or margin credit, bubble like in late 20's America , and when it deflates it rains, not drains, liquidity, which means people have money to spend on goods and services, or on enjoying life, whereas after the 29 "giant sucking sound" selloff there wasn't any money to spend after the markets fell, and life sucked which is why it's called the great depression.
As to Maria Bartolomo, her job is to look good reading what's written by the CNBC writers, and it's her, not anyone else's, job because nobody looks better reading it. She is not an intellectual analyst. That's not her natural talent. Her special ability is her ability to communicate information in a manner which is extremely pleasing to the eye whether or not you like the information she is communicating. That's why she's accurately called an infobabe.
Bill Gates, Warren Buffet, Ross Perot, Jack Welch, Larry Ellison, Morry Taylor, Bernie Marcus, Herb Keller, etc.. or any other intelligent, wise, and honest person who has money to invest, but does not "know gold", YET, that is. Your job is to convince them to sell their stocks and bonds and buy gold. "Action Today!"
Looks like the "mother of all short covering rallies" I guessed about the other day may be happening. How long and how far will it go? No idea. Shorts are squaring up their positions for the weekend after some excellent gains and dipsters are rushing in for "bargains"...desperate not to miss the next bull move.
I'm still looking for under 3000 on the NAZ and under 10000 on the DOW and a BIG move in gold....but yes, patience is a virtue.
http://dailynews.yahoo.com/h/ap/20001013/wl/navy_ship_attack.html 17 of America's finest including 2 woman get blown apart by terrorists and the U.S. financial sector responds by having a buying orgy, driving up prices on all major indices, buying 30 year Government debt, driving the price down, and the U.S. dollar strengthens in value against all other currencies!
I DON'T GET IT!
Did the financial sector surge after bombs were dropped on Pearl Harbor Sept. 7, 1941?
Goldhearts may be the only "SANE" ones left in an "INSANE" world!
Still Buying Gold as the Budget Allows, at insane prices.....beesting.
This volatility should be a "heads up" for all investors. The only word for me to express what I am thinking (about the markets) is "bizarre". How can these trading patterns be considered normal by any strtetch of the imagination?
I am quietly going about my business and enjoy the company here. Sorry to say but I do think there is a bad ending to all of this nonsense just right around the bend.
Is there an accurate measure of monetary velocity? How many ounces of gold exist above ground and what percentage of it is owned by the govt and central banks?
I think that market selloffs raise the velocity of money and thus increase consumer spending and price inflation. Has the velocity of money increased since the market have corrected?
M * v = P * Q
Finallly, my nickname is Midas Mulligan, who was a character in Atlas Shrugged, because I try and sell those who think, but do not know gold, on gold as an investment. I tell them to consider their prior profitable investments in stocks, bonds, their businesses etc... a mulligan, and then explain why they should consider starting over by investing in gold. I do so because I want to see the price of gold rise because it'll be good for me and thus secondarily everyone else.
I'm just wondering, how blind the investing public can become at the end of a totally overblown bull market to believe the spin of TV talking heads, Wall Street promoters and the one or two outstanding earnings surprises, among all the blatant for never performers in the virtual new economy. - And the buy the dips preachers seem to stand high and mighty, again.
An economy, highlighted by the fact that - among few other benefits - it can't deliver reality, only virtual prices ... forgetting about production, transportation and availability (storage - look at Oil/NG) of none core components of PPI/CPI, where inherent volatility of these, as I would feel core goods to your core existence are excluded for "your benefit"! - At least according to BLS, a synonym befitting the gov. agency it seems to stand for and administering an economy of serfs in the long run. As long as you can hide behind the illusion of massive productivity gains via massive technological advance - you may export not only your real productive capacity, but much more to the point your economic autarky, which may come back to haunt and challenge the authority of the paper Dollar and the creators of its excess availability for all the wrong reasons - mainly to serve and maintain the credit bubble, while bypassing any sound productive investment! A rare and un-necessary deviation to "profit" today, anyway.
As the pendulum of virtuality is swinging back already for some time from its extreme amplitudes, some erratic movements are to be expected on its way to nirvana ...and as
the fat rats are ostensibly deserting the sinking ship for some time in big waves, it's again the small fry lured into the long term winning markets. Markets, which will be severely punished, as probably never before, by malpractice, overwhelming promotion and worst of all - screened as absolute and only safe haven for the b-boomers retirement funds - not in the least by postulating the "virtual" budget surplus, amidst a crippling, exponentially growing twin deficit.
To come back to the start - Ari - I do agree - physical
represents the least headache, though I will always look for the best option* of gold in the ground as well! - Remember locked in oil reserves? - Think of locked in gold reserves as well - may be as good as gold in your hand - ...
Regards cb2
* Option - in this regard it is minable at these prices -\
Qu: Who want's to sell a rare elephant for tusks only? BB's are out - hedgers ... buy - not us!
PS: - I,also believe in bullion - deliverable gold -
and - mineable gold - !
PPS: - Get you some - now - at a bargain (thanks to
paper tigers) - Get Real!
When Alan G testified to the Congress a while back about the proposed regulations regarding derivatives he strongly urged Congress not to regulate them due to impairing competitive advantages the US has with the European derivative players.In my opinion the lack of regulations (even though I am against governmet intervention by more beureaucratic regs)has given the power money brokers carte blanche to do whatever they so desire with our country's future economic health at the demiss of the investment public. The derivative markets outside of the old grain and cattle markets have just contibuted to legalized gambling by John Doe and public.(stock, gold etc. options) The poor John Does just keep throwing their hard earned money into the power broker's pockets and their dream of instant riches from the high leverage derivatives are just a pipe dream. Until such a time when the power brokers and their cronies lose control of their complex computerized derivatives or all hell breaks loose we Gold Bugs have no chance at all. Today's Gold Market says it all. Until the paper is gone in gold or the stock derivatives (via a crash or monetary collapse) the only real course of action we all have is to dump all our paper (stocks included) and just buy physical Gold.
Then the only problem we will have is the heavy weight to lug around but, at least we will know the gold is there and not just some power brokers promises. But, then of course
if the power brokers did not have the derivatives that they now have this absurd stock market bubble or the manipulated gold market would not be around for us to enjoy on the internet chat forums and then again we would not need to worry about the NWO picking up the economic pieces after
the Financial Armeggedon that is just around the corner.
"COT report was out, as it is on every Friday now, and
we find that commercial traders (the "smart money")
once again increased their record net short position
in the spoos. Their net short position in the NDX was
unchanged. Commercial traders also reported another
increase in their net short position in the euro as
they continue to bet it's headed for its namesake,
"zero." Gold saw its commitments improve slightly as
the commercial net long position increased by 35
percent.
"On the brink of an all-out crash, the bulls threw
everything they had at today's rally in an arrogant
final stand to try and put reality back in the box.
Time will tell if they failed or succeeded, but I tend
to believe this little squirt will collapse about as
quickly as it began. Next week we get more earnings
reports, which will likely have not-so-nice things to
say going forward. Over the weekend, we have the
potential for further blow-ups in the Middle East.
Additionally, stock markets overseas are in as much
trouble as ours is. There's a virtual grab bag of
potential market debacle catalysts to choose from over
the next couple weeks. If you have already rowed away
from this sinking ship, be glad you did. If you are
still onboard and thinking this is the unsinkable
ship, you may want to reconsider. You may get one more
chance next week to get away before she slips beneath
the waves.
"Finally, I wanted to point out an absolutely ludicrous
article in the NY Post called "IT'S TIME FOR GREENSPAN
TO RESCUE THE MARKET." Yes, that's right... the
article proposes that Uncle Al and company step in to
bail out all the gamblers that have carried this ponzi
scheme into the outer known reaches of silliness. I've
linked the article below. It's a wonderful addition to
anybody's mania clippings collection:"
I don't know about you guys but I'm getting very thin, VERY THIN.
Watched the world go to war yesterday, heard of a US Destroyer getting blown to bits, heard of producer inflation
rising 0.9% last month, seen oil rocket to +36 dollars/bbl. and gold and gold shares fell like a brick today.
I mentioned last night that 8:30am this morning we shall see, yes we saw.
So here we have a planet that is on very shakey ground, very shakey ground indeed and gold is doing nothing; what does it take?
Today's paper has special note, "Taiwanese government openly intervenes in stock markets to prop them up". The author suggests that in the event of US stock market crash, the Clinton administration will OPENLY buy futures to save them. This is the future boys; are they wrong? They are doing it now for crying out loud! We can it 'manipulation' or 'management' or whatever. Well no guff Batman, ya, that is what they are doing. The difference is soon the US government will say that they are doing it. What then?
"Today, the Treasury announced sales of 2.2 tonnes of gold to provide pressure against surging gold prices and purchase of numerous tech shares to provide support for the ailing tech sector. After 2:00 pm, the markets settled with a small gain of 0.3%; and that's today's financial summary"
This B.S. was in the paper today boys. This uphill battle gets more strenuous by the day, help me, dammit. Nearly cashed out this am and wishing that I did.
Cost of missed opportunity is getting VERY, VERY expensive.
Midas Mulligan, You may be right about the flow of money out of the market.But remember it may not flow to the same people that bought in . I think the real winners in the market are the middle men that get a cut off each trade. The insiders always have the edge over the dumb ,and their are plenty of them that think the markets will always come back, maybe not in their lifetime, so they buy on the dips. And, for the insiders there is always the danger that they will buy their own story, it has happened before. White Hills
To answer this question, let's consider the forces which have been haunting stocks lately.
1. Interest rates: Many on Wall Street were relieved recently when the third consecutive meeting of the Fed Open Market Committee resulted in no increase in interest rates. But, the FOMC did make it clear in their official announcement they continue to view the inflationary implications of rising oil prices and low unemployment as the number one threat to the U.S. economy. It is worth noting that nothing has happened since that warning which in any way mitigates these influences. Indeed, in the days since the announcement, oil has risen several more dollars per barrel, and unemployment has reached it's lowest level in over 30 years (3.9%). Just today, headline producer prices for September were reported at +.9%. All of these statistics are clearly worse now (from the Fed's point of view) than they were a year ago when rates began to rise. So, by the way, is the monthly trade imbalance, which ultimately poses an equally serious threat to import prices. In fact, the U.S. is now running an astonishing trade deficit approaching $400 billion a year. With oil prices now at new highs, no progress has yet to be made in this area.
2. Earnings Deceleration: In recent days, many companies have warned the investment community about earnings disappointment in the months ahead. While normally such warnings could be bullish for stocks in that they might presage a Fed ease, it is hard to see how such an ease could be forthcoming now while the Fed is still losing the inflation battle.
3. The Strong Dollar: American multinational corporations such as Coca Cola and Gillette are experiencing problems because much of their earnings are derived from overseas. These companies must convert foreign earnings into dollars when reporting them to stockholders. But because the dollar keeps rising, companies keep getting fewer dollars when they make that conversion. I, for one, happen to think this problem is about to reverse to the benefit of these companies. But, even if I am right, and the dollar falls, think of what will happen to American import prices. Strength in the dollar has been restraining these costs. So, a reversal would inevitably mean more inflation in the United States and higher interest rates to boot.
4. Valuations: At the top of the recent bull market, the S&P 500 carried a price to earnings ratio of about 36. At yesterday's "bottom" that same ratio had fallen only to about 26. This is progress, yes. But, remember, prior to the recent bull market, no American market ever had achieved a P/E above 23. Valuations, therefore, are still extraordinarily high.
Only a fool thinks he fully understands Wall Street. But I am convinced that what we witnessed today was almost certainly a violent upswing in a bear market. What's more, powerful rallies like this are typical during down cycles. By no means does this indicate that an important bottom has been achieved. Nor, for that matter, is an important bottom likely to be achieved until at least some of the issues discussed above are resolved. With selling temporarily exhausted by the emotional reaction to news from the Middle East, and with the Nasdaq and the Dow at psychologically important numbers (3,000 and 10,000 respectively) one might have expected something big to happen on the upside. And, while such bounces can last for weeks, normally most of the gains they provide are over with in the first day or two.
We are now, of course, coming up on the end of the year. This is normally a period of seasonal strength for stocks. But the key is to own the right ones. For my money, energy and precious metals are still the place to be. The mad rush today to get into the same old over-hyped techs was nothing if not a sign that traders are still approaching this bear with too little respect.
A young 26 year old married couple that work with me were talking to each other after work while watching the market at her cubical next to mine.
Wife to Husband: "Do you think the buy went through?"
Husband to Wife: "It should have I placed it last night"
Me to both of them: "Your buying stocks in this market? It's just going to keep crashing."
His Wifes Reply: "I hope the market continues to crash. I want to add to my shares at it falls"
My Reply: "Why don't you just wait till it hits bottom and then buy?"
Her Reply: "No, I want to buy on the way down"
I JUST DON'T UNDERSTAND THERE THINKING. I've stopped talking about mining stocks and gold to co-workers, what's the point, they might start buying and force the price up preventing me form accumulating at cheap prices.
The gold equity indices have reacted rather well with a third higher low in so many days. The underperformance of the gold equities relative to gold is an indicator of deflationary fear in the markets, coincident with the lockup in the junk bond markets.
The equities rally has not shown any gross intervention, bringing us to the conclusion that this is a possible "organic" rally created by preceding liquidity injections over the past month.
An open question:
The Fed publishes a "key assets and liabilities" of the Federal Reserve System which encompases bank assets and liabilities other than Money Market funds. The assets less liabilities balance among these has been falling steadilly from some $70-80 billion to under $10 billion today, on a total of some $4.7 trillion in either assets or liabilities. This would seem to indicate some difficulty on the Fed's part in maintaining interest rates at these "high" levels. They will have to lower rates so that it would be possible for banks to play the carry margin/spread between the Fed rate and the market rate of interest. Otherwise, if these figures have any significance, insolvency of the system is just around the corner. The key asset less key liabilities figure has a loose relationship to the points at which the Fed decides to start lowering interest rates in order to support the banking system.
The above URL has on pgs 7-9 charts of spreads between corporates and treasuries, that indicate heavy deflationary fear in the markets as they are at the highest spreads recorded, and at double their 1993-7 range. In terms of the originary interest concept, the relative discount of future goods vs. current goods, it has risen to double its prior rate and the expected long term price inflation is at 6.8%, down from 7.5% at the end of spring. This is still reflected in backwardations in a number of commodity futures markets, particularly in energy.
I think the concept of "vanishing" money as the markets fall is really in the eye of the beholder (so to speak).
Suppose you buy 10,000 shares of stock in X-Co. at one dollar per share. As you are holding, the market valuation of your stock increases, say to two dollars per share. In a technical sense, you have "doubled you money". At least there are some who would interpret it that way. Others of us would recognize that you still had exactly what you started with.....10,000 shares of X-Co.
So now you are the proud owner of $20,000 worth of X-Co., but all of a sudden the market starts to break, "losing" a dollar per share on X-Co. stocks. Where has all that "money" gone ? Vanished ?
Or did it ever exist at all ?
One way it WOULD have existed is if you had been smart (or lucky) enough to "cash out" at two dollars a share. You could have realized the equal increase in "gold value" had you simply cashed out of the stock and traded the "profits" for an equal (fiat) value of gold. Even take it a step farther, and suppose you started with $10,000 worth of gold, sold it and moved your funds into the stock, doubled your "money", and then poured it back into gold. Did you "profit" in that case ? I think most would agree you had.
But what of the person you sold your $20,000 worth of X-Co. stock to after the market retreated ? Did the money "vanish" ? Or did it simply transfer from his asset line to yours ?
The "trade" is the key. In a simple run up and retreat, there is no real gain or loss if the positive position is not taken advantage of by someone. Same holds true for any kind of market, be it stocks, commodities, silver, gold, diamonds, or whatever.
If I remember correctly it was Dec. 7 that was Pearl Harbor day.
And relax, folks -- one day does not a trend make. From too many movies, we have begun to believe the hero grows up, makes a fortune, pursues the love of his life and wins her - - - - all the while whipping dozens of bad guys. And it's all over in less than two hours.
If this kind of volatillity makes you nervous, just think how it makes all the folks counting on their 401ks, stock options, and stocks for retirement, etc.
As a professional gambler, I used to put up with fluctuations like this daily, weekly, monthly, and one time, yearly. I always ended up ahead -- eventually. Even with practice, on the more volatile swings, you end up sometimes with night sweats, panic attacks, etc.
But these gamblers, ah, that's right, sorry, ah, "investors" don't HAVE any real practice. Their mind set is all wrong. As many have pointed out, they think of their stocks, etc. as savings. Trust me on this -- after this is over, higher, lower, the same -- they'll NEVER feel safe in equities, etc. again.
If you feel sick because gold fluctuated six dollars, about 2.2% in the last two days, how would you feel if you were in the NASDAQ? If you owned Apple (down about 56%), etc.?
We call it "riding the bankroll." When someone starts "riding the bankroll," their days as a professional gambler are numbered. The syndrome is easy to spot -- euphoria on up fluctuations and up days; depression and anger on down days. The normal human nervous system, without training, simply can't cope with this very long without breaking down.
It's like a starfish opening a clam. The starfish isn't strong enough to overcome the clam's shell muscle. So it pulls every once in awhile. The clam doesn't know this, so it tenses it's muscle all the time. Eventually its muscle gets exhausted and the shell opens on the next tug. The starfish drops it's stomach inside and has a good feed.
Sign on the bathroom mirror: "It's the long-run, stupid!"
I was glad to see gold fluctuate the 2.2%. It proved for me that, despite manipulation, POG can still react in a traditional manner to events as they've been reported these last couple of days. This sign of life was good to see.
Journeyman that was one of the most valuable posts I have ever read here.
I think you are exactly right. The public is "riding it's bankroll" and having done that myself several times I know the agony of it. I always wondered why many older people who had lived through the 1929 market crash would never have anything to do with stocks again in their lives. They are almost all gone now of course but thirty years ago when I fist started in stock investing some of them were still around. You are exactly right the capital markets will be permanantly impaired by this sucking of the public into the crap shoot that stock investing has become. I now need another line of work unfortunately. Perhaps some insurance company has an annuity product that might be need an experienced salesman. Thanks for your insight.
You said, "'Today, the Treasury announced sales of 2.2 tonnes of gold to provide pressure against surging gold prices and purchase of numerous tech shares to provide support for the ailing tech sector. After 2:00 pm, the markets settled with a small gain of 0.3%; and that's today's financial summary[.]'"
Spot on post AU! Thanks for saving me the time to straighten out the confusion once again. Despite a long year of effort by Aragorn, Ari, ORO and myself (Forgive any omissions please) This concept of "Flow-through" has been elusive.
Perhaps if one regards fiat money as a �Document' like a title to a home, passing from one hand to the next indicating ownership it will be visualized.. Rather then a substance, Fiat is an "Entitlement Chit" and when used to acquire whatever, passes on to the hand of whomever delivered the goods. Fiat is a recording device circulating through the system and there is more or less of it only when it is created or returned to the issuing bank.
The �Fact' of Fiat does not cause it's abuses anymore than the fact of a weapon causes violence.
Violence or creating undeserved amounts of money supply are both acts of harmful behavior.
I am shedding tears as I write this for those Marines who lost their lives that day and for the "America" (now lost but not forgotten) that Reagan embodied with his words.
Patriotism (and politics) may be one of the last refuges of scoundrels but I am completely convinced of President Reagan's sincerity and commitment to; in the words of Douglas Macarthur, "...duty, honor, country".
Great post amigo,
Your "virtual new economy" pretty much sums up a pathetic state of affairs. You sent me scrambling for Webster's with the word autarky. Gotta stay alert around here! Will, also, still go for "mineable gold in the ground" as well as LIKELY mineable gold in the ground with the leverage provided. Not real interested in the typical majors though plan to revisit them in 01. STAYING POWER is the key by my way of thinking. A junior with lots of props, JVs, cash, and correct philosophy {let others spend the money}, will likely be there for the victory and reward the risk taken. In the meantime they can perform w/o POG advance. Buy nothing that is too tenuous to survive a few years w/o a strong gold {silver, etc} advance. Of course many of us wish we had never bought those mining shares in the former Zaire, but we learn from mistakes and proceed accordingly. Have definately learned, primarily from this site, the staying power of physical. Thank you all for that!!!
CB2 {Central Banker Squared?}- Had a Macallan 18 yrs in your honor tonight. Enjoyed immensly and thought how similar to my Ron Anejos {37 yrs}. Let us celebrate together our empty nests as soon as my last "birdie" flies away gracefully.
Stateside Regards,
Auadvocate
Please say hello to Frisco, John, and Ragnar for me. I know I'm wrong to do it but, I'm still out here fighting to keep the looters off of MY train.
Regards to all in Galt's Gulch,
Bd
Auspec, I didn't see an Officer and a Gentleman. Why do you ask?
I don't care if I persuade anyone to think like I do. Nature will be the judge of who's thinking is correct, I just like to vent my mind to entertain myself and relieve boredom. I am certain what I think is true however. I also believe that God is the business cycle and I'm Noah calling everyone aboard the ark of gold because the boom is over and the markets are falling meaning the rain has begun.
Never got an answer to the question of whether there is an accurate measure of monetary velocity and if so does it indicate an increase during this market correction?
last 20 years Fed expands money supply which causes bubble in financial markets and RELATIVE drought in commercial lending that inverts the multiplier effect of fractional reserve banking and causes disinflation that depresses price of gold. A real life version of Aesop's tortoise (goldbugs) vs. hare (paperbugs) fable.
I was reading a sample issue of Howard Ruff's newsletter, and a writer (Mr. X) for his gold section goes into the gold manipulation scheme. He identifies all the players though GATA is the focus of the article and after going into the details of all the parties involved he comes to an interesting statement: "so far nobody has sued GATA which means to some gold watchers that they have caught the gold derivative players with their pants down and they are afraid to take legal action" I have wondered why some would not sue GATA for defamation and slander and perhaps this is the reason. It is a case of when the lights are turned on, the cockroaches run for cover. The newsletter is more political and social commentary though and I definitely prefer MK's "News and Views." The GATA message seems to pop up in some unusual places.
Cavan Man: There was a small explosive "�..tossed over the wall" at the Brit embassy in Sarnah, Yemen. There were no casualties but a few blown out windows. Looks as if we (US) and Palestinians got the worst of this mess in the Middle-East so far.
I hate it when that happens. I hope i,am proven wrong soon.
I've been on the Gold Trail awhile and i feel like we are just going around and around the mountain!
G.T
Northwest Natural Gas, servicing Portland, is giving their customers a fixed rate for the winter of a 20% increase. Apparently they will take their chances around that re their profit margin.
This seems to be a move to keep their customers from converting to electric or wood heat.
Peter Asher: It might even be possible that the bought into NG contracts based the number of customers who lock in at a certain price. It has the same effect and creates a fixed income stream that they can count on (the spread). Normally I would question how that would prevent customers from going to electric, but in the northwest they have a lot of hydro-electric power as opposed to NG-generated power. View
Yesterday's Discussion.
THE STRANGER 38962
Item 4: In other days, when markets did not always just go straight up, they were called fools rallies, because they sucked in more fools.
CANUCK 38962
Considering how crudely the intervention at about 10:30 on Thursday was done, I wondered if the government was announcing, in its non announcement way, that it was clearly intervening, or if somebody big was panicing. Surely, not. Even if, or especially if they were big, they would know how to act without tipping their hand publicly. (which might also be construed to be illegal)
If Taiwan has publicly announced it will intervene to keep the markets up, and most people already know there is interevention in most US and other markets, my mind makes the leap to Britian, and Indonesia, and Malasia, and etc., etc., who all announced that they would not allow their currency to fall. It was the last stage of; 1)normal market operations 2) slight intervention, not noticeable or only to one or two pros, 3) more massive intervention noticeable to all professionals, 4) even more massive intervention, noticeable to the astute man on the street, 5) Announcement "we will intervene," 6) collapse.
If the governments are announcing they will intervene, it may take a while, maybe even a year or so, for them to learn that governments are not larger than the market. Market forces will prevail.
MIDAS MULLIGAN- velocity of money
Perhaps if we look at what the velocity of money IS, the answer to yuor question will be a bit clearer.
Velocity of money refers to the speed with which the average bear gets rid of his money in return for goods and services. (not strictly accurate, but close enough)
In inflationary times, (and also when fiat is becoming worthless) people want to get rid of their paper, (which is losing value) for real goods, such as groceries, which maintain their value. The higher the inflation the quicker people want to get rid of their paper for groceries. In Germany at the height of the inflation, people got paid a noon every day so the could rush out an spend it, because by tonight it would not buy a loaf of bread.
How do you measure the urge to get rid of paper, as opposed to the urge, or simple need, to spend or buy regular groceries?
There is some anecdotal evidence, that is claimed by some to portray this, but personally, I would answer NO to your question.
The following graph shows the longterm cycles of
US-wholesale prices versus the ideal Kondratieff
cycle.We had pretty good correlation until ~1935.The
curve is then getting distorted to the inflationary
side,in sync with the gradual abandonment of the
Goldstandard.Unfortunately the graph is very dated (and
german),but one can still see what might loom on the
horizon.Imagine the curve gets equally distorted on the
downside!I think the nineties are the 10year plateau of
slightly lower prices.
Re the starting year for AIDS. When did the first human become HIV positive.
In theory I would agree that your log normal plotted to one, could find a starting date. The problem is that the level of infection is suspect.
One of the rumors that I heard, which I believe to be, at least in part, inaccurate, but with a surprising amount of very interesting detail, concerned a named French Canadian Air Canada gay steward as point zero. At least the rumor reported that they had traced it back to the initial cases in North America. In his relatively short lifetime as a HIV/AIDS positive, he was reported to have had over 1,000 sexual partners.
True or not, there is a comparatively well documented propensity for the male homosexual to have a far greater number of sexual partners than his hetrosexual counterpart. The HIV virus did spread relatively quickly through the gay community, and I believe that the beginning infection rates were somewhat higher than the current, OR overall rates. Such a circumstance would give a huge boost to your initial numbers, in a much shorter period of time, than would be evident in the average rate determinable today. Today as I said, it appears to me (not official) that the average HIV/Aids positive is infecting 2 point something others per annum. This rate appears to be slowing as it hits the hetrosexual population. This guy, or the gay community as a whole, was not infecting 2 point something people per annum. If he did have over 1,000 partners, he was infecting 100-150 people per year.
Say 125 new partners per year ON AVERAGE. Now there is a real man. As I said I doubt the accuracy of the rumor, but it does serve to illustrate.
Regarding the economic rate of return for the marginal West African oil play.
It has been a very long time since I fooled around with either economic rental, or statistical analysis. (however, I do have to get back to the latter)
Your math and logic look sound to me. However I do have 2 caveats. One for each direction.
1) These assumptions work when you are at the go/no go stage of planning. That may be a "fair" price, but that is not how the market works. Once you have made the initial investment, the cost of lifting is somewhat marginal, and you are somewhat at the mercy of the market.
2)The problem I have with most of these calculations is that they assume an infinite supply of, in this case oil. Rather, as we are getting our nose rubbed in today, the supply is very finite, and we are approaching the end of available supply.
NONE of these calculations consider the cost for the future of humanity of NOT having a source of oil. What will be the cost to our childrens children for our prolifigate squandering of what has taken mother nature millions of years to save up, and which we have, in less than a century, squandered.
Where is this cost in our formulae? Humanity exhibits a really extreme stupidity this way. We tend to not start bailing until our asses get wet, and sometimes that is to late.
To some extent that is also the problem I have with the various alternatives such as sasol. We have simply found another account that mother nature has been saving for millions of years, and we are planning on squandering it as well, in what might be as little as a decade.
Take for example gasohol. Alcohol, made from primarily grains, is used as a source of energy. In a world suffering from malnutrition and starvation, we propose to divert a major source of food toward energy, so that Joe sixpack can cheaply get into his gas guzzling SUV or Humvee, and take off for the wide open spaces, simply on a whim. What is the cost of diverting that grain from food production? How much value has a human life? How about thousands of lives? We are obscenely selfish.
NO, I do not see the problem as being the direct cost of lifting a barrel of oil.
I see the problem as one of conspicuous consumption of our resources, so that a small part of humanity, largely located in North America, can wantonly throw away humanities future. We have shot ourselves in the foot, environmentally, financially, in more ways than I care to count.
I personally have been very lucky to live my life in a time and place that has been the very best ever experienced by mankind. EVER. In my 60's, I probably will live long enough to see the opening chapters of what may be the worst for mankind.
The range of 1 gram to 3 gram gold to bbl of oil chart shows another side to the above chart. It would appear that oil had something unusual occuring two out of the three times the Dow/Gold chart spiked. I am sure someone will make the argument that in 1929/30 that oil too had something going on with it then. In any case the fall off of the ratio in the above chart would (historically) be very fast in chart years. One thing is certain (by this chart), the DOW lowered and gold rose to make the dips on this chart.
Truly, the proverbial s... is going to hit the fan, anytime.
http://www.sharelynx.net/Charts/Dow-Gold-Ratio.gifAlso, note that in 1996, something happened which clearly opened Pandora's box on the gold v dow chart. Do we believe that to be the delinkage of gold from oil? The gold-carry trade? Yen-carry? And at the top of 1999, the Euro was born. That wasn't the case in 29' nor in 73'.
The three spikes most certainly relate to gold anomolies as well -- the three gold defaults (two known, and one in the works). The current gold default is the mother of all defaults, like a massive wave building on itself until...poof...tsunami....
Gold has been one of those monetary assets that paper needs to keep low as long as possible. Yet, it has the propensity to rise, to the chagrin of paper each time. It is the squelching of gold's monetary role that comes to bite paper in the arse each time and with more gusto. Perhaps this is the end of the grand experiment of paper and now it is time to admit that gold does play a major and direct role in inflation and in paper and that is why the Euro has been tied to gold or marked to gold. Only in this manner can one truly measure inflation and misuse of money.
Have you notice that GATA only focuses on the commodity use of gold and then attacks the monetary control of gold through the commodity markets but without actually officially recognizes a sovereign powers right or need to control gold as a monetary asset? In other words, the issue isn't really one of collusion -- it is one of structure. The commodity markets are by definition free markets for commodity customers. When some of those customers are Nations, then this is what we get. One could say that LBMA is the currency-of-gold market and COMEX is the commodity- of-gold market. One uses the other to set the public perceived price of gold whilst the other trades hidden from view. The grand experiment of demonitization on the surface but with a base of monitization. Gold really hasn't ever been demonitized, just submerged where this duality has created a structural and moral hazard. GATA's quest becomes by default: "If you are going to manipulate gold then why not be honest about it? Stop calling gold a commodity when it is really money. Just give us gold market investors (stocks or physical) our money back so we can move on. We have been duped, we know it, and we are as mad as hell. Don't ever again play this shell game with us. We deserve better."
This duality of gold trading has given some players extreme advantage, insider trading information that is morally reprehensible -- a dishonest system for dishonest players where the honest folks are chewed up before breakfast. This is the foul that GATA has called. Vietnam was the shining white lie, this gold market is the brightest shining lie yet.
your view on the palestinian/israeli crisis sums up my thoughts well.
You will no doubt now be labelled as anti-semetic. During the whole debate, i've never heard anyone with an opposing view to yours be labelled anti-arab or threatened with having their rights to this forum revoked because of their racist, anti- arab views.
I suppose a hater of jews is more evil then a hater of arabs.
to tedw,
your constant references to arabs as being snakes is irritating and misguided. Last time i asked you to keep your zionist propaganda to yourself, you asked me if i was an anti-semite. You weild that word around as if it was a crime against all humanity. No i am not anti-semetic, i do not hate jews, but i do have opinions that are critical of israeli actions and policy, and like journeyman, i do have criticisms of how the U.S.A is constantly caving in to the demands of Israel.
I am sure some idiot out there is going to say, you are not a friend of Israel. My reply, only true friends will tell you the truth, others will tell you what you want to hear.
ORO (10/13/2000; 17:00:58MT - usagold.com msg#: 38967)
First the missing URL
http://www.yardeni.com/public/flqual_c.pdf
"An open question:
"The Fed publishes a "key assets and liabilities" of the Federal Reserve System which encompases bank assets and liabilities other than Money Market funds. The assets less liabilities balance among these has been falling steadilly from some $70-80 billion to under $10 billion today, on a total of some $4.7 trillion in either assets or liabilities. This would seem to indicate some difficulty on the Fed's part in maintaining interest rates at these "high" levels. They will have to lower rates so that it would be possible for banks to play the carry margin/spread between the Fed rate and the market rate of interest. Otherwise, if these figures have any significance, insolvency of the system is just around the corner. The key asset less key liabilities figure has a loose relationship to the points at which the Fed decides to start lowering interest rates in order to support the banking system.
"The above URL has on pgs 7-9 charts of spreads between corporates and treasuries, that indicate heavy deflationary fear in the markets as they are at the highest spreads recorded, and at double their 1993-7 range. In terms of the originary interest concept, the relative discount of future goods vs. current goods, it has risen to double its prior rate and the expected long term price inflation is at 6.8%, down from 7.5% at the end of spring. This is still reflected in backwardations in a number of commodity futures markets, particularly in energy."
If the Fed system is insolvent on its own, it does not mean that it is iliquid. Meaning that the margin of available funds for settlement of transactions is generally sufficient. However, such conditions of insolvency are an invitation for some to speculative attack by absorption of liquidity coupled by sale of assets of the type held against liability, thus burning the candle on both ends. The ultimate type of attack would be sale (short) of treasuries in US markets and deposit of funds at foreign banking institutions who then sell the dollars on the markets for Euro or for Yen while the buyers of these dollars use the funds to pay down corresponding dollar debt. This would be similar to the Koreans selling their treasury reserves to pay down dollar debts - particularly to the IMF, probably more effective through an intermediary that would score the profits.
Interestingly, a condition of IMF "assistance" to its "clients" is that they do not sell their main source of reserves; US treasuries. I do not see any reason for anyone of the IMF "clients" abiding by their obligation, which forces them to pay the spread between the low treasury rate and the high rate on their dollar sovereign and local commercial debt, which is at 1% minimum, 4% "normal" and up to 10% (down from 20% in 1998's Russian debt fiasco) for sovereign debt, and 3% min, 7% normal, and up to 17% (and higher) for commercial debt.
Back to the structure of the raid.
The Euro market would be most attractive because of the smaller spread relative to the US. The Yen market would require a substantial Japanese dollar exposure and substantial non-Japanese Yen exposure. This is missing.
The Euro zone has a much larger pool of outstanding dollar debts and includes more than sufficient volumes of Euro debtors holding dollar assets or dollar market income sources (exports - say oil, or commercial enterprises such as Daimeler, who's Chrystler division is a large cash flow producer).
1. ECB system (or private) Treasuries are sold into the market, lowering the value of bank assets and raising interest rates.
2. Dollars generated by the sale are taken from existing bank liabilities and deposited at a foreign bank, say BNP in NY.
3. BNP transfers dollars to London and forces the Fed to buy securities from the treasury purchasers' banks in order to provide cover to the liabilities, which being a large transaction would be an extraordinary drawdown on liquidity. Further liquidity would have to be pumped into the bond market to lower treasury rates back to acceptable levels.
4. In London the dollars are sold for Euro, thus lowering dollar/Euro and providing for excess liquidity in the Eurodollar market and lowering liquidity in the Euro market, also causing a drop in short term Eurodollar rates and a rise in Euro rates.
5. Foreign dollar debtors refinance short term dollar debt (which is predominantly owned by Japanese and European banks) at the lower rates and pay down current debt, thus producing a
"little squirt" and other descriptions of an 8% up move in the NASDAQ !
This is clearly a sign of complete desperation on the part of the market movers who are pulling the strings. I haven't learned much in twenty years in this game but I can tell that the move on friday didn't even convince the most sanguine of institutional bulls. These guys have watched their sacred cows be slaughtered over the last several months and this manipulation of the indexes while encouraging for them is nowhere near what they need to repair the damage. As I tried to point out yesterday on my posts about the actions of the New York Stock Exchange Specialists and the big Market Maker Desks for the NASDAQ this lifting is a part of the normal course of business. It is what they do to get rid of their inventory. It really just shows you a small glimpse at their price setting power. They have highly paid movie star analysists and million dollar a year salesman for this purpose to get a lift. Why else would they pay these guys so much to repeat the bannalities that only the institutional sheeple would listen to with any credulity. They popped it, period. The only interesting thing is that they thought they had to do that over a weekend!!!!!!! That is interesting because the normal operating behavior of the Trader on a major trading desk would be to go into a weekend with a neutral position. So maybe they have been told that they must pop it or face a deflating of the public willingness to hold which is critical to the continuation of the market levitation act. That is interesting, because in any other period with the potential for war in the Middle East there is no way they would go home over a weekend with a large inventory of stocks. The risks of something unexpected happening would be much too great. SO now we know that they are galvinized into action to go long stocks and take that risk inspite of the extremely uncertain political and world climate. THEY MUST HAVE BEEN SCARED TO DEATH! TO pop it on friday they had to be at the very brink of desperation. And unless my read of the institutional investors out there that I have been meeting with the last two weeks is very wrong, not one of them believes any more that a pop like that means much of anything. I think we finally have them terrified of the resurgance of the market. How fitting.
If you think the gold bugs are depressed read this supposedly upbeat peice from Silicon Investor!
Wall Street's Thrill Turns Into Defeat
By Pierre Belec Oct 14 8:39am ET
NEW YORK (Reuters) - Investors who've gotten used to Olympic-sized gains for the last five years are no longer feeling the thrill of victory. Instead, they're tasting the agony of defeat.
But don't think they're willing to toss in the towel yet.
What's happened is that after years of denial, investors are realizing that stock valuations and earnings do matter, after all. Stocks had risen so high that people began to believe there was no end to their expectations.
But this year's third quarter has sobered up a lot of die-hard bulls. Some of the high-profile names such as Lucent Technologies, (LU.N) the world's largest telecommunications maker, and Motorola Inc., (MOT.N) the second-biggest cell phone maker and Yahoo! Inc. (YHOO.O), one of the largest Internet companies, have warned of lousy results.
What's scary is that the Street should not expect the earnings story to suddenly turn brighter, experts say.
``This is an extremely unhealthy market environment but one in which investors will take a slap in the face, a punch in the gut and are still willing to come back for a kick in the pants,'' says John Hussman at Hussman Econometrics Advisors.
Most companies have cited higher oil prices, Europe's weak single currency, the euro, and a slowing U.S. economy for their poor showings.
But the concern is that these nasty problems will not go away anytime soon.
YOU AIN'T SEEN ANYTHING YET?
While the market has been rocked by earnings warnings, the betting is that the fourth quarter will bear the brunt of the damage from the euro and oil.
Also, the lag of up to nine months between the time the Federal Reserve raises interest rates and the impact on the economy, means that the bulk of the central bank's six credit tightenings, which first started in June 1999, have not fully filtered through the nation's economy.
Experts say the earnings warnings and plain disappointments could last into next year.
``We aren't looking at short-term phenomena,'' said Ned Riley, chief investment strategist for State Street Global Advisors in Boston.
``All of the nasty factors popped up in the third quarter but what happened is that the companies, after being able to absorb a tight labor market and high wages for years while still generating high profits, are now finding out that they just can't do it any more.''
The slumping euro slammed Intel Corp. (INTC.O) and Microsoft Corp. (MSFT.O) and other U.S. multinationals that do a lot of business in Europe. The currency has been battered since it was introduced in January 1999.
The multinationals face two problems overseas. The euro's weakness against the dollar makes American goods more expensive, thereby cutting into sales. The companies' earnings are further slammed when they convert euros into dollars.
Other U.S. firms that have been hurt include consumer products kings Gillette Co.(G.N), Colgate-Palmolive Co. (CL.N) and Procter & Gamble Co. (PG.N).
Riley said the stocks of ``New Economy,'' or technology, companies are in their darkest period as investors realize that they've had extremely high expectations for their earnings.
But the Dells, Apples and Nextels will bounce back because they still have a healthy growth trend, he said.
``We are going through a transitional period with companies returning to a more normal growth rate after the stock market has gone from $3 trillion in value to $15 trillion in 10 years,'' Riley said.
``People are acknowledging that companies that grew at 30 and 40 percent a year are not going to continue,'' he said. ''Unfortunately, investors had wrongly priced stocks on the assumption that the big gains would go on forever, such as the Yahoos of the world at 215 times earnings.''
Historically, corporate earnings have risen 7 percent a year and the slowing economies in the United States and Europe, will make a tough task of lifting profits even tougher.
A FAIR PRICE, EVEN FOR SUPER GROWTH STOCKS
During the bull market, people reckoned that pricing stocks based on the level of interest rates and inflation had gone out of style. Based on the new rules, companies that spent millions in grabbing bigger market shares would fetch stronger future earnings, which could justify higher P/Es for their stocks.
The current market carnage, which slaughtered stocks that used to trade at three digit levels, proved once again that there is a fair value for everything, even the super growth stocks.
For example, CMGI Inc. (CMGI.O), the huge Internet investing company, has seen its stock plunge in the past year to $22 from $163. It has left a nasty bruise on a lot of Internet groupies, even though CMGI is one of the sector's blue chips of the future. Yahoo! is at $65, down from $250.
The P/E for the 500 companies that comprise the Standard & Poor's 500 Index is still nearly twice the norm at 28, which would suggest there is still room on the downside for the market to slide, especially after big companies have warned that there are storm clouds ahead.
But the ``Old Economy'' companies may have a tougher time bouncing back than the New Economy firms because they don't have as much top-line growth to bail them out.
``What's causing more issues for the market is that the cracks that developed in the tech sector have now developed into major fault lines in the economically sensitive stocks,'' he said.
``Chemical companies are suffering in this high energy price environment and the retailers are getting eaten up by rising prices at a time when they aren't able to pass on higher prices to consumers,'' he said.
So, the earnings of traditional companies will continue to be undermined by a slowing economy and rising costs, which in turn will cut off the supply of elixir that has fueled the stock market's spectacular growth for the last five years.
Experts say the outlook is bleak for the euro -- a currency without a country. The unit is being jostled around by contradictory statements from euro-zone policy-makers about whether the currency is dangerously low or not. The worrying comments have rattled currency traders' confidence in the unit.
Also weighing on the euro is the European Central Bank's focus on heading off inflation by raising interest rates at the risk of slowing the region's growth.
Despite seven rate increases in the past year, the euro has stayed under water and the dollar has risen. The reason: currency traders have attached a premium to the dollar because the U.S. Federal Reserve's policy is aimed at both tempering inflation pressures while still promoting a reasonable level of economic growth.
The surge in crude oil prices has also raised the risk that energy costs may be an economy-killer for the Europeans, who are paying for higher oil prices with a rising U.S. dollar.
For the week, the Dow Jones industrial average slumped 404.36 points to 10,192.18. The Nasdaq composite index was off 44.48 at 3,316.53 and the Standard & Poor's 500 index was down 34.86 at 1,374.13.
You only have to look up the market cap losses of a few of the bull's sacred cows to know this game is over!!!
Microsoft has around 7 billion shares outstanding I believe and has lost about half its value in the last six months that is $55/share times 7 Billion or $385 Billion.
Intel Corp, the bluest of blue chips has lost at least $35 dollars per share on 6.7 Billion shares or a total since March of $245 Billion.
Apple, Priceline.com, Lucent, Doubleclick and a host of other favorites of the recent past will quickly push the number well over 2 Trillion. That is a lot of paper burning in any society. I think the nose of the Titantic is about to disappear under the waves and the last few people on board better get into a gold life raft or they are going to be swimming with the cubes very soon.
Swissair SR111,TWA800 and EgyptAir990 crashed because of electromagnetic interference from military experiments?
All flights were on the same route,along the northern east coast of US toward Newfoundland over a military zone.Thats the route when there are military exercises.All airplanes had electric problems as the source of the crashes.
The Swiss ambassador in Canada who called the Swiss investigator to look into these possibility, fell "accidently" right in front of a train.The investigator died in a strange helicopter accident.Twice unknown persons broke into Swissair bureaus to catch documents.
Elaine Scarry made did an in-depth investigation in this mysterious scandal.
GE the sacred cow and origional earnings engineer that also happens to own CNBC Bubblevison.
It is currently selling at 46 times their ability to manufacture what they call earnings. It has 9.8 Billion shares outstanding and yes that is billion and a market cap of over 500 Billion. The number Billion should be kept in context perhaps. I believe it was once described as the amount of dollar bills if you began counting when Jesus was born and counted twenty four hours a day seven days aweek you still would not be at a Billion. They have almost ten billion shares and $1.34 in "earnings" per share. That is a lot of hope. Fundamentals have been so irrelevant in this market for so long that it didn't pay to look at them because nobody cared but now it is very insightful since the answers are so comical. This "core" holding of could easily trade in the mid twenties and still be ridiculously overvalued. It will be the fitting final novena for the apotheosis of Jack Walsh by every one of his media talking heads. I wonder if they will still babble as well when their options are underwater?
Not to argue your point of view in this tragedy, I long ago picked my side. What has really impacted my thinking on the latest atrocities by both sides are the Video clips of the mob as they murdered one of the Israeli soldier. The look of glea and joy on their faces as they kicked and hit the body of the soldier made me sick as did the cheering of the crowd in obvious elation. I assume this was also on TV in Israel and I find it difficult to believe that the Jewish people after witnessing this would ever make peace under any condition other than the complete security of their people guaranteed by their own force of arms. You don't have to wait until you are bitten to decide it is a snake. White Hills
Justemerebear, Barron's used to publish a velocity indicator until 1995. Just thought there might be another indicator out there somewhere.
Bonedaddy, I am "John Galt", just borrowing Midas Mulligan's knickname since I am writing in a gold forumn. Let me say that my motor which converts static energy, like oil and paper wealth, into kinetic energy, or gold is running well. All in the Gulch, or valley, are eagerly anticipating a return to normal life. Please check your premises! As an outsider, or "scab", you are not fighting the looters but supporting them at your own expense by your innocently misguided, marty-like, efforts to "fight them". I think you and the others will join us soon, based on the recent market activity. Ragnar, Francisco, Midas, all the rest of the strikers, and I give you our regards.
Got this just now with three pages of forwarding addresses going back to April
THE NEW SCHOOL PRAYER
This was written by a teen in Bagdad, Arizona.
Now I sit me down in school
Where praying is against the rule
For this great nation under God
Finds mention of Him very odd.
If Scripture now the class recites,
It violates the Bill of Rights.
And anytime my head I bow
Becomes a Federal matter now.
Our hair can be purple, orange or green,
That's no offense; it's a freedom scene.
The law is specific, the law is precise.
Prayers spoken aloud are a serious vice.
For praying in a public hall
Might offend someone with no faith at all.
In silence alone we must meditate,
God's name is prohibited by the state.
We're allowed to cuss and dress like freaks,
And pierce our noses, tongues and cheeks.
They've outlawed guns, but FIRST the Bible.
To quote the Good Book makes me liable.
We can elect a pregnant Senior Queen,
And the 'unwed daddy,' our Senior King.
It's "inappropriate" to teach right from wrong,
We're taught that such "judgments"do not belong.
We can get our condoms and birth controls,
Study witchcraft, vampires and totem poles.
But the Ten Commandments are not allowed,
No word of God must reach this crowd.
It's scary here I must confess,
When chaos reigns the school's a mess.
Lord, this silent plea I make:
Should I be shot;
My soul please take!
Steve, thanks for all the data, will study after dark
J-bear, re AIDS. The story of the Airline Steward was published as his obituary. It appearred to be pretty well documented.
Our client base was Fire Island Pines during the first year of the AIDS explosion and we saw firsthand how it got loss as an epidemic. Part of the problem was that many off them thought it was not a virus. I'll write up the history tonight or tommorow. Meanwhile, I'd like some opinions as to whether to post it or send it out to the forty Forum E-mail addresses I have.
BTW I read awhile back, a claim that AIDS was found and spread in Africa as an attempt to depopulate the "Third World."
GE (Paper Gold, Physical Gold, Gold Demand & Reg. Howe) ID#420163:
Copyright � 2000 GE/Kitco Inc. All rights reserved
I have learned a lot from the studies made by Mr. Howe:
1- The total gold demand by the banks of the whole world can be
inferred from their gold derivatives position.
2- The demand can be estimated using BIS data.
Quoting from http://www.goldensextant.com/commentary12.html#anchor341719
At the end of 1999, the BIS put the total notional amount of gold derivatives at US$243 billion,up from $189 billion at the end of June. Converting the year-end notional amount to tonnes at the
year-end gold price ( $290/oz. ) gives just over 26,000 tonnes. Using a $300 gold price gives around 25,200 tonnes. However, these 1999 figures are for major banks and dealers with their head offices in the G-10 countries only.
On a more irregular basis, the BIS collects similar information for as close to the whole world as it can. Its last larger survey as of the end of June 1998 showed a total global figure for gold derivatives of $228 billion compared to a G-10 figure on the same date of $193 billion, indicating that at that time there was an additional $35 billion ( or 3629 tonnes @ $300/oz. ) in gold derivatives outside banks and dealers headquartered in G-10 countries. Accordingly, assuming a
continuing difference of around the same magnitude, the total global gold derivatives market is on the order of 26,000 to 28,000 tonnes ...
3- BIS figures are similar to open interest data which is
quite different from the volume data. See,
http://www.goldensextant.com/commentary14.html#anchor27297
4- Within this framework, paradoxically, the lower the actual
physical short position, the higher the NAKED paper short tonnage!
Quoting Howe:
What does this number mean? How should it be interpreted? Is it really as large as it looks? Analysts are unlikely to agree. I look at it this way. If the net short physical position is 10,000 tonnes, and if that position has been fully hedged ( far from certain ) , the total notional value of all
that business should be around 20,000 tonnes. In that event, using 26,000 tonnes as the total notional amount for all gold derivatives, the net short gold derivatives position -- over and above the net short physical position -- is about 6000 tonnes, and the bullion banks have undertaken to deliver this amount in addition to what they must deliver to cover the net short physical position of 10,000 tonnes.
Midas Mulligan 39009
Since I think so little of any attempt to measure velocity of money, for the reasons stated, (ie how do you seperate velocity from other spending) I haven't paid any attention to anything I might have seen. In this case, I simply look at my surroundings and ignore all the theories. Sorry about that. I don't know of any offhand. I dimly recall it in Barrons. Was that not a government source? I'll bet an email to Barrons would get you the source.
Peter Asher
39010- Amen Bro AMEN.
39011- I'll take whatever you have however you want to dispense it. Would be delighted if you added my address to your list=
currie@mqcinc.com
or I also have no problems, personally, with it on the forum. IMHO, AIDS is a major part of the equation, and the effects will be very apparent to the man on the street within a decade. Again IMO, I feel it won't be long before there is a good deal more gold per capita available than there is now. (2 to 3 decades or less) So I would expect it to have major financial ramifications, and therefore be a proper subject for the forum.
I take it that you are somewhat of the opinion that I am, that we have a geometric progression here, with all the ramifications that entails. Into this cocktail stir a little energy crisis, a little financial crisis, a little environmental crisis, some society changing technology, and first thing you know you have a pretty potent brew.
Any "war stories" or personal observations you have, particularly as to the man on the street, and how he reacted (singly or as a society), are of a great deal of interest to me.
Many thanks for your time, both generally on the forum, and as it effects me personally.
I posted a similiar request the other night, but it was late, so I suspect nobody noticed. Moreover it was at that time that the Yemeni thing literally blew up.
Does any one know offhand, or know of a good source that is not a dry recital of politics, how the currency question played out (for the man on the street) when the confederate dollar became worthless, upon losing the war. How did all those people with confederate dollars cope?
Peter Asher >>>I'll write up the history tonight or tomorrow. Meanwhile, I'd like some opinions as to whether to post it or send it out to the forty Forum E-mail addresses I have.<<<
Sir Asher
Please post what you write for the benefit of all. This subject will impact everyone in the coming decades.
Thanks so much for all your efforts.
Weren't those Southerners with gold the ones who preserved their wealth after the Civil War? Remember Rhett Butler and his ill-gotten gold, that saved Tara from the tax man? Remember the stories about trunks full of Confederate currency that was completely worthless? Apparently it couldn't be traded in for anything.
Some clarification: The London Times reported: "Palestinian leaders warned Israel...that a plan to build a senagogue on The Temple Mount in Jerusalem could provoke a war in the Middle East. The warning came after the Chief Rabbinical Council announced that it was setting up a committee to 'realize our rights and sovereignty on the Temple Mount.'
The decision appeared to be an attempt to avoid a confrontation with Muslims over what many regard as the most sensitive site in the Middle East. Jews believe that their temples stood on the site, which is inside Jerusalem's walled Old City, in biblical times. To Muslims it is known as al-Haram al-Sharif, the 'Noble Sanctuary', housing the Dome of the Rock and the al-Aqsa mosques. Ikrema Sabri, the Mufti of Jerusalem, said that building a synagogue on the hill would start a war and 'only God knows where it would lead'......"
My comments: you are looking at the most contested holy land sites for the world's major religions, this issue cannot be solved by money or politics or the usual tactics. Thus Jerusalem is indeed "a stumbling stone" for world peace. Some biblical prophesies {2 Thesselonians 2:4; 1 Thesselonians 5:3} are interpreted that there will be a 3rd temple built and war will follow.
Keep your eyes on Jerusalem to understand world events unfolding. Biblical reference to Israel; " I will bless those who bless you, and curse those that curse you."
Gold Myths & Realities: The Press' "Gold-Bug" Stereotype
One of things we've accomplished here at USAGOLD is to shatter the press-driven stereotype of the gold owner being some fringe lunatic obsessed with guns and weaponry living in a bunker somewhere in the hinterlands waiting for civilization to self-destruct. USAGOLD is showing the world that, quite to the contrary, gold owners are some of the most articulate and concerned people you would find anywhere. Before USAGOLD,the rest of the world got the image of the "gold bug" the press painted for it. After USAGOLD, the world found out that the picture of the hunkered down gold advocate with a sack of gold in one hand, and an Uzi in the other, is not only absurd but presented for what are obviously ulterior, self-serving motives. For whatever reason, they fear people owning gold. They fear it because gold represents individual liberty, and individual liberty is junxtaposed to the concept of fealty to a government -- the social system they prefer, defend and advance on a daily basis. If the population at large would like to consider its gold owning physicians, dentists, attorneys, academics-thinkers-writers, architects, engineers, investment professionals (including stockbrokers) military officers, top corporate managers/sales professionals and small to medium business owners kooks -- as the press would have it -- then we are all in the hands of kooks for what amounts to our most pressing daily needs. I know this because I work with gold owners and have done so for nearly 30 years. The gold owner described condescendingly by the press is about as far from reality as one can get. As I say, USAGOLD shatters the stereotype.
Your observation/facts about index manipulation and dividends are interesting but most people are overlooking 1 very important fact about the heard. They DO NOT KNOW what a dividend is! 99% do not have ANY idea whether a company in the Sock-Puppet 500 pays them out or not. The concept is invisible to all of them. As for the Fri. jerk off, your certainly on the money. You simply cannot have 'unhappy' people facing 'withdrawal' symptoms left alone all weekend to contemplate what to do. That can't occur. Thus the 'Friday effect'. Do a personal poll and ask what the dividends are for the companies they hold . Guess what?
To explain further, you "can't serve two masters", ie. Gresham's law. So when you produce and profit you are forced to pay half of it in taxes which is an investment in big government at the expense of your personal freedom. The rest you invest in the private sector for your own personal benefit. It's a contradiction, "the cross", that makes you commit slow suicide. What you are doing is slowly devaluing the dollar in relation to the constant value of gold. The price of gold is just an illusion, "the ray screen" which hides the Gulch or valley.
I might add that a gold bug is a fellow just like everybody else, only he has a sack of coins in his hand and a worried look on his face. But Aristotle, Gandalf and a whole bunch of others would shoot that one down in a hurry. Ah... peace of mind(I should get me some). Anyway, lately it seems to be everyone else who has the worried look on his face.
Meantime, thanks for your help the other day. It was marvelous speaking with you over the phone. I am very excited about the pending arrival of my Philharmonic. I will give it as a Christmas gift, but, for about ten weeks, I will get to hold it in my hand, and it will be mine, all mine! AHAHAHAAAA!
Too often, people focus on what they find distasteful in outward manifestations or representations of "religion". The trap one can fall headlong into is one of unremitting cynicism. "Religion" is within; not without.
Religion is a fine thing if one observes both the letter and Spirit of the proscriptions. These hateful people you indirectly reference; they might well be religionists but they are certainly not Christians, Moslems or Jews.
Distraction and obfuscation are a favorite tools of the evil one. Worship Him. Shalom....CM
....and the nice thing about the Philharmonic is, it is not "legal tender" here in the US. Certainly, it is legal tender on the old continient. That being said, it is a full 2000 Shillings. Is that chopped liver? (You knew all that!)
MK, it's been a good thing for me these many months hanging out with you and all the other wackos here (especially Aristotle--he's really crazy). Many thanks....CM
I would like to thank whoever runs this service because it's provided me with a lot of insight into events that I otherwise would be in the dark about. As an active paper trader and aetheist I certainly disagree with much here,but it's SO MUCH FUN! As a person who writes music and sound effects for TV/CD, I am constantly amazed at how tuned in to the 'real' angle/spin posters are here, while those around me are the most disconnected bunch of whining re-distributionist's you could meet. Symbolic Analyst's I think we're called. Thank you again and I hope you get paid big for this.
Ps. Shameless plug for my show, "Action Man", Saturday AM on NBC.
The feeling is mutual. I thoroughly enjoyed our conversation and hope to have many more.
A small follow up to the previous post:
Quite often, a goldmeister calling the office for quotes is astonished when I pick up the phone. But as I metioned in our conversation, one of the things I enjoy most about being in this business is the people I meet and I have met some extraordinary individuals over the years. For that reason, I doubt I will ever completely give up taking calls from the public. The Forum provides a glimpse of what I'm talking about. Many who post here are also clients, I am proud to say. Just before you called yesterday, I had the pleasure of talking with Ph in LA and a wide variety of gold topices. . . . Oh well. . .All in a day's work ...... life is tough here in the Castle.
Let me know if you get attached to that gold in hand, and I'll replace if for you after Christmas.
To TheStranger...your gift has profound implications. The more the recipient understands what they have received, the more they will appreciate it and know that you care! And what is most interesting is that the attributes of the gift reflect the values of the one who gives it. In other words, you are obviously one who recognizes and appreciates such qualities as honesty, integrity, value, durability, timelessness, etc. etc and the act of unselfishly sharing all of that with another is no small gesture. What a fine example to set!
Hello Mr. G.
As "Religion" may, in fact, turn out to be our fifth horseman, perhaps a case can be made that some observations in that area may not be Off Topic.
You said, "And I thought religion was supposed to have something to do with peace."
One thing is for sure...you can't base your supposition on history.
Consider this: "The one question henceforth is, how shall man get back to that Paradise which he has lost? In Gen. chapter iv, we have, as the first step revealed, God's way, which Abel took; and man's way, which Cain invented. There never has been other than those two ways- "the way of God" on the one hand, and "the way of Cain" (Jude ii) on the other. In the one way, the believing sinner is brought to the confession "Nothing in my hand I bring." In the other, independent, rebellious man says the opposite - Something in my hand I bring." This is the one thing common to all systems of religion. They quarrel and fight to the death over the question as to what that "Something" is to be: but they are all at one in agreeing that it must be "something". And so the weary conflict has gone on, and will continue to the end."
Sir USAGold, thanks for the affirmation given to all of us gold advocates. To some extent, it is not surprising to see a chasm form as a result of a difference in values. We are, simply, in the minority in a lot of respects, a position I've found myself in on many occasions and have grown accustom to it. Based on the behavior of the masses, I find it quite comforting too.
Also, after reading your msg# 39032, I regret that I used e-mail last week to conduct business...I assumed you have a lot on your plate and opted for the more efficient approach, but I see now that I should have called, instead, to chat. Oh well...that...won't happen again.
Note: "the Pale" was a small area on the eastern coast of Ireland where, after the award of Ireland to Henry II in 1205 by the only English Pope (Hadrian, methinks), the Norman's took up residence. Significantly, this was the only area the Normans ever truly controlled.
Holtzman: All this talk from you about Ireland being ptiched and, "tossed about"; they've not done too badly in only 79 years of FREEDOM.
The Euro will replace the Punt as it will Sterling.
Thank you for your responses. You are good and wise companions on this golden path we walk.
I sparked a fracas one Sunday last year (in my first week as a poster) by speaking disrespectfully here of another's beliefs. Won't do that again. Most of my life was saturated with religion for the first 30 years, and I am enjoying life now largely without it, while carrying deep respect and sympathy for those who honestly live it, as you describe.
My guiding lights the past 30 years have been Gandhi, Dr. King, and Einstein, so my surmisal that a religious life should lean toward non-violence should not be considered too strange, no?
It occurs to me lately that I am trying to recover from an over-romanticism of life, and that could start with romance itself, go through religion, politics, economics, and yes, even gold. (oops gotta go -- kitchen duties calling)
7 REASONS TO INCLUDE PRECIOUS METALS
IN YOUR INVESTMENT PLAN
1) Gold and silver are at or near historic lows
adjusted for inflation
2) Both metals are indestructable and have stood the
test of time for thousands of years. Governments have
come and gone, but gold and silver are still with us.
3) The investing public has sold his or her share of the
precious metals market and has placed the proceeds into
paper assets. The public historicly has always been on the
wrong side of the market.
4) Oil prices have quadrupled over the last 18 months
and inflation is showing up everywhere. Even the
government who's inflation numbers where distorted
are now showing much more inflation than otherwise
realized.
5) Inflation will only get worse because it's going to take
years to raise interest rates and lower inflation with all
the money still locked up in the stock market. The world
is on a binge and to ring out the excesses will not be done
overnight, probably a few years.
6) Gold and silver are liquid assets and can be sold in
small denominations and can be tax free. Secrecy and
privacy can be very advantageous. Lets not forget
they are portable and easy to hide. Midnight gardening
can be a favorite passtime.
7) If you check out, you can pass it on to your family
and heirs tax free. No one has to know.
First, I have been away for a while due to work and personal commitments. I have caught up a bit, and I would like to thank TownCrier and MK for the honourable mention. It is an honour to be recognized by such illustrious judges of merit.
Some Musings:
1. I listened to Don Coxe's call tonight. There was a question re gold. Coxe said he doesn't mention gold as a hedge any more because as soon as it makes a move, some sniper(s) just shoot it down. He states that the POG won't move until the "dollar as haven" mentality ends. He seems to believe that some significant events must occur before the POG moves. (My sense is that Coxe tends to been favourable towards gold's role; I infer he was referring to gold in this context as a means of hedging to preserve wealth in dollar terms, as opposed to gold as an alternate store of wealth).
2. Who are the snipers shooting gold down? Whoever they are, I continue to believe that they must be directly or indirectly backed by official holders; otherwise their actions would be too risky.
3. The snipers are killing much of the support for the POG by their actions, which means they need to engage in less and less activity as time goes on. it seems they allow a rally to occur, to get the goldbugs excited, then they clamp down; this approach is much more effective in demoralizing the goldbugs.
4. People won't flock to gold as a hedge to preserve dollar denominated wealth until they believe the snipers will be overcome. This requires some new official embracement of gold akin to the Washington Agreement. The big fear is the official sector overhang (perceived or real), and the general investor needs assurance that the official sector will not dump, or that other (probably official) activity will nullify any dumpers.
5. Gold's role as ultimate safe haven is tied in with its role as inflation hedge. Inflation in the early and late 70's gave rise to fears that the dollar would be toast; hence, the drive to gold. Quaere whether a new period of inflation will help gold, unless people fear that the dollar will lose most or all of its value, as opposed to just some of its value. In other words, will mere inflation help gold unless that inflation places the dollar's continued value or existence into doubt?
6. The desire for Iraq to receive euros for payment is interesting, and tends to corroborate part of the FOA/Another thesis. However, such moves do not take place on an empty chess board, and Uncle Sam is a pretty skilled and sometimes ruthless player.
Stranger, sorry for the typos in my message to you. I was in a hurry. Dinner time.
Cavan Man. . .Good Sir. The pleasure is mine. And thank you for your presence here. Had the good fortune to talk with a fellow meister in Ireland who was looking to acquire some more yellow and he told me that they've put price controls on a pint. We have asked to republish his whole email to me so that all can get a feel for what's happening in Ireland with respect to the EU and euro. It's an interesting story. He has a solid, interesting perspective to share. Also, Cavan Man, I thought Holtzman's post one of the best we've had in a long while here. Hello, Holtzman and thank you.
Java Man. . . . I have yet to meet a paper money man I could convert to gold or gold man I could convert to paper.
We must understand our limitations and not spend our energies needlessly. At times, events and personal understandings will work their magic whether we intend them to or not.
Megatron. . . .'Tis Randy Strauss, our brilliant TownCrier, who runs the show. I just show up from time to time to post and talk with my fellow goldmeisters. I can only hope that the ranks of knowledge and understanding continue to grow from this endeavor. I can't tell you who much it means to all of us here at Centennial to see the growth and popularity of this site.
Mr. Gresham. . .Ed Stein did a cartoon here for the Rocky Mountain News where he showed an Arab throwing rocks and an Israeli shooting iron. Each was keeping score on his portion of a wall. The one said "Eyes" with a long row of marks/scores; the other said "Teeth" with a long row of marks/scores. I thought that Mr. Stein's representation said it all.
Towncrier. . .I just tried to post without putting in my code and I was able to bounce back to my original post! This is terrific.
Why I didn't, and don't, participate in the bull market
In 1990 Gold was almost 500$, the markets were at the end of a bear market, and the Fed rate had been raised to 9%. Then the Fed lowered rates to 3% over the next 1.5 years to revive the economy from the recession. The Fed, for the next 10 years, created a "giant sucking sound" of money flowing into stocks and bonds, a mania, or a bull market. I saw it coming in 90 and I told myself to not participate in it because then I'd get sucked into the siren song and lose touch with reality and real money which is gold. Since then I've abstained from stocks and bonds and only invested in gold. I've lost 80,000 dollars since 93 (always thought inflation was around the corner) from gold stocks and options. All I own now is a .10 oz gold eagle coin and some warrants on a gold penny stock. I feel like the character in the Old Man in the Sea. But at least my mind is clear of any crowd madness, or popular delusion concerning the stock and bond mania bubble, and I plan on buying gold by making money off of put options and then converting it to gold and gold stocks and options (leap calls on Barrick Gold) before the price of gold rises. I think that inflation and the price of gold rise with the rise of interest rates. So when the economic data provoke the Fed into raising rates that will inflate prices and thus the price of gold, just the opposite, a reversal of what's happened since 1982.
MK, I completely agree. I really enjoy the Holtzman' posts. There's a lot to be said about the Celtic Tiger and the Euro experiment. I do not have all the answers and I look to contributors like this Holtzman fellow to provide enlightenment.
I will say one thing though. I was there (Ireland) for two weeks a year ago this week. Since my last visit (nine years prior) I must say I did not recognize the country. Not long ago, the Irish had not two pennies to rub together. There was no capital to be formed. Capital consisted (for most Irish) of the roof over their heads and the produce of their meager estates. Today, well, you know the story.
I suppose my problem with the British stems from history, plain and simple. The enlightenment (gleaned from history) is teriffic but to my everlasting regret, I am becoming a "professional Irishman"; something I always have disdained.
I shall name my Glen of Imaal terrier "Collins" and trouble Holtzman no more. I'll close with an interesting and timeless exhortation with regards to temporal existence:
"Cast a cold eye on life, on death.
Horseman; pass by."
I will remind you of another Horseman. . . .Our Fifth Horseman thundering over yonder hill. Talk of here long before others recognized the power of this threatening visage. . .
Rising Oil. . .
Unfortunately he hasn't "passed by". PPI up .9% on Friday and I don't believe we've come close to seeing all the fall out from that!
Thanks for the Yeats. . .I've only read him in passing. Should he be studied?? I have to say I keep running into him these days. Why??
It's simply forward selling by gold producers and selling by central banks. They, the myopic, sell gold to raise dollars to save the economic system which is analogous to the Titanic. This is govt welfare for the wise as it allows for accumulation at depressed prices. I can't understand why so many here believe it's conspiritorial, evil, or malicious. What they are doing is not intended to be against gold though it is, as they don't know gold. These people are like the psychiatrist in What About Bob, nothing to get worked up about. I see too much paranoia concerning those keeping the price of gold down which is creates unnecessary anxiety and friction between people. It's something I've delt with myself all of my life and have overcome.
"It's a clear choice for anyone walking this trail; use paper gold derivatives to gain more dollars or hold physical gold to gain more wealth?"
At what point then would the paper gold or gold derivative market fail?
Answer: At the point that the dollars earned through paper gold derivatives tried to buy physical and it becomes apparent, public, obvious, well-know that paper gold can no longer buy physical gold.
When would this time come? When no more gold in quantity is available or released to satisfy the physical demand.
The Washington agreement was the shot across the bow. Physical is running out and will be doled out over five years. Anymore and you are on your own.
OPG (other peoples gold) is being shaken loose through political arm twisting to meet what other paper gold derivatives needing transferred to physical.
When OPG is gone, when five years pass or sooner, when the public begins a buying spree in gold in earnest, any or all of these or an unseen event (dollar tanking because of ME chageover to Euro for oil) causing a drying up of physical happens, then gold will rise explosively.
How close is this event? Judging by recent volatility in the markets and overseas in the ME, I believe soon, but everytime soon arrives, the nation players turn their cards over one by one, delaying the game.
Truly, Nations play in the gold commodity market through agents or agents of agents, they do play and it is obvious. So, in the words of the song, "Bye-bye Miss American Pie" The chevy has been driven to the levy but the levy is dry (or getting there) and the gold old boys are drinking whiskey and rye singing this will be the day paper gold dies.
So let us not kid ourselves (GATA listening?), nations control gold, not commodity brokers, or miners. Miners are silent because they hold the key to the levy. This game is so much bigger than they. It is about a fight to the finish. Somebody threw the rulebook out and we are witnessing our paper gold worth hit the skids while nations vie for position. When positions are set, the levy will be refilled, but not with whiskey nor rye.
"Within our lifetime, silver may very well
become more valuable than gold, as it was in
ancient Egypt."
Jerome Smith
Truly great profit opportunities are rare.
Most people never see them or take advantage
of them. The secret to capitalizing on these
"once in a lifetime opportunities," is to buy
into them before the knowledge of their profit
potential becomes widespread. As more and
more people become aware of an opportunity,
the price appreciates and the potential for a big
percentage gain lessens. The key is to get in on
the ground floor. Such opportunities (as silver
is today) often appear to be dead in the water.
That dissuades most people. They won't act until
they see a price rise. Then they dither some more.
Soon it's too late. To make the most of a powerful
opportunity to profit, you must act beforehand
with independence and a certain amount of
courage.
I am going to lay out the strongest cases for
silver that you may ever see for any asset.
I'm talking about a possible percentage gain
of from 1000% to 2000% for the reflective
metal. You may argue that such gains are
available in technology and internet stock.
There are some differences. One is that
nobody gets in your face so forcefully and beats
the drum for a stock as I am now doing with
silver. You can't say the opportunity was not
presented to you. Secondly, many huge gains in
stocks aren't realized because much of the stock
purchased at low prices is lettered or restricted
from sale. Thirdly, there is still tremendous risk
in high-tech equities. Many companies fail and
others have seen their stock price collapse. If
you bought these stocks late last year, you
probably got hurt. Furthermore, many stocks
eventually lose all their value. A major
difference with silver right now is that there
is limited downside risk. At $5.00 an ounce,
silver fundamentals argue against any significant
drop. In that sense it is a much stronger holding
than a share priced at $5.00. The value of silver
can never vanish or become worthless as can
many types of stock speculations.
DREAM FORMATION
One of the most bullish chart patterns for a
stock or commodity is known as a basing pattern,
or flat base breakout. On this chart the price
movement crawls along in a straight line for
months or years. It is said to be building a base.
Then it breaks out to the upside. Investment
lore says "the longer the base, the bigger the
move." The chart for silver shows a flat base for
the past twelve years with only a small
interruption or two. Some of the most powerful
price moves have come off a flat base. Silver
has built such a base and prices can catapult
upward in a price breakout at any time.
RUBBER BAND
One of the things silver guru Jerome Smith
taught me years ago was how any kind of
intervention in a free market would eventually
boomerang. (Smith was the author of "Silver
Profits in the Seventies," a powerful and accurate
analysis of silver that was said to have heavily
influenced the Hunt Brothers). At the time,
silver and gold were coming off a period of
government price controls. This had artificially
depressed the price. According to Smith a
powerful upward surge was inevitable after this
price suppression was relaxed. He claimed that
prices would explode upwards after the controls
were lifted and as usual, he was right.
A similar situation exists today with silver
short sales that artificially suppress the price.
In a nutshell, a tremendous volume of silver has
been borrowed and then sold. The people who
loaned the silver (central banks) expect to be
repaid and most would not have sold it at $5.00
an ounce. In effect, the mining companies and
others who borrowed the silver and then sold
it have kept the price depressed. This silver
wouldn't have been sold at those prices by the
owners. It's wacky and it's not normal to free
markets. Commodity laws prohibit short sales
from mining companies for more than one year's
production. That's because nobody can look
into the future for years ahead. Yet mining
companies such as Barrick and others have
borrowed silver and sold it in amounts up to
five years of future production. It must be paid
back eventually so it represents a huge short
overhanging the market for years to come
with the likely outcome of a painful short
squeeze.
Silver expert, Theodore Butler, argues that
silver would be $15 to $20 an ounce without
these free-market irregularities. After all, who
would sell silver at giveaway prices (under
the cost of production) when it's in known short
supply, and demand is far greater than supply?
Nobody sells something for which there is a
shortage until they are enticed to do so by
higher prices. Yet that's what's been happening.
This represents more fuel on a potential bonfire.
Ted Butler insists there will be an explosion that
forces up the price of silver until these market
distortions are cleared. Then the price of silver
will have to come to rest at levels that reflect
true supply and demand factors. According to
him, it's not out of the question for silver to
rise to $50 or $100 an ounce.
Figure it out yourself. You have booming
industrial demand for silver (soon to be a billion
ounces a year). The available supply from scrap
recovery and mining is 25% less than required.
Above ground supplies are tapped out and used up.
There is an ongoing short of stupendous levels
that's so precarious it's considered by some to
be an act of financial hari-kari. Silver has an
incredible number of industrial uses and most
can't be substituted. Mining production can't be
easily expanded because most silver comes as a
byproduct of other types of mining. Silver
production fell last year. Taken in total it's an
amazingly bullish story that only needs to gain
wide currency before buying pressure puts the
squeeze on. Ted Butler prophecies that the
frantic run up will go down in history as one of
the powerful price explosions ever to occur.
Leigh 39020
Thank you, and very pleased to "meet you", make your aquaintance, or whatever the appropriate phase is. What is it anyway? I am relatively new to the internet.
I think that what happened then could provide us with hints as to what might happen when fiat collapses.
gidsek 39019
I've been searching all day for my glasses and just found them on my forehead-- Of course, "gone with the wind". Still, while I have a request in with the library, to see if there is a copy in the system, I am going to try to locate a less fictionalized account of what happened, not knowing whether the author did their homework.
Likewise, Thank you, and pleased to communicate with you.
"The Washington agreement was the shot across the bow."
The more I think back on the past year, the more amazing the immediate price spike of 30+% was in the context of behavior in normal markets.
It meant several things:
SOMEBODY(S) was/were watching the European central banks. They did not need to study gold for months and years more to know the connection between CB behavior and gold supply availability. They are still out there, with bucks to commit.
The only question for them had to be WHEN the Euro CBs would make the move. The Somebody(s) in September '99 thought they might be too late to get on board a runaway gold price, and bought the upswing. Who were they? Hibernating gold bugs? I don't th-e-e-e-nk so...
They were those near the center of financial power and information. WHO ELSE would be watching such an announcement as closely? Until I started reading this forum, I had no thoughts of connecting Europe and gold -- like nearly all other ordinary investors.
A reasonable surmisal: A price surge IS possible, likely, even inevitable, and only some downward pressure from more powerful sources keeps it postponed. Only the who and how remains hidden from us, to be read in history books or memoirs later. The only hints we get in the meantime are from market eruptions like the WA one.
I read a very interesting article on the internet a couple months ago about the Greenback and Confederate dollars but am unfortunately unable to locate it again. It talked about the uncertainty of the war's outcome- such that notes of both sides retained their value (or more precisely devalued at roughly the same rate) up until the last few months of the war. The Confederate note even held value better at some points in time. In both cases (North and South) the paper was discounted against specie at increasing rates. A search engine such as
webcrawler.com
may turn this article up for you.
Also,
SierraTimes.com
has some good articles on postwar Union propaganda, still being disseminated in government schools and CFR-controlled media. Imo, the US Dept. of Education will need to be eradicated- the collapse of the dollar will provide an opportunity to accomplish this and other worthy projects.
*********
@ ORO
On another subject, I briefly scanned an Hispanic-community newspaper about a month ago that had a Mexican Minister of Finance's statement on the front page, to the effect that Mexico has now retired all of its dollar denominated debt (as ORO has been saying), without giving the method (euro carry?). He went on to proclaim in rather bombastic tones (although this might be an artifact of translation) that Mexico will not be taking out anymore IMF loans unless it is upon their terms. There was a distinct 'Yanqui go home' flavor to it.
Your last, most fascinating post was chopped off, would you be so kind as to re-post it?
**********
@ Journeyman
And on another subject that I meant to write about back when, "20/20" aired a piece on or about May 31st, 2000 concerning a proposed luxury tax on yachts. The rate was something like $200K on $million. A presumably wealthy woman was interviewed at a marina, asked her opinion of the tax. As she brushed bleach-blond straw out of her leather saddlebag face she replied to the effect:
"We don't need such a tax since we already give so much more than 200K to charity. After all, the poor would not even exist if we didn't support them."
It was a classic piece of footage, wish I had a copy. This particular philosopher-economist is not unusual in her views, in my albeit limited experience. Point being, every culture, has its own set of beliefs, or mythology, that support its raison d'�tre, however twisted they might be.
http://www.pacinlaw.org/thorington.htmFound this link looking up some law tonight. It's a legal case involving a land purchase made with Confederate dollars, and a resultant lawsuit after the war was over. Basically, when the war was over, Confederate money was irredeemable and worthless, as is often the case in defeated states, noting some of my own family's suffering after WWII in Germany. A rather illiquid condition to be in. Fwiw.
In "Vision of Redemption" the temple mount faithful movement states its belief that the creation of the modern state of Israel is "the Beginning of the redemption of the world."
which is completed with the building of the third temple.
http://www.sunday-times.co.uk/SIXTY years ago, as a trainee researcher, Peter Bernstein was taken to the basement of the Federal Reserve Bank of New York.
There, five floors down, stored in vast troughs, were towering piles of what looked like outsize candy bars - about $2billion in gold, enough at that time to buy about four days' worth of the total production of America's goods and services.
This image of unthought-of wealth lies at the heart of The Power of Gold, in which history, myth and metaphor combine to produce an entertaining study of the dangers inherent in bullion worship.
Although familiar figures come and go - Midas, for example, and Croesus - the book's real charm lies in its detail. Did you know, for instance, that gold is so dense that a cubic foot of it weighs half a ton, that you can draw a single ounce of gold into a wire 50 miles long or beat it out into a sheet covering 100 square feet?
Gold's blood-soaked history - predictable when one realises that even now there are only about 125,000 tons of it in circulation - turns out to be engagingly circular.
In the early days the world's rulers tried to turn gold into money and over the past century and a half many of the world's economists have gone broke trying to turn money back into gold.
Bernstein's most entertaining chapters take in the sustained efforts of 20th-century western economies to preserve a "gold standard", the idea that, in the last resort, money could be convertible to bullion.
Despite a line of distinguished casualties, including the inter-war governor of the Bank of England, Montagu Norman, and Charles de Gaulle, the last vestiges of a gold standard lingered until 1971 when Richard Nixon did away with the Bretton Woods agreement on exchange rates.
As for the future, at least one Nobel-winning economist maintains that gold will remain a valuable hedge in turbulent trading conditions and as such will continue to play a crucial part in the 21st-century economy.
For all the perils of gold mania, exhaustively reproduced here, there is something consoling in this (literally) elemental throwback.
Those who are sceptical of the long term viability of the Euro monetary experiment often hold up Ireland as a poster child to declaim the potential ruinous effects of joining the Euro block. I have my own thoughts and will hold same but do believe the case of Ireland in the Euro and the corresponding rise in the domestic inflation there might not be directly correlated. I believe it's simply more complicated than that.
Would appreciate your comments and analysis. As always...thanks.
Sorry folks, it was lost on the way into the text box and the original was destroyed in the crash that often follows an online visit. I'll rewrite it when time permits me to address the issue again.
A strange thought for an early morning. Myers-Briggs profiles of preferences!
I noticed about a year ago that many of the posters on this site when they would recount their lives story in some small fragment had a lot of similarities with myself. I began wondering if there was maybe a genetic variation called "gold bug" or someone who thinks about the things that we love to discuss here. After a little study I discovered that there was a system invented by Carl Jung that catagorized the various personalities into sixteen groups and that this system called the Myers-Briggs system was perfected and popularized by the mother daughter team Myers and her daughter who married a man named Briggs. Millions of people all around the world use this system to organize work teams in the business world and chose mates and thousands of other things. I would bet that there is a very high correlation with the types of people that share this forum. I am an INTP and while only 3-4% of the population I would bet that there are quite a few on this site. This becomes valuable for all of us since it helps clarify why we often have so little luck in trying to make our ideas understood by others. Many of the personality types that represent large portions of the population have no real wiring that would allow them to appreciate the theories we are discussing and other large portions of the population have no interest in any high theories unless they can see the clear applicability. This observation has saved my endless frustration by not wasting my arguements or efforts on those who have no interest or proclivity to understand the world in this way and instead focus my attention on those types largely NT s who might well appreciate the ideas we are discussing. THe various impacts that a system like MYers-Briggs has pays tremendous dividends in many ways and I have implemented many of its insights in everything from choosing when to leave my teenage children to their own wishes and desires which are different from mine since they are wired differently to not wasting time with trying to sell or work with people who are not likely to share my interests or values.
A brief on the history and legality of legal tender laws and confiscation
http://fly.hiwaay.net/~becraft/MONEYbrief.htmlThis brief is addressed to an issue commonly referred to as the "money" or "specie" issue which is based, in addition to other authority, upon Article 1, � 10, clause 1 of the United States Constitution which reads as follows:
"No State shall ... coin Money; Emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts."
This brief discusses this issue at length for the purpose of conclusively demonstrating the premises that constitutional money in our country can only be gold and silver coin and that the States are constitutionally compelled to operate on a specie basis. It is the contention herein that Article 1, � 10, clause 1 of the U. S. Constitution is an absolute prohibition upon the States which cannot be circumvented by permission or command of the federal government, and that such provision prohibits the States from utilizing any paper note or credit issued by any private banking institution, whether the same be Federal Reserve Notes, bookkeeping entries of liability or otherwise.
The who has been well documented by GATA. We know who. It is Britain and the US (ESF) and, for some unknown reason, Deutsche Bank and the likes of GS, JP, etc. It is the countries using these civilian banks, who are in the know, that irks the likes of us. I suppose one could argue that the CB's can't intervene in the gold market directly and must use the best tools at their disposal: the bb's or bullion banks. It is this dotted line from CB's to bullion banks that gives the bb's the advantage and insider knowledge. That Mr. RR happened to have been chairperson of GS and then later Sec. Treas. and now head of Citibank and friend of Al G. shows clearly the dotted line relationship that GATA speaks of. Nothing official, just a bunch of conflict of interests in power who also have an on/off switch to investigator bodies to expose all.
The why has been sufficiently documented. The US dollar has defaulted twice on its debt in gold. It is about to do it again. Nations have a right to protect their currency. Noone can argue with that. It is the manner of intervention that has us all up in arms because as commodity investors we have been duped by an underhanded attempt to show gold as only a commodity but yet has the full force and power of nations behind its manipulation in order to extend the life of the dollar. It is this relationship that has the press only focusing on gold as commodity and that completely ignores its role as monetary asset that were it left on its own accord would show inflation to be extra-ordinarily high, that has us all up in arms.
It is NOW a no brainer to see that the charts of RossL and the other two (Kondratieff and Dow v Gold) show that the backing of currency with gold but not allowing it to float at market price of gold has caused governments to conspire to hide the true relationship of currency to gold. These chart show that nations can only hold inflation and gold back for so long and than vrooom something causes the clock to start over again, just as though a winding spring has broken loose. Because so much gold is stored in Central Bank vaults, they have the ability to extend the lifeline of currency but when that gold is no longer held or controlled by CB's in sufficient quantities that they loose control of it (as now appears to be the case), then the clock is reset. We are witnessing such a collosal resetting of a clock that has three lives, with the third one seemingly on its last few days or months. Who can blame the Nations for colluding in gold? Can we as Americans (some of us) really blame our country for trying to extend the life of the dollar? I say go for it.
What irritates me, though, is that instead of doing it in the open, we have chosen to manipulate through hidden deals in a way that has directly cost me easily $100K, either in lost opportunity or reduced gold-share prices. It is this hidden tax that you and I bear directly through underhanded dealings with a few special banks in the know, because of their unique market position, that makes me support the efforts of GATA. I want the dollar to win, let there be no doubt. But I believe that goldbugs, mines and gold-mining countries are truly hurting because of these efforts.
If the finincial powers believe that they are in a currency war, then they will take extraordinary measures to save the dollar. I believe that is what we are witnessing -- extraordinary measures of CB's to save the dollar. If that means stepping on a few goldbugs, so be it, eh? Is this right? No. Perhaps in their minds it is and that is what GATA is all about. It is a foul that has a maximum 20-yard penalty and forfeiture of the ball to the other team.
Yet, the Euro was born by some pundits to replace the dollar as the eventual world reserve currency. It is the oil-gold-Euro-Dollar relationship that would appear to be the trump card in this relationship. If the dollar were to fail, and let's hope it does not, then would it be better to have another currency that could step in without much harm to world economies or would it be better to move soley to a gold standard? We have thoroughly discussed this topic here and elsewhere on the web. I believe the conclusion was that it would be better for another currency to step in that had the potential to handle the volume, as it were.
In the meantime, we are forced to watch this all unfold, while we call "foul." And now we must wait while the referies determine whose ball it is and what to do about it. Negotiations will take a while, they are reviewing the tapes now. "Please, I'll take a bear and some peanuts." It is going to take a while while they figure this out.
I forgot to mention that we watch this game behind an opaque screen and only occasionaly get glimpses of players being carried off the field. We hear grunts and clashing pads, but see no direct action. What is most clear: gold is at the center of a tremendous world-wide game of dollars, gold, euros, and oil. The nation players don't talk about their game, they just do their thing and we watch what we can.
Finally, it is gold as the ultimate inflation indicator that keeps it suppressed. We have heard that Greenspan watches gold for signs of inflation. If he knows, and we know he knows, that gold is being held back, then he knows what true inflation there is out there. It is gold as the ultimate thermometer of inflation that throws it into center field. When gold resets the clock of values as has been shown in 1929-33 and in 1979-80, it bought time. Because the US didn't mark the dollar to gold's market value (a very unpopular move in 1971-73) the dollar only bought more time. Had it been allowed to float with the value of gold and gold allowed to act as a thermometer of spending beyond US means, then all may have been good longer term for the dollar, but instead, one chose to eschew the role of gold has on currencies -- a disciplinary role that keeps excess spending in check beyond 2500 tons of mined gold per year.
So, the game appears to be about how Nations reassert the role of gold without shocking the world with that reality. Since the dollar has twice defaulted and appears close to doing so again on gold-debt (paper gold), it may have been decided by the refs that the other team (euro?) gets the ball now. We shall see.
WHEN is also the question. When will gold rise? When it is time to let currencies reset the clock to gold's market value. When will it be proper to let currencies reset to a gold? When no more moves can be made to hold gold back or a key player who can turn the ball over decides its time. Is oil the key to turning the ball over? It seems so. Why?
Oil going higher and gold staying low has skewed the historic relationship of gold to oil. (RossL, it would interesting to see a chart of oil v Dow, as this would likely show the reset is in progress but through oil this time [as a leading indicator]. It is oil that appears to be the leverage that will cause a turnover. The reason is the record trade deficit, the rise in US dollar inflation, and the subsequent inability of the US to control inflation as reflected into the economy by higher oil prices. We saw this in the PPI on last Friday. It showed a nearly 12% per annum inflation rate. As more oil dollars chase less physical gold, physical gold will dry up and reset the gold clock. The turnover will be complete. For now, though, the dollar is still in play and stashes of OPG (other peoples' gold) are being put in play to extend the game.
So, the WHEN, now becomes when the physical gold is all called for and oil has no more to buy, then currencies will reset. Oil will drive gold higher through an ever increasing appetite for physical gold. The game can only be extended as long as players accept more and more dollars for paper gold. Once this insatiable appetite for paper has been been stopped, physical gold will rise. The ME (Middle East) may then be an attempt (in this game) to leverage the leverage or turn the timetable up. Any quick turnover, would cause more harm to the US. The ME may be such an attempt. It has the effect of ratcheting oil prices higher, forcing the hand in the trade deficit quicker, and making inflation that much more apparent. Gold is now starting to react to such pressures (but was quickly contained). The ME would seem to be another horseman then. Oil has gone ahead of gold in its traditional behavior from a lagging to a leading indicator and now oil supplies are being threatened that further compounds this traditional break in gold v oil. If oil ratchets higher quickly, then this will force hands much sooner. All eyes turn to the Middle East. (The currency battle has turned violent in the ME).
I am fairly certain that all the Euro gold (Swiss 2000, British 400 or so and whatever else was allowed through the Washington agreement) is all called for already. It is supplies of new or OPG that are being tapped and when that run dries, the changeover may occur. Oil and tensions over oil appear to be the play that could force the Euro into reserve currency status much sooner than hoped for or thought possible. Higher oil prices will allow more dollars to buy more physical exerting more pressure. Physical gold will dry up much more quickly with higher oil prices. More profit, more gold. More gold, less available. Less available, higher prices for gold, once the paper can't or won't satisfy.
So, the question now becomes: how long can the Commodity exchanges for gold support a lower gold price? Answer: as long as those buying the paper are satisfied to not convert paper into gold. Or, as long as those buying physical can still buy it at the artificially lower price of gold as set by COMEX and LBMA. When physical gold becomes scarce it will require more and more of it to be directed to COMEX. Or, COMEX will have to set up to demand less and less physical gold. When COMEX no longer needs physical gold or can't provide it, or provides an alternative (dollars?) for settlement, then physical gold will rise. Only those who follow COMEX much closer than I could tell us when this might be. Are the gold lease rates the barometer for this? Some of you know.
I have taken the tests several times. I have usually tested as an INTP, but I also have tested as an ISTJ. It depends on the questions in the particular test. My results in the first and third letters have always been lopsided, while the second and fourth letters are very close and could go either way.
While clearly you and I are a very small sample to prove my suggestion it is none the less very interesting. I tend to be a very talkative "I" or introvert so I often show up as an ENTP but when you read the detailed descriptions on a site like www.personalitypage.com you see the detailed desciption that fits you quite clearly. I would venture that there are most likely a great deal of more INTP s or the similar groups on here. THere are many interesting characteristics of the groups that are very helpful. The most obvious is that there is a very high correlation between jobs or careers and certain personality types. Teaching is full of ENFJ for example and composers are often ISFP s . The National Merit Scholars are 85% N s or intuitives even though they make up only about thirty five percent of the population. Your alternative reading of ISTJ is the same as my brightest child so I know a fair amount about it. THe S s or those who tend to be interested in concrete proof of the world versus the N s (intuitives) or those who are willing to put the pieces of the puzzle together through intuition are generally not as high a scorers on standardize tests which are almost always written by N s and therefore slanted toward their way of thinking. Of the National Merit Scholars the 15% that are S or Sensors versus the 85% who are N s or Intuitives are heavily ISTJ s. The ISTJ represent only 10% of the population but dominate the non N portion of the high scoring standardized test takers. The ISTJ s are also extremely heavily represented in business management and executive positions and any type of military leadership. The INTPs tend to be the big picture pure thinkers and structure builders like research scientists, architects, and gold bugs evidentially.
Let Me Simplify Everything that's said here with Midas Mulligan's Law
All that's said here is true it just needs to be distilled and simplified. I've done so with my new law. AS INTEREST RATES RISE GO SO GO THE PRICE OF GOODS AND SERVICES, OIL AND GOLD. Everything else said about gold here or anywhere is derivative and secondary detail examination.
I believe Carl Jung also pioneered the psychological theory that people always manage to get what they want. He used this theory to get to the root cause of people's mental illness with some success. Also, I vaguely remember a discussion on banking, US dollar, etc., that someone (Aristotle?) made a reference, in a similar vein, to people getting what they want as a partial explanation for why fiat is destined to have problems.
My lovely wife, who administers MB tests, tells me that, based on her experience and observations, I am an ESTJ..."with a very strong T", she adds. For those not familiar with the test, E = Extrovert: thinks aloud to validate one's thoughts, energized by physical environment. S = Senses: gather information by using the five senses. T = Thinking: objectivity, able to separate feelings in decision making process, how one prefers to make decisions. J = Judging: overall attitude towards life or the way one prefers to live their life. Need closure, schedules, need to know what's happening next...i.e. anal.
As she watched me typing her interpretation into the word processor prior to posting she mentioned that people with "P" = Perceiving: attitude towards life, would probably enter their thoughts directly into the USAGold posting page.
As she was leaving the room, just now, she concluded with the statement that she is an INFP, in other words, we are complete opposites!
Note that a score in any area indicates the strength of the preference and an exceptional high preference could be an indication of personality disorder.
An oil-Dow chart sounds interesting, but I don't have the data on hand. Does anyone know of a good data set online that would give monthly data for oil and the Dow?
AS THE FED FUNDS RATED GOES SO GOES THE PRICE OF GOODS AND SERVICES, OIL, AND GOLD. (Midas Mulligan's Law.) If you want the price of gold to rise you have to get the Fed to raise the fed funds rate. To get them to do that requires data suggesting an overstrong economy or you could have a million man goldbug march around the Fed to put pressure on them to raise regardless. The rise in the Fed funds rate is the iceberg that will sink the Titanic-like markets and send gold soaring.
WAC (Wide Awake Club) (10/15/2000; 4:30:55MT - usagold.com msg#: 39053)
Book of the Week - The Power of Gold
http://www.sunday-times.co.uk/
"This image of unthought-of wealth lies at the heart of The Power of Gold, in which history, myth and metaphor combine to produce an entertaining study of the dangers inherent in bullion
worship."
Hidden presuppositions:
1) Gold is worshiped by some thoughtless nuts as a religion.
2) The faithful are dangerous people. (Money is the root of all evil.)
"Although familiar figures come and go - Midas, for example, and Croesus - the book's real charm lies in its detail."
Hidden presupposition:
Gold becomes an obsession that takes over everything else.
"Gold's blood-soaked history - predictable when one realises that even now there are only about 125,000 tons of it in circulation - turns out to be engagingly circular."
Hidden presuppositions:
1) Gold causes murder, war and genocide. It is better not to have it around.
2) Fiat currency has no "blood soaked history".
"In the early days the world's rulers tried to turn gold into money and over the past century and a half many of the world's economists have gone broke trying to turn money back into gold."
Hidden presuppositions:
1) The primitive rulers of yore came up with the idea of gold as money. They forced this unnatural stuff upon the masses in order to oppress them.
1a) Modern governments are much more civilized.
2) Traders would never have thought of this on their own. It has nothing to do with the Principle of Least Declining Marginal Utility.
3) If you want to be part of the establishment, you had better leave this issue alone. (This, I think, is what happened to Greenspan.)
"Bernstein's most entertaining chapters take in the sustained efforts of 20th-century western economies to preserve a "gold standard", the idea that, in the last resort, money could be
convertible to bullion."
Hidden presuppositions:
1) Paper currency is money, gold is not.
2) Governments and banks did everything they could to preserve the integrity of the monetary order.
"Despite a line of distinguished casualties, including the inter-war governor of the Bank of England, Montagu Norman, and Charles de Gaulle, the last vestiges of a gold standard lingered
until 1971 when Richard Nixon did away with the Bretton Woods agreement on exchange rates."
Hidden presuppositions:
1) Defenders of gold are at mortal risk.
2) We are better off now without the gold standard. The rest of the world agrees.
"For all the perils of gold mania, exhaustively reproduced here, there is something consoling in this (literally) elemental throwback."
Hidden presuppositions:
1) Gold as money is a barbaric idea promoted by (literally) lowbrow Neanderthals.
2) These Neanderthals are dangerous and crazy, and we have the proof.
Hello Steve,
I am also a GATA supporter. Your posts these last two days paint a lucid and "big picture" scenario for the end of gold supression. Thank you much. I am attempting to get a GATA response to you regarding their strategies concerning the "system" of govt, CBs,& BBs, and the point at which abuse starts and normal intervention ends.
These are clouded points, yet they go straight to the crux of the manipulation/collusion issues. Since govt can intervene in these markets to a certain point and have their actions be deemed "prudent", are we heading for a legalese showdown over the meaning of the term prudent? That is really fertile grounds compared to the word "is". Which would you rather debate the meaning of? Is this the core meaning of your post on the 14th? The conflicts of interest and the bread crumbs show us who and where, but can they be stopped prior to this thing coming to it's natural and desperate dollar end? Seems like a lot of lines get crossed in trying to determine who has crossed the line!
Best to the Faithful piecing this end game puzzle together. Thanks for your discernment!
I want to thank ji for posting the link to attorney Larry Beecrafts history of the legal tender laws. Larry Beecraft is a first rate Constitutioanl attorney, scHolar, and patriot. If you dont understand the money issue that link i s well worth a read.
The sad fact is that the courts of this country are involved in a charade. The charade is that the US Constitution is in effect. IT IS NOT. At least, large sections of it are not.
Instead of the courts being forthright and saying,
" we dont like that part of the Constitution, so we will use our POWER to nullify it", they engage in sophisticated arguments to prove that the Constitution doesnt mean what it says it means. Thereby, they keep the average man from realizing what has been done to him. IT IS THE WORST KIND OF MIND CONTROL.
The RIGHT to honest money has been stolen from the American People. It was stolen by politicians and bankers, and the deed is done. It continues with the agreement,connivance, and blessings of the current court system (Anthonky Kennedy and Clarence Thomas included). It continues with the blessing of both Political Parties.
Let me state it plainly: Our government is not lawful and our courts are corrupt.
That is the truth,and it is plain for all to see who which to see. If you dont see it, it is because you wont see it.
And there is little you can do about it at this time except tell your children about the heritage that was stolen from them.
WOWERS !!, Sir SteveH, the puzzle pieces start falling into place. -- I must agree with Sir Auspec also, as he said:
auspec (10/15/2000; 10:56:08MT - usagold.com msg#: 39067)
Steve H & GATA
Hello Steve,
"I am also a GATA supporter. Your posts these last two days paint a lucid and "big picture" scenario for the end of gold supression. Thank you much."
====
I feel that this review of TRUTHS should be joined with those many others in the FORUM "Hall of FAME" and hereby NOMINATE #39058 for such.
====
<;-)
I must say I'm a little surprised that we aren't more excited about this development. Is this not the beginning of ANOTHERs' scenario out in the open? Witness this post from another forum (not widely commented on either). Even this post omitts the comments of French official Jacques Santer, who suggested that pricing in Euros would "stabilize" the oil markets. (butter would not melt in that mans' mouth)
(Please excuse the venom at the bottom but I didn't think it was my place to edit James' post)
Credit to James of Kitco
--------------
Date: Thu Oct 12 2000 18:13
James (The pieces are all falling into place) ID#69113:
Copyright � 2000 James/Kitco Inc. All rights reserved
About 4 weeks ago Iraq stated that it intended to sell its oil for EUROS. They recently made an even stronger statement in which they said that if the cannot sell their oil for EUROS then they will NOT SELL it at all.
About 2 weeks ago plane loads of officials from at least a dozen countries including france, iran, russia & libya began arriving in iraq.
Coincidence? I don't think so.
It is ironic that saddam may be the man that lights the spark that will blow a huge hole in the obscenely overvalued u.s. war machine fiat.
After all the suffering that the iraqi people have been put through by the despicable USG leadership with the full connivance of the vast majority of the brain-dead u.s. public, if they could play a role in greasing the skids for a u.s. descent into a hellish depression, then a small measure of justice will have prevailed.
My fervent hope is that millions of those immoral, unprincipaled bastards who slavishly supported clintler through all of his attrocities lose their homes, their SUVs & even their lives.
-----------------
I saw someplace a stat to the effect that Iraq suppies %4 of the worlds' oil (79,000,000 bbl/dy).
Conservatively priced at $30/bbl I make that to be about $30 billion in foreign exchange (not dervative notation but "real" fiat money) per year swinging toward the new Euro currency.
Is this to small an amount to have an impact on the USD and the yellow?
The middleeast does shut down OIL supplies, no one
person would have fuel for their vehicles. Our cities
would collapse with food distribution cut off and many
everyday necessities rationed. The U.S. dollar would
be almost worthless in this kind of enviroment.
Or we our struck by terrorism inside this country and
dams are destroyed and stock exchanges brought
to a halt by surprise terrorist bombings. Could happen
and gold and silver would be off the market at any
price.
REVELATION can lead you to water, but can't make you
drink. If anything major out of the ordinary occurs to alter
peoples lives, there will be no time to prepare. At todays
low prices for precious metals it is prudent and recommended to have up to 20% of ones wealth in
P.M.'s. Any credited investment advisor would recommend
10%, but with prices as cheap as today 20% is a good bet.
When the dam breaks, it will be too late buy only at ridiculous inflated prices. Keep in mind GOLD is the same
as insurance. It only pays off when you have the insurance during the loss or accident. Just like insurance, you cannot
go out and buy it after the fact or loss. Don't be caught
without it !!!!!
FARFEL especially needs to pay attention to the perils
we all face in life. Just because GOLD doesn't go up
today, doesn't mean it will not go up tomorrow. The fact
is we really don't want gold to go too high. Then we will
never be able to enjoy it.
I never thought of anyone preparing the text before entering it on the posting page and my misspellings prove that I never have. It is a fascinating twist to this arguement. If you look at the various personality types and the number who have these types in the population you begin to see a slightly different perspective on the entire discussion of fiat versus real money and many other issues. It is safe to say that most of us have the vast majority of our friends and associates look at us with complete disbelief when we even question if fiat is money or that there might be a reason to own gold. I will continue more on this subject later. I hope that others who know their personality type will share it with us so that we can see who is attracted to this arguement. Best wishes to you and your wife she is a very fast read.
Steve H & Gandalf the White {would love an explanation on that one!},
Here is an official 2nd for HOF post #39056 by Steve H.
For all of you recent posters asking for explanations in plain English, here it is. All you had to do was ask and wait a couple weeks. Couple comments- Could you refer me to location of RossL chart, don't recall that one specifically?
Steve, If this goes in HOF you had better hope you can ammend the post to delete your dollar losses. You're braver than I, as can't even bring myself to add them up! Can see you showing your Gchildren your HOF post, explaining why no inheritance is coming their way. They will be quite impressed. Of course, when this whole scenario plays out the way we KNOW it is going to, that 100K isn't gonna mean much.
Clearly the Govt-CB-BB structure has lead to temptations and subsequent abuses, yet I do not think the existing structure alibi is going to hold up to scrutiny. I still don't know exactly where the line is, but they sped past it years ago. If all this passes as business as usual it's later than we think! They could return my losses and I would remain mad as Hell and still hot on the trail.
Great post, integrating your own thoughts and interpretations with numerous others. You are on the "cutting edge" and we look for further illuminations from you!
Auspec the Auadvocate {has nothing to do with guacamole}
Hello Sir Turnaround.
Had a look at Sierra Times, and have tried a couple of searches. One certainly does have to sort through a great deal of hay to find a needle on the internet. But it is a worthwhile idea and train of thought, and I will pursue.
Thanks
Regarding the eradication of the US Dept. of Education; I believe that several DEPT's., who insist that, only they are all knowing, and get their fiddle faddeling pudgy little fingers in my life, must, and will go. Big is no longer beautiful. Still it is imperative that the other part of the expression, education, be expanded. It is still true that the most effective education come from 2 people, a student and a teacher, sitting on a log. (and I view education as critical to our ongoing survival)
714 -- 39050 Confederate dollars.
I am not quite sure how to start, or even how to express myself. In short, you have opened a can of worms for me with your post.
I suppose the question of how the authorities will react to the coming turmoil, has always been a major part of my thinking, but for some reason, I had not given adequate consideration to where the ripple would go next. In short; How the nation state will evolve, and on what foundations.
It is fine to say or think, I will own gold, because when fiat collapses, "I will be rich". But "rich", in and of itself, isn't going to do much. True this may give you options not available to those who do not have such assets. But, most goldbugs do not carry it to the next step. For instance, most do not consider the negatives adequately. "Fine, I will get a gun. That will protect me," and they stop there. You can't stay awake forever, and sooner or later, one of the thousands who covet what you have, (most also with guns, especially the entrenched authority, government.) is going to get through to you, and if you are lucky, the worst that will happen is you lose your hard won assets.
This Thorington case, for me has brought to the forefront a train of thought that I had not previously pursued adequately.
As an aside, the case mentions "in TILE circumstances" several times. At first I thought it was simply a typo for THE. After several repetitions, I began to wonder. Does "tile" have a significant meaning in old legalese?
Regarding your families background, I would be most interested to know what things your parents talked about as contributing most to their suffering. What things did they need the most, and were difficult or impossible to obtain? (in as much detail as possible, eg flour as opposed to food) What things did they miss the most during that period, that were available "in the olden days"? How did the "medium of exchange" play out? What were the various forms that medium of exchange took?
I know this is a massive imposition on your time, and I can see you are quite occupied. Hopefully, such a discussion will benefit both of us. Failing that, I hope to appeal to what one poster on another forum calls your sense of "namaste". (I am pleased to impart this information, or, teach you.) I can be reached at currie@mqcinc.com
Thanks for everything.
NICKLE62 - 39056 Meyers-Briggs
I am not going to go there. This is the sort of subject that interests the BEJAYUS out of me, can consume untold hours of time and thought, and is not particulary pertinent to my main goal of how to cope with the coming events.
In that vein, I have sometimes speculated as to the derivation of some of the names used as handles at this forum. Peter Asher may well be Peter Asher, but Midas Mulligan makes sense only when you know Ann Rand. And then what kind of mind, or at what stage of its development, would find the example Midas portrayed as significant to a gold discussion? (not that I say it does not, but what kind of mind?)
It does seem a truism that birds of a feather, flock togeather.
I see that I have mispelled you name more than once. Sorry!
And, see, that changes the possibilities of what sort of mind you might have, and your motivations. (smile)
And now I am off to commune with my offspring. Later.
What kind of mind would use the Ayn Rand character Midas Mulligan as a nickname in a gold forumn? The perfect, which simply means normal, mind, the mind of a person like the character John Galt in Atlas Shrugged. I'm totally 100% honest and rational like John Galt and my brain, which is a real life version of the John Galt motor, can drain emotion which is static energy like oil, from irrationalists. I take energy away from irrational people and give it to absolute minds like mine, as represented in Atlas Shrugged by the strikers. Then the irrationalists are forced to replenish their lost energy or emotion by draining the minds not on strike, "Atlases", called scabs. That's how I get the minds to join me on strike so I can drain the brain and make the world of emotion collapse in order to make reason absolute, ie. establish a gold standard. Ayn Rand meant what she said in Atlas Shrugged. It is a literal forecast as I'm literally the real John Galt. (BrooksDorn@hotmail.com)
You really nailed it! -- so many pithy sentences and phrases that carried the ideas we've been working on here. It's amazing how a restatement can seem so fresh!
This is how scientists work on sub-atomic particles, ones they'll never see in any form, but only by measuring and comparing the effects to known phenomena can they advance knowledge in that field.
I'd like to bounce questions off your posting when I get back later...
Justamerebear, I always have leaned toward the less dramatic example of the 1970s
When trying to imagine what might be instore for the dollar and the value of gold. In that period much like now gold was being held down by a lot of factors at the artifical price of $42.25/ounce. When it finally did get to free itself and believe me it was a very erratic run,up and then down again sideways for years then up and down and sideways and then finally a major up move in a very short period of time from $600 to $800. This took more than ten years. It resulted in an eighteen fold increase from the low to the peak but it was a good possible example of how the current situation might play out. The dollar lost much of its value during the period but like many major currencies continued to have its primary funciton of being a facilitator of trade. The first thing you noticed was that houses which were in tight supply because of the emerging babyboomers entering the housing market for the first time began to take off in price. The second was the rapid increase in the price of oil around the arab boycott in late 1973. Then the wages that you got started to reflect the reduced value of the dollar as inflation started to take off and companies had to pay up for labor or they would have none. Houses roughly tripeled during the ten year period in non hot housing areas and wages more than doubled in nominal terms and the dollar declined big time against the yen and the German Mark. The British of course were sufferring from an even worse case of the same problems we had so their currency went down even more than ours did but the parralles are interesting. So don't get too carried away with the get a gun and guard your stash scenario, peoples have a way of muddling through and if and when the dollar does begin to loose value it will probably be dramatic but not cataclismac and will largely be played out in the same general context of the examples above although maybe at a faster pace and with a steeper slope.
I missed the SteveH (10/15/2000; 8:34:28MT - usagold.com msg#: 39058) post completely (today was a honey do day) and am glad it generated some response which lead me to find it. What a lucid read...and as I think I, and many others, would benefit from additional reads of the post, let's put it where it would be most accessible...in the HOF as also suggested by the gentlemen below.
auspec (10/15/2000; 13:41:06MT - usagold.com msg#: 39074)
Gandalf the White (10/15/2000; 12:51:19MT - usagold.com msg#: 39070)
A third second to Gandalf the White's # 39070!
Congratulations Steve H, I think this second officially qualify's your # 39058 to the USAGOLD HOF! Great Post!!!
**********************************************************
Nickel62,Java Man, and Ross L....Myers-Briggs test:
In the last 20 years I took the test 3 times and like Sir Ross L I scored slightly different results each time.
To refresh old memories(mine) how many total questions in the test?
Also please fill in the missing letter.(F) For those that don't know what the letters stand for:
1.E=Extrovert...I=Introvert.
2.S=Uses 5 Senses...N=Uses Intuition(To reach conclusions)
3.T=Thinker...P=Perceiver.
4.J=Judgemental type....F=????????Must be forgetful, because I remember I was an "F".
Conclusion(mine):
Some human minds are continually evolving, similar to the earth and the universe, while other minds are not!!
FWIW....beesting.
The John Galt motor in Atlas Shrugged converted static energy to kinetic energy. Static energy is emotion. Most people are emotional and not cognitive. They simply conform and desire to keep the status quo, the state (Titan Pometheus), in power. Cognitive people are the creators and thus supporters of the emotional world. (Titan-Atlas) The absolute minds are not willing to support or compromise with emotion, thus they refuse to think and live to conquer the Titans.(Olympians) and make time and money absolute/gold versus only relative/paper (Cronus). Emotional people live as parasites off of cognitive people by draining the mind which can create it's own energy. They live off the dollar draining it of it's value by consuming the goods and services it represents without producing anything, but the mind creates the value of the dollar or those goods and services. I live to drain emotion using my mind which is my motor. I do this by making my mind totally passive. Thus when emotionalists try and drain my mind I reverse the drain and drain them instead. Then they must replace what I take from them by draining more from the minds of Atlas. That's how I, Zeus, conquer both Titans. Oil is the material energy that Titan's depend on. It's static energy so my mind drains it to Olympians/strikers thereby raising it's price and making prices rise. The goal is to make prices rise so the Fed will raise rates and thus cause the markets to fall and gold to rise. When that happens Cronus (mediocre power lusters/statists) and the Titans will be conquered and the Olympians will rule.
Why do 'analyst's say there is no evidence of collusion when the POG drops $70 but cannot bring themselves to admit the obvious that the WA certainly WAS collusion and the price rose $70? Markets work both ways.
www.personality.comThe above link gives several online tests for free and the Kiersey Tempermant Sorter is a good one to figure our the four basic letters of your type. A very good description of what that personality would be like is then given in detail at the www.personalitypage.com site where all 16 types are described in detail and shows their suggested mates and careers that many of that particular personality tend to prefer. It also has a slightly better test of sixty questions but charges $3 per person to evaluate you online while the other site is free for a similar test. The last two letters are either a J or a P depending on the way you prefer to have your world organized. J s tend to be rather liking of order and routine and P s tend to like to leave all their options open as much as possible and tend to be somewhat messy as a group. The P s are the adventurers and explorers who drive cars full of all kinds of stuff not necessarily in very organized fashion. The judgers are the neat organized anal types who want things to be rather predictable. The other type poles have been described quite well.
For years now, there has been speculation about the coming break out in the pog. Among gold-bugs, there seems to be a unanimous chorus of "it's just a matter of time". Tomorrow maybe? Next week? Next spring? Weariness is setting in for this gold-bug and the constant readiness/waiting/watching is leading to despair! Is it time to take delivery and fogeddaboutit?
Steve H remarked here in the last day or two
that GATA seems to deal with gold as a
commodity rather than as money itself. Since
GATA has concentrated lately on market
manipulation, Steve has a fair observation,
so maybe it's worth clarifying GATA's
position.
GATA has ALWAYS has recognized gold's crucial
monetary function. In fact, defending gold's
monetary function is part of our charter.
GATA recognizes the power and right of the
U.S. government and all governments to trade
in gold and to issue money. When GATA
stresses an anti-trust approach to the gold
situation and identifies private parties
acting against gold, it is because such an
approach seems most promising for ordinary
gold investors and believers in gold's
purposes.
That is, as Americans we all have certain
rights under anti-trust law, but other than
exposing what the government is doing
surreptitiously with gold (as GATA indeed has
tried to do), we may not have much leverage
under the law against the government's power
to issue money and trade in gold. But we do
have a moral claim, and a freedom-of-
information claim. That is, in GATA's
dealings with Congress, the Federal Reserve,
and the Treasury Department, we have
maintained that the economic policy of the
United States is PUBLIC policy and thus
should BE public in every respect, so that
everyone can know about it equally and so
that inside knowledge of that policy cannot
be exploited for private gain -- as we
believe inside knowledge of it has been and
still is being exploited for private gain.
Steve characterized GATA's anti-trust
complaint well; it IS essentially a commodity
approach to gold. But if gold wasn't so much
more than a commodity -- if it wasn't money
in itself, the universal measure of all
currencies, and a guarantor of individual
liberty throughout the world -- GATA would be
just another special interest. In seeking a
free and transparent market in gold, GATA
works on behalf of gold's monetary function
and thus joins a noble cause of importance to
justice around the whole world.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Did anyone catch the article Fiday in the NYPost where Greenspan purportedly ordered buying of S+P futures and blue chips on Fri. AM ? It was on Marketwatch this morning
in an article about Taiwan propping up their market and gone this afternoon before I could grip it.
I try not to make a habit (or nuisance of myself) meddling in the affairs of GATA, but seeing your latest post here has inspired me to bring a past post to your attention, and to offer some additional words for your consideration.
This is where everything hinges. You said-----
"in GATA's
dealings with Congress, the Federal Reserve,
and the Treasury Department, we have
maintained that the economic policy of the
United States is PUBLIC policy and thus
should BE public in every respect, so that
everyone can know about it equally and so
that inside knowledge of that policy cannot
be exploited for private gain -- as we
believe inside knowledge of it has been and
still is being exploited for private gain."
It is my contention that the "inside knowledge" of your targeted parties is really nothing more than an "thorough understanding" of the foundations of modern banking, and bullion banking in particular. Before I repost my prior attempt to guide the thoughts and peceptions of others, this brief question will go a long way to set the stage, if such a person is willing to give it some thought.
Please consider--What specifically is to blame for the value of the dollar in your wallet losing its value over time? Does it take "inside knowledge" and a manipulative Trust to recognize the inflationary effects of banking, and to trade accordingly?
------------
Aristotle (09/26/00; 10:45:44MT - usagold.com msg#: 37534)
Sharing a practical lesson for dealing with "conspiracies, cabals, and manipulation"
A hammer, a screwdriver, a saw, and lumber may all be manipulated, yet not in a manner that is "against the law." What is to be done as the lines blur?
True conspirators and cabals earn that title, get your attention, and attract your anger only when they have been operating successfully--and they reach that success only if they can and do avoid identification. What is to be done?
When it has been proven impossible to catch and identify the thief who steals nightly through your window to burglarize the wealth of your home, you may choose instead to simply let him be, and yet lose no more sleep or wealth if you follow the easy path of wisdom. Dismantle the tools of his "trade."
Send home the constable. Call instead for the caprpenter--to remove the trellis from beneath your window, or else make fast the shutters. In this way you need not catch a thief, nor catch the next and the next, that each new season may bring.
The parallel is obvious. Where it is impossible to bring charges against sophisticated entities for swinging hammers or climbing ladders, so too is it impossible and irresponsible to seek to levy charges against corporate entities who use the available and lawful tools of their trade known as derivatives and bullion banking. Perhaps the use of these tools are in such as manner so as to blur the lines into a harmful outcome resembling that of conspirators and cabals. The energy is surely misspent to seek for their head on a platter.
When the harmful outcome from the use of these tools is clear for all to see while the "perpetrator" remains safely and forever in the shadows, when you seek the sympathetic ear of your congressman, you will appear far more rational and inspire change if you demonstrate the adverese impact being caused by the mere existance and use of Gold derivatives and bullion banking in general. If you enter their office spouting notions of conspiracies and seeking a redress of greivances through a general roundup of banking CEOs, you will surely be dismissed, albeit politiely. Instead, become a lobbyist (in a manner of speaking) for the abolition of Gold derivaties (Gold futures, etc.) and bullion banking.
As congress shows its willingness to seek to eliminate the effects of the sometimes harmful "manipulation" of assault rifles (done by a small element of criminals) by ridding the land of the guns instead of the perpetrators, then (regardless of your stand on assault rifles), let this be your guidepost in working with your elected officials toward an investment/freemarket climate that is once again safe, clear, and part of mainstream thought for all individuals to store their wealth in Gold. Push for a "recall" on Gold derivaties and bullion banking, because you'll never be able to lock up all of those willing to manipulate these currently lawful tools to their own advantage. Instead, follow this guide to do your own manipulation. Manipulate our democratic system to your OWN advantage in order to protect the market value of your Gold.
The lobby to abolish Gold derivatives is surely the point Archimedes would seek today on which to place his lever to move the world.
Mechanical advantage and Gold. Get you some--but only at such a time as you grow weary of cheap Gold and no longer want THAT particular advantage. ---Aristotle
---------------------
Your position is a noble one----
"In seeking a
free and transparent market in gold, GATA
works on behalf of gold's monetary function
and thus joins a noble cause of importance to
justice around the whole world."
Would the battle not be easier to focus on the education of the public and politicians, getting them to recognize that we do expect and can tolerate governmental influences upon the currencies that national governments put upon their currencies, and that our tradeoff for that concession is that there is no good reason for Gold to be subjected to the same forces that act upon national currencies?
This is in no way meant to be critical of your past actions or gameplan. It's simply the sharing of thoughts from one Gold "insider" to another.
Like the gentleman said in NYPost today, anyone who works in a muslim medicine factory should avoid work this week.
This is, sadly, true and you and I know why. It is indicative of the level to which it is 'KNOWN' the Klintler
administration will stoop for feel-good political gain. Talking to anyone in Washington about 'public access' to economic information is going to be fruitless. The level to which the press condones and avoids issues concerning the abhorent behavior of them, leads me to the conclusion that any headway you make will only A. get a 'That's nice' response or B. 'I'm going to look into this' and once they do 'look into this' it will terrify them, politically, and will instantly be removed from their memory. I believe 100% in what you are doing, but asking NAZI-2000 to tell-all about what will inevitably be the economic mega-ton blast of all times is wishful thinking. Your ace in the hole is going to come out of nowhere, somebody is going to snap, just wait em' out. You will have the last laugh.
I actually read that article, but the Marketwatch summation said "Greenspan ordered Cb's and Treasury' to buy in order to 'save peoples life savings'. Obviously the Marketwatch article was grossly wrong. Or was it , Aristotle? Maybe Mr Magoo had a aneurism and admitted to 'something'
May mean to bind to keep what is said or done in strict secrecy. In Freemasonry, to guard against the entrance of the uninitiated by placing the tiler at the closed door; as, to tile a lodge; to tile a meeting.
Webster's New Twentieth Century Dictionary of the English Language Unabridged 1971
PAPER GOLD could fold in the case of extreme crisis.
Money on options or futures can be denied payment.
Mining companies could collapse due to placing
and removing hedges or poor management.
Stock exchanges could close their doors due
to terrorist attacks.
PHYSICAL GOLD is the safest and most secure
means of having gold ownership. It can be traded
or sold in the market immediately and has no boundries.
It is indestructable and will never change color or
deteriorate. Physical gold can be held privately and
secretly with no trace. But you could be robbed or
burglarized, so it must be kept in a safe place. Otherwise
physical gold is the ultimate personal insurance policy
againest economic breakdown.
It wasn't my parents in Germany. It was my cousins. I had relatives that died fighting on BOTH sides of WWII. My great Uncle Matthais was mayor of a village of about 1500 or so in the Eiffel (near the Ardennes) from 1933-1945 (yes, he was a Nazi) and he lost two sons on the Eastern Front: one KIA, one captured never to return (like 70% of German prisoners taken by the Russians). Having said that, my father was wounded in Italy fighting the Germans and my uncle killed in the same country by the Luftwaffe. Anyway, after the war, our family here in the States sent weekly care packages to the German relatives consisting of flour, sugar, tobacco, and sometimes chocolate, sometimes dollars, for FIVE years. It was very, very tough in die Deutschland after the war (bad karma). There was no money, little food, and bare essentials. I visited once in the 70's and got a hero's welcome, only by default of my birth. This was all before my time. FWIW.
I'm using my "motor", my mind, to cause the price of oil to rise by converting it to energy for the men of the mind on strike.(passive minded thinkers invested in gold) As price of oil rises this will pressure Fed to raise rates due to inflation fears, which will cause inflation in prices and thus gold. Since I'm making the price of oil and gold rise I'm requesting royalites for my motor be sent to #418 175 15th st Atlanta, GA. 30309 c/o Brooks Dorn.
Thanks
P.s Explanation of how motor works: I make my brain/mind totally passive and limp which allows me to drain static energy. Emotion and oil are both forms of static energy.
Response to Revelation about physical vs paper gold
Paper gold gives you leverage. It's also safe because it's price is tied directly to the price of physical gold and the only purpose of gold or gold paper is to accumulate dollars anyway, and no matter how weak the dollar gets it'll be the medium of exchange used to acquire goods and services. Plus when system fails it'll liberate the mind from economic controls thus causing production to boom and the value of the dollar to soar offsetting it's severe erosion caused by the meltdown of the financial system.
Truly inspiring. You have stated a correct course of action. The path is clear: inform our leaders that gold derivatives and paper gold has gone too far, perhaps beyond the edge. It is time to bring back honest money.
For those into protecting gold:
a repost:
New Anti-Gun Strategy Doomed to Fail
Dr. Michael S. Brown
Oct. 10, 2000
The always fascinating cultural war over the right to bear
arms has taken another interesting turn. Leaders of the
anti-gun lobby know that they are now in a fragile stalemate
and are seeking to tilt the balance in their favor. Their new
strategy is dictated by the nature of the two opposing
forces.
Anti-gun groups are small, relatively few in number, and
based exclusively in major cities. They are funded by large
donations from liberal-left foundations and wealthy
individuals who seek to change society to fit their desired
model.
Gun rights groups have evolved on a different pattern. There
are hundreds of them, in all types and sizes, scattered
throughout the country. The majority of their money comes
from dues paid by members who just want to keep the rights
they have. These members, as many as four million in the case
of the NRA, are the source of their political power.
Lacking a large membership, the anti-gun lobby has used mass
advertising and a blindly sympathetic media to spread their
message. This has worked well in the past, thanks to the well
documented media bias and diabolically clever marketing
techniques. But it exposes them to charges that they are
elitist organizations, financed by millionaires who want to
disarm the unwashed masses.
To alleviate this unseemly situation and shift the power
balance in their favor, the anti-gun lobby has spawned a new
crop of surrogates and a new strategy that seeks to imitate
the grassroots success of the NRA. The optimistically named
Million Mom March and First Monday 2000, for example, are
attempting to recruit new members at the local level by
staging marches and rallies.
This shift in strategy is doomed to failure. It also reveals
how poorly the leaders of the anti-gun groups understand
their opponents.
After enduring decades of mean-spirited demonization, gun
owners across America are extremely angry and frustrated.
They are tired of writing letters and donating money to slow
the nanny state juggernaut. When vengeful gun owners hear of
an anti-gun event in their area, the are overjoyed that they
can finally meet the enemy face to face.
In dozens of cities, anti-gun rallies have been met by large
numbers of counter-demonstrators singing and waving signs
with hard hitting gun rights slogans. Well-dressed and
well-spoken gun owners have slipped quietly into public round
table discussions on gun control and dominated the
discussion. In several cases the anti-gun people have been
outnumbered at their own event.
At a recent candlelight vigil sponsored by the Million Moms
in Vancouver, Washington, fifty pro-rights demonstrators,
armed with their famous signs, appeared to contest the issue.
Considering that only sixty people attended the vigil, the
local newspapers and television stations could not ignore the
demonstrators. Instead of the usual glowing account of the
saintly Moms, the resulting stories described the conflict
between the two groups, including the thought provoking
slogans, "Guns protect moms and kids." and "Gun haters ignore
the real causes of crime."
Depending on the effectiveness of the gun rights
demonstrators and the reaction of the local media, anti-gun
rallies can actually be counterproductive. The only thing
media people like better than a good story about gun violence
is a story about two opposing forces clashing in the streets.
Journalists love to denigrate the sinister gun lobby, but
it's an entirely different matter when their own neighbors
are demonstrating in the streets to save the Second
Amendment.
Dozens of small guerrilla-like groups have spontaneously
formed to organize these efforts. They are not controlled by
the NRA. In fact, many participants are angry with the NRA
for being soft in its defense of the Constitution. They are
entirely self-sustaining and do not divert any resources from
national organizations.
These local gun rights activists benefit from a delicious
irony. Although gun owners are amazingly law abiding and
generally very polite, they can be frightening to people who
have absorbed the propaganda about evil guns and dangerous
gun owners. These are precisely the people who are needed to
populate the anti-gun rallies. In this case the demonization
campaign has backfired. Loyal gun prohibitionists are less
willing to take to the streets when they believe that they
will be met by the very demons they've been warned about.
The anti-gun lobby has foolishly tried to attack the
strongest part of the pro-gun community. Instead of leveling
the playing field with the NRA, this ill-conceived strategy
will consume resources while it reveals how little support
anti-gun groups have at the grassroots level.
*****
Dr. Michael S. Brown is an optometrist and member of Doctors
for Sensible Gun Laws. He may be reached at:
rkba2000@home.com
Yours In Liberty,
Robert
"May the road rise to meet you, may the wind be always
at your back, the sun shine warm upon your face, the rain
fall soft upon your fields, and until we meet again, may
God hold you in the hollow of his hand."
*** sidenote. You know the battle of gold and the battle for gun rights is about the same thing: honor in government. The constitution is clear as to the meaning of money and the meaning of the right to keep and bear arms. Let us not drift too far from either.
STOCKHOLM (Reuters) - A Swedish mother of five, distraught after her shares crashed,
robbed a bank in neighboring Finland by threatening staff with an axe, she admitted in court
in Finland.
The 41-year-old woman said she panicked after her Swedish information technology stocks
fell heavily in May, not knowing how she would provide for her children's future, the daily
Expressen reported.
She initially succeeded in obtaining 20,000 Finnish markka ($2,911) from a cashier but was
overpowered outside by a man who had seen her enter the bank wearing a mask and carrying
an axe.
The paper did not identify either the town or the defendant, who is appealing against a
one-year prison sentence to the high court in Rovaniemi, Finland.
True, but only at the great risk involved in giving someone else "control" of the assets involved. Leverage, no matter what the ratio, will matter not one iota in a default situation in which you cannot retrieve your gold or claim your currency.
And "It (paper gold) is also safe because it's price is tied directly to the price of physical gold and THE ONLY PURPOSE OF GOLD OR GOLD PAPER IS TO ACCUMULATE DOLLARS ANYWAY......"
It seems either you or the rest of us are missing something here. Have you ever considered that the REAL purpose of (physical) gold may actually be the retention of the highest degree of freedom "from" the dollar rather than the pursuit of it ? It's simply a continual struggle between "honest money" and "manipulated currency", between true wealth and debt promises, and if it should come to that point in the future, between hard assets and worthless confetti.
REMEMBER gold folks --- the price of gold you see at Kitco, on Yahoo!, in the Wall Street Journal, etc. IS NOT the price of PHYSICAL gold --- it is the price of a PROMISE TO DELIVER gold. This is VERY different than gold --- many of these promises are completely bogus.
Therefore we won't see the TRUE price of physical gold posted at Kitco, etc. until paper promises and physical gold separate and alternative price discovery evolves.
I REPEAT: WE WILL NOT SEE THE TRUE PRICE OF PHYSICAL GOLD UNTIL THE CURRENT PRICING STRUCTURE, WHICH INCLUDES BOGUS PROMISES TO DELIVER, BREAKS DOWN.
Further, the powers that be can't afford to let that happen because it would be a red inflation flag that couldn't be ignored, so - - - -
Relax, sit back and watch the show. It'll be over soon enough. But don't get sucked in to believing the price you're watching is something it isn't.
SIGN ON THE MIRROR: It's the long-run, stupid!
Regards,
Journeyman
P.S. I know most of you-all already know, just thought a little reminder might be in order as we progress on this adventure.
I missed a lot of the action from last week. I hope I can catch up on all the reading.
I did see a 10 oz nugget for sale at the gold show, priced at $15,000.00
A sea of black ink in Asia today (Oct 16th)-or at least at the moment- melting up pretty high!
UP!
DOWN!
UP! UP!
DOWN! DOWN!
I like Mr. Holtzman's "Galloping Gertie" Tacoma bridge analogy, not just for stocks (over the past few months) but also for the increasing amplitude and frequency of currency collapses (over the past 15 years).
WHOA. I now see that my post may have had the capacity for offense, and I apologise for that.
I often communicate using some form of example. In this case I had seen your explaination of the Midas Mulligan handle near a post of Peter Asher, and had indeed speculated about your handles. As well I have been wondering why I simply did not use my real name, But at the time it seemed like the thing that was done in forum, Have a handle.
In retrospect, it would have been much better to have let a throw away line like my example, paticularly using specific names, remain thrown away, and unsaid.
This was simply a comment that you seemed different, and no negative connotations were intended.
I haven't abandoned the AIDS history post, just got into too much background and was barely started after 2 pages. Need to start over and t's tricky to tell it without getting R-rated. Then today was a three generation, all-hands home improvement workout. I'm still reading today's posts.
Strangely enough, just now the following was received. As Robin is the editor for "Non-toxic living" on the ODP search engine, the author sent this to her.
----- Original Message -----
From: Marvin R. Kitzerow Jr. To: Robin Asher Sent: Sunday, October 15, 2000 8:31 AM
Subject: ODP Feedback - Alternative AIDS treatment
> You will find the answer for the optimal care in reversing all AIDS
indicator illnesses and thus the panacea for curing AIDS at:
There are thousands of HIV positive persons surviving
AIDS, that date back to the alleged origin of AIDS in 1981, by practicing a
lifestyle similar to the protocol as outlined in "The AIDS INDICTMENT"!
>
> In the book you will read why I refer to the AIDS epidemic as "THE MOST
COLOSSAL, DIABOLIC MEDICAL BLUNDER OF ALL TIME" and that the over 450,000
U.S. AIDS mortality victims died of iatrogenic poisoning by their
physicians
and not their HIV status!
>
> You will read that aggressive compulsion to treat persons suffering only
with immune dysfunction with a criminally, fraudulently licensed drug that
was not fit for human consunption, is the primary cause of death in all of
the patients who were treated with this drug. The drug that has been forced
on to nearly 100% of the persons who tested positive only to antibodies and
not a virus (HIV), since 1987, is Zidovudine AZT which is actually
pharmaceutical genocide!
>
> There are over 40,000 HIV positive persons who have been surviving AIDS
over 16 years by refusing all of the traditional treatments of choice with
chemotherapy or alledged anti-viral drugs. It is so blatantly obvious that
the AIDS patients who have died, died of their medical treatments and not
HIV.
>
> Read "The AIDS INDICTMENT"
>
> Marvin R. Kitzerow
>
I did see a post about the intervention in the Taiwanese market on another forum. Someone had cut/pasted it and added an addendum about Greenspan buying futures and neglected to make clear the point at which the news story ended and the fiction began.
I've been too busy to post, but stop in to read now and then. I sure appreciate all the great thoughts in here...
Many posters are obsessed with the collapse of the dollar. And if the dollar goes south, they may well be able to trade their gold for goods and services in the chaos that will ensue.
The posts of the "dollar doomers" hoover about the cyber landscape, like vultures circling the sky, waiting for the death of the living.
But what will life be like, if the dollar has to finally face the music? AND/Or if OPEC accepts Euros?
All transportation will be exhorbitant, and all goods and services associated with transport. (gee, thats about everything!)
All little refinements of our culture will be swept away, and only the lucky ones will have solace in their underground bunkers.
Yikes!! Hold the phone! Thats not what I want for the United States! (apologies to the world at large)
Lets not pray for the collapse of the Federal Reserve Note just yet. Because if it undergoes a major devaluation, our lifestyles will change drastically.
Maybe we should labor for a system where the paper currency is less variable, and try to salvage the extant financial infrastructure.
**714 post 39102 Germany
Many thanks for the personal data.
Obviously I see a worse future than many here at the forum, and I have been gathering as much information as I can. I also have some insurance in place (to top up my holdings) that I suspect I will only be able to collect in fiat. (but not be able to convert to physical) Alternative mediums then become important, and having alternatives in mind seems a smart thing to think about.
I have made good headway in sources of supply, and storage of flour and sugar, some limited headway on tobacco, and none in chocolate, which I had better get on to.
Thanks for your input
** ji 39100 Tile
I guess I'm getting a bit senile, because once you posted, I recalled that definition.
This was in regard a court judgement, about a case in which some land was sold in the south during the US civil war, which had a mortgage payable in dollars. After the war ended, the dispute arose as to whether the remaining balance was payable in the now worthless Confederate dollars, or in the valuable Union dollars.
The court, in its judgement wrote that,..... "in TILE circumstances", the amount was payable in Union dollars. As I said at first I thought it was a typo, but it was repeated, so I began to wonder.
All said, I don't see how that might fit, altho you never know.
Thanks for the info.
** Nickel 62 39080
I keep forgetting I am a plan for the worst, and hope for the best, kind of guy, and much of the world isn't. Moreover, I often get carried away with it. As I said above, I feel this situation has the potential to be much worse than many people who were not alive in the thirties can conceive.
Personally, I think that a "get your gun and guard your stash" scenerio is not very workable, but I have run across many who do.
If I am standing on a railway track, and see a train roaring down on me, if I manage to get off the track even 2 seconds before the train arrives, I am safe.
I am also experienced enough (read old) to be mindful of the adage that anything that can go wrong, will. I hope to use information to get me off the railway track should a train come.
For Peter Asher and others interested in the subject
http://www.duesberg.com/Iatrogenic AIDS deaths caused by AZT is relatively old news, having been put forth as early as 1995 by Dr. Peter Duesberg. His seminal book "Inventing the AIDS Virus" came out in 1996 and almost immediately disappeared off the shelves since its message was so "politically incorrect". Nevertheless, the scholarship backing his views is impeccable and his arguments are certainly medically and scientifically compelling. Anyone with an open mind on the subject ought to get ahold of a copy, although I don't know if that's possible or not. Having gotten stuck today trying to cross to the other side of Hollywood through tha annual "AIDS Walk", this is a topic fresh in my mind. While AIDS is certainly a tragic illness, the greater tragedy is that its politicization has directly resulted in so much unnecessary suffering and death. Beyond that I wonder, when I see so many people out on a long trek to support AIDS research, how many of them might expend the same energy marching in support of flu research. The flu, after all, kills more people every year in the US than does AIDS.
HIV apparently can be traced back to 1959. In the 80's, I recall a newspaper article about a St. Louis boy who died sometime in the 60's from a mysterious ailment, and from which the MD had saved a tissue sample. He subsequently tested it in the 80's and turned up AIDS/HIV. Fwiw.
...there is a noticeable plunge in oil in 1985 and that seems to earmark (on the chart) a more dramatic rise in the DOW. Then gradually and more from 1996, the DOW and oil rise together. Interestingly, that is the same time oil separates from gold's tracks.
I also see three tops on the DOW in the last few years (a triple top).
Dollar breaks two more record lows
From AAP
16oct00
17:39 (AEDT) THE dollar
continued to take a battering
today, posting its second
record low of the day in late
afternoon trading.
Traders said the local currency
recorded a new low of
$US0.5255 around 1655 AEDT.
In morning trade it hit a low of
$US0.5260.
At 1700 AEDT the local unit
had recovered slightly to be
trading at $US0.5260/65, from
0.5303/08 at Friday's close.
Citibank Australia head of
foreign exchange trading Nick
Waite said continuing selling
pressure from both local and
offshore players and the euro's
struggle to rally from its lows
drove the local currency to its
new lows.
"There has been a large
amount of Japanese selling of
Aussie/yen that has also
helped it down," Mr Waite said.
"I think the concern down here
has to be that if the euro
manages to rally the Australian
dollar might follow suit, I don't
think too many people would
want to be short Australian
dollars down at these levels."
At 1700 AEDT the local unit was also at 56.86/94 yen from 57.04/11
at Friday's close, 0.6164/69 euro from 0.6146/51 and at 0.3623/29
British pounds from 0.3607/13.
It closed at 1.3210/40 New Zealand dollars, from 1.3237/66 at
Friday's local close.
Traders noted some options positions set at 52.50 US cents which
are to expire in New York trading tonight could weaken the dollar
further although it is likely to keep some support at current levels.
"It could test lower (than 52.50 US cents) but I would be very
surprised if it did," Mr Waite said, adding that the local unit would
probably trade in a 52.50-53.10 US cent range tonight.
The euro could also lend further support.
"I don't think early Europe is going to be selling the euro aggressively
down here and that could lend support to the Australian dollar," Mr
Waite said.
Locally, at the end of the local session the euro was at
$US0.8538/43 from $US0.8626/31 at Friday's close and at 92.26/31
yen from 92.78/83.
The US dollar closed at 108.04/09 yen from 107.55/60.
On the Reserve Bank of Australia's Trade Weighted Index at 1600
AEDT the dollar was steady with Friday's close at 49.0 points.
Gata is great !, always on the ball, but at the Kiki table
one thing in the " Has the Australian Government joined the Exclusive club ?" document; one paragraph sticks out not quite correct . i.e that says in essence the government has been hamstrung by the opposition ( Labour ), and the Democrats .
In Aussie one has a thing called Hansard , a registered
tape come transcript of all that has been said by all parties whilst in power and opposition. In House !. to which the public whom may be interested are privey to watch this said as it happens on TV . A freeedom huh ?.
I venture to suggest that after visualy seeing Hansard and reading the transcripts , one might easily call the opposition hypocrites for opposing that which they intended to do in the first place , Flog off to the people that which we already possess as this govt is doing .
The reality is that the public are pissed off at privateization , saying in essence " why are you trying to sell us something that we already own ?".
Its the old game of Duelopoly ...... good cop, bad cop
just as in the movies . Never before have I seen so many angry politicians as a result of a mere demonstration in the recent past as of university students chanting the slogan "Liberal /labour no choice !" The common Sheeple believe what they read here in the media unfortunately ,
but times are a changing :).
Some however , dont belive a dam thing that has been said by the polly until it has been proven or disbelieve anything that has been said by a polly until it has been disproven and reap rewards from the impartiality of it.
One thing I percieve may well be for sure , they are not fools as the media might have the majority believe.
Date: Mon Oct 16 2000 05:13
SlangKing (CyclePro) ID#293152:
Copyright � 2000 SlangKing/Kitco Inc. All rights reserved
Bank Derivatives: The 2nd Quarterly Report of the Bank Derivatives Fact Sheet from the U.S. Treasury Office of the Comptroller of the Currency ( OCC ) , has been released. The notional value of all bank-held derivatives is over the $39 Trillion mark. While it is true that this total amount is not exposed outright by U.S. banks, however it must be recognized that systemic and credit risk is entirely feasible since many of the derivative possitions are in illiquid OTC swaps and options. The extent of this risk is debatable. But if you look at the two most outragous individual bank examples: Chase Manhattan Bank and J.P.Morgan, you must ask yourself what level of risk is possible. For example, the total notional derivatives on the books of Chase Manhattan is almost $14 Trillion while bank assets are only $320 Billion, J.P.Morgan has booked $9.5 Trillion derivatives with bank assets of only $174 Billion. With asset to derivative ratios of only 2.3% and 1.8% respectively, one must ponder the question... is it possible in a significant market reaction ( stocks, interest rates, or currencies ) for these bank's counterparties to default on 2.3% or 1.8% of their derivative value? If so, it would completely wipe out each bank's assets. If 2% is deemed too extreme and a lesser counterparty default loss is more appropriate, then envision what would happen if only a 1/2% loss is achieved, this would wipe out 25% of each bank's assets. This alone could be enough to spark a run on the banks, Federal Reserve bailouts, and certainly a panic-effect carrying over to the value of the U.S. Dollar, Bond and Interest Rate markets, Stocks, Gold, and many other commodities.
Hey all - thought I would add a bit concerning the AIDS 'crisis'. These diseases, AIDS, cancer, etc. are for the most part avoidable given simple lifestyle/dietary changes. This has been known for over a century and practiced by the Natural Hygiene advocates. For some background read Harvey Diamond's series "Fit For Life" which includes a new book just out this year.
Diamond argues that the medical treatment industry has a vested interest in not curing medical maladies but prescribing drugs instead. He further claims that some food industry participants are less than truthful concerning their products. Essentially, Diamond claims what you eat and how you eat it are what make you sick. Your body will naturally keep itself healed if it is not overwhelmed with toxins introduced through a poor diet. Diamond claims you can live virtually disease free your entire life and live a much longer life as a result.
In health as in other aspects of life, if you want to understand the problem, follow the money. Disease is a big business.
I expect a market and thus dollar meltdown, but it'll just shift dollars and purchasing power from those who now own paper stocks, bonds, etc..to those who own gold. Gold will ABSORB all the excess fiat paper as it's price soars and thus keep the economic system from the doom and gloom 20's Germany and 30's America scenario. Also, I think your forgetting that most of those who own gold are capitalists, so when gold rises they will rise to power and be able to remove all the govt controls on the economy ("The Era of Big Govt is over") that suppress and stifle thought, production and economic growth, or to quote John Galt at the end of Atlas Shrugged, "The road is cleared". That means output of goods and services will soar as those who own gold sell their gold at it's peak to the public and then invest their dollars in the economy, incluing stocks, bonds,etc at their low. So that's why there is no need to worry about paper gold vs physical gold. Those who own gold "are prepared" to borrow from the boy scout motto.
O.K. then, when do you expect this market/dollar
meltdown to begin ? For how long and what will
be the price of GOLD ? Also, do you have any
timing models of when to exit ? Are you sure
the events above will indeed happen or how
would you rate this in percentages of this happening ?
A notional value of all bank-held derivatives of $39 trillion is by any means impressive. The actual value-at- risk (VAR) should, however, be lower, as there should be considerable offset in the derivatives held. The situation is complicated by the fact that in times of stress (read: market crash), the volatility and liquidity parameters on which the VAR calculation is based, tend to work against the risk assessment. Typically, the VAR will be under-estimated in a crisis situation. What is fascinating, is that never before in the world's financial markets has there been such a large derivatives market relative to the underlying markets. Furthermore, it should be born in mind that not everyone loses in a crash situation. If the player is astute enough, and maybe just plain lucky, he can gain out of a market crash!
You may like to check the South African Rand as well. It is also hitting new lows against the US dollar, which should be good for the profits of the gold mines.
REPOST FROM KITCO which is a copy of the NYTIMES article on Paper moey
You can see why they want to get out of the paper $1.00 bill business at treasury and replace it with the more durable golden looking coin. If these counterfiters are having trouble making money at less than a dollar a piece the Feds are probably having trouble keeping their costs down too. There is no inflation though. In ancient times the debasement of the currency would go on until it reached the value of the base metal they were putting into the coins. Paper therefore led to whole new realms of opportunity in the pursuit of bankrupting a currency through debasement. It appears there might be some limits in the costs of even paper.
EJ (Oops. Here's the NYT article on counterfeiting...) ID#85100:
Copyright � 2000 EJ/Kitco Inc. All rights reserved
Sssssh. Don't tell anyone I posted it. My favorite line:
"Bolanos, who has been hunting counterfeiters in Colombia for two decades, attributes this in part to the country's weak laws. The maximum penalty for a conviction is six years in prison, but under the Colombian penal code, any sentence up to six years can be exchanged for a cash fine."
-EJ
Drawing an envelope from an inside pocket of his leather jacket, Fabio slides out a
fresh $100 note and, clasping it gingerly between thumb and forefinger, holds it up to
the bare bulb. "It's a good one," he says. "High quality." He hands it to his friend, a
cocaine-and-arms dealer, who turns it over in his fingers and nods. We are in a house in north
Bogot�, the capital of Colombia, which is the principal source of counterfeit bills in the United
States. After a series of negotiations that led me downward through Bogota's underworld, I
was introduced to Fabio, who agreed to explain to me the process of counterfeiting and the
business choices counterfeiters make.
During the late 1970's and early 1980's, Fabio, who requested his last name not be used for
this article, counterfeited U.S. dollars and other currency in the back room of an apartment in
Bogota. While he was by no means the biggest player in the industry, he estimates that over
the course of seven years he flooded the world market with low-to-mid-quality fake bills that
had a face value of more than $100 million. He now works as a middleman in the counterfeit
distribution industry, a chain of commerce that leads from the barrios of Bogot�, Cali and
Medellin to the streets of New York, Newark, Miami, Buenos Aires, Tokyo, London and
Madrid.
The first thing Fabio tells me is that, of course, the excellence of the finished product depends
on a combination of skill and costs, as with any manufacturing enterprise, and the first
spending decision a counterfeiter has to make concerns paper. The base paper of choice
among counterfeiters is the $1 note. Through a bleaching process, the bill is washed of its
ink, so that what remains is blank U.S. Treasury paper -- the perfect texture and weight, the
correctly colored microfibers embedded in the paper, everything but the paltry denomination.
Fabio studies his $100 note, which he picked up on the city streets earlier in the day, and
guesses it came from the greater Cali area in southwestern Colombia, where the best dollar
workshops are located. Its makers made a critical cost-cutting decision, he says. They chose
to use Venezuelan bol'var notes, a paper with decent texture and durability, rather than $1
bills.
It's a significant cost-saving measure, since a 10 bolivar
note is worth about 1.5 cents. Multiply this by 20,000
bills -- the size of a standard shipment -- and the
counterfeiter has already saved himself $19,700 when
compared with a run built on $1 notes. ( Though a $1 bill doesn't always cost $1; a
drug-trafficking cartel recently found itself with too many $1 bills on its hands and was
unloading the notes for 70 cents each. ) Fabio estimates that the $100 fake in his hand cost
somewhere between $2 and $2.50 to make and would fetch at most about $17 in Colombia.
Final sale price, after the bill had been smuggled into the United States, might be between $35
and $40. Had the same crew used a $1 bill or illegally obtained currency paper, and had they
employed the same level of workmanship and detail, the note would cost about $3 or more to
make but would be sold in Colombia for as much as $22 and in the United States for $50.
The shoddiest bills Fabio has come across had a top price in Colombia of only a few bucks
and probably never even left the country. "Cardboard," he scoffs.
abio comes from a criminal subculture with a rich and very productive tradition. Of the
$52.7 million in fake currency seized during raids or recovered from circulation in the
United States during 1999, a remarkable 34 percent was identified as
Colombian-made. During the same period, Colombian investigative agencies, with the
cooperation of the U.S. Secret Service, shut down 16 factories in Colombia and seized $16
million in false U.S. currency.
"The Colombian counterfeiter has great ability," observes Lt. Col. Eduardo Bolanos, chief of
the economic-patrimony crimes division of Colombia's national investigative police force.
"Colombian criminals are world specialists in assassination, cocaine and falsification."
Bolanos, who has been hunting counterfeiters in Colombia for two decades, attributes this in
part to the country's weak laws. The maximum penalty for a conviction is six years in prison,
but under the Colombian penal code, any sentence up to six years can be exchanged for a
cash fine. A recent change in the criminal code, which goes into effect next year, will make
counterfeiting a crime eligible for a maximum sentence of 10 years in prison, closer to the
15-year maximum in the United States. While the law-enforcement community is optimistic
that the change will hinder the counterfeiting industry, Fabio isn't convinced. "A quien le
gusta, le sabe," he says, an expression from his home state of Caldas that roughly translates
as "To each his own."
According to Bola--os, an entire industry of falsification has
arisen in Colombia during the past 30 years. "It's a culture
of counterfeit," he says. "Clothes, videos, CD's, drugs,
household products, the most up-to-date dolls, Pokemon,
stuff like that. They're even taking fake Levi's blue jeans to
the States and selling them." In the mid-1980's, Colombian
counterfeiting also developed a symbiotic relationship with
the cocaine trade. In one arrangement, Bola--os says, the Cali drug cartel used false dollars to
buy coca base from easily duped indigenous coca growers in Bolivia and Peru. The demand
for dollars to buy base stimulated the growth of the Cali workshops, and Cali remains the
source of some of the finest fakes in the world.
That said, in most cases, a small group of associates -- three or four people, perhaps -- operate
independently and may do business with larger criminal cartels. That was Fabio's
arrangement. He began his counterfeiting career in 1970, peddling small quantities of dollars
on the street. Eventually he moved into production with three friends, one of whom operated a
small offset print shop out of his home in a working-class neighborhood in Bogota. The shop
ran as a legal business by day, "producing fliers, stickers, funeral announcements, that sort of
thing," Fabio says. At night it became a money factory.
In this age of high-tech computers, digital scanners and commercial-quality film processors,
Colombia's counterfeiters still use old-fashioned mechanical methods to churn out their notes.
Both Fabio and his drug-trafficking colleague say they know of no one producing counterfeit
money in Colombia with technology more modern than offset machines. The process is this:
a counterfeiter first creates actual-size photographic negatives of a note's front and back, then
cleans up each negative with a jeweler's precision. The images on the negatives are burned
onto a series of photosensitized aluminum plates, with each plate showing different details
from the bill. Then the plates are run through the offset printing press, so that one set of
details is layered on top of another. No matter how high-quality the paper is, the finished
product will amount to nothing if the photographic negative is shoddy.
Smaller operations generally contract out the making
of the negatives and plates. Today, Fabio says, a
contracted set of negatives can cost anywhere from
$750 to $2,000, depending on quality and quantity,
and the plates cost another $500 to $1,500. Only the
larger operations that control production as well as
distribution have the money for the equipment to make
negatives. The better the equipment, of course, the
better the result.
As for the offset presses, Fabio's team employed a
midcentury, American-made machine. Most
Colombian counterfeiters, law-enforcement officials
say, use archaic castoff machines from the United
States that have been retooled in Colombia after a life of legal use in the States. Some
top-of-the-line machines cost more than $100,000, but Fabio says he has commonly seen
machines that cost about half that. According to anticorruption investigators, they most often
come across machines worth only a few thousand dollars each, though they say that the
declining number of old offset machines on the market has inflated their price.
Part of the reason that counterfeiters have been slow to modernize, says Col. Miguel Evan
Cure, a top anticounterfeiting investigator for Colombia's Administrative Department of
Security ( D.A.S. ) , is that over many years they have developed a complex skill. "They're
artisans," Cure says with undisguised respect. Jim Mackin, a spokesman for the Secret
Service in Washington, agrees that the best fakes come from offset machines, not computers.
"Genuine currency is printed, not scanned or duplicated," he says. "Real plates are used in the
manufacturing of real currency."
There is also the matter of cost. High-quality computerized equipment that would allow
production of near-perfect offset-ready film might cost hundreds of thousands of dollars.
Nonetheless, the use of computers and scanners to produce fakes is spreading rapidly in the
United States. Forty-six percent of all fake bills seized or passed in the United States were
produced through computer or inkjet processes, says Mackin, up from just 1 percent five
years ago. To date, only one unfortunate fellow in Colombia has been caught counterfeiting
with a computer and scanner. Says an official at the United States Embassy in Bogota, "His
downfall was that he was using a counterfeit bill to make other counterfeit bills."
ith the heavy tools in place -- plus top-grade paper cutters, electronic money
counters, communication equipment ( mostly pagers and cell phones ) and guns
and ammunition for protection -- the rest of the process depends on patience and
precision. Fabio says it might take several weeks for a team to develop a good shipment of
bills. "You can lose a lot of paper at the start as you try to get everything right," he says.
"After that, it's like making bread rolls."
But there still remain important spending decisions to be made along the way. Fabio points
out the security strip running through the $100 bill in his hand, the fiber that reads "USA 100
USA 100 USA 100" along its length. While most counterfeiters use a light print to give the
impression of a strip, others will laboriously thread a material in between the two thin sheets
that are used to make up the bill. The job of making those strips is almost always contracted
out, he says. He knows of only one artisan in Colombia, a very busy "miniaturist," who does
that work. A set of 100 decent strips can cost about $40, though the cheapest are made of
similar material to the plastic tear strip found on a cigarette-box wrapper. "The guy who
doesn't include that security strip won't get anywhere," Fabio cautions.
Inks, too, range in price and, like everything else, are for sale on the black market. According
to lithograph printmasters, the basic inks sell for $15 per kilogram of powder. But those can
smear easily, Fabio says, so better counterfeiters prefer to splurge for special magnetic and
security inks that approximate those used by federal printers. On the black market they sell
for upward of $750 per kilo, enough for 500,000 bills. ( Antifraud authorities couldn't confirm
that price, and several legal lithograph professionals winced at it in doubt. ) Fabio also says
that there is now a special ink on the black market that gives the numbers in the corners of the
new-
series bills a shiny, now-it's-green-now-it's-black effect, which counterfeiters normally achieve
by dumping metal shavings or a metallic powder into ordinary ink.
The so-called optically variable ink was one of several design and security features that made
their debut in 1996, when the United States Treasury began to issue new, higher-security
notes. Other changes included the larger, slightly off-center portrait, a watermark and new
microprinting details. "The U.S. has had to make changes to its currency because, well, we
Colombians are total geniuses," exclaims Martha Muriel, spokeswoman for the D.A.S. When
I ask Fabio whether he thinks the new features have impeded production of fake dollars, an
impish grin flicks across his face. "If today they make a new one in the United States," he
confides, "the day after tomorrow it'll be ready here."
Ready, perhaps, but not perfect. As they did with the security strip and the ink, counterfeiters
have conjured approximations of the security devices in the absence of the real materials and
techniques. A good watermark, for instance, continues to evade counterfeiters, since real
watermarks are integrated into the bill during the papermaking process. The best
counterfeiters can do is apply a pseudo-watermark by making a light print of the image on the
bill.
The most difficult details to duplicate are the microprinting, fine-line printing patterns and the
U.S. Treasury seal. "The Treasury seal is usually the big giveaway," says Patrick Convery of
the counterfeiting division of the Secret Service in Washington. "It won't have sharpness, or
sometimes the pointy ends will be jagged. The stars in the center won't appear to be stars;
they'll just be dots." To reproduce those details with precision, the best counterfeiters often
enlarge the photographic negatives of the bill to several times their normal size and spend
hours touching up the lines.
On close examination, Fabio's $100 bill is less astounding. The Treasury seal looks passable
when placed alongside a real bill, but the green is a bit darker than it should be and the cables
on the scale are frayed. The microscopically thin lines behind Benjamin Franklin's portrait
and etched in the sky above Independence Hall are even but broken in several places. The
words "The United States of America" printed on Franklin's lapel look perfect, but the
microprinting -- USA 100" -- printed repeatedly within the numeral 100 on the portrait side
of the bill -- is blurry. Also, the watermark doesn't have the strong presence of a real one; the
delicate grace is gone from the calligraphic lines bordering the top and the bottom, and the
green color of Independence Hall lacks its usual tonal depth.
Still, there's no question the bill would have duped me and many other people, particularly
Americans who, according to the Secret Service, inspect their currency far less closely than do
foreigners who trade in dollars.
Fabio holds up the bogus note and tilts it back and forth beneath the light. The numeral 100
in the corner shimmers green, black, green, black. "That's really good," he says admiringly,
and smiles at the beauty of it.
I Think Mr. Greenspan also has a Golden Nestegg,From the Sound of This Speech!
Monday October 16, 9:22 am Eastern Time
Greenspan: Settlement Needs
Overhaul
SEA ISLAND, Ga. (Reuters) - Federal Reserve Chairman Alan
Greenspan said on Monday the clearance and settlement process
for U.S. equities and other corporate securities was outdated and
in dire need of overhaul.
Addressing a Federal Reserve Bank of Atlanta conference, Greenspan warned that failure to
modernize the system could create serious capacity problems, and even compromise the entire
equity market when ******trading volumes jump in times of increased volatility.
``Already there are signs that trading volumes are straining the capacity of the infrastructure,'' he
said.
``Many fear that, without a complete re-engineering of the process...further increases in trading
volumes, driven in part by the ongoing decimalization of equity prices, will soon result in serious
capacity problems,'' he added, noting that such developments ``clearly must be a significant concern
for policymakers''.
Equity and other securities trades are usually settled by the third business day after the trade occurs,
but growing trading volumes -- driven by the development of new technology -- has led to errors
and delays in settlement and thus increased risk to all participants, Greenspan said.
``Furthermore, should capacity problems emerge because of a *******volatility-induced spike in trading
volumes,******** the equity markets themselves could be compromised,'' Greenspan said.*********
He said efforts by the Securities Industry Association to shorten the settlement process from three to
one business days ''deserve support and encouragement''.
But he also noted that the task of overhauling the system was up to the private sector, not to
policymakers. ``It has never proved wise for policymakers to try to direct the evolution of markets,
and it strikes me as especially problematic at this juncture,'' he said.
The powerful central bank chief said the key was *******to let free market forces work unhindered.
``Equity markets will inevitably shift capital from the losers to the winners,'' he said. ``In most cases,
the losers will fade away without placing any burdens on their creditors. But some undoubtedly will
fail. This is a tendency that should not be resisted.''
Greenspan's speech, transmitted via videolink to the Atlanta Fed's Financial Markets Conference in
Sea Island, Ga., did not address the outlook for the U.S. economy or short-term interest rates.
Comments:
Please read carefully where you see this********!!
It sounds to me like Mr.Greenspan has been reading some of these forums and fully expects volatility in equities of all types.
Wouldn't the "paper" Gold market be called an equities market, or am I reading too much into this speech?....beesting.
When market meltdown begins ... answer to Revelation
The market meltdown, or Titanic sinking, has already begun. If the Fed inflates market bubbles by lowering rates it also pricks them by raising rates ("the iceberg"), which it's been doing. "Don't fight the Fed", in either direction, is the wisest Wall St maxim. The price of gold simply follows direction of interest rates. Contrary to popular belief, however, raising rates creates inflation not fights it, causing a mutually reinforcing upward spiral in interest rates, inflation, and the price of gold. A reversal of what's been happening since 1981 when interest rates peaked.
There are more (market) unsettling comments from Mr. D today with regards to potential intervention and valuation etc.
You've got to hand it to the ECB; playing the game this way. They're not playing the conventional game. They are playing a different game and they are making the rules. Problem for them is, the rest of the world including their own informed constituency is not on that (ECB) board.
How long can they keep fiddling and dancing before the next move?
The perfect mind is the mind that excepts no compromise with irrationality. It excepts only perfection which means no force or fraud, just freedom to think and act for yourself. That means no initiation of force, no taxes, no economic regulations, and no economic public property, but instead all trade done my mutual consent for mutual benefit. The world we live in is emotional and against a perfect, or normal world. It is a barrier against the perfect, or normal mind. The perfect mind can convert this barrrier of static energy into kinetic energy by being totally passive. When the emotionalist feel that the perfect mind is passive they can't react against it and drain it like they can the imperfect, or active, minds. The perfect mind drains them of their emotion/energy instead and converts it to energy for the friends of the perfect mind. The more emotion/static energy the perfect mind takes from the emotionalists and converts, the more energy the emotionalists must take from the imperfect minds who respond by creating more of the energy they lose by thinking and producing more. That's why the price of oil and interest rates are rising, the markets falling, and the demand for, though not yet price of, goods and services and gold are rising.
Reply to Beesting's message about Greenspan speech from Sea Island,Ga
Sea Island, Ga. is the most golden of the Golden Isles
(Cumberland, St.Simons, Jekyll, Sea, and some smaller ones) along the gold coast of Georgia, and is accessible by car (5hrs) from my home in Atlanta by way of the golden isles parkway. I think Greenspan was responsible for the legalization of gold ownership in 1974?, and has written the best definition and explanation of the gold standard I've ever seen in the Ayn Rand Lexicon. And congratulations to Ga.Tech football team for their victory Saturday over Wake Forest. The school colors are old gold and white and their fight song, along with the famous I'm a Rambin Wreck from Ga. Tech, is Up With the White and Gold, which I like even better.
I read the key phrase in that comment as
"key was to let the free markets work unhindered."
I think the man is covering his A$$. Which in turn means that he foresees trouble, and knows that while the fed can influence the market, it cannot control it. This in turn leads me to believe that should the fiat market tank, they will be much quicker to impose draconian measures.
Damn, I had hoped they would bumble along a bit. Going to have to be real nimble to keep ahead of them.
Buy physical.
Do people really get what "they" want? @Aristotle, ALL
http://fly.hiwaay.net/~becraft/MONEYbrief.html The following is excerpted from the link provided by ji (10/15/2000; 8:22:45MT - usagold.com msg#: 39057). Thanx ji!! It's excellent work, as is typical for Attorney Becraft.
This excerpt shows an interesting piece of history -- where the hard money clause in the constitution came from -- and, I think, that people don't really want paper money --- most people just go along, trusting the folks in control to do what's best. We know how that turns out, and ALWAYS has. (Caveat: genuine change DOES sometimes happen. For example if the monetary "authorities" controlled their emissions of paper currency, fiat would work. Are they this time?)
Aristotle, I think the worst you can say of "the people" is they trust what the self-serving bankster/government mouth-pieces tell them. True, that's a very serious mistake, but do you condemn them for trusting --- or the so-called "leaders" like Philander Knox, et. al. (who habitually lie, cheat, and steal) who regularly mislead?
The first paper money experiment in colonial America
occurred in 1690 when Massachusetts, anticipating a need to pay
soldiers sent to war in Canada, made the first emission of paper
money. After the soldiers returned from this unsuccessful
invasion attempt, they received their pay in this scrip; see
Craig v. Missouri, 29 U.S. 410 (1830). The direct result of this
improvident experiment brought Gresham's Law ("bad money drives
out good money") into operation and such specie as existed in the
colony soon departed for use in England. Notwithstanding the
apparent adverse effects of paper emissions, the supposed short
term benefit was noticed by other colonies and over succeeding
years, they repeated the same experiment. In May, 1703, South
Carolina engaged in this same expedient. Thereafter, New
Hampshire followed in 1709, Connecticut in June, 1709, New York
in November, 1709, Rhode Island in July, 1710, Pennsylvania in
March, 1723, and Maryland in 1733. The remainder of the colonies,
particularly Virginia, seems to have escaped the urge of the
dreadful expedient of paper money.[2] George Bancroft noted that
the colonies, once addicted to use of paper money, continued with
further emissions which only proved to be disastrous.
During the period when many of the colonies were emitting a
paper currency, the value of the notes of one colony constantly
fluctuated against the value of all other colonial notes. This
uncertainty in value was directly proportional to the number and
amount of the emissions made by any particular colony; the
results were certain and caused the destruction of trade and
commerce as well as confidence in the medium of exchange. This
was aptly demonstrated by the example of Rhode Island. In 1743,
Rhode Island issued "bills of credit" wherein 27 shillings in
paper denomination were alleged to equal one ounce of silver. But
in 1751, the Rhode Island General Assembly devalued these bills
to the point where, at law, 54 shillings in paper were
exchangeable for one ounce of silver. Undeterred by the ill
effects of devaluation, the Assembly thereafter made the exchange
rate equal 64 shillings of paper for an ounce of silver. Not only
did the colonies violate the express dictates of Oresme and the
common law by making paper be money and not gold and silver, but
they further violated the law against debasement and debased
their paper.
In 1751, one of our founding fathers, Roger Sherman, the
very man who made Article 1, � 10, cl. 1 a prominent part of our
Constitution, was engaged in business in Connecticut. While so
employed, he extended credit to a merchant from Rhode Island, who
later attempted to discharge his liability to Sherman with Rhode
Island paper money. Sherman refused, and a legal controversy
thereafter ensued. While Roger Sherman plead in this suit that
the law required specie payment, the Rhode Island merchant
defended himself on the basis of custom of the people. The
decision in the case was in favor of the Rhode Island merchant.
Sherman was incensed at the verdict and decided, in the
great tradition of Oresme, Cotton, Locke and Blackstone, to
espouse his views in book form. In 1752, Sherman wrote a short
treatise entitled A Caveat Against Injustice, or An Inquiry Into
the Evil Consequences of a Fluctuating Medium of Exchange. This
treatise of Roger Sherman, in addition to its value in noting the
injustice and inequity of a fluctuating medium of exchange, is of
immense value in determining the true intent and meaning of Art.
1, � 10. He demonstrated that the viability of commerce was
dependent upon traders and businessmen exchanging their goods and
commodities for currency of intrinsic value. Such businessmen had
surrendered property of specific value in order to accumulate the
commodities they were selling. At the time of sale, the contract
price of the goods sold included the cost of such goods as well
as a return for the labors of the businessman. If the currency
utilized to effect this commercial exchange was without intrinsic
value, or its intrinsic value was being deflated by actions of a
sovereign government, the businessman was being unfairly and
unjustly deprived of his property and labor. Sherman concluded:
"But if what is us'd as a Medium of Exchange is
fluctuating in its Value it is no better than unjust Weights
and Measures, both which are condemn'd by the Laws of GOD
and Man, and therefore the longest and most universal Custom
could never make the Use of such a Medium either lawful or
reasonable."
"And instead of having our Properties defended and
secured to us by the Protection of the Government under
which we live; we should be always exposed to have them
taken from us by Fraud at the Pleasure of our Government,
who have no Right of Jurisdiction over us."
"But so long as we part with our most valuable
Commodities for such Bills of credit as are no Profit; but
rather a Cheat, Vexation and Snare to us, and become a
Medium whereby we are continually cheating and wronging one
another in our Dealings and Commerce ... we shall spend a
great Part of our labour and Substance for that which will
not profit us."[3]
While Roger Sherman had concisely stated the reasons and
need for a stable currency of specie, he was denied the
opportunity to remedy this vicious problem until he attended the
Constitutional Convention in 1787.
Larry Becraft, Huntsville, Alabama, (Last update: September 1,
1999) http://fly.hiwaay.net/~becraft/MONEYbrief.html
From Monetary Trends October 2000;
Titled - Are the Fed and Finacial Markets in Sync?
One would get the impression of dissociated events based on the question, but the answer summarized in this cover message is;
"Still, since 1994, FOMC actions generally have not taken markets by susprise-the Fed and finacial markets apparently are in sync."
Trying to make sense out of currency fluctuations.
On Sept, 22,2000 all the worlds currencies gained in value, as the U.S. dollar lost value. I know Sir ORO could figure out what exactly happened much better than me, but let me take a wild guess.
Using this definition of "The Floating Exchange Rate":
""Currencies strengthen or weaken based on a nation's reserves of hard currency and Gold,its international trade balance......etc. etc.""
Now what also happened on Sept. 22 the British Pound jumped an astonishing(for one day)7 U.S. cents, and has kept its value until the last few trading days.
This is what I think happened, but remember it's an opinion only:
England, a few weeks before Sept.22 had bought some U.S. electric utility companies in the northeastern U.S., with total figures in the transaction into the billions.Sept.22 may have been the settlement day for the transaction.
Pounds were exchanged for dollars, but the U.S. FED..(because of continuing U.S.dollar strength, caused by oil being bought worldwide with U.S. dollars)..instead of adding billions in Pounds to the U.S. dollar reserves, bought Euro's enmasse with the Pounds driving the price of the Euro up, and on the books only, losing the billions in dollar value of the sold utility companies.Big time currency traders got wind of the deal beforehand,and by buying Euro's before settlement and selling after settlement, made a killing.Now the U.S. owned Euro's may still be in limbo somewhere, or the currency traders(hedge funds)may have bought a lot of them and are holding them(Euro's)offshore so they wouldn't show up as U.S. dollar reserves.How did the Japanese fit into all this? I don't know,maybe some kind of silent partner, to the whole deal they're money(Yen) has kept about the same value throughout all of this.
Which brings us back to today!
Again most currencies are now losing value as the U.S.dollar gains, simply because oil is still payed for in dollars worldwide.All this transaction did was buy a little time.
Why am I writing all this? Only to show how easy it would be for some to manipulate paper money on a world wide scale.
Those in the Know are Buying Physical....Gold....beesting.
After first doing the right thing by looking to the United States Congress for help in regulating industries such as tobacco and firearms, the federal government and many states are now directing their efforts toward the civil courts. Having failed to get their way by constitutionally provided means, advocates of greater government regulation over a number of legitimate industries are making an end-run around the democratic process. Civil suits are quickly becoming an acceptable means to force unfavored but perfectly legal industries to settle huge lawsuits by essentially accepting new taxes and regulations their attackers could not persuade the American people to impose through their duly elected representatives.
This approach offers them a number of distinct advantages. First, the courts determine a winner and a loser often much more quickly than Congress. Second, if the plaintiffs do not receive the desired verdict in one court, they may well succeed in another. And if all else fails, they can take advantage of the appeals procedure. For the federal government and the states, the process resembles gambling�they may lose on the first deal, but they still hope to win on a later hand. Finally, the defendants in these cases have to pay the litigation costs out of past profits, whereas the federal and state governments can pool huge resources to bring and pursue these suits. This disparity in resources can and has made some corporations within the targeted industries make settlements and concessions that they would not otherwise have made.
This type of activity by the federal government and the states may seem innocuous, but it presents a fundamental threat to America's representative democracy. One of the cornerstones of our form of government is the principle of separation of powers, the division of governmental authority into three branches. The legislative branch makes the laws, the executive branch enforces those laws, and the judicial branch interprets the laws and administers justice. Allowing one branch of government to intrude too far into the role of another invites an inherent abuse of power. The three branches of government were designed to check each other, thus preventing abuses by any branch.
What the federal government's executive branch and the states are essentially doing is asking the courts to step in where Congress has refused to do their bidding. They are trying to make law. Each time this occurs, the courts tread in water reserved for Congress. As citizens, we elect the Congress to represent us, and if they do not keep our interests in mind, we can decline to send them back to their jobs after their term in office has ended. Judges, however, are appointed by the president and confirmed by the Senate. Consequently, they are not accountable in the way the Congress and president are, which is why the Constitution does not allow them to set public policy. They would have too much freedom to set it according to their own agendas without the consent of the governed.
Hence, regardless of one's feelings about the tobacco and gun industries, this type of activity by the federal government and the states should concern every citizen. Such behavior blatantly subverts the legitimate legislative process, bypassing the protections that the process was designed to ensure: open and zealous debate over the issues and most important, accountability for the decisions that are ultimately made. Bypassing the Congress puts policy determinations in the hands of a few judges who make decisions based not on an understanding of the popular will, constitutional authority, and a legislator's individual conscience, but instead on their own reasoning, emotions, opinions, and biases, without the benefit of debate and electoral accountability.
One objection to the legislative process, of course, is that it can be slow and unresponsive, but this is part of the system's brilliance. The legislative process serves to ensure that public policy determinations are not quick, knee-jerk reactions to ephemeral social pressures and mob psychology. Instead, it ensures that public policy develops over time and by the consent of those governed by it. Therefore, by allowing a few unelected and unaccountable judges to decide the nation's public policy directions, the executive branch of the federal government, using the lure of big financial prizes to ensure the cooperation of state governments, is systematically removing the citizenry from the decision-making process. This trend is a sure threat to the representative democracy that has made America the envy of the world.
(The author is a research assistant at the Hudson Institute's Crime Control Policy Center.)
Response to Steve and detail explanation of my "John Galt"- like motor/mind
Steve, your wasting your time, effort, and energy fighting primary emotion. Emotion, by it's nature isn't real but reactionary, and statists are all emotional reactionaries against the mind, including yours. It's you and every other thinker that created them and support them by your thinking and actions. You are like Dr. Frankenstein, they are like Frankenstein because you made them whether or not you know it, and they hate you for it and live to destroy you and your mind through an ever increasing amount of force, ie. taxation, regulation, and private property confiscation against you. To only escape you have is to do what Ayn Rand said to do in "Atlas Shrugged" and shrug, which means quit thinking, producing, and fighting them. Go on strike against them so to speak and invest all your money in gold. If you must work to support yourself then get a low level job like I have. I drove a cab the last 5 years and now I drive a mobile billboard. For further explanation read "Atlas Shrugged" and "For the New Intellectual" and all the rest of Ayn Rand's books.
Now about my motor, the static energy converter which is my mind. I make my brain totally limp and passive. When I do this I'm able to periodically drain static energy or emotion from emotional people. I can feel their static energy or emotion come through my ears into my brain which then converts it to energy for me and those other minds on strike (passive) like mind. When I say passive I mean physically, I still think while my mind is passive. I can't control when I drain them but as long as I keep my mind passive it happens periodically and randomly for brief moments usually between 2 to 10 minutes.
and Steve, democracy is unlimited mob rule that created the mess which you talk about and all other messes. That's why we need a gold standard, so we can replace democracy with a representative republic which protects individual rights against the whims of the public. To achieve such a government and economy will require that our current corrupt system fail so that those who own gold can rise to power and use their gold gun to lay down the Natural and Constitutional Law so to speak. The sooner those who still
think and produce stop and quit the sooner this will happen.
Now I just consciously and clearly and explicity learned about the power of my mind, which is the power to drain emotion from emotional people, early this past winter. That's when oil prices began to rise and markets began to fall. I lost control of my motor and mind from late may to late august and markets took off as oil fell. But I corrected my error and since then markets have been falling as oil has been rising. This will continue because I'm in full control of my mind and motor now. Don't expect stocks to go down every day and oil to rise every day, but expect the trend in stocks to be steadily down and in oil to be steadily up. Eventually the Fed will have to respond by raising rates and this will set the stage for inflation and a rising price of gold. Be patient as my mind is a slow draining motor and society is a sea of non-thinking static energy, or emotional people with their irrationallly exuberant dollars hoarded in stocks.
It's about the $86 BILLION loss on investor equity in the 40 largest merger/buyouts this year. Sorry cannot get the link but it is a good read for the bears (da'bears).
Emotion is great if it's based on, secondary to, absolute reason just as paper currency is great if it's based on, secondary to, gold which is absolute money. Otherwise both are primary, instead of secondary, and therefore evil or irrational. My emotions and paper money, are of course secondary derivatives of my mind and it's knowledge of gold, and thus good. Unlike the general public, I am not an "irrationally exuberant and euphoric paperbug". To the contrary, I'm a rationally exuberant and euphoric goldbug who desires to live not die. The problem with communicating by writing is that it's impossible to control the connotation of what you say.
Letter to the Philadelphia Exchange concerning Phelps Dodge
Recently I was provided the criteria necessary to include a company in the XAU.
However, I find these Exchange rules to be preposterous, given the dire circumstances in the gold industry.
The main issue is this: why does the Philadelphia Exchange adhere to such rigid rules, yet other exchanges will change rules on the spin of a dime to adjust to new emerging circumstances?
For example, when palladium started to go through the roof, the NYMEX instituted new 150% margin rules designed to eliminate the speculation.
So why can't the Philadelphia Exchange recognize the unusually bearish nature of the gold market and ADAPT its rules to the new situation?
Of course, gold investors know the answer: we are faced with yet another egregious double standard, one designed to benefit the gold shorts to the detriment of genuine gold investors.
If you give a damn about the matter, then write to these corrupt clowns and give them a piece of your mind.
Thanks
F*
---
feedback@phlx.com
Dear Sirs:
Please do NOT bother to send me the litany of your criteria for companies' inclusion in the XAU.
You are well aware of the troubles facing gold producers today, not to mention their many thousands of investors.
YOUR RULES WERE NOT HANDED DOWN BY MOSES FROM MOUNT SINAI. THEY CAN BE CHANGED, THEY CAN BE ADAPTED TO A NEW SET OF CIRCUMSTANCES.
Your rigidity with respect to the Exchange's XAU criteria is simply another categorical indication of Wall Street's aim to bankrupt an entire industry sector and an entire class of investors; furthermore, by your actions, it
is obvious that you wish to exclude gold as an investment for the sake of protecting the enormous gold short positions of Wall Street's major bullion banks. Those enormous gold short positions have been documented by numerous
analysts in the industry.
So spare me your litany of Exchange rules. Either recognize the necessity of ADAPTING those rules to current negative circumstances in the gold market or else be ready someday to face the consequences of your actions to harm an entire class of gold investors.
This FT article reports from London:
"Sony on Monday blamed sterling's value against the European single currency and the rising cost of doing business in Britain for 400 job losses at its plant in south Wales.
"The announcement, which follows 350 job losses at Hitachi's plant near Cardiff, prompted claims that inward investors are beginning to think seriously about diverting investment to continental Europe because of the euro problem."
They are feeling the pinch from the difficulty to export to continental Europe. Ahhhhhhh...the marvelous vagaries of international exchange rates...
A pattern and cause for concern seems to be welling up among Japanese companies fretting over the UK's commitment to the euro. The general secretary of the trade union body TUC Wales, David Jenkins, said, "We believe that with the current strength of the pound and without a clear commitment to the euro, we will see a drift of investment on to mainland Europe, probably to the new emerging countries which are about to join the EU."
A Grass Roots Way to Raise the Physical Price of Gold!
First a disclaimer:
This post is in no way ment as a solicitation of any type!
Dedicated and hopefully read by Sir Yukon Gold Miner!
This is an expansion of a post I made many months ago,which drew some agreement from Sir Journey Man.
PART ONE......THE MINE!!!
As I have mentioned here before I live in the western U.S.A. in an area where some very small Gold mining is still going on. Since my last post on this subject I've made a point to become a lot better acquainted with a local friend I'll call "Pete".
Pete is retired but is an owner in some capacity(partner I think)of a producing Gold mine.The mine runs straight into hard rock for about 100 feet, makes a left hand turn, and drops straight down for about another 100 feet.You see the owners for about the last 60 years(?)have been following a vein of high concentrate Gold.The vein varies in width from about one inch to eight inches, says Pete.On both sides of the vein is an extremely hard greenish volcanic type rock. Pete is drilling and chipping this apart, to follow the Gold vein.Pete is also building an elevator to move himself and ore up and down easier.Electric lights are also installed. Pete didn't give me an estimate of the amount of Gold that has been mined over 60(?) years but lets just do an estimate. 5 ounces per month for one year would = 60 ounces per year, times 60 years would = 3,600 ounces. At $275 per ounce Gold it comes out to just under 1 million dollars or $990,000.
PART TWO.....THE IDEA!
The reason the mining is going on at a snails pace is, it costs "BIG" money to hard rock mine(equipment,EPA,etc.) also the low price of Gold is not helping. Now I have some background in finance, so I'm going to present this idea to Pete:
Using past performance at the same rate as future production, we'll say the mine is currently worth 1 million dollars. So, without any additional information available at this time, lets under write one million dollars worth of stock, and offer it to the public, of course still retaining controlling interest of the mine.
PART THREE......THIS GOLD MINE vs OTHER GOLD MINES!
Now, to be legal the mine has to issue quarterly & Annual (progress) Reports.In the past "values"($) of listed stock close-ly followed earnings and projected earnings, reported in the earnings and assets section of annual and quarterly reports. Now for those still reading, please pay close ATTENTION NOW!!! All previous Gold mines and many listed companies have diminishing assets as time marches on.Hence the total value of the whole company should diminish(including share prices, unless there is new expansion) over a period of time.
This proposed company, if they are successful in raising 1 million dollars is going to BUY with the funds raised from the sale of stock(hope-fully from USAGOLD) $900,000 worth of physical Gold, and use only $100,000 for mining expenses and SAVE all the Gold they mine!!(adding to assets)
So, lets say this happens quickly and by the next quarterly report the company is "debt free" and the assets now total $1,900,000.
This time the company issues an additional $5,000,000 worth of stock, and when it sells buys another $4,900,000 worth of Gold.(from USAGOLD)
Again, things happen quickly and by the next quarterly report the company is still debt free with assets of $6,800,000, and able to issue more stock. Repeating and expanding as quickly as time and finances allow.
The next purchase could be somewhere around $25 million! Well folks thats about 3 tonnes of Gold at todays prices!
I'm sure by this time the physical "POG" would be rising as others would get wise to this scheme, causing our companies stock to skyrocket along with the price of Gold!
Does anyone see anything wrong with this scheme?
Comments Welcome!......beesting.
I hope I'm not too late to join in this discussion, as I find the MBTI personality type of a person highly predictive of his approach to life. Personally, I'm an NT, and so are almost all of my friends, as is my wife. I suspect that almost all gold bugs are NT's. After all, if you're a Sensor or a Feeler, you aren't likely to be able to or be interested in looking underneath the covers, so to speak, of the current fiat money charade.
The chief economist for Dresdner Kleinwort Benson in Hongkong said, "Consumption is taking on a life of its own and is driving the economy," as the first three quarters of the year revealed retail sales to be up 9.9 percent. Fueling that spending was increased wages from additional hours of workers as industrial output climbed by a record 12.8 percent in July and August.
Can you imagine the potential for gold consumption as this nation makes additional progress to liberalize its gold market?
A Grass Roots Way to Raise the Physical Price of Gold!
First a disclaimer:
This post is in no way ment as a solicitation of any type!
Dedicated and hopefully read by Sir Yukon Gold Miner!
This is an expansion of a post I made many months ago,which drew some agreement from Sir Journey Man.
PART ONE......THE MINE!!!
As I have mentioned here before I live in the western U.S.A. in an area where some very small Gold mining is still going on. Since my last post on this subject I've made a point to become a lot better acquainted with a local friend I'll call "Pete".
Pete is retired but is an owner in some capacity(partner I think)of a producing Gold mine.The mine runs straight into hard rock for about 100 feet, makes a left hand turn, and drops straight down for about another 100 feet.You see the owners for about the last 60 years(?)have been following a vein of high concentrate Gold.The vein varies in width from about one inch to eight inches, says Pete.On both sides of the vein is an extremely hard greenish volcanic type rock. Pete is drilling and chipping this apart, to follow the Gold vein.Pete is also building an elevator to move himself and ore up and down easier.Electric lights are also installed. Pete didn't give me an estimate of the amount of Gold that has been mined over 60(?) years but lets just do an estimate. 5 ounces per month for one year would = 60 ounces per year, times 60 years would = 3,600 ounces. At $275 per ounce Gold it comes out to just under 1 million dollars or $990,000.
PART TWO.....THE IDEA!
The reason the mining is going on at a snails pace is, it costs "BIG" money to hard rock mine(equipment,EPA,etc.) also the low price of Gold is not helping. Now I have some background in finance, so I'm going to present this idea to Pete:
Using past performance at the same rate as future production, we'll say the mine is currently worth 1 million dollars. So, without any additional information available at this time, lets under write one million dollars worth of stock, and offer it to the public, of course still retaining controlling interest of the mine.
PART THREE......THIS GOLD MINE vs OTHER GOLD MINES!
Now, to be legal the mine has to issue quarterly & Annual (progress) Reports.In the past "values"($) of listed stock close-ly followed earnings and projected earnings, reported in the earnings and assets section of annual and quarterly reports. Now for those still reading, please pay close ATTENTION NOW!!! All previous Gold mines and many listed companies have diminishing assets as time marches on.Hence the total value of the whole company should diminish(including share prices, unless there is new expansion) over a period of time.
This proposed company, if they are successful in raising 1 million dollars is going to BUY with the funds raised from the sale of stock(hope-fully from USAGOLD) $900,000 worth of physical Gold, and use only $100,000 for mining expenses and SAVE all the Gold they mine!!(adding to assets)
So, lets say this happens quickly and by the next quarterly report the company is "debt free" and the assets now total $1,900,000.
This time the company issues an additional $5,000,000 worth of stock, and when it sells buys another $4,900,000 worth of Gold.(from USAGOLD)
Again, things happen quickly and by the next quarterly report the company is still debt free with assets of $6,800,000, and able to issue more stock. Repeating and expanding as quickly as time and finances allow.
The next purchase could be somewhere around $25 million! Well folks thats about 3 tonnes of Gold at todays prices!
I'm sure by this time the physical "POG" would be rising as others would get wise to this scheme, causing our companies stock to skyrocket along with the price of Gold!
Does anyone see anything wrong with this scheme?
Comments Welcome!......beesting.
You know maybe if we all worked real hard at making the true information available about how this market manipulation
Is being done we could achieve the Nast level of impact. The cartoonist from the last century really stirred the pot on the politicans of Tammy Hall in New York City who were so currupt they became an icon for corruption to this day. The cartoonist charactures of them made their actions so obvious that even the youngest and most unsophisticated reader understood who was screwing who. The myteries that have been revealed to all of us throught the great minds that share at this forum should be translated like those old cartoons into concepts that are so elegant in their simlicity and impact that even our children will understand how the game is played. Collectively between us we have much understanding and some wisdom perhaps this is an acheivable goal. I would so like to have the American investing public understand the scam that is preying on them so they can walk with some fragment of their retirements still intact while the paper rolling investment bankers are still holding their undistributed underwriting and like the junk bond underwriters are doing right now have it forced on them as it goes to zero. Perhaps a quixotic quest but one that might well find support here among the others who share my views. Plus all of us have much to learn from each others experience so in trying to make it understandable to all we will enhance our own knowledge.
Gold, get some. And then get more understanding and share it with others who are as of yet unaware.
Welcome Hugh Akston I found your post very interesting regarding the Myers-Briggs
personality profiles. I had thought something along the same lines but then one of the first several posts pointed our that other types also can be suspicious of movements in the very basic element of their survival like money. I do think that their are probalby a great deal of NT s here at he forum, which is interesting in and of itself but there also appears to be a fair recognition of others as well. I will tell a little story of the nature of types to illustrate the point. When I first got into the study of personality types and decided that it would be a wonderful way for me as a widower to better understand my teenaged children I joined the chat room support groups of all the personality types of my three oldest children so that I could better understand not only their personality type but how they would want to be treated excetra. The only problem was my daughter who at fourteen was my major concern was an ESTP a type that is very much a doer and always looking for excitemnt. Not exactly what a single father wants to hear from his only daughter. So I signed up immediately at the chat sight and waited for someone to post. Weeks became months and now almost a year and no one, not a single person has joined the club. All the other clubs have members but this personality type has no time for this feely touchy stuff and as far as I can see no interest in talking about it. So maybe we are the collection of people who care about what is happening to our montetary future and we post because to us it is important. As far as my fourteen year old daughter goes I gave up trying to understand her and am now spending all my efforts trying to keep her as interested in sports as I can for as long as I can.
Greetings Good Sir,
Am I missing something? How do we know the FUTURE production of this mine, reserves etc? Otherwise would be buying stock relating to a "hole in the ground with a guy with his hand out at the entrance". That was interesting a few times, but even I catch on eventually.
OK say there are plenty of reserves, say 5 yrs worth. Gotta find a source of money, need a feasibility study and so on. Without a great internal rate of return no funding coming. You have it all WRONG, you need to SELL your future production not BUY it. They will run you guys off the planet for such a scheme. You're trying to turn USAGOLD into the Anti-Bullion Bank. Michael will be kicked off the net and we will all lose our "intellectual p-nut gallery". Better just buy some physical like the rest of us. Best to you!
Response to Hugh Askton and Town Crier and general message
Professor, this is John Galt. Midas Mulligan let's me use his name for this forumn. It's good to here from you. I just wanted to let you know that I agree with you because as Ayn Rand said, "Emotions are not tools of cognition". Feelers, as opposed to thinkers like us, can not grasp reality and thus can't know or grasp gold and it's value today since they have no means of cognition, no mind. They will surely buy it though when it peaks in price.
Town Crier, my mind is limp and passive, but I still actively think with it just like any others like me do. So YOU CAN SUCCUMB to having a limp, passive mind like mine and actively engage in thought and discussion with yourself or others. I just don't like feeding emotionalist parasites energy from my mind. Let them get it from those willing to be their victims whom we strikers (minds on strike) call scabs.
Feelers (exmpls of) and Thinkers who are good friends
(Peter Keatings) vs (Hank Reardens)
Tiger Woods vs David Duval
Derek Jeter vs Alex Rodriguez
Bill Clinton vs Bill Gates
I'm an independent contractor mobile billboard driver. I just got a contract for work out of town for a few weeks, but don't know where yet. Might be my last post for a while, but if so I'll be back. And in case you didn't know already, 1st gold rush was 1hr north of Atlanta in Dahlonega. Ga. in 1829 to add to what I said earlier about Sea Island and Ga.Tech.
auspec (10/16/00; 18:35:50MT - usagold.com msg#: 39169)
Beesting/ Mine
Greetings Good Sir,
==
Auspec answered you while I was ROFL !! If you want to see some other similar mines, I can show you a bakers dozen not too far from your home.
<;-)
Unless you're very wealthy it makes more sense to invest in paper gold. The physical is only for those who are so wealthy that they can't invest in paper due to liquidity problems, or those who are paranoid doom and gloomers.
auspec (10/16/00; 18:35:50MT - usagold.com msg#: 39169)
Beesting/ Mine
Greetings Good Sir,
Am I missing something? How do we know the FUTURE production of this mine, reserves etc?
Otherwise would be buying stock relating to a "hole in the ground with a guy with his hand out at the
entrance". That was interesting a few times, but even I catch on eventually.
OK say there are plenty of reserves, say 5 yrs worth. Gotta find a source of money, need a
feasibility study and so on. Without a great internal rate of return no funding coming. You have it all
WRONG, you need to SELL your future production not BUY it. They will run you guys off the
planet for such a scheme. You're trying to turn USAGOLD into the Anti-Bullion Bank. Michael will
be kicked off the net and we will all lose our "intellectual p-nut gallery". Better just buy some
physical like the rest of us. Best to you!
beesting comment:
Thanks for the input! With the $100,000 extra cash from the sale of stock, exploration could be performed as needed, at the mine.
Why should I sell my future production at below production costs which would quite quickly bankrupt the whole operation?
If I were a farmer, yes I would have to sell my production before it spoiled, as a producer of Gold(which has some of the longest "shelf" life known)why not legally keep the fruits of your labor safe-ly in your own safe keeping? All the stock holders of this operation could easily see on the quarterly reports just exactly how much their shares are worth.
Instead of a pure Gold mine, why don't we call it a combination Gold mine/Savings Bank(remember banks operate on fractional reserves).Does that make more sense? The biggest Gold mines are making their profits from "paper Gold"(deritives)not the sale of metal.
P.S. I'm not the owner of the mine, and don't want to be, but if the plan is feasable I wouldn't mind being a shareholder.....beesting.
"Town Crier, my mind is limp and passive, but I still actively think with it just like any others like me do."
I do not doubt for a minute the veracity of that, and as such, you would be doing us a service to elaborate how it is that you rationalize your following claim:
"Unless you're very wealthy it makes more sense to invest in paper gold. The physical is only for those who are so wealthy that they can't invest in paper due to liquidity problems."
A devoted wife was taking care of her husband, who had been slipping in
and out of a coma for several months. When he came to his senses, he
motioned for her to come near. "You have been with me through all the
bad times," he said. "When I got fired, you were there to support me.
When my business failed, you were there. When I got shot, you were by
my side. When we lost the house, you gave me support. When my health
started failing, you were still by my side. You know what?" "What dear?"
she asked gently.
"I think you bring me bad luck."
Hello Friend beesting,
Short & sweet- You gotta have the goods proven before anyone is going to buy the stock or provide a loan even in Vancouver { at least in current market}. When a gold mania is upon us most any project can find financing of some sort.
The comments about not BUYING future production were made in jest, poking fun of the hedging mess we are in.
World class projects are currently on hold for lack of interest and financing. This is shake-out time and only the strongest companies are going to survive, very hard times. The contrarian now says load up on something with staying power.
OK- say you could find someone willing to buy X amount of stock {that is the problem}. This could turn out to be quite lucrative with 2 blessed events: 1- You get appreciation of the gold CPM will graciously sell you. 2-You are able to make a clear profit over expenditures on the mining operation. Gold stocks are "burning matches" and very few are successful.
My bottom line-Sell stock of any type you can {who will put up $1,000,000 for all shares of auspec intl.?} We will buy 90% gold from Michael, and of course have founder's shares and many options. Odds are as gold goes where it belongs we will succeed greatly. Worse case scenario- all those fools that bought shares in rtmauspec inc. lose all their investment. We lived it up in the meantime with perks and salaries. Welcome to historic Vancouver! {Actually own lots of "Vancouver" stocks so much of this is, again, on the lighter side}. This is all where the expression comes from that a gold mine is a "hole in the ground with a liar at the entrance.
I would like to be one of your paid officers once you have sold this stock.
Best to you Sir beesting
President Bill Clinton is threatening to interfere
once again in the search for a peace settlement in
the Middle East. If possible he should be kept at
arm's length by the UN secretary general, Kofi
Annan, whose quiet diplomacy has begun to make
peace look like a possibility. If Mr Clinton now
tries to elbow him aside and to reassert America's
control of what should be an international
operation, he is likely to fail as he has failed
before. If that happens, it will be tragic for the
people on both sides, Palestinians and Israelis,
for whom a settlement would have brought relief
from violence and misery and despair.
But one need feel no sympathy for Mr Clinton,
whose motivation in bringing together Arabs and
Israelis has always seemed to be his own personal
ambition to score a foreign policy triumph that
might rescue his tattered reputation. In pursuing
that ambition, he has masqueraded as a mediator,
an "honest broker", while all the time he and his
team of Middle East advisers have worked,
sometimes openly and sometimes surreptitiously,
to advance the interests of Israel.
It would be more accurate to say that they were
pursuing what they took to be the interests of
Israel - whereas in fact they were helping to
produce the result that we see today: a result
tragic for the Palestinians, damaging to the Middle
East and likely to be disastrous for the Israelis as
well. Israel will never be secure until it can win
the goodwill, or at least the tolerance, of its Arab
neighbours. It must be obvious to everyone that
this fictitious "peace process" has only intensified
the frustration and bitterness that have found
expression in the present Palestinian uprising.
The Americans have not merely failed to achieve
their stated aim of an equitable settlement
between Israel and the Palestinians. Ever since
Mr Clinton persuaded Yasser Arafat to shake hands
with Israel's prime minister, Yitzhak Rabin, on
the White House lawn in September 1993, the
American president and his advisers have actually
made a just settlement harder to achieve.
Before that meeting there was already a perfectly
adequate framework for peace, in the shape of UN
resolutions 242 and 338. What was needed was to
implement these resolutions, which called on
Israel to withdraw from occupied territory in
exchange for recognition by the Arabs of Israel
and its right to exist behind secure borders. But
as the Israelis built settlements all over the
occupied territories it became apparent that they
had no intention of withdrawing.
For a time, the Americans professed to regard the
UN resolutions as the basis for the artificial
"peace process". But gradually they dropped any
mention of them, and as the years passed ( and the
Israeli settlements multiplied ) , they led the
negotiations further away from the United
Nations. They resisted every attempt to involve
the Europeans or the wider international
community in the search for peace in the Middle
East. When the Palestine question was debated in
the UN security council, the Americans
invariably came to the defence of Israel, even to
the extent of vetoing resolutions critical of Israeli
policies that had the unanimous support of the
other council members, including Britain.
All this has encouraged the Israelis to think
themselves politically invulnerable. Confident of
the unfailing support of the US, they could ignore
UN resolutions, annex East Jerusalem, build
Jewish settlements on Arab land, deny the
Palestinians freedom of movement, invade
southern Lebanon and bombard whatever targets
they chose, up to and including Beirut - all this in
defiance of their obligations as members of the
UN. This is a scandalous catalogue of illegal
activity, in which the underlying responsibility
has been that of the US, made worse by the
pretence that President Clinton, Madeleine
Albright and the rest of them were acting in the
interests of peace and justice.
So what next? A way must be found to break the
US monopoly over Arab-Israeli negotiations and
to return the search for peace to where it belongs:
the UN. This is what the Europeans should aim for.
They have never made use of the influence they
possess, and it is time they - especially Britain -
played an active role instead of tagging along
behind the Americans.
It is not a matter of being anti-American or
anti-Israeli. The fact is that between them Israel
and the US have colluded in a policy designed to
favour the Israelis, rather than produce a
balanced peace that would take account of the
interests of all the peoples concerned.
Whether such a peace is still possible, now that a
spark has set light to all the pent-up resentment
over the failure of the American "peace process",
it is impossible to say. Certainly it will not be
easy, so the sooner a new initiative is taken, the
better. The fact that the secretary general of the
UN has taken the lead makes a good start. Now let
Britain lead the other Europeans in lending him
their support. And, if possible, keep Mr Clinton
and Mrs Albright out of the picture.
Michael Adams is a research fellow in the politics
department of Exeter University and a former
Revelation has both physical and paper gold. Anyone
who carries paper without the physical may have no
insurance at all. Like anything else, moderation for
both. But don't be without physical. My holding
consist of 70% physical and 30% mix of juniors
and major mining co's. This way I am not playing
any wild cards. I have some leverage, but I am
sure to have the insurance I will need when the
time comes. Physical gold is still the ultimate personal
survival insurance policy of choice. Nothing else comes close. Fools come and go, but physical gold and silver
remain. Mining companies is more in the form of gambling.
Physical is not. Draw your own conclusions, and hope
your right.
Let's suppose I buy 1000 ounces of gold for 270,000$. If the price of gold rises to 4800$ an ounce I can sell it for 4.8 million dollars. If I invest the 270,000$ in Canyon Resources, a gold company, I can buy 500,000 shares at 50 cents a share for 270,000 and sell it at 30$ a share for 15 million dollars using a conservative p.e ratio. Gold paper is a derivative and derivatives give you more leverage than buying physical gold plus margin. Paper gold is safe because it's tied to the company's gold reserves. If you are investing billions of dollars like Buffet and Gates etc... you buy the physical because there isnt enough gold paper to buy at reasonable prices due to lack of liquidity.
The Friends of the Dollar are the enemies of Gold. They are....
those few people who think, and profit, and thus are responsible for the increases in production of all goods and services. The more goods and services they produce. and profit they make, the stronger the dollar becomes, since it's strength is based on the total supply of goods and services, instead of, and thus against, the supply of gold. The stronger the dollar the lower the demand for, and thus price of, gold. So the friends of gold must destroy the mind to destroy the dollar and make the price of gold rise. How do you destroy the mind to accomplish this? You convince it to stop, to quit, to "shrug" or go on strike against the dollar world it, an "Atlas" supports. You tell it to sell it's paper assets and instead invest in gold. So if you want to raise the price of gold it's time to convince Bill Gates, Warren Buffet, Jack Welch, Ross Perot, and all the rest down the line etc...etc..."scabs" the producers and profit makers who befriend and support the dollar at the expense of the price of gold and thus you, to join you and your mind on strike. For further explanation I'll refer you to the novel Atlas Shrugged.
Canyon res. is a high speculative bet. I hope you have
a strong stomach. A stock like that could cease to exist
in a hurry. I wish you luck, sounds like your a little green
under your toes. Sometimes the odds are better in Las
Vegas. You might get the same results or increase your
odds playing craps.
I am a stock trader also interested in small cap gold/silver plays. One thing you should not forget about and to me this of utmost importance, gold/silver bullion ARE NON- VISIBLE CAPITAL GAINS. This cannot be stressed enough. Any stock you trade in an on-shore account will be accessed by you know who when it comes time to you know what. A substantial difference will have to be made on the stocks in order to equal the secure non-visible transaction
that will take place in a gold/silver bull run.
The different personality types, according to MBTI
http://www.keirsey.com/cgi-bin/keirsey/newkts.cgiI recommend anyone interested in personality types go to this web site and take the test for yourself. You may be amazed at how accurate it is. They also have explanations of all the various types.
It's interesting to note that all of Rand's heroes were NT's and most of her villains were Fs of one sort or another. Personally, I've never met an F whose life wasn't seriously messed up in some way. That's understandable, because they don't use rationality to make decisions; they use their feelings as tools of cognition.
Of course, feelings are important. They should be taken into account in deciding what the right course of action is. But the final decision has to be made rationally, at least if you want the best possible results.
Thanks again Sir auspec for your input, and thank you too Sir Gandalf # 39171, glad you had a good laugh, laughter is the best medicine, they say.
Now, to go back to my original post on the Gold mine, lets ask ourselves this simple question:
Why do investors invest?
My answer would be to build wealth, or at the very least preserve wealth.I believe the Gold mine operation I described today would be the only investment, that I know of that would true-ly be as good as Gold!!! Why? Because it's shareholder paper backed by "REAL" Gold! Sir auspec, I'm true-ly grateful for your feedback because it shows the biggest concern to share holders would be the safe keeping of Gold assets and credibility of whoever ran the operation is of the utmost importance.
I wasn't sure if the whole plan was legal.
What is happening to paper wealth worldwide as I write this?
Again my answer; Paper wealth is being eroded by the minute worldwide,mainly because it represents someones debt. My proposed Gold mining operation HAD NO DEBT! The share holders would be what shareholders were originally intended to be,"partial OWNERS of the company." A clause could be entered on each and every shareholder certificate,"REDEEMABLE IN GOLD!!! If the price of Gold rose to certain levels, or if the shareholders voted for it dividends(anybody remember what that used to be?)could be paid in Gold or paper.
I still think it's a good idea, and I'm going to talk to the mine owner,Pete about it.
Thanks for Reading.....beesting.
I was through China last year , for those whom travel the world somewhat and get to see the whole picture as it were can easily tell simply by the construction noises/hums and numbers of overhead cranes that permeate the said cities , how any economy/country is holding up .
The word Significant !! re bullion & China may well be the biggest whispered understatement yet to effect the precious metals market. Yes yes Sir Towncrier by ratio's; INDEEDY! I say . Thats indeed extaordinary !. :)
I have been following Ben for a while, I feel he may be right on.
Your brillant call of more than a year ago is also right on; gold can't move until after elections.
Did you see 'Snowgirl's' post of 14:44 (15th) yesterday?
Funds are locked in tax protected vehicles and major redemptions are not possible. Just here on the morning news that (in Canada at least) net redemptions for Sept. were 1.4%. People are locked in and will go down with the ship.
Yes, the next 60 days will be interesting. Anxiety and craziness should peek soon.
Ever wonder why the European leaders would be so willing to allow there currency values to be undermined by various measures like selling their gold and then watching as the EURO sinks?
Well here is probably part of the puzzle. The VAT or value added tax which is the major revenue raiser for all the European countries is of course embedded in the price of the goods they produce. The United States does not have this problem with its goods which while they also reflect some taxation as do all manufactured products it is much less. Therefore with the introduction of the internet and other forms of modern globalization the competetiveness of the European manufactured goods are penelized in the marketplace because of the higher VAT tax burden. Faced with this the Europeans as a group would be more willing to accept currency devaluation as a way to adjust the problem since it is more politically palatable for their leaders. This type of macro economic pressure is what allowed Rubin and the designers of the "US strong dollar policy" to be able to step on gold and then assure themselves that with other moves to control the flow of investment dollars they could push the US dollar up agains the only three currencies that it is measured against, the Euro or the combined european currencies,including the mark; the yen which in order to keep it's economy from slipping into depressionary deflation needed to print money at a fantastic rate to keep foreign exchange rates of the yen low enought to continue export strength and at the same time print up enough new yen to paper over their hollowed out banking system. That of course left only gold. So throught the yen carry trade they were able to attract enoug speculative capital to begin to bury the standard by which the cheapness or richness of the US dollar currency is measured.
Voila, you have a manipulation of the currency markets, interest rates by the Fed using the trade deficit dollars to be recycled back into the US bond markets, and the gold market which was of course the lynch pin of the entire rigging.
The following article will show why there was motivation for the European business and government leaders to allow their vast gold reserves to be lent to accomplish this.
Europe needs a fair online sales tax
Present duty on the sale of digital products via the internet discriminates against European companies, says Frits Bolkestein
Published: October 16 2000 19:32GMT | Last Updated: October 16 2000 20:50GMT
In June I proposed an amendment to European value added tax legislation to allow for an easy application of VAT to digital products delivered over the internet.
In terms of total VAT revenue this is not yet big business. But it is important to modernise our tax rules in this rapidly developing business sooner rather than later.
European VAT legislation was conceived long ago at a moment when modern internet-based trade was not a reality. Our legislation is therefore outdated and needs revision.
Today European producers of digital products, such as computer games and software, are at a competitive disadvantage compared with non-European producers because they have to apply VAT to their products within Europe. US competitors, by contrast, can export to Europe free of VAT. Similarly European exporters to the US are now obliged to pay European VAT, whereas US producers are not faced with the same obligation.
I propose to put European producers of digital products on an equal footing with US and Japanese competitors by applying VAT to digital imports into the EU and exempting digital exports from the EU. This would create a global level playing-field for European and non-European companies.
This should take place in a way that is easy and straightforward to apply. First, a threshold of E100,000 ($86,000) should be introduced so that small operators whose annual sales within Europe do not exceed this sum would not have to comply. Second, foreign companies should be allowed to register for VAT in one place in Europe and to do all their European business from there.
This measure is a clear and positive signal not only to the business community, which needs clarity, but also to the treasuries in Europe, which need to know that the tax base is not being eroded by e-commerce.
Surprisingly, however, these proposals have provoked a range of criticism, not all of which has been equally well informed. For example, some businesses in the US argue that if Europe implemented the proposals, it would be pre-empting global agreements on the taxation of the internet to be made within the framework of the Organisation for Economic Co-operation and Development. That is untrue. The proposals are neither more nor less than what was agreed by OECD Ministers in Ottawa in 1998.
Some business circles have suggested that, instead of the present proposals, we should have a moratorium on internet taxation. That view must be based on a misunderstanding of what has been agreed internationally. It has never been said that existing taxes such as VAT should not be applied to electronic commerce. Rather, no new, special taxes should be invented for the internet. This is what we have done. To exempt electronic commerce from VAT in contrast to other forms of trade would not make sense. Furthermore, it would not be accepted by European finance ministers.
Other critics argue that it will be impossible to control effectively the payment of VAT on digital services. True, the VAT system in general - and not particularly in an e-commerce context - is plagued by tax evasion. But most companies are honest and wish to comply with the law. The explosive development of e-commerce does raise issues of law enforcement that may be difficult to tackle, but these go beyond the issue of just taxation.
Finally, some member states of the EU are loath to accept a single place of registration for non-European operators. But there are compelling arguments for such a system. First, a complex requirement for registration by non-European companies may run counter to our obligations under the global trade agreements in force.
Second, to create a difficult and complex system would militate against European efforts to embrace the new technologies and possibilities offered by e-commerce. Surely, having a cumbersome tax system applied to the development of e-commerce cannot be in line with our ambitions to become the most competitive knowledge-based economy in the world.
The EU has done - and is doing - a lot to promote the development of electronic commerce. We have recently completed a comprehensive framework of legislation for this commerce. We are negotiating an important initiative with member states to simplify and modernise the framework legislation for telecommunications in order to enhance competitive pressures and maintain the European lead in mobile communication. In a situation where we are striving on a number of different fronts to meet the requirements of the new economy, it is obviously of central importance that we also get the fiscal aspects of e-commerce right.
When European ministers meet today to discuss our e-commerce taxation proposals for the first time, I hope that the determination to modernise our economies will prevail over short-term revenue considerations.
The writer is European commissioner for taxation and the internal market.
I beieve if was Shelley or maybe Keats who said that poets are the unacknowledged legislators of mankind.
What they meant is that the thinkers who can conceptualize and then encapsulate the truth so that it can be understood by the common man rules the world. Since their ability to enlighten the masses through the power of the world moves minds and therefore mountains. Tom Paine and Jeffereson with "all men are created equal" jumps to mind. Think about it we maybe could have more impact than we think if we can peel off the cloaks of mystery the manipulators have covered their actions with and lay the truth out naked before the average citizen.
CORRECTION OF MISSPELLING IN LAST POST!!!!!!! I beieve if was Shelley or maybe Keats who said that poets are the unacknowledged legislators of mankind.
What they meant is that the thinkers who can conceptualize and then encapsulate the truth so that it can be understood by the common man rules the world. Since their ability to enlighten the masses through the power of the word moves minds and therefore mountains. Tom Paine and Jeffereson with "all men are created equal" jumps to mind. Think about it we maybe could have more impact than we think if we can peel off the cloaks of mystery the manipulators have covered their actions with and lay the truth out naked before the average citizen.
Steve H Thank you for highlighting the Golden Sextant piece I had seen it but it didn't sink in as much until you pointed it out again. A major insight and very clear to all with the charts.
Thanks for all your efforts, I find the URL s that you post very informative and a great help.
"Great bull markets float not on a sea of easy domestic credit, but an ocean of international liquidity. Gold is best seized at the flood, when Anglo-American governments lead the campaign to denigrate its value in a vain effort to escape its discipline."
Looking at the second chart from SteveH's post below it becomes obvious why Rubin left in July of 1998!!!!!
http://www.sharelynx.net/temp/DowGoldOilRatio.gifThe price rise in oil(tangible asset) had already started to outpace the sizzling pace of the DOW as of mid 1998. The death of the manipulation had already begun to be obvious time to leave the stage and leave the clueless Harvard professor babbling for the crowd with the other performers.
http://www.sharelynx.net/temp/DowGoldOilRatio.gif It seems odd that this chart looks so different than the oil/gold chart. This chart is a ratio of two ratios based on the Dow. Of course, the oil/gold chart is a ratio of two ratios based on the dollar. On both charts things started changing around 1997-1998. I'm still trying to come to a conclusion on what it all means!
I had time away from gardening this morning, so reading your directives and TownCrier's recent good thoughts gave me something to say.
I read your recent long post that organized (in your own mind) all the goings on in the currency / gold world. It is some mess, isn't it? A lot of the better understanding of all this has been hidden for years as it was covered up with "goldbug" oratorio from the broker / trader camp.
You see, our world of physical gold thinking has been influenced by these Western trader thoughts and convictions for many years. Physical gold advocates didn't know how much the "gold - is - wealth" story was being diluted until only recently.
Now as we watch reality sink in, events are distilling the gold story and burning off all their paper trading theories. Suddenly (for them it's suddenly) gold is not "to the world" what traders wanted it to be or played it for. Leveraged paper gold substitutes and their lot, such as mining shares are no longer as good as physical.
This is a hard truth for most Western hard money thinkers to accept. They predicated their investment position for years (and some still do) on the past record that is; "as long as paper gold multiplied my dollar account in more or equal fashion as bullion, then paper is as good as gold".
But the truth always was that a dollar account will never keep up with physical gold during a currency war where the fiat is defeated. This is the final outcome that hard money advocates have waited for and positioned themselves against for many years. Yet, when the game is at hand, they find themselves having taken a hard money position that advocates more paper trading (instead of riding physical). They
brought the leverage story and it's suddenly become a leverage against them. All the while we knew that the most fantastic leverage available was really in holding physical.
After reviewing some of the posts on other forums it's clear they are drifting now. Traders (such as "uptick"?) entered this paper arena and operated in it most of their hard money lifetime. They analyzed it like it was a stock or commodity. They did this over the recent life of our semi free gold
market since it was born. Sometimes with success and sometimes not, but now that gold is entering it's real explosive stage their game plan cannot read it. Paper trades don't work when this thought comes out into the open; "gold - is - an - international - money - and - manipulated - in - fiat - warfare - just - like - currencies"------.
The gulf between those that have "physical and can stay and master the play" and " those that will be driven out with paper loses to great to bear" is widening now. The once confident trading opinions we all read are being burned out of our gold world and truth is replacing them. In some
ways it's good to have these outdated thoughts still posted because even "new to the game" thinkers can see this is not the way to go. Even though sharfin is not a newcomer, he is smarter than than most. Here is part of his post:
--------------------------------
Date: Tue Oct 17 2000 02:32
sharefin (The tent pegs come flyeth undone.....) ID#284255:
Copyright � 2000 sharefin/Kitco Inc. All rights reserved
The comments weren't mine but from the other side. As to your last comment re paper gold.
I think exactly opposite.
There's no way I would touch paper gold till after this coming correction. All the signs are there that paper gold is slowly being destroyed. To commit assets to paper gold in front of a meltdown is a lunacy.
After the washout perchance it will be different. But to do so before is pure gambling.
-----------------------------------
Steve,
Our modern gold market is set to bankrupt itself. All the political options have been put in play now and it's showtime. We must grab all the physical possible without disrupting the price setting mechanism. Lean back and watch as the US (our) dollar / gold structure cooks away in it's own stew. "NOONE" is going to grab any gold at the bottom of the turn because it will not be for sale then for an extended workout time. Once the real dollar price emerges (many thousands) only physical will trade. Only at this time, at and after the turn will paper gold be fully discredited in a total default. Don't look for many posts saying this thinking was right, those traders will be too
despondent to even think much less write. I don't feel to badly about saying this as most of these guys were never hard money advocates in the first place. Many of them never stood back and looked at what their actions really entailed. That being; they mostly wanted to use the physical gold
advocate's actions to make some leveraged money for themselves then move on. Owning real wealth was never their philosophy.
So, every investment era has it's beginning and end. We (I assume you are a bullion holder like myself) can stand back and watch this paper gold system dissolve while gold the real international currency moves on. Our wealth in gold , whether large or small will weather this storm and produce
some spectacular gains for our living standard. All because we made the hard choice to stand aside the misguided torrent that was an unavoidable river of Western thought.
To use an illustration from an old Robert Redford movie I state my own verse;
"the land is pure from peak to peak
it is we that must choose our gate
from where to view this nation's thoughts that flow
this river that runs through it will decide our fate"
I point out the $272 support for this reason: Since the yellow metal is pegged here it seems that pog isn't being affected by aussie producer selling, for the aussie pog is skyrocketing as the aussie dollar plummets.
If the aussies aren't selling, what is driving gold downward? Why should ANYONE be selling?
The Missouri Governor was tragically killed last night in a plane crash reminiscent of a crash over 20 (?) years ago that killed an up and coming candidiate for the US Senate from Missouri (name???). He was from Chillicothe.
Anyway, they were interviewing Gephardt on KMOX this morning about the accidient. The news reader asked a really inappropriate question about the future of the Democratic Party in Missouri now with Carnahan gone. Gephardt began by saying what a shame...etc.. and then went to the playbook mantra which can be used interchangeably for any occasion; as you know, "HE REALLY LOVED CHILDREN"...ETC.
response to megatron and please read yesterday's explanation of what's keeping gold price down
Megatron, I believe that when the price of gold rises the current political establishment will fall so capital gains will not matter. If you are a trader making money now off the rise and fall of gold prices then I see your point.
Professor Askton, I like the way the movie What About Bob portrays the envy ridden mediocre type, power and prestige seeking, character which Ayn Rand's villians are. I'm referring to the psychiatrist who's tormented by the goldbug patient, I say he's a goldbug because he wears a goldfish in a bowl around his neck.
The best gold movie I ever seen was KELLY'S HEROES. Anybody disagree?
I just sold all my mining shares,but I keep some GOLD and HGMCY in honour to you (smile).It is now obvious for me it is playing out as you described it.Altough I would never sell at the bottom,but this time it is different.I think I will regain my lost wealth (and a little more'smile).
Thanks for all your efforts in sharing your knowledge.You have convinced me,but took a long time for this western thinker....
I might add that I will buy Gold with the little bit left of my mining shares ...
Physical Gold will be THE vehicle in the coming Goldbull market!I was unsure for long,but am now certain'so its time to act accordingly,no matter what it costs.
I urge all to read the "too hot to post" post below. All of this about more than just bullion and money. It is about power and misguided values. Also, check out Ron Paul's (also too hot to post) post.
It is all tied together, somehow, guns, gold, and power.
I agree with you on Kelly's Heros. Do you remember the look on the face (and in the eyes) of the German Tank Commander when he first looked at all of the Gold stacked up waist high? Now, that's what you call "Gold Fever".
Could some one please tell me where the 14 th Congressional District is in Texas?
I was very impressed with the posting of SteveH of the speech by Ron Paul and would like to send it to my son who is a student at Rice University. Being from New England I have no idea if Houston is in the Congressman's district.
WAC (Wide Awake Club) (09/26/00; 10:37:16MT - usagold.com msg#: 37533)
@AUgustUS, nickel62 - Control of Markets
There are a couple of questions that I have been asking myself.
1. Are the the current TPTB the first ones in mankind's history to attempt world domination. What became of the ones in the past who attempted the same - Nebuchadnazer, Assyrian, Greece, Rome etc. Are these current mob any more likely to succeed than their predecessors?
2. Why does anyone want to control the world and more specifically, it's resources?. What ever happend to 'live-and-let-live'.
3. Even more specifically, why do they want control of world gold supply, current and future?
4. Can control be achieved without force, cohersion, aggression? Will it be achieved by 'Humanitarian Reasons'?
5. Is it really a simple case of USA versus the Rest of the world, or Western versus Eastern, or whatever. Are not the elites in the USA, Europe (East and West), Middle East, Africa and Asia, ALL in the same camp. It is surely not in their interest to rock the boat too much. What about China? What does China want and can she be accommodated.
6. Does history TRUELY repeat itself, OR is it really different this time
U.S. Rep. Ron Paul's district, the 14th
CD in Texas, is a large rural area in the
southeastern part of the state, sort of a
triangle southeast of Austin, east of San
Antonio, northeast of Corpus Christi, and
west of Houston. Looks like the 14th's
largest city is Victoria.
The fulcrum point of gold leads to a much bigger transfer of wealth.
Gold is being held lower in price as a necessary precurser to raising the US dollar against all major currencies not to piss off the goldbugs but to mark the US dollar up so that we can continue the policy that then TReasury Secretary Rubin put in place in January of 1995 to allow the financing of the burgeoning US debt through a massive creation of new liquidity.
The only way her could continue to lower interest rates and deliver the economic growth he and Clinton hsd promised in light of the fact that in 1995 the current interest payments on the US debt were about to exceed the total tax revenues from the individual income tax, was to begin to dramtically increase the money supply and by recycling this increase in money supply into the US stock and bond markets resulting in a surging US equity market and a lower level of interest rates caused by the flow of money into the US bond market.
The other world currencies, the Yen and the Mark and then Euro were for their own reasons desperately trying to lower the external value ( the foriegn exchange value used to promote trade ) of their own currencies. With gold in which all currencies are measured as the only other currency to highlight the true state of the US dollar the US Treasury entered into a strong dollar policy that cooperated with private sector sources of capital to orchestrate a down ward pressure on the price of gold and therefore allow them to continue to be able to achieve a strong and rising US dollar. This virtually insured that the growing US trade deficit would be recycled back into the US stock and bond markets since the number one determininate that every foreign investor makes is what will be the relative movement of the US currency versus the currency of the country that I am living in. In all of Europe and Japan this decision would give a very positive return to all investments in the US as long as both of these currency based areas investors were confronted with a weakening currency strategy of their own governments.
This being the case the Rubin/Clinton strong dollar policy allowed the direction of flows of international capital to be directed into the US stock and bond markets with almost no end in sight. The key was the ability to inflate the NASDAQ and the Dow to whatever level was necessary to keep providing a satisfactory lure. The payoff was the ability to artifically inflate the value of the US dollar at the same time that M3 money supply was being created at unprecidented rates. This allowed US dollar holders to buy the products of the worlds labor and commodities at a roughly 30% discount to the more normalized free market price and to effectively "steal' the value added from all commodity and low level manufacturing world wide.
The holding down of gold,as you refer to it, was only a necessary but tangential concern of the policy. It was a critical part of the rigging but not what they were primarily after. It is the realization of this rip off that led the commodity producers that could do something about it namely the energy producers to cooperate and raise their prices three hundred and fifty percent over the last 23 months. If you notice this rate of increase is even greater than the returns on the paper backed DOW or Nasdaq during the period and shows that the end of the sceme is at hand.
The departure of MR. RUBIN is almost exactly coincident with the beginning of this reversal when the oil markets ceased to be able to be manipulated lower. As the great traitor that he is he knew when to get out of town and leave the fool academic from Harvard pratteling on the stage for the last act with MR. Hillary and company.
The paper strategy isn't working!
Noone of the traditional bugs could resolve my paradox:
1)ordinary Goldmarket
2)Goldstocks will rise xtimes the POG,like in the seventies
3)XAU shows accumulation=POG is rising later,(like the last year) and vice versa
4)we all believe a huge Gold bull is very close and imminent
5)in an ordinary Gold market,XAU would now beginning to rise massive
6)but it isn't,in fact it goes straight down,and that would point to a very low POG ahead.But a Goldbull is imminent.So how can that go if the market is still the ordinary one?
So it must be not an ordinary Gold market this time.Who said that first?"Nothing will be as we knew it" or so!Credit goes to FOA/A.
-Then we had the euro/oil deal from Saddam!No one predicted that exept?"Watch oil",yes,I did,it more than tripled!OPEC flexing muscles
-We had very nice charts here oil/Dow/Gold.Gold for oil?
-China opens a new physical Gold market,fact!
-Dollar skyhigh,that almost killed me as I had $'s on margin.Short dollar,long mining stocks...and the dollar didn't tank.A failing currency is rising!
-Goldstocks going to zero,to "levels no Goldbug can stand"
-I could stand it,but I don't need to as something is becoming very fishy here,"Mines must sell in the old market at whatever prices" would fit as this stocks anticipate ridiculously low paper prices,(no doubt banks will do it!!)
-Dow/Nasdaq collapsing,paper POG not advancing,Goldstocks no insurance so far
-Palladium default as a first sign on how they will handle problems("Comex will default"),
-XAU is in accelerating distribution mode(contrary to the explosivness last year in advance of the WA,where insiders then sold out and IMHO started to buy physical)
-"Gold is in undersupply",obviously contrary to mining stocks!
-"Comex must default before a new market is needed"
-mining companies doing nothing (or can't),and WGC showed its real face,the short one with the long nose!
-US faction scraping the bottom of the barrel (Uruguay etc..),will not sell itself (W(!)A);Europe limiting sales and leasing(!),and sell through BIS,not Comex/LBMA.
-and my physical Gold in my currency (sFr)is in bullmode,contrary to my mining shares.I played them "all or nothing",had my chance Sept 99 but didn't use it.My fault I didn't believe FOA ,hey its just money and I am just a plain western thinker.Maybe it was already too late to sell now.You never stop to learn.
"Physical Gold will outperform all investments"
AND IT ALREADY DOES!
Thanks very much for that summary. Am facing a hard choice in the IRA and that's why I asked. I figured my stocks were more than hedged with physical but it is getting painful. The potential double whammy is the (long term) value of USD for me.
I was convinced FOA was right a year ago and despite all the trail marks you note, why am I still asking the same questions!!!???
Physical Gold it is. I wont argue that physical is the way to win no matter. Trail Guides guides have been most informative and I see prophetical as well. There is only a few things left to now happen. I am not in controll of what is going on, so fallowing those who are is my only way. I cant make things work the way I see they should, but others seem to beable to, so I will fallow them even though what they are doing is sick. I dont think the world is better in there controll, but they sure do, so the can have their way, as they have paved it. A bunch of fools addicted to the illusion of controll is what they are, and they dont even know better. They may make themselfes out to be smart, but they are the least. Nothing dumber then doing evil, as they are showing by having to use deception. If you have to decieve it should not be done!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Going to make sure we learn that one the hard way though.
Anyways what I needed help with is I am itching to buy FEB calls. AAAHHH Stop me pplleeaase. Actually I cant help it I am going to do it. But I still know the yellow itself is a no brainer. (actually it is a brainer, it will strain the heck out of your brain, but you have done some good thinking to conclude that physical is where it is at) Not just feb gold calls, but I want Euro calls, I want dollar puts, I want CRB calls, ECT. When is it time to put the money where the mouth is?? Cause if you cant figure the time out, then you will maybe have nothing left by the time it is time. Unless you add physical. Actually the best idea I could probably have (but have not enough balls 4 it) is to sell papper gold and attain physical and the go BK with all my gold in the ground. Thats what they are up to right??
Physical Gold it is. I wont argue that physical is the way to win no matter. Trail Guides guides have been most informative and I see prophetical as well. There is only a few things left to now happen. I am not in controll of what is going on, so fallowing those who are is my only way. I cant make things work the way I see they should, but others seem to beable to, so I will fallow them even though what they are doing is sick. I dont think the world is better in there controll, but they sure do, so the can have their way, as they have paved it. A bunch of fools addicted to the illusion of controll is what they are, and they dont even know better. They may make themselfes out to be smart, but they are the least. Nothing dumber then doing evil, as they are showing by having to use deception. If you have to decieve it should not be done!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Going to make sure we learn that one the hard way though.
Anyways what I needed help with is I am itching to buy FEB calls. AAAHHH Stop me pplleeaase. Actually I cant help it I am going to do it. But I still know the yellow itself is a no brainer. (actually it is a brainer, it will strain the heck out of your brain, but you have done some good thinking to conclude that physical is where it is at) Not just feb gold calls, but I want Euro calls, I want dollar puts, I want CRB calls, ECT. When is it time to put the money where the mouth is?? Cause if you cant figure the time out, then you will maybe have nothing left by the time it is time. Unless you add physical. Actually the best idea I could probably have (but have not enough balls 4 it) is to sell papper gold and attain physical and the go BK with all my gold in the ground. Thats what they are up to right??
I will never finish my fresh herb garden if I continue to read these posts. Good health and a strong spirit from fine wine with food is much better than gold, you know (smile).
Yes, I also own some gold shares. It's quite an amount, even at these prices. But it is in a reasonable proportion to my other assets. Should have never said anything about it because I knew very few people would understand the rational at that time.
Brought the companies for their philosophy, not their current (at that time) share values. This was done with an eye on the future, on the other side of this battle. From the beginning, it was fully well understood that the paper price of gold would fall until some convulsion crushed it's credibility. Where on the dollar gold price range this would occur depended on the players at the chess board. But, the ongoing dollar price was never to be the gauge of success, anyway.
With this in mind, the very best shares were chosen (there are only a few good ones around the world). Both bullion (large amounts, still accumulating) and shares (small amount and one time buy) were brought with an expectation of a zero price in dollars. In other words; we brought shares for
their possible survival and we brought bullion to own ounces outright, not dollars per ounce. This is a far different and stronger mental position than you read from leveraged traders, no? If gold soars tomorrow, good! If it plunges tomorrow, good! I am on this trail for the destination, not the game. Even though, the sights along the way will be incredible to behold.
For better of worse, richer or poorer, in sickness and good health,,,,,, this is the path I follow. After reading that line, you are correct to assume I am married to this position (smile). I can tell you it is a very large ongoing wedding, because none of us ever walk this trail alone.
Further:
I have to say that had the mining industry promoted it's product as a wealth holding and pushed for investors to buy gold first, ahead of and in greater quantity than their common shares; there is a good chance the markets would have changed long before now. No different than watching Ford
push their vehicles and ending up with people owning and always buying more of their product. Never hear of anyone saying their ford shares can carry just as much as a new ranger (smile).
But, by promoting paper leverage (of all kinds) as being the same or better in value than what history taught us about gold, trader advocates played themselves and their investors right into the slaughter of open currency warfare.
It would be great if these markets would break, right now. Giving some type of paper run that allowed many regular people time to reallocate. It may, but political will is against it. As it is, many such as yourself (?) are striving mentally to adjust their diminished capitol so as not to risk it all.
By the way,,,,,, the very old investor I mentioned some time ago,,,,, the one that was slowly allocation a decades long ride in the dow into bullion. He is now completely out and in cash and bullion. He trusts gold and knows nothing about oil or the Euro. Yet, still strong in his feelings that a
big inflation may lift the dow further. I don't dare debate him because his record is flawless for some many many years,,,, and his wealth is truly great.
I took the liberty to edit nickel62's excellent repartee...
(hope this was ok nickel62?)
An edit of nickel62 (10/17/00; 11:50:15MT - usagold.com msg#: 39227)
The Great Gold Fulcrum
Evidence suggests that the US Exchange Stabilization Fund (ESF) under control of the President of the United States and the Secretary of Treasury and specific Bullion Banks are holding gold lower in price in order to raise the US dollar against all major currencies � the intention is not to irritate gold bugs but to mark the US dollar up so that Treasury Secretary Rubin's strong dollar policy of January of 1995 can continue. It allows the financing of the burgeoning US debt through a massive creation of new liquidity most of which has found its way into the US equities markets.
In light of 1995's showing that interest payments on the US debt were about to exceed the total tax revenues from the individual income tax, the only way the Administration could keep its promise to deliver economic growth and provide lower interest rates was to dramatically increase the money supply. This increase in money supply went primarily into the US stock and bond markets. This resulted in a burgeoning US equity market and a lower interest rates.
Other world currencies, specifically the Yen, Mark, and eventually the Euro tried desperately to lower the value (the foreign exchange value used to promote trade) of their own currencies. Gold -- in which all currencies are measured and is the only other "currency" that could tattletale on the near-failing state of the US dollar -- prompted the US Treasury to cooperate with US and International bullion and brokerage banks. This orchestration forced a downward pressure on the price of gold. Containing gold's price achieved a strong and rising US dollar; it guaranteed that the growing US trade deficit would be recycled back into the US stock and bond markets. The number one determinant that every foreign investor makes is: "What will be the relative movement of the US currency versus their own currency?" This gave Europe and Japan a positive return to all investments in the US (as long as these countries� investors had to contend with their own weakening currency strategies.
The Rubin/Summers/Clinton strong-dollar policy directed the flows of international capital into the US stock and bond markets in what is now being called the longest US expansion in history (now we see why). The secret was inflating the NASDAQ and the DOW to be a satisfactory lure of foreign capital. The payoff was a strong US dollar and increased liquidity (this policy increased the M3 money supply at an unprecedented rate). US dollar holders could now buy world-wide products, commodities, and services at near a 30% discount to the a more market price -- effectively "stealing' the value of all commodities and manufacturing worldwide.
To succeed, this policy required that gold be held low (below $290). It was a critical that gold be sold short on world commodity markets such that monetary gold be contained to 1) prevent a weak dollar and 2) to keep the historic measure of inflation low. When Oil countries realized what the strong dollar policy was doing to oil prices (remember $10/bbl oil?), they controlled the price of oil upwards 350% over the last 23 months. This rate of increase is even greater than the returns on the DOW and NASDAQ during the same period. This increase in oil prices was pervasive and worked its way into world-wide pricing of goods and services, thus sparking global fears of inflation and recession.
The timely departure of Mr. Rubin appears to be more than coincidental with the beginning of this oil-price reversal. Charts are now showing a major divergence of the long-standing highly correlated oil-gold/oil-DOW ratios that appears to be an omen for market upheavals now being forewarned by global market volatility.
Will Silver also be "FREE" from the paper pushers?
I hold all my GOLD in coins,bars etc.
I just bought some silver last week to diversify a little.
Sort of what you did with your shares in "Gold" i hope you really did not burn them, as a symbolic gesture to never sell them?
Anyways your thoughts on Silver when GOLD disconnects from the paper price would be much looked forward to,and thanks for being here all this time through thick and thin.
http://fly.hiwaay.net/~becraft/MONEYbrief.html If you read through the page (above link) you will find a history of paper money in America. Several times in the past, the notes became worthless. What good would a gold call have been (say one had been available) denominated in confederate dollars or revolutionary greenbacks? At best it could have resulted in the acquisition of some physical gold before the currency collapsed. After the currency collapsed, the contracts would be worth nothing. Remember, the US federal reserve note is based on nothing but trust. It is possible that your gold calls could earn you nothing but a truckload of worthless FRN's.
Worthless paper money. It has happened before. It will happen again.
For those unable to listen to the debates tonight the transript!!!!
For those who don't have time to watch the presidential debate Tuesday
> night, I've prepared this transcript of what will be said:
>
> Jim Lehrer: Welcome to the third and final presidential debate between
> Vice
> President Al Gore and Gov. George W. Bush. The candidates have agreed on
> these rules: I will ask a question. The candidate will ignore the
> question and deliver rehearsed remarks designed to appeal to undecided
> women
> voters. The opponent will then have one minute to respond by trying to
> frighten
> senior citizens into voting for him. When a speaker's time has expired, I
> will whimper softly while he continues to spew incomprehensible statistics
>
> for three more minutes.
>
> Let's start with the vice president. Mr. Gore, can you give us the name
> of a downtrodden citizen and then tell us his or her story in a way that
> strains the bounds of common sense?
>
> Gore: As I was saying to Tipper last night after we tenderly made love the
>
> way we have so often during the 30 years of our rock-solid marriage, the
> downtrodden have a clear choice in this election. My opponent wants to cut
>
> taxes for the richest 1 percent of Americans. I, on the other hand, want
> to put the richest 1 percent in an ironclad lockbox so they can't hurt old
>
> people like Roberta Frampinhamper, who is here tonight. Mrs.
> Frampinhamper has been selling her internal organs, one by one, to pay for
>
> gas so that she can travel to these debates and personify problems for me.
>
> Also, her poodle has arthritis.
>
> Lehrer: Gov. Bush, your rebuttal.
>
> Bush: Governors are on the front lines every day, hugging people, crying
> with them, relieving suffering anywhere a photo opportunity exists. I want
>
> to empower those crying people to make their own decisions, unlike my
> opponent, whose mother is not Barbara Bush.
>
> Lehrer: Let's turn to foreign affairs. Gov. Bush, if Slobodan Milosevic
> were to launch a bid to return to power in Yugoslavia, would you be able
> to pronounce his name?
>
> Bush: The current administration had eight years to deal with that guy
> and didn't get it done. If I'm elected, the first thing I would do about
> that
> guy is have Dick Cheney confer with our allies. And then Dick would
> present me several options for dealing with that guy. And then Dick would
>
> tell me which one to choose. You know, as governor of Texas, I have to
> make tough foreign policy decisions every day about how we're going to
> deal
> with New Mexico.
>
> Lehrer: Mr. Gore, your rebuttal.
>
> Gore: Foreign policy is something I've always been keenly interested in. I
>
> served my country in Vietnam. I had an uncle who was a victim of poison
> gas in World War I. I myself lost a leg in the Franco-Prussian War. And
> when that war was over, I came home and tenderly made love to Tipper in a
> way that any undecided woman voter would find romantic. If I'm entrusted
> with the office of president, I pledge to deal knowledgeably with any
> threat, foreign or domestic, by putting it in an ironclad lockbox.
> Because the American people deserve a president who can comfort them with
> simple metaphors.
>
> Lehrer: Vice President Gore, how would you reform the Social Security
> system?
>
> Gore : It's a vital issue, Jim. That's why Joe Lieberman and I have
> proposed changing the laws of mathematics to allow us to give $50,000 to
> every senior citizen without having it cost the federal treasury a single
> penny until the year 2250. In addition, my budget commits $60 trillion
> over the next 10 years to guarantee that all senior citizens can have
> drugs
> delivered free to their homes every Monday by a federal employee who will
> also help them with the child-proof cap.
>
> Lehrer: Gov. Bush?
>
> Bush: That's fuzzy math. I know, because as governor of Texas, I have to
> do math every day. I have to add up the numbers and decide whether I'm
> going to fill potholes out on Rt. 36 east of Abilene or commit funds to
> re-roof the sheep barn at the Texas state fairgrounds.
>
> Lehrer: It's time for closing statements.
>
> Gore: I'm my own man. I may not be the most exciting politician, but I
> will fight for the working families of America, in addition to turning the
>
> White House into a lusty pit of marital love for Tipper and me.
>
> Bush: It's time to put aside the partisanship of the past by electing no
> one but Republicans.
>
> Lehrer: Good night.
>
17:23 API POSTS 3.11 MILLION-BARREL DROP IN LAST WEEK'S CRUDE STOCKS - BRIDGE NEWS
17:23 API POSTS 540,000-BARREL DROP IN LAST WEEK'S DISTILLATE STOCKS - BRIDGE
17:23 API POSTS 3.676 MILLION-BARREL DROP IN LAST WEEK'S GASOLINE STOCKS - BRIDGE
Does anyone have a site where I can see graphs of Gold vs. the Asian stock market, or the European stock markets, or the Australian stock markets? I get these dumb investment magazines that my father signed me up for and they always show gold vs. Dow, or NASDAQ, or the S&P but never anything else. I wanted to show someone why they should have physical gold in there portfolio by showing them a comparison of gold vs. a declining market but the damn magazines never show it and I don't know where to go to see these types of graphs.
I really want to see if gold is rallying in Europe vs. Eurpean markets or if it's declining. I know it's up against every currency but the U.S. dollar but magazines never show that either.
This is not investment advise, but if you are bound and determined to buy gold call options, at least be aware of some factors.
If one buys options, 85% of the time you are going to lose all or nearly all of what you invest in gold options.
Gold options are composed of a great deal more than the price of gold, for example if the lease rate of gold goes up normally (except for other market forces) the price of the option will also rise.
Options are a wasting asset. Time is a BIG factor. For instance, the long dated option, say Dec. 01,(which is about a year from now) loses about 50-55% of its value (assuming the POG & lease rates stay constant) over the first 9 months and the other 45-50% over the last 3 months. So if you really want to play this game, and you have decided that POG will rise in Oct., or Nov., you can buy Dec. 01 options, and assuming POG & lease rates, and market sentiment, stays constant, except for brokerage fees, on Jan 12, which is when those Feb. options expire, you can sell out, having lost only a small fraction of your capital. (As opposed to buying Feb. options which will then be worthless)
By buying Feb. you are betting that POG will rise, before they expire Jan. 12, by an amount at least equal to how much your options are out of the money, PLUS an amount equal to what you paid for the option. Only then can you make a hoped for profit.
If you are buying anything but in the money options, dated Feb., as a way of cutting down the possibility of margin, I would feel you are playing a mugs game.
I, personally buy options as a type of insurance against the rise in the POG before I have the rest of my plans in place. I buy options, and if they expire worthless, fine. I paid fire insurance on my house and it didn't burn down either. I lost the premium there as well.
The only big win I ever had in options was last time gold spiked to 320. I had Dec. (long dated) 320 options which I had purchased at $200, when volatility was very low. When I sold out, at around 315, I sold them for $4,000. So basically you have to play them as a volatility play, not a POG play. If, as I did at first, many years ago, I had continued to buy out of the money nearby options because they were cheap, and have them expire worthless, I would have spent 20 to 40 times what I did spend, to have this insurance. (This during a time when POG drifted downwards slowly, which is not impossible even now.)
This is not to say I have not had small wins by playing the volatility, but over the long haul it has still cost me a fairly substantial amount to keep my insurance in place.
So, in summary, if you are buying Feb. options you are rolling the dice, in a game where the dice are loaded.
What had been an unfolding financial dislocation took a dramatic turn for the worst earlier this week. And despite today's wild rally, it is my view that we are now in the midst of a full-fledged financial crisis. Further, for the U.S. financial system and economy, the Middle East crisis could not have come to a head at a more inopportune time. In numerous commentaries, we have written extensively on the issue of financial fragility and we do not think one can overstate the critical importance of this concept. Unfortunately, over this protracted boom cycle the U.S. financial system has developed acute vulnerability to the point that it hangs in a truly fragile balance � there is absolutely no room for error. There is going to be an accident, it is only a matter of time and under what circumstances. The amount of leveraged speculation is unprecedented.
There has been considerable marketplace speculation with respect to losses suffered by U.S. financial institutions. Clearly, there are problems associated with a near breakdown in the junk bond market - with the plethora of downgrades, earnings disappointments, defaults and now a self-feeding credit crunch. Morgan Stanley Dean Witter denied the most heated rumor of a billion dollar hit. There are, however, serious losses out there somewhere, and we suspect that the entire leveraged speculating community is desperately hoping for a recovery. According to MarketNews International, the spread between Treasuries and the S&P Speculative grade credit index widened 17 basis points yesterday, indicative of a virtual panic.
Greetings,
Follow up from yest. discussion. Your idea of holding gold for investors is such a good one that it has been done for years via the Central Fund of Canada. It used to be on the American Exchange and may still be {CFC?}. They hold gold and silver and used to pay around a 3% dividend as you are suggesting. Sometimes you can buy it below net asset value, likely right now. Not investment advice, of course. This idea is certainly a worthwhile one. It is not quite gold in hand however.
On a second subject- viability of a mining project. I have recently invested in a gold stock that is tracking a 5-15 METER thickness of gold mineralization {1/2 Oz/ton} that initial indications suggest extends 1000 meters or more. It's not in the best country politically but is run by seasoned and successful pros. So what does this great looking mining co sell for???? You got it $.16C. Does that help put a mining project in perspective for you?
This is the type of project that MIGHT have some success selling shares to raise $. Wouldn't this be a good one to link up with your gold in reserve idea? That way you get your "gold certificates" plus a world class exploration play. Those certificates are not quite "dense" enough for me and don't jingle when in hand however. Best to you!
Folks, I just painfully watched two "promising" presidential aspirants strut around on stage. They promised everything to everybody. Is there anyone out there besides me that feels either vice-presidential candidate would be superior?? Excuse me, I feel a major major puke coming on........
JustamereBear, in reference to your explanation of options as time wasting assets (39250), I couldn't agree more. Someone at G-E mentioned a figure around $500 for the 350 Dec. 2001 gold call. Mini S+P puts are also looking very tempting and might be the means to finance both long term calls and some physical. These thoughts are only one poor man's opinion and not trading advice.
Interesting trains of thought in the last few weeks.
Most recent is new visible cracks appearing in 'debt' markets. Excellent 'link' below from Noland (Tice).
Junk bonds and high yield debt increasingly subject to default.
Stock markets failing/stalling; where does capital gain tax come from? Servicing debt now improbable, realization will lead to non-confidence.
Last herd stampede to US dollar? When USD becomes insolvent
where is the last, last flight to quality?
Collapsing debt is now the key, the oil spike has completed it's task. Unwinding this monster will soon start. After elections the NEED to hang on will be past.
Paper as discussed on this forum may go anywhere, everything is too bizarre to call. Physical is safe, shorting the dollar, play it simple, play it safe?
I for one will load up soon, before end of October and then the chips can fall. This could be very extreme. The acceleration of the unwinding may be frightening, startling.
I am going with my gut instinct, that's what brought me here almost 2 years ago. I know I've seen enough; I don't understand alot of the going's on but I do know that things are not right. There is an slimy, artificial and distorted
feel to money and wealth. The graphs, the salaries and the markets are not real.
Evening Sir,
The silence ends as am no longer able to contain myself, here is a second to your desire for a separate HOF category for the off-beat! Lord knows this site could lighten up a bit. This poster has a lot of influence with Michael as am currently in process of ordering $2.34M worth of British Sovereigns from him. Either we get our category or I will pull this order! This is clearly a capitalist enterprise that responds to it's customers {and their bucks}. You know, with the commissions this outfit charges, 30-35%, that order is worth a lot of ski trips, and bottles of Chivas, even to Buffet, Gates, and Kosares. If we don't get our needs met by the next new moon we'll organize a strike and all buy our future fortunes on Comex {they have all that gold don't they?}. It is totally unfair and undemocratic to limit the HOF to the intelligent. Let the people speak and gain the victory from our oppressors...What say you fellow {half} wits??????????
P.S. This post will appear daily until the revolution is over.Thank you Sir Peter for your persistence.
Both the Nikkei and the Hang Seng are down close to 3% tonight. This is no doubt due to IBM's earnings report which came out after the New York close. As usual, IBM managed to finesse the bottom line, but the top line is a lot harder to fudge. Either the sales are there or they aren't. In IBM's case they weren't as the increase over last year was only 3%. At last report, the stock is down about 9 points in overseas trading. By itself, that is enough for a quick haircut of 60 points or so off the Dow Jones Industrial Average tomorrow morning.
Friday's bounce in U.S. stocks came off of a couple of widely watched round numbers for the Nasdaq (3000)and the Dow (10,000). Unfortunately, or fortunately, depending upon point of view, this IBM news will probably plunge the Dow below 10,000 in the morning. Eventually, something will panic the $250 Billion dollars worth of stock that is currently held on margin. Most of it is in technology stocks so this IBM report could be the catalyst. If so, we may be about to witness the final capitulation in a bear market that has been around a lot longer than most people realize.
Everybody I know, practically, has bought a computer in the last 5 years. But no one I know has bought one this year. How could so many people think the growth in this industry would sustain indefinately? It boggles the mind.
None of this is either here nor there for a gold forum discussion, of course, except for what it ought to imply for the dollar.
Trail Guide, you would have to be living in a fairly temperate climate if you are now tending to a new herb garden. Let's see....zone 7 maybe, more likely 8-10. My compliments to you for the ability to enjoy that time spent out of doors working the earth. At this time of year it is a blessing. In my climate, we are just getting ready to batten down the hatches so we can enjoy winters wonders. But as a former landscaper who seems to own just about one of everything from area nurseries, I can appreciate your "winter" hobby. I have to resort to a screensaver that has pictures of our land and how it looks, in the growing season.
I have watched what you have written over the last year and a half. You are from an arena that offers interest to me, yet I can only watch from a distance and see over time whether you are right or not. I have always been more from The Stranger's camp. There I find a reasoning that I understand, based on my life experience. And I often postulate that the whole of all you offer would easily be stunted if the good ole USA would do one thing and one thing only. Utilize honest money. I am perhaps to simplistic and naive in the ways of your teachings but the need for a euro, for watching gov't gold holdings and carry trades etc are just an outgrowth of abuses of the US currency system and manipulations of financial systems.
Happy gardening to you. And may what is right show itself to each of us. And may what is right be accepted by each of us.
I am relieved that someone is finally getting serious about this. Obviously it was going to take a "Big Player" like yourself to whip this show into line. How �bout you hold the sovereigns down to 2 Mil even and we build a spec house with the other $340,000. Remember what TG said about residential real estate and the pending hyper-inflation. BTW the house should be by a major ski lift so if it doesn't sell we can get some use out of it! (;-)
I am not to sure exactly where I stand. And I am certainly not giving investment advice.
I have no problem with someone who is doing something and are aware of what they are doing, but, Feb. gold options are so illiquid that even if one wins, by the time the big boys get done raping, no profit. People buy lottery tickets all the time knowing they have a bigger chance of being struck by lightning than of winning, and I have no problem with that.
I am sticking with options, rather than futures, simply because I can quantify my maximum downside. All I can lose is what I put in. As time goes by I am expecting more and more that government will impose some pretty draconian measures, and fairly early in the game. The final straw was yesterdays speech by Greenspan, in which he went on record as being in favor of letting markets find their own level, WITHOUT INTERFERENCE FROM GOVERNMENT. This from a bunch who have been very clearly interfering with everything under the sun.
Why? Could it be that they expect they are going to lose this battle anyway, and are saving their ammunition for the war to save the treasury if fiat fails? In the final analysis, no matter how smart I am as an indiviual, they have thousands of brains using the best and latest equipment, and they are going to think of a lot more possible plans than I am. Sure one can sometimes predict how that particular mindset will react and take advantage, but I am not counting on it.
As to gold options at this time, I think the volatility is low, and a volatilty play could possibly pay off.
However, I am really expecting to NOT be able to covert my paper options to physical. I do hope to be nimble enough to get greenbacks out, and I have some plans that I hope will yield some pretty good results in that case. There are to many uncertainties.
Yesterday I believe it was, there was a post regarding some 39 TRILLION in notional derivitives on the books of US banks. Now a lot of that will be double counting, but, as the economists say, on the other hand that is only US banks. Now think for a moment about LTCM. They had huge leverage, but not as much as these banks who are largely building these derivitives out of thin air. The post gave as an example Morgan, who if 1.8% of their derivitives went sour, would use up their entire capital. If one of these banks gets in trouble, they will all be in trouble in a row of dominoes effect. LTCM was a small, new player, but they threatened the entire US banking system, and maybe the worlds banking system. That's why Greenspan jumped so quickly to rescue them. But with 39 Trillion at risk, can all the central banks of the world, all banding togeather, salvage 39 Trillion. I doubt it. And WILL they? I doubt that too, since they will have their own problems to worry about.
So I am expecting a good deal of defaults when I go to cash in my paper, not to mention the other small problems floating around such as the middle east, finite and rapidly depleting hydrocarbons, etc etc.
Saddam baby is going to win his war, because he introduced an element of doubt into the US dollar, by demanding no more payments in US dollars, anything else but, even the failing euro, or we won't ship any oil. If that doubt grows, and I have seen evidence that others are inclined that way, or at least mistrust the US, if not its dollar, yet.
In May I said to myself, "self, come early Sept, you are going to buy lots of S&P puts." Well I got tied up in other things and did not.
I can also say that as far as dollars go, I am completely tapped out, to the extent that I am short of walking around money. Frankly, I am TERRIFIED. I freely admit that there are very few in the populace who are as negative as I am, and they may be right, but if I am right, they are going to hurt, a lot. If they are right, I am not going to hurt very much at all.
Yes I do believe that the S&P is going down from here. I won't get involved in advise as to how to play it.
The main flys in my ointment are: Retail sales remain strong in North America, indicating continued confidence, and in the final analysis this game is all out confidence. Some other parts of the world are also confident, eg China.
The second is that every crash I have studied or heard about, started after there was at least a recession underway, So maybe not this year. Call me again next Oct.
Some more on the Gold mining scheme that was discussed yesterday.
Hi again Sir auspec,and thanks Chris Powell for the follow up and "ALL" the time consuming work you and Bill Murphy are doing for the Gold industry thru GATA.
auspec My Friend, in your 39257 msg. you stated that you have recently invested in a Gold mining company that trades for .16C per share.
Ask yourself this question, with proven Gold assets, WHY is the share price so low?
My answer; Partly because of the low POG but "MOSTLY" because of heavy financing of some kind(hedges, etc.).
When a potential investor looks at a company, and I don't care what product their producing, he/she looks at assets,future potential assets, and liabilities(real debts). Does a little math and tries to figure if there will be a profit from operations. If there is a profit and the company increases assets with the profits the share price should rise, as the shares are now worth more than before.
My example with Pete's mine yesterday should "RAISE" the assets of the mine by a 9 to 1 ratio every time new Gold is purchased and added to existing assets,therefore raising the "VALUE" of the mine and the shares, in the case of Gold,real wealth, not paper wealth.Another way to put it, investors have sunk .10 of every dollar into a bonified Gold mine and .90 of every dollar into "REAL" wealth, Gold, which has a value in every currency in the world.If the price of Gold ever rises the price value of the mine and shares would rise accordingly.
Are any Gold miners reading? Sir auspec, ANY EXISTING GOLD MINE CAN RAISE THE VALUE OF THE MINE SIMPLY BY ADDING THE($) VALUE OF UNSOLD GOLD, or bought Gold, to the total assets of the mine,and not giving it(Gold) away at unreal(manipulated) prices.
Now here is the REAL kicker:
A shareholder of a company can and should, ask for the stock certificates that represent his/her shares. This certificate is a negotiable instrument(transferable from one person to another) or using a different term "PAPER MONEY"!,but it can only be used once since it has to be indorsed(my brokerage house charges $30.00 per certificate and the certificate is issued by a bank)
In the example of Pete's mine the share certificate would always be backed by 90% "REAL" physical Gold. Do you see where this line of thought is leading?
Using these certificates among consenting parties in time it may be possible to use them in place of dollars, Euro's, Yen etc. The company maaayy even be able to issue them without additional fees, and in small increments........WAAA LLAAAA..paper Gold backed money.
A little bit more about Pete, before I get too sleepy. Pete is about 70 years old and in very good shape. He doesn't have to rely on the revenue from the Gold at his Gold mine to pay his living expenses.From what he told me he would only like to sell chunks of ore(with heavy Gold content visible)by weight. IMHO Pete would rather chip away at the vein in the hopes of uncovering a really big nugget,rather than develop the mine into a big operation. Looking for that elusive "BIG" nugget is what drives, and yes excites,many small time, long term Goldhearts, including me.....Thanks for Reading.....beesting.
I have a rather unusual hobby, and I have an interest in that context in the sort of ore that you describe. I would use them as bases for art objects. (hot glass sculpture.) I would be very interested in obtaining ore with small streaks of Au. They would have to be at least a foot in diameter, preferably 18 inches and no fractures so I could cut and polish them.
Can we communicate off forum? I am at currie@mqcinc.com
Greetings to all. To earn my meal from the Forum's table, I shall entertain you. Decide later if I am the court jester.
The charts offered at the beginning of today's forum do tell a sobering tale. Several of the relationships illustrated therein are worthy of expanded commentary.
From a strictly mathematical analysis, the three charts of the inter-relationship of the Dow, oil and gold conclusively demonstrate that the long-term equilibrium ratio for gold to oil is 20. (Gold at $350 � until 1997, Greenspan's often quoted "fair value" POG - and oil at $17.50). This corresponds well to the official $35 POG and $1.75 WTI that was in effect for decades prior to the peak in domestic production in 1968 and the closure of the Gold Window by Treasury Secretary (and Texan) John Connally and President Nixon in 1971. Flip the ratio and it is .05 � the median value of oil to gold from 1989 through 1999 as shown on the chart of the Dow/gold to Dow/oil ratio.
Observe that in 1995 something began to upset the flat-as-a-board Dow/gold ratio of 10 and the flat Dow/oil ratio of 200. The Dow/oil ratio was below 200 in late 1990 due to high oil prices and a Dow scared by the Gulf War. The war also explains the spike in the 1990 Dow/gold to Dow/oil ratio. What happened?
The Rubin/Clinton strong dollar gambit began in April, 1995 in response to the rapid fall of the US$ from 100 yen to 79 yen. (Some might recall that the dollar bought 240 yen in 1984. A year later, the weak dollar gambit of Baker/Reagan sank the dollar in accordance with the Sept, 1985 Plaza Accord). The dollar was also falling hard against the German mark and Swiss franc in early 1995. And don't forget that the "curse of the Sexenio" was threatening to crater Mexico and CETES holders on Wall Street in early 1995. This dollar downdraft threatened to bankrupt the already weak export driven economy of Japan (the Nikkei was already down over 60% from its 1989 high) and stifle European exports to the US. In short, a global meltdown was percolating.
In concert with other G-7 Central Banks, the yen carry trade was implemented. Thus chosen ones borrowed in yen at 1%, converted the yen into those mountains of dollars that kept piling up overseas and next bought risk-free US Government obligations at 6%. They then pledged the obligations to the yen loan. With a falling yen and falling bond yields due to incrementally heavier demand for bonds, capital gains were assured along with the net interest spread of 5%. This play works identically for the gold carry trade which was implemented in 1996 by the bullion banks. Also note that foreign CB holdings of US debt kept in custody at the FED has tripled to nearly $800 billion in just the last six years.
The primary effect of the strong dollar policy was to make America the importer of last resort and to generally lower interest rates globally. Lower rates postponed debt defaults and sparked big moves in the equity markets. A win-win, yes?
Now take the Dow/gold ratio of 10 and the Dow/oil ratio of 200 and play with the math for a glimpse of things to come as the three variables REGRESS TO THE MEAN. Warning � this glimpse is valid only if you believe the US$ will retain its reserve status. Similarly, this view is valid only if you believe that Another's / FOA's / ORO's Free Gold Market will NOT be allowed to develop.
If the Dow is the driving factor of the inter-relationship, to hold at Dow 8,000, oil should hover around $40 and gold should zoom to around $800. To hold at Dow 6,000, oil need only decline 15% to $30 as gold doubles to hit $600. If the Dow recovers and advances to 36,000 (as Glasman wrote), oil would be near $180 and gold would be $3,600.
If gold is the driving factor and it holds at the SDR peg of $270, then oil should fall over time to $13.50 and the Dow should sink to 2,700. If gold breaks the peg and goes to AG's $350, then oil drops into its historical trading range around $17.50 and the Dow should crater to 3,500.
If oil is the driving factor and it holds at $34, then gold should zoom soon to $680 while the Dow slides to 6,800. With oil at $40, gold should bob around $800 while the DOW stops bleeding at 8,000.
So, you ask, which is the driving factor? Oil, plain and simple. We fought the Gulf War over OIL according to Secretary of State James Baker. We are in Bosnia and Albania protecting the Moslems to show the Moslem world that we don't favor Christian Serbs over them. Every President from Nixon on has been desperately trying to broker a peace between the Arabs/PLO and Israel. Why? So that the western world can continue its high standard of living that the hydrocarbon age has produced. Did you hoard gasoline on 12-31-00?
Next��.
Refer to the Dow/gold chart offered at Golden Sextant that covers 90 years. By drawing a straight line from the 1929 Dow/gold high through the 1965 high, the line perfectly extends to the 1999 Dow/gold high. The time period from high to high is 35 years. Thus when the next cycle high is reached in 2035, the Dow/gold ratio should reach 53.
Remember this well since it is often said: The hard lessons learned in your youth can be your advantage when your hair is gray. It's a generational phenomenon. Perhaps this partially explains why FOA is such a capable Trail Guide (I'm smiling).
Trail Guide � I believe we've had lunch together at the Houston Club as guests of our friend from The Woodlands. We talked about his early days in Wise County and the cat crackers off Texas Avenue.
Next��.
I produced oil at the wellhead for $16.19 in 12-97 only to see the paper markets drive the physical price down to $8.61 by 12-98. Yes, the paper oil market drove the physical market down despite the FACT that supply and demand were within 3% of being balanced. (See Matthew Simmons� website for further analysis).
By now, the borrowing base of many independent producers (both public and private ones) was over advanced and loans made on $16-$18 WTI price decks went into default. Panicked banks encouraged their borrowers to sell producing properties to "deep pockets" in order to pay down the loan balance and thus bring the collateral base back into formula. To their regret, many complied and then watched the price � suddenly - march higher.
When the price of WTI recovered to $18, the paper market pushers scared producers into forward sales at $18 or so with the emotional argument that "You don't want to go through that again do you?" By 12-99, I produced oil at the wellhead for $24.00.
With the "deep pockets" now owning cheaply bought physical (producing wells) plus paper barrels at $18 or so, it was time to ramp up the price. Today, the field posting is $34.
This financial engineering has direct correlation to the much discussed paper and physical gold markets. For example, for those looking for leverage to increasing gold prices through gold mining shares, observe that the shares of large independents (pure price plays since they lack transportation, refinery and marketing operations like the majors) are trading at 30% to 40% DISCOUNTS to their PV 10 Net Asset Values. Said differently, despite oil being in a bull stampede towards $40, the NAV of the shares only reflects a $22 to $24 price of oil.
Lastly��.
With due respect to Trail Guide's very old and shrewd investor, the coming severe deflation will sink the Dow for a decade or more. As credit collapses globally and defaults rise rapidly, collateral sales will send financial assets and (most) hard assets spiraling downward in value. Gold will hold, oil will slip but real estate values will crater due to the lack of 90% financing on new purchases and to constant collateral sales which will create still lower market comps.
Sorry for the long post and late arrival��.
Black Gold and Yellow Gold � the only true wealth worth physically possessing.
Cinton's Flaming Bags of Poo/Screwed-up F's/& Belated Congrats
In January, President George W. Bush is going to move into the White House. On his first trip to the front door, he's going to find three flaming bags on the front porch. "Yikes! Put out the fire!" STOMP..STOMP..STOMP...Stomp...stomp...EEEEoooouuuuuu!
The new Pres. is going to find himself up to his knees in
Oil S***, Economy S***, and MiddleEast War S***. And it's gonna STICK and STINK worse than Skunk spray if he's not ready with a quick antidote!
Clinton's been working on those bags of s*** for 8 years!
And there may be more in the closet. 8 long years of short-term self-centered planning. Because, just like in a game of Pool..."If you can't make the shot, make sure you leave the cue ball in a bad spot for the other guy."
Now, George Dub-a-yuh probably knows about most of the flaming bags of poo he's going to find on the White House porch. I just hope Dick Cheney and George, Sr. are ready with shovels and deoderant!
By the by, for those who are following the M/B Personality line. I'm an INTF. And contrary to the opinion of at least one poster (sorry, don't remember who), not all "F"s are screwed up. But, "F"s do tend to be screwed up if they are trying to be "J"s. "F"s tend to think in words and pictures. Numbers are harder for an "F" to grasp, but not impossible.
"F"s excell at seeing the "big picture", and are therefore good at communicating it to others. Therefore they are good negotiators, peace makers, teachers and creative writers. I've been a writer all my life. At various times I've worked in creative, marketing, technical and journalistic capacities. Communication skills are getting rare these days. It's not hard to find work.
My advice to screwed-up "F"s is, "Stick to what you're good at and hire someone trustworthy to do the "J" work!"
But then...There are NO "J"s HERE! Nobody wants to admit they're an "F", that's why they're screwed up!
Sir HBM and Sir RossL. Thanks for all your work on the graphs. For those of us who think in pictures instead of numbers, they're invaluable tools!
CONGRATULATIONS to all winners of the lovely Gold and Silver prizes in USAGOLD's Triple-Header Contest! I don't have a list of names but I read the posts and every one was elegant and succinct! I'll bet you kept poor TownCrier up nights trying to decide which award to give to whom! And, my thanks to USAGOLD for the opportunity to participate.
Thanks to ALL for letting me read their thoughts on Gold/Oil/Economics/Life.
agree with your sentiments whole heartly. As i've also said in a previous post, property prices will tumble as well as other assets in a deflationary spiral, especially if one forsees a credit crunch, one of which Greenspan averted in 98 with the demise of LTCM.
Credit is far too easy to obtain and leverage of up to 90% and sometimes greater is given to property investments. A devaluation of property prices of up to 70% as was the case in the 70s credit crunch is a very real scenario.
My only concern is whether gold will drop in value as well, but still be relatively a much better performing asset.
I'm sure you'll receive a proper welcome in the morning.
'Till then, one of the 'creatures of the night' extends greetings. Come sit by the fire, warm yourself and doze till the rest of Golden Court arrives with the sun.
I'm sure your post will earn you a feast, since knowledge is the coin of the realm here.
But wasn't shure which characteristic you had confused with "F". I take it you are actually an INFP and in your piece you were talking about "P"s compared to "J" .
Which is a constant line of comparison since we are always in each others faces so much. I am a pure "P" and it has driven both my wives and my kids nuts. I kind of enjoy it.
Thanks for your excellent post. I wanted to throwmy two cents into the stock market discussion. Those who own IBM and are feeling some pain today as part of the air flows out have been helped by The Strangers analysis to maybe not be all that interested in keeping many of these over valued "blue chips". GE alone is so overvalued that a major correction from ridiculous PE of 46 to a too expensive 23 times highly suspect "earnings" would take almost $250 Billion off the market cap value of someone. I mention this because I had just finished doing an analysis of GE when The Stranger made his point that the total margin debt in the market was $250 Billion, a collossal number, but as you can see one that could be easily wiped out if this one sacred cow(and owner of Bubblevision,CNBC) were to come a little closer to reality. There are of course still hundreds of equally overvalued stocks out there, each preposterous on any true financial basis and heavily owned in everyones 401k, IRA or whatever.
Market Capitalization is really the bottom line in stock investing
In this type of market where there has been almost unbridled optimism and a sea of international liquidity one of the things to watch when you are evaluating the risk in a stock investment is the number of shares outstanding. The investment community has often been working overtime pumping more and more of these shares out there in a bull market and as the bear takes hold fundamentals begin to have a purpose again. Intel has almost 7 Billion shares outstanding which means $35 isn't cheap and $15 might not be either. GE has 9.9 Billion shares outstanding and that means $12/share is doable before this thing is over very doable maybe half that, it depends on how much these masters of earnings creation and manipulation have been cooking the books. Take a look now while these values are still there so you can protect yourself from the plunge once the public realizes that the so called wall street professionals are neither looking out for your interests nor very cognizant of the above numbers. Doubt it? Ask an analyst how many shares are outstanding in the stock he follows and his opinion of the relevence of the number. If he scoffs, you now you have a complete bozo. You will meet many.
Looks like the "Y2K Global Meltdowners" who jumped on the "Middle East's about to burn to the ground" scenario were wrong again. Expect volatility, & plenty of it & for those prepared to go contrary to market opinion at the right time good gains at the reward.
Really a time for more focus on the Yen, Euro & the USD.
Your comment below is a good point of discussion to highlight the critical insight that Rubin had in how to manipulate the world financal markets to get the strong dollar he wanted.
"The Rubin/Clinton strong dollar gambit began in April, 1995 in response to the rapid fall of the US$ from 100 yen to 79 yen. (Some might recall that the dollar bought 240 yen in 1984. A year later, the weak dollar gambit of Baker/Reagan sank the dollar in accordance with the Sept, 1985 Plaza Accord). The dollar was also falling hard against the German mark and Swiss franc in early 1995. And don't forget that the "curse of the Sexenio" was threatening to crater Mexico and CETES holders on Wall Street in early 1995. This dollar downdraft threatened to bankrupt the already weak export driven economy of Japan (the Nikkei was already down over 60% from its 1989 high) and stifle European exports to the US. In short, a global meltdown was percolating."
One of the reasons that the US dollar was falling was the correct perception of the inability of the US to live within its means and the burgeoning interest bill on the treasury debt which was growing so fast it was about to eclipse the ability of the Income Tax to pay it. Therefore necessitating dipping into the Social Security surplus funds to pay interest on the current debt. Not a very palpable option politically. So Rubin who as a trader for years knew that if he could "lead" the money flows back toward the dollar he would be able to direct these flows into the US stock and bond markets creating a virtuous circle of booming stock prices and lower interest rates both accomplished by the flood of money he could attract to the US by a manipulation of the currency higher against ,the mark, swiss franc, yen and of course gold. The rather questionably legal use of the Economic STabalization Fund to save the large US institutional investors who got caught in the Mexico collapse takes on new meaning in this light. It was and is the power of the ESF and the US Treasury to deliver on its promises that allows them to continue to lead international capital flows where they want them to go to accomplish their objectives. I wonder if Rubin had sucked the US institutions into the Mexican Ceres market and by showing them that he would come to their aid even over Congress objection was establishing the necessary trust to allow him to be able to continue to implement his "Strong Dollar Policy" that we are discussing? In light of this the whining about the lack of accountability and "moral hazard" that he has been making public noises about becomes a little hypocritical since he was the first mover in creating much of what he bemoans.
The one dollar bill you're looking at first came off
the presses in 1957 is its present design. This
so-called paper money is in fact a cotton and linen
blend, with red and blue minute silk fibers running
through it. It is actually material.
We've all washed it without it falling apart. A
special blend of ink is used, the contents we will
never know. It is overprinted with symbols and then it
is starched to make it water resistant and pressed to
give it that nice crisp look. If you look on the front
of the bill, you will see the United States Treasury
Seal. On the top you will see the scales for balance
-- a balanced budget.
In the center you have a carpenter's T-square, a tool
used for an even cut.
Underneath is the Key to the United States Treasury.
That's all pretty easy to figure out, but what is on
the back of that dollar bill is something we should
all know.
If you turn the bill over, you will see two circles.
Both circles, together, comprise the Great Seal of the
United States. The First Continental Congress
requested that Benjamin Franklin and a group of men
come up with a Seal. It took them four years to
accomplish this task and another two years to get it
approved.
If you look at the left hand circle, you will see a
Pyramid. Notice the face is lighted and the western
side is dark. This country was just beginning. We had
not begun to explore the west or decided what we could
do for Western Civilization.
The Pyramid is uncapped, again signifying that we were
not even close to being finished. Inside the capstone
you have the all-seeing eye, an ancient symbol for
divinity. It was Franklin's belief that one man
couldn't do it alone, but a group of men, with the
help of God, could do anything.
"IN GOD WE TRUST" is on this currency. The Latin above
the pyramid, ANNUIT COEPTIS, means "God has favored
our undertaking." The Latin below the pyramid, NOVUS
ORDO SECLORUM, means "a new order has begun." At the
base of the pyramid is the Roman Numeral for 1776.
If you look at the right-hand circle, and check it
carefully, you will learn that it is on every National
Cemetery in the United States. It is also on the
Parade of Flags Walkway at the Bushnell, Florida
National Cemetery and is the centerpiece of most
hero's monuments. Slightly modified, it is the seal of
the President of the United States and it is always
visible whenever he speaks, yet no one knows what the
symbols mean.
The Bald Eagle was selected as a symbol for victory
for two reasons: first, he is not afraid of a storm;
he is strong and he is smart enough to soar above it.
Secondly, he wears no material crown. We had just
broken from the King of England.
Also, notice the shield is unsupported. This country
can now stand on its own. At the top of that shield
you have a white bar signifying congress, a unifying
factor. We were coming together as one nation. In the
Eagle's beak you will read,"E PLURIBUS UNUM", meaning
"one nation from many people."
Above the Eagle you have thirteen stars representing
the thirteen original colonies, and any clouds of
misunderstanding rolling away. Again, we were coming
together as one. Notice what the Eagle holds in his
talons. He holds an olive branch and arrows. This
country wants peace, but we will never be afraid to
fight to preserve peace. The Eagle always wants to
face the olive branch, but in time of war, his gaze
turns toward the arrows.
They say that the number 13 is an unlucky number.
This is almost a worldwide belief. You will usually
never see a room numbered 13, or any hotels or motels
with a 13th floor. But, think about this: 13 original
colonies, 13 signers of the Declaration of
Independence, 13 stripes on our flag, 13 steps on the
Pyramid, 13 letters in the Latin above, 13 letters in
E Pluribus Unum", 13 stars above the Eagle, 13 plumes
of feathers on each span of the Eagle's wing, 13 bars
on that shield, 13 leaves on the olive branch, 13
fruits, and if you look closely, 13 arrows. And for
minorities: the 13th Amendment.
I always ask people, "Why don't you know this?"
Your children don't know this and their history
teachers don't know this. Too many veterans have given
up too much to ever let the meaning fade.
Many veterans remember coming home to an America that
didn't care. Too many veterans never came home at all.
Tell everyone what is on the back of the one dollar
bill and what it stands for, because nobody else will.
17:00 (AEDT) THE chief UN
financial officer has painted a
bleak picture of UN finances,
saying the organisation was
$US3 billion ($A5.8 billion) short
of what it was owed - a great
part of that due to unpaid US
bills.
In a report to the UN budget
committee,
Undersecretary-General for
Management Joseph Connor
said yesterday the shortfall
meant that the organisation
was essentially a year behind in
collecting its bills and that the
result was undermining the
financial stability of the
organisation.
Total UN bills are significantly
higher this year, primarily
because of the increase in UN
peacekeeping costs with
enormous missions in Sierra
Leone, East Timor and Kosovo.
Costs for the UN tribunals for the former Yugoslavia and Rwanda are
also higher.
Connor's report said the United States was responsible for 61
percent of the outstanding UN regular budget, peacekeeping and UN
tribunal bills, which amounted to $US3.094 billion ($A5.97 billion) as
of September 30.
Deputy US Ambassador Donald Hays told the committee that
Washington anticipated paying all of its 2000 regular budget dues
before the end of the year, and that it would increase its
peacekeeping payment.
He acknowledged that the US policy had put the United Nations in a
"straitjacket" but said there was no way around US congressional
conditions for releasing money Washington owes the organisation.
Congress approved legislation last year that would pay back $US926
million ($A1.79 billion) of the $US1.8 billion ($A3.47 billion) in US
arrears.
But the legislation said the full cheque would only be sent after the
General Assembly agrees to reduce the US share of the
administrative budget from 25 percent to 22 percent and the
peacekeeping budget from about 30 percent to 25 percent.
The United States has been lobbying the 188 other UN members to
agree to those conditions. The European Union, which would have to
pick up a chunk of the US slack if it reduces its payments, has been
less than enthusiastic about the US demands.
In a speech to the committee, French Ambassador Jean-David
Levitte, speaking on behalf of the EU, sharply criticised the United
States and suggested that the United Nations should take into
account its record when awarding UN contracts and making
appointments to high-level UN posts.
"No organisation can function without a severe crisis if it was
dependent on funds that reached it, in the best scenario, a year
late," Levitte said.
Observation. In your discussion, you talked of the carry trades as an attempt to delay default. Not to point out the obvious but isn't the act of delay that you discuss also causing the inevitable defaults to be much worse than had corrective actions been taken by leadership who sensed a problem?
Gotta be brief, work calls. To answer your Q re my $.16 mining shares: it sells for this price because it is a "shot in the dark" even with this extraordinary level of mineralization. That is my point! Please put this in perspective with what you are calling a "bonafied" mine.
Q for you- Why should I buy your shares, with your "paper gold backed money", when I can just go buy my own gold outright? Hint- it is not this mine which would make a difference {most likely}.
Best to beesting
Reversion to the mean can encompass a time frame larger than for instance a 100 years.
Just so, as a Grand Super Cycle, the entire 500+ years
of the modern Industrial Age progression would seem to be in play.
That is why , truly this time will be different. The grand debt dream and asset gimmick schemes have propelled mankind
to great heights. Accomodating everything from 125% mortgages to pet rocks.
Now everything must pass through an all encompassing paradigm shifting fire.
The bitterness of the Grapes of Wrath, can only be experianced if said grapes are even available. What will be judged as having great value will inflate, likewise what has little wealth value will deflate.
I for one am not smart enouph to gauge what such a large time frames Reversion to the mean will look like.
http://www.gold-eagle.com/gold_digest_00/noland101700.html In the commentary by Noland (Tice), a transaction was described where an institution provided 90% liquidity loans for grantees of large stock and options and the loans were guaranteed by delta hedging. Question is: how long can losses be covered up on this trade before the loans have to be marked to market? Can the loans be carried on the books of the institution essentially forever while they are underwater, just like the Japanese banks do?
More ramifications of the manipulation implicit in the US strong dollar poliicy
Your said: "In concert with other G-7 Central Banks, the yen carry trade was implemented. Thus chosen ones borrowed in yen at 1%, converted the yen into those mountains of dollars that kept piling up overseas and next bought risk-free US Government obligations at 6%. They then pledged the obligations to the yen loan. With a falling yen and falling bond yields due to incrementally heavier demand for bonds, capital gains were assured along with the net interest spread of 5%. This play works identically for the gold carry trade which was implemented in 1996 by the bullion banks. Also note that foreign CB holdings of US debt kept in custody at the FED has tripled to nearly $800 billion in just the last six years."
It is very important to understand that here you have the beginning point(actually the continuation point) of the doing away of the free market mechanisms in favor of an investment policy directed by the US treasury that is using the nations savings controled by supposedly independent mutual funds, pension funds, and investment advisors and coopting their responsibility to their clients to protect their assets by "leading" the money managers to the path you desired to achieve your goals. The reality of this is that the free market mechanism has been supplanted by a manipulation of the entire capital markets that massively rewards those that played along and destroyed those that tried to fight it.
The key here is to understand that this action did away with the normal concept of prudence and responsible action for all money managers.
If the markets were controlled by the secret actions of the few who were in the know of the Treasury strategy then they were the ones who would prosper and gain more assets and those not initiated would be driven out of the business.
The true cost though is in the leading of millions of uninformed savers who in the creation of the bull market fraud had been converted to "buy and hold" investors in their 401ks and their IRA s etc. and naively think it is a market of normal proportions and risks.
The truth is they have been used as pawns in a shell game of political motivation and are about to be gutted of their retirement assets by a return to more normal valuations.
Meanwhile the wall street insiders who perpatrated this fraud are running for the Senate, The House and Rubin even had the audacity to float trial balloons about himself as Vice Presidental running mate for Gore.
As we all know knowledge is power and the very concrete and clear explanation of the stock and bond market co-option and rigging that has taken place is the only protection from this situation.
A reluctant defense -- to set the record straight only @Zenidea msg#: 39288
I don't know about current situation, but the main reason the U.S. Government, those paragons of fiscal responsibility (who's accounting arms can't account for what happend to about a third of the US's own budget) refused to pay "their" due --- until the U.N. had a chief accounting office to keep track of what happened to the money. That's right, until a few years ago when you gave money to the U.N. and later asked what it had been spent on, NO ONE KNEW AND THERE WASN'T EVEN A HONCHO TO ASK.
Finally the U.S. Congress refused to send them any money till the situation was remedied. The U.N. bureaucracy of course resisted -- who want's to give up control of a giant slush-fund that enables you to buy yourself and cronies hookers, booze, free travel and accomodations --- and literally who knows what --- "for free." If I remember, they finally appointed a chief accounting officer -- but I would appoint an innumerate (or a crony) if I was them --- and little else happened.
Anyone know the current status of U.N "accountability?"
I show gold up 50 cents. Please forgive the pun, but you don't suppose people are finally starting to get it, do you?
Originally, Wall Street dismissed rising inflation because it seemed concentrated in oil and tobacco, two commodities which were heavily influenced by politics. But, as demand for petroleum reaches levels where even OPEC can't keep up, this argument falls flat on its face.
Once again, when excessive amounts of a currency are created, buying power is lost.
I enjoyed the brief detour of the forum on Monday (and some previous days) into the realm of personality types -- with the Gold-related hypothesis that Gold advocates are most likely of the *NT* type. Dabbling with a linked on-line testing page revealed me to be distinctly a type INTP --for whatever that's worth to anyone keeping score.
Which brings me to my point. Any population can be divided and subdivided yet further based on the presence or absence of any given trait. In one rough cut we can focus on those who think independently about monetary affairs, and the remainder will be those who just go along with the flow. I call this latter group the "chimps" in this post because they see no evil, hear no evil, and speak no evil regarding the dollar, and are contentedly guided by the credo "Monkey see, monkey do." They follow the directions of their neighbors, whom at this point in time have been conditioned to consider Gold in low esteem. Obviously, this post is not written for the chimps--they aren't visitors to this forum.
Of the group of thinkers who see the problems with the dollar and the special merits to be found in Gold, we can divide them further into the physical "champs" and the paper "chumps." The champs are the ones who stand behind their thoughts by acquiring the Metal that they support in principle. This post isn't written for the champs, either -- they're already on the right track.
Hello, chumps. You guys comprise the sad group that is "so close and yet so far." Your good independent thinking has steered you toward the merits of Gold, yet you have undermined yourself in an attempt to capture additional paper through leverage based on the proclivity of me and my fellow champs to drive up Gold prices through our wise demand for Metal. Sorry. It doesn't work that way--as I (and many others here) have explained time and again, and most recently this past weekend.
What you chumps fail to recognize is that the Gold itself is the objective and desirable monetary wealth--as a safe and meaningful alternative to dollars which are subject to devaluation and collapse. And most importantly, you also fail to recognize the true role of your leveraged paper gold (futures) within the Gold market. The crux of this entire post is contained in the next two sentences, so open your mind and think objectively, setting aside briefly your indignance that words on a computer monitor have called you a chump.
Long positions in paper gold are NOT used, as you might like to think, as a "fire insurance policy" among institutions having vested interests in the status quo, whereby such a long derivative position would be expected (by you) to compensate them for rising Gold prices and weaker dollars. Instead, these institutions use the offering of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.(!)
By allowing yourself to miss the big picture, you are being played for a chump. The tragedy is not that you are throwing your paper currency away on paper gold, but rather that you approached so close to the brink of truth, and yet will likely have nothing material to show for your journey and efforts. It's not too late to stop beating your dead horse and take your place on the growing bandwagon headed down the Gold trail--that is, if you're not too consumed by your own pride and determination to stay with your horse until it regains its breath. My prediction is that the vultures will have your flesh too, because you'll let them.
Centennial Precious Metals, Inc. - - - (800) 869-5115
http://www.usagold.com/onlinestore/special.htmlWhen company stocks go *BUMP* in the night,
or stumble and bloody their nose on the floor,
The man with some gold in his pocket just might
not grumble or worry 'cept to wish he'd got more.
Looks like the Interventionist's are losing Control!
All markets tanking madly - who's in charge of stopping the carnage at the end of the Clinton era? PPI + 0,9 and CPI + 0,5 can't be argued away anymore, it seems.
Even Spot POG up 1,90 - Great day over in rainy Austria - cb2
'Tis always nice to see another oil roughneck finding his way to the freedom forum that only wealth retaining commodities provide.
BTW, you're exactly correct with your thoughts on oil financing. As an independent producer, we were subject to those same financial forces at work that would lend on $18 price decks in 1997, but not in 1998, and then in late 1999 when oil was at $25+, only lend at $18 price decks again. It's only been in the last two weeks, that the severe backwardation in oil prices (DEC '01 selling for $5 less than DEC '00) has faded to a reasonable spread.
It's also eminently interesting how oil producers' timing on hedging is bass-ackward. When prices are high, they fail to act quickly enough to recognize a price decline trend and enter into a hedge because they're living in a state of denial. Then after suffering through one of those horrible declines, wishing they had hedged all the way down, the moment prices rise to a moderate level, they act too quickly to enter into a hedge, fighting against the trend and costing their company bigtime dollars. This same company now gets a bad taste of hedging and doesn't want to enter into another hedge at the right time to protect the downside. The viscious cycle then repeats. ;-) Talk to most independents and they have yet to make any money at hedging their production because they can't time the market and control their emotions (fear/greed).
I've begun to think that I may open my own bank in a few years and advertise that consumers' money is backed by personal oil and personal gold. ;-)
BTW, I've reformulated by PV 10 formulas to account for $50 oil in 2003, $100 oil in $2006, and $200 oil in 2010. I'm probably conservative too. Of course, I can't borrow against it or receive dollars for it today from a buyer, but I'm quite certain that the era of cheap oil is over.
NEW YORK, Oct 18 (Reuters) - Despite red hot crude oil prices, oil production growth in non-OPEC countries is expected to slow roughly 55 percent next year as a drought in exploration and production investment catches up with the industry, analysts say.
Production growth outside the Organisation of Petroleum Exporting Countries (OPEC) is expected to average barely 600,000 barrels per day (bpd) in 2001, compared to a 1.1 million bpd increase non-OPEC producers are on course for this year, analysts said.
"Low spending in 1998 and 1999 is now making it difficult for countries to increase their production by as much as they want," said Eric Kreil, international analyst for the U.S. Department of Energy (DOE). "If they could pump more, they certainly would."
Low global oil supplies, the strongest prices in a decade and OPEC's tight hold on production would seem to give the ideal opportunity for oil companies to pump up output in non-OPEC's relatively high-cost areas.
But growth next year will be held back by industry-wide drive to cut back exploration and production spending after oil prices slumped to their lowest level in nearly a quarter of a century just two years ago.
While independent oil companies are now stepping up spending in non-OPEC hotspots such as Angola and Brazil, long lag times between exploration and first commercial output will take a couple of years to translate into badly-needed new oil.
"The previous lack of investment has caught producers flat-footed when they should be producing heavily," said analyst Matthew Simmons of Houston-based Simmons & Co. "
"It has now become very difficult for producers to fight the ferocious decline rates at the major fields, let alone increase production," he said.
Non-OPEC producers are forecast to bring production up to 46 million bpd next year, or 60 percent of global output, slowing from this year's one million bpd growth to 45.5 million bpd, said Merrill Lynch bank in a report.
The International Energy Agency, the Paris-based energy watchdog, pegged next year's non-OPEC output higher at 46.6 million bpd, up 800,000 bpd while the DOE was more conservative with a 600,000 bpd rise to 46.3 million bpd.
While gains of some 300,000 bpd in China should help Asian output grow, the former Soviet Union, the United States, and the North Sea will see little increase, the DOE said.
Much of the spending shortfall comes from supermajors Royal Dutch/Shell and Exxon Mobil determination to cut costs and maximize investor returns.
Their continued caution means mature oil fields in key non-OPEC areas the U.S. Gulf of Mexico, Alaska, Western Canada, the North Sea and South America are not getting the investment needed to stabilise decline rates, analysts say.
While cost-cutting technology has enabled oil companies to bring fields online from previously uneconomic areas, firms are increasingly finding peak production from these fields is lower and briefer than they had expected.
"There could be a down-side surprise in those regions in the coming years," said Simmons.
Some analysts believe, however, that non-OPEC producers could achieve nearer 900,000 bpd of growth next year.
Sarah Emerson, analyst for Energy Security Analysis Inc. in Boston forecasts a 400,000 bpd increase in FSU production in 2001, a 300,000 bpd rise in Brazil, and a slight 25,000 to 50,000 bpd jump in China.
"We have a more optimistic view than some of the others," she said.
My comments: I'd draw your attention to the restated quote from above, "It has now become very difficult for producers to fight the ferocious decline rates at the major fields, let alone increase production," he said.
KUWAIT CITY, Oct 17 (AFP via energy24.com) - Kuwait's Oil Minister Sheikh Saud Nasser al-Sabah has said world demand for oil will rise by 25 million bpd, to hit 100 million bpd by 2010, a newspaper has reported.
"World demand for oil is expected to grow by two per cent annually during the coming 20 years," Sheikh Saud said, quoted in Al-Anba daily.
He said that, based on plans to seek the assistance of foreign oil majors to develop the emirate's northern oilfields, Kuwait's production capacity will reach three million bpd in 2005.
Current production capacity is estimated at around 2.2 million bpd and is expected to rise by another 400,000 bpd by the middle of next year after the commissioning of two huge gathering centres.
Kuwait's OPEC production quota was increased to 2.101 million bpd as of October 1.
The $7 billion investment, known as Kuwait Project, aims at doubling the output of four oilfields near the border with Iraq to 900,000 bpd with the help of international oil companies (IOCs).
The project has met with opposition in parliament for fear that the emirate's lifeline may rest in foreign hands.
Sheikh Saud said that no contract has been signed with any foreign company for the project, as the government was awaiting parliament to approve a bill on the issue.
The announcement of a shortlist of IOCs qualified to be invited for the project, which was scheduled for September, was further delayed, but Sheikh Saud said the issue is almost complete.
Reports have indicated that Texaco, Chevron, ExxonMobil, TotalFinaElf, Shell and BP Amoco were selected as the main operator companies. Several other companies were selected as non-operators.
But contrary to what was earlier announced, Sheikh Saud said Kuwait will not accept a consortium by all the IOCs to carry out the project. "No more than two operator companies will be allowed to form a consortium... in order to encourage competition," he said.
The majors are to be paid by a fee per barrel of oil extracted for developing the fields, not through production-sharing agreements.
Foreign oil firms in Kuwait, which holds around ten per cent of global oil reserves, have previously been restricted to technical service agreements.
My comments: This is more aggressive than I see it 90 MMBOPD, but it is very reasonable given the industrialization of China and India alone.
Leigh,always read your posts,you must be really a women with a golden heart!
CavanMan,why you still ask these questions?Hmm,maybe because it still did not happen,the POG to the moon overnight?Or because the TG stuff just does not fit in our (western) brains?But I tell my friends we are wrong until we are right and then they will admit.
Here I'd like to say,trust your instinct!I too did not for a year,was still clouded by my limited thinking,but now can't deny anymore in the light of the facts which emerge.I don't like to follow someone blindly and want to make my decisions on my own'so it might take some time but I can stand then firmly behind it.Not that I had found the trail on my own,but TrailGuide added something new into my brain.Instinct said : accept it!
Cornell founder Andrew Dickson White's analysis of Fiat Money Inflation In France just, for some reason, seems apropos at this point in history. What do you think? Are we indeed heades back to the future?
"Out of the inflation of prices grew a speculating class;
and, in the complete uncertainty as to the future, all business
became a game of chance, and all businessmen, gamblers. In city
centers came a quick growth of stockjobbers and speculators; and
these set a debasing fashion in business which spread to the
remotest parts of the country. Instead of satisfaction with
legitimate profits, came a passion for inordinate gains. Then,
too, as values became more and more uncertain, there was no
longer any motive for care or economy, but every motive for
immediate expenditure and present enjoyment. So came upon the
nation the _obliteration of thrift_. In this mania for yielding
to present enjoyment rather than providing for future comfort
were the seeds of new growths of wretchedness: luxury, senseless
and extravagent, set in. This, too, spread as a fashion. To feed
it, there came cheatery in the nation at large and corruption
among officials and persons holding trusts. While men set such
fashions in private and official business, women set fashions of
extravagence in dress and living that added to the incentives to
corruption. Faith in moral considerations, or even in good
impulses, yielded to general distrust. National honor was thought
a fiction cherished only by hypocrites. Patriotism was eaten out
by cynicism."
_"Thus was the history of France logically developed in
obedience to natural laws; such has, to a greater or less degree,
always been the result of irredeemable paper, created according
to the whim or interest of legislative assemblies rather than
based upon standards of value permanent in their nature and
agreed upon throughout the entire world. Such, we may fairly
expect, will always be the result of them until the fiat of the
Almighty shall evolve laws in the universe radically different
from those which at present obtain"_. *86 -Andrew Dickson White,
Fiat Money Inflation In France, (Irvington-on-Hudson, New York:
The Foundation for Economic Education, INC. 1959), p. 106-->109
http://www.wsj.com/Just before the open, perhaps 2 mins the Nasdaq 100 futures did a switch from 0 premium (-1% off of fair value) to 40 (above fair value and at the arbitrage point) and when this was overtaken by selling, the premium was jacked up within 12 mins to over 90, or (+2% over fair value). This trigerred a massive short squeeze and marked the precise bottom for the day.
The market was left to its own from 9:50 till 10:30, when slight weakness brought on a milder injection from the futures at smaller pulses just above the arbitrage limit.
Prep for this has been in the works since the 11th of the month, as the Fed has added permanent reserves at that time, for settlement thursday. This made the funds available for trade the next day. Which is when the SPOOs made an abrupt U turn of 3%+ and the NDX went up some 8%.
Needless to say, the bank trading desks had used up their liquidity and had to get new settlement cash in order to support the market by posting margin into the futures market. The emergency this morning probably used substantial extra cash which was generated by sales of puts over Thursday and yesterday, and by a probable Fed action.
The projected Fed intervention at the time was in the 2-4 billion range. I expect something on that order to be reported some time this week.
Gold intervention seems to have coincided with this action at precisely the same time.
Can anyone find an e-mail address for Wim Duisenberg, head of the ECB? (Home or office).
If the ECB would buy gold with much of their US dollars, the value of the euro would increase to the level that they desired.
Thanks for your help!
"So, the game appears to be about how Nations reassert the role of gold without shocking the world with that reality. Since the dollar has twice defaulted and appears close to doing so again on gold-debt (paper gold), it may have been decided by the refs that the other team (euro?) gets the ball now. We shall see........
WHEN is also the question. When will gold rise? When it is time to let currencies reset the clock to gold's market value. When will it be proper to let currencies reset to a gold? When no more moves can be made to hold gold back or a key player who can turn the ball over decides its time. Is oil the key to turning the ball over?
So, the WHEN, now becomes when the physical gold is all called for and oil has no more to buy, then currencies will reset. Oil will drive gold higher through an ever increasing appetite for physical gold. The game can only be extended as long as players accept more and more dollars for paper gold. Once this insatiable appetite for paper has been stopped, physical gold will rise......."
Opening Dow smashes through multiple support levels into 9600's before tommorrows option close out and people start covering ... I'm off down to the coin shop
-Old Dante Allighieri should have known our day markets and he would have put up another (not too different) sign on the entrance of his purgatorio, which is turning rapidly into your inferno: " You are entering a rigged market place and are eternally condemmed to buy the dips on ever depreciating paper. " With the compliments of your friendly
investment devils , the B(eelze)B(ubs), the Hedge Communi(s)ty, the PPT and N-(under-)WO.
cb2
By the way, options expiration seems to be the motive for the pump up and the wild swings of Friday and today. While Friday contained a large amount of actual investor buying, today we had futures led purchases for arbitrage. Early next week we shall see the actual sentiment in the market manifest itself with less interference from the need of the bank trading desks to avoid crashing the bank.
As I have mentioned before, the breaks seen in the market over the past few years have had a substantial danger of wrecking the bankers. The break this morning, with the gap down open was a non-hedgeable event in the dynamic delta hedgeing strategy used by bank traders and had to be undone post haste in order to avoid a very substantive loss come expiration.
The bond markets are still distressed as spreads continue upwards. Now at 8.5% or so, corporate junk bond spreads have yet to fully reflect Moody's expectation of an 8.4% default rate, but have fully reflected a 6.4-6.7% (number from memory so don't hold me to it) default rate. with a 0.7-1% originary interest component, which is very low. Perhaps a non-economic "investor" is playing in this market, attempting to avoid spread increases to the requisite 11-12% range that would reflect both the low credit quality and the originary interest component.
The "main street" buyer of mining shares (me) is looking at POG and will not buy share until the POG moves up. The smart traders and insiders would normally be accumulating in light of the inflation news now coming out--they are not. Must be they are well tuned to the "political will" FOA spoke of.
In this struggle, the "political will" has to be broken by the other side for POG to rise. I do not understand this market failing on the way down scenario. In light of current events, I do not understand it at all.
Would either of you care to comment on the general topic of mining shares. Are they a lost cause even in small amounts? Sure would appreciate your wisdom. Thanks
The stocks in the Nasdaq 100 index have increased by 7% or so, while the stocks that are not so priveleged have declined. The NDX/NCOMP ratio of index leaders to the overall market has moved from 0.4 level in early 98 to 0.75 at the open of 99, to a peak of 1.6 at Mar 2000. The inflated members of the ND100 have given up much of the premium and have gone to just over 1 in relation to the broad Nasdaq market. The PPT action in May brought it back up to 1.2 and this was followed by natural buyers lifting the ND100 stocks to near 1.3. From there, declines were registered as nearly all of the major ND100 components presented problems in their operations. The ratio was brought down to 1. On Friday, the markets were again "supported" (though it did not seem so at the time) with a futures driven/aided rally that ended with the ratio rising back to 1.08 in one fell swoop, thus showing a disproportionate flow of funds into that portion of the market that could be purchased through the ND100 futures. Meaning that the move was not a natural one. This morning's entire move was a product on this type of intervention as the ratio went from 1.4 back up to just under 1.08 in all of 30 minutes.
One of the telling elements of the March spike up is that it was led by the ND100 in way above trend runup that could only come as a result of a short squeeze from the futures market, where bullish investors had hedged exposure to the tech stocks with ND100 futures, which they had to liquidate as the hedge caused losses. Only when this hedge was exhausted did the market fail. This comes as part of the rule of ends; the end of the trend is upon us when the hedges destroy the investor seeking safety in them.
My Gold calls and dollar puts are not doing real well. Actually the best move for me to do is to always stradlle these things, but I did not. I love it when I know something and dont impliment it. But anyhow... I think there could perhaps be a point I will use 350 and 400 to cash out long play options and convert to physical, if it will be possable, I will give it my best. Of course I would never do this if I loved money, cause I know it is lost playing this game heheheh.
That dollar is just nuts. Before this is all said and done, many of times I see I will have to question my sanity.
But I already know that, so it will not be a big surprise.
I go to my local gold dealer about once a week for pysical and I have just been able to fill my hole safe up. (some gold, lots of silver) And he informs me I am the only one that comes in to buy those 100 once silver bars. I just love walking out carrying 600 to 800 onces (all I can carry) and having looks flashed like, WHAT THE HELL???? (Dont worry my safe is in the hills burried, and it is very heavy, way to much to carry) So if you want to make your safe so it cant be carried away, just fill the thing with physical, its even cheap to do it. Put 10000 in physical silver, and you will have a heavy safe.
OOHH By the way I have to throw out a suggestion, You know ol Jack Nicholas, the "Golden Bear"? You want some really nice hats or shirts, he has them. I just thought of this a bit back, today I am going to go find me a GOLDEN BEAR hat. I love that big picture of a Gold Bear
Thank you SIR ORO ! -- and WELCOME to The Traveler !!
I knew that I could come to the TableRound and find out "what in the Mordor was happening" !!!
===
Pull up a chair near me, Traveler, I like your stories, but you can't be the court jester, as The Stranger says that I am !!
==
"Greetings to all. To earn my meal from the Forum's table, I shall entertain you. Decide later if I am the court jester."
==
<;-)
Here's the part of the PPT business that boils me the most.
The POG this am, is merrily bouncing along at 271, along comes a 'more-than-expected' CPI and a caving stock market opening so gold reacts (as expected) with a little spike to 273.30.
Immediately afterwards, gold gets its face ripped off and settles down to 270, a FULL DOLLAR BELOW the original pre-opening (Comex) price of 271.
That is insulting; it is beyond insulting. If the PPT had brought it back to the 271 I would have called them a bunch of snivelling snot-nosed children but actually BELOW the pre-opening price? We get plunging financial news and we are expected to beleive gold has faired worse because of it.
This is beyond believable. The dork on CNBC just said, "The impact of lower earnings and growth has sparked inflation concerns and thus the 420 point (opening) carnage in the Dow". And this causes gold to drop?
Every arrow is red on the stinking TV, every financial indication is bleak and gold is down for the day?
What in God's green earth do these people expect us to believe anymore? Are they asking us to believe gold is worth less now than at 7:00am this morning?
"Investors on Wall Street and on Bay Street are running scared today". The dork just said that. "The TSE opened 300 points lower and the DOW 420, investors are leaving the tech sector....".
And gold is down?
Sure pal, yep, gold is down; just a few more brazen insults like this and we shall see, we shall see. A dork like you is definitely short and we shall see a parabolic spike that will shut you up once and for all. When your paper has diluted to pennies on the dollar and you need a 50 inch monitor to see the top of the spike I get to go on the tube and tell you distortions of truth you sub-terranean lizard.
Ok,.... hysteria mode off.
Oil up a bit, ENB cooking with 'gas'; sub-10k DJIA at the end of the day might prove interesting.
Our pain is almost over folks! The US$ seems to be experiencing its blow-off/shortcovering blow-up......just a few more days..........then BOOOOOOOOOOOM! Gold will be freeeeeeeeeeeeeee!
(some hedge fund must be getting its clock cleaned of a short US$ postision.....always seems to end that way.....)
Dow Jones down 400 pts in first hour
From AP
19oct00
02:20(AEDT) THE Dow Jones
industrial average dropped
more than 400 points today,
falling below 10,000 for the
first time in six months as
investors, spooked by earnings, oil prices and inflation numbers,
unloaded stocks.
The drop followed disappointing earnings reports from IBM and Intel,
and a Labor Department report showing a pickup in inflation also sent
prices falling.
In the first hour of trading, the Dow was down 421.38 at 9,668.33,
extending a 149-point drop from yesterday. The last time the Dow
fell below 10,000 in trading was March 15, and today's decline
brought the blue chip index to its lowest levels of the year.
Broader indicators also fell. The Nasdaq composite index was off
183.77 at 3,030.19, compounding its 76-point drop of yesterday,
and the Standard and Poor's 500 index fell 42.03 to 1,307.94.
The market opened on news that consumer prices jumped 0.5 per
cent in September, the biggest advance since June, as energy prices
rebounded sharply.
The increase renewed fears that the Federal Reserve would keep
interest rates where they are, rather than decreasing them, at its
next meeting in November.
"People are starting to worry that the rise in energy costs is
beginning to fall over into the rest of the economy," said Mark
Vitner, an economist with First Union
France
Italy
Portugal
Spain
United Kingdom
Netherlands
Germany
We are still waiting for clearance on the other EU nations.
We are requesting that USAGOLDers contact us if you live in one of the above countries so that we can verify that the number is working.
It is toll free so it won't cost you anything:
00-800-2760-2760
If there is a problem and you have a moment, would you be so kind to e-mail us at
marie@usagold.com
and describe the problem? We would be grateful. Be sure to identify which country you live in.
We consider the publishing of this number the official indicator that we are "in business" in those countries.
To our European friends:
Please visit our European Delivery Page linked above for details if you would like to order from us. We would like to thank those Europeans who have already ordered from us. From what we are told, gold is doing very well in euro terms.
We look forward to hearing from you if you have an interest in gold. We are now ready also to deliver information packets to Europe. If you would like to receive our Almanac and further acquaint yourself with Dr. Moneywise (and USAGOLD/Centennial Precious Metals) who was quoted in today's Daily Report, you can make your request at the "Request Info" page (See the very top of this page for the link.)
You've got to love this guys way with words. To bad he is embroiled in his present difficulties, I hope they are unfounded.
The United States Is In Deep Doodoo!
United States Congressional Record - March 17, 1993 - Vol. #33, page H-1303 - Speaker- Rep. James Traficant, Jr. (Ohio) addressing the House:
"Mr. Speaker, we are here now in chapter 11. Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U.S. Government. We are setting forth hopefully, a blueprint for our future. There are some who say it is a coroner's report that will lead to our demise."
The Wet Blanket Phenomenon -- Are there any doubters left?
Excerpt of my post offered at the start today's "Gold trading" --
"Long positions in paper gold are NOT used, as you might like to think, as a "fire insurance policy" among institutions having vested interests in [maintaining] the status quo, whereby such a long derivative position would be expected (by you) to compensate them for rising Gold prices and weaker dollars. Instead, these institutions use the offering of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.(!)"
Canuck, maybe this addresses your concerns from post #39327 where you rightly fumed--
"This is beyond believable....Every arrow is red on the stinking TV, every financial indication is bleak and gold is down for the day?
What in God's green earth do these people expect us to believe anymore? Are they asking us to believe gold is worth less now than at 7:00am this morning?"
And Wolavka, are you a believer now in the "wet blanket" phenomenon? What have you to say regarding your earlier comment to me, "I will address your post at end of trading day"? I don't mean to put you on the spot, just to solicit your latest thoughts, impressions, or opinions on this matter.
Real Gold. A horse that's free to run, and easy to ride. ---Aristotle
On Going discussion about USAGOLD Msg. 39164 10/16/00 17:52MT
Hi again sir auspec,hope you had a good day.
Your question from this morning:
<buy my own gold outright?>>
Very good question and you would actually have more physical Gold on hand at the end of a certain time period for the same dollar amount invested.
Here is my answer:
The heading on my original post # 39164 said:
A Grass Roots Way to Raise the Physical Price of Gold!
Despite the valiant efforts of GATA and all those in The Know, Buying Physical Gold for the last few years(us Goldhearts), the (paper)POG has languished.
Lets examine briefly what most believe is the cause:
Some of the largest Goldmines in the world have sold off future Gold production to "Bullion Bankers" who in turn have flooded the paper Gold trading markets with an over supply of paper Gold(future contracts for Gold) thereby forcing the "paper" price of Gold in U.S. dollars down.
Now it seems to me from reading these Gold forums even though most realize what is really going on in the Gold market,diversified Gold investors(including me)are still hoping and praying for a miracle investor to come along and buy all the existing Gold on hand causing a shortage of Gold on a worldwide scale and forcing the POG up(a short squeeze)or some other catastrophic event.
Maybe this will happen, maybe it won't!
I say to all those paper Gold investors who have been losing dollar amount value on their paper Gold investments for the last 20 years( Yes, me too) should reverse the power the "Bullion Banks" have over the every day POG by putting "REAL WEALTH" back into the hands of the Gold mine share holders, and taking the paper Gold pricing mechanism away from them(the Bullion Banks)!
See my #39164 post and follow ups on how it could be done.I think share holders of one small company "WORKING TOGETHER" could cause a snowball effect on the POG and the whole Gold mining industry!
If only one small Gold mines share price started to rise dramatically over a period of time, wouldn't the other Gold mining companies take notice to see how that Gold mine was doing it, and quickly follow?
Lets take an example of what would have happened if Ashanti Gold mining co. had defaulted:
The BANKS have first priority over remaining assets, so the banks and maybe the Ghanian Government would get the physical assets and the shareholders would already have paper gold which would have little or no value.
What would happen if Pete's Gold mine with NO DEBT closed for some reason?
The shareholders who would be the owners of Pete's mine INCLUDING PETE, would get 90% of their investment back in physical Gold. Now if the price of Gold went to zero I would still prefer to own worthless physical gold to worthless paper Gold!!!
Bottom Line:
***If a small percentage of the money invested in paper ever cashed out and re-invested in physical Gold,or a Gold mine like Pete's, I think a very real physical Gold short squeeze would occur worldwide, forcing the real POG up!!!***
Sorry Sir auspec, I don't think Pete's mine would have any paid management,only shareholders and possibly hired help at prevailing wage rates for the time being anyway.
Thanks again for reading.....beesting.
I noticied today they kept interrupting the CNBC/GE talk show to announce that the EURO was making new all time lows. Is it so tight right now that they not only have to throw a wet blanket on money flows going into gold but also into the EURO? They must be running out of magic money to keep these bloated Dow and Nasduck carcasses afloat.
I want to apologize to you, the reason being I remember about 1 month ago making really lame statements. About leverage, "leverage, get you some." What a stupid thing to have said, really. I really sort of thought you, and others maybe really did not want others to be leveraged like themselfes perhaps, and that it would be great if folks could help to take physical off the market and help to explode the paper market when the time was right. But that is not the game is it? I am better understanding this game due to ones like yourself, thanks for the class. The game=Sell the hell out of paper gold, with a strong paper dollar, in order to attain an artificial low ""physical" price, and then you are covered with physical. Like Trail Guide said you do not expose a market dynamic that is delivering in your favor. I saw someone here mention this selling with paper oil created an artificial low oil price as well for as long as they wished it to be low. Its easy from what I can see to create a low commodity price through this leveraged paper crap. Its a good idea for those with all that paper at there disposal whenever they can to sell Paper Commodity anything, and go ahead and buy the physical goods, at a wrong price you created. Now what about the dollar? DO they do the opposite? Do they have a strong dollar system too? What are they up to on that one? DO they just buy leveraged paper dollars with less dollars through going long "leveraged paper dollar contracts" to get a high artificial price on the dollar??? What are they doing in order to get this dollar like this??
I never fully appreciated the significance of the use of the paper commodities to depress the price until your last post. Thanks.
"The game=Sell the hell out of paper gold, with a strong paper dollar, in order to attain an artificial low "physical" price, and then you are covered with physical.
Like Trail Guide said you do not expose a market dynamic that is delivering in your favor.
I saw someone here mention this selling with paper oil created an artificial low oil price as well for as long as they wished it to be low. Its easy from what I can see to create a low commodity price through this leveraged paper crap.
Its a good idea for those with all that paper at there disposal whenever they can to sell Paper Commodity anything, and go ahead and buy the physical goods, at a wrong price you created."
Sir beesting,
OK, I'm coming around a bit now to the idea. Am all for a method of bypassing the BBs up as a means to capital! You still have to have a VIABLE mine in order to have this as a part of the co idea. Will leave that to you and Pete and move on to the LARGER picture.
I certainly do like the idea of a mining co holding physical gold as an asset. This slows down the "burn rate" on that burning match previously mentioned. Anyone else know of a reason a mining co cannot hold physical????? "Taking the paper gold pricing mechanism away" from the BBs is the key! We have been promoting the idea of supporting the non-hedgers with a degree of success from shareholder perspective. To take this a step forward, the idea of convincing a major or junior miner to hold some physical ,in hand & not just in the ground, may have merit. A great way for a co to PROMOTE instead of undercut their product.
We know what it feels like to get the {mining} shaft and, all other things being equal, would clearly prefer to vote {buy} the shares of the co that has physical on hand. Must clearly see the difference between gold reserves in the ground, that may require selling the company soul to produce, versus free and clear in hand yellow metal.
OK MINING COMPANY EXECUTIVES- 1- Are you unhedged? 2- Do you support GATA? 3- Got PHYSICAL??!! If you build it they will come {buy}. I'm sure all of the mining execs have been following our discussion so this is basically a done deal, right? Best to the schemer. AUPROMOTE
Greetings,
You must be some type of distant relative of mine, so wanted to say hi. The only people I know that speak of "hunkering down" are Georgia Bulldog fans. Exceptions to most rules of course. You are correct, these are glorious times to those with wisdom, foresight, and MONEY to take advantage of current gold market gifts. I am on my haunches and ready for the real game to start. Best to you!
Peter,
I can't seem to get a rise out of these guys, maybe they're asleep at the stern. Thought for sure my financial pressure would get the job done, guess some people just don't need that kind of money. Maybe CPM is another BB, have all this physical supply readily on hand, and just simply don't care about another $2.34M order {maybe they didn't see that M correctly}. Anyway in the interest of obtaining our HOF for "colorful" posts we should try another tact. Let's just keep pestering them until they accede! No one can hold up to that type of pressure. We need some more USAGOLD posters to join our small ranks {2}. Looking for former class clowns, the irreverent, goofballs, offbeats, lefties, Californians, past glue sniffers, poets, philanderers,plagarists, ANYBODY that can work a keyboard! Will settle for just one more humor advocate. It doesn't hurt that much to use several sections of the cerebrum. Help me, Peter. Here is yesterday's post as promised, guess what you will get to see tomorrow with additional commentary??? Give up yet???auspec (10/17/00; 21:27:22MT - usagold.com msg#: 39265)
Peter Asher/ Satire
Evening Sir,
The silence ends as am no longer able to contain myself, here is a second to your desire for a separate HOF category for the off-beat! Lord knows this site could lighten up a bit. This poster has a lot of influence with Michael as am currently in process of ordering $2.34M worth of British Sovereigns from him. Either we get our category or I will pull this order! This is clearly a capitalist enterprise that responds to it's customers {and their bucks}. You know, with the commissions this outfit charges, 30-35%, that order is worth a lot of ski trips, and bottles of Chivas, even to Buffet, Gates, and Kosares. If we don't get our needs met by the next new moon we'll organize a strike and all buy our future fortunes on Comex {they have all that gold don't they?}. It is totally unfair and undemocratic to limit the HOF to the intelligent. Let the people speak and gain the victory from our oppressors...What say you fellow {half} wits??????????
P.S. This post will appear daily until the revolution is over.Thank you Sir Peter for your persistence!
Higher than expected CPI and a beating laid on the DOW and TSE300 (Canada); both breaking key 10K levels.
The 'gold management' dolts managed to bring gold down a bit through the fireworks demonstrating to gold novices that gold cannot be an alternative in economic downturns.
Pass me a puke bucket, I'm going to hurl.
The dolts, asleep at the wheel from 8:30 to about 9:00, 9:15 let gold rise from 271 (spot) to 271.30 then woke up and smashed in back down BELOW 271 providing insult to REAL investors.
Anyone looking at tomorrow's paper seeing NY close day on day would miss the real truth. Anyone and I mean anyone looking at the 8:30-11:00 window this am can SEE the 'management' crystal clear. At 8:30am this am the CPI was released; the POG, coupled with the fact that the stock markets were going to have a brutal day, took on a 60 degree vertical leap for nearly an hour. Soon afterwards the PPT regained composure and slapped the POG around.
Earlier today ORO posted the critical details of the introvention as he does so well. My point to other novices like myself is the obvious, crystal clear, stopping of a supposed free-market. There is no free market in gold.
The coiled spring theory.
This week-end I fixed my recoil on my lawnmower. The rope was lazy; I had to tighten the spring. Ever fix a recoil?
There is a spring that tightens when the rope is pulled out so that when released the spring pulls the rope back into the mechanism. If you get yourself out of whack and the spring lets loose, a one hour job turns into a nightmare.
Well, at a critical point during the repair where I had the spring at full tension I paused to think of the 'gold management' team. One millimeter slip and the spring would explode from a tiny circle into a steel snake whipping and whirling about completely out of control. I almost let it loose on purpose just to see!!
Anyone not sure of the 'game' need only print out the POG today and examine the morning track from 8:30-11:00. Ask yourself what happened from 9:15/9:30 to 11:00.
@ Ari,
Thanks for the comment; I am beginning to get over it. Looks like the dollar/euro game is near its end, yes?
Money flowing (naturally?) to highest R.O.I. will soon cease. I believe the end-game nears, apres Nov. 7 perhaps.
The dollar game is up and very soon the oil game is up.
The debt game is lurking, margin debt etc, etc. Convergence
of misalignments is upon us, time to kick over the barrels of snakes?
Higher than expected CPI and a beating laid on the DOW and TSE300 (Canada); both breaking key 10K levels.
The 'gold management' dolts managed to bring gold down a bit through the fireworks demonstrating to gold novices that gold cannot be an alternative in economic downturns.
Pass me a puke bucket, I'm going to hurl.
The dolts, asleep at the wheel from 8:30 to about 9:00, 9:15 let gold rise from 271 (spot) to 273.30 then woke up and smashed in back down BELOW 271 providing insult to REAL investors.
Anyone looking at tomorrow's paper seeing NY close day on day would miss the real truth. Anyone and I mean anyone looking at the 8:30-11:00 window this am can SEE the 'management' crystal clear. At 8:30am this am the CPI was released; the POG, coupled with the fact that the stock markets were going to have a brutal day, took on a 60 degree vertical leap for nearly an hour. Soon afterwards the PPT regained composure and slapped the POG around.
Earlier today ORO posted the critical details of the introvention as he does so well. My point to other novices like myself is the obvious, crystal clear, stopping of a supposed free-market. There is no free market in gold.
The coiled spring theory.
This week-end I fixed my recoil on my lawnmower. The rope was lazy; I had to tighten the spring. Ever fix a recoil?
There is a spring that tightens when the rope is pulled out so that when released the spring pulls the rope back into the mechanism. If you get yourself out of whack and the spring lets loose, a one hour job turns into a nightmare.
Well, at a critical point during the repair where I had the spring at full tension I paused to think of the 'gold management' team. One millimeter slip and the spring would explode from a tiny circle into a steel snake whipping and whirling about completely out of control. I almost let it loose on purpose just to see!!
Anyone not sure of the 'game' need only print out the POG today and examine the morning track from 8:30-11:00. Ask yourself what happened from 9:15/9:30 to 11:00.
@ Ari,
Thanks for the comment; I am beginning to get over it. Looks like the dollar/euro game is near its end, yes?
Money flowing (naturally?) to highest R.O.I. will soon cease. I believe the end-game nears, apres Nov. 7 perhaps.
The dollar game is up and very soon the oil game is up.
The debt game is lurking, margin debt etc, etc. Convergence
of misalignments is upon us, time to kick over the barrels of snakes?
This letter is in response to your e-mail message of September 22, 2000 to the Commodity Futures Trading Commission (CFTC) in which you expressed your concern about trading activity in the gold market. You referred to a letter sent to Chairman Rainer by Mr. Ethan Stroud in which Mr. Stroud alleged a manipulation of the price of gold.
The CFTC places the highest priority on the prevention of price manipulation in all U.S. futures and option-on-futures markets. The CFTC monitors trading activity in commodity markets in order to detect and prevent market manipulation and other forms of market abuse. The Commodity Exchange Act (CEAct) makes it unlawful to manipulate or attempt to manipulate the market price of any commodity in interstate commerce, or for future delivery on or subject to the rules of any contract market. In order to prove a manipulation, it must be shown that a trader intentionally caused the price of a commodity to become artificial or, in other words, intentionally moved the price of a commodity away from a level reflecting the legitimate forces of supply and demand.
The CFTC receives daily reports identifying the holders of all long and short positions (above certain reporting levels) in each futures and options market. Using these reports, CFTC economists routinely monitor trading activity in the gold futures and option markets. In addition, our analysts monitor prices and price relationships and other data in the gold cash and futures markets. In light of recent expressions of concern about possible improper activity in the gold market, our analysts have conducted special analyses of the trading and position holding activities in the gold futures and option markets. Based both on our routine review of the gold market and the additional analyses we have conducted, we are not aware of any evidence to conclude that the gold price has been, or is being, manipulated. We have also found no evidence of coordinated sales of gold futures and/or option contracts.
I hope this information is helpful to you.
Today's action in the stock market inspired me to recall the old song, "SUNRISE, SUNSET," from Fiddler on the Roof.
In the midst of all the unease and frayed nerves, SUN MICROSYSTEMS, a major core holding of most tech funds, "accidentally" released earnings, which soundly beat estimates and removed a key source of nervousness/anxiety from bullish hearts. Of course, "accidents" will happen, especially those that save Wall Street bulls from the consequences of their irrationality and greed.
So the SUN slowly but surely rose, and emboldened bulls decided to do all in their power to establish a final, incontrovertible bottom.
Around that time, gold got sold into the marketplace, and undoubtedly funds realized were used to buy bullish investments and accelerate the recovery.
Once again, the Clinton government's interference in the marketplace occurred, the hallmark of the most corrupt government to ever hold office in this land. Period.
Once again, it is worth restating that the next time somebody lauds the "free" US markets, then go tell them to stick it, there is nothing free about these US markets, they are immersed in manipulation, market rigging, cronyism, and moral hazard. The only difference between American markets and the most corrupt third world markets lies in appearance, NOT in reality.
Oh, if only all of us poor duped naive gold investors could go back several years in time, and never never never touch a single ounce of gold, in physical or paper form. How much happier we would be! If only all the contrarians in this land could go back in time and never never never short a single dollar of S & P stock! I feel so foolish thinking that I once believed in a level playing field, that I once believed that fairness existed in any form in this country.
My late father, rest his soul, loved his country, and taught me the golden rule, and a litany of themes about playing the game as it is supposed to be played, NEVER straying from the duties and obligations required of the society in which you live. For that reason, I gave to my community, served on some six boards of directors of various community organizations, etc.
Yet after a day like today, I feel once again like a sap, an idiot, because the bottom line reality is this: in America, you get nowhere playing by the rules, you get nowhere serving community unless you only aim to serve yourself, because anybody who accomplishes anything significant in this country cheats and lies, claws and tears at those around him, no matter how much suffering is inflicted. Anybody who progresses up the ladder of success in this country holds no respect for boundaries or manners or etiquette or any other such niceties of life.
Good morals are OLD PARADIGM, and in America, the NEW PARADIGM demands that you cheat, screw, piss on, and f*ck your neighbor, no matter how, where, when or in what form.
That is why a company like SUN MICROSYSTEMS can do what they did today, because success at any cost is all that matters in America today and if it means breaking the rules and screwing those who play by the rules, so big F_ing deal! Let all the goody two shoes eat cake, only the manipulators really matter in this country, and they will accomplish their ends no matter how many rules of proper conduct have to be broken!
Ultimately, I have no idea whether or not SUN and its beneficiaries will be punished for their latest "accident." At the tender age of 44, I am finally realizing that realistically, Good only conquers Evil in Hollywood movies, NOT in reality.
Yet if there is one vestige of Karmic justice in this world, then those manipulators from SUN will face the most awful repercussions for their short term victory, and the Universe will provide them with a permanent Sunset.
But don't hold your breath waiting for it, don't count on it.
Shifty!
We suspected all along you couldn't hold out {with a name like shifty he has to be funny}and are rolling now. Who else will join the fray? Have you ever in your life told a joke or laughed at someone else's? You are fully qualified. Consider straying from the establishment and joining our merry band. We are talking GROUND LEVEL OPPORTUNITY! Cb2, there is no way you can pass this up. All will officially be consider FOUNDERS of this select group up until the very minute Michael and Towne Crier {spelled the correct way} beg us to participate in their new USAGOLD HOF
category for the cerebral left hemisphere inhanced {is that right?}. CLHIHOF?
WHOM ELSE???
The Monster that Ate the Real Economy @Nickel62, The Traveler, Aristotle, Rockgrabber, ALL
"Its a good idea for those with all that paper at there
disposal whenever they can to sell Paper Commodity
anything, and go ahead and buy the physical goods, at a
wrong price you created." -nickel62 (10/18/2000;
16:28:03MT - usagold.com msg#: 39338)
I don't think "they're" doing it to manipulate prices, except
perhaps in the case of gold. They're doing it for short-term
profit. But "they'll" only buy the "physical goods" if they
understand what's happening and have the patience to await the
inevitable but un-timeable consequences. I don't think most of
"them" understand OR have the patience.
Now think about this in relation to all the derivatives out there
and what they've been doing to the "real economy." Think
"Cambior." Think "Ashanti." Think how American Can Corp.
morphed into Primerica. Now think Ford Credit, General Motors
Credit, General Electric Credit (which produces 45% of GE's
bottom line). Now think INTEL and Dell (who have been making a
very significant part of their bottom line in the markets). - -
- - Now think what happened to "oil" - - $10/bbl a year or so
ago.
Can you think "gold spike?" Can you think "commodity price
spike?" Think "squeezed farmers." Can you think "general price
spike." Can you think "inflation?"
I was given the handle of shifty by a friend I go dredging with. I had a run in with the cops one night at the Xmas parade in my town. I did not even want to go but my wife was in the parade so it was best for me to attend.
Well seems a guy that fit my description did something and the cops grabbed me. I told them " You got the wrong guy" I guess all us long hair hippie types look the same to the men in blue. Well they took me away and took my picture to show the victim. She told them they had the wrong guy and they let me go.
Reading around the posts today I wonder if the biggest, most
bizarre deal has been cut.
This currency war (dollar/euro) is getting wild.
Remember a quote shortly after the W.A. announcement, "..you guys have 6 months to cover your shorts and then it is over...". I forget the author, maybe Greenspan?
So now we have a new dollar/euro high. The disparity is killing both parties so I wonder about the deal of deals that is to be cut.
I wonder if the current administration has cut a deal with European and possible Japanese authorities that if the USA can continue the 'high dollar' policy until after the election (to ensure relection) then in return the policy is dropped after November.
It seems the ECB is not overly concerned about the EURO. I find this odd. The ME is putting the screws to the planet over oil and things are too quiet.
I watched the 2 gentlemen quibble last night; it was too boring. Something very large is brewing, anyone getting the same feeling?
Debt, gold mining, corporations, revolution and CLHIHOF nomination @Aristotle, Rockgrabber, auspec, Town Crier, ALL
"why dont mines just hold gold, instead of trading it
for paper junk?" -Rockgrabber msg#: 39341
Because they borrowed money -- and most need capital to keep in
operation. A small operator without these concerns could just
sit back and wait. But today even he/she would be at the mercy
of the big corporations who can't do that. Most areas of the
economy these days are dominated by just such corporate entities
which can't do anything that interrupts cash flow. This makes it
difficult for the economy to adjust to normal fluctuations.
This is another good reason to examine the legal under-pinnings
of corporations. A good place to start might be with "The Legal
Foundations of Capitalism" by John R. Commons.
auspec: Hmm. "former class clowns, the irreverent, goofballs,
offbeats, lefties, Californians, past glue sniffers, poets,
philanderers, plagarists, ANYBODY that can work a keyboard!"
O.K. I guess that's inclusive enough to include me somewhere --
probably several times. So what is it you want me to do? Go for
the gold-mine backed currency? Or lobby for the CLHIHOF?
Town Crier: Better give into these guys -- I hereby join Sir
Peter and auspec in calling for a CLHIHOF!! It would be good for
morale! I don't smile nearly often enough.
Aristotle: I hereby nominate Aristotle's "Chimps, Champs and
Chumps" (msg#: 39302) as the first post to CLHIHOF. Aristotle,
I'm STILL smile'n!!
I think it is important to remember that a major form of paper creation and credit expansion.....
Has already blown up. The junk bond markets are in a state of chaos and that has got to have these financial masters of the universive in a very tight tizzy. The losses are spectacular from what I have heard and the liquidity is gone.
More to come tomorrow.
The advantage we goldbugs have is we have waited so long that we can wait a little longer as these bastards begin to burn real slow. I think if you listen very closely you can hear a banker crying somewhere in a town near you.
Sir Journeyman,
Welcome to CLHEHOF Founders Group! It is actually CLHEHOF as I was briefly spelling impaired. With a steady archer such as you defecting to our expanding group we will soon overtake the castle. As was said by a famous man {GANDALF?}: First they ignore you {currently it appears}, then they laugh at you {soon, probably tomorrow}, then they fight you, then you win, then they laugh with you. We are now too numerous {4} and worthy to be denied. We expect and demand a response from the {Ivory} Tower tomorrow, even if it is just a laugh.
FREE GOLD FOR CLHEHOF FOUNDERS GROUP!!!!!
By special arrangement with the CPMT Treasury, all Founding Members of the Cerebral Left Hemisphere Enhanced Hall of Fame {CLHEHOF} Advocacy Group are to receive FREE GOLD of their choice {type and quantity}. This is official, and all you have to do to become a Fellow Founder is to step {TYPE} forward and join our ranks BEFORE the victory is claimed, probably tomorrow. Make something of your life, do the right thing, walk away from the mundane, join our growing & vibrant group of renegades. Be on the winning side for a change!
Brave & determined with momentum swinging our way- Sirs Peter Asher, Auspec, $hifty, and Journeyman
Not much going on in Tokyo tonight. But Hong Kong is down a couple of hundred points. There was talk that Microsoft's robust earnings announcement after the N.Y. close would provide some lift. I'd like to know why. Most of their profit increase came from a $557 million gain on the company's investment portfolio, and not from actual operations. Profits from operations actually fell by $12 million in the quarter. Recent disasters in tech land are forcing analysts to cast a more discerning eye toward such reports, so it will be interesting to see how this story plays tomorrow.
One analyst who garnered raves recently was Ashuk Kumar (sp?). He was a lone voice among Intel analysts when he recently warned Piper Jaffrey clients that all was not well with the company. Unfortunately, Ashuk kind of put his foot in it today when he admitted he never expected the stock to go below 50 regardless of how bad things might be. Intel was only about 35 when his words hit the tape, so, with that, the mindless ones quickly bid the stock up for a couple of points gain on the day.
That is a good exercise in how much stocks really are commodities. The price of a share of Intel, for example, is never so much a function of supply and demand for microchips as it is a function of supply and demand for the shares themselves. Business hasn't dropped 50% for Intel in the past 7 weeks, but the stock sure has. And, just as the great bull market of the 90s was built upon too many dollars chasing too few shares, the current bear market is all about too few dollars chasing too many shares. In the end, even decent earnings won't spare most companies...
contracyclicals, such as oil and gold, excepted, of course.
I just want to make it clear that I was proposing a DIGNIFIED site for Satire and Allegory. Writings should specifically address the broader scope of Forum topics regarding economics and sociology and current events pertaining to those.
I am somewhat alarmed at the suggestion of "goofballs, class clowns and glue sniffers; (I suppose Californians would be OK) after all, we wouldn't want this thing to be like the Internet! What? This IS the Internet? Oh, I often forget we're part of that thing. Well, you get my drift, right?
I would hope to see included such work as Peter Asher (4/3/99; 19:36:07MDT - Msg ID:4173)
"The Final Battle"; Led by the ### 5th Horseman, OIL ### (The Darth Vader satire) and the recent Peter Asher (9/22/2000; 0:44:21MT - usagold.com msg#: 37164) "Best Place In Town" which, though winning the popular vote, was ignored by the Electoral College.
There are other past works we might want to search up and submit for entry in this wing.
Finally auspec, we should be aware that considerable time and software capability on TC's part will be required. Maybe you should put in half that order in advance!
More later, I've got two on subjects I want to get on today's board. P.
>>>That is a good exercise in how much stocks really are commodities. The price of a share of Intel, for example, is never so much a function of supply and demand for microchips as it is a function of supply and demand for the shares themselves.<<<
I think these paper gold markets have changed from what they used to be years ago.
I expect the stocks to not mirror the POG when it takes off.
Maybe they'll react half-heartedly to a rise in the POG.
But I doubt as a sector that they'll offer leverage to the POG as they used to do.
These charts to me speak volumes of the changes we've seen in the gold industry.
http://www.sharelynx.net/Markets/Charts/GlobalGoldIndices.htm
No one knows what's coming but I personally have little confidence in paper gold being a proxy for catching the coming gold bull.
Obviously individual stocks may differ but on the whole I expect the industry to be savaged by sentiment.
And my feelings here apply to the financial debt systems imploding to the extent that they trigger the POG much higher.
I doubt we'll see an orderly rise in the POG where it creeps day by day higher.
I see the POG being held down till the system fails.
Likewise with index puts that you can collect on as the SM falls in an orderly conduct but become uncollectable in the event of a major meltdown.
I expect the same within the gold markets.
Positions that have worked in an orderly market will become defunct in an explosive one.
To review the majority of gold producers globally.
And to rationalise them by ascending order of total production and extent of hedging.
One gets the impression that though there are really few gold producers globally.
The greatest amount of hedging is concentrated in the biggest players.
You could probably work a formula out something like ( mkt cap x hedging % ) where the end result would cover 90% of global production ( with hedging impacts ) from 10% of global producers.
To impact a $100 rise or even a $200 rise against this backdrop leaves me to believe that the industry will be torn apart in many places through financial shock.
Given the extent of leverage ( derivatives ) admist this small concentrated number of producers/hedgers
I can well understand why the POG is held in such a position as it currently is.
And I don't expect it to change till the markets force it to change by imploding.
I guess I'm pretty sure that a meltdown in the general financial markets
Will impact these gold derivatives to the extent that they to will break down.
In the face of the above happening
I see no value at all in paper gold stocks.
Sentiment within the industry will be abhorrant.
Far worse than what we are seeing today.
I would only be holding physical through this period
With the intention of jumping back into the paper
After the event.
Searching through the carnage looking for the new Homestakes ( a la 1930 )
****I cannot for the life of me**** understand the fascination of traders trying to preguess and profit from the coming debacle.
The last twenty years have been statistically profitable for trading markets.
Probably so with the next twenty, once this purging is over.
But this coming debacle is one to stay well clear of.
With little debt, liquidised assets, and the insurance of physical.
Play for 20 - step aside for 6 months - and get to play for the next 20.
So many will end up having their heads ripped off.
Anyone here deigning to profit with paper from what I feel is coming is deluding themselves that their pieces of paper will be honoured.
As far as judging the extent of what is happening & coming.
I expect the current systems to suddenly snap.
Not this gently roller coasting we've seen so far.
auspec (10/18/2000; 21:07:24MT - usagold.com msg#: 39359)
Welcome Journeyman/ FREE GOLD!
Sir Journeyman,
Welcome to CLHEHOF Founders Group! It is actually CLHEHOF as I was briefly spelling impaired. With a steady archer such as you defecting to our expanding group we will soon overtake the castle. As was said by a famous man {GANDALF?}:
====
Did the WIZ hear correctly? -- Someone called for the Court Jester (Tks, Stranger) <;-) -- Sure, why not a CLHE-HoF !! Count me as a FOUNDER ! -- It may well take a while to convert the castle dungeon to properly "hang" the FUNTASTIC ones, but I am sure that Townie and SIR Jeff can do it.
<;-)
I think gold has become an insiders investment vehicle, after all the �public' has a negative savings rate so that factor (including a �knee-jerk panic buy) has been removed from the long side.
My take is that all the "Insiders" knew they were going to re-inflate the bubble and so ignored gold. I've said this several times before; If the markets are going to be allowed to crash, there will be a precursor in the form of an unexplained Gold rally. �They' are not going to "give up the ghost" on the stock market without first securing a hard asset position!
There was some discussion here of Iraq switching from dollars to Euros for settlement being a watershed event. However, almost at that exact moment the first of two sharp Euro sell-offs occurred
The old adage, "The tape doesn't lie" should be considered here. The Euro �should have' rallied on that news, but in fact, has accelerated downward to new lows. All we know is that fact. I haven't been able to get a glimmer of an idea why.
ORO?? Can you come up with any thing here? TG??? anyone else ???
Something to Think About...
..
.
===============================================
Something's up. Big time.
Can you say "c-o-n-f-i-s-c-a-t-i-o-n" .?.
The many scenarios we read about daily,
here in the Forum, seem to overlook one
important point:
If/When the system crashes, Gold will soar.
Indeed. For a few days. Then the the inevitable
must occur to save the system and thwart us all
once again. Your precious Physical Gold will be
confiscated. Make no mistake about that.
Whether $600/oz; $2000/oz; or (gasp) $30,000/oz.
It will be confiscated. And at a paltry government
dictated price.
It happend before. It will happen again.
But wiat: In the past, Silver was *not* confiscated.
Nor will it be this time around.
Silver is safe. Safer than gold. Much safer.
I forsee the price of Silver becoming higher than
the price of gold. Does that seem unreal.?.
Consider this: Only a few years ago, an ounce of
Palladium cost a mere 1/3rd of an ounce of gold.
Yet recently, Palladium (at $800+/oz) was far more
than Gold.
Silver, for various and obvious reasons, will
equally surpass gold.
Unfortunately, for me, I own nary an ounce of
either. I'm still stuck with the paper shares.
Peter,
I think we'll be OK as far as dignified is concerned, as soon as we win this one I'm moving on to the next one.
Here's our merry band to date;
Peter Asher- Original and dignified founding member
Auspec - Rebel without a pause
$hifty - Timely entrance to group
Journeyman - No turning back after this key addition
Goldfan - Signed up under false pretenses
CoBra{too} - Conscripted to this Foreign Lesion
Gandalf the White- Ya gotta be in it to win
Aristotle - Honorary member {don't tell him}
numus aureus-Pretty much sums up the whole concept
Cavan Man - Conscripted
Leigh -Social member
The Bullion Banks had better pray that this group isn't turned loose on them. Looking for more Founders!
confiscation/arts & craftsThaiGold how have you been? I have thought about that and wonder if I will need to make myself a nifty gold ash tray, coffee cup, and door stop set. How about a set of book ends?
Or a gold box to keep my silver in. Can they steal that kind of stuff?
Hi $hifty
I've been here and there. Fighting to keep the incessant
wolves from my door. An 80 Lb Doberman is very helpful.
How's Baby Raymond.?.
If/When I can unload alot of near-worthless GoldShares
(can you say N-e-w-m-o-n-t.?.)
I will use the proceeds (?!) to get out of debt again, then
invest (?!) what's left into Physical Silver. (@MK)
I will probably bypass the Gold Trinket stage, even tho'
a Gold Coffee Mug would be useful. In case my more valuable
glass one gets broken.
If they grab the gold, you could see gold stock prices rise ? You just don't know. I hold both metal and gold stocks. I figure if the mines fail, production slows or stops. Supply and demand would make the price of metal go up. Time will tell.
After yesterday's turbulence, the DJ Index has broken below its 6-year uptrend. Next support at 9500. S&P500 has likewise fallen below the 6-year uptrend. A real doom≷oom scenario could see support only at 7500 for the Dow and 1000 for the S&P500.
Attn: $hifty============================================
$hifty:
Give Baby Ray a big HUG for me. That's great news.!.
As for Gold Share Prices, when Gold is confiscated, it's
likely those will muddle along at commensurate same/low
prices. Since they (producing blue-chip mines) will still
remain the primary source for industry Gold. (Which of course
can only be sold-to the confiscating governments, and at the
government's decreed price). I forsee that price to be locked
at US$ 50 per ounce. Same as the face value of GoldEagles.
Did they know something we didn't know, when they minted
those.?.
Sure, there will be other Gold sources. "Melt". Etc. But do you
think Aristotle would ever consider parting with any of his for
melt.?. Of course not. There'll become a BlackMarket value
for Gold. But so-risky, that most, if not all GoldBugs would
not consider selling into that. At any price. I wouldn't.
So it would seem that Gold will become the proverbial Poor-
Man's Silver. (Yes, Yes, I know I have reversed that adage.)
Physical Gold will have an industrial value: $50/oz. Nothing
more. Nothing less. Because the government says-so. Period.
It will have no Monetary value whatsoever. Because the same
government says-so. Period. Paragraph.
The only "exception" will be the Government Central Banks
themselves, which will always hold Gold as a Monetary asset
amongst themselves as the only means to give any integrity
to their fiat currencies whatsoever. And to set exchange rates.
What I mean is this: Silver, being exempt (as before) from
confiscation, will become the PM of choice. A store of wealth
that remains freemarket priced. Supply/Demand. And all that.
I would not be surprised to see $200/oz Silver at that time.
For, worldwide, Silver will also become the only "affordable"
physical metal coinage of choice. For the multitudes who, by
then will thoroughly distrust their government-promulgated fiats
upon them. Demand will soar. Useage for day-to-day trade in
the local marketplace will be common. Be demanded. By the
skittish shopkeepers.
I say "affordable", because Gold will be locked at a virtually
worthless price of $50/oz. Who would want it.?. Nobody.!.
But Silver will have the edge. Commanding a far higher price
because of its versatility in industry as well as worldwide
acceptance as a non-fiat "trustable" store of wealth and an
intrinsic unfaltering value for purshases of goods and services.
Imagine that:"I don't want to "waste" $50 of my cash on an
ounce of Gold. Worthless Gold. I'm not stupid." Hence it is
unaffordable to wise people everywhere. A relic of the past,
and you go straight to jail if you try to peddle any of it to
anyone, anywhere. Contraband. Just like Dope. Even worse.
The government would surly go after Gold Sellers.!. Whereas
they generally don't seem to bother trying to catch Dope Peddlers. But if you have Gold... Watchout.!. They will track
you down, and seize more than your Gold. Bye bye house,
cars, assets, and for-sure, even your guns.
It's difficult for us to comprehend this scene. But just sit down
and chat with any person who lived thru the Depression: They
will share with you their fondness for their Silver coins during
that hapless era. They lost their Gold. But were thankfully
allowed to keep their Silver. Example: USA's Silver coinage
remained and thrived throughout the Depression era, WWII,
Korean War, and almost thru the Vietnam War era. So it's
easy to envision once again, Silver becoming a valuable metal
for coinage, worldwide, as fiat currencies collapse everywhere.
But this time around, Silver coins will not fall victim to their
melt value exceeding their face value. Because they will have
a face-weight-value rather than a face-fiat valuation in the day
to day marketplace. Goods will be priced in ounces rather
than in Dollar$, Pesos, nor Euros. Silver ounces.
Not officially, by governments. Just pragmatically, by people.
And I believe we will see various forward-thinking smaller
countries (3rd world-wise) who will put themselves upon a
Silver-Currency standard. To achieve stability and finally free
themselves from the shackles and whims of the IMF and the
World Bank ,and indeed, the US GreenButt and politicians.
History seems to always repeat. Can we learn from it.?.
Rockgrabber--I'm pleased to see the "wet blanket" post was illuminating for you and others. Sometimes I get a lucky break in effective expression.
Most of us can grasp the design providing this period of cheap Gold for those mindful enough to acquire it--a happy consequence of larger monetary events that will one day see their end.
As for your additional question, you asked--
"Now what about the dollar? ... Do they have a strong dollar system too? ... What are they doing in order to get this dollar like this??"
My thoughts-- to see this one and the easy answer, one must be willing to look beyond U.S. borders to consider the global supply/demand dynamic for our currency unit. Being past its international usage prime and on the backside of its life, can you recognize how the international creation would wane, leading to supply tightness when dollars are sought on the forex for those with obligations to repay outstanding dollar indebtedness from prior years? It takes an obvious toll on external exchange rates lifting the dollar against all others, and would also express itself as an aggravation of the U.S. balance of trade--which is something we all see quite clearly. It also explains why loan repayment has become problemmatic and is being replaced with generous degrees of consideration for debt forgiveness for the Heavily Indebted Poor Countries. It also reveals some of the motivation behind the IMF's latest Gold scheme which did little more than to create new dollars for international use without going through the borrowing process that would put another on the hook for even more difficult loan repayment.
But don't fret over domestic deflation. The banking system will surely be saved at any cost--and that cost is hyperinflation, to be specific.
To cryptic ,... To clever, , and to funtastic for me brothers and sisters . and if I read this story right some of us are just to Special , and I for one dont belong here just like this fool stop (.) Whatta heart-sink .
Chase and Morgan merger gives insight into a lot of modern wall street!
Lex: Chase/JP Morgan
Published: October 18 2000 20:54GMT | Last Updated: October 18 2000 20:59GMT
As Marc Shapiro, Chase Manhattan's vice chairman, explained on Wednesday, the nice thing about an all-paper deal is that the price fluctuates with your market value. JP Morgan shareholders might see it differently. Since the news broke that Chase was acquiring JP Morgan, Chase's shares have fallen by 28 per cent against the S&P 500 and by 26 per cent against the S&P Financials index.
The reason for Wednesday's blip was Chase's disappointing third-quarter results (JP Morgan's much better ones were ignored). Earnings missed analysts forecasts by about a third. Poor control of expenses in the investment banking division did not help. But the bulk of the problem is investment losses in Chase Capital Partners. Private equity earnings are low quality earnings. Given the technology-heavy content of the fund and what has happened to Nasdaq, the earnings shortfall is not the surprise that the consensus forecast suggests. When the deal was announced, Chase's offer valued JP Morgan at almost $35bn (�24bn), a 60 per cent premium to its valuation before UBS's acquisition of PaineWebber sparked the speculation. As things stand, the offer now values JP Morgan at just above $25bn, and that premium is closer to 15 per cent. The deal no longer looks as sweet for JP Morgan shareholders (or quite as sour for Chase's) as when it was announced. JP Morgan's executives should have insisted on a collar. As it highlighted in a presentation to investors at the top of the market last February, Chase is now an internet stock as well as a bank. Financial Times London
****Notice that the analysts didn't really have an independent view of the earnings? WHY? Because few analysts nowadays really try to estimate the earnings of companies they simply rely on the management to direct them.
If you are going to be using your stock to purchase another company this can be a valuable situation for the management. Also it undermines the shareholders because they really don't get the independent analysis that they think they are paying for in the very high investment fees they pay their managers. In this case it is taking it out of the hide of the Morgan shareholders.
SECOND POINT The two of the largest banks in the world are merging for reasons that no one seems to know. Why? Supposedly JP Morgan got its head handed to it in some derivatives and needed to merge quickly and Deutsch Bank took a close look and passed about three months ago.
If that is correct then this is a case of both sides snookering the other. I love it.
Chase as it turns out had lost enough in its Chase Capital Partners to dramatically hammer its earnings. Kind of funny when you think of it.
Now pay attention because Al "Too big to fail" Greenspan will be whining to you in a few months that we can't let Chase(with Morgan under the covers) fail since it is a linch pin of our banking system and all those pension assets are invested in their commercial paper blah, blah, blah, only when they take the ability to create money away from these clowns will they stop. And that will happen ONLY when the market fails to accept it. Which luckily is probably a lot sooner than they think. By the way the old Chase almost crashed the entire market back in 1992 remember? They were the "December surprise that Perot kept talking about would happen right after the elections. The old Chase had to be saved by merger by Chemical Bank which then took over eveything including the name. The old Chase had almost defaulted a year earlier on its commercial paper I believe and needed a rescue since all those supposedly safe money market funds had their commercial paper up the ying yang and would have broken a buck, which is an euthemism for not having the money market value stay at a dollar per share. It happens when the losses are so great they can't be hidden by the income being deceased. It tends to really panic savers. Which is what we called the market speculators in America before Rubin came along.
Someone is pushing the triad futures hard this morning. NASDAQ up over 90 now. CNBC noted saying this morning that the 300 point comeback was remarkable from its yesterday's low.
**Triad futures is my term for S&P, DOW, and NASDAQ.
Do you heed your own advice? Thoughts on Trade deficits--big and small
Back in the "good ol' days" of the Gold Standard, there really wasn't such a thing as a trade imbalance. Exports always matched imports in real terms because the currency used to make up any shortfall in exports was itself a tangible and exhaustible good (Gold). What we would today call a trade deficit was back then more properly described as an unfavorable trade position -- unfavorable because instead of consuming in sustainable accord with current production, we would actually be dipping into our monetary savings through the export of our most flexible asset, Gold. Of course, as a major Gold producer, the use of Gold to balance our trade position would not be unlike the use of corn or machine parts to do the same.
Only in modern times does the sense of balance take on new significance. For most countries, the external value of their currencies is affected by the direction of currency flow dictated by the balance of trade settlements. As for the U.S., we are in a unique but temporary position in which we haven't yet had to pay the full price for our past trade deficits. Until that day arrives (with severe currency devaluation), we might be inclined to stand the old terms on their heads and describe our current trade deficit as a FAVORABLE trade position because we are receiving real goods and services from other countries with partial payment (required in excess of our own exports) made in typically depreciating paper of our own easy creation.
Many Gold advocates would like nothing better than to see these countries immediately exchange these dollar assets for more permanent and politically neutral Gold assets. Indeed, that would be the best management paradigm to see adopted at some point going forward, guaranteeing a level monetary playing field.
If this seems appropriate for the best international interest of trade-surplus countries, wouldn't it also seem to follow that it would be prudent for individuals, too? When you engage yourself in gainful employment, it is as though you are a one-man nation running a trade surplus, and you are being compensated with the currency created by a nation other than yourself. If you would advise other nations to "go for the Gold" as a no-brainer, isn't it hypocritical if you don't also "go for the Gold" with your own personal balance-of-trade surpluses?
I have a few replies / comments:
-----------------
HA! HA! This is good! You know, there are only a hand full of people that know I post here and one of them just sent me this comment. I had to share some of it with everyone. It went like this
============
auspec (10/18/2000; 17:27:06MT - usagold.com msg#: 39342)
WE'RE BAAAAACKK!/ Peter Asher
What say you fellow {half} wits??????????
-----
His how his note to me was: What the hell? That auspec has some nerve. I spent years trying to move from 1/4 wit up to the 1/3 wit level! Now I have to orientate my goals to reach his 1/2 mark to enter that select group. Well they can stick it, I won't live long enough to get there!
====================
ALL: this is how some of these brainy people think when they are drinking a little. HA! HA! HA!(laughing hard) (smiling) Here is another one:
Date: Thu Oct 19 2000 01:21
sharefin (From the far side) ID#284255:
Copyright � 2000 sharefin/Kitco Inc. All rights reserved
Joe Bataglia just announced on his national radio show:
( uponroof ) Oct 18, 15:04
"If you look at the action of gold and you look at the action of the Dow, at the key turning
point where the Dow was down 400 and some odd points, and gold was up 3-4 dollars, 5
dollars what ever it was. AT THAT POINT THERE WAS AN INSTANTANEOUS AND
SIMULTANEOUS CHANGE IN DIRECTION IN BOTH OF THOSE MARKETS.
I'll tell you what I believed happened. I think that the big investment bankers, and there's
probably a hand full of them who's names I won't mention. I'll bet they borrowed gold from
central banks, sold the gold, used the cash to come back in and buy the key companies. What
were the key companies? JP Morgan, IBM, Intel, Citicorp, Chase. Those were the key dow
components that caused this enormous rally.
I'll bet if we had access to the trading information you'd find out that it was some of those
very same companies that came in, got a huge amount of cash from somewhere. Where could
you get a huge amount of cash virtually free? The only place I know where you can get nearly
free money is to borrow gold from a central bank and turn it into dollars at 1% interest a
year....."
Joe also said he heard through the grapevine information to lead to the above theory. END
What a great post! The game is becoming visible and therefore dead! These forces can only operate in the dark and they know it. Mr Battataglia had better watch his back.
All of this can only happen where the Press is owned by the same people who own the brokerages and the banks, and the elected officials have no term limits and stay in power because of soft money from the former. There lacks a credible check and balance to prevent such a mess as we see developing.
The Press doesn't tell on the brokerages, the brokerages don't tell on the banks, the elected officials don't tell (or do), and the appointed oversears look the other way. A mighty mess we have here.
Aristotle I think you are right but Traveler made some comments the other day that differ from your opinion of the ultimate outcome.
Any comments? Traveler predicted that the ultimate outcome would result in such a destruction of wealth that real estate would be depressed as the collateral was called in and sold into the market to cover the unpaid debts. This and a general decline in all comsumer borrowing and spending would severly depress many sectors. Granted the newly competitive US manufacturers would benefit if the collapse was accompanied by a decline in the dollar and this might be a counter force of some significant magnatude, but in general while I agree with your statement:
"But don't fret over domestic deflation. The banking system will surely be saved at any cost--and that cost is hyperinflation, to be specific.
Gold. Get you some. ---Aristotle"
I wonder if the prognosis of The Traveler might not have some validity as well. What are your thoughts?
The only answer is communication by means other than the national media. While it is unlikly that we will change the world with only the internet links, when you add talk radio and cable, c-span and others of independence, it becomes plausible. Perhaps the very rapid growth of all these mediums over the last ten years is the best testament that what you imply is true.
I have been thinking a lot lately about the various types of personalities there are in our society and how different ones or types are capable of handling data in different ways. I think it is interesting that a site like this attracts people who want to know the answers and that other mediums attract many of those that don't want to know much about anything. What the other side has become very adroit at is knowing which type they are talking to and addressing their arguements in a language those types of people want and can understand. It is a powerful knowledge after all.
Paper currency has often been called funny money, but it can't compare to the amount of fun people can have with a firm grasp (understanding/physical) on Gold.
On Darwin, I tried reading his "Origin of Species" once, but the plot took too long to evolve.
My take is that all the "Insiders" knew they were going to re-inflate the bubble and so ignored gold. I've said this several times before; If the markets are going to be allowed to crash, there will be a precursor in the form of an unexplained Gold rally. �They' are not going to "give up the ghost" on the stock market without first securing a hard asset position!
I think that if they are looking for a hard asset play to buy to save their own assets, they would force it down not up as they buy it. Especially since these guys are thugs not investors. They want their risk minimized. Maybe their is a reason they named the place "goldman sacks"?
The siege continues, still no word from the{Ivory}Tower. They are certainly worthy, or possibly asleep. The intellectual CLHCs {Cerebral Left Hemisphere Compromised} are firmly entrenched to this point.
BREAKING NEWS!!!We have been mentioned by Zenidea. She is now numbered among us for not ignoring us. WE ALSO RECEIVED AN ENDORSEMENT FROM TRAIL GUIDE!!!! Victory is now certain, am planning on going after Hollywood later today.
Our faithful are rallying behind Peter Asher, our Rosa Parks, and we now estimate being in total charge of this formerly esteemed forum within days. Unless the elitists yield to our pleas we will have to storm the castle and take ALL the plunder {Uruguayan Pesos} from these Robber Barons. Their Unfairness Doctrine, giving quotas and preferential treatment to the intellectuals and humor-impaired, is a crumbling Manifesto. The brainy have their HoF, we are only asking for "what is rightfully ours", our CLHF-HoF for the clever/Conscripted. This site isn't like the U.S. elections, as our kind host actually listens to our votes here {I think}.
To date we have used the weapons of blackmail and pestering on the anti-CLHHE-HoFs, w/o any visible success. They need to know we have many more aces up our arses {sorry Peter}, begging comes to mind, and we will not hesitate to use them. Hint: I know the guy who INVENTED the internet. Recognition of CLHE-HoF will bring quality of life to the USAGOLD Forum. We're all going to be independently wealthy {like MK} soon- might as well start learning how to enjoy life more NOW! Who else will join our ranks, see your name in lights,& learn to laugh your troubles and enemies away?
TownCrier- What say ye to your fellow countrypersons- Peter the Great, Auspec, $hifty,Journeyman, Goldfan, Cb2, Gandalf the White, Aristotle, Leigh, nummus aureus, Cavan Man, Zenidea, and Trail Guide?????
As promised- The records of previous battles;.
auspec (10/18/2000; 17:27:06MT - usagold.com msg#: 39342)
WE'RE BAAAAACKK!/ Peter Asher
Peter,
I can't seem to get a rise out of these guys, maybe they're asleep at the stern. Thought for sure my financial pressure would get the job done, guess some people just don't need that kind of money. Maybe CPM is another BB, have all this physical supply readily on hand, and just simply don't care about another $2.34M order {maybe they didn't see that M correctly}. Anyway in the interest of obtaining our HOF for "colorful" posts we should try another tact. Let's just keep pestering them until they accede! No one can hold up to that type of pressure. We need some more USAGOLD posters to join our small ranks {2}. Looking for former class clowns, the irreverent, goofballs, offbeats, lefties, Californians, past glue sniffers, poets, philanderers,plagarists, ANYBODY that can work a keyboard! Will settle for just one more humor advocate. It doesn't hurt that much to use several sections of the cerebrum. Help me, Peter. Here is yesterday's post as promised, guess what you will get to see tomorrow with additional commentary??? Give up yet???auspec (10/17/00; 21:27:22MT - usagold.com msg#: 39265)
Peter Asher/ Satire
Evening Sir,
The silence ends as am no longer able to contain myself, here is a second to your desire for a separate HOF category for the off-beat! Lord knows this site could lighten up a bit. This poster has a lot of influence with Michael as am currently in process of ordering $2.34M worth of British Sovereigns from him. Either we get our category or I will pull this order! This is clearly a capitalist enterprise that responds to it's customers {and their bucks}. You know, with the commissions this outfit charges, 30-35%, that order is worth a lot of ski trips, and bottles of Chivas, even to Buffet, Gates, and Kosares. If we don't get our needs met by the next new moon we'll organize a strike and all buy our future fortunes on Comex {they have all that gold don't they?}. It is totally unfair and undemocratic to limit the HOF to the intelligent. Let the people speak and gain the victory from our oppressors...What say you fellow {half} wits??????????
P.S. This post will appear daily until the revolution is over.Thank you Sir Peter for your persistence!
The one year and 6 month lease rates edged higher yesterday, according to the charts at Kitco. The shorter term lease rates fell. This does not reflect a greatly increased in demand for leased physical gold, and that does not seem to support Joe's theory that lots of gold was leased and sold yesterday. To me, it appears to be a futures-driven event as ORO has suggested.
nickel62 -- inflation it shall certainly be -- as the more politically palatable and doable outcome
http://www.usagold.com/hall/halldiscussion3.htmlThe Traveler's own past words will lend ample reasons that support that position (expecting inflation) from part of our prior monetary discussion found at this URL. Just scroll down a post or two for his input at that time, which was a very good post on creditor/debtor dynamics. I would encourage everyone new to the forum to review this entire thread from the beginning as time allows. There is some classic Trail Guide commentary throughout, and good thoughts by many on a monetary issue that looms large on the horizon.
Those of us at the back of the class have been wakened from golden slumber by your loud conniptions and protestations. What the bleep is going on here? Can't a simple dullard catcha wink of nod without someone catching an infarction two rows over cause he can't get the prof's attention?
PLEEEEEEEEEEEEESE Sir Townie, give them what they want, whatever it is cause if they don't shut up I'm gonna go out of my mind.
NOw, where was I...goldisgoodgoldisgoodgoldisgood...zzzzzZZZZZZZZZZ-SNORT-COUGH-zzzzzzzzz.
Thank you for your very enlightening posts over the past few months. I have learned much from you all.
However, there is one question about the relative value of financial contracts and physical gold investment in financial/currency crisis which I do not think has been addressed. What do you think are the relative advantages/disadvantages of invesmtment in physical gold versus investment in inflation-adjusted bonds issued by sovereign states such as the US and Canada?
auspec -- don't be shy to try (the sitemaster) e-mail, too hard to ignore
You won't hear it from Townie directly (at least not on the forum), but just as in the fine old tradition of mining, take it from me, he tackles mountains (largely behind the scenes) like a rented donkey. I'll see what I can do to make sure he gets out for a good lunch to pick up the energy and attitude necessary to go that extra mile for us all -- the poor chap.
a.g. chariot's question -- "What do you think are the relative advantages/disadvantages of invesmtment in physical gold versus investment in inflation-adjusted bonds issued by sovereign states?"
Most obvious would be the question: Can you trust the sovereign state to provide a reliable calculation and adjustment that adequately reflects the FULL extent of the inflation? The Gold market is not there yet, but when a fully free market takes hold as is inevitable given the political will evident in the context of current world developments (China and euro), with Gold you will gain not only capital appreciation as the current shackles break away, but from that point on you will have the market, not the government, properly marking the value of your asset to reflect the existing conditions of inflation.
You guys are a riot! I cast my vote for a Social Hall or Hall of Fun or whatever it is you're agitating for. Things do get overly serious around here sometimes. My husband is complaining that I'm turning into a gloom-and-doomer.
I ordered a couple of pesos and Argentinos yesterday, so I KNOW my vote carries lots of weight!
As a long time lurker, i bow to the wisdom of the many veteran posters on this forum...it appears to be one of the only discussion areas i've found where the participants haven't completely lost their bearings.
A question....Does Central Fund of Canada, set up by the Spicer family in Canada, holding bullion, both gold and silver,unemcumbered and segregated,
qualify as physical or paper holding? I realize it's not as liquid or portable as physical, but would it suffice in an IRA situation.
Opinions, please, especially from ORO'sir.
Thanks in advance.
Bowing humbly to you all.
Goldenpeace
CLECHOF I leave you alone for 1 minute, and see what you go and do!!
Yesterday I went off in an attempt to win a few coins for my poor purse, and come back to what I view as the best days postings ever. Almost every post had insight and wisdom. Well done to all.
I would be a supporter of CLECHOF, but doubt I would qualify as a founder.
All to often, upon reading someones post here, I smack my forehead and wonder, "Do you have any brains at all?" The smack does not help that one poor braincell rattling around in there. Could it be that it is a right brain cell? I might qualify then.
I took the online MB test and wound up as ENTP, however I wonder how Sir JAVAMANs wife would react to the scores. My high score was 52% and my low score was 51%. The scores have always been lowish, but my P has been falling. Not sure I am in favor of that.
I enjoy the humorous element, particularly when it is of the nature of Darwins plot taking to long to develop, or FOOLSTOP comments.
The HK Gov. hasn't intervene since the last Economic-storm of Asian. HK Gov. has set up the "Trafu- Fund"(I'm sorry that I forgot the correct spelling but it's a kinda Fund) for manage ALL of the shocks that she has bought at that moment and it(Trafu-Fund) has been go to public about 1 more years. Now, it is NOT controlled by HK Gov.ANYMORE. Anyone could buy its shares anyway!
About the Fund of Taiwan for "defend" its stock markets. Well, they have invested about NT400 billions in markets butthey just lost about NT100 billions from it too.
Journeyman thanks for your info on this. I am just thinking, that it would be in better interest for mining companies to be debtless, and hold physical gold as there holding. The first one that would do this has my vote. There is not one mining company that holds physical????
Aristotle thanks for your minds work. thanks to you all for your minds work. It takes little dollars to buy alot of leveraged dollars through this paper futures market. If large entities buy dollar contracts (with the leverage being there) does it create a artificial high value on the dollar. I think it does, by just thinking it myself. The exact opposite of what is going in gold is going on in dollars?? instead of selling leveraged paper gold and creating a low price, it seems that they also buy dollar contracts just to strenghthen it.
A hearty welcome to new recruits:
Christopher-You have pushed us {WAY} over the top, you are now a ranking officer of CLHE-HoFA{dvocacy}G{roup}! Do not wake that guy up again!
justamereBear- Founder you are. This is the internet- we make the rules here. Call MK with your "free gold" order.
Aristotle- Thanks for the short-cut tips, but this is so much fun now am trying to delay our inevitable victory a few days. Now here are Aristotle and Trail Guide, a couple of switch hitters using both cerebral hemispheres. That is a path we can all follow......BiCerebral. They will certainly get some type of special protections around here.
Who else wants to cultivate some new neurons? Use it or lose it, join us or risk going down with the Castle. Do you other guys read anything besides your own posts? What time does Townie get to work these days? If we could enlist Farfel and turn that anger to OUR advantage....WOW! SteveH- You must be limping from your right brain dominance, you need us. Fair warning to all; If you even mention CLHE-HoF, directly or indirectly, or do anything besides ignore us completely, you will be considered a full fledged member with all privileges due you. This is like a cerebral tumor, once a few synaptic connections are made you will never be the same {as your Founders clearly demonstrate}.
Who Else????
Victory is close at hand. Gold is going to break free
of modern mans shackels in the next few days ahead.
If you have not done so, make sure you have put on
the armor of God.
Rev. Chapter 3 verse 18
( I counsel thee to buy of me gold tried in the fire, that thou
mayest be rich; and white raiment, that thou mayest be clothed, and that the shame of thy nakedness do not appear; and anoint thine eyes with eyesalve, that thou
mayest see.)
God is speaking to me and I feel very confident the end
is close at hand. Do not give up, man will not prevail.
Remember, Wall Street and the politicians are the evil
empire trying to lure every last soul into the stock market
where it will be lost for years to come. Innocent people
will lose their life savings and lay naked in the street
in belief of our financial system is too big to fail.
Hee Heeeee I love it guys.........from my observations of markets,.....they seem to turn just as I (and others(all of us here?)) percieve that the fabric of reality has been stretched (boken?) to the point were all I can do is laugh at almost anything relating to what is holding back the change that I have been expecting for some period of time.
Like the market action these last few days.......it is so luny ........my head feels light.......and I can giggle every time gold dips and the dollar rises......its like I know that I know that I know that I know that I know.....that I really do know that the change is upon us!
Cheers, and pass the grawg!!!
Back in September of 98, I met an old friend, recently retired, whom I had not seen in a while. Our discussions soon came around to action in the stock market, at which time he revealed that some 80% of his retirement capital was tied up in stocks. This was a time shortly after the Russian bond default and the ensuing LTCM debacle. Pessimism was raging, and the market had experienced a significant decline from its summertime high. He was somewhat concerned about the losses he had taken of late, but remained confident in the long term.
I counseled him that the similarities to 1929 were significant, and that the risks of remaining in this market were too great to be trusting a loss of his nest egg. I mentioned the ridiculously high P/E ratios of the day, and talked of bubbles and manias past. I spoke of the Japanese experience, noting that their market remained below half of its former peak of eight years . What got to him was my mention that the Dow did not return to its 1929 peak until 1955, some 26 years later.
He subsequently rearranged his portfolio to move largely out of stocks and into bonds, T bills, and other such investments. This transpired at the bottom of that market decline. What followed amazed me and upset my friend. The aggressive easing of the Fed, with the convenient cooperation of such lending institutions such as Fannie Mae, did its magic and the market soared into the year end. Part way through that rise my friend returned to stocks, dismayed for having taken my advice. He had learned an expensive lesson. The lesson that the stock market rises in the long term, and that any drop is to be ridden through. The lesson that some collective irrationality takes hold of the market in the early fall, resulting in a temporary dip, and a great buying opportunity, providing a base from which to rise again to new heights.
This same lesson had been seen before by investors the previous year. It was also seen in 1987. It was to be reinforced to a lesser extent in 1999. This is a lesson learned well by many again and again.
This lesson is probably at play in today's market. It is bolstering the courage of those who buy stocks in this environment. It is being repeated ad noseum by the investment professionals whose well-being depends so much on a continued rise in the market.
This will likely someday prove to be an erroneous lesson, a false wisdom. It will cost many very much of what they cannot afford to loose. When? I don't know. Perhaps this is the time, perhaps not. The current investment climate certainly seems more dire in many respects than recent years. But I had also learned a lesson at that time. Mine was that the timing of the collapse of a market is very difficult to know. That the power of vested interests to forestall what seems to be inevitable is significant. And finally, I learned not to play investment counselor. Now when asked, I will give my opinions on the current environment. I will freely relate what I am doing with my savings, but I avoid going out of my way to forcefully advise others on what to do with their savings.
NOw that I have reached such an austere and(might I add, humbly) so deserved position among my peers, My first official act is to give myself a raise and take the rest of the day off. By the way which way to the executive wash room....(another)By the way Towne Cryer, there is that little matter of our HOF.....
CHLE-HOFAG's...Get us one.
http://www.sharelynx.net/temp/ProductionRanks.htmHere's a table showing gold production by the top companies.
The top 15 companies are producing 74% of total ounces
The top 30 companies are producing 92% of total ounces
90% plus of all hedging globally would be concentrated within 30 companies.
What needs to be filled in is the two columns on the right hand side.
http://quote.yahoo.com/q?s=^VIX&d=3mThe lesson could also be learned as: Buy volatility (VIX) when it is low, sell when it is high. This was my mistake in 1998, when I let $20,000 in SPX leap puts vanish, deciding to "let my gains run", and not knowing when a good bargain was being offered for them (at near 50% VIX).
The problem with options in a final collapse, of course, is that they do not price in the default of the market itself, and the dissolution of all contracts with counterparties into dates with lawyers in court for years down the road. Thus you can never fully collect your winning bets -- that you paid full economic and Black⪼holes price for -- if you wait till your full move happens.
With gold now, we are buying volatility cheap. The gold "VIX" is being suppressed in the derivatives markets. But ESPECIALLY with gold, the physical is the only way to collect, as the derivative markets seem to be a put-up job carrying multiple agendas for bigger games than gold itself.
You said:
>>>I think that if they are looking for a hard asset play to buy to save their own assets, they would force it
down not up as they buy it. Especially since these guys are thugs not investors. They want their risk
minimized. Maybe their is a reason they named the place "goldman sacks"?<<<
That's what they have been doing, per my ongoing "best guess." I think that for the "Endgame" all the stops will be pulled out and we will see a definitive sustained rise in the price of gold and silver. That is IF they throw in the towel on trying to keep the wealth transfer machine afloat and hyperinflate to permit the debt bubble to be serviced.
"Beginning in January, the cost-of-living adjustment will increase the average payment $29. to $845. a month.
.....the largest increase under the nation's retirement system in nearly a decade, federal officials announced Wednesday."
ORO -- your PPT-watching analysis is fascinating, even read a day later when I can't watch the action real-time. I'm grateful that you share with us, knowing there are other sites that would love to pick your brain as a trading source.
The rumors were coincident with the declaration of intervention and had resulted in a surprise dumping of treasuries the day before intervention.
I think it was a case of "buy the rumor" when treasuries were dumped and "obfuscate the fact" when the Fed/treasury declared that the repatriation of the proceeds of treasury sales was "intervention". And finally, the "study" by Iraqui economists confirmed the political intention to have the dollar dumped in Iraqui oil trade, which was followed by a "sell the news" response as the players involved converted back to dollars.
ORO - Thanks for the resonse. So much of the contemporary markets are the actions of traders jocking for profit position and in doing so obscuring the actual trends.
If your wife or friends think you have gone off the deep end with the gold market being manipulated get them to read this book!
John Brimelow
john.brimelow@donaldco.com
October 18, 2000
"When Genius Failed
The Rise and Fall of Long-Term Capital Management"
Roger Lowenstein
Random House
When the financial madness of the late 20th century America fades into history, the saga of Long-Term Capital Management could well emerge as the quintessential story. Roger Lowenstein's �When Genius Failed� is likely to be a classical primary authority.
Lowenstein is a deeply professional writer, who reduces the arcane complexities of derivative dealings to lucid prose, and focuses on the crucial components in a confusing complex story. He brings the icy precision of the battlefield surgeon to the deafening chaos of Wall Street conflict. His chilling assessments of such phenomena as the appalling Larry Hillibrand, perhaps the key force at LTCM, a strangely-diminished Allan Greenspan, and the sinister force of Goldman Sachs, are likely to prove definitive..
As a member of the Frank Veneroso/LeMetropole Cafe circle, and consequently feeling in possession of some first-hand knowledge of the LTCM smash, I found this book stimulating and informative. So also would others with professional involvement. This is not a book to be ignored.
LTCM was set up to profit from irrational disparities in valuation between similar financial assets, primarily bonds. The assumption that these occurred randomly in a normal distribution pattern had become an article of religious faith at U.S. Business Schools in the previous 20 years. Two of the progenitors of the view, Robert Merton of Harvard, and Myron Scholes of Stanford (and of the Black/Scholes option valuation model) were L-T partners. (Fischer Black had had the judgment to die an untimely death previously.) Careful reading of their work reveals that they assumed continuous markets and stable volatility ranges (neither always present in reality) and they acknowledged but ignored the fact that probability distributions in financial markets often show �fat tails� -- in other words that extreme events occur far more frequently than a normal curve would predict. But they nonetheless built a �school� of like-minded thinkers and disciples. This group had become very influential on Wall Street by the late 90s.
Wall Street in a sense, became a victim of the principle vice of the U.S. academic profession: the eagerness to set up introspective communities, dedicated to a dogma, which insulate themselves from fact-based criticism by exclusion and intimidation rather than argument. This behavior pattern, more redolent of Eastern European despotisms than of the English-speaking empirical tradition, turned out to be inimical to financial as well as intellectual health.
The life cycle of L-T was quite simple. Profitability in the transactions the fund sought out was quite thin, if reasonably predictable. Therefore, from the start, the partners sought to maximize size and leverage. Central to this strategy was relentless, brutal pressure on credit sources, seeking the cheapest rates and least encumbering terms.
Founded in March 1994, with equity of $1.25 billion, the fund was able to pay out $2.7 billion at the end of 1997 to selected shareholders. This sharply increased the active partners� share of the pool at the expense of the investors, some of whom were in effect sent a check and told they were no longer involved. As L-T did not reduce its enormous positions, this move also hugely increased L-T's leverage.
By then, however, numerous other operators had entered the same field and opportunities were growing scarce.
It was widely thought L-T was working on advanced and refined versions of Merton & Scholes� theories: this was not the case. Shortage of opportunity was dealt with simply by astonishing geographical diversification - Lowenstein cites 24 countries - and by an expansion into equity risk arbitrage. Up to 30 positions were carried, some in huge size. LTCM� s expertise had little to contribute in this area. In retrospect, this was a major strategic error by management.
Consequently, it is not surprising that the Russian default of August �98 triggered the demise of the firm. As Lowenstein says, �In seventy years, Russia's communists had not succeeded in dealing markets such a telling blow as did its deadbeat capitalists.�
However, there is much more of importance in the LTCM saga than the rise and fall of hubristic, if well-funded, intellectuals. In my view, the most important document that appeared in the aftermath of the rescue was published in the Financial Times weekend edition Oct 10/11 1998. (Lowenstein does not mention it.) This was a leaked credit memorandum from Union Bank of Switzerland, one of the main losers in the smash, concerning the reasons the bank chose to do business with an entity leveraged far beyond the bank's normally tolerated limits. LTCM was a good credit, UBS hoped, because "eight strategic investors" including "generally government-owned banks in major markets" owned 30.9% its capital, giving LTCM �a window to see the structural changes occurring in those markets to which the strategic investors belong�.
This appears to be a bald statement that LTCM had access to inside information (which in the bond market, as Lowenstein points out, is not illegal) on particular national credit markets - because of its� involvement with government institutions.
Who were these �generally government-owned banks�? Why would they want to give a foreign institution such privileges? In the case of the Italians, the only known Central Bank participant prior to this book, there was a reason, as Lowenstein reveals. Italian Government bonds were unpopular. �The bond market was rating the Italian government as a poorer risk than private banks�. Investing $100Mm and lending $150Mm more, the Italians obtained the sympathy of a market player willing to operate on a staggering scale � quite enough to move the Italian market. L-T made 38% of the $1.6 billion it earned 1994-95, its best years, from the Italian relative value/convergence trade. The Italian authorities got a bond market that appeared to be applauding their efforts to reach Germanic standards of financial probity. Who knows what other tasks L-T was performing for its �generally government-owned� investors?
So who were the other �strategic partners�? World media displayed a peculiar lack of interest in this question. (I can vouch for this - I myself tried to get two major wire services to follow up.) Indeed, as Lowenstein remarks, the general press was also �stunningly silent� during the period when L-T's death throes were starting to disturb markets.
But the author does have some answers: the Bank of Taiwan, the Government of Singapore Investment Corporation, The Hong Kong Land Authority and the Kuwait Pension Fund were names not publicized at the time. Some large private sector entities were: Sumitomo and Dresdner Banks, Paine Webber, the Liechtenstein Global Trust and of course UBS.
Still, several names are still needed to fulfill the UBS credit memorandum. Given L-T's Latin American interests, one must suspect one or two of that region's notoriously free wheeling Central Banks were involved. Similarly, I have always thought the Dutch Central Bank, perhaps the Austrian, and one of the French para-statal banks, likely candidates.
The perspective clarifies an obvious puzzle: Why was the L-T affair such a crisis? Lowenstein reports that the ubiquitous Peter Fisher of the New York Fed, when called in to evaluate the L-T situation in mid-September 1998, guessed 17 counterparties might lose $3-$5 billion combined. While annoying and bonus- (even department-) threatening, this amount, or several times this amount, simply was not big enough to create systemic risk. The S&L, 3rd World debt and Russian crises were all far larger.
True, the exposure was all in, or related, to public markets, which might indeed have had a dramatic few days. But these were generally not outright risks where losses might never be recovered. L-T was quite right to plead that their convergence or relative value trades would most likely work out, given time and enough carrying strength. This is in fact what happened, enabling the rescuers to recover their $3.65 billion injected in less than two years.
However, if members of the Central Bank fraternity stood to be embarrassed, and even surreptitious market manipulation revealed, the eagerness of the Federal Reserve to orchestrate a bailout (or coverup) becomes comprehensible. It must also be said that, although the likely losses might have been limited, some of the bonuses and jobs threatened by L-T exposure and by involvement in similar trades were located at politically well-connected private institutions, notably Goldman Sachs. (Happily, the Treasury official working with Fisher on the rescue, Gary Gensler, was an ex-Goldman partner.)
The picture of Goldman Sachs painted by Lowenstein is perhaps the most significant aspect of the book. After reading it, and remembering the stories emerging from the Ashanti disaster of a year later, it is difficult to understand why any public company would want involvement with this firm. As Lowenstein portrays it, Goldman under Robert Rubin and Stephen Friedman in the 1980s dropped the old firm's previous inhibitions against, for instance, proprietary trading that might damage client's interests. The sheepdog in effect turned into a wolf. The dimwitted sheep in Corporate America have only just begun to realize this. In the LTCM case, hordes of Goldman people flooded into L-T's offices in the guise of evaluating the portfolio for the purpose of raising capital: "Goldman's sleuths... had the run of the office. According to witnesses, [ one] appeared to be downloading Long-Term's positions...Meanwhile, Goldman's traders in New York sold some of the very same positions. Brazenly playing both sides of the street, Goldman represented investment banking at its mercenary ugliest"
Lowenstein dutifully records Goldman's denials, and their counter-arguments they did own some of these trades anyway and were merely being prudent. He also notes that others appeared to be doing the same thing. But he seems to accept that L-T's trades were singled out, makes clear that the partners- and some outsiders in the final rescue discussions - believed Goldman guilty and piles on such detail as to make it clear they were.
Goldman's behavior might be considered irresponsible, since it, along with others, was also having a bad time. It lost $1.5 billion in August and September 1998, and was obliged to put off its own IPO. A market meltdown must surely threaten all investment banks. But there were cards up its sleeve. Goldman's Jon Corzine, having eventually indicated an inability to raise funds for L-T, held up the meeting of banks subsequently summoned by the New York Fed to announce a vulture bid by Warren Buffet, AIG and Goldman, at less than half L-T's hugely eroded net worth. Since L-T's assets, once again, were convergence or relative value trades, virtually certain to recover handsomely once panic receded, this transaction could have been extremely lucrative. It died essentially because of Buffet's determination to humiliate the partners caused the proposal to be poorly-structured. (No doubt coincidentally, L-T had aggressively shorted Berkshire-Hathaway stock.) Goldman's specially privileged legal representative spent the rest of the rescue meetings repeatedly jeopardizing the proceedings seeking (fairly successfully) improved terms for his client and more pain for the partnership.
One has to wonder at Goldman's behavior, especially after the Buffet bid failed. After all, it was still a partnership. The partners� own money, not that of anonymous shareholders, would be lost if the financial system had really crumbled. Morgan and Chase, in contrast, were quite cooperative. Was it just reckless selfishness -or was Goldman confident a bail out would indeed occur?
This brings us to the interesting question of gold, a market in which Goldman became peculiarly influential in the 90s. Eighteen months before L-T's demise, Frank Veneroso was told by a prominent hedge fund manager (unmentioned in this book) that L-T was short four hundred tonnes of gold. This seemed plausible, because we were aware of a more rapid expansion of Central Bank bullion lending than could be accounted for by known borrowers, and it was obvious that a heavy seller had been active in the market.
Moreover, it was becoming clear that large hedge funds and bank proprietary desks, having profited enormously from the �Yen carry� trade (borrowing cheap Yen to fund higher yielding positions in other markets) were hunting around for similar situations. Since gold interest costs (�lease rates�) were even lower than Yen, and bearishness was rampant, such a strategy had logic. I was told by a sophisticated derivatives man that he doubted L-T would take the �basis risk� (e.g. borrow or short gold with no hedge). But Lowenstein reveals that the fund took substantial basis risk right from inception: much of the Italian sovereign risk was unhedged (merely very closely watched).
We were never able to confirm this story. But given the manic secretiveness Lowenstein reports was characteristic at L-T, this was hardly surprising. Anecedotal evidence continued to accumulate.
There is no mention of gold in any form in this book. In response to repeated assertions by Bill Murphy on Le Metropole Cafe, L-T's counsel took the extraordinary step in June 1999 of sending an affidavit from L-T partner Eric Rosenfeld (who seems to have been charged with being fund spokesman - he also answered written questions for Lowenstein) asserting L-T had never had any dealings in gold "in any..form whatsoever." Why it was necessary to respond in such a way to an obscure dissident website then only 9 months old, when no litigation was in process, is an interesting question.
Since those early days, Le Metropole Cafe has greatly extended its network of �Deep Throats" supplying information from all over the world. One of these has reported a conversation between Myron Scholes and a boyhood friend in Hamilton, Ontario to the effect that L-T was indeed massively short gold, that the position was relieved by the authorities who swore the partners to secrecy for which they were indemnified. This conforms interestingly with otherwise curious behavior by L-T partners towards Lowenstein. Davis Mullins and Eric Rosenfeld initially gave him formal interviews "but such formal co-operation quickly ceased. Subsequent attempts to resume the interviews and to gain formal access to..others of the partners, proved fruitless." Since the passage of time has vindicated the partners� view that their portfolio was capable of full recovery, and some of them are re-entering the business, this is precisely the reverse of the behavior one would have predicted. It must be said that Lowenstein's omitting dealing with the widespread rumors of an L-T gold position is itself somewhat surprising.
Gold declined almost continuously over the life of L-T. An unhedged borrowing of cheaply-priced gold credit would have been a bonanza. The reason for gold's decline was a substantial shift in the propensity of Central Banks to sell and lend �"mobilize"- their bullion. This development was accurately heralded by certain observers thoughout. It was precisely the sort of �structural change� that L-T �generally government-owned� �strategic investors� would have been able to identify.
The L-T partners were well aware that their competitive advantage lay at least as much in developing cheap funding sources as in asset management. They were constantly, aggressively, searching for lower rates and more liberal terms, and their tight fistedness with their brokers was notorious throughout Wall Street. That a fund running over sixty thousand positions in at least twenty four countries, which had required considerable ingenuity and inventiveness to identify, should have overlooked gold borrowing, is simply incredible.
The Long-Term debacle reflects poorly on their creditor counterparties, and raises serious questions as to the sagacity with which these major financial entities are managed. Lowenstein is justifiably stern: "Through their carelessness, their reckless financing, their vain attempts to ingratiate themselves with a self important client, the Wall Street banks had created this fiasco together...They, too, were awed by�the partners� reputation, degrees, and celebrity."
Interestingly, When Genius Failed confirms what Le Metropole Cafe alleged at the time: the Bankers Trust sale to Deutsche Bank was a distressed merger. What kind of grooming was necessary to achieve the appearance of a premium over Bankers Trust's preceding market price remains a question.
Union Bank of Switzerland, of course, was in the process of ruining itself with various types of derivative exposure: their writeoff of $700Mm on Long Term was the largest announced loss. In large part this was due to an absurdly-priced warrant on L-T's equity that the Bank sold the partners, hoping to improve their business relationship. (An ex-UBS man told me the delicious story that having closed the transaction, L-T promptly shorted Union Bank's stock.) Credit Suisse First Boston sold a similar warrant. Another transaction which seems odd involved Merrill Lynch. In April 1998, with L-T still appearing to be walking on water, Merrill's senior executives personally purchased most of the firm's stake in L-T. This turned out to have the happy effect of getting Merrill out close to the top: But what would it have looked like if L-T had continued to prosper?
Lowenstein judges the derivatives revolution harshly. He asks penetrating questions about the role of the authorities. Given that L-T's "stunning losses betrayed the flaw at the very heart - the very brain- of modern finance" and that the concept it used "prevails at virtually every investment bank and trading desk" it is very strange to find Greenspan and Rubin (when Secretary of the Treasury) blocking all efforts to improve transparency and improve regulation even to the extent of forcing out the former CFTC head, Brooksley Born. A ridiculous situation has been allowed to arise where the balance sheets of major financial institutions have no reliable relationship to the actual economic situation of the firm, because of derivatives. Who benefits from this?
There are few appealing personalities in this drama. James Cayne, chief executive of Bear Stearns, L-T's clearing broker, appears impressive. It was his inflexible determination to hold the fund to its promise to keep a $500Mm pool of liquidity with his firm which triggered the final crisis. According to Lowenstein, he precipitated a near-riot when he told the assembled rescuing banks that Bear Stearns would not be contributing to help its formerly lucrative client. �When did we become partners?� he asked. �They have a different view of the world� said a participant, �they're completely self-interested�. Cayne personally was an investor with LTCM who had been allowed to stay in after the capital reduction.
In fact the figure who emerges with most moral stature could be the lead perpetrator, John Meriwether, Long-Term's founding partner. Somehow managing to command the loyalty of a group of spectacularly arrogant, selfish and volatile men, and shepherding them from Solomon to the new vehicle he designed, Meriwether repeatedly displays in the book an eerie emotional self-control and discipline which in another era might perhaps have made him a great fighting general. A practicing Roman Catholic leading a mainly Jewish group (everyone compromised � he professed to be a liberal Democrat and they played a lot of golf), an intensely private man who with his wife has apparently endured the agony of infertility, Meriwether now appears to be engineering a third Wall Street career. The reader is left with the feeling that he probably deserves one.
The implications of the LTCM crisis are ominous for everybody. That the derivative vogue has undermined and weakened the world's major financial institutions - and to an unpredictable extent, courtesy inadequate reporting procedures mysteriously tolerated by the authorities - has been obvious to any sensible observer for some time. Having an example so skillfully explicated is nonetheless disquieting.
What is really alarming, however, is the insight into the modern Wall Street mindset. The Fed despaired of getting a private sector banker to lead the rescue. "Wall Street had many bankers but no J.P. Morgan.". The reason for this is that proportionately more activity is now in the hands of entities with "a different view of the world" � like Bear Stearns. While Morgan in the 1907 Panic was able to dragoon virtually all significant financial actors, it is notable that no participation by the other great hedge funds is reported in L-T's case - even though they stood to be seriously effected by any disruption.
On an operational level, L-T was notorious for the atomistic view it took of business. It "analyzed every deal in terms of the profit and loss on discrete trades rather than in terms of the overall relationship". Minor technicalities were ruthlessly exploited - Merrill, which raised the initial capital, was stuck with a $7 million loss arising from a drafting error in a transaction document. The fact that Paine Webber's Chairman invested $10Mn personally, and the company $100 Mn did not prevent the firm being cut out of L-T's trading because it wanted collateral. Complaints by counterparties about the poor profitability of the relationship were ignored.
There is obviously a question as to the prudence of this, since L-T was such a huge borrower L-T's staff below the partner level - many highly educated and skilled professionals - were treated with similar brutality. No social activity took place between partners and the rest, unusual for an American firm. Partners "treated the staff with cool formality. They were polite but interested only in one another and their work". Although the associates were encouraged to invest their substantial pay back into the firm, they were kept totally in the dark when things turned bad, despite their being as exposed personally.
�Explain to us why we should be..here� demanded an employee after the rescue. �That's a valid question. We'll get back to you� was the answer. There is no J.P.Morgan to rally Wall Street not because there are not men of similar financial stature - Morgan was not especially wealthy - but because the current beneficiaries of the American capitalist system lack a sense of community. One day we may all regret this very much.
Deflation Scenario I - The Collapse of Real Estate
Greetings to all and I lift my stein to those who welcomed me back to this august forum.
Here is how the boom and bust in the real estate values works. I will try to personalize the example for better understanding by those whose minds are not financially wired.
A new subdivision with 100 lots is developed in a good suburban location. Homebuilders advertise heavily and draw many eager young families to their "Street of Dreams". You are among the first to buy a standard home for $100,000. The friendly mortgage lender squeaks you through the underwriting process for an 80% loan at an attractive rate. The lender then sells your mortgage into a Fannie Mae pool.
The economy is going swell as is the stock market. Furthermore, lenders are anxious to lend more (put more cash � fuel - into the economy) so that the stock of their bank will rise and their options will be "in �the-money". This translates locally into more people wanting homes. Thus as demand is up, the home price rises to $120,000. As an early buyer, you are thrilled at the appreciation (inflation) in the value of your home. You have a paper return of $20,000 on your $20,000 down payment in just 9 months!!! You mark to market your personal balance sheet and start talking about a pool in the back yard with the spouse. Flyers from three banks came just this week that say they love home improvement loans and have easy payment terms tailored to your specific needs. You bite and the pool is built.
More time passes and one Saturday morning out by the pool you read that INTC split again and popped $3 thus adding $8 billion to its market cap for simply passing out more paper. You smile since your 401(k) holds some INTC. The adjacent article reports consumer confidence at an all time high due to FEELINGS of job security, raising equity values and strong home prices.
The subdivision is a great success. So much so that carpenters and brick layers are in short supply. Help wanted ads run in distant newspapers offering top wages for tradesmen. Naturally, the homebuilder passes this price on. New homes now command $150,000 and there is a waiting list. A zoning change on the adjacent acreage is proposed so that section two can be built. Additional amenities are sketched on the promotional plat.
But sales are slowing because fewer families can qualify for the same standard home at this higher (inflated) price. Lender to the rescue! He offers mortgages at 90% financing ($15,000 down - $5,000 less than you paid). Not to be outdone, another lender offers 90% financing with a low ARM teaser rate. Sales pick up especially since a new plant is coming to town that will create more jobs and thus higher demand for housing. The zoning permit is changed and construction crews that just arrived from Ohio begin pouring concrete for streets in section two.
Only ONE month later, the standard home is fetching 10% MORE or $165,000. You have a $65,000 paper gain on your $20,000 down in less than two years. You consider getting a real estate broker license and writing an online newsletter about shrewd real estate investing. A batch of flyers from banks offering a line of credit secured by your home arrives. You bite and sign up for a $32,000 line (80% of $165,000 less the $80,000 first less the $20,000 second for the pool).
A month later you face a choice: replace your three year old auto by drawing on the line or take advantage of the perpetual 75% annual gains the Evergreen High Tech mutual fund has been achieving as a result of the "rising tide of liquidity that lifts all boats" by borrowing on the line.
Lender to the rescue! While driving to your new job � you jumped to a startup for its incredible story and a ton of cheap-cheap-cheap options � you hear that the local auto dealer has a model closeout in progress. You buy that SUV under its ZERO program. That is - after $5,000 off the MSRP, you pay zero down, zero interest and have zero payments for one year. Thereafter, the loan is payable in 60 monthly installments. You ask skeptically "How can this be done?" and the dealer answers that the credit arm of the car maker bundles this type of paper together so that it can be sold in an asset securitized pool to thinly capitalized funding corps on Wall Street. You recall reading in a prospectus that these funding corps get the funds needed to purchase this auto paper by selling commercial paper to YOUR MONEY MARKET FUND as well as others. You are hungry for yield, aren't you?
You are tempted to take two SUVs off the hands of that friendly dealer under those terms, but refrain because you don't want to get over extended. Besides, you hear that the lender lobby is pouring cash into congress in order to get the bankruptcy laws tightened. No more being discharged with a "fresh start". Indentured servitude is making a come back. But hey, you're making all you payments on time even though it sometimes requires you to transfer balances between your 10 credit cards. But heck, if you weren't so credit worthy, why would those lenders keep sending you new cards and constant offers to transfer balances at low teaser rates? You wonder if those funding corps are also buying securitized credit card receivables with funds borrowed from your money market fund.
During the long, slow drive around the subdivision in your new fully loaded SUV, you recall that back in the 70's and early 80's (before the credit boom started), your Dad often bitched how tough it was to get a car loan. Banks would only lend 75% of the base price (zero on the extras) and require full payment in 24 maybe 30 months. Only those with pristine credit histories need apply for credit. What the hell, those were the days before the technology revolution, Alan "Mr. Pump" Greenspan and the NASDAQ.
The next morning, you draw on the line of credit and buy that hot tech fund that surely will be the pot of gold at the end of your rainbow.
The next weekend brings home sales at $200,000! Surely, America has corned the world in its ability to make everyone perpetually prosperous. Your $20,000 down has turned a paper profit of $100,000 in 30 months! At church, your banker wants to know if he can increase your line by $28,000 to $60,000. He sees that you are bumping up against the limit. Besides, he needs to make his sales quota for the month and earn more commissions. He hopes to receive more options at year-end from his aggressive market penetration. He seems sad when you prudently decline.
Then to the protest of all, Mr. Pump begins to raise rates on fed funds � what ever that is. This causes all other rates to also rise. You are happy though for you have a fixed rate on your mortgages and a zero rate on your car loan. Those credit cards could be a problem though.
Section one is now sold out. The last handful of homes went for $190,000 - a closeout sale the developer said. These buyers are full of glee since they got a discount and 95% financing from lender that just opened a new branch in the market that already has 10 lenders in it. Competition is great for the consumer!! One buyer claims to have gotten 120% financing and an adjustable rate mortgage that resets every 6 months.
Over the next several months, interest rates continue to rise, the equity markets seemed trapped in a trading range that signifies "a pattern of distribution" according to Maria and energy prices are heating up. Sales of homes in section two are slow and the home price isn't rising anymore. The newspaper says local building permits are down, the new plant will not be built and that some tradesmen have been seen headed for Ohio.
A year later, as the recession rolls out, some of your neighbors have � suddenly � become unemployed. Your confidence is shaken. Their homes are FOR SALE since it seems the ARM teaser rates have jumped to the point that they struggle to make payments. In an effort to cut his losses, one neighbor sells for $175,000. That is the price it took to get the only "showing" he had in a month to buy. Besides, that buyer's lender has tightened its credit policies and now only makes 80% LTV loans.
Next three more sell, one at $160,000, another at $150,000 and WOW one at $140,000. Seems that few buyers are interested and the ones that are want "a deal". Besides the lenders are getting nervous as credit losses are increasing across all product lines. They hold firm that 20% down is only prudent. That is what the FED examiners told them last month just before they required a 300% increase in the lender's provision for loan losses. Why argue with your banker. He seems dejected now that his stock options are under water following the earnings shock his bank announced to Wall Street.
Then one day you open a letter from your bank that says it is reviewing your line of credit. Please send updated financial statements and your last tax statement showing your home's assessed value. Fortunately for you, you think, the tax value is still $200,000. At the current price of $140,000 and falling, your line limit would be cut from $32,000 to $12,000 (80% of value less the $80,000 first and the $20,000 second for the pool). You could not have paid down the line by $20,000 if the lender demanded it since your tech fund has a 50% loss.
Next you hear that several of your neighbors were foreclosed following their Chapter 7 filings. At the court house steps, their homes went for $125,000 (a fresh set of comps for every appraiser to use). You feel sick and wonder if Bill Clinton feels your pain. The lender who foreclosed it now wants to move the unit so it offers the home at $125,000 with 10% down � 90% financing.
You decide to sell and settle up your debts. You offer your home at $120,000. If you sell, you will settle your home equity line by selling your mutual fund and dipping into your 401(k) for the difference. You are after all an honorable indentured servant.
As your house is the lowest priced house on the market, a buyer shows real interest until he applies for a mortgage requiring a 20% down payment. He too has had stock market losses and doesn't have an EXTRA $12,000 to put down. He takes the foreclosure instead even though it is $5,000 higher in price! Funny how the availability of financing effects behavior.
One day, you read in the paper that your money market fund "busted the buck" and is now in receivership. Seems that those funding corps defaulted on its commercial paper following a 25% default rate on the unsecured credit card receivables and the auto receivables that had no equity.
Another month passes and more foreclosures occur. So many that the lender (or the RTC) is liquidating the units at 50% of replacement cost or $80,000. Deep pocket investors step in, snap up the units and put them on the rental market. The whole complexion of the neighborhood changes.
Though upside down on your mortgage, you take some consolation in the fact that you were an early buyer and didn't buy at the top like your best buddy did, you still have your job despite half the company's workforce being reduced and your spouse though stressed hasn't divorced you. Sadly, your options are worthless since the IPO never occurred.
Then at the mailbox you read that your lender wants another personal financial statement so that it can support the line of credit secured by your home. After you submit it along with a new tax value statement, you promptly get a demand letter requiring full payment ($32,000) immediately or your house will be posted foreclosure.
In resignation to the events that beset you, you file Chapter 7 and call your Mom to see if you can stay in your old room. You can't because she is renting it out for bean money. You hang-up and vow that you will never again borrower a dime from anyone regardless of the liberal terms that may be offered. Debt has ruined everything that you hold sacred. You then have a nervous breakdown and apply for tax-free disability payments under your disability insurance policy.
The economic lesson is �����.
Deflation is everywhere and always a monetary phenomenon � a lack of sufficient currency and CREDIT in the economy to support prices. When the growth in credit slows or turns negative due to higher interest rates and higher default rates, then the above illustration plays out.
Some wise ones here state inflation is the curse waiting for us over the horizon. I doubt it because we are already highly inflated. I point you to the NASDAQ's PE, home prices and auto prices for but three easy references. For hyper-inflation to occur, even more credit would have to flow from Mr. Pump. But to whom? The consumer is over leveraged already. The consumer has binged on easy credit to the point that debt service now takes more than 90% of disposable income for 80% of consumers according to the St. Louis FED. See why the economy has soared. If the above illustration does play out, most consumers � still anguished by their recent credit traumas - will avoid the credit trap and thus Mr. Pump will be "pushing against a string".
Remember, the consumer represents 65% or so of the GDP. As credit goes so goes the economy.
One caveat: Imported goods and services (particularly oil) will cost twice to three times as many greenbacks following the international adjustment (devaluation) of the greenback. I suppose that that counts as hyper-inflation from a domestic viewpoint.
Another lesson in What's To Come will be offered for your consumption tomorrow.
Black gold, Yellow Gold �� THE only wealth worth physically possessing (unless you are like Peter Asher and simply enjoy your unencumbered real estate for its natural beauty).
I was going to post again, but am glad to have waited. Many more good items were presented that also deserved comment. I'm reading, thinking, exploring what must be said. I'll reply later.
Is THERE a secret handshake passed around this fine oak table??? C'mon fellas, fess up. Otherwise meticulous
posts with this glaring anomaly?? Figured if I BOUGHT it
to your attention .... (smile)
wasssuppp? It is considered slightly innapropriate on internet forums to criticize the grammar of another poster. Please try to focus on the message instead of the English.
Have been travelling in Waco last 24 hours and have missed many good posts. I see I am being conscripted into something. Well, I have always shared the wisdom of not wanting to join any group that would have me as a member. However, in the case of USAGOLD and this merry band of goldmeisters, I am making an exception.
Thanks to all for putting up with my occasional weak moments regarding mining shares. I'm biting the bullet; NO MAS!!
Kind regards to all here it is good to be back....CM
http://www.lemetropolecafe.comAzteca de Oro (no relation to our ORO, I believe) is back at LeMetropoleCafe. It's his opinion that the financial superstorm HAS arrived.
(former PM of Singapore)Watched an interview with this gentleman the other night on Charlie Rose. Such wisdom and insight; this interview was another reminder to me that it is a big world out there and Americans should try really hard not to be geocentric.
Hi RossL,
I think those trillions of dollars held overseas you mentioned, won't come back to buy U.S assets if such a scenario as the traveller has described plays out, rather dollars will be dumped to buy any other asset which is more valuable than a falling US dollar. I hope it is mostly gold.
Look at what happened in many asian countries. Soaring inflation, currency devaluation, stockmarket and real estate deflation.
Japan has been pumping the printing press to the max. Yet property prices continue to fall, as has the stockmarket.
exactly... soaring inflation on IMPORTED goods, deflation on those houses in the areas that have seen rampaging inflation in the last decade. Specifically, deflation in neighborhoods whose owners are in the services sector rather than manufacturing. In many places, this means entire cities will see the deflation.
A few gold coins may go a long way.
Someone made a comment about the Taiwan and S. Korean bourses being down significantly YTD.
From today's FT:
"The Seoul stock market appears oversold--it has fallen 50 per cent this year--but it is unclear whether it has hit bottom"
Does the concept of the FED playing in the futures market sound unreal to some? Here's how governments can and do intervene in suppposedly "free" capital markets; from the same article:
"The bourse briefly touched a 20-month low of 485 points yesterday before the government STEPPED IN WITH A PACKAGE OF MARKET BOOSTING MEASURES, INCLUDING THE CREATION OF A WON 1.5BN EQUITY FUND THAT HELPED THE SHARE INDEX CLOSE NEARLY FLAT AT 514.17".
I had a cigar and a pint last night in Crickets and made the statement to a friend that I believed the FED was playing in futures (perhaps not a totally bad idea). My friend was incredulous. I am sending him this article.
I do think there is something really bad brewing over there and the rate of exchange for the Aussie and NZ currencies are making matters much worse FWIW.
By Catherine Reagor
The Arizona Republic
Oct. 19, 2000
The Valley's housing market has gone from hot to just warm.
Sales of existing Valley homes fell 10 percent during the third
quarter and are expected to keep falling through the rest of the
year.
The median resale home price decreased in September to
$129,900 from a record $131,000 in August.
Also, it is taking longer for metro Phoenix homes to sell. For
September, the average time on the market for an existing Valley
house was almost 49 days. A year ago, it was fewer than 40
days.
"The market continues to be reacting to the higher mortgage rates
of prior months," said Jay Butler, director of Arizona State
University's Real Estate Center.
Rates have fallen recently, but most analysts aren't optimistic the
drop will be enough to boost the market back to last year's
record pace. In 1999, 65,000 existing homes changed hands.
For the three months that ended Sept. 30, there were 14,075
resales in metro Phoenix, according to the Real Estate Center.
During the same period in 1999, there were 15,550 existing home
sales.
New home building has also been on the decline in the Valley, but
likely got an artificial boost in September from builders rushing to
get permits in case voters approve Proposition 202, an initiative
to limit growth.
Heartland mutual funds plummet;
disaster points to run on assets
Oct. 19, 2000
The news coming out of the Heartland mutual
funds group this month seems too incredible
to believe.
One Heartland fund is now showing a
year-to-date loss of 46 percent. Another is down 71 percent.
Such awful results would be bad enough if the portfolios in
question held risky Internet stocks. But these are bond funds,
which just aren't supposed to behave this way.
Heartland hasn't gone into detail on what went wrong. The
Milwaukee firm issued a short statement saying the funds'
directors adopted "fair value pricing procedures" Oct. 13 that
resulted in lower prices. Heartland didn't state what the prior
policy was, nor how the valuation gap widened. A spokesman
didn't amplify on the situation.
Also left unsaid was how a repricing two weeks earlier, which
resulted in a small initial price drop, may have made things worse.
"It's possible that many investors tried to sell their shares after the
first repricing," said Chris Kelsch, an analyst at Morningstar in
Chicago. That may have forced the managers to unload bonds in
an illiquid market to meet withdrawals, he said.
In other words, the portfolios may have suffered a run on assets.
Heartland's terse explanation did cite "credit quality concerns"
and a "lack of liquidity" as factors.
The hardest-hit fund, Heartland High-Yield Municipal Bond,
invests in tax-free bonds with low ratings from watchdogs like
Moody's and Standard & Poor's. Low-quality munis often slump
when the economy slows when weak borrowers have trouble
making payments. Such bonds can be illiquid or hard to sell, so
it's difficult to value them.
Low-rated munis "certainly have been bid cheaper due to fears of
a slowing economy," said Todd Curtis, who runs the Tax Free
Trust of Arizona, a high-quality muni fund. But there hasn't been
panic selling, he said.
Even when bankruptcies occur, bond investors often recover
most of their money. That's why it's so unlikely a mutual fund
would slump 71 percent, virtually overnight.
"It's almost unheard of for an individual bond to drop that much,
let alone a bond fund," said Peter Crane of imoneynet.com, a
research firm in Westborough, Mass.
More curious was the collapse of the second fund, Heartland
Short Duration High Yield Municipal. What makes this odd is the
fund's focus on bonds coming due within three years. Such
bonds are less risky than those with distant maturities.
Another question concerns lead manager Thomas Conlin, a
22-year muni veteran who resigned last month. Heartland didn't
say why he left.
The funds' prospectus limited Conlin to buying only a modest
amount of low-rated, illiquid bonds. Kelsch thinks he might have
stretched the policy by loading up on IOUs issued by hospitals
and other medical outfits that have been hit by Medicare reform.
At any rate, the episode may spur other investors to rethink their
strategies.
"Some of the short-term bond funds have attempted to market
themselves as money-fund substitutes," Crane said. This incident
shows they can be a lot more risky.
Yet the massive losses also paint this as a special case.
"I really don't think we're going to see a ripple effect," Kelsch
said.
The mark of the 1998 crash and the reliquification that followed was the near official re-statement of support to the stock market (openly stated by Fed trial baloons after the '87 crash intervention). The much rumored story of the PPT seemed to gain currency. Thus the market pros could understand clearly that there is a big "put option" being sold for "free" to the market, and that purchases of anything on the main indices would be as close to a no-brainer as the street allows. Particularly important was the realization that a dollar of futures intervention has a disproportional effect on stock of closely held companies, those with a low float. Thus the market participants could simply choose the large cap names with the lowest floats and see that on any recovery in the markets following a crash, these would outperform, since with futures led intervention, these stocks would get a disproportional push upwards. Consequently, the companies had responded with ESOP programs that made their earnings appear that much more attractive.
Today, CNBC reported that the big investment banks (and this means the big commercial bank trading desks that cater to them) were aggressively buying the NASDAQ futures. It did not strike anyone there as unusual that they were standing openly at the pits buying for their own accounts. The normal route to intervention is borrow, write OTC puts to favored hedge fund clients at below market prices, have clients buy futures, have the arbitrage funds borrow the money that the investment banks borrowed in order to arbitrage the futures into the underlying stocks.
The fact of their open action indicates that there was no time to let the process work, and it had to be an immediate and aggressive spike on these two days before options expire.
The general rule is that spikes occur where there is leverage or where a brontosaurus is entering the pool. The outstanding leverage is always bullish on net. Therefore the saying that prices fall more quickly than they rise. This rule does not hold well near futures expiration, nor does it hold at the end of a month, where mutual funds try to mark up their portfolios. Thus expiration weeks count for disproportionately large numbers and intensities of up swings following a substantial down week (it should be noted that during strong moves in the market the disproportionate number of calls induces the bankers to short the market, thus expiration weeks are not over represented on the best week list). By the way, Thursday-Friday-Monday periods contain the greatest intraday up swing (Friday Monday) to downswing (Thursday Friday) ratios at 1.4 and they are strongest on expiration weeks at 1.8, vs 1.3 on average days (for the Nasdaq) over the past 3 years.
The final point here is that each of these interventions is assisted by the injection of funds by the Fed or Treasury by purchase of T bonds/Notes/Bills that put in liquidity that is needed to free up cash when investors don't want to lend any or borrow any new cash into existence. These provide the inflation of the money supply at the exact point at which there is minimum investment happening, since it is done when no large borrower is willing to borrow for business investment because his expected profits on this investment (and hence his stock price) is too low.
Thus these funds go down the financial lines to reach the consumer level, where these funds eventually cause new demand that has not been backed up by new production or productivity enhancement. Same goes for all other interventions of this type, whether in suppressing of the gold market, support of the bond spread market, or saving the money market or banking system - all of which are up in the air right now. Only currency interventions are not necessarilly inflationary of the money supply.
So far as I can tell, the price pressures are secondary to the Fed, and it will not have much upwards room on interest rates since the system is on the verge of insolvency as it is. The recent noises from the Fed about "tightening" is more bark than bite. If it does raise short rates, it will have to buy back bonds and RPs by the truck load if it reaches the interest rate level that actually stops long term price inflation from accellerating.
The favorable move in the trade deficit is mostly a result of dollar appreciation, but also reflects the emerging shift from investment in the US to the purchase of US goods as the target of dollars coming back home.
The lesson Shermag's friend should have learned was only partially different from his actual lesson. Don't hold dollars, hold anything else; stocks, goods, gold...
Though the stock market has the protection of the Fed behind it, the profitability of companies has been falling as the margin between the prices they can get and those they are charged declines drastically with the relative rise of the PPI re the CPI, particularly the Crude goods PPI relative to the CPI. After 20 years without major investment in the natural resources industries and in the basic materials industry, there will have to be a period of reinvestment such as we had in the 70s, where everyone scurries about every piece of land looking for oil, gas, copper, any metals. While they are searching and building the new mines and wells, the people doing the work are going to consume while the old resources are depleted. During this period it is necessary to have people move from whatever they were doing and into the resource sector, where they must earn substantially more (otherwise they won't come) than they can where they are now. Because of this, average "real" wage must fall while resource industry and capital equipment industries see climbing wages. Any attempt to retain viability in the previously booming markets of the consumer goods industries, their suppliers and financiers can only bring further price rises as this boom must go bust because it had thrived on underpriced basic goods that can no longer be had because they were under-priced for so long that even existing capacity was declining.
Raising interest rates may prevent short term price pressures as new investment dries up and either puts people on the street, or at least prevents more demand for labor from expanding. High short term interest rates raise the cost of working capital, which causes inventory reductions and removes existing cushions against shortages, though it keeps prices lower on the short end, it eliminates the "shock absorbers" of the future and increases prices on the long end. This high rate environment also leaves the investment in resources lagging and prolongs the period of depletion. That can not assist in solving the problem, only make it worse and make it last longer without reducing price pressures long term. Lowering rates, however, may spark a price spike in the goods in shortage, as inventories are built up at the lower interest rates. That price spike would finally provide the appropriate market signal that would make the shift into resource investment happen. The easier this investment is made, so will this period end more quickly.
Van Rip - I read you loud and clear on that 3.5% Social Security inflation adjustment being the largest in ten years. Unfortunately, even being right is often not enough when it comes to investments. In the last 48 hours, the Labor Department announced the biggest 12-month CPI increase in a decade, (and even that is grossly understated, a subject I hope to get to later) -AND- Microsoft announced a 12% drop in operating earnings. So, true to form, gold prices sank while Microsoft stock rose something like 18%. I work very hard at understanding economics. I don't always succeed. But this is getting exasperating.
appolo's golden chariot - Your question was not addressed to me, but perhaps I can help. Gold and inflation-indexed government bonds are two very different investments. Gold is an aggressive, highly unpredictable, capital gain ploy which can greatly increase your buying power when your timing is good and greatly decrease it when your timing is bad. Inflation-indexed bonds, on the other hand, are among the least aggressive investments and are designed only to slightly improve your buying power over a long period of time. Each of these investments is liable to be attractive to somewone who expects inflation, but they are at opposite ends of the risk/reward scale.
No need for inflation hedges when market participants believe they can beat it (inflation) in US equities. Little accumulating of mining shares in this environment is both unusual and, not a good sign (not to mention discouraging).
You have hit a subject I know something about for a change. The problem is important to understand and is not at all unusual or rare as the article suggests. In fact it will become all too common as the comming bear market continues to unravel. The problem begins with the nature of the investment products you are talking about in these two funds. They are both high yeild funds which is simply a euphenism for Junk bonds which means very high risk bonds that pay a high yeild in order to attract investors to the greater risk. THe municipal market and in fact the corporate bond markets are much less liquid than the stock markets are generally thought of being and what I mean by that not intuitively obvious statement is that municipals trade as individual issues since each separate bond has it's own set of risks, fundamentals, exposures and maturities etc. In other words it is a single issue that might have only fifty million outstanding. Junk munis are by definition very risky specific situations. What hit these two funds though is not the credit of their specific issues but rather the fact that because of the disasters going on in the junk bond market the market has gone "no bid" and therefore there is no way of either pricing the portfolio at the end of the day to tell what the NAV or net asset value is and also of course there is no way of selling some of the bonds. The bonds are still good in the sense that most of them will probably continue to pay although with "JUNK" this is often problematic. The problem is a technical one where the only way to price the bonds is of a comparable sale. If there are no sales for several weeks or months of that specific issue of that specific municipality then the price stays the same and in a crisis this causes the portfolio to have certain bonds that are "priced" each day at 4:00 pm when the market for stocks closes and mutual funds are priced by the fund accountants stay the same as if they were in a time warp. The danger is normally minimal because the period passes and usually their is enough cash to meet redemptions but in a mid size or smaller fund family as the information about the problem gets out the redemptions can overwhelm the cash on hand and the bonds for which there are bids are sold quickly and soon you come to only the bonds for which their is no bid or those for which the bid is far below the stop in the air price that you have been quoting for weeks since there has been no trades in the market reported of that specific bond. Now sudddenly as you do sell those bonds that you get low bids for the NAV plunges more and this scares the remaining holders even more and redemptions really take off. The directors of the fund begin seeing personal law suits and they begin to force the management to reflect the real market no matter what since they can be sued for showing an artifically high price and don't want to depend on a judge or jury understanding that the small specific nature of municipal bonds makes it quite normal for some of them to trade only one a month or so. The directors now force a change in pricing to protect themselves and the fund from claims of misrepresentation and the new fair market prices in a time of no bid in the junk bond market means lower prices still. Now there are real bargins being created here since much of this stuff is still as good and valuable as it was two months ago but the panic and the perculiar pricing of mutual funds and muni bonds in particular have combined to slaughter the poor investors and the manager and his company. It will become very very common as the illiquidity of the stock market in high tech and small cap stocks run there course. The same problem exists. Liquidity is of course not always like you are seeing in a bull market. At the bottom of bear markets even the biggest companies can go "no bid".
"We must grant that the attempt to measure "price levels" is not
completely mad, as long as it is taken as an extremely rough
approximation of monetarily induced changes. To return to the
thermometer analogy, if, in our peripatetic attempts to check its
accuracy, we read 80 degrees, walked five feet, and then read 40
degrees, we would be justified in suspecting that something is up
with the thermometer. Similarly, Austrians do not dispute that when
the CPI shows 20% inflation, prices are probably undergoing a
general rise. What is absurd is to publish CPI figures that show that
inflation has "ticked up" from 2.4% to 2.6%. As Mises said:
The pretentious solemnity which statisticians and statistical
bureaus display in computing indexes of purchasing power
and cost of living is out of place. These index numbers are
at best rather crude and inaccurate illustrations of changes
which have occurred. In periods of slow alterations in the
relation between the supply of and the demand for money
they do not convey any information at all. In periods of
inflation and consequently of sharp price changes they
provide a rough image of events which every individual
experiences in his daily life. A judicious housewife knows
much more about price changes as far as they affect her
own household than the statistical averages can tell. She
has little use for computations disregarding changes both in
quality and in the amount of goods which she is able or
permitted to buy at the prices entering into the
computation. If she "measures" the changes for her
personal appreciation by taking the prices of only two or
three commodities as a yardstick, she is no less "scientific"
and no more arbitrary than the sophisticated
mathematicians in choosing their methods for the
manipulation of the data of the market. (Human Action,
XII.4)"
Revelation; you write; "...I feel very confident the end is close at hand. Do not give up, man will not prevail..."
To which man/men do you refer? and which specific end?
I am reminded of the 'Lone Ranger' talking to his trusty sidekick Tonto saying; "Tonto, Tonto we're surrounded by Indians!" to which Tonto replied back to the Lone Ranger; "What do you mean WE white man?!".
I hasten to add that the value in the prior situation is not for the remaining fund holders.
Although they may see a significant bounce back. But most of the value is extracted by the traders for the bigger trading firm that buys the merchandise from the Heartland Funds when they need to raise cash. They low ball them of course since taht tis what traders do as the nature of their work. The mutual fund is not a good investment even at the low price since the good stuff that could be sold has been and what is left is often just real junk. Do not bottom fish. You could buy merchandise from them but you don't want to buy their mutual fund shares.
Back from straightening out Hollywood and ready to resume our siege of the Castle. Membership news- Cavan Man has acquiesced and will not fight his conscription. He says he is going to quit mining shares "cold turkey", this is the kind of man we are made of. Buena Fe is now with us also, can't figure out whether to put her {right?} in charge of "grawg" or Faith. This will sort itself out one way or another. Grawg will be the official drink of CLHE-HoFAG regardless of her indicision. Welcome BF! Cb2-you are AWOL.
ALERT! We have made an informal contact with Townie and his lackey, MK. An all night negotiating session looms, and it does not look promising. Will report to all Founders results of same tomorrow morning. Sleep on your left sides tonight and be ready to wrap this up tomorrow {enough is enough, there are soap operas that havn't run this long}.
There are a few more Founder's positions available, but Mike has reneged on the "free gold", some sort of misunderstanding. Goldfan- your membership is not negotiable. Leadership spots in CLHE-HoFAG are waiting for the right, cerebrally balanced, Bravehearts. Who else will follow in the footsteps of the CLHE-HoFAG Giants??? {you shoulda got a patent}.
Hey nickel62 - I enjoy all the stuff you post here. My apologies concerning the bond article. I now realize I left off the link for that article and the one concerning the housing market in Phoenix. Both are from the Arizona Republic, today's issue.
Thanks for explaining the situation. I'm afraid you're right concerning the liquidity issue in these funds as well as some of the other debt and equity funds. It's interesting that FOA's message concerning liquidity in the paper gold market seems to fall on deaf ears here even in the face of articles like this. This is an increasingly common occurence in many markets. It will be interesting to see how this case as well as others to come are resolved.
It is a process in which the underlying fundumentals behind current trends are knocked out one by one. As each one is knocked down, another attempt is made to compensate. Oil and other goods were rising as Asian investment in new production capacity grew by leaps and bounds through the early-mid 90s, and caused consumption of crude goods to rise beyond the world's capacity to bear without price increases. As these came, both the Fed and the BIS took action to cut them off. The one raised interest rates, the other pulled the plug on their bank's capital adequacy. As these markets came crashing, the US and Europe could continue on their binge and steady course, respectively. The US could continue falling into debt and the EMU could have more ammo to use when the time came.
Though the Asian crash saved Rubin, Clinton and Grenspan's back end, it shortened the lifespan of the dollar as it induced accelaration of dollar debt paybacks. Just short of a dollar debt market collapse in 8-10/98 - some say it was already ongoing - the US dropped rates before Brazil, Korea and company defaulted (which would have destroyed dollar debt demand forever - foreign dollar debt being the source of much of the fundumentals of the 80-90s bull market in bonds, stocks and good times). The dollar debt, was not only restructured, it was being paid down. Korea is now a net creditor, Israel joined the ranks just as investors flew in fear in 1997 - dumping their Korean and Israeli bonds at a 20% discount into the hands of locals, Mexico just announced the same, Malaysia is there, Saudi and friends will be there by the end of this year or early next, and many others are on the way - even Brazil is advancing. The dollar markets are still tight as low foreign dollar borrowing creates fewer dollars in the international arena and sucks liquidity out of the US markets. As the new creditors put their house in order, any excess not needed as reserves against dollar debts coming due is being spent on rebuilding inventory and on consumption - hence the oil price rises, the metals price rises and the stabilization of agricultural prices (some actually had a time in the sun) and $1/lb pork chops are a thing of the past. The dollar is in undersupply against other currencies, but it is in over supply relative to crude goods and now against some basic intermediate goods such as some key chemicals, textiles (recently), some semiconductors etc...
The Fed is trying the same old trick from the past by trying to raise dollar demand in the international and local markets through interest rate rises. However, the US debtors are standing up to the pressure and defaults are running quite high and Moodys and SP are projecting that things will get worse. Banks have about 1/4 of their assets in this paper and will have their solvency threatened. Solvency, though, is secondary. Primary is liquidity, which the Fed is maintaining with the help of Treasury bond buybacks and repeated RPs. The decline in borrowing due to high rates is putting more demand on Fed injections, which actually increases with higher rates. While consumers are doing fine with these interest rates (though not quite as well as without them), businesses, which have a 9-10% average Return on Assets are not capable of borrowing at prime rates (these are 3% above the Fed funds rate +1%/-0.5%, now at 9.5%). Therefore, the fed will have to pick up whatever slack is left by the consumer.
I will note an interesting item here; the Fed raises rates whenever the ratio of new business borrowing to new consumer borrowing grows. Consumers are much less sensitive to the interest rate. It is only now that prices of existing houses in hot areas have stopped rising or dropped slightly, despite a full 1.5% increase in mortgage rates earlier this year. The reason is that while business borrowing is proportional to profit, labor income and borrowing is proportional to business revenue.
The aftermath of the elections should see the new pres greeted by a hurried Fed response to the credit crissis at least in monetary injection and perhaps in interest rate drops to "save" country X, or the Euro. The Fed is bluffing and the bank mergers are just bringing the size and importance of the first bailout up. After the Chase merger we will have waaay too big to fail, not only too big. The Fed simulations of bank system survival in 1995-8 were with banks about 1/2 the size of current institutions relative to the total. The largest bank can now take nearly 10% of bank assets if they fail - which is all that there is between a live banking system and a dead one.
So yes, the supports are falling one by one. Each reaction that keeps the system afloat prolongs and intensifies the future pain.
I think we need to draft Sir Black Blade. I have not seen him post in a few days. He sometimes shows up this time of night. He may be at the testicle festival he spoke about a wile back. I need to get to sleep , I'm supposed to go hunting wild boar in 4 hours. Not much sleep for me tonight. Gold will probably move tomorrow because I wont be here watching it. Oh well , Good night
Hello fellow knights........I seldom post & have lurked for almost 4 years on the gold forums.
I have an idea that may be able to put pressure on "The Powers That Be" if we all work together collectively........ Let me know if you all think this may be a good strategy or if it will even work.
My understanding is that most people do not take possesion of their stock certificates and that "TPTB" use our shares at times to short our gold stocks.
What if we collectively put out the word on every forum possible and everyone requested their stock certificates be sent to them.........all on the same day. I do not know how many shares are out there.........but I have thousands of gold shares.
Would this tactic put pressure on anyone who are using "our" gold shares for shorting purposes ??
Thank you all for any thoughts on this topic........
I keep passing a sign on a Golfcourse/lakeview subdivision that says "Lots, 100% financing, zero down!"
As background: Per Oregon lien law, any work done ,even after a financing is closed to title, takes precedence for payment. Therefore most "Contract of sale deals" forbid any construction. So, buyers basically have a titled lay-away plan, and the developer has some cash-flow. He has nothing to lose if he can't sell otherwise as either the payments keep coming or he gets the lot back.
Now what is interesting here is that to the degree the developer has paid for equity in these lots , he is in effect creating unrecorded Money Supply! (M-X ??) He, the developer is personaly "printing" the credit for these probably 60K, lots. (It would seem that if he was substantially encumbered on the lots, his lender would not permit this.)
I see four distinct major bubbles threatening the show. Non-liability equities, Derivatives, Big Float, and Credit. The latter is the one that will bring the system down if it bursts. There appears to be no economic sector that is not operating at maximum market share capacity due to the credit expansion. There is no cushion! The only direction to go from here is down.
The composite world of banks, credit card companies, government securities, corporate bond holders and the aforementioned private term grantors, requires the status-quo of debt service to be maintained. This is the "Too big to fail" item.
AG and the others must first and foremost keep everybody IN their jobs by what ever mechanizations are required. The chain reaction of default, once triggered, would be as totally destructive of the global economy and paper assets as that envisioned by Cory Hamasaki for Y2K
View
Yesterday's Discussion.
Bull fighting, auto racing and the Olympic Downhill are all bad ideas on four hours of sleep. But Wild Boar Hunting? that is totally nuts! I hope you have one of those quasi-legal, magazine load shotguns with heavy gauge pellets or slugs.
Turn off the alarm and sleep in, please. we're really getting to like you here.
Hello fellow knights........I seldom post & have lurked for almost 4 years on the gold forums.
I have an idea that may be able to put pressure on "The Powers That Be" if we all work together collectively........ Let
me know if you all think this may be a good strategy or if it will even work.
My understanding is that most people do not take possesion of their stock certificates and that "TPTB" use our shares (held in street name)to short our gold stocks.
What if we collectively put out the word on every forum possible and everyone requested their stock certificates be
sent to them.........all on the same day. I do not know how many shares are out there.........but I have over 40 thousand gold shares.
Would this tactic put pressure on anyone who are using "our" gold shares for shorting purposes ??
Thank you all for any thoughts on this topic........
I can't imagine that ANYONE is shorting mining stocks at this point. Your idea is fine, but I wouldn't anticipate any material effect because these dogs are already trading at pennies on the dollar.
My guess is that either of two outcomes are most likely for current owners of mining shares: 1) bankruptcy before the fact; or 2) "nationalization" after the fact. To explain outcome #2, one need look no further than the precedent of the Texas Railroad Commission to see how the Government can implement production controls "in the interest of national whatever."
Make no mistake. Ownership of mining shares is nothing more than buying a stake in the management team's ability to outperform other management teams, and to compete against the clutching ingenuity of government. There is no leverage in mining shares when you look at the big picture, and given their trading level, shorting them at this point is as silly as owning them. No offense.
bravos2all (10/20/2000; 0:22:57MT - usagold.com msg#: 39458)Myself, am inclined to agree with Aristotle. These dogs can't
go much lower. So why bother.
Especially since they produce only Gold, which will soon
be confiscated anyway. At $50/oz.
Better, to simply do as F*arfel did: Dump them all. To teach
those incompetent CEO's a lesson. In economics.
Spite is so fun.
But perhaps there's a better alternative:
We could order out our shares and use them in our homes
instead of expensive paper products. I feel my Newmont
shares would make very colorful placemats. And the CCH
shares could ...er.... fit well in the bathroom.
Owning equity is always a calculated risk on management's ability to perform, or rather, to outperform. One can also look at equity as a call option on the company. If liabilities exceed assets, you can walk away from the company and your call otions expire worthless. Consequently, the value of equity should be subject to similar considerations as for call options, namely the strike price, interest or discount rate applicable, volatility, underlying asset price, etc. Going short on equity by writing out of the money call options is fairly standard, with nothing sinister about it. At the end of the day, I guess everyone would like to avoid a financial collapse, and not engender one!
I shall Call my Option in the morning. And advise him to
stop Collapsing my Finance. I will Engender him no-more
with my precious (little) cash.
Certainly, that is the least I could do, since I'm Out of
the Money. My money. It's been Discounted. And Interest
Rates no longer apply. This is Fairly Standard for me.
It may be a Sinister thing to do. But it's a fair Strike Price
to pay. For the feeling of freedom. Where is the Equity in it.?.
For-sure, Liabilities Exceed my Assets around here. If there's
an Underlying Asset lurking anywhere, I'll try to find it.
I guess it's Time for me to Walk Away. Before the Volatility influences my writing. The fresh air will feel nice at The End
of The Day.
Must hurry. Before the moonlight Expires Worthless.
Gold Debate: Contents
a. THE DEBATE IN A NUTSHELL
1. The gold market's nuclear winter - Jim Sinclair
2. There is a time-bomb, but for different reasons - Daan Joubert
3. Gold has lost its monetary day job - Andy Smith
4. Response to Daan Joubert - Jim Sinclair
5. Second response to Jim Sinclair - Daan Joubert
6. The multiplier effect of gold hedging
7. Current article
Some feel the weight of the gold market is economic. Others, like myself, believe that the constant selling by the hedging gold producers is the key negative price factor. Some subscribe to the gold carry as the culprit. The balance tends to be members of the school of conspiracy theory. Through MoneywebUSA we have examined hedging, conspiracy and economic factors. The focus of this article is on the remaining factor, gold carry.
While there are various types of carries, they all have the same goal. A carry is executed in an attempt to profit through the spread (or premium) between the cash cost of a commodity (or a near term derivative) and the future cost of the same commodity. The premium is moved by trader sentiment and the impact of changes in the interest rate due to the money cost necessary to hold the carry position. A carry may be the purchase of a near term derivative (or the actual commodity itself) and the sale of a long term derivative, or it may be the reverse position. The pillar for profit in these transactions is the correct interpretation of the direction of the cost of money and the positive or negative market sentiment.
At the time this article is being written cash gold is $273.2 per ounce and the price of December 2001 gold is $287.46 per ounce. The spread or "Contango" is $14.46/oz, a premium of 5.2%. The rational investor would realize that since the cost of money currently exceeds 6%, this type of gold carry is not economical.
Some believe in the existence of a 400 tonne carry position and believe that it is somewhat to blame for the continuing pressure on the gold market. If such a position exists it would be only economical if it were transacted by an entity that had actual bullion, or leased bullion whose cost is as low as 1.5%. In such a case, this entity could enter such a position profit in excess of 3.5% easily. Given the fact that individual or corporate investors cannot easily lease bullion with this purpose, the only entity that could have transacted it is a gold bank because they alone have access to the leased bullion.
In whatever form you design the carry, in order to generate a profit in this terrible bear market, the transaction would generate bearish weight on the gold market. Assuming you have the bullion in some form or lease bullion there is a sale without a buy. The buy comes in the future when the transaction is closed. However it is NOT the carry that caused the gold market to become demoralized. The supposed 400 tonne carry is possible only because of the mechanism for leasing gold and the size of the ongoing hedging book effecting continuous bearish pressure on the gold market.
If the people that mine gold demonstrate their BEARISH conviction by selling all they can mine for the next 15 years in year one, is it the carry that leads the potential for hedging or the hedging that makes the carry attractive? It is the hedgers that invite the carry bear spread to exist. For those with practical market knowledge the truth of this statement is obvious. Practical knowledge of the carry is only obtained by trading them in volume.
Economically we have increasing inflationary indices returning. We have equity markets preparing for a gut wrenching experience. International tensions are rising, not falling. The technical price objective for a barrel of oil is $47. Gold however is flat as a pancake. Why? Because the hedgers haven't a clue about what they have done or how to undo it. I suspect that they will continue in their foolishness until they are killed by a rally.
My greatest fear is the damage a fearsome rally will do. It is prudent to examine the implication of a new low in bullion, but I believe that greater destruction will come to the industry if the market experiences a powerful rally. This rally may be reality and may be propelled by ultra wealthy international traders determining the industry gold short position. This position can be calculated accurately on a daily basis. To bust the short all that has to be done is break the smaller carry market and the chain reaction will be nuclear. The resulting rally will take gold much higher than anyone, even I, am willing to say. At the top of this peak, who will buy it? No one and the fall will be more spectacular than the rise. Thus gold could be discredited beyond repair.
When United California Bank of Basle Switzerland (formerly Salik Bank), Basle Switzerland took on a major US market operator located then in White Plains, NY in Soy Beans it resulted in the first spectacular bankruptcy in Swiss Banking History. As a young man, I resigned from Salik Bank as their investment manager six months before they went bust. I witnessed the commodity department trading wildly in Soy Beans for an account code name "University." It did not take me long to figure out that "University" was the bank itself, not a client. When I submitted my resignation to the then President, Mr. P. Erdman, who did not know what was going on, I told this famous gentleman that the commodity department would break the bank. I left Basle, Switzerland to return to New York City to accept a partnership with a New York Stock Exchange firm. Six months later the bank exploded. As was the law in Switzerland when foul play is suspected in a financial institution, the President and the entire board of directors along with non-executive department heads went immediately to jail pending the audit. I know the president did not know what the commodity department was up to. Regardless, he spent time in a medieval jail.
To the Gold Producing Industry Hedgers, I predict that your enormous companies and all the work done to make you what you are today will be placed in jeopardy. I have outlined all the reasons why and you ignore them completely. You can save yourself, your companies and your industry now by quietly covering your short spreads while the price is cheap and execution can be accomplished profitably. Barrick, you are a mega-genius. Homestake, Newmont and the rest of you real miners, not moneychangers in a mining industry, your non-hedging in any large amount will be rewarded. You producer hedgers must have the right of offset with your gold bank, and the ability to transfer your contracts to any broker or party of your selection, or your covers could be in vain due to counter party risk.
I predict that the Central Banks will experience considerable embarrassment when it is discovered that you have leased to extremely low credits. A Central Bank really has only one asset and that is credibility. Loss of credibility to a major central bank is untenable, and predictable, unless they review the credit worthiness of those entities standing behind the gold banks to which the return of your gold will be sought. Clearly leased gold should not find its way into supporting a carry position. The Gold Bank has no mine to produce bullion but only money to make good on the loss. No matter how big the balance sheet of the Gold Bank, it pails when compared to the commitments of these derivative dealers. Asset versus liabilities is meaningless unless you know the absolute size of the counter obligations an entity has if all were to be executed at once on one day. That number is cleverly undeterminable.
To those that sold the Gold Producer Hedgers on this financial strategy and those who are now in the producing company and refuse to consider the risk be warned, it will all end up in the courts. Your position is untenable when you realize that a judge and/or jury will decide your and the company's future.
Keep a close eye on the complaint and the discovery deposition process in the Ashanti case. It may well be a lesson concerning your own future in this litigious world we live in. Even MIT's derivative brain surgeon cannot guarantee you that in the time between mathematical predictive market relationship-disruption-return to predictive normality you will not face the judge. You will. Try to explain to a jury that you had no risk but experienced momentous losses. It is along that line that Ashanti will have to defend itself if they do not offer a settlement. While Ashanti may now find comfort from the Ghana Court Act that proclaims that only legal rulings of the Ghana Courts will be enforced, this ease will be offset by frustration should they ever wish to borrow money in the future.
By: James Sinclair
But if "TPTB" are already short using "our" shares, wouldn't they have a problem if the shares they were using were called away on a large scale ?
Maybe it is too late........perhaps most are not willing to fight any longer, but if this strategy could work, I think it should be considered if there could be a large enough consensus of shareholders worldwide willing to fight back.
Then again maybe we should just give up, sell our shares and wait, wait some more, and then wait some more..........
I own a fair amount of physical & am getting close to selling many of my paper gold(shares) and buying more PM's.
bravos2all (10/20/2000; 2:33:43MT - usagold.com msg#: 39466)bravos2all:
Okay. I'll get serious for a minute. Your idea has merit and
would possibly cause some minor unavailability of borrowed
shares needed by the shorters to achieve their devious acts.
But it would be difficult to get small share holders like us to
order out our certificates from our (distant) brokers. It takes
about two weeks minimum, to receive them. Meanwhile,
during that period we cannot trade them safely. Nor at all.
If the market should spike either up or down, most of us
would wish to take some immediate action. Buy or sell.
It would be a risky time period, and we'd be hamstrung with
our shares somewhere in limbo/transit/postal.
Next, consider the similar situation arising after we actually
hold the certificates in our possession: Should the market
spike, most of us would wish to buy or sell these (our) shares.
On a moment's notice. But wait. There's still a problem.
Now we are faced with the task of returning the shares to our
(distant) brokers. And the time is tight. Settlements now only
allow three days. Registered mail is slower than snail mail.
So the broker may not receive them in time. And we'd be hit
with a broker-initiated adverse trade that could devastate.
It's just too risky to try to trade shares from possession in
volatile markets.
Lastly, I'd put forth the notion that (we) small shareholders
could hardly dent the borrow-pool. The large Funds, would
have far far more shares in Street Name, available. And it is
those shares that are (typically) in vast enough quantities to
be (always) available to the shorters.
Your idea is a good one. But I feel it's too cumbersome and
would not work. Also, it's very difficult to get alot of normal
people to do anything (such as requesting their certificates)
all together, coordinated, worldwide, on the same date. Etc.
I didn't know you were a Cory fan! But aren't you thinking of Paul Milne? (Inspiring me to next go search DejaNews and see what Y2k's #1 doomer is up to...)
The "too-big-to-fail"ers I'm imaging as big, nasty guys adrift in a liferaft many weeks, eyeing each other as a likely cannibal snack. Each potential victim in turn takes up a teetering pose on the gunwale(? --boat's edge) threatening to tip the whole thing if he's approached. "If I go down, I'm taking you all with me" is the spirit. Improve my metaphor, anyone?
ORO we have heard from others concerning their opinion of which way the coming market action might unflod.
Would you give us your opinion as to wether or not the situation will lead to a spiraling down in real estate prices as Traveler suggests with the shrinkage of credit and the default and collateral sales. Or are we going to see hyperinflation as the government continues to extend credit in order to avoid the scenario of Traveler. Or will we see something entirely different? Thanks
Bing, "Bullshit is different than horseshit, which is alot smellier and has a mean and unpleasant edge to it.
Bullshitting is different than lying. In this particular craft, you can't really call it an art, those that succeed must recognize the moment of bullshit.
You can sling bullshit or serve it up.sling it out there see if it flies.
Be surprised and somewhat shocked when your bullshit is discovered. Wow , "is that mine?"
The only antidote to a bullshit situation is more bullshit.
Never attempt to rectify bullshit gone bad with anything other than more bullshit, UNLESS YOU WANT TO CHANGE THE GAME.
There is a time, however when bullshit should cease and you should once again reenter the world of truth and lies.
Having a reputation as a prime bullshitter only works for some professionals."
Nickel62 -- Traveler really laid it out. An encumbered real asset is probably better than a paper asset, but not as good as an unencumbered real asset (AU, AG). People are "smart" today buying real estate on leverage, and counting on various bailouts and their own pressure as voters to protect them from default if it happens to enough at one time. "Possession is 9/10ths..."
I wouldn't go as far as to sell and rent back the family residence, especially if you love your place, but rental properties are a lousy idea in peak markets. If you've protected your source of income and other savings, you should be able to make home payments better than most, and perhaps join in any mass "workout", "debt moratorium", "renegotiation" that occurs, anyway.
The clear picture from Traveler's story is that most people were helping to prematurely spend THEIR OWN retirement funds through credit overuse, as they'll find when the fund defaults ("break a buck") hit. Some borrowers will be net gainers, and most actual savers (as trusting lenders to financial entities) will be net losers.
Re your 39423 post on deflation scenario--an excellent post that deserves to be printed out an hung on the wall. The only comments I have that you would probably further agree with is that there are a lot of floating interest rates and short term balloon notes out there that with sudden economic changes will lead to much knashing of teeth and wailing.Also, property taxes have risen to such heights than in an economic turndown nonpayment of taxes by many will wreak long term havoc because subsequent property sales, whether voluntary or forced, have to be marked down a lot just to acccommodate this underlying constant item. And when the mood is sufficiently bearish, there may well not be buyers at ANY price.
I donna auspec......showin up with the grawg is something I know I can accomplish but butt.......showin up in drag????? I don't think I can explain that one to my wife.......although she does think i have a cute butt! Hee Hee
And don't worry bout runnin outta tickle juice.....my Lord was at a weddin once....and......and the host was really lookin stupid (he ran outta grawg early, outch).......so He helped out and turned some water into wine!!!!!!..........man I'd liked to have been there! Hey come to think of it He's going to be hosting a party of His own soon.......and I've got invitations for everyone!!!!
Battle Cry!! Give us our own HoF NOW!!!
The scuttlebutt is that Sir Black Blade wants to darken our doorway, a major defection. Thank you $hifty- you are now in charge of recruitment.
After an all night negotiating session {Jimy C. & slick were both there} there is nothing to report but inflammatory news. Will just highlite a few of the insults cast our way as most were not family friendly. MK and TC said they have no interest whatsoever in creativity, only academia and SALES. They followed up with various comments; CLHE-HoFAG is "childish", "wrong headed", not evolved as highly as the "normal HoF guys", "defective &/or missing chromosomes", "missing several links", & "village idiots". They then drew their line in the mud and said "next they'll be asking for a HoF for those that use NONE of their brains, and besides we're running out of cyberspace". "either step up to the plate with the Big Boys or quit whining. All you intellectual wimps, including TC, are welcome to convert one of your mining companies into your own internet site". Clearly, these are not reasonable people.
It was a long and painful night, but we let them know we are not going away easily or quietly {who else would have us?}. The good news is they are now laughing at us and FIGHTING us! Thank you Gandalf the Gandhi- now in charge of slogans. Our strategies are finally paying off. We started with #1 Bribes, #2 Pestering, #3 Groveling, #4 The "Free Gold" assult with OPG {MK's}, and lastly #5 Name Calling- "Townie is a donkie", "MK a lackey". Very limited results {0} with these ingenious strategies.
It's now time to play ace #6 {don't play cards with us, we have learned from TOCOM & COMEX} VIOLENCE. These guys are either deaf and/or dumb and/or part of the gold cabal {ultimate insult}. We have GATA CONNECTIONS, and they will soon be knocking {battering} on your door. The Castle will be under assult all day- to the victor go the spoils!
If violence fails us we will still prevail as there is one last quiver in our arrow to be directed your way much later today, only as a last resort. Our camp is starting to get bored with all this, and, frankly, suffering a drivel defecit. Our final ace, to the relief of all, will be played late today...............THE SILENT TREATMENT!!!!!!!!
Previous posts to follow.
Sincerely,
CLHE-HoFAG aka The Society for the Betterment of USAGOLD Forum
I've recently seen you and others make comments about "paper gold" such as this--
-------"I own a fair amount of physical & am getting close to selling many of my paper gold (shares) and buying more PM's."-------
I'm not sure how many others have come to consider Gold mining company shares as a form of paper gold, but seeing this, I must make a clarification of my own usage of that term. To me, stock is stock, with some companies being perhaps more attractive than others, or simply less repulsive. If I were to need to refer to mining stock, I would most definately say "stock" or else "shares", but not "paper gold."
In all of my prior usage of the term "paper gold," it is important for the understanding of my posts that people realize I used it for exactly what the name implies, that being, "Gold" that exists as a ledger entry beyond the on-hand vault Gold (analogous to vault cash) within the bullion banking system, and also the various Gold derivatives including the well-known COMEX Gold futures contracts.
With this, I'm not trying to dictate how others use the term, but merely clearing the record regarding the meaning behind my own usage of the term. My posts would make little sense to anyone who thought it to be equivalent to mining shares. To show an example: An increase in outstanding mining shares relative to the availability physical Gold would not increase the risk of a "run" on the bullion banking system or affect price discovery as I have previously described, whereas an increase in paper gold (bank ledger and derivatives) would. I hope this is helpful.
auspec (10/19/2000; 6:41:22MT - usagold.com msg#: 39397)
CLHE-HoF/USAGOLD Siege-Day3
The siege continues, still no word from the{Ivory}Tower. They are certainly worthy, or possibly asleep. The intellectual CLHCs {Cerebral Left Hemisphere Compromised} are firmly entrenched to this point.
BREAKING NEWS!!!We have been mentioned by Zenidea. She is now numbered among us for not ignoring us. WE ALSO RECEIVED AN ENDORSEMENT FROM TRAIL GUIDE!!!! Victory is now certain, am planning on going after Hollywood later today.
Our faithful are rallying behind Peter Asher, our Rosa Parks, and we now estimate being in total charge of this formerly esteemed forum within days. Unless the elitists yield to our pleas we will have to storm the castle and take ALL the plunder {Uruguayan Pesos} from these Robber Barons. Their Unfairness Doctrine, giving quotas and preferential treatment to the intellectuals and humor-impaired, is a crumbling Manifesto. The brainy have their HoF, we are only asking for "what is rightfully ours", our CLHF-HoF for the clever/Conscripted. This site isn't like the U.S. elections, as our kind host actually listens to our votes here {I think}.
To date we have used the weapons of blackmail and pestering on the anti-CLHE-HoFs, w/o any visible success. They need to know we have many more aces up our arses {sorry Peter}, begging comes to mind, and we will not hesitate to use them. Hint: I know the guy who INVENTED the internet. Recognition of CLHE-HoF will bring quality of life to the USAGOLD Forum. We're all going to be independently wealthy {like MK} soon- might as well start learning how to enjoy life more NOW! Who else will join our ranks, see your name in lights,& learn to laugh your troubles and enemies away?
TownCrier- What say ye to your fellow countrypersons- Peter the Great, Auspec, $hifty,Journeyman, Goldfan, Cb2, Gandalf the White, Aristotle, Leigh, nummus aureus, Cavan Man, Zenidea, and Trail Guide?????
As promised- The records of previous battles;.
auspec (10/18/2000; 17:27:06MT - usagold.com msg#: 39342)
WE'RE BAAAAACKK!/ Peter Asher
Peter,
I can't seem to get a rise out of these guys, maybe they're asleep at the stern. Thought for sure my financial pressure would get the job done, guess some people just don't need that kind of money. Maybe CPM is another BB, have all this physical supply readily on hand, and just simply don't care about another $2.34M order {maybe they didn't see that M correctly}. Anyway in the interest of obtaining our HOF for "colorful" posts we should try another tact. Let's just keep pestering them until they accede! No one can hold up to that type of pressure. We need some more USAGOLD posters to join our small ranks {2}. Looking for former class clowns, the irreverent, goofballs, offbeats, lefties, Californians, past glue sniffers, poets, philanderers,plagarists, ANYBODY that can work a keyboard! Will settle for just one more humor advocate. It doesn't hurt that much to use several sections of the cerebrum. Help me, Peter. Here is yesterday's post as promised, guess what you will get to see tomorrow with additional commentary??? Give up yet???auspec (10/17/00; 21:27:22MT - usagold.com msg#: 39265)
Peter Asher/ Satire
Evening Sir,
The silence ends as am no longer able to contain myself, here is a second to your desire for a separate HOF category for the off-beat! Lord knows this site could lighten up a bit. This poster has a lot of influence with Michael as am currently in process of ordering $2.34M worth of British Sovereigns from him. Either we get our category or I will pull this order! This is clearly a capitalist enterprise that responds to it's customers {and their bucks}. You know, with the commissions this outfit charges, 30-35%, that order is worth a lot of ski trips, and bottles of Chivas, even to Buffet, Gates, and Kosares. If we don't get our needs met by the next new moon we'll organize a strike and all buy our future fortunes on Comex {they have all that gold don't they?}. It is totally unfair and undemocratic to limit the HOF to the intelligent. Let the people speak and gain the victory from our oppressors...What say you fellow {half} wits??????????
P.S. This post will appear daily until the revolution is over.Thank you Sir Peter for your persistence!
The issue here is that there is a difference between the political weight of the various components of our economy. The Fed is first and foremost a steward of the banks. If you remember our various declarations on independence and the constitution, there is a "by the people for the people" statement in all. The Fed's founding was not accompanied by these kind of broad public statements but it is very obvious that it is the Federal Union of the banks "by the banks for the banks". The bank's profitable clients are the secondary constituents - and most of the public does not belong to this group. The reason for this is obvious, each $1 in personal income will have a corresponding $2.2 of business transactions and cash income/revenue and expenditure. Therefore, we are just lightweights in the game. Besides which, we are diffuse, where business is concentrated.
Why all this? Because long before we are in pain business will be in pain. It already is. Just look at Noland's spreads over at P Bear. Total US debt service load stands at about $2 trillion per year. Which requires that much in credit creation per year just to keep the system solvent and liquid. The Fed has been cutting it close since Volcker took office. The 1986 tax reform that took out the tax writeoff for non-mortgage personal debt nearly collapsed the economy despite heavy Fed support, aided by the BOJ and EU Central Banks. The Fed responded by injecting money to grow M1 by 35% over the 3 years after the adjustment to the new tax rules. During the adjustment - before the Fed acted, the S&Ls - sworn enemies of the banks - were set up for failure and destroyed together with the much maligned junk bond market - which became a Wall Street profit center once Wall Street's competitor, Drexel, was taken out and shot together with all of their partners and clients.
Today, banks would like to see money markets and the corporate bond markets go under so that they can get hold of businesses before prices shoot up and money as dollars becomes a losing proposition. For that purpose they lobbied successfully to have the business ownership restriction lifted and bankruptcy rules changed in their favor. I am certain that this was done in preparation for a credit squeeze on America, following the 20 year squeeze on the rest of the world. Which, in turn, followed a 10 year debt trap setup during the prior bank bailout period.
The businesses they want most are precious metals and telecom. Wall Street and its partners in London, Bazel and Frankfurt have taken over substantial chunks of the industry - such as 15% of Ashanti. But they still can't get the nice juicy chunks they really want. They will not get them because too few of them are leveraged that way. They will only gather a few more little miners to add to current ownership of Barrick (allways was a banker's mine). Banks wanted to take over oil, but have never gotten far in that arena because of oil's loud lobby and fierce independence - which also characterizes the precious metals people.
Telecom was set up for a debt trap, into which the maverick techies, inexperienced with the den of thieves, have walked right in. One year after extending and marketing unheard of levels of credit to these businesses, banks are letting them fail their debt by restricting the Fed's credit extension from keeping this group viable. However, the margin for error is very slim. The moment that these enterprises fall, if not before, the Fed will have to print up enough money to bail out the bankers, who have taken out dangerous positions in the derivative markets that are now putting them in too close proximity to the same industries they wanted to take over. Citi and National City seem to be the only big ones left without a disproportionate derivatives position. Citi is obviously using the bulk of its political muscle to climb to the top of the heap and stay there. Seems like they have turned on their oligarchy partners and are letting them rot in the same way that these old mobsters treat their clients, using the same tricks.
Chemical, after swallowing the old incompetent Chase, have adopted their name, and have swallowed them with their bacterial maningitis, which has now taken hold of the combined organization. They will now pick up Morgan as a protective move to become "really" too big to fail, but concentrating most of the "likely to fail" strategies under one roof. They will be bailed out when it is too late to save their clients and will be left weakened. Citi and the other likely survivors will pick at what's left. If things collapse too quickly, as they are likely to do, the margin of safety being so thin between the point where conditions in which clients are broken and the point where their bankers are hurt.
This will all occurr before the bulk of consumers, protected by Fannie Mae and banker's own interests in keeping this part of the market alive to absorb their mistakes (a.k.a. securitized debt), hurt too badly. The main point is that immediately after the telecom sector debt bites it's issuer's back end and we hear news of "restructuring" in the sector, the Fed should start printing up money like crazy in order to keep the new owners in the black. We will be monetizing bandwidth by 2002.
So the Fed should be lowering interest rates at that time; Price inflation or no. Remember that Jefferson and Jackson both warned of banks inflating and contracting the money supply in order to gain ownership of as much as they can. Today, they are again squeezing the world, but they themselves are too close to the brink and may not be able to accomplish their goal.
Remember that monetary deflation and price inflation can go hand in hand and exist concurrently. Without demand for dollars to repay debt, there is nearly no demand at all. Already the public has moved their funds to stock and real estate "money" balances and somewhat into bonds, and hold only 10% of their direct and indirect money substitutes in banks. Also they have moved checkables from regular bank accounts into money markets at more than equal allocations, moved savings into bond and equity income funds/direct holdings, in quantities much greater than their savings, and have waaaaay more outside of CDs than in them.
Though the broad public is always wrong in its speculation, it has enough voice today to herd its congress into changing the rules so that they are made "right" in what were mistaken speculative judgements. Their bankers are too leveraged to allow anything else.
The maximum banks can see in debtor failure and still survive is 14% of business and 9% of consumers at the upper limit, but more realistically, major banks would be in danger with half that level - at 7-10% of business and 3-5% of consumers. The hot technology corridors of Cal, Seattle/Redmond, Boston, Phoenix, Texas and the financial hot spots in New York and San Francisco will more than take care of that limit. By the time this is well in process, the bankers will have the flames in close contact and will have the Fed turn on the sprinklers and liquify everything.
Noland, Richenbacher, Grant and others say they smell the smoke. So the Fed will be turning on the sprinklers once it gives up on putting out hot spots with its little CO2 cannister.
Answer: Man is part of the grand scheme of things to deceive as many as possible. Not intended to be
directed at anyone particular individual or group.
But, to all seekers out there. Gold is Gods money
and puts immediate value in ones hand. Not lies and
deception connected to paper who's value could
become worthless if a crisis did develop. Gold will
always have value, no matter what. Paper is paper,
and holds no value unless connected to a real
assets. U.S. dollars have very little asset backing.
The very disturbing part of all this, is they keep flooding
the world with more dollars and less and less gold to
back it up. Great concept and it's seems to be working
very well for now until people realize these dollars are
nothing more than paper with ink on them.
Damn! Standing on the shoelaces of a giant, I've just gotten a look over the edge of the table at the chessboard, and I think I can see some of the pieces on it.
I'll be carrying your extraordinary look at the Great Game with me today, to see if I can't get some of your perspective to rub off on me.
Sorry Hombre,
I know just enough Spanish, and other subjects, to be dangerous. Your Master will likely save the best for last once again. You are needed on both faith and grawg committees, thanks for serving!
ORO (10/20/2000; 9:41:44MT - usagold.com msg#: 39481
Brilliant ORO just simply Brilliant!
"By the time this is well in process, the bankers will have the flames in close contact and will have the Fed turn on the sprinklers and liquify everything.
Noland, Richenbacher, Grant and others say they smell the smoke. So the Fed will be turning on the sprinklers once it gives up on putting out hot spots with its little CO2 cannister."
Smells like a good old fashioned Jubilee barbacue to Me!
Thanks ORO I appreciate your very insightfull comments.
I do not know the Noland person you refer to? Is he a newletter writer with a publication that I could subscribe to? I wonder what your opinion is on whether or not the gold stock investors who have bought the unhedged and lightly hedged will survive the process if the sprinklers are turned on? Thanks again.
NICKNAMES
> If Laura, Suzanne, Debra and Rose go out for lunch, they will call
> each other Laura, Suzanne, Debra and Rose.
>
> If Mike, Charlie, Bob and John go out, they will affectionately refer
> to each other as Fat Boy, Godzilla, Peanut-Head and Scrappy.
>
> EATING OUT
> When the bill arrives, Mike, Charlie, Bob and John will each
> throw in $20, even though it's only for $32.50. None of them will have
> anything smaller, and none will actually admit they want change back.
>
> When the girls get their bill, out come the pocket calculators.
>
> MONEY
> A man will pay $2 for a $1 item he needs.
>
> A woman will pay $1 for a $2 item that she doesn't need but
> it's on sale.
>
> BATHROOMS
> A man has six items in his bathroom: a toothbrush, shaving
> cream, razor, a bar of soap, and a towel from the Holiday Inn.
>
> The average number of items in the typical woman's bathroom is
> 337. A man would not be able to identify most of these items.
>
> ARGUMENTS
> A woman has the last word in any argument.
>
> Anything a man says after that is the beginning of a new argument.
>
> CATS
> Women love cats.
>
> Men say they love cats, but when women aren't looking, men
> kick cats.
>
> FUTURE
> A woman worries about the future until she gets a husband.
>
> A man never worries about the future until he gets a wife.
>
> SUCCESS
> A successful man is one who makes more money than his wife can
> spend.
>
> A successful woman is one who can find such a man.
>
> MARRIAGE
> A woman marries a man expecting he will change, but he doesn't.
>
> A man marries a woman expecting that she won't change and she
> does.
>
> DRESSING UP
> A woman will dress up to go shopping, water the plants, empty
> the garbage, answer the phone, read a book, and get the mail.
>
> A man will dress up for weddings and funerals.
>
> NATURAL
> Men wake up as good-looking as they went to bed.
>
> Women somehow deteriorate during the night.
>
> OFFSPRING
> Ah, children. A woman knows all about her children. She knows
> about dentist appointments and romances, best friends, favorite
> foods, secret fears and hopes and dreams.
>
> A man is vaguely aware of some short people living in the house.
>
> THOUGHT FOR THE DAY
> Any married man should forget his mistakes. There's no use in
> two people remembering the same thing
Understand that I have been sitting within bank and financial market data published to the public for the past 3 years. From this and some readings in financial history and a 20 year interest in economics and monetary - political issues and a wee bit of personal exposure and contacts I have put together this picture, which I share with you on occasion.
My quick and dirty approach combines theory, speculative thinking, and determination of boundaries of the issues derived from their analysis and stretching the parameters to the absurd - which sets the possible range of results. The process then results in observations that are either conflicting or in agreement. The resolution of conflicting observations is my key to understanding and the clarifier of confusion, much of which I have inflicted on you with the hope of some people picking through the mess and pointing out flaws in analysis, theory or whatever. Aristotle and TrailGuide/FOA are very helpful.
Howe often looks in more fine detail and a more definitive manner into many of the issues and data I point out. Me hat's off ta' him, most excellent work.
So, don't gee wiz me, think critically and look for holes in the reasoning, since people in banking don't want to talk about any of this, nor do the few politicos who could understand this I get minimal feedback.
Good News- Great humor in that post, will share with spouse!
Bad News- You are now an official Founding Member of CLHE-HoFAG. You didn't mention our cause but we recognize a kindred spirit immediately. Welcome!
auspec (10/20/00; 10:29:09MT - usagold.com msg#: 39485
...a portfolio of "grawg & faith" eh.......sounds like fun.....they both involve the Spirit! ;)
ORO (10/20/00; 12:03:59MT - usagold.com msg#: 39491)
Just a lowly geek trying to put it together.
......."The process then results in observations that are either conflicting or in agreement. The resolution of conflicting observations is my key to understanding and the clarifier of confusion, much of which I have inflicted on you with the hope of some people picking through the mess and pointing out flaws in analysis, theory or whatever"...........HAL, HAL.....or you all right, HAL?
A long time ago one of the shambling creatures, not so long down from the trees, called by the others Da' win because he always seemed to be lucky, found something sort of bright and shiny in a shallow stream bed. Picked it up and carried it away. Sat in the sun and bashed it around a bit with a rock. Found it would shape itself to his bashings, but not disintegrate. Left it then in the dirt by the cave door and forgot about it for a few weeks. One of the small ones running around came up to him with it one day, saying "what zis, what zis". He recognized the lump of stuff he'd found in the stream. Got a bit interested and sat down hammering it into some kind of shape with a hole in the middle. Hung it around his neck with a bit of rawhide from an old wolf he'd brained last year.
Well the story goes on, the lump of stuff was joined by others over many millenia and times. The shambling ones got to recognize that this stuff was not only golden and shiny, but also almost indestructible, and easy to make into interesting even magical shapes. It had in fact the property like the sun and their fires, of seeming magical. We now venerate old Da'win as the first to discover gold, and to see in it, the survival of the fittest of all the art materials, the currencies, the store of what we now call wealth, in fact, the origin of specie.
FWIW, in contribution to the mad CLHE-HoF endeavours
http://www.prudentbear.com/bearthoughts.htmDoug NOLAND writes the Credtit Bubble bulletin weekly at prudentbear.com. Howe writes I think at goldensextant.com. Both are brilliant, IMHO, but not as interesting and thorough as ORO.
Following is snip fromlink above, on yesterday's market, Oct 19.
The bulls called "bottom" yesterday and were going to try and buy them today regardless of anything in an all-out desperation jam. They had to, and they knew it because expiration is tomorrow (most index options go out in the morning at the open and individual equities at the close.) As a friend of mine says: "derivatives rule the world." They had to squeeze out as many of the Oct put holders as they could in hopes of floating this sinking ship a while longer. I think they failed. Reality does matter, and reality always wins out in the end no matter how much you try and fight it. The reality is that there are huge problems in these individual companies, the credit markets, currency markets, and the energy markets. Consequently, valuations are compressing to reflect these conditions as well as higher interest rates. It's a slow moving, relentless march that cannot be turned back, no matter how much one wants to fight it. Technicians out there will note that the NDX and SPX failed to break their downtrend lines today going back to the Sept 1st top. We'll see if they can gap them up over those lines tomorrow and jam this thing into wonderland one more time, but if they don't and we see selling for whatever reason... well, let's just say I wouldn't get caught long over the weekend...
The room was full of pregnant women and their partners, and the Lamaze class was in full swing. The instructor was teaching the women how to breathe properly, along with informing the men how to give the necessary assurances
at this stage of the plan.
The teacher then announced, "Ladies, exercise is good for you. Walking is especially beneficial. So gentlemen, it wouldn't hurt you to take the time to go walking with your partner!"
The room really got quiet and the men all looked at each other. Finally, one man raised his hand.
Nine months ago back in January, Coca-Cola took a whopping $800 million charge against earnings. At the time this was treated as an exceptional charge and thus wasn't reported as their main earnings.
But what this did was it enabled the expenses for the quarters to come to be offset by this charge in January. In other words the charge made today's earnings look good (up 39%). Moreover, I think many who follow the stock are aware of this and today's reported earnings were no more than what was expected, thus the stock went lower today.
However, even though this gain in reported earnings didn't positively affect Coke's stock price, I do think this helped the market by lulling the common investor into complacency in seeing in the headlines that Coke's earnings were up 39% on last year's earnings which of course pre-dated that mammoth $800 million exceptional charge. The common investor is getting a false sense of security as things are not always what they appear to be.
"don't gee wiz me, think critically and look for holes in the reasoning"
Exactly. The best compliment to a thinker (lonely job) is to join in and advance the work. Only time and/or the experiential tools are our limits. Let us try harder to acquire both.
Oro's synthesis is two steps ahead of the commonplace offered around us, one step ahead of the best, IMO. In my case, a daring reach of conclusion usually captures my approval, but then I still ought to check what facts I can find.
The stuff about debt traps, and banks as an industry (both cooperatively and competitively) capturing certain markets, while pushing their own survival risk to the limit with the Greenspan put, is dramatic and worth further exploration. Modern day empire-builders. "How can they accomplish this?" "Will it work?" "Is this their goal?"
Sheesh -- a million and one Q's. But with this as Oro's starting point -- watching the strategy of Engulf and Devour -- you can see the possible game. You just won't get to read the book about it (except by Oro) for twenty years to come.
The first official mention of the "s" word on CNBC @ALL
~"I think stagflation is a little too strong a word. But we definitely see a cyclical upward trend in inflation. We see a dichotomy between manufacturing, which is in recession, and the rest of the economy. We expect about a 5% rate of increase in the economy this year. The consumer is obviously still there -- unemployment below 4%." -Kathleen Camilli, Chief Economist, Tucker Anthony, CNBC, Fri. October 20, 2000, ~6:15
enjoyed your detective work,
but perhaps i'm not smart enough to read between the lines. In plain english,(for the dummies like me)do u see realestate & stockmarkets spiraling downwards in your play of coming economic events.
I guess there will always be a conflict among the carps. Maybe Thaigold regards itself as a fully elightened carp. I doubt whethet the levity shown can allow any other conclusion. It is probably better that carps do not play in the pond of the sharks and the dolphins, because both sharks and dolphins eat carps. I guess ThaiGold is a pure and simple carp.
WASHINGTON POST
For Democrats, Gun Issue Is Losing Its Fire
>From Friday, October 20
OnPolitics
Washington Post Staff Writers
Friday, October 20, 2000; Page A01
MONROEVILLE, Pa. �� The issue of guns-once seen as a potential winner for Democrats-is now threatening the party's prospects of keeping the White House and regaining control of Congress, according to strategists and officials with both major parties.
The problem for Democrats is that gun control is unpopular among many of the swing voters both campaigns are targeting in the final weeks of the campaign, particularly in battleground states-such as Michigan, Missouri, Ohio and Pennsylvania-with a sizable bloc of hunters and other gun enthusiasts.
As a result, Vice President Gore has moderated his anti-gun rhetoric in recent weeks, going out of his way in the last two presidential debates to emphasize that he would not take guns away from sportsmen. And many House and Senate Democrats have found that gun control is not resonating in many key contests like other issues, such as prescription drugs.
The situation underscores the volatile politics of gun control this election. After the Columbine High School shootings a year and a half ago, anti-gun advocates had political momentum, but politicians and pollsters say the National Rifle Association and others appear to have had some success with the argument that more enforcement, not new laws, is what's needed.
"Watch Al Gore on guns and you can see the issue has not had the universal appeal some people had anticipated," said Rep. Thomas M. Davis III (Va.), who chairs the House GOP's campaign arm and supports stricter gun laws. "It's not a national issue. It's a regional one."
Fueling the pro-gun forces has been a massive mobilization by the NRA under the banner of "Vote Freedom First," as the group has blanketed the airwaves and billboards in key states with the message that guns alone should be the deciding factor in this year's election.
In Pennsylvania, for example, which boasts the second-highest number of gun owners in the nation next to Texas, more than 1,000 NRA supporters jammed a hotel ballroom early Wednesday morning to attend a rally headlined by NRA President Charlton Heston.
The former movie star told audience members they were "the direct descendants of America's revolutionary heroes" by working to elect gun control opponents such as Republicans George W. Bush, Sen. Rick Santorum (R-Pa.) and House candidate Melissa Hart.
"They won their freedom with bullets so that we could defend our freedom with ballots," Heston told the crowd at Al Monzo's Palace Inn here. "That is the holy war which you in this room help wage and win. But instead of fighting the Redcoats, we're fighting the blue-blood elitists."
Several members of the audience said they were not only voting Republican this year, they were also volunteering on behalf of GOP candidates to make sure Congress does not take up gun control legislation next year. Last summer in the wake of Columbine, the House narrowly defeated a measure that would have imposed a three-day background check on firearms purchased at gun shows.
"I'm not a gun fanatic, I'm a constitutional fanatic," said Gibsonia resident Michael O'Block, who will be working the polls for Hart in her bid to succeed Rep. Ron Klink (D). Klink is challenging Santorum for his Senate seat.
Beth Wineland, a 29-year-old catering manager, said, "If Gore gets elected I'm going to be buying a gun as soon as I can, because I'm going to lose that right."
Heston attracted crowds of 5,000 each in Hershey, Pa., later that day and in Flint, Mich., on Tuesday, where union workers made up a sizable portion of the audience. Yesterday, he traveled to Virginia for three more rallies.
"You know, if Vice President Gore had the guts of a guppy," Heston said last night to the laughter of several hundred supporters at a Richmond hotel, "he would simply stand up and say, 'Look, I was wrong. . . . I pretended to be in favor of gun rights-I really am not.' But, of course, he's not going to do that."
The intensity of the NRA drive has thrown a wrench into AFL-CIO efforts to mobilize on behalf of Democratic candidates, especially in Michigan, West Virginia, Pennsylvania and Washington. In Michigan, state Rep. Valde Garcia attended an NRA rally in the town of DeWitt, and he estimated that at least half the men in the audience wore United Auto Workers jackets. "This [gun control] is a real issue with these guys," he said.
Steve Rosenthal, political director of the AFL-CIO, said union members have been bringing their leaders leaflets from pro-gun groups telling members, "Defend your guns, defeat Al Gore." Labor leaders are now countering with a message delivered directly to members that "Al Gore doesn't want to take your gun away, but George Bush wants to take away your union."
Rosenthal contended that "the NRA stuff is so strong that is is not really credible." But key officials in the Gore campaign believe that it is a major reason for the erosion of Gore support in such states as Pennsylvania and Michigan.
Andrew Kohut, director of the Pew Research Center, said Gore's decision to deemphasize gun control may be based on poll trends that show a reduction in the overall support for gun control, especially among men.
Gore had been an ardent gun control advocate during his primary fights with Bill Bradley. Bob Shrum, one of his media advisers, said gun control remains "a continuing issue" in the campaign. He denied that Gore has backed away, noting "in the second debate, we had a whole discussion on that."
In fact, in the second debate, Gore chose first to say that he and Bush "agree on some things" and that he "will not do anything to affect the rights of hunters or sportsmen."
He did refer to his support for closing a loophole allowing the unregulated sale of guns at gun shows, for restoration of the three-day waiting period and mandatory trigger locks, but he made no mention-as gun critics wanted-of a provision in a Bush-backed Texas law that allows people to carry concealed weapons while in such places as churches. Only when pressed did Gore refer to his support for requiring photo licensing for new gun purchasers.
Gore's shift has disappointed gun control advocates such as Cathie Kopecky, who served as the Million Mom March's coordinator for western Pennsylvania.
"I'm angry about it," said Kopecky. "Both presidential candidates are pretty silent on the issue. They're trying to say what both sides want to hear."
Last year, Democratic Congressional Campaign Committee Chairman Patrick J. Kennedy (R.I.) predicted his party would hang the gun issue around Republicans' "necks on Election Day," but in recent months House Democrats have also scaled back their legislative and rhetorical attacks.
Laura Nichols, spokeswoman for House Minority Leader Richard A. Gephardt (D-Mo.), said Republicans have simply stymied the Democrats' attempts to force action on gun control.
There are some contests where Democrats are pressing the issue of gun control, including the Virginia and Florida Senate races. Handgun Control political director Joe Sudbay said this demonstrates "there's a big sea change in terms of how this issue is being debated and perceived."
But the issue of gun control is also being used to attack Democratic candidates in such states as Michigan, Nevada, Pennsylvania, and Washington. Klink-who had voted consistently with the NRA until he backed the three-day gun show check last summer-said he's well aware he may now have to pay a political price.
"If you're not a 100 percent with them, they come at you from both sides," Klink said during a rally in his district Tuesday night. "In this state the gun issue has defeated a lot of people on the state and local level. It's a powerful issue, and there are a lot of single-issue voters here."
Edsall reported from Washington. Staff writers David S. Broder in Michigan and Robert H. Melton in Richmond contributed to this report.
(c) 2000 The Washington Post Company
ORO we are all kindred spirits in the search for the truth about what is going on.
I think probably one of the things we all share her is a burning desire to actually know what is going on. Not many other people seem to share that interest. It has always surprised me but it is very true in almost all fields. That is what got me onto the Myers-Briggs types. I was certain that there was something unusual about those of us who felt compelled to find the answers.
On the other sites there really is not as much search for learning as there is here. It is often just a long ongoing food fight with a lot of information which happens to often be excellent.
If trailguides scenario of hyperinflation plays out and prices of assets like real estate are going to skyrocket, then i can't see any reason for buying gold ( only except that it may be a better performing asset). Why not just stay highly leveraged in a property investment and FIX the rate of interest for 10 years. You could leverage much more this way than you could by buying gold (at which time now, u cant buy on leverage). By the end of ten years u will have a great investment which u pay back the principal in very devalued dollars.
Trailguide also mentions that the US Fed will not induce a recession. Perhaps not, but the next recession will be by way of a loss in confidence, and no matter how low the fed reduces interest rates or pumps up the money supply, u cant force people to take risks if they have no confidence. (look at Japan)
Maybe as trailguide says, im walking forward looking back, and perhaps my understanding of events is not quite up to scratch. Maybe im just having a bad day and i just dont get it.
Maybe im right, got to trust my instincts and keep away from property until the sh.t hits the fan
I am getting ready to build a picket fence (to protect my gold). It will be four feet tall. Does anybody know how deep the posts need to go? I don't want to dig down three feet if I don't have to, and I don't know who to ask. Thanks.
A few materials, precious metals among them, are too rare, useful, and inherently valuable to be used for something as ordinary and common as "money", and if these materials have to be made "worthless" to drive home that point, so be it.
Well, here it is, folks. No doubts that this rally just HAD to happen...too many people prepared to jump in on the October V-bottom for the big houses not to set the trap.
Today was options expiration for equities...couldn't have those puts in the money, now could we?
In the end the stock market is about psychology - not fundamentals. That's why technical trading works so well...it is a measurement of the CURRENT thinking of those with the larger money holdings. Fundamentals do tend to assert themselves eventually, but it is often like trying to sharply turn a huge luxury liner.
This rally (which blew out a large portion of short positions) fulfills the expectations of all those just itching for the next bull move in stocks...there's only one problem -- things really are "different" this time, but not in the way the bulls expect.
It's going to be quite a rude awakening when the NAZ finally settles at 1500 and the DOW is below 6000 with gold at $1000+ an ounce.
These things take time, however - patience my friends, patience.
I have mentioned before that I share an office with a lady from Nepal. Today, she told me that she recently received an email from her home where they are expecting an increase of 20% to 100% in petroleum products. I know, I know, that's quite a range but I was up against a deadline by end of day today and didn't have time to pursue the conversation. I plan to look into this more next week to get more specifics.
About the Euro, someone said, "...For the problem is that the new currency will of course not be gold, a market-produced money, but a fiat paper issued in new currency units. So that the result of this new-Keynesian scheme will be inflationary fiat money, the issue of which is controlled by the regional Central Bank, i.e., by the new regional government.
This collaboration will then make it much easier for the Central Banks of the U.S., Britain, and Japan, to collaborate with the new European Central Bank, and thereby move rapidly toward the old Keynesian dream: a World Central Bank issuing a new world paper currency unit. And then, we would be truly off to the races with the world's Money and macro-economy totally at the mercy of a world-wide inflation, centrally controlled by self-proclaimed all-wise Keynesian masters."
If this is the case, the Euro doesn't sound like a solution to me. Out of the frying pan and into the fire???!!!
And speaking of Uro's, my Uruguayan 5 peso arrived in the mail today and it is one beautiful coin! Thank you, again, USAGold. "Clink" as Henri would say...and where is he anyway?
Most of us have probably seen the movie Amadeus. I've watched it several times as it has a special message to me. Without getting into too much of the plot, it's a tale, as told by a musician named Soliari (a fantastic performance by F. Murray Abraham) about his encounter with Amadeus Mozart. Yes, it was just a movie and subject to creative license by the writers, but there was an aspect of the film that was absolutely real - the relativity of talent.
Soliari was a good musician and had visions of going down in history for his work, but once he encountered Mozart, it became immediately apparent to him that his dreams would never become reality. Mozart was a genius and Soliari was...simply, talented. The irony of the movie was that Soliari had enough talent that he could appreciate Mozart's work...and that was his curse. He knew enough that he could appreciate the elegance and brilliance of Mozart's music but he would never, ever create anything of such magnificence.
Perhaps the movie, Amadeus, made such an impact on me because I see much of that same phenomenon in real life. Some people write computer programming code that could be considered works of art to one who can appreciate it. And before anyone jumps to conclusions, I see myself playing the part of the Soliari of computer programming, not the Mozart, though I believe I cope with my "lot in life" in a much more healthy way than Soliari of the movie. I have the good fortune to work with some truly brilliant people and often, I see work from them that simply causes me to take pause as Soliari would as he reviewed Mozart's sheet music.
And here is the point of this rambling...one observation I have made time and time again, is that these people of such rare ability, who can be found in any field of endeavor, don't seem to be aware of the fact that their everyday accomplishments are anything special. To them "it's obvious". But that which they see, instinctively(?) is unapproachable to most. We have such gifted people among us at USAGold...and I respectfully, and affectionately refer to them as gunslingers.
We stormed the Castle gates today with blood {and milk} curdling yells, and determined, fearless hearts............ and..................................................................................unfortunately, we were turned back, routed, and the battle was hopelessly lost. Man, that hot oil really hurts! They made us look like the pitiful knaves we are. We defeatedly returned to our encampment in the moors and sought consolation from our General, Peter the Grate. This {formerly} brilliant tactician regrouped us as we contemplated our next plan of attack. We suddenly noticed one of the children in the camp was wearing a WWJD bracelet and it suddenly dawned on us how to totally overcome our adversary with no more bloodshed whatsoever. WWJD, What Would James {CARVILLE} DO? That was the answer! We had, many times, previously marvelled at this Master and how he could totally ignore the FACTS at hand, and just create his own PERCEPTION. It is so simple, claim victory, and proceed accordingly!
Henceforth, any time the words CLHE-HoF are written or spoken the term VICTORIOUS is to also be used along side. This mantra is to be repeated ad nauseum until it is on the lips and minds of all. It is only a matter of time until the USAGOLD FORUM ESTABLISHMENT thinks this was all THEIR idea. I am thinking about writing a book about controlling the minds of the people with this type of technique and calling it 1284. What do you think?
Anyway, the CLHE-HoF is now ours and it is time for feasting and celebration. This knave is going to kick back a while, lick my wounds {minor} and a mug or so of grawg. Working on a late night rendezvous in the moat with a fair maiden that caught my eye today- serious frivolity. Will return to the intellectual p-nut gallery tomorrow and await the next insurrection.
CLHE-HoF is now reality, we are no longer just an advocacy group. Let history record the following brave men and women who gave up their dignity for this worthy cause;
Peter Asher- Our Grate One. The Founder's Founder.
Auspec- Could fight, chew gum, and tell jokes at the same time.
$hifty- No 2 men could pin this guy down!
Journeyman- Veteran of Local Wars.
Goldfan- Got fame but no gold.
CoBra{too}- MIA
Gandalf the White- Don't let this name deceive you!
Aristotle- Can fight as well as think!
Leigh- Led the men charging up the hill.
nummus aureus- Applied anesthetic to wounded aureuses.
Cavan Man- Fought valiantly against his own in-laws.
Trail Guide- We fell into in his footprints unfortunately.
Zenidea- Brought expertise from foreign campaigns.
Christopher- Slept through the battle.
justamereBear-This is no mere man we're talking about here.
Buena Fe- Fiercest of the inebriated, chaplain to the injured.
Nickel62-Joined just in time to lose a few body parts.
These are your worthy and honorable CLHE-HoF FOUNDERS, deal with it!
I built a deck on the back of my house some time ago and went to the local municipality authorities to get a building permit as I was considered to be "in the city". In the process, I learned that digging deep 3-4 feet is only required in northern climes as winter causes the ground to rise when it freezes (2-3 feet deep) and settle in the spring causing all kinds of problems for structures if they have a shallow foundation. Govern yourself accordingly.
We love you!! You've brought fun to our group. (But you sure don't know how to treat the wenches. Spend the evening in a moat? No.) I nominate every one of your posts for the CHLE-HoF. Any seconds, fellow Founding Members? CoBra(too), where are you?
$1- investment in gold U say will be 109 times more after 10 years,
that gives u $109-
$1 investment in property (with 90% leverage as is the norm today), allows u to have an investment worth $10- . U say will only be worth 12 times more after 10 years,
that gives u $120-
Mr. Farfel. Sorry, I don't have the numbers you're looking for but today was options expiry on the index. I was contemplating a put on the mini-S+P. How do you see this? TIA for any opinion Rich
MK: You asked if one should study WB YeatsPermit me please then, on a slow evening with a decent glass of Chilean merlot in hand (very inexpensive thanks to our monetary policy I might add) to offer something spectacular:
EPHEMERA
"Your eyes that once were never weary of mine
Are bowed in sorrow under their trembling lids
Because, our love is waning"
And then she said:
"Although our love is waning, let us stand
By the lone border of the lake once more,
Together in that hour of gentleness
When the poor tired child, Passion, falls asleep:
How far away the stars seem, and how far
Is our first kiss, and ah, how old my heart!"
Pensive, they paced along the faded leaves,
While slowly he whose hand held hers replied:
"Passion has often worn our wandering hearts."
The woods were 'round them, and the yellow leaves
Fell like faint meteors in the gloom, and once
A rabbit, old and lame limped down the path;
Autumn was over him: and now they stood
On the lone border of the lake once more:
Turning, he saw that she had thrust dead leaves
Gathered in silence, dewy as her eyes,
In bosum and hair.
"Ah, do not mourn," he said,
"That we are tired, for other loves await us:
Hate on and love through unrepining hours;
Before us lies eternity; our souls
Are love and a continual farewell."
W.B. Yeats
And now, we return to our regularly scheduled program....CM
T. Stranger, I seem to recall a tool you can rent called a groundhog that is a gas engine powered, 2 man device that drills a 10 or 16 inch diameter hole (your choice) in no time flat (unless you hit rock) that sure beats the alternatives.
Cavan Man, at the price of cedar, I'd go with pressure treated all 'round, especially since its probably going to be painted.
Javaman
Amadeus is a great movie, one of my all time favorites. Your post made me feel as a Solieri, in seeing you make such an insightful tribute to the "gunslingers" who post among us. You walk alongside them.
auspec
"The Battle is Over!!!!"
A post that is a work of art in its own right. Thanks for the great laugh! And I raise a mug of grog in salute to a great victory.
FOA
Thank you for the generous gift of your wisdom. As I read your latest Gold Trail submissiom, I gently rolled a Maple Leaf aroung in my hand, comforted by the weight of it.
"But I also agree that, without a doubt, no arm of the government should mess with the financial markets, including the Federal Reserve."
"Let the Fed rescue the market if it wants to. It beats the hell out of the alternative."
Crudele- Is this guy a financial economist or a politician?
These two statements were in the same article. This is a sharp guy, ordinarily, but he needs to make up his mind where he stands on this issue.
Yes indeed, once your committed to paint, your committed. I remember driving from Pennsylvania south on rt. 80 to Washington DC (as I mention below) and seeing a horse farm that had literally miles and miles of white plank fence. It had to be a year round job to paint it! Cedar turns grey with age due to ultra violet rays from the sun but it will last long. I built a 900 sq foot deck out of cedar. I don't think I would spend the bucks for it for a fence.
RE: your earlier post...
While the poem was beautiful and tends to take me back in time to rather unpleasant memories, you're statement on Chilean wine interests me as I like to think I have some experience in this area. In the late 80s, I used to travel to Washington DC (although it was highly illegal to do so) as they had very competitive prices compared to Pennsylvania, to purchase wine by the case.
I remember buying Casino Macul, a Chilean wine, considered the "poor man's Petrus" for about $4.95 a bottle. That's four dollars and ninety-five cents. Petrus is a French Merlot (I believe) that averages around $400 per bottle. Casino Macul was a great value at that price.
Anyway, I don't believe there is any wine, from anywhere, available at that price today. If there is, I don't think I would be interested in trying it. It seems to me, that even the mediocre wines from Chile and Australia have gone way up in price to $8 -$10 per bottle, and I don't understand why they have if our dollar is so strong.
Date: Fri Oct 20 2000 22:56
sharefin (From the far side) ID#284255:
Copyright � 2000 sharefin/Kitco Inc. All rights reserved
@All - hey, how'd we miss this one today ?
( Humbug ) Oct 20, 21:43
I think all foreigners had better read this one - we are about to see a very large wool rug pulled over all of our eyes. Would others please comment on what this all might mean ?
WASHINGTON ( Reuters ) - Federal Reserve Chairman Alan Greenspan and Treasury Secretary Lawrence Summers Friday urged Congress to act this year on legislation that would simplify the treatment of derivatives contracts in the event of the bankruptcy of a major financial company. In a letter sent to House Speaker Dennis Hastert and Senate Majority Leader Trent Lott, Greenspan and Summers said the bill would help reduce the impact of the failure of any one financial institution on the stability of the broader financial system. "We believe this is a rare opportunity for the government to take an important tangible step to mitigate systemic risk and improve the integrity of our financial system," they said. Derivatives are investments whose values are derived from an underlying financial asset, rate or index. They are widely traded among major banks, broker-dealers and other financial companies to manage and control complex business risks. The legislation aims to allow the speedy resolution of derivatives contracts held by a bankrupt financial firm rather than having them tied up in bankruptcy court, where delay could spread the firm"s problems to others involved in the deals. Among other things, it would permit the "netting" -- or offsetting -- of all the derivatives contracts between a bankrupt financial firm and a counterparty to quickly arrive at a single outstanding claim. "It would reduce the likelihood that incidents such as the near-collapse of Long-Term Capital Management in September 1998 would pose a broader threat to our financial system," Summers and Greenspan said. The effort has near-universal support in Congress, but has become ensnarled in controversy surrounding a broader overhaul of U.S. consumer bankruptcy laws. The House has already passed the broader bankruptcy bill, which contains the derivatives provisions, and the Senate may follow suit next week. But the White House has threatened a veto, making it unlikely to be enacted this year. However, the derivatives measure was also introduced as a separate bill earlier this year, and supporters believe that vehicle may now represent its best chance. "We are writing to urge that Congress pass ... a free-standing bill before the end of this legislative session," Greenspan and Summers said. "It is important that we not miss this opportunity." ^
Along the lines of "plagerism is the sincerest form of flattery" I copied it. It is a keeper.
To add to that, I am not much in favor of encouraging long jokes, more encouraging one liners, so the lengthy one that makes the cut is good. But then who ever said I had a representative sense of humor, or for that matter, any thing else?
It's hard to paint pressure-treated lumber but stain works just fine. I paint my retaining walls, made of pressure-treated landscape timbers, every time I change the oil in either of our trucks. Works great, looks good, greatly enhances the life of the timbers, discourages bugs of all kinds and gets rid of the used motor oil. Also, the paint brush never needs cleaning and never dries out, just remember to keep quests from sitting on them until dry. Good luck with it. If you do it yourself, you'll appreciate it all the more when it's done, both because it IS done and because YOU did it! Have fun Rich
----- "We are writing to urge that Congress pass ... a free-standing bill before the end of this legislative session," Greenspan and Summers said. "It is important that we not miss this opportunity."-----
It carries the distinct ring that time is of the essence.
Thanks for all the help. I am going to use a translucent deck stain as it turns out. But I am afraid I will be digging the holes by hand. My property is glacial moraine which is full of stones that I fear would give an auger fits. As it happens, though, I only need six holes. The fence is a short one.
My new Austrian Philharmonic arrived today. What a beautiful piece of work it is. This fence will help me protect it!
Yes, I would be interested in finding the COT info on S & P futures, my computer keeps giving me an error when I go to the CFTC website.
This past month has been outstanding for me, a huge, huge gain thanks to IBM, and several other choice overvalued tech firms, and I would have done much better except for Sun Micro and the gang pulling the co-ordinated ramp job on the market. But the net result was very positive for me.
The reasons I believe the market surge was a co-ordinated ramp job are as follows:
1) The market opened up with the Dow down some 450 points, of which almost 200 points consisted of IBM's drop, so in reality, the rest of the market was only down 250 points, and that is really not much considering we are around DOW 10,000.
2) CNBC sounded the alarm, acting as though it were a crash in the making, but again, DOW down 250 points (excluding IBM) is far far far from being a crash. That is no more than a bad day in the market.
3) The opening dump only lasted at most 15 minutes, maybe not even that long. Then immediately the market began to move up, forcefully and with almost no equivocation.
4) Now as you know, it is very difficult to get a consensus on anything in life, there are huge divergences of opinion. So if the market were moving back up solely on its own accord without any concerted manipulations, then at some point, conservative institutions/investors who were nervous about the market, should have begun selling vigorously into the rise. As such you would think that other big institutions could have caused at least a 100 point retrace against the rise. That did NOT happen, instead we saw a slow steady relentless rise with small little 10-20 point down-blips until the averages moved into positive territory. From that pattern, one can only conclude that the really big players were involved in a concerted move to squeeze the shorts and buy the market, without any fear or doubt as to where it would ultimately settle, knowing full well that they had the power to do it, knowing full well all the big players involved in pushing the market back upward, knowing full well that they had the government's Mr. Fisher acting as their helpful backstop.
5) Given that over the past two weeks, the market consisted of one bearish key reversal after another, then it is impossible to imagine that investors would believe with full conviction that the market could go straight back up.
A normal market would have seen at least one bearish key reversal on the way back up, maybe even two or three. BUT that did not happen, the market just kept moving up like a determined marathon runner, certain and sure.
6) Then while all the tumult is occuring, we get Sun Micro's "accidental" pre-release of earnings, about as accidental as Clinton's pentrations of Lewinsky. The SUN announcement served to encourage small investors to get on the institutional ramp-up bandwagon, since one of the major sources of market nervousness had been removed. After all, given the poor IBM results, poor MSFT results, poor DELL results, poor INTEL results, many investors were very nervous about SUN's after market report, especially given its super-bloated PE. As most people know, SUN has strong ties to the Clinton government and has been a major instigator/witness in the government's attack on Microsoft. So again, I categorically believe the SUN release was known to all institutions participating in the ramp-up job, and no doubt was co-ordinated by the Clinton government.
7) Finally we have the good old IBM factor, Lou Gerstner, another one of Clinton's most loyal good buddies. The whole time the ramp up job is occurring, IBM refuses to join the party. Why? So as to suggest to contrarian investors/shorts that maybe, just maybe the ramp up job is NOT real, that there might be another bearish key reversal at any point in time. After all, if most techs are ramping up, then why is IBM sitting in the basement? Answer: to scam shorts into believing a bearish key reversal might be imminent at any moment, and haul them in to short the market along its retrace.
That's my case, sir, and if the forementioned evidence were presented in a courtroom, then I believe that SUN, IBM, the government, and the Wall Street institutions would be found guilty beyond a shadow of a doubt.
Let's face facts, there is simply no doubt that this stock market bubble is the result of years of intervention, manipulation, cronyism, and moral hazard. Markets do NOT get this way left to their own devices, investors do NOT put their house equity into the market or max out credit cards without the assistance of a government that has conditioned them to believe that stock investment is completely NO-RISK.
Given these facts, then only the most naive Pollyanna would believe that this week's stunning market ramp-job occurred spontaneously without any pre-conceived orchestration.
Although there are many who debate whether Democrats or Republicans would be better for gold or the stock market, my feeling is there is absolutely no difference.
Both parties are shades of the same color where Wall Street is concerned, they are both bought owned and paid for by the bullion banks, so in fact, if Bush gets his way and can put Social Security into the stock market, well, that will be more fuel for the bubble, more paper fuel for shorting gold.
That is why I think Ralph Nader is the best choice, simply because he is the only one who will stand up to the corporations and Wall Street manipulators. Moreover, although he is a green environmentalist who is probably not in love with certain mining companies (and who can blame him), nevertheless, I think if the man understood how gold itself represented the main sword in the fight against Wall Street corruption, or if he understood how a rising gold price could bury some of the most venal, offensive, environmentally hazardous, overhedged gold companies (you know who they are) then he might develop a fast fondness for the metal. Why he might just want to send it through the roof, bury some corrupt giant gold hedgers, and save the lightly hedged little miners. After all, Ralph has always been for the little guy in America, against the big corporate bullies.
Stranger; I have been a carpenter for 25 years and built dozens of fences and decks. It would be crazy for you to sink posts 3 feet deep for a four foot high fence. The main thing to worry about is the posts rotting in the ground. Just put a couple of coats of polyurathane on the part that goes in the ground and it should be O.K for many years.
don't get me wrong, I have no intention of investing in the property market at the moment, in which i have sold all but few of my properties.
All i am saying is that if the hyperflation scenario which Trailguide expouses (in which he also seems to think that realestate will appreciate much in value), then a leveraged property play with FIXED interest is a better play than gold.
I personally tend to agree with Travellers thoughts on a deflationary enviroment where realestate values will tumble.
I hope i'm making myself clear, your replies dont seem to be consistent with what i'm trying to say
http://www.peterasher.com/ OK, I'm pulling rank with 50+ years of wood craft, boat building and residential design and construction.
Use Pressure treated 4X4, not "Outdoor-wood" which is dipped, but the deep treated with the penetrating embossing on it. If 8' is longer then you need, cut 14' or 12' in half and put factory treated end in ground. Throw 4" of drain rock in hole first, then tamp post in on top.
Dig hole with hand held post hole digger, If you hit a rock it wont lift use a long crow or wrecking bar and a sledge to break. If you don't dig below frost line you can get frost heaves but that may not matter to you. For stability scoop out enough dirt around the top for half a 90# bag of premix concrete per post. (Brace for three days if soil is soft) Finally cut a four-way bevel on the top of each post and brush on some heavy duty, (green) "woodlast" (For drainage and aesthetics)
This is the least expensive and longest lasting way to do it. You will have sold your Gold for 3K/oz. long before those posts rot!
R Powell, re crankcase oil treatment. I hope the EPA doesn't read the Forum!
We recognize that government control over money and banking is the primary cause of inflation and depression. Individuals engaged in voluntary exchange should be free to use as money any mutually agreeable commodity or item, such as gold coins denominated by units of weight. We therefore call for the repeal of all legal tender laws and of all compulsory governmental units of account. We support the right to private ownership of and contracts for gold. We favor the elimination of all government fiat money and all government minted coins. All restrictions upon the private minting of coins should be abolished so that minting will be open to the competition of the free market.
We favor free-market banking. We call for the abolition of the Federal Reserve System, Federal Deposit Insurance Corporation, the National Banking System, and all similar national and state interventions affecting banking and credit. Our opposition encompasses all controls on the rate of interest. We also call for the abolition of the Federal Home Loan Bank System, the Resolution Trust Corporation, the National Credit Union Administration, the National Credit Union Central Liquidity Facility, and all similar national and state interventions affecting savings and loan associations, credit unions, and other depository institutions. There should be unrestricted competition among banks and depository institutions of all types.
To complete the separation of bank and State, we favor the Jacksonian independent treasury system, in which all government funds are held by the government itself and not deposited in any private banks. The only further necessary check upon monetary inflation is the consistent application of the general protection against fraud to the minting and banking industries.
Pending its abolition, the Federal Reserve System, in order to halt inflation, must immediately cease its expansion of the quantity of money. As interim measures, we further support:
the lifting of all restrictions on branch banking;
the repeal of all state usury laws;
the removal of all remaining restrictions on the interest paid for deposits;
the elimination of laws setting margin requirements on purchases and sales of securities;
the revocation of all other selective credit controls;
the abolition of Federal Reserve control over the reserves of non-member banks and other depository institutions; and
the lifting of the prohibition of domestic deposits denominated in foreign currencies.
If you want truly free markets and sound money, only The Libertarian Party can help. Nader is a crook and an opportunist who has lined his pockets in the stock market while attacking "those evil corporations" who provide jobs.View
Yesterday's Discussion.
I went to all the major party web sites to collect their "mission statements." I wanted to compare what they stand for. As a lifelong tech weenie, I believe it is important to articulate your purpose clearly and succinctly. It was not easy. As you can see, there is quite a difference in the statements.
I could not find anything in the Republicans or Democrats platforms to fit my goal. They both had long winded preambles touting either their history and accomplishments. Nothing clear on where they stood.
The Greens party states "This platform is not binding for candidates on any level."
I found the Reform Party (Buchanon) and Libertarian Party having the clearest statements.
I'll leave the rest to you.
Green Party
http://www.greenparty.org/
Green politics is an ecological approach to politics that links social and ecological problems. Ecology studies the relationships among organisms and their environment. Political ecology brings human institutions and ideologies into this holistic perspective.
Reform Party (Buchanon Wing)
http://www.reform-party-usa.org/
Mission Statement
We, the members of the Reform Party, commit ourselves to reform our political system. Together we will work to re-establish trust in our government by electing ethical officials, dedicated to fiscal responsibility and political accountability.
Reform Party (Hagelin Wing)
http://www.reformparty.org/
Web site not available
Republican Party
http://www.rnc.org/2000/2000platform1
So long winded I could not find a simple parargraph outlining their mission.
Democratic Party
http://www.democrats.org/hq/resources/platform/platform.html
Same as Republican platform. Something for everyone.
Libertarian Party
http://www.lp.org/issues/platform/platform_print.html
Preamble
As Libertarians, we seek a world of liberty; a world in which all individuals are sovereign over their own lives, and no one is forced to sacrifice his or her values for the benefit of others.
We believe that respect for individual rights is the essential precondition for a free and prosperous world, that force and fraud must be banished from human relationships, and that only through freedom can peace and prosperity be realized.
Consequently, we defend each person's right to engage in any activity that is peaceful and honest, and welcome the diversity that freedom brings. The world we seek to build is one where individuals are free to follow their own dreams in their own ways, without interference from government or any authoritarian power.
In the following pages we have set forth our basic principles and enumerated various policy stands derived from those principles.
These specific policies are not our goal, however. Our goal is nothing more nor less than a world set free in our lifetime, and it is to this end that we take these stands.
What a mess! As Arab leaders meet in Cairo this weekend to posture and pontificate, and yes, click their worry-beads at the futility of it all, the "peace process", if one exists at all, is in intensive care . . . and barely on life support.
We can predict with absolute certainty since we have been there many times before � what will emerge from this ragbag gathering on the banks of the Nile, of Arab kings, emirs, potentates, dictators, chieftains, warlords and assorted scoundrels, and that is a blanket denunciation of Israel and all its works.
There will be an enormous amount of sound and fury signifying absolutely nothing.
Israel will be blamed for the escalating tension in the occupied territories and asked to respect United Nations resolutions calling for it to withdraw to pre-1967 war boundaries.
Some of its leaders will be accused of "crimes of war".
In the ornate and dusty salons of the Egyptian capital, oleaginous Arab officials in their robes and Italian suits will caucus and consult on a consensus statement with one eye on the West, on Washington in particular, and the other firmly on the Arab street.
You can be sure their outrage will be calibrated to meet the various constituencies at home and abroad, and then when they have huffed and puffed sufficiently, if not elegantly, they will climb aboard their private jets and wing their way home to their palaces and castles.
Honour may not have been served, but if it has been perceived to have been served, if only through the lattice of a mashrabiya screen, then that will have to do for the time being.That is the Arab snapshot.
In Israel, as Yom Kippur, the day of atonement, slides astern, Israeli leaders will continue their petty squabbling over the formation of a government of "national emergency", a process which has rather less to do with emergency than with the febrile ambitions of the participants.
For if the Arab world is a patchwork of historical enmities,tribal hatreds, religious differences and personal feuds, so is Israel itself a witches brew of all of the above stuffed into an area about one third the size of Tasmania. And some of the aspirants for national leadership would not be out of place in a mafioso gang.
Indeed, not least of the risks in a Middle East on the brink of a debilitating renewal of a wider conflict is that Israel's democracy, already under significant strain, will erode to the point where it is perfectly conceivable that a goulash of religious nuts and nationalist demagogues take control. In that case, heaven help us all.That is the Israeli snapshot.
But what of the Palestinians themselves in their towns and refugee settlements under the guns of the Israeli army? Of course, the television cameras narrow the focus on the mob scenes, and render them starker, more disturbing. Of course, a mis-impression can be gained about the intensity of conflict, that, in fact, the entire West Bank and Gaza are on fire.
That is not the case. However, there is also no doubt that the unravelling of the peace process, following the failure of Camp David in July and the outbreak of mob violence is the most serious threat to regional stability since the Israel-Lebanon war in 1982, and possibly since the Yom Kippur War of 1973. And that includes the Gulf War of 1991.
For, the risk is that what we are seeing on our television screens is the "Lebanisation" or "Kosovisation" of the conflict with all that implies, not only most immediately for Israel and the Palestinian leadership, but the wider Arab world and the West as well.
By "Lebanisation" we are referring to the possibility of greatly escalated inter-communal violence between Israelis and Palestinians which gradually saps the energy of those involved, and ends destructively for all concerned. By "Kosovisation" we mean the risk of slaughter of a people by a superior (military force) leading ultimately to outside intervention.
US officials, from President Clinton down, had every reason to look anxious in the Egyptian resort town of Sharm el-Sheikh this week when, by the skin of their teeth, they brokered the flimsiest of truces an agreement which was aimed as much at saving the faces of those who had travelled halfway around the world as it was at stopping conflict on the ground.
The truce may, or may not, lessen the violence, but in the absence of the resumption of a genuine peace effort to which both sides are committed, then it is as certain as night follows day that simmering conflict will boil over again and again with the ever present danger of a truly catastrophic eruption.
What we are talking about here is not peace, but an absence of war. Over the next few days or so it will become clearer whether the Sharm el-Sheikh truce holds and whether the protagonists, having been shocked by the possibility of an escalation, really do decide enough is enough and return to the negotiating table.In the meantime, it is reasonable to ask how did we get into this mess in the first place? After all, it was barely three months ago that we saw cosy pictures of PLO chieftain Yasser Arafat and Israeli Prime Minister Ehud Barak, escorted by US Secretary of State Madeleine Albright and Clinton himself, walking in the woods at Camp David.
Those talks, which began with guarded hope and ended in crushing disappointment,appeared to suck all energy from the process, and left us with what we have today which is a completely unacceptable level of violence unless, of course, you are among elements on either side with a malign interest in further destabilisation.
And make no mistake there are groups and individuals in both the Palestinian and Israeli camps who are not at all disappointed by what has taken place, and would be even happier if things got worse.
When the Middle East and Israeli-Palestinian dispute in particular is at its most dangerous is when we have a vacuum, such as that which prevailed after the Camp David failure.
Into that vacuum marched Ariel Sharon, leader of the Nationalist Likud movement,who toured an Islamic holy site in Jerusalem, like a prospective purchaser checking out the real estate.
The Arab street erupted over what Sharon claimed was a perfectly legitimate visit to a site Muslims call the Haram al-Sharif which also happens to be sacred to Jews as the Temple Mount, or location of the Second Temple, although, as The New York Times reported, observant Jews are not supposed to walk on the area atop the Mount that contains the Muslim sites, because of a religious ruling that they might accidentally step on the Holy of Holies where Second Temple priests were ritually purified. That aside, the disappointment of Camp David, in which Barak went further than anyone expected and perhaps further than would have been acceptable even to his own peace constituency in his offer to Arafat of 90 per cent of the West Bank, and Palestinian sovereignty over the Christian and Muslim quarters of Old Jerusalem, had cast an unfavourable spotlight firmly on the PLO leader.
In some minds his behaviour at Camp David had exposed him as an impostor who,in spite of all his talk about a desire for peace, was simply not prepared to take the risks necessary.
Indeed, so this view goes, Arafat, whose hold on the Palestinian "street" has been eroding, is quietly exhilarated by the recent turn of events, because it has enabled him and his supporters to shore up their position with the Palestinian masses.
If we take this interpretation of events a step further, we might share the self-serving opinion of Arafat's critics that he is able to turn Palestinian violence on and off like a tap.
But things are never that simple, nor is an expectation that the 71-year-old Palestinian leader, who has headed a ramshackle movement for 31 years, should suddenly be transformed into an Arab Nelson Mandela, able to come to terms with past and present with grace and dignity.
Arafat, the indefatigable wheeler and dealer in the great Arab bazaar, the scheming clown, is not Mandela and he never will be.
The Palestinian issue, except for the obvious human rights aspects, bears little comparison to apartheid where a minority of whites was holding a majority of blacks in subjugation within a national boundary. Arafat, in his latest incarnation, has achieved the proximate status of mayor of a medium to large-sized American city. He may be the leader of a state-in-waiting with some of the trappings of statehood. But he is no statesman.
His many critics may be right: he has run his course as a putative peace negotiating partner, as Barak claims; although in the Middle East one learns never to say never, however bleak the outlook may seem.
Times, however, have scarcely, if ever, been bleaker, except in the midst of war.... what a mess!
Attn: FOA/Trail Guide===============================================================================
Hello Trail Guide:
In your recent Gold Trail post: FOA (10/20/00; 14:00:07MD - usagold.com msg#43)
You wrote:
[quote]
I submit that many smart hard money thinkers like Traveler and Thai Gold (and many others) are walking forward but looking backward.
[-and-]
No, we will not confiscate gold again. Perhaps if it is designated as US legal tender and caught up in some kind of currency change, that will pose a risk!
[unquote]
=================
ThaiGold reply:
=================
I'm not sure if walking forward with an occasional glance over one's shoulder
is an act of clumsiness; cowardice; or just common sense, when venturing into
unfamiliar territory. Perhaps it's all of the above. Whatever. I plead guilty.
I'm glad to read that you at-least consider the possibility of Gold Confiscation
to "pose a risk!". And the other words in your sentence are exactly what I plan
to elaborate on in the very near future. In a post I tentativly title:
"Virtual Gold Confiscation: The Government's Response to Financial Meltdown"
I feel (strongly) that in the event your (or similar) scenarios happen, that
you may not have adequately addressed the issue of what the Government's fast
response would be to such a meltdown. Perhaps it's inadvertant. But to just
imply that Gold will soar to $30,000/oz and prices of goods and services to
adjust wildly to such currency-deflation leaves many questions unanswered and
indeed, implies that government(s) would be helpless and chaos would result.
I suggest, that will not be the case. The US government is not that inadequate,
and could not, would not, allow such a situation to ensue. It will be squelched
and quickly. And very simply.!. You may agree. You may disagree. But we in the
Gold Forum should consider the possibilities and plan our future accordingly.
To this end, I will be writing and posting some thoughts and issues for open
discussion. I invite everyone, and yourself, to join in the fray; add or modify
points; and hopefully we all can benefit from the wealth of combined knowledge.
So please watch for it, coming to a GoldForum session near you soon.
Here's some brief excerpts:
... the systemic meltdown will occur over a one day/night and be breathtaking.
The all-powerfull US Government will be forced to act swiftly and decisively.
All stops will be pulled. And nothing will be sacred. Especially GoldBugs who
are and have always been held in disdain by the Government. But they will not
be materially nor financially hurt. The government understands the Gold Fetish
and will act responsibly to allow those so-inclined to continue their hobby.
... a well thought out in advance plan will be implemented by the US Treasury
in concert with the Federal Reserve Bank and the IRS. It is a plan which in
fact is quite simple and easy to implement, yet achieves astoundingly good,
fast and fair results. The US Dollar will remain the world's reserve currency.
Prices and markets will not be shocked. Indeed, Joe Sixpack will hardly notice
that anything has even changed. CNBC may even "overlook" reporting it.
... The IMF; World Bank; BIS; and G-11 nations will all implement at the same
time, a coordinated, similar and interlocking plan. There will be no surprises
to any of them, nor to Central Banks worldwide.
... Initially, the President will declare a Banking and Market closure. That
may last as little as two days. When the Markets are reopened there will be
some significant changes that will squelch the Meltdown in it's tracks and
return stability instantly to the world financial system.
... Physical Gold will be "confiscated" in a new and untried way. This will
be a "Virtual Confiscation". Persons currently owning Gold coins or bullion
will be allowed to retain it. They will be required to report their holdings
on a detailed "Schedule PM" to the IRS each year along with their normal tax
return. Gold holdings will be taxed a 1% annual excise on your IRS return.
... Persons holding Gold coins or Bullion will not be allowed to sell them,
nor to export them. They will be sellable *only* to the US Treasury. And only
at a permanent governement decreed price of US$ 50/oz. GoldEagles may be used
as Legal Tender. The US Mint will continue to mint them. These can be bought
by any person from the Treasury or Federal Reserve Bank for US$ 50 each, plus
a 1% fee.
... It shall be unlawful to buy/sell/trade Gold coins or Bullion in any other
manner without an explicit government authorization permit. Penalties will be
severe: $1000 fine per ounce and 1 month in prison per each ounce so-marketed.
... Industrial users of Gold may obtain such permits and purchase their Gold
needs directly from the US Treasury. Nowhere else. And at US$ 50/oz plus 1% fee.
... Gold producers (mines) will only be allowed to sell their output directly
to the US Government. At US$ 50/oz. Efficiencies will be achieved and some will
be able to continue at a profit. Others will fail. The government will assist
mines by waiving all corporate taxation; issue long term zero-financing; minor
subsidies; and environmental exemptions where appropriate and safe.
... COMEX/NYMEX/CBOT futures trading of Gold will be halted permanently. Any
outstanding positions long/short will be settled in cash. At US$ 50/oz.
... The US Dollar will instantly become "good as Gold" in world trade and
settlements. For oil. For wheat. For widgets. Everywhere.
... The US Dollar will instantly become "stronger" by a factor of six. Since
under Virtual Confiscation, Gold will have been devalued by a factor of six.
ie: from US$ 300/oz to the new worldwide standard valuation locked at US$ 50/oz.
... Other countries of the G-11 will fall into agreement. Gold sales and gold
holdings by individuals in their countries will be similarly fixed at an
equivilant local-currency amount. Based upon the US$ 50/oz Virtual lock.
... Governments everywhere will still be free to inflate and overprint their
fiat currencies to accomodate credit expansion, trade surpluses, etc etc just
as always. But the spectre of a POG (Price of Gold) soaring will have been
removed from the equation. They no longer will need to consider that. It is
a win-win situation: A strong dollar; good as (US$50) gold; unlimited banking
flexibility; international agreement and standardization. Local currencies
unaffected. Worldwide prices unaffected. (Except for one: The Price of Gold).
... so we see, a Virtual Confiscation of Gold achieves the same or better
results than an actual physical confiscation. Gold is locked permanently at
a Virtual(ly) worthless price of US$ 50/oz. The government has taken your
Gold's value, but not the Gold itself. In the process, they have freed the
US Dollar from the constraints of a floating Gold Price. Worldwide fiat
currencies as well. Prices of goods and services remain unchanged. Hardly
a bump is noticed in international nor regional trade as the plan implements.
Of course, U.S. Dollars are also useful to buy all the things that are internationally traded in terms of U.S. Dollars. Of these, the most obvious is Oil. Unless you have your own, you have to buy Oil with U.S. Dollars. How much longer that is going to be the case is not clear, there have been many reports of nations suggesting that Oil might be priced in terms of other currencies. But so far, Oil is priced in Dollars, and only in Dollars.
For ThaiGold:
Kind of odd how there are court cases of people trading xx ounces of gold for property looking for tax relief at the lower property value inherent in 30 $50 gold pieces and being adjudged upon that the relief so sought isn't possible because gold must be valued at market. (cake and eat it too syndrome, eh?)
Your scenario would have gold quickly leaving the US whilst people spent there dollars on our gold in Fort Knox or where ever it is at.
Two old army buddies in the Middle East decided to play good cop/bad cop.
"Tell ya what Ehud. You go to Camp David and promise �em everything. You'll be a hero. We'll all be heroes. Then I'll put on a dog-and-pony show in the streets to antagonize these guys, just something to inflame the passions a bit, and they'll start throwing stones, and then they'll be the goats. We'll never have to make good on your �concessions� and we can make them guys look bad at the same time."
"Gee, Ariel. Do you think it will fly? Is the Western press really that stupid? And somebody's gonna get hurt�"
"Don't worry about the press, Ehud. We have influence there. And don't worry about anybody getting hurt. We've got bullets and they've got rocks."
ORO wrote:
"The businesses they [banks; the cabal] want most are precious metals and telecom. Wall Street and its partners in London, Bazel and Frankfurt have taken over substantial chunks of the industry - such as 15% of Ashanti. But they still can't get the nice juicy chunks they really want. They will not get them because too few of them are leveraged that way. They will only gather a few more little miners to add to current ownership of Barrick (allways was a banker's mine)."
Taurus asks:
I have read that the capitalization of all gold mines in the world, if added together, is less than the market capitalization of Coka-cola. Probably Bill Gates could afford to buy Coke single-handedly. Certainly he and a couple of buddies. The question is this: Why does not the cabal (Rockefellers, Rothchilds, whomever) already own all the gold mines in the world outright? Seems like that's a question worthy of a moment's reflection. They can't buy a gold mine in, say, Venezuela? Seems like they could buy the country if they wanted to.
Attn: Humble Pie & Steve HHumble Pie (10/21/00; 05:31:43MT - usagold.com msg#: 39555)
=== You're wrong on all three charges. How does ultra-
conservative; USAF Veteran; Retired AT&T 30 yrs; Rancher
sound to you. The only moles around here are in the lawn.
SteveH (10/21/2000; 5:03:21MT - usagold.com msg#: 39550)
==== Read my fine-print. Gold is non-exportable from the US.
Severe penalties. Ditto in each coordinated foreign country.
In all cases and places: Physical Gold is Nice to Hold. But
other than that, Virtually Worthless.
Hey Humble, how's the pie!!! (Just kidding) Thaigold has been in 'lurkerland' for a while; he/she's a oldie from way back. Thaigold presented strong arguments for silver and confiscation some 4-12 months ago. It brought out long serious discussions for a few weeks.
There probably are 'weasels' on this forum from time to time but they get weeded out quickly. Thaigold is not in that category. As an aside, perhaps one should not rule out Thaigold's thinking. The default opinion that gold will not be confiscated does not leave any room for error does it?
Attn: SteveHSteveH (10/21/2000; 5:03:21MT - usagold.com msg#: 39550)
==== Regarding that Judges's mark-to-market decision:
He musta been one of those
"raving left wing liberal academics who has never had a
honest job. Might even be a Govt mole coming out of
deep cover" that Humble Pie mistook me for.
Under the government's rescue scenario, such disputes
would henceforth be settled at Gold's locked Virtual value
of US$ 50/oz. That would be fair to all parties. And would
save the landowner some property tax to boot. Is that fair,
or what.?.
Attn: CanuckCanuck (10/21/00; 06:48:42MT - usagold.com msg#: 39558)
=== Good Saturday Morning to you too, Sir Canuck.!.
Thanks for the glowing resume'.
I just checked.... I'm still a male.
http://216.46.231.211/credit.htmOf course it's a concern, and with historical precedent we'd be stupid to ignore it. After all, we're citing history for the 1933 and 1971 dollar defaults on gold, aren't we?
I think FOA's comment has been that the private percentage holding within the US now is so small relative to what's already in official vaults, that little is to be gained by another grab. Also, some private hands are favored ones.
Hasn't the US Eagle issue been fairly small? -- check me, someone, but between 1-2 million oz. per year? Almost a commemorative function, not a monetary one, in their view?
An overnight breakdown, once crisis passes the inflection point of any rescue chance, is a strong possibility. And I'm sure they have scenarios already in place, already distributed in sealed operational notebooks. But I wonder if ThaiGold was thinking the gold grab was somehow the cure for dollar collapse on the magnitude of the link I give above?
oops gotta go, cat's threatening to vomit on my carpet...
(sharing my feelings EXACTLY!)
Taurus - bidding vs grabbing security put against debt
When bidding for gold companies/mines a bank would put its cards on the table and create a bidding war. By lending and then forcing the borrower into default the bank can take the mine put up for security or gain an equity stake without having to bid. The price would be negotiated without bidding because the property would be distressed, thus having only vulture funds bidding against you, and their bids would be external to the bankruptcy restructuring.
Attn: Cavan Man & Mr GreshamCavan Man (10/21/00; 07:06:57MT - usagold.com msg#: 39562)
=== Thank you. I'll try to behave myself. But it's difficult.
Mr Gresham (10/21/00; 07:04:24MT - usagold.com msg#: 39561)
=== That link you posted (http://216.46.231.211/credit.htm)
certainly contains some scary statistics, numbers and bombs
to think about. I wonder if Alan Greenspan can even sleep.
In my posted ... excerpts, I've only touched upon the effects
of the Government's rescue plan, as it would affect us here
in the Forum, as GoldBugs and wannabee Physical holders.
Of course, I've not extended it into the vast realm of additional
meltdowns of credit bubbles and stock bubbles. Perhaps ORO
could analyze and comment far better than I, on that aspect.
It seems nobody has yet put forth any viable scenarios that
illuminate for us what the possible action(s) of government(s)
would be to the many crises and meltdowns which are often
forcast here in various postings. I feel it's time we consider
such issues. Before they are upon us. Which could be soon.
Forcasting Doom-n-Gloom is easy. Pinpointing the workable
aftermath and soloutions is more difficult, but seems worthy.
My focus, is on the "probability" of confiscation or an alternate
version..." Virtual Confiscation". It would be more painless,
easier to implement, and instantaneous. In-fact, it may even
occur as a pre-emptive strike prior to the meltdown. As I'm
sure the Federal Reserve and Treasury will see it coming in
enough time to act first. ie: the "sealed operational notebooks"
of which you spoke. Perhaps I'm reading one now, as a mole.
And whether or not the mintage of GoldEagles is large or not,
is not relevant. I do not envision them becoming widespread
nor used much as circulating Legal Tender. But they can be
if so desired. Unlikely, when one considers the old adage of
"Bad Money drives out the Good Money".ie: people would
hoard their GoldEagles, prefering to spend instead, perceived
less-valuable $50 bill paper currencies. Even though both are
(then) fixed/decreed as equal by the government. My focus
on this point was to mildly alleviate the worst fears of physical
Gold buffs, to show them that they will still be able to retain
their assortments of coins and bullion, and continue to enjoy
their Gold Fetish. Perhaps a harsh term, but in-fact, holding
Gold after the Virtual Confiscation is law, will be simply that.
A hobby. That indeed, costs them an extra 1% in IRS taxes.
One must not lose site of the big picture. The meltdown of
the Gold derivitive and carry stuff is only a small portion of
the impending meltdown. And as I said, the government will
need to pull out all stops. Take no prisoners, and nothing and
nobody nor institution will be sacred nor immune. It's gunna be
a whopping meltdown, and they will have no choice but take
stern and decisive measures. Cronyism and favorites and too
big to fail may become a moot point. When the very Republic
itself is at risk. Sometimes, the government gets it right. This
will be such a time. I hope.
I see no chance for a Libertarian system except possibly as a solution to a true economic crisis in America. In my mind a vote for a Libertarian is a wasted vote.
Instead, you need a leader (like Nader) who will work in the established system, yet is willing and able to stand up to the Federal Reserve/big corporations and insist they respect certain parameters of conduct....but nobody can hope to dismantle the Federal Reserve in the absence of some kind of monetary crisis in America.
Although it is said a vote for Nader is a wasted vote too, I think that based upon the huge attendance he is getting in certain regions, he can obtain at least 10-15% of the vote, and if he does, then that will ensure that neither Gore nor Bush get the majority of the vote, and that puts the new government on alert as to the severe disenchantment with the corporate-led status quo and the imperative to address the concerns of that 15% of the populace. It could be the beginning of the end of this absurd two party dictatorship.
I do not believe the mainstream polls that say he only has 1% of the vote any more than I believe that gold is trading in a free market. I have met too many people who plan to vote for him, on average two or three out of ten people I've personally polled.
Netking,
Thanks for your insight and apt description of the Middle East mess. No peace yet and when they do arrive at "peace" there will be no peace. As long as Israel exists there will be no end in sight to this enmity, IMO.
On another note relating to Jerusalem; The cornerstone for the third Jewish Temple was to be laid last Mon. the 16th, but the process was not allowed to go forward by the Jerusalem Police. Not exactly the best timing! Do you or anyone else know where this Temple is planned to be constructed in relationship to current Moslem holy site? Alongside, in place of? Thanks again.
-----------------------
SteveH (10/21/2000; 5:03:21MT - usagold.com msg#: 39550)
Stuff
http://www.the-privateer.com/gold6.html
Snippet from above link (even the-Privateer is getting on the Euro for gold band wagon now):
-----------------------
Hello Steve,
I'm hearing more and more where various commentators are allowing for a change in this direction. Most of them still do not think it's a real plausible event, but can at least see the pressures building in that way.
When I said a few days ago that it was showtime, several major moves came out of the woodwork.
Paris, Friday, October 6, 2000 ------- ECB Raises Key Rate ------ 'We see no threat to growth'' from this rate increase, Mr. Duisenberg said. He said the euro-zone economy was at ''cruising altitude.''----- "the forces underlying solid growth in the medium term remain in place"-----
also:
Dubai Monday, October 09, 2000 ---------
Mr Jacques Santer, former president of the European Commission, has called on Gulf Arab oil exporters to price their crude in the euro rather than the US dollar as a means
to stabilize the oil market --------- "It could be the instrument to consolidate oil markets" and would be less affected by US foreign policy, he told a Gulf-Euro conference in Dubai. ------ "Trust and partnership spirit between the Union and the GCC could well increase if we were to consider trading the barrel in the euro" instead of the
dollar,-------- the future will certainly offer us opportunities for a move in this direction," he said, describing Europe as the world's biggest oil importer. ---------- "My contention is that the euro will move again toward parity with the US dollar by gradual extension of
the euro in international transactions"--------
Also:
BAGHDAD (AFP) - - Iraq's central bank has begun to buy european currencies, following Baghdad's decision to stop using the dollar, the INA agency reported-------Iraq's cabinet commissioned a team of economists on September 14 to prepare a study on the possibility of using the euro or any other currency in Iraq's trade instead of the Dollar.----
Steve,
These were powerful diplomatic thrusts and they received very little commentary in our media. Santer's proposal is "in the works" as we speak and will impact the dollar now
and for a long time into the future. It has to be appealing to the producers in that region because the bulk of their supply goes to EuroZone countries. Why do you think
Duisenberg is playing his hands off policy so openly now? Market traders don't have a clue to the "whys" of his recent remarks. They think he is some fool. He's offering them (producers) a completely independent currency, exactly what they wanted and lobbied the ECB / BIS team for during pre Euro formation. We in the US are standing on our heads trying to explain how the Euro has fallen against the dollar. Stand on our feet and it's easy for anyone to see that the Euro is fine and in a strong position. It's the dollar that has risen far above other hard currencies lately.
This whole scene is playing out in a fashion that will allow producers (and ultimately many others) to shift (sell) out of dollar reserves while it's over valued. I cannot stress enough how important this development is or it's influence on American money policy in the months and years ahead.
Everyone thinks "showtime" means a spike in gold. In reality, it's all about a currency war that is setting the stage for a crushing failure in our gold pricing mechanism.
I remember when we used to get post after post of Middle East experts telling us how the US had all these producers under their thumb. We would never allow them to raise prices, they said! Again, that's walking forward while looking backwards. In the early 90s desert storm era, this was true to a degree. But, I point out that the Euro was not available then and most everyone said it wouldn't even be born. Today, it's a whole new political initiative because money always talked louder than guns.
Here we are with $30+ oil (who of these poster experts would have believed it, back then??? MK knew!) and the prospects are for it to go much much higher. So, what is our heavy handed, massive influence in the region doing to change this? Well, we take a serious, strong approach in the matter to show the world just how much our US military might can buy in production increases: "we release oil from our strategic oil reserve"!!! OK! That should send a signal that nothing has changed in the affairs, right??!! We rule that part of the world, right?!
Steve,
the whole notion that we would back out of any military conflict in that region because they dropped our dollar is ludicrous. We must defend their oil production at all costs, no matter what currency they use. We simply cannot afford to allow that supply to completely fund EuroZone development at a cheaper price than we can get it for. That is exactly what would happen if we do not continue to back their governments and economic systems. Without free military and funding for
their economic structure's longevity, we would ultimately lose all influence in the region. This is strategic planing not discussed in the open by any of our want to be experts. For us (USA), keeping all oil, worldwide, priced somewhat par (in any currency vs the dollar) is extremely important to US vital interest. Both military and economic.
So:
Today, all Euro oil supply is headed to being priced and settled in Euros. This change will greatly impact world perception as to the value of holding US dollar reserves. It is a change that is now "on the table" and producers are not taking the decision lightly. Once the ball starts rolling, it's good buy dollar overvaluation,,,,, and hello US hyper inflation. Especially if we want to keep our DOW and
financial structure away from bookkeeping failure. Roaring prices for goods, yes, but bookkeeping failure, no! This is how a real inflation plays out!
ALL:
Again, ThaiGold, Traveler and others make good points, but these positions do not factor in the political will that's now in process. ThaiGold's argument that physical gold will be confiscated has been around for a long time. It has often been used as a reason to buy paper gold substitutes (mine
shares, ex?) because of their past response to such an action. But, today taking such a position is not working, is it? That's because it doesn't factor in the new "gold market direction" Another pointed to long ago. I only recently understood completely the ramifications of it. Anyone reading my Trails posts also understands it now. As far as to FreeGold and Legal Tender problems; our discussions about these items are numerous and date back to pre Thai days. Most of you long time readers have followed it as ORO, Aristotle and many others debated these issues.
Whether our paper price making markets take contract gold values higher or lower here is not the complete issue. The whole presentation is based on an utter failure of the entire dollar markets for gold as they now exist in paper form. The little physical gold that trades relative to the gargantuan paper trading today, will be completely overwhelmed as the dollar is transitioned from reserve
status. This "crushing of credibility" of paper gold will have an extreme impact on market valuations of all gold shares. "Semi hard money paper gold bulls" used to tell everyone that they would hold these shares through any crisis. Now we are finding out just hard their claim is in the face of the real ramifications of dollar destruction! The facts are that paper gold only functions well in "regular inflation's" like we saw in the 70s and 80s. When "real events" start marching our currencies into open warfare, paper gold is worthless. Unless you can hold them through a complete trading shutdown where their mark to the market value would be "ZERO"!
Many market watchers have always said that the battle was between the dollar and gold. That was true until another digital currency could take it's (dollars) place. We have been putting this private discussion in front of the public for a few years now. Recently with the help of Aristotle, SteveH, TownCrier, ORO and many others posters (too many to mention), Michael Kosares's USAGOLD forums are blazing the trail for all to see.
All of the many items ThaiGold posted today about government control of gold pertains to past policy in a different ""gold is official government money era"". The use of gold through that era is riddled with failure. In the future (see my latest Gold Trails) currency reserve competition will
require a country to keep gold free for private trade. Making price discovery a physical affair only. This will come about in a completely different atmosphere from today where gold is still manipulated as a world "official currency" asset. Mostly now manipulated by a failing IMF/dollar system. The next reserve currency, the Euro will not compete with gold and will require it to find it's
FreeGold value level. The US will have absolutely no incentive to controlling gold to defend it's currency in that era.
Traveler,
Hello sir! I certainly do respect your thinking and have agreed with some of it for some time. However, I believe that Another is very right in that "Events" are telling a different story than the one we are used to. I doubt we will ever see a real restrictive money policy in this country again. We shall see.
Sir, I know oil from it's "down hole operations" into and "far past" the influence of the old Texas Commerce Bank! If those" Cherry Wood" wall on the 40th(??) floor (if they are still there) could talk, some tail they would tell. Indeed!
But those days are long gone and far removed from today's
reality. I don't think we could have ever had a very private conversation at the petroleum club, it you did know me you would know exactly why. (smile) :)
Some people think I'm MK (hello Michael (smile)). Well, in my current time and stature of life, if two people saw a picture of Michael and myself, standing at "Roy's" for dinner,,,,,, You would most likely hear:
-------------
"OH! OH!, I know that one,,,, saw him on TV! He is in the movies!
"NO! NO! he's Michael Kosares, very famous and photogenic ,,,, but I don't think he's been in hollywood" ,,,,, Who's the other one ,,,,,, standing kind of in the shadow?"
OH! OH!, I know I've seen him before,,,,,, can't think of where,,,,,, Now I know,,,, saw him the other day ,,,,,,, He's Michael's ,,,,,,,,,,,,,, gardener?????????????
----------------------------------------------
HA HA, talk to everyone another day, on the trail.
Trail Guide
Ironically if there is a global crisis and meltdown of the US financial system over the shenanigans of your current government, it would seem that a worst case scenario would result in many of the goals of libertarianism being achieved by default. Please excuse the atrocious pun (smile).
The LP's published remarks on separation of government & banking warm this old anarchist's heart. Thanks for posting them here. Meet you at the polls?
Farfel,
A vote for Harry Brown is not "wasted". I know the perception is that winning is everything, but for minority parties that is not entirely the case. What the LP stands to win if it can get the votes is BALLOT STATUS. The only way for any party to compete with the biggies (in economic terms) is to not have to expend all their resources just achieving ballot status.
I don't know what the other states require, but I believe NY's requirement is 50,000 votes for Governor or President. That's pretty tame compared to many other states, where restrictive requirements defeat minority parties before they ever get off the ground. My sources indicate that Brown may get as many votes as Nader & Buchannan combined. He'll get mine, that's for sure.
1. I believe you are assuming the US has many "friends" throughout the world; many who would continue to enjoy US hegemony: we do not.
2. I also believe you might be assuming the USD has not conquered the world and that competing nations will continue to support the USD to their own disadvantage: they will not.
3. Further, I believe you are not accounting for the fact that gold is the global monetary/financial "currency" par excellence: it is.
4. Lastly, you obviously discount the viability of this "freegold" system where a 5000 year old tangible asset can revert to its historic role as the ultimate store of value and a benchmark against which fiat can be measured (therby allowing continued central bank meddling etc. CB's will grow accustomed to this change and employ it to their mutual advantage.). I say, it (freegold) is in the making. We are not alone on this planet and other strong "hands" will make it so.
5. PS: You are also assuming that the strong hands in the world who do hold gold as a monetary asset would allow their holdings to devalue drastically: THEY WILL NOT.
Otherwise, I think your concerns about confiscation are well founded IMHO.
Sir Aristotle,
Your Chimps, Champs, and Chumps essay is marvelous, and quite likely to produce even more Chump Change!
The major issues with many gold investors is of course LEVERAGE, this is not a CD mentality group. On the other hand, who is wise that blindly ignores RISK?
I confess to being largely a Chump, backwards looking, and to some degree overlooking physical in preference for shares. Am not an evolution guy, but something is happening {Changing} to my chromosomes {the XY IS STABLE, THANK YOU}! Find myself thinking, planning, and BUYING more like a Champ every month, probably more a metamorphosis than an evolution. The key us in understanding what form of Au you are investing in, and what are the respective risks. This Forum has illumuinated the risks involved in Au paper, shares, or physical. THANK YOU!!!!! Eyes are wide open now, looking behind, ahead, and at present environment.
CLHE-HoF- This new entity is also evolving {Being Created actually}. If Randy will build it- They will come! This is an official 2nd to your nomination of Chimps, Champs, and Chumps #39302 to CLHE-HoF. This is a perfect example of using profound thinking blended with some left brain creativity. It really isn't that painful is it? Looking for numerous more 2nds- you do not need to be a Founder to nominate or give 2nds {new club-anything goes at this point}. I am curious as to how many Forum writers came to receive their handles, but you, Sir Aristotle, require no explanation.
ThaiGold ,Now that's more like it.I meant no harm.Keep the comentary coming, but IMO when the meltdown occurs it will be anything but orderly and at that point,it's every man/woman for his/her self. Canuk, Don't feel so humble to day ,just got my Argentino's in the mail,very pretty indeed.makes the pie look better everday.As Ari sez Gold ,get it before its to late.
The Question was, to paraphrase: How does the Central Fund of Canada compare to owning physical gold?
Answer- It comes in 2nd as it is not actually in your posession like physical gold or silver are. Here's an extreme example- Say you're trying to escape a crumbling South Vietnam and you need to get the attention of your potehtial rescuers. They are not going to be real interested in your CEF shares, right? CEF does pay some dividends and is as safe as govt entities will allow it to be. Not likely to be stolen from your posession.
Again there are advantages and disadvantages with CEF vs physical. It's called informed consent in the medical professions. Hope this helps some. CEF is more Champ than Chump IMHO, but will never be THE CHAMP!
Got Posession?
Auspec
I didn't write this, it came by E-mail so there is no link. While this is satire, I seriously think that, more important than any Third Party statement, A vote for Bush is one step closer to insuring that, no matter what, Gore and his handler's agenda do not get in control of anything.
>>>>
>Hello, I'm Al Gore, and I'd like to tell you about myself. I know a lot
>about hardship, because I came into this world as a poor black child in a
>tiny town in the backwoods of Tennessee. I was born in a log cabin that I
>built with my own hands. I taught myself to read by candlelight and
helped
>support my 16 brothers and sisters by working summers as a deck hand on a
>Mississippi River steamboat.
>My mother taught me the value of education, so every day; I would walk 5
>miles to a one-room schoolhouse. I was a mischievous, fun-loving scamp,
>though I never dreamed that one-day, my youthful escapades would serve as
>the inspiration for "Huckleberry Finn." Back then, black folks in the
South
>were second-class citizens. One day, a traveling minister came through
>town, and I asked him if anyone was ever going to do something
>to guarantee civil rights for all Americans. Well, I guess I made an
>impression. You see, the minister's name was Martin Luther King, Jr.
>My father was a United States Senator. He once
>perched me on his knee and said, "Son, if you work hard and listen to your
>mama, someday you can live in a hotel in Washington, D.C., and go to an
>exclusive prep school." But life of privilege was not for me. After
>getting my high school diploma, I took a job in a hot, dirty textile mill.
>I was so appalled at the treatment of the workers there that I organized a
>union. Later, that experience inspired a movie - which is why, to this
day,
>my close friends at the
>AFL-CIO call me "Norma Rae." When word got out what an 18 year old
factory
>worker had done, Harvard called and offered me a scholarship.
>I captained the hockey team to four consecutive national championships,
but
>I also played football and was good enough to win the Heisman Trophy.
>During my college years, I lived in a housing project and moonlighted
>playing lead guitar for a little rock band. You may have heard of it-the
>Rolling Stones.
>But there was a war going on, and I felt I had to serve my country. So I
>enlisted in the U. S. Army and went to Vietnam. I was deeply opposed to
the
>war, but I did my duty as a soldier and came back home with the Medal of
>Honor and the Croix de Guerre, all in less than 4 months. When I got
back,
>I took a long journey across this great land of ours. I've crossed the
>deserts bare, man, I've breathed the mountain air, man, I've traveled,
I've
>done my
>share, man, I've been everywhere. And the people I met at truck stops and
>campgrounds and homeless shelters on that journey all said the same thing:
>"Al, we need you in Washington." I knew they were right, but first I had
to
>take care of some other business---building the World Trade Center,
>founding the Audubon Society, doing the clinical research that proved
>smoking caused cancer, and coming up with the recipe for Mrs. Field's
>chocolate chip cookies. Finally, I deferred to the demands of the people
of
>Tennessee and allowed them to elect me to the House of Representatives and
>the Senate, where I established the US Strategic Oil Reserve. And then
one
>winter day nearly nine years ago, for no particular reason, I answered
the
>call of the people once again and took the oath of office as Vice
President
>of the United States.
>Since then, I've been part of the most successful
>administration in American history. And, in my spare time, I invented the
>Internet. Many times Bill Clinton has been pondering some grave decision
and
>has asked me what to do. And when I would give him my thoughts, he would
>invariable say, "Of course. That's brilliant. Why didn't I think of
that?"
>During the darkest days of the impeachment battle, the president told me
he
>only wished he had listend when I told him to stay away from that
>dark-haired intern. So after I decided to run for president, I sat down
>with him and asked if he had any suggestions about how to conduct my
>campaign. And Bill Clinton gave me a few simple words of advice-words
I'll
>never forget. He looked me in the eye and he said, "Al, just tell the
>truth, it's always worked for me."
Let me add: Confiscation could most easily be achieved by going after only the speculative profit on a rising POG. After holding Gold down below $300 for this long, they could simply "Freeze" the price at that level or a bit higher and not create a global upset. The holders of Gold would have a much harder time getting public sympathy for an action that created a guaranteed, though small profit.
ThaiGold throws up several cautionary flags that easily deserve serious thought. Even though FOA's comments rightly cast doubt on them, it should be pointed out how radical they actually would be.
Thaigold's idea that the federal government would be able to force citizens to declare their gold holdings and pay a tax of 1% to continue to hold them flies in the face of all past experience that Americans have ever had with taxation. At no time have we, as a people, ever had to pay federal taxes on our possessions, just for the mere privilege of owning them. Instead, the whole concept of taxes has always been on "income". The idea has always been that a citizen has the right to own what he has. That private property is basically sacred. Property as such has always been respected as such. Taxes have always been due and payable on the increase of property only. The exception to this concept are the property taxes due (at the local level only) on real estate holdings. These taxes are mostly for schools, and other local-level improvements to infrastructures such as water levies, local roads, etc. These social costs are accepted because they benefit all citizens at the local level. At the same time, as there is no obligation to own property, yet all real estate property must be owned by someone. And the costs of society are passed on to every benefiting citizen in the form of higher prices by property owners, whoever they might be.
To suggest that these basic concepts are about to change is radical in the extreme. Taxing gold ownership outright would open some very big doors in our society. How about a tax on art works? Food supplies? etc. The idea easily becomes that the government now owns everything... a portion of which must be tithed away periodically. Basically stated: No private property exists anymore. The government has the fundamental right to everything. Period. And eventually (at the rate of 1% per year?) it would own everything (in 100 years?).
Last time I heard, that concept had been tried in the form of communism, and it was discovered that such a form of forced labor was too inefficient to compete with other systems.
Thaigold suggests that such moves by American government would instantly be supported by IMF and G-11 government actions modeled along the same lines of a hard and fast gold standard (@ $50/ounce) imposed on the population. Yet, we can already see that the ECB intends to mark its gold to market. (They are already doing so on a quarterly basis.) So that already blows a pretty sizable hole in the international cooperation card. Anyone holding gold and desiring to not live under defacto communism could merely change their residence to the European Community, financing the move with their undeclared gold holdings. And of course, with the Europeans already opting for a non-communist approach, the basis exists for an eventually lethally competitive confrontation for this new American-communistic system.
And ThaiGold's vision flies in the face of reality on other basic levels, too.
The indisputable fact is, that gold, far more than a mere attractive adornment to be indulged by goldbugs out of a fanciful inability to conform to modern concepts of social value, is uniquely endowed (Durability/permanance, beauty/desireability, rarity, etc. -- readers of this forum know this from memory) with all the necessary requisites of true money. Always has been so. And must continue to be so. Witness the Europeans with their quarterly mark to market of gold. Their treatment recognizes the monetary value of gold.
Their recognition of this reality creates the reality that all others must also accept.
FOA and Another are right. There can be no confiscation of gold, or of gold's value at this late stage in the game. That concept worked before. But it wouldn't work this time.
Thank you, FOA and Another, for all your help in seeing beyond history. Following and digesting your thoughts is like seeing history as it unfolds. What an exhilarating experience!
That's called a Personal Property tax and we have it here in Missouri. In fact, years ago (30?), there was a tax on the furnishing in your homes here in Missouri. This was part of the PPT assessment. Of course, everybody fibbed. This was unenforceable so the political intelligensia did away with it. Today here, anything that needs a license is taxed. That's how they manage it.
Attn: Trail Guide & Shermag & Cavan ManTrail Guide (10/21/00; 08:50:07MT - usagold.com msg#: 39569)
=== Thank you for your comments. Please understand that
I am not necessarily fully-advocating the rescue scenario that
I've put forth. It's an excercise to stimulate thinking within the
Forum about a facet of the Meltdown scenarios that hasn't
been addressed: ie: "what will..WILL..government(s) possibly
do to rescue the world's financial system from total colapse?"
And I am therefore playing a "Devil's Advocate" role herein.
Also, I'd encourage others to step-up and offer some of their
own concrete scenarios likewise, as alternatives. To date it
seems nobody has, including yourself.
One point you made (that my gold confiscation scenario was
old-hat or done-before or fully discussed/dismissed before) is
not correct. This new approach is totally different: Virtual
Confiscation, where Gold is retained by the masses, only the
value is taken-away is, I think a new exciting concept.
Also, it is not the old tried-before/failed method of returning to
a Gold Standard. It's just the opposite. Please re-read my
earliest post today. You have overlooked that aspect. Gold
is not the reference standard. It has been decoupled and fully
neutralized by the government US$ 50/oz lock/decree. Then,
the US Dollar itself becomes the defacto Reference Standard.
Gold becomes essentially worthless. Nobody would wish to
"waste" their US$ cash any longer to accumulate nor hoard.
And in the other worldwide cooperating countries, their local
currencies (Euro, Lira, Yen, Baht, Whatever) would likewise
lock-in at an initially agrred upon equivilent POG. So it (Gold)
becomes identically priced, instantly, worldwide, at the same
never-to-change-again value(s).
Those currencies, then become competive or referenced for
all future international settlements, in terms of US Dollars. Not
gold. Gold is no longer on anyone's radar screen.
At first glance, many here in the Forum "think" about arbitage
and smuggling etc etc. Nonsense. To buy it here at US$ 50
tthen smuggle it (at great risk) elsewhere, to be only able to
sell it to another country's Official Treasury Gold-Input Window
at an equivilent (local) (Yen/Euro/Ruble) price, is ludicrous and
profitless. Nobody would bother. There is no market for Gold.
Others mention a Jewler's Windfall: Buy gold from the govt
at US$ 50/oz and fabricate it into expensive jewelry. Also this
becomes silly. Gold jewelry will also have lost it's lustre in the
aftermath of the lock-gold reprice. ie: a $300 necklace of
"yesterday" becomes a $50 necklace of "tomorrow". Who in
his/her right mind would pay $300 for only $50 of tooled Gold?
The jewelry market would adjust (deflate) to the new reality.
Next I want to clarify a point you expressed: That I or others
often use the pretext of gold confiscation to buy paper gold
substitues such as shares or derivitives. Let me say flat-out,
that I am not "Talking My Book". Indeed, Sir Trail Guide, as
a result of my learning curve and review of your teachings on
the subject of paper substitutes, I fully agree with you about
their invalidity and worthlessness. I truly hate my Newmont
share position. I'd prefer physical Gold, instead, even at only
$50/oz. Or better yet, Silver.!.
You also speak of "regular inflations" vs open currency warfare
and/or "new inflation" realities. etc. Stop and think: If we are
currently inundated with high unacknowledged "old" inflation,
and it hasn't changed Gold's price one whit, ($270/$290), then
for sure, in a locked-gold-price ($50) era, it'd not matter either.
Inflation (too much money chasing too few goods) is a function
of money supply, not gold price. Not at $270. Not at $50. It's
irrelevant under such a rescue-era scenario. Isn't it.?. Since
any inflations at that time become strictly (as before) simply
a function of government(s) management of their currencies.
Or mismanagement, as is more often the case, and would
continue to muddle in the same fashion. Dumb today, equals
dumb tomorrow. Bureaucrats never learn.
Finally, Trail Guide, please consider that my scenario occurs
at a viscous time of worldwide total meltdown. Chaos of an
incredible sort would result in every financial arena worldwide
if drastic steps were not taken immediately. Other countries
would be hell-bent to jump onto the US$ stabilized wagon just
as they (and their economies) were recently saved from the
jaws of collapse during Asian/SouthAmerica/Mexico meltdown
by the USA assuming the role of "Consumer of Last Resort".
I mean, here are many countries, swimming in current US
Dollars from their exports. It seems to me they would welcome and fully cooperate with any US-sponsored plan
to save the value of those (their) Dollars. And if it harmed-not
their own economies in the process, indeed, even stabilized
their own currencies further, would see it as the only/best
soloution to a mega-mega-problem.
The USA's dollar may be despised, but it sure is widely used
and accepted everywhere. I'm reminded of the old adage:
"Where does an 800 Lb Gorilla sit down.?. Answer: Anywhere
he wants.!. So, I ask, where does an 800 Lb Dollar spend.?.
Answer: Anywhere it wants.!. You could even purchase Euro's
with them. To buy Iraqi oil. In France. During post-meltdown.
Thanks for listening. Further comments appreciated.
Shermag (10/21/00; 09:47:15MT - usagold.com msg#: 39572)
=== Cocaine and Heroin (smuggling/sale) are in a different
class. They will continue to be profitable, since there is a big
demand for them. Whereas Gold, after-meltdown scenario
will be mostly unwanted by the masses. Only fetishists will
crave it, as before, and they can easily purchase it in any
desired quantity from their local Central Bank, worldwide, for
a paltry US$ 50/oz or local-currency equivilant. Trust me.
Cavan Man (10/21/00; 10:10:04MT - usagold.com msg#: 39573)
=== You've listed five points. I'll try to offer rebuttals:
(1) [US has no friends to cooperate] See above: 800 Lb Gorilla
(2) [to disadvantage their own] See above swimming in dollars.
(3) [currency par excellence] For Central Bank national equity
comparisons/exchange rates: Maybe. For Joe Sixpak: No.
(4) [FreeGold in the making] Post-meltdown it will be UnFree
and definetly locked. Sorry. There goes 5000 years of tears.
(5) [Big holders thwarted] A humbling thought. But inevitable.
Thanks everyone. My Dobie now wishes to take me for a run.
You will hear no more of me until tomorrow.
GOT TO KNOW! Nickel62, Goldfan, Christopher, Leigh
Hey Guys,Gal,
Nickel62- Did you write the "Debate" #39243 & "Sexes" 39489?
If so, this Forum is a lot wilder and woolier
than anyone realizes. Honerable mention to you!
Goldfan- Ditto with post #39495. I am a fan of yours!
Christopher {The Certifiable}- Am still howling over post
#39400. You are out of the closet now and we have
high and regular expectations of you!
Leigh- USAGOLD Forum needs you more than you need it!
Other Certifiable Closet Comics- This Forum can be like a morgue when POG plummets $.60, we need some of your "moisture" in a dry and weary place. Bust loose and let that creative genius come out of that moth eaten hole!
Got Bi-Hemispheric Synaptic Activity?
Auspec
Why would I trade a one ounce gold coin for $50 in federal reserve notes just because a bureaucrat demanded that the price be fixed there?
What force makes the US FRN the de facto reference standard? Especially when there are umpteen trillion in existence.
Just why would this decree stabilize the credit balloon/ meltdown?
I agree with you that the only solutions that bureaucrats come up with will be 'solutions' that remove personal liberty and/or property. Will the American people act like sheep and give away those freedoms?
Gold is the real money. That a politician wishes it would go away so that fiat can be printed endlessly will not change that fact.
ThaiGold, I am a student of the forum and willing to learn. How and why would the rest of the world permit the USA , in the midst of a financial crisis, to set the POG on the world market. I can't see the EU or the Oil Producing States going along with such foolishness not to mention Asia. Would the USD be more than it is because it set the POG at US$50, not backed by gold at that price, and still a fiat currency. And remember as Another/FOA have said, the whole point of the Euro was to replace the USD as reserve currency of the World. Isn't that what is happening now? Cavan Man, I liked your post better but had to get my 2 cents in., White Hills
Now that you've had a good run with the Doberman, maybe the oxygenation of the �ole brain cells has cleared out the cobwebs and you can re-think the $50 Gold scenario.
In the extremely unlikely possibility that a President Gore can convince a bunch of closet Marxist, new age democrats to vote in such an abomination, consider this.
1) Gold still requires $200+ to get it out of the ground
.
2) What government decrees, government can cancel.
3) Not everyone who has some investment money on hand is stupid.
So, now you have gold being bid for at $50 and taxed at 50 cents a year. There is not going to be much of any supply out there at that point. Not many people are going to see that the Golden Emperor and is wearing only $50 cloths. They can SAY gold is only worth $50 an once but that won't make it so. Heck, I'd sell everything I owned and buy all the $50 gold I could get and hunker down at 50 cents a year for a bit until the scheme crashed and burned.
So, now you have gold being bid for at $50 and taxed at 50 cents a year. There is not going to be much of any supply out there at that point. Not many people are going to see that the Golden Emperor is wearing only $50 cloths. They can SAY gold is only worth $50 an ounce but that won't make it so. Heck, I'd sell everything I owned and buy all the $50 gold I could get and hunker down at 50 cents a year for a bit until the scheme crashed and burned.
ThaiGold,
Interesting "end game" thought scenario. IF we ended up in a One-World Government that govt cartainly could make whatever gold decree they wanted, but am not going to hold my breath for that one. Too many world wide conflicting interests, even if one huge governing body has a major control and influence on worldwide events. Let me know when the Middle East is unified and we'll take another look at this issue.
Confiscation could only happen on a country by country basis and is doomed to failure. That cat will not fit back into that bag, IMO. Too many activist/advocates with access to air waves. The TRUTH has a leg up on a LIE every time {in the end}. Don't care how many times AG takes responsibility for this Forum, his decree shows his delusions only.
Best to you,
Auspec
Your "drastic steps" have been taken. We've been debating same here for over two years.
Here's another reason why confiscation might NOT occur:
1. This country needs all the brains it can muster from both within and without. Any significant repressive measures will keep talent away from these shores. BTW, that's not an original thought--has been mentioned here before.
Let now your bliss be turned into bale. --Spenser.
2. Evil; an evil, pernicious influence; something causing great injury. [Now chiefly poetic]
Now hearing rumors of the IMF gold to be used to bale out the BB's once things get too far out of hand. Think of it. The IMF has already marked some of its gold to market. What's to stop it from being marked to market at a much higher price? So, when gold is needed as the golden bale, that is when she will rise. Could this also be the impetus behind the derivative law change request by GS and LS?
Just imagine if this is know by these BBs. Sure confirms GATA's claims, eh? No wonder they lease to hearts content the golden swill. They already know the bale is in the works. What a bunch of horse pocky.
Sure is pointing to a behind the scences happenstance with gold, doesn't it?
RE: Currency WarfareTrail Guide speaks about POG being caught in the crossfire of a developing currency war. Gold is the Euro's trump card. Therefore, POG (by proxy) will be attacked as the Euro cannot be attacked DIRECTLY due to FOREX/Trade complications etc. Look out below?
Date: Sat Oct 21 2000 13:37
sharefin (Email chatter) ID#284255:
Copyright � 2000 sharefin/Kitco Inc. All rights reserved
It seems that we are tracing out the first leg of the major equity bear
in the classic emotional roller-coaster. Commentary here and in the
public media and press continually looks for "proof" that bottom is in
-- the tough description is denial, the kinder words are skepticism or
optimism. The bulls still hold the upper hand in terms of numbers, but
they just don't have the money ( or conviction to commit it all ) to push
to new highs. Failure to get there, along with realization that
continuously accelerating economic growth assumptions are just plain
impossible, will be the impetus for the big leg down ( Elliot III ) . This
pattern is of such a high order that most can't see it. After all, the
entire pattern will be several decades long when we look back at it,
IMHO. The talking heads have no clue what capitulation is about. We're
nowhere near the widespread belief that no price is too low -- that's
capitulation.
FWIW, the debt game is running on schedule, with the telecoms now
recognized to be the lousy credits they are. Coming next is the telecom
infrastructure suppliers, still months away. After that comes the
financials. The end game will be the consumer debt and mortgages, which
is still three to eight years away, I would guess.
Anything that is a major life-shift can't be that good. I suppose the adage, if it doesn't kill us then we will be stronger, applies. All of this high faluten(sp?) mumbo-jumbo, taxes my brain. I just want my gold stocks to go up. (see mono lisa smile or smerk). You know (seriously now) that is what brought me here in the first place. Just like Bill Murphy and lots of us. We just wanted to know what the heck was going on with gold. Now look what we think we know, eh? Pretty scary sometimes. Don't you know? (smile)
www.commitmentsoftraders.com Farfel, this gives large and small specs and commercial positions as well as open interest through 10/17/00.
Stranger, plastic fence is also available. I don't know about cost but it never will need paint or stain. It's not a very organic idea but I've seen it and can state that if I hadn't been told, I wouldn't have known it wasn't wood.
Peter Asher, if the EPA or DEP or anyone ever asks about my painting with used motor oil I'll tell them I'm just using a common oil-based stain. I poured a concrete footing some years ago, right on the ground between forms but on the ground. Poured about 30 tons and then listened to the EPA idiot tell the concrete truck drivers that they couldn't wash their shutes because the 200-300 lbs. of sand, stone and cement from the shutes was harzardous waste that shouldn't be dumped "on the ground". Please don't damage our only planet, I agree, but let's have a little common sense.
My vote for president goes to the candidate from the Ben Franklin Party. Franklin was once asked what the best government is and replied "that government is best that governs least". I'd also vote for a somewhat limited "golden" collar imposed on their spending. Happy weekend to all!! Rich
Thought about cashing out of my gold stocks as sold as I am on our friend. However, there are still way too many reasons why POG might get back to around $300 or so and bring me back to par so I am holding. This whole new episode will take time to "work out". By the Grace of God I am pretty employable and with my sweat equity I can hang in there long enough. One thing I am absolutely convinced of. When the POG rises it will be a screamer and I am going to be there to watch it all. Best to you friend.
Your post triggered quite a response! Wow! If I may rephrase your thoughts, at the risk of over simplifying�
It sounds to me like you're saying the U.S. is likely to (1) knock a couple of zeros off its currency, like any self-respecting banana republic would do as an inflation cure, and (2) re-enter the equivalent of Bretton Woods with gold at $50/oz.
Is that the gist of it? It's certainly not implausible.
Ploy #1 has been employed by any number of governments any number of times. Ploy #2 worked well for 25 years. And no doubt many folks in "high finance" fondly remember the good old days when life was simpler. Not that it WAS simpler. But as they remember it�
Only a minute to post before honey-do's take over:
Reminds me of the thoughts I came to the forum with over a year ago when talk was of Y2k bank runs (low likelihood, but snowballing effect with high consequence).
What would FDIC and Treasury do to calm public outrage over loss of their savings? Turn all uncollectible bank deposits (and then T-bills next) into long-term public (taxpayer) obligations, a la S&L crisis (multiplied many xxx). Use time to obfuscate the loss already suffered/spent away by credit excesses.
The math is already out there, but people are math-challenged and can't do the ROI calcs in their heads or anywhere else for that matter. Illusory time is all they've got left to play with.
It's just the policy design to put it past them that needs to consider this for them to pull it off.
ThaiGold I know you do not advocate that. You're just guessing what the govt types must already be thinking through. It brings out the nervous streak in us. I'm hopeful they don't get their ideas from reading us. (But you never can tell...)
If USA gives up on being world reserve, and it can't expropriate external wealth any longer, well then, yes, it only has its own homeland serfs to milk for what it can. Bye-bye K-Mart specials... Hello, barefoot sharecropping, of all types.
What happens in a meltdown is everyone runs for liquidity -- value-in-hand -- as THEY understand it. For most people today, that's various forms of paper obligations, written by those they deem most reliable for repayment. How quickly they learn otherwise determines how quickly the lines form at your local coin dealer.
We consider gold-in-hand as ultimate liquidity. All paper may burn, at almost anytime. Some moments are palpably pregnant with probability. (Yeesh! I got my tongue twisted over that one...)
ThaiGold is reminding us of the govt (fiat-decreers) strategy of making an end run around our liquidity security strategy and biting us in the rear. "We will send our armed whoevers to take it away. We ARE, after all, the government, and force rules when markets, the markets we run, anyway, fail. There is no security outside our (paper) castle."
That threat is intended to police up our rational tendency to defect from the paper crowd and seek an independent security, for others may see us and follow, putting an end more quickly to their game. They wish to write their own terms for that ending. In fact, the beginning and ending of games IS their game. That is the way of Power.
Where was it said recently, "Most men seek only to farm the land. A few figure out how to farm other men." Bolshevik or capitalist, isn't that what the past century (and before) has been about?
At this time, they will not make such threats public. That would only raise the topic (gold) they are trying to make everyone forget, and largely successful, too. Most answering here feel we are off the confiscation radar screen this time (but MK IS emphasizing pre-33, isn't he?) because financial times are different. It may be an uneasy undeclared truce, at this distant outpost between empires (gold/fiat), where fighting could erupt one day as a surprise to all...
One question lingering for me (Oro?) is the proportionality of gold vs other markets. If all the gold in the world is valued at about $1 trillion today, out of, what, $30-50 trillion GDPs isn't it mathematically insignificant in the total mix? I wonder why the BB's (branches of big banks) play in it at all, with such small margins, and high risks.
Or is it the solid money tail wagging the fiat dog? They're just keeping their rears covered, as a system, as we're trying to do as individuals.
Thanks for the response. Let me rephrase to see if I have your reasoning straight. The bullion banks are extending easy credit (e.g. 1.4% gold loans) to miners, encouraging the miners to take on debt and over-extend themselves so that, when they (the miners) miss a loan payment, the bankers can foreclose. It's a cheap way to buy gold mines. Is this the gist of what you're saying?
It's an old trick. A specialty, I believe, of William Rockefeller (brother to John D., Sr.) on farm land. Ol' Billy was a loan shark. He generously extended loans to midwest farmers who were already way over over their heads in debt and who had no business borrowing further. If they missed one payment by 24 hours �- BAM! -- the sheriff was there with an eviction notice. Good old Billy Boy. Did a lot for the family name of Rockefeller, too.
But the question remains. Why don't the Rothchilds (or equivalent) already own (by two hundred years or more) ALL the gold mines in the world? ALL the gold mines -- lock, stock, and barrel. WHY NOT? There must be a good reason why they have chosen not to do so.
Another topic. In post 38767 (10/11/00) you closed with the remark: "If gold is �useless� other than its use as money or as a plating material, so are all of our personal choices as to what to consume and how much to pay for it, and so we all are �useless�."
That may be closer to the mark than any of us care to admit. Shakespeare, in "A Midsummer Night's Dream", closed with the line that, in the final analysis, life itself is "full of sound and fury, signifying nothing."
What a wonderful idea! But I think it has a few problems.
Namely, if they tried your scheme, many people would be happy to purchase as much as they could at the fixed $50 price, believing that the government would not be able to hold that price due to running out of gold. I believe the demand would quickly exhaust the supplies that the U.S. government has left, if any.
Bankers are not in the mining business. They are in the banking business. After they foreclose they resell the properties so that they can continue to make more loans. If they owned it all to whom would they loan?
Is ThaiGold really saying that the USA would pay the $50 Legal Tender value of a one ounce Gold Eagle for NEW USA PAPER that really just had the last two zeros lopped off ? That I could understand ! $5,000. Present FRN would now become $50 NEW US $.
That is the usual way the Banana Republics did the "restart". Remember Ecuador, it made 25,000 of its monitary units = ONE US $. Simple, yes?
<;-)
http://www.greenparty.org/Platform.htmlRalph Nader a "leader?" I have to respectfully disagree. If you do some research you will find that he has benefited financially from some of his "crusades" against big business.
HAve you ever stopped to think about how corporations get BIG? Who is Microsoft's biggest customer? The Dept of Defense. Who set up the monopoly of AT&T? Feds.
Ever hear of a guy named Preston Tucker? Guy tries to make a better car and the Big 3 use the government to shut him down.
Government is supposed to support and uphold the law.
Here is an excerpt from the Green Party. Does this read like a party committed to individual rights? Does it say somewhere that they will "take on" the Federal Reserve and Big Corporations? No it does not. This is a socialist plank wrapped in environmentally-safe paper if there ever was one.
The following platform planks are the immediate policy goals we support to move us toward an ecological democracy.
An Economic Bill of Rights
Universal Social Security: Taxable Basic Income Grants for all, structured into the progressive income tax, that guarantee an adequate income sufficient to maintain a modest standard of living. Start at $500/week ($26,000/year) for a family of four, with $62.50/week ($3,250/year) adjustments for more or fewer household members in 2000 and index to the cost of living.
Jobs for All: A guaranteed right to job. Full employment through community-based public works and community service jobs programs, federally financed and community controlled.
Living Wages: A family-supporting minimum wage. Start at $12.50 per hour in 2000 and index to the cost of living.
30-Hour Work Week: A 6-hour day with no cut in pay for the bottom 80% of the pay scale.
Social Dividends: A "second paycheck" for workers enabling them to receive 40 hours pay for 30 hours work. Paid by the government out of progressive taxes so that social productivity gains are shared equitably.
Universal Health Care: A single-payer National Health Program to provide free medical and dental care for all, with freedom of choice for consumers among both conventional and alternative health care providers, federally financed and controlled by democratically elected local boards.
Free Child Care: Available voluntarily and free for all who need it, modeled after Head Start, federally financed, and community controlled.
Lifelong Public Education: Free, quality public education from pre-school through graduate school at public institutions.
Affordable Housing: Expand rental and home ownership assistance, fair housing enforcement, public housing, and capital grants to non-profit developers of affordable housing until all people can obtain decent housing at no more than 25% of their income. Democratic community control of publicly funded housing programs.
Farfel, you're a bright guy. Read where Nader and his party stand. They do not believe what you think they believe.
The Libertarian Party will be on 49 ballots. They missed Arizona due to a legal issue. First time in 16 years they are not on all ballots. If you love freedom, which is possible without anarcy (it's called upholding The US Constitution/Bill of Rights), you'll vote Libertarian.
I Have again been dealing with the issues previously discussed regarding what may be considered "abuses" in the manipulation of gold and what may be considered just using the existing "structure". This post was posed in the Le Metropole Cafe Chat Site and is being reposted here for input. Having gone back through GATA's GDBC once again, there are still questions in my simple mind as to
exactly where the responsibilities and liabilities for this "crisis" lie. It is best described as a Gold Derivative Banking Crisis because that is patently obvious as to what this creature is, as all who dare to look within can see. It does entail fraud, manipulation, collusion, & conspiracy, whatever you want to call it, but big picture, it is now a "Crisis". Only a blind fool would argue that {Rusty Rose comes to mind, a guy Bill Murphy met with in the bush camp}.I still have more questions than answers so have attempted to sort out the range of activities of the various players that have created this crisis. Have placed activities in 3 categories; 1-Political/Economical Business as Usual. 2-Illegal &/or unconstitutional behavior. 3-"Gray" zone between 1 & 2. Please make comments as I know there are some who think there is nothing illegal or unconstitutional going on- just business as usual. SteveH, I would still appreciate your input if you can find the time.
Category 1-Political Business as Usual- As much as it hurts me to write it, this category includes manipulation, reckless, dangerous, stupid, &/or greedy behavior, breach of public trust, or scandalous behavior. SCANDAL!
A-Crony capitalism, Robert Rubin and Goldman Sachs. The whole issue of public bailouts and "too big to fail".
B-Lying to public via hedonic manipulations of official statistics; CPI, Current Account Deficit, etc. Analysts making false bearish projections of POG. Lack of truthful disclosure/deceptions by ESF, FED, CBs, BBs, WGC, GFMS, or undisclosed official sales of gold.
C- Manipulation of POG similar to other currencies by official entities. Note: Dr. Greenspan says it would be "wholly inappropriate" for Treasury to fiddle w POG. He did not say it is unconstitutional or illegal, big difference. So Fed or ESF can "deal in gold" including futures and derivatives. ESF can pretty much do whatever it pleases as has practically no accountability just by the nature of the beast. Abuses of public trust, and/or public deception is another story. Fed and Treasury {ESF} may be at cross purposes with each other, which is certainly not in the public interest.
D-Bullion Banks and Gold Banking system have created a dangerous moral hazard via gold and other derivatives. Risk to international financial system. They and CBs have overstepped prudent limits to interventions.
E- Quid pro quo manipulations. Example; Kuwait sends gold to BOE, US supplies defense to Kuwait.
F- BOE gold auctions are a misuse of public trust for starters. Central Bank follies- Recognizing the folly of CBs/Govt and punishing them accordingly {Soros?}.
G-Conflicts of interest via Rubin and his FORMER investment bank {GS}. Creates a Clintonesque escape hole.
H- One more gigantic scandal for the "BOSS", that dwarfs the rest of them put together.
Category 2- Illegal &/or Unconstitutional Behavior-
A-Improper insider trading. Investment banks acting on inside information for their own or their client's behalf. Example; Deutsche Bank telling their clients on 5-6-99, Just prior to the BOE announcement, that gold was stopping at 290.
B-SPECULATIVE trading by the State on Comex. Constitution grants Congress the exclusive power to determine the gold value of the dollar. The Executive branch's use of ESF to set the dollar-gold price would be "illegal and unconstitutional".
C- Abuse of mining companies by investment/bullion banks. Banks may end up with extensive liabilities. Example- GS selling "hedges" to Ashanti {time will tell}.
D- Public Commodity Exchanges are regulated under authority of Congress to function honestly and fairly in the interest of the public they serve. Just because Congress is not doing their job doesn't mean laws are not being broken.
E- Federal and State statutes against the manipulation of gold prices by Bullion Banks IF done via ESF. I still do not know what BB's are allowed to do through FED, and where they cross the line {breaking insider trading rules?}. Are there Bullion Bank liability issues with "abuse of structure" under which they function?
Category 3- Gray Zone- Between 1 & 2 above, reckless and stupid but not quite illegal or unconstitutional.
A-Endangerment of Fort Knox gold. By ESF actions with knowledge of Treasury and likely the FED also. Misuse of Ft. Knox Gold.
B- Chase, GS, others- Are they a "legal arm" of the US govt and at what point do they get caught "red handed" crossing legal/constitutional lines?
C- The Fed has "safeguards" and accountability that the ESF does not have. Do you doubt for 1 second that the FED, and all CBs for that matter, know exactly what is going on in the gold/silver/US$ markets? These issues are not as murky to the CBs as they are to us.
NOTE- Can you see why I say all the lines get crossed in trying to determine who has crossed the line? Please take this essay as a form of question as opposed to answers and help clarify all you can.
Thank you,
Auspec
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Post New Topic | Reply to: "HELP!!!"
Thank you very much for sharing your knowledge and useful perspectives on currencies and gold. I have learned much from you these last few months.
There is, perhaps, something that I miss in your many brilliant and informative analyses that I wonder whther you would be so kind as to comment upon.
Specifically what I had in mind was the broader poltical economic implications from the decline of the US dollar as an international numeraire that you perceive will occur in the future.
In my view the primary benefit that international dollar community has experienced since the Bretton Woods time has been a long period of peace and security which made possible the spectacular post World War II economic recoveries of Western Europe and Japan. The acceptance of the dollar as an international reserve currency and all it implied from the standpoint of US trade and governmental deficits seem to have been a small price to pay for sixty years of peace and prosperity. The build up of dollar reserves by allied states as a consequence of US hegemony also seems to have a far better arrangement than the reparations imposed by the USSR on its East Bloc clients or imposed by the victors in World War I and the Franco Prussian War.
But with the fall of the Soviet Union the benefits of this type of arrangement seem of very little value from a European perspective. The Russian bear has retreated--why accept the seignorage implicit in a dolar based currency system. The promotion of the Euro in my view was more responsive to this change in the changing realities of European security and defence needs than the ideas of Professor Mundell, although he certainly put forth a powerful rationalization for European currency autonomy in the changed politcal environment.
But such a change has not been experienced in other strong dollar provinces such as the Middle East or East Asia.There the need for strong allies to help deter the attacks of hostile neighbors still is as real as it was in Germany in the 1960s.
If the dollar fries in the type of currency blitzkrieg that you envision, the whole political order of the Gulf states will change radically and Japan will also lose a strong ally in confronting China.
Given these latter political costs I am not so sure that the entire dollar community will wish to shift exclusively to the euro no matter how hard it is in terms of purchaing power. And this is because Euroland provides no assurances that it will provide military support to assist these nations to protect themselves from their adversaries.
So the corollary to stong gold euro--weak dollar is a major geopoltical reordering. But I doubt that too many large dollar holders outside of Europe are eager for this outcome.
Moreover, it is unlikely that the European federation will ever have the political strength and cohesiveness to support the type of military committments that are necessary to preserve the peace in the Middle and Far East.
Trail Guide it seems to me that it is not just a question of relative inflation rates, derviatives, bullion banking and public finance. It also very fundamentally a question related to creating effective mechanisms for maintqaing peace and security whcih Euroland is incapable of doing.
ThaiGold:
Lots of good discussion!
Confiscation, a few points not covered yet or partially covered.
1. As sir Peter suggests every Gold mine in the world would close down shortly after $50 per ounce Gold was implemented.
2. AngloGold states 80% of world Gold consumption is jewellery,are they going to tax every item of Gold jewellery in existance?
3. 24 karat is pure Gold, 1 oz. Chinese Panda's, Maple Leafs, and others are 24 karat, while American Eagles are 22 karat, how would the 24 karat coins be priced?
4. 10 karat, 12 karat,14,16,18 etc. jewellery, Gold plated??
5. What about Platinum coins and jewellery?
6.I would say say all of us currently holding Gold coins are classified as coin collectors, I don't think any government could enforce a set price on a rare Gold coin, please think about that, what would a $20(double eagle) 1854O Ms-60 be worth? Only 3250 were minted, currently valued at $165,000 for one. That's why the rules were changed after the 1933 confiscation.
6. Who reading this would fully and truthfully,disclose his/her Gold holdings knowing they would be taxed on what they report?
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Sir Rockgrabber:
Sir Cavan Man:
Your statement:
<>
Sir Gandalf, do I have the "Hobbits" permission to start another rumor?
Most reading this know Gold could be rolled into a thread thinner than a spiders web thread, and not break apart. What if the new Euro paper 100 Euro(to be launched Jan. 1 2000) had a precise amount of thread Gold woven into it? 1/100 of a gram, or whatever. If that happened we would sure-ly see which paper money the masses would prefer.
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Steve H:
The IMF:
I have a terrible hunch the IMF is involved in some way with the possible manipulation of POG. Who are they accountable to? Who audits their physical Gold? Where is their Gold stored? Is their Gold in ledger form only or real physical Gold?
We watch events together.
Thanks for Reading.....beesting.
http://home.columbus.rr.com/rossl/gold.htm New US paper with two zeros lopped off and tied to a gold standard is an interesting concept. Why would politicians who are philosophically married to the concept of fiat paper money go for this?
Http://home.columbus.rr.com/rossl/hbm.htm For those who would care to read all that follows it would be helpful if you could print the Charts found at the link above for handy reference.
THE POG/POO LINK:
A. Does it exist?
B. If so when was it established?
C. If so what brought the link into existence?
D. Has a link previously established been broken?
E. If a link ever existed what were the forces that brought it into existence?
F. If a link does not exist, could such a link be brought into existence?
G. If a link ever existed or still exists what forces would gain by breaking the link?
H. If a link does not exist at present what forces would gain by establishing such a link?
I. If a link has existed would a break in the linkage either reinforce or cast doubt upon the scenario put forth by ANOTHER?
J. If a link has existed would a break in the linkage either reinforce or cast doubt upon the charge by GATA that POG is being manipulated?
Three years have passed since October 1997 when ANOTHER first began to unveil his scenario concerning the Oil for Gold deal and the coming currency war. As he was fond of saying, "Time will prove all things." I have been skeptical all along. As events are slowly unfolding my skepticism is slowly eroding.
It seems appropriate at this point to present the following synopsis of ANOTHER's thoughts in this area:
A. The purpose of the Euro is to unseat the US Dollar (US$) as the world reserve currency; thus relieving the world of the hegemony of the US$.
B. The Euro was established with a target of 15% to 20% gold reserve requirement apparently with the understanding that the US$ could not be unseated by the Euro unless the Euro had something valuable to back it besides the good faith and credit of the European Community.
C. The biggest obstacle in the way of the Euro's success is that the settlements of Crude Oil transactions are in US$. In other words as long as the US can require settlement of Crude Oil transactions in the US$ there can be no challenge to the hegemony of the US$.
D. There is an oil state, presumably Saudi Arabia, that "no one will play the fool", says ANOTHER
E. A deal has been cut with, presumably Saudi Arabia, to the affect that whatever US$ price Saudi Arabia sets per barrel (bbl), it will require settlement in 50% US$ or Euros and 50% in physical gold.
F. The world economy is hooked on cheap oil (that is, cheap in terms of paper currency) and will continue to demand more and more of the same and for this reason central banks (CB's) of the world will exchange physical gold reserves for oil if and only if the oil can be obtained in no other manner without an excessive acceleration in the paper currency price of the oil.
G. In order to keep the US$ price of oil down (cheap oil) the CB's of the world have been forced to drive the POG down in terms of US$ in order to allow the Saudis to accumulate enough gold from the transactions to keep the spigots open. The point is that the Saudis would greatly benefit by the devaluation of gold in digital currency terms, for they would receive more physical gold in the 50%-50% mix for each barrel of oil exchanged. Thus because the digital currencies of the world have so little value to the Saudis, the only important factor in the price of oil to the Saudis is the amount of gold received in exchange for a barrel of crude? In other words the Saudis will go to and stay at full production if and only if settlement is made in an appropriate amount of gold.
We have no consensus concerning any linkage between the Price of Gold (POG) and the price of Crude Oil (POO).
SteveH has stated that the POG and the POO have been joined at the hip for about 30 years (1970-thru 1999). He also has expressed a strong conviction that the link may have been broken in recent months.
Peter Asher takes the position that there is no rule or 'lock' that makes Gold trade at a specific multiple in barrels of oil and he gives two reasons, 1) ME nations do not have enough discretionary income to convert enough dollars to Gold. 2) Gold-for-Oil ratios will be irrelevant in any volatile Gold market. He equates the use of the historical statistics to forecast any future occurrence by that history as pure numerology. Peter also expresses his opinion that more than one of "our compatriots" is involved in "mumbo-jumbo" with the historical ratios between the POG and the POO.
SteveH has correctly assumed that he was included in the group at which the comments about "pure numerology" and "mumbo-jumbo" were directed and has shown much civility by simply rephrasing his prior statement. Rather than using the phrase, "joined at the hip", he very carefully restated his position with the phrase, "traditional relations gold and silver have had". SteveH has very diplomatically held his ground and has not changed his position at this time. He simply submits his opinion that a break from the traditional relation of Gold and Oil has occurred and that this break seems to be revealed by the "grams of gold per bbl's of oil" chart.
I would like to make some comments about the above exchange between SteveH and Peter Asher. What I am about to say is simply an opinion, my opinion, and not intended to be considered "statement of fact". After I express my opinion I will follow with an overview of what I consider to be facts in this area.
The controversy in the area of linkage in the POG and the POO arose from an honest pursuit of the truth. I took some information presented on this forum about the nominal prices of Gold, Crude Oil, and Gasoline and made an effort with my limited technical abilities to produce a clear comparison of the price changes among the these items in question. RossL took the data which I presented and graciously produced vivid graphic pictures of them. RossL was very careful to give proper credit to the source of the data and clearly took responsibility when he chose on one occasion to present my data in a way that was just a bit objectionable to me. I asked him to remove the (POG/CRUDE X 20/GASOLINE X 500) chart because, in my opinion, it was not precise enough and could result in distorting the facts. I contended that the percentage change in the various prices would not tend to distort the facts. Town Crier came to RossL's defense and the matter of removing the one graph in question was dropped. I did not ask Sir Ross to remove the graph again; however I maintained my position, as I still do, that I think a chart of percentages is the most precise has less tendency to distort the facts.
I do acknowledge that Ross's presentation of the data in the X 20 / X 500 format was of great value, if for no other reason than that is seemed to stimulate the debate. In retrospect I am glad that he did not remove the chart.
If I may presume to read SteveH's mind concerning the charts presented, I would offer that he appeared to be groping for truth just most on this forum are presently doing. I do not think he or RossL nor myself were engaged in the practice of numerology. Neither were we involved in mumbo-jumbo concerning these price relationships. A more accurate statement about the three of us might be that we do not have the credibility to treat these numbers, period. This is of course my opinion. I disagree with Sir Peter on this point, however I do acknowledge that he certainly has a right to his opinion, for opinions are what this forum is all about.
Now let me say that I agree with Peter in that there is no specific multiple in the price of oil as expressed in units of gold, however I arrive at my conclusion from different reasoning. The reason there is no specific multiple is, in my opinion, that the are not the same thing, period. The discretionary income of ME nations has nothing to do with specificity. Also in the past 30 years the ratios (relationships) between Oil and Gold have been quite relevant, especially during times of volatility as can be clearly seen in the Cumulative Real Price chart, in my opinion. What we see in this chart among other things is that Gold is more volatile than Oil but we also see that when the volatility of Gold has increased significantly, an increase in the volatility of Oil has followed in a consistent manner and when the volatility of Gold has decreased significantly, a decrease in the volatility of Oil has followed in a consistent manner. (My opinion of course, a right to which I claim entitlement and which I still choose to exercise)
Now an opinion on Steve's pursuit of the truth: - Steve's effort to come to a valid conclusion has been an honest one. It is clearly revealed by the fact that he pushed for the price comparison based on units rather than nominal US$ prices. His reasoning was not clear to me until I tested the results against the Cumulative Real Price Chart. I discovered that the percentage in change of price of oil expressed in grams of gold was identical to the Cumulative Real Price Chart. This can only be explained by the fact that we were doing exactly same thing, only expressing our argument in a different manner. If I may use an analogy, I would say that I expressed these relationships in black and white and Steve expressed the same relationships in color. However, although we came up with the same results we came to different conclusions. I agree with Steve that a "traditional relationship" of at least 30 years has existed but have not come to his conclusion that this relationship has been broken. My inability to draw Steve's conclusion is based on my contention that we do not have a change in average annual price over the length of time that would entail a change in the established trend. I am no statistician but memory tells me that it would normally take three years to be consistent, in this case, in the establishment of a trend. In other words what Steve claims about the break in relationship cannot be established in the short period of time two years much less 6 to 8 months.
The following are facts and not mumbo-jumbo or numerology:
1) The POG has been more volatile than Oil over the period (1970 thru 1999)
2) During the period (1970 thru 1999) the real average annual POG never dropped below the price level in 1970
3) During the period (1970 thru 1999) based on annual averages the number of barrels of Crude Oil which could be purchased by physical gold was never lower than in 1970
Steve may be right and he may be wrong. What he is observing, however must be maintained for an extended period of time and apples must compared with apples before his contention is proven. When I say apples with apples I mean that we must have a full year average for the year 2000 to support his contention and then we must have a three-year period of this phenomenon before full validity can be attributed to his contention.
I have one other observation. It seems that Steve's whole purpose is to anticipate what is coming in advance and that if we are just going through mental gymnastics to see what happens, then this whole discussion is of little value. For we can simply wait until three years have passed and speak with confidence about the empirical facts. That would be a little late if we were using this information to help us make decisions as to whether or not we should move our wealth into or out of Physical Gold. I am not quite ready to come to the conclusion that a link exists let alone that a previously existing link has been broken yet, at least not to the point of basing my investment decisions upon it.
Now Back to the thoughts of ANOTHER and GATA:
1) If a link between Gold and Oil has existed that simple fact would provide strong evidence to support ANOTHER's advice that we should observe the POO as an indicator of a coming change in the POG.
2) If the POG has been the price directional leader for Oil in the past, but they change roles in leading and following, while a link between the two continues to exist we will have valuable empirical evidence to confirm that ANOTHER has been right all along in his "Oil for Gold" scenario.
3) If a link has existed all along and the link is broken we could all be fools to hope that Gold would ever find its value from our historical perspective.
4) If a link has existed all along and the link is broken we will have confirmation that GATA is justified in its claim that the POG has been manipulated or that the POO has been manipulated or both.
5) If it turns out that Oil can rise significantly without a corresponding rise in the POG given a reasonable response time then we will know that either oil is no longer a significant factor in price inflation or that Gold has truly been relegated to the status of a commodity and nothing more or both.
HBM repost:
SOME INTERESTING FACTS REVEALED BY COMPARING THE REAL PRICE OF GOLD, CRUDE, AND GASOLINE:
Http://home.columbus.rr.com/rossl/hbm.htm
In reference to the above link:
In 1970 about the time the world began to change drastically 1 Ounce of GOLD would buy:----------11 barrels of CRUDE and 100 gallons of GASOLINE----------
In 1980 the year when the average real price of GOLD peaked at $1364.05 (1999 US$) and the average real price of GASOLINE PEAKED at $2.78 (1999 US$) 1 Ounce of GOLD would buy:-----------29 barrels of CRUDE and 490.67 gallons of GASOLINE----------
In 1981 when the average real price of CRUDE peaked at $68.78 (1999 US$) 1 Ounce of GOLD would buy:-----------13 barrels of CRUDE and 333 gallons of GASOLINE----------
In 1990, the year prior to "Desert Storm", a relatively boring year in economic terms, the average real prices in 1999 US$'s were $500.14 per ounce of GOLD, $29.17 per barrel of CRUDE, and $1.51 per gallon of GASOLINE, one ounce of GOLD would buy:-----------17 barrels of CRUDE and 331 gallons of GASOLINE----------
In 1999, by general consensus, a terrible year for GOLD, 1-Ounce of GOLD would buy:-----------17 barrels of CRUDE and 240 gallons of GASOLINE----------
The article begins: "The Coca-Cola Co., boosted by stronger overseas sales, reported a better-than-expected 36 percent increase in third quarter earnings but warned that a weak euro could put pressure on its earnings next year."
If overseas sales are strong, then in fact, the so called "weak euro" is not hurting anything (with respect to on-the-street sales) so much as the dollar's strong external exchange rates are reducing the repatriated profits to an American number that is disappointingly small in the books.
Coke CFO Gary Fayard said, pointed the wrong way in typical fashion when he said, "We do have some downside risk related to currency. If the euro stays near these levels, it will put some pressure on our earnings next year."
You decide what picture of reality you are willing to accept. The article said that sales were up 5% in Europe and Eurasia (though Germany was down 5% in Q3 due to adverse weather for soda drinkers), whereas in North America, the article says "sales have been flat this year because of higher retail prices for Coke products." Can you see that the phenomenon here is one of international exchange rates? It clouds the true picture if you are not willing to look more closely at the details. Domestically, the dollar is not buying as much domestic product as it used to.
Can you say "End of timeline"? I knew that you could.
Could be that everybody is going to get their 15 minutes
of being "right".
You noted that stagflation came up on CNBC, recently, for the first time.
Junk bonds freeze up and severe nose dives in retail stocks,
etc., juxtaposed against obvious inflationary build up
pressures, will over time, escalate the conditions that will make the stagflation theme, common.
This will set the stage for the ultimate appearance of a most dreaded Spectre, the Inflationary - Depression.
Paper portion of India's Forex reserves fall by $298 million, gold reserves remain steady over previous week
http://www.hindubusinessline.com/2000/07/24/stories/042433ju.htmAnd forex reserves were down $98 million the week prior to that, moving on such effects as exchange rate fluctuations of the non-US currencies. With respect to the gold reserves, I do not know what their policy is regarding the book value or the frequency with which they might otherwise mark the gold assets to market values. Euroland does it quarterly, and I believe the Swiss do it more frequently than that.
On another note, the link provided will show you an operation that should remind you that gold is the ultimate money in international affairs.
http://www.the-privateer.com/gold6.html"The U.S. cannot afford a lower Dollar. It cannot afford anything that would stem the flow of foreign capital on which it continues to finance its present economic structure. The difference between the U.S. and Australia -
which also runs huge current account deficits and whose currency has been plummeting for months - lies in two facts. First, the U.S. is the most powerful nation in the world.
Second, the U.S. Dollar is the world's trade currency, reserve currency, and to this point, the world's most desired financial instrument.
The vested interest in preserving this arrangement is GIGANTIC. The fact that Gold has held its own in $US terms - while skyrocketing in terms of most other currencies - is
impressive in itself. While possessing yourself with patience, remember this. The fantastic universe of financial instruments, and the even more fantastic universe of derivatives which connect to these instruments, are viable as long as the underlying asset is viable. The asset underlying EVERYTHING is the U.S. Dollar. That's how big the stakes are."
Your danger e-mailPeter: I did get your Danger e-mail when I got up to go boar hunting. You were right! I was injured but not by a hog. A tree branch fell on my head, and when it did it hit me so hard it caused the butt of my holstered .357 to catch me just under my ribs. OUCH!! It left me with a good size bump on my head , and some very sore ribs. My Stetson did not have a mark on it. Go figure. We did not see any hogs, but the place was torn up from them. Some of the tracks I saw looked almost as large as a cow. The mosquitoes were world class in size and numbers. We were sitting just on the edge of a large swamp. I think I will try again later this week , when I can move without pain.
In like manner to your Stetson, the English Bowler (just turned 150 years) was designed to protect the noggins of fox hunters from low branches during the chase. It is also quite stout.
1) If a link between Gold and Oil has existed that simple fact would provide strong evidence to support ANOTHER's advice that we should observe the POO as an indicator of a coming change in the POG.
** At least three of the charts, especially when 2000 numbers are projected show a break from traditional numbers. What is most clear is the high degree of positive correlation of gold and oil. Gold is now the lagger; oil the leader. I view this as stress on gold. The greater the disparity, the greater the stress. Therefore, the higher gold goes, the faster gold will reverse and the higher it will go. I see final chess moves being made by players in gold and oil and derivatives. Only observations, mind you, but as I have always maintained, the news about gold and oil has been crescendoing for quit a while and appears to be in a too-late-to-stop-now mode. As much as I hate to see this happen, the cooberations of news from all quarters supports a convergence on change sooner than later (before election maybe or just after). Volatility in the markets is the biggest gauge of all of this and oil is always there keeping the pressure on.
2) If the POG has been the price directional leader for Oil in the past, but they change roles in leading and following, while a link between the two continues to exist we will have valuable empirical evidence to confirm that ANOTHER has been right all along in his "Oil for Gold" scenario.
** The link is broken in the sense of the chart. Oil has broken the bond, but herein lies the key. I believe the chart relationship is broken; not the actual real world relationship, meaning: the higher oil goes, the quicker and higher any chart reestablishment will occur. In other words, think of the winding spring. Gold and oil were content until 1996. Then something changed and oil decided to break with gold (on the charts). That continues (on the charts) today. But the relationship that isn't reflected in the charts still exists; only in the backdrop. Once this is reestablished it will be at much higher levels.
3) If a link has existed all along and the link is broken we could all be fools to hope that Gold would ever find its value from our historical perspective.
** I believe this is the opposite theory to the above, one which we must continue to visit. I don't believe the facts support this as even though there are record divestitures of gold, there are record purchases. The noise made by sellers shows their interest is to hide the truth of the buyers, imo.
4) If a link has existed all along and the link is broken we will have confirmation that GATA is justified in its claim that the POG has been manipulated or that the POO has been manipulated or both.
**Proof no. Statistical indicators, yes. Proof would be a person who is doing it comes forward and tells all on Rosie or Oprah. These folks all have plausible deniability.
5) If it turns out that Oil can rise significantly without a corresponding rise in the POG given a reasonable response time then we will know that either oil is no longer a significant factor in price inflation or that Gold has truly been relegated to the status of a commodity and nothing more or both.
** I disagree. The higher oil goes, the quicker and higher gold will turn around once it resets. IMO.
Auspec,
What we have, I believe, is croneyism(sp?), insider info governement to private industry, private industry to private industry, private industry to government. We have a lack of proper enforcement and investigation, we lack a press with the courage to investigate, we have TV money programs that hire the foxes to comment on the hen house, without full or even partial disclosure of conflict of interests or positions. We have some folks who are whizes at computer spreadsheets and AI market analysis and some very bright but amoral Harvard and Wharton School MBA's who need to get a real job. Then we have the political motivation to have a legacy of the longest bull market ever. We have governmental agencies whose employees must pack a lunch and don't buy new clothes or all live in apartments and don't buy gas to go to work. When you add it all up, we have people who have instutionalized fraud and or dishonesty and follow the pack. Finally, we have excess credit with no place to go except the markets. Along with that some have figured out how to play the paper and computers to make the markets move short term at critically timed points of trade. Other than that, there really isn't much of a problem.
Speaking of unconstitutional. Not many courts will take that on. The court system costs too much. Corporations must hire lawyers, law is too complicated for Pro Per defense. Constitutional issues must normally go to the higher courts for proper resolution.
Do any of you guys/gals have the link on that 58 page .PDF
government report?
It was posted here a year, maybe a year and a half ago. I think I had it for a long time but I 'lost' my PC a few months ago.
If I recall the 'jist' was to keep the POG strained and contained forcing miners to hedge, slowly bankrupting them, nationalizing and ultimately controlling gold supply.
I'd like to review that document to see how this charade may be playing out over the last year or so.
Hey Canuck this isn't the site you requested but I think it might have good info concerning how the central banks are buying the mines by forcing them to go bankrupt. The site is www.womensgroup.org/ it is done by a free lance reporter by the name of Joan Veon. She attends all the meetings held by NWO people and the UN. She had quite a few stories on Worldnetdaily around 3-4 weeks ago. Go to that site and scroll down the left side until you see a story called, He Who Has the Gold Makes the Rules. Turkey Hunter
Hi all, Had a really tough week ,a good mate was found in the middle of the Aussie desert by police dead from de-hydration alone in tent. So the emotional roller coaster has been abit stray. He said before he left a couple of
strange things as a result of a family separation , and I just patted him on his back and said as men usualy do , to the effect "Talk sence mate , get it togeather".
So I quess I have been feeling dam sorry for myself and guilty that i didnt actively/empathically listen to him at the time :(. Enough said . End of drinking binge.
Black Blade where are you these days buddy. I am in the middle of making arrangement to travel to HK around Jan/Feb
( holidays ) and am joining a local Metal detecting group here in Perth. I phoned up and they have 160 active members which blew me away , indeed the club is only 15 minutes drive from my home, surprise surprise and the average member age is between 60 and 70, so good heavens I can imagine the wisdom and experience I might glean from that . Wow ! at 40 I will be the baby . The plan this time is still to look for that forbidden tonnes the Japanese were supposed to have left, on Lamma Island.( Remember Leigh) ? and to dive the shorelines ( new experience ). I dont know how many of you go Gold metal detecting, in your spare time , but I can assure, that that Signal or Hum of the Universe as i call it of gold once the ear is tuned in is like a cure for any phyciatric condition. smiles.
Gold cures depression fast !. Get yea some.
Sorry to hear about your mate. I'll bet you were and are a good mate yourself, and there are plenty who appreciate what you do for them. I'm glad you're here with us.
They say death sould come to a person like a good nights sleep after a hard days work and in my first aid they said that there really is only two ways in the end one passes away dispite reasons like dehydration , cancer etc , i.e either, circulation or respiration. I guess one or an autopsy will never really uncover the measure of ones intent. Murry had a heart of Gold , immmmm lost thoughts, just speechless . Thanks my cyber friend.
1. The closure of the gold trade is a repeat of the 20s and 30s. The main cause for global chaos and economic constriction and contraction was the introduction of irredeemable currencies during the war and the failure of renewing the gold standard after it. The switch to permanently irredeemable currencies immediately raised the cost of trade, thus moving the center of gravity of many industries producing internationally traded goods. The US was among the last to do so but suffered the same consequences of reduced trade due to other nations adopting funny money (among other things).
The whole point of the "rescue" you propose is that international trade continue. Without gold settlement (gold import and export), it would stop altogether for a while till markets can figure a way around it and choose a new settlement mechanism. Once it is figured out, trade would still be reduced compared to where it was, and would never grow as quickly as it could otherwise.
"Virtual Confiscation" after a currency meltdown would bring a severe reduction in trade because of the illiquidity of substitutes for gold. As I stated before, at the end of a profitable business venture is profit, the purpose of the venture was to gain that profit. Out of profit, part is reinvested, part is "stored" as wealth. Of all items that are wealth gold is most liquid and the most useful for "non specific" storage of purchasing power. Without gold trading anonymously and freely, the liquidity of the wealth portion of profit would be reduced and thus introduce a further inefficiency into the market another cost from which none benefit. You should note that the Asian countries, where gold is actively used for wealth accumulation, grew much more quickly in physical output than the West for 4 decades despite crony "capitalism" and abysmal banking practices, as well as dollar debt and often incompetent governments.
To make it clear, some 10% of profit is traditionally put into wealth and not consumed. Of that, liquid real assets (a.k.a. gold) take a portion � say 10% without considering liquidity issues. When liquidity is considered, gold is 20-30% of the "exit" (estate liquidation) value of the wealth accumulated simply because gold loses much less of its value upon quick sale than does a painting or a Ming vase. Limiting the gold trade would raise the return on investment required by the large worldly investor in proportion to that loss, which at 20-30%, say 25%, leaves 75% - which raises the required return on investment by 1/0.75=1.33 or 33%. This means that large scale business opportunities would not be taken up till expected profits grow by that proportion. Furthermore, upon getting wind of the planned "confiscation" ("virtual" or otherwise) investment would simply stop dead in its tracks as everyone converts all possible portions of their profit into wealth in order to compensate for the expected loss of 1/4 of their wealth.
We saw this in the 30s BEFORE confiscation when the decoupling of the dollar from gold was proposed by Democrats, Keynesians, and bankers. People withdrew specie in droves, and many took it out of the country, many others melted it into jewelry and "artwork". FDR and his backer's program was the cause for the continued bank panic, and the subsequent destruction of the banks that survived the initial meltdown � which was most of them, 80%. The other 40% that died before FDR took office were destroyed because decoupling gold from the dollar was expected by enough people, and they hurried to take their gold out of the banks and put it wherever they felt it was safe.
It took another 10 years for investment to start over when WWII started and the new business opportunities were made available. And even then, the owners of great fortunes could still retrieve their profits in gold somewhere abroad � since the gold window operated till 1971. Among the results of the closure of the gold window was the rise of the minimum return on investment level that resulted from the need to assure conversion of the dollars into gold in a floating exchange market � which contributed to the intensity of stagflation in the 70s as the needed investment in industry was delayed till margins allowed sufficient profit to compensate for the risk in exchange for gold once parity was removed.
2. It is an absolute necessity for credit money to expand following a prior period of expansion. Thus the "Virtual Confiscation" and new "gold backed" dollars can not coexist with the current rules of the game � of what money is, who creates it, and how. The rules would have to change according to the new gold standard. They would mean that banks and their clients in industry and politics � as well as the average mortgage and car borrower � adjust to having their power curtailed by an order of magnitude.
In short, it would create the same problem that the above are trying to avoid.
3. The program, so far as I can understand it, does not seem to serve any purpose nor any set of identifiable interests. The dollar reserve system is the equivalent of a seignorage tax (through interest rate premiums, or spreads) on the world that ranges from 9%-30% of international trade for Europe (9% for government, and up to 30% for business), to 60% for many South American countries, and was 50-70% for many in Asia. The cost translates to about 3% of GDP for the EU at the bottom end, and at the high end: 25% of GDP for Korea before the crisis and some 45% of GDP for Korea during the height of the crisis and some 30% today. I consider these figures to be underestimates, by the way.
This simply raises the question of why would anyone outside the G-1, the US, would want to suffer America's "exorbitant privilege". Why would the G-11, 10, 7 continue with this?
4. TrailGuide made the point that the US must stay within terms acceptable to the world community in order to retain access to oil and other raw materials at prices that allow its industries to remain competitive. It can't be done by force because the world will not let the US do it without a war, and we are not willing to have WWIII (at least not yet), and we are not assured of "winning" it. The terms that make it possible are the terms of the "neutral" currency; gold. At the end of the day, the leftover portion of trade that did not settle in currency must be settled in gold (and silver�). This can only be replaced by settlement in the goods of wealth � important art, antiquities, etc� but not without paying for the reduced liquidity � meaning that the portion that is not settled in currency would double or triple to compensate for the reduced liquidity of alternatives to gold.
Hill Billy Mitchell (10/21/00; 18:28:56MT - usagold.com msg#: 39615)
Using your >>> synopsis of ANOTHER's thoughts in this area: E. A deal has been cut with, presumably Saudi Arabia, to the affect that whatever US$ price Saudi Arabia sets per barrel (bbl), it will require settlement in 50% US$ or Euros and 50% in physical gold.<<<< as the lynchpin of the gold for oil thesis, It is impossible to the order of several magnitudes! 17 months ago there was an extensive discussion on this. I've culled out the posts that maintain a continuity of subject. It's a long read but more on subject now then it was back then
Peter Asher (3/23/99; 21:39:40MDT - Msg ID:3765)
Check me out on this arithmetic. The difference between an average price of $ 15.00 a day per bbl. and the $30.00 the Saudis allegedly want made up in gold, would require an oz. of gold at $300.00, for each 20 bbl. That's 250,000 oz., or 7.8 tons per day! Or 32 tons per day for all of OPEC. However, did I see something in �Footsteps' about counting the weight at a much higher price?
Even at $3000 an oz., the .78 ton would have to come from somewhere, did some one say it's from the Fed, today? How much was, or is, in Fort Knox?
The Stranger (3/23/99; 22:51:55MDT - Msg ID:3768)
Peter
Your arithmetic checks out just fine with me. You've got me wondering, 'Why didn't I think of
that?'
night, everybody!
Peter Asher (3/23/99; 23:30:54MDT - Msg ID:3771)
Jade
They, The Saudis, more likely have to support the national standard of living they became
accustomed to at $30 + per barrel. There probably isn't any "discretionary" income to buy the
gold with.
jinx44 (3/24/99; 7:34:44MDT - Msg ID:3780)
Beesting at 15%
Reference your post of yesterday---"My opinion, they may cut oil supplies to countries who pay
in dollars simply because at some point in time they may want to cash in EURO'S for the 15%
Gold content". I have posited this question too, and don't feel I have ever received a good
answer.
I have yet to receive any confirmation that the ECB will give up ANY gold if you want to cash
in euros. They will take gold in exchange for euros but it is a one-way street. They have gold
backing but no convertability to gold. The euro is just another fiat currency like the dollar, but
without the debt associated with it. Hence, if the OPEC nations switch to the euro for oil
settlement, the demand for the euro will far outstrip the supply. This demand is what I see
bolstering the euro, not the 15% gold "backing". It is not a perfect currency, it just doesn't have
the debt baggage the $US has. That is its' secret.
The Stranger (3/24/99; 8:35:10MDT - Msg ID:3782)
jinx44
I think an OPEC switch to the Euro is very plausible. However, with so many other variables
affecting currency valuation, such as relative rates of inflation, economic growth and so on, I do
not have the courage to predict Euro vs. dollar.
One other point: Opec oil doesn't normally sell to countries. It sells to international oil
companies. Opec would have difficulty denying delivery to selected nations.
By the way, how or why the oil companies have kept the secret of history's greatest transfer of
gold from their stockholders is beyond me. If the theory were true, I suspect there would be a lot
of law suits coming.
Jade (3/24/99; 9:54:36MDT - Msg ID:3790)
Peter Asher
That would make a good argument, but they have only seen 30 dollar oil in 3 years.
1980-1981-1982. The average over the last 30 years has been 21 and if it you look at the prices
year by year they run in the 15-19 dollar range. About right where we are now. What I have
proposed here has nothing to do with the Euro. This is an engineered plan [no doubt by Rubin]
to add fresh liquidity using Gold as an option to increase the percentage in the play. It also buys
Rubin time [friends of Rubin] to unwind some of their Gold Shorts before the time runs out. So
they are killing two birds with one stone, with that stone being Gold at 282-286. Also I would
add, if we can not really figure out if Buffet still holds his Silver, how are we going to see
200-400 tons run thru Dubai into Saudi or some dumb Central Bank handing over 100's of tons
in trade for electronic fiat USD's. I think these oil producers are a little smarter than we give
credit. They have survived the insanity that rules in that part of the world over the last 30 years.
Jade (3/24/99; 19:31:50MDT - Msg ID:3812)
Detailed Calculations for the Gold/Oil Exchange Rate
Gold/Oil Exchange Rate for the years 1968 to 1998. These calculations are approximate.
Oil in USD per Barrel [Avg. for Yr]�.Date�.Gold Price [Avg. for Yr]�.Gold/Oil Exchange
Rate [Barrels of Oil per 1 OZ Gold]
2.7...1968�..38..14
2.7...1969..�41..15
2.7...1970..�36..13.5
2.7...1971..�40..14.9
3�..1972�..58..19.3
5�..1973�..97..19.4
10.�.1974�159..16
11�..1975�161..14.6
12.5...1976�124�9.9
14�..1977�147...10.5
15�. 1978�193....13
20�..1979�306�20.4
30�..1980�612�18
32�..1981�460�14.3
27�..1982�375�14
25�..1983�424�17
24�..1984�360�15
22�..1985�317�14.4
14�..1986�367�26.2
15�..1987�446�29.7
14�..1988�436�31.1
15�..1989�381�25.4
17�..1990�383�22.5
15�..1991�362�24.1
14�..1992�343�24.5
13�..1993�359�27.6
12.5.. 1994�384�30.7
13�..1995�384�29.5
14.5...1996�387�26.6
14�..1997�325�23.2
13�..1998�305�23.46
11.5..Dec98...297�25.8 Averages for Months
12.8..Jan99�287�22.4
12.3..Feb99�287�23.3
Event [Gold manipulation downward and rise in Oil]
15.25.Mar99�282-284�18.6..18.5
Average is 21-1 for 1968-1999�Average for 1986-1999 is 26.5 to 1. The exchange rate as of
mid March has now shifted to Oils favor. Again when we see Oil at 17-18 and the exchange rate
normalizes back to a historical average we will no doubt see 400+ Gold.
Gandalf the White (3/24/99; 23:18:48MDT - Msg ID:3821)
Re: Peter's question
somehow I got the idea that the crude oil "contract" was for a set low price per barrel -- plus
gold based on the price of say $30,000. per oz. This would not be anywhere near your large
quantity of physical. Does this make sense to you ? Whom is the buyer?- I have no idea. From
where does the physical come?- I have no idea. your comments please.
Peter Asher (3/25/99; 0:00:34MDT - Msg ID:3822)
Jade, AEL, ET, One thing led to another here.
Jade: Whatever time the Saudis were getting whatever price for their oil was not really my
point. My understanding is that they, like the rest of the planet, are living beyond their means at
the moment. Therefore, they wouldn't have funds for gold hoarding, unless they raided the
national "grocery jar".
The storage of value in gold, requires one to have some unspent value available to store.
Oil trades in the marketplace. Producers sell it by whatever deal they can achieve with users
who desire it. Maybe next week the best deal for some producers of oil may be 50 cumquats or
100 oranges per barrel. Or maybe a couple of thousand barrels for an SAM missile. The
marketplace may never again trade gold for oil at its historic rate, or maybe it will.
Suppose the world collapsed back to basics. You (and certainly Aristotle) may have by then
accumulated a substantial stored value in gold. I, on the other hand would probably have
prepared for that eventuality by acquiring a wheatfield, a stone grinder and an oven. Unless you
use some of that gold to acquire the means to produce something for exchange, I will eventually
have all your gold and still have my wheatfield, grinder and oven.
So let's move on now to AEL's lovely reality check regarding the Japanese postal bonds.
I am fascinated how similar this is to the WWII War Bond. These were �pay interest at maturity'
10- year instruments where you paid out $75.00 for a bond of $100 face value. After the war, as
the maturity date came up, the government tried to get people to keep them longer and have the
redemption value increase over time according to a table of value that I believe was printed on
the back. Basically, perpetual IOUs until cashed. They also came up with new issues, which
they then called �Savings' bonds, to replace (or create) the money paid out in redeeming the War
Bonds.
Bonds, stocks, Savings accounts, money market funds and CD's all have in common the simple,
but I think often overlooked, fact that the money which purchased them has been SPENT! The
most paramount factor in mankind's economic life is what that money gets spent for. When
government spends on welfare, social programs or weapons; nothing which can pay back
anything can be produced as a result of that expenditure. Likewise, when individuals spend
borrowed money for things that are consumed, such as food or movie tickets, no productive
capability is created.
Believe it or not, in the 1940's people who bought things on time payments were considered "the
poor". Houses were mortgaged, but that was pretty much it. As the post-war economy got revved
up, auto loans became socially accepted, and then appliances. However, in those days, the loan
spans were definitively shorter than the life spans of the products. Since the convenience and the
personal labor saving which was derived from possessions allowed one to produce more in
life, there was still some productive payback, even from consumer credit.
I think the moment in time when the world began to go hell in an economic handbasket was when
the banks came up with the Vacation Loan. I was a young man at the time, no more interested in
economics than I was in an old age home. But I remember thinking, "I don't believe this! They're
going to lend money for something that will be gone before the loan's paid back!" What once
made no sense is now considered totally logical. That, by the way, is the key to the dwindling
spiral of our society. Getting people to accept as normal, that which a sound and sane mind
would reject out of hand.
ET: That's what's happening to these generations you were referring to the other day. Ever hear
the expression "Values Neutral"? It's what the New World Order folks are having the shrinks put
into our school systems to create a nation of psychopathic "Epsilons" who won't have the ethics
or the intelligence to use the law of the land to defend themselves against the Masters of the
Universe.
All our analysis of monetary function will be to no avail if we don't get a grip on the underlying
activities of those who wish to create their wealth by the enslavement of everyone else. Take a
starved man, feed him well, chain him to a Galley Oar and only whip him occasionally. He may
perceive he's doing better!
Peter Asher (3/25/99; 0:06:56MDT - Msg ID:3823)
Jade, AEL, ET, One thing led to another here.
Jade: Whatever time the Saudis were getting whatever price for their oil was not really my
point. My understanding is that they, like the rest of the planet, are living beyond their means at
the moment. Therefore, they wouldn't have funds for gold hoarding, unless they raided the
national "grocery jar".
The storage of value in gold, requires one to have some unspent value available to store.
Oil trades in the marketplace. Producers sell it by whatever deal they can achieve with users
who desire it. Maybe next week the best deal for some producers of oil may be 50 cumquats or
100 oranges per barrel. Or maybe a couple of thousand barrels for an SAM missile. The
marketplace may never again trade gold for oil at its historic rate, or maybe it will.
Suppose the world collapsed back to basics. You (and certainly Aristotle) may have by then
accumulated a substantial stored value in gold. I, on the other hand would probably have
prepared for that eventuality by acquiring a wheatfield, a stone grinder and an oven. Unless you
use some of that gold to acquire the means to produce something for exchange, I will eventually
have all your gold and still have my wheatfield, grinder and oven.
So let's move on now to AEL's lovely reality check regarding the Japanese postal bonds.
I am fascinated how similar this is to the WWII War Bond. These were �pay interest at maturity'
10- year instruments where you paid out $75.00 for a bond of $100 face value. After the war, as
the maturity date came up, the government tried to get people to keep them longer and have the
redemption value increase over time according to a table of value that I believe was printed on
the back. Basically, perpetual IOUs until cashed. They also came up with new issues, which
they then called �Savings' bonds, to replace (or create) the money paid out in redeeming the War
Bonds.
Bonds, stocks, Savings accounts, money market funds and CD's all have in common the simple,
but I think often overlooked, fact that the money which purchased them has been SPENT! The
most paramount factor in mankind's economic life is what that money gets spent for. When
government spends on welfare, social programs or weapons; nothing which can pay back
anything can be produced as a result of that expenditure. Likewise, when individuals spend
borrowed money for things that are consumed, such as food or movie tickets, no productive
capability is created.
Believe it or not, in the 1940's people who bought things on time payments were considered "the
poor". Houses were mortgaged, but that was pretty much it. As the post-war economy got revved
up, auto loans became socially accepted, and then appliances. However, in those days, the loan
spans were definitively shorter than the life spans of the products. Since the convenience and the
personal labor saving which was derived from possessions allowed one to produce more in
life, there was still some productive payback, even from consumer credit.
I think the moment in time when the world began to go hell in an economic handbasket was when
the banks came up with the Vacation Loan. I was a young man at the time, no more interested in
economics than I was in an old age home. But I remember thinking, "I don't believe this! They're
going to lend money for something that will be gone before the loan's paid back!" What once
made no sense is now considered totally logical. That, by the way, is the key to the dwindling
spiral of our society. Getting people to accept as normal, that which a sound and sane mind
would reject out of hand.
ET: That's what's happening to these generations you were referring to the other day. Ever hear
the expression "Values Neutral"? It's what the New World Order folks are having the shrinks put
into our school systems to create a nation of psychopathic "Epsilons" who won't have the ethics
or the intelligence to use the law of the land to defend themselves against the Masters of the
Universe.
All our analysis of monetary function will be to no avail if we don't get a grip on the underlying
activities of those who wish to create their wealth by the enslavement of everyone else. Take a
starved man, feed him well, chain him to a Galley Oar and only whip him occasionally. He may
perceive he's doing better!
Aragorn III (3/25/99; 3:23:55MDT - Msg ID:3827)
The Stranger and turbohawg: Oil, Gold, & the Dollar
What is OPEC up to? What is the euro for?
Surely you are not so inclined to think your brilliance is not distributed around the world? You
have an exit strategy--gold. Or rather, a Survival strategy. You are not alone. But recognize that
national concerns are not the same as individuals' concerns. You have options not available to
nations, and nations have options not available to you. The euro. In the past I have explored the
many sides of the euro, some as pure exercise. "This is not the gold standard of your fathers"
I've said before. This remains true. It shall be a contractual currency, unencumbered as is the
dollar with debt that cannot be serviced. Yet in its euro price gold will display its true value.
What folly is it to suggest that a body is impoverished that commands a position atop a
commodity needed the world over. Impoverished, no. In dire need of contract renegotiation to
undo past mismanagement? Yes. Much like the United States renegotiated its debts in 1971 by
saying "no more gold shall be paid to settle accumulated dollar-denominated debts". Dollars at
that point became very cheap and easy to come by. OPEC is in the position to do likewise,
though they will say "no more oil will be paid to settle accumulated dollar-denominated debts".
By pricing oil in euros, the U.S. will find that euros are not easy to obtain as the U.S. is a net
importing nation. And what more need will any net exporting nation have for U.S. Dollars as
balance of trade when oil requires euros? Suddenly, the outside world is not eager to accept any
few dollars for its real products. Exchange rate of the dollar falls, and all countries use these
newly cheap dollars to settle all accumulated dollar-denominated debts. That is the exit strategy
of nations. The U.S. will be at a disadvantage until it achieves meaningful balance of trade. It
cannot continue to print its primary export value. This will not kill the future demand for oil. The
world is a much larger place than 50 united States, and any group of nations would be equally
happy to rise to the occasion to be the fat consumer of last resort.
These are the few remaining days of easy money. I suggest you use them wisely. Here's a
hint...gold is the universal currency. Here's another hint...
The platform reads like a combination socialist/fascist party. What they don't want the Federal government to own, they want it to control.
I think the following statements are relevant to US voters comtemplating voting for Nader:
Living Wages: A family-supporting minimum wage. Start at $12.50 per hour in 2000 and index to the cost of living.
30-Hour Work Week: A 6-hour day with no cut in pay for the bottom 80% of the pay scale.
Social Dividends: A "second paycheck" for workers enabling them to receive 40 hours pay for 30 hours work. Paid by the government out of progressive taxes so that social productivity gains are shared equitably.
Maximum Income: Build into the progressive income tax a 100% tax on all income over ten times the minimum wage.
Wealth Tax: Enact a steeply progressive tax on net wealth over $2.5 million (the top 5% of households).
End all commercial exploitation of public lands by private timber, mining, and cattle grazing interests.
These are just some of the "highlights." It makes for some very interesting reading.
If the minimum wage is $12.50, equal to $25,000 per year, then the MAXIMUM wage is $250,000 per year. Since I have made more than this maximum in one year, I obviously cannot support this.
If your talents and skills allowed you to make more than $250,000 a year, Farfel are you listening?, would you want it all taxed away?
Legislation was entered into both the Senate and the House back in June of this year. Click on the following.
http://www.congress.org/congdir.html
Scroll to the bottom, click on legislation, enter S.2678 for the version of the bill, or enter h.r.4170 for the House version of the bill. They're basically the same bill. There appears to have been an attempt to have gold, silver, and platinum bullion reclassified to receive the same capital gains treatment as stocks and bonds. It appears to have been put on the back burner, I'm not sure where it is at atthis moment. What a deal huh ?
Wow! What a difference a year makes. When I read this a year ago I was alarmed that C.B.'s were going to sell all their gold. Oh no!!
This years take is a little different. After scanning 44 pages of goobly-goop here is what sticks out......
"It is clear that
if governments lent out all their gold but wanted to keep open the possibility of using
it in a crisis, they would have to structure their loan contracts so that they could
get their gold back immediately in a crisis. It is not clear how difficult it would be
to incorporate the necessary provisions into loan contracts."
These super-geniuses go through 44 pages of hypothetical reasoning, graphs, equations and theories and in conclusion
they say '..it is not clear how to get the gold back...'.
Ha, ha, ha, ha, ha, ha, ha, ha........ha,ha,ha,....ha,ha.
Thanks again. I have printed out the conclusion pages 44-46
for further chuckles in the future.
Imagine the BOE boys to the Queen or something.
"Your Majesty, we understand there is financial crisis and the war in the Middle East is escalating but they won't give us back our gold"
"And why not you little peasant"
"Because it was NOT CLEAR how to get it back"
Ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ...............
3.30pm (AEDT) CARACAS:
OPEC was expected to increase
oil production by 500,000
barrels a day later this month,
US Energy Secretary Bill
Richardson said today after
meeting OPEC's president.
But OPEC President Ali
Rodriguez said a decision to
boost output would first need
approval from the entire
11-member Organisation of
Petroleum Exporting Countries.
"The will to increase production
at the end of the month, if it is
necessary, exists within OPEC,"
Rodriguez said he told
Richardson.
However, the decision "will be
made with consensus, not in an
isolated manner", he said at a
separate news conference.
The oil cartel is to meet in
Vienna on November 12.
Rodriguez, who serves as
Venezuela's oil minister, also said OPEC would only increase its
production by 500,000 bpd if prices exceed the established price
band of $US22 to $US28 a barrel.
Under the price band mechanism, OPEC increases production by
500,000 bpd if its reference crude price stays above $28 a barrel for
20 straight business days. The US thinks a healthier price for crude,
between $22 to $25 a barrel, is acceptable for both producing and
consuming nations.
Richardson's visit to Venezuela comes as oil prices hover close to
10-year highs due increased demand worldwide, refining bottlenecks
and fears that tensions in the Middle East will prompt an Arab-led oil
export embargo.
US oil refineries are operating at 96 per cent - near full capacity -
and may not be able to transform more crude as it arrives.
But Richardson downplayed the situation, admitting that "there have
been some problems" but later calling refining capacity "adequate".
The increase would be OPEC's fourth this year for a total of 3.8
million barrels.
If oil prices remain high next month even with an OPEC output, the
Clinton administration will consider untapping strategic petroleum
reserves as it did last month, he said.
Clinton gave the order to release $US30 million ($57.42 million)
barrels into the domestic market in September in what Richardson
said was a precautionary measure.
Funny how this works. A few people buy some precious metals and WHAM! like a freight train Congress wants to tax you.
AND IT'S RETROACTIVE! You see, they got away with it once, so they think they can do it again. These are Republicans and Democrats sponsoring I believe. Wake up folks.
When the world price is too a high a price to pay...
Summary:
Seems to me, a key question is,
why should we pay the world price compounded by an extremely adverse exchange rate, for our own stuff? Isn't this the question asked by every small country with gold in the ground? Or oil?
Does Alberta oil belong to all Canadians? Or are they entitled to treat the rest of us like foreigners, so that we have to pay US$ prices for their oil, while they get to take part in the benefits of being under the Canadian economic umbrella and the Canadian way of supporting each other in times of personal or collective crisis?
Exposition:
I've been pondering lately the spectre of the return of the NEP. In Canada, in the early �70's the sudden rise then of the price of oil, in US $, world markets, was creating a situation of windfall profits for large oil companies, and sudden riches for the people of Alberta, the province with most of our oil. The rest of Canada "viewed this with alarm".
The Federal government, and the rest of the country, asked,
Why should a country which was self sufficient in oil, (and now natural gas), have to endure vast increases in the prices of these, paying world prices and maybe exchange rate penalties, just to enrich a handful of people who didn't invent the stuff, nor even the means of finding and extracting it?
After all, the people of Alberta get to keep their oil partly because of the willingness of Canada to provide armies, international treaties, etc. so they won't have it taken away by force. In addition, they get the benefit of "equalization payments" from the other provinces in times when oil prices are low, and the Alberta economy is suffering as a result.
And of course, the Federal government, virtually owned by Ontario and Quebec, was under pressure by the financial moguls in these provinces to somehow stop the Albertans from becoming so rich, they would begin to have a real voice in National business and finance.
So the Federal Government invented the National Energy Policy, the NEP, designed to cap oil and natural gas prices in Canada, and prevent excessive export of these outside Canada, keeping it for the long term use of Canadians, instead of the short term depletion by foreigners.
Well, the policy failed, the Liberals lost Western Canada forever out of it, and Canadian oil and gas is being firehosed out of the ground to the USA mostly, and will soon be depleted forever.
However, today, with rapidly rising world oil prices and natural gas prices, windfall profits are once again accruing to Albertans.
Canadians, including myself, are beginning once again to ask, why should we pay the world price compounded by an extremely adverse exchange rate, for our own stuff?
As I see it, there are only a few ways this can resolve.
1. The Federales somehow confiscate Albertan oil for the use of all Canadians, something they can't do without breaking the NAFTA with the USA and Mexico.
2. The Feds rebate Canadians some or all of our current high taxes on oil products.
3. The rest of us outside Alberta adopt alternative energy strategies as fast as possible, and cut Alberta out of the loop of Canadian economics, leaving them at the mercy of international exchange rate vs. the US dollar, and ourselves somewhat freer of this particular form of slavery and imperialism.
I'd sure welcome comments. And to Journeyman, isn't this an example of how a free trade agreement can really stiff a small country to benefit a larger??
Private oil is not a National Resource, in Canada or elsewhere
The situation described by goldfan: Alberta getting rich on oil and the rest of Canada green with envy and fearing a move in the center of gravity of financial power away from them. The possible "solutions" to this are simply the description of popularly backed plan to steal the products of successful business. People who had not made the investments, not taken the risks and not had anything to do with oil, now want to call it a "National Resource" and unilaterally change the contracts with the oil and gas producers as well as steal land owner's profits.
Even if 99.999% of the population "feels" the oil is "rightfully" theirs, it does not make it so, and it does not make taking the oil profits or restricting the oil production into anything more than stealing, nor is it any more beneficial to Canadian's economy to loudly proclaim that the returns on investment will be taken away in greater proportion if very successful. Investments would simply be curtailed because of the reduced prospects for reward. All Canadians would suffer as a result. Albertan oil men would just suffer more.
Do "speculators," "securities investors" and "gamblers" have anything at all in common? @ALL
Consider the following scholarly excerpt from the classic on the
subject, "The Futures Game:"
*WHY DO SPECULATORS SPECULATE?*
....
Certainly the greatest [motivation] is the
opportunity to make an important amount of money in
relation to the capital base used. Not many speculators
are naive enough to compare their activities with those
of more conservative investors. Most of them are well
aware of the risks that they take in return for the
large and quick profits possible, although there are
some who, like gamblers, are so convinced that they
will win that they are unable to admit even to
themselves that they might lose. Most of them learn
all too quickly that it is a rare opportunity indeed
that provides an important potential profit without an
attendant large risk.
Other speculators are attracted almost as much by
the stimulation of the speculation itself as they are
by the opportunity for profit. For some it is the sheer
excitement of the game; for others, it is the dynamics
of the involvement with world politics, trade, currency
fluctuation, wars, and other events that come to affect
their own positions rather than just provide newspaper
headlines. Aside from those who receive some
masochistic pleasure from losing, it seems likely that
even those motivated in large part by the desire to
have something to get up for in the morning find the
pleasure of speculating more satisfying when they win
than when they lose. -Richard J. Teweles, Frank J.
Jones, The Futures Game, (New York: McGraw-Hill 1987)
p. 14 [ISBN 0-07-063734-2]
Now remember Yogi: "Prediction is very difficult, especially of
the future."
And von Mises: "... to acting man the future is hidden."
In the next section, entitled "SPECULATE ON WHAT," Teweles &
Jones call up, and I quote, "the Mississippi land schemes of John
Law in France and the South Sea Bubble that was perpetrated on
the English public." On the next page, there is a section
entitled, "FUTURES VERSUS SECURITIES AND OTHER SPECULATIONS.
Catch the drift?
Free trade and who wins and who loses? @Goldfan, ALL
"And to Journeyman, isn't this an example of how a free trade
agreement can really stiff a small country to benefit a larger??" -Goldfan (10/22/00; 10:38:19MT - usagold.com msg#: 39640)
A VERY good question, Goldfan, and one that may just kick me in the other side enough to get back to that pesky "Free Trade" series! At any rate, I'll try to do it justice, but not just now. I promised to take my organic burglar alarm on a long walk today, and talk things over with one of my more radical pens. As in "The PEN is mightier than the sword."
I think ORO did an excellent job on the who-owns-what aspect, so I'll try to hit the "free trade" side of things.
A quick insight might cast some more light on the situation: Montana is a lot closer to Alberta than Quebec. Why couldn't Montanans claim THEY should share in the benefits of forcing oil-owners to sell oil cheaper to THEM -- since they are closer than the people who live in Quebec?
Suppose you grow sunflowers for a living and someone in Russia is willing to pay you twice the price for sunflower seeds as are your neighbors. Should you sell to your neighbors at a reduced price anyway? The real question: Should you be forceably PREVENTED from selling to the Russians at personal cost to you?
There's another question here too: What does "Canada" get in return for the oil? Yea. But what if it were honest money instead? Would you feel the same way? Why or why not?
Of course things are incredibly more bolixed up because of lack-of-universal-trade-value-standard.
Regards,
Journeyman
P.S. What really obfuscates the thinking along these lines is what I sometimes call the "map mentality." That is, people tend to act as if those lines on maps signify real dividing lines between people, and they act accordingly. I remember my mother's story about the first time they told me they were going to take me across a state border. As near as I can figure, I was about four at the time. She said my eyes got big and I asked if it were safe and what would happen. Someone joked and said the car would drop ten feet and have to crash through a barrier. Everyone laughed. That was the border between Pennsylvania and Maryland. - - - - Now think about Alberta, Montana and Quebec. And the Berlin Wall. And the barrier part.
ORO (10/22/00; 11:10:34MT - usagold.com msg#: 39641)
ORO and Journeyman thanks for your responses. I know from following your stuff that you don't believe "might is right" and that you have a set of principles that aim to produce a civil society, with no unfair advantages. I hope I am not putting words in your mouth in saying that. In what follows, I am trying to find out how the idea of a "commons" shared by all, fits in with with the notions of every person for themselves, or whomever they can coerce or persuade into being part of their army.
Sure the risk-takers and finders etc. deserve all the profits. This is just another way of saying might is right. It's just a question of who has the army and the courts on their side. Why do not the finders or inventors, get most of the profits and the risk takers, financially, much less? What is so great about finance, that the gallery owners should make twice as much as the artist, merely because they own all the gallery property in town, which they maybe got from their fathers money, not their own?
Surely there is a difference morally, in the ownership of money got from theft or from inheritance, compared to that got from hard work or ingenuity? Why is a man's son or daughter, the inheritor of his wealth, suddenly so much more able to demand and command than someone who has not the advantage of being "owned" by a rich man? Yet, our value system kowtows as much to the rich boss of a biker gang, as it does to a Nobel prize winner.
I know an old lady in a nursing home, 104 years old, she lived an absolutely exemplary modest life, and "saved" enough to care for her old age. But because she is living so long, she is at the mercy of successive nursing home operators who constantly drain money and resources from that place, because they have the idea they have to compete with .com s for profits. Is she at fault because she didn't properly prepare for her old age?? She did everything the so-called financial advisors told her to...This is a moral question, we ought to revere anyone who lives that long, instead, she has to compete with .com billionaires on the same reasoning that says that if I have all the money, or the property, or the oil or whatever I have the right to make myself king of the world if I can.
What if the price of oil goes to 500 $ per barrel, not because of the ingenuity of the finders or producers of oil, but merely because the overinflated US$ and US military might, controls all sales of oil everywhere. In Canada, even if the owners of oil in Alberta wanted to, they could not do deals to supply other Canadians with lower priced oil, even though the prices are not fair market, but are rigged market, because the NAFTA and WTO forbids this "unfair" favoritism.
I think it is just as much confiscation, to have oil priced only in one currency, as it is to tax away what some people would like to call excess profits. I am not allowed to do things which block my neighbor's access to the common street we both need to do business, even if I am the guy whose labour built the street. I think we would have constant warfare, if we didn't all live by enforceable rules when it came to building and using streets. The same reasoning IMHO applies to certain goods such as oil, gold, air and water. There ought to be an enforceable right to trade oil or gold in whatever currency the owner wishes, without the need to go through a US$ money-laundering.
And maybe you would say the system will work all this out, in time the US$ will collapse, and those who relied on it for their power will suffer the same fate. IMHO this is not enough, to say our present system will collapse of its own dead weight. I need to think of what I would support in its place. I am struggling to understand what form of civil creed I would agree to, and how it could be enforced.
In the First Nations way of thinking, Bear is the one who travels the forest, making sure all the rules are being followed, that everyones behaviour is appropriate. Notice that Bear is big and has claws and teeth, which he may use from time to time. What do we call appropriate, and what are our claws and teeth?
"And maybe you would say the system will work all this out, in time the US$ will collapse, and those who relied on it
for their power will suffer the same fate. IMHO this is not enough, to say our present system will collapse of its own
dead weight. I need to think of what I would support in its place. I am struggling to understand what form of civil
creed I would agree to, and how it could be enforced."
If it was me I would support the idea of free markets of free men. Only a free market will bring about what you seek. You can learn more about these ideas by reading the works of Mises, Rothbard and others. On the web you can check out some of this stuff at www.mises.org and www.lewrockwell.com. Good reading!
I find your comments concerning Alberta's oil windfall to be emblematic of an Ontario culture long accustomed to getting its own way within the confederaton.
Nothing upsets the Ontario crowd more than the concept of an economic power shift away from Toronto to Calgary or Edmonton.
Somehow, the fact that Ontario has controlled the Canadian economic destiny since 1867 and exploited the remaining provinces to the advantage of Ontario is defensible, but now that Alberta is moving into the catbird seat in Canada somehow in your mind that is not allowable.
Well, I say, "Get used to it," I do not empathize with your viewpoints in any way shape or form.
Albertans are becoming the economic leaders of Canada, and that is no more or less offensive than the former Ontario dominated status quo in Canada.
I happen to love Alberta, I think it's a great province, the people are wonderful. For almost a century, Alberta had to suffer the slings and arrows of Ontario hegemony (e.g., most foreign industries were strongly urged to set up plants in Ontario before other provinces were considered) and it is great to see a little underdog province like Alberta supplant Ontario as the most important province in Canada.
It gives hope for gold investors that maybe someday, the underdog goldbugs may supplant the bullion bank owners as the economic leaders of this country.
Sure miss Black Blade. It's been a rough weekend in the ME--very rough. Just read that Chairman Arafat told Mr. Barak to, "Go to hell". Still, Secreatry Richardson was trotted out once again to proclaim that OPEC will pump more oil. This proclamation despite the fact that even if OPEC client countries did pump more oil from the ground, there is no place to put it, transport it or refine it.
The Fat Lady Hasn't Sung Yet...Good Afternoon Everyone.!.
====================
I'm back. (BAAAaaaaccck).
Rain_Dog took me for an envigorating run and Peter (Asher)
you will be glad to hear that some cobwebs were rearranged.
I'd like to thank you all, for your many posts and comments,
including the deluge of e-mails I've received. One cannot
appreciate the worldwide coverage of this Forum and the very
depth of it's many Lurkers. And their incredible knowledge.
Until one includes his/her e-mail address at the bottom of
his/her posts. (hint to all).
My earliest post of yesterday (10-21-2000) about a possible
scenario by worldwide governments to extricate themselves
from widespread financial collapse and the resulting chaos
(while hypothetical at this point) still served to awaken some
of us to such a probability, or at very-least, stimulate us all
into doing some serious thinking along those lines.
As expected, most of your responses were well thought and
in many cases, well written and informative. We all gained
as usual, from everyone's intellect. And that's as it should be.
The consensus seems to be that it was unworkable folly, at
best, and at worst (as PH_in_LA alluded) communism ala 2K.
As I read each comment and mentally formulated a response,
I came to the conclusion that it would be best for me to wait
until I have finished writing and (coming soon) posted the full
white-paper report with all it's myriad details and gotcha's and
catch-22's etc. Because that will fill in many of the blanks that
were of concern to you all, and may exonerate some of the
report's theories and conclusions. We shall see. I hope.
But during the process, I reached another (astounding) [to me]
conclusion. And I shall now put it forth as today's gredade or
bombshell, into the forum. Spoil your day, so to speak.
Here it is:
Just re-read my previous report, but as you do, substitue the
price of US$275/oz wherever I used the figure US$ 50/oz and
where I used 1% annual IRS excise tax, substitue 100% Cap
Gains tax. Or anything inbetween.
And then ask yourself, "Isn't This what we already endure?"
What I mean, is this: The USA and other world governments
have already locked the price of Gold. At US$ 275/oz. Plus or
minus a few bucks, to make it appear as if Gold FreeTrades
in the marketplace. It doesn't. Can you say m-a-n-i-p-u-l-a-t-e?
Think about it. Plan "A" has already been enacted. Mine will
be their Plan "B". Now does that spoil our day... or what.?.
A proclamation has been issued from the mighty Wizard, Gandalf, regarding FREE GOLD
Early in the week upon reading an excellent post by Sir auspec, I
proposed that a wing in the HOF be created for posts that use satire
and allegory to get across a philosophical or economic point of view. I
also mentioned that I had proposed this before but there was no
response. Sir auspec was seized by an overwhelming emotion of youthful
exuberance and launched a Crusade in the form of a frontal assault on
the Castle walls and through enlistment and conscription put together a
formidable battle group. The fray was becoming rather violent and I
became alarmed that in carrying my banner the assembled host of "Young
Turks" might suffer unwanted casualties. I decided to open up back
channel diplomatic communication lines by E-pigeon and as it turned out
auspec, who had apparently become alarmed at what he had let loose, did
so also.
Meanwhile Gandalf had mounted Shadowfax and flown over the fray.
Observing the brave attempts of the left brained warriors to scale the
insurmountable walls he also opened up diplomatic channels and though
the frontal attack failed, the Castle hosts, though alarmed by the
degree of aggression, were so impressed by the valiant attempt of the left brained warriors, that they were willing to negotiate. An announcement of the agreement is forthcoming from the Town Crier after the details have been technically defined.
Well the Wizard has just informed me that he has performed some alchemy
on a sacred crucible of crushed quartz (and other secret items) and has created flakes of 97%+
raw Gold! He is announcing that he will place a few of these flakes in
small vials and make good on auspec's outrageous promise of Free Gold to
all the warriors that joined sir auspec in the now legendary CHLE-HOF battle. He is also
awarding this Boone to Town Crier for the stoic manner in which he
conducted himself under this surprise duress
In order to receive this Free Gold, Gandalf has requested (in order to
maintain the secret of the location of his Wizard's Keep) that I obtain
the mailing addresses of the recipients at my �known to all' E-pigeon
landing , peter@peterasher.com The Wizard will then use The US Postal Service to convey those rewards to those that he has dubbed "Bravehearts,"
Believe me, there is much in the Nader platform I do NOT like or which I simply think cannot be applied to the real world.
Some of the concepts are naive (e.g., excessive taxation... that ALWAYS results in corporations or individuals moving offshore to avoid it) and some of the concepts are too extreme, especially in their socialist perspective.
However, I disagree with you in regard to your label of Nader as part "fascist."
Let us re-examine the definition of fascism: it is political control by the corporations, and that is certainly what exists in America today. In effect, the country has surrendered to corporate fascism. It is so extreme today that a man like Nader could not even gain entry to the presidential debates, as a mere spectator. That is absolutely pathetic!
Nader opposes that, he would never tolerate the kind of collusive, market rigging crap that the bullion banks are pulling. So he represents a much needed swing toward corporate intervention, an antidote against rule by the corporations, and that is a swing sorely needed. For the past eight years, we've had a government bought owned and paid for by Wall Street...and if it were elected, a Republican government, although radically different in social policies, would be more of the same with respect to economic policies, namely complete subjugation to corporate America's interests.
What I like about Nader is this: he wants to restrain the corporations and make them responsible to the people...he wants to address infrastructural problems that the corporations do not give a damn about (e.g., severe shortage of burn wards all over the nation, crumbling highways, lack of skilled teachers, etc.)...he wants to put some kind of cap on the outrageous profits flowing to corporations or individuals.
Contrary to Adam Smith's ideology, the invisible hand is NOT leading to efficient results in the marketplace.
Getting back to my baskbetball example....isn't it pathetic that today, we are faced with a possible situation where a group of people watching a basketball game, watching their favorite idols who earn $20 million a year, could find themselves in an explosion or fire, badly burned, yet discover that there is a major shortage of burn wards in most metro cities, and a major shortage of specialist burn nurses, because those nurses don't earn enough money to entice others to enter the nursing field?
According to the free market crowd, an efficient marketplace is supposed to correct those aberrations and prevent them from happening. Yet such is not the case, and that is because all variety of inefficiencies exist in the marketplace, preventing desired results in terms of proper allocation of capital and resources.
These various inefficiencies have come into effect because of the huge overwhelming power of corporate monopolies and oligopolies all across the land. Somehow this neo-fascist dilemma must be resolved, and Nader is a move in the proper direction. Although the corporations and the corporate-led media decry Nader as being a socialist, in reality, he could be better described as a corporate interventionist, somebody who would demand more responsibility from corporations toward the society.
Is he too extreme? Yes.
Is he too much of a socialist Pollyanna? Undeniably.
Are his environmental policies over the top? Sure seems like it.
Would he be able to carry out all his policies if were elected? Almost impossible, he would have to adjust many of them to reflect the realities of the marketplace and the world in general.
For example, where mining is concerned, Nader will learn quickly just how sorely diminished that sector really is, as a result of huge misallocations of capital and resources from hard assets to high tech development, especially the internet. He will likely demand more responsible behavior from mining firms (nothing wrong with that, who wants cyanide in their drinking water?), then once reality dawns, enhance the economic conditions allowing them to develop at a faster (yet safe) pace and correct the almost ten years of capital underallocation.
Bottom line: he is a wake-up call, a populist cry against the unbridled hegemony of corporate America, but most importantly, as the (non-mainstream) polls reveal, he is the third party candidate with the best chance of getting more than 10% of the vote.
On the other hand, a Libertarian candidate is complete pie-in-the sky, because for most Americans, the abolition of the Federal Reserve, etc. is meaningless, especially in these times of (apparent) prosperity.
So if you really want to send a message to the politicians that the current status quo of corporate dictatorship is unacceptable, if you want to send a message to the bullion banks that they can no longer break the rules of the marketplace upon mere whim to the disadvantage of those who play by the rules, then Nader seems to be the best focal point for such dissent at this particular time. IMHO.
In a nutshell, Dave, I see America today as a government of corporations...where the politicians are little more than servants of the corporations even as they suggest that they act as their regulators...where the media are also servants of the corporations even as they pretend to act as their watchdogs.
Hence I do NOT believe the main issue of the election is the one that you (and all other Libertarians) see, namely the individual vs. government. That is because, since the government today is no more than a subsidiary of the corporations, then the main issue in the coming election is this: the individual vs. the corporation.
What we really need today is NOT less government, rather we need the RIGHT government, and that would be a government that is responsive to the public's interest, NOT the corporations' interests.
Once America has a government that compels corporate responsibility to its citizens, instead of a corporate-controlled government, then we will actually need MORE government involvement to free the economy from years of subjugation to the parochial interests of the corporations.
Farfel, Taking my CLHE-HoF duties seriously, I've taken the liberty of copying your post to me, with my thoughts in <.... > after your words.
I find your comments concerning Alberta's oil windfall to be emblematic of an Ontario culture long accustomed to getting its own way within the confederaton.
Nothing upsets the Ontario crowd more than the concept of an economic power shift away from Toronto to Calgary or Edmonton.
< After Jack grabbed the fat goose or hen or whatever, said to lay golden eggs, he ran like H. For the beanstalk with the Ugly Giant in hot rampaging pursuit>
Somehow, the fact that Ontario has controlled the Canadian economic destiny since 1867 and exploited the remaining provinces to the advantage of Ontario is defensible, but now that Alberta is moving into the catbird seat in Canada somehow in your mind that is not allowable.
Well, I say, "Get used to it," I do not empathize with your viewpoints in any way shape or form.
< Says Jack, listening to the Giant's imprecations and shouts of death and revenge and threats to foreclose on Jack's mortgages>
Albertans are becoming the economic leaders of Canada, and that is no more or less offensive than the former Ontario dominated status quo in Canada.
I happen to love Alberta, I think it's a great province, the people are wonderful. For almost a century, Alberta had to suffer the slings and arrows of Ontario hegemony (e.g., most foreign industries were strongly urged to set up plants in Ontario before other provinces were considered) and it is great to see a little underdog province like Alberta supplant Ontario as the most important province in Canada.
>
It gives hope for gold investors that maybe someday, the underdog goldbugs may supplant the bullion bank owners as the economic leaders of this country.
Gandalf, you have absolutely made the day for all us Founding Members! Gold flakes, carefully vialed up by your own hands, and thoughtfully sent out as a memento of our efforts to get a Hall of Fun! You can rest assured that those gold flakes will NEVER be torn away from me (along with my treasured gold and silver prize Eagles from USAGOLD). Thank you ever so much.
Fellow Founders, this was a lively week, was it not? And now we have the promise of a Hall of Fun! This was a lot better than sitting around grousing about why the price of gold might be going down.
Gandalf, do you think Trail Guide's going to send in his address for the gold flakes?
@GF, I must be too obtuse, your response goes over my head.
@DaveC, concerning my earlier post, as I was typing faster than my thoughts, a correction in the following paragraph:
" Although the corporations and the corporate-led media decry Nader as being a socialist, in reality, he could be better described as a CITIZEN INTERVENTIONIST, somebody who would demand more responsibility from corporations toward the society."
Farfel - you're right, you voting for Harry Browne would be a wasted vote. You obviously aren't a libertarian, since the principles of activist intervention and that of liberty are at odds.
Sir Journeyman, thanks for your reply, I've put my remarks in<...>. the rest is repost of yours..
Free trade and who wins and who loses? @Goldfan, ALL
"And to Journeyman, isn't this an example of how a free trade
agreement can really stiff a small country to benefit a larger??" -Goldfan (10/22/00; 10:38:19MT - usagold.com msg#: 39640)
A quick insight might cast some more light on the situation: Montana is a lot closer to Alberta than Quebec. Why couldn't Montanans claim THEY should share in the benefits of forcing oil-owners to sell oil cheaper to THEM -- since they are closer than the people who live in Quebec?
Suppose you grow sunflowers for a living and someone in Russia is willing to pay you twice the price for sunflower seeds as are your neighbors. Should you sell to your neighbors at a reduced price anyway? The real question: Should you be forceably PREVENTED from selling to the Russians at personal cost to you?
The freely elected government of Canada tried to force the retention of oil in Canada, tried to force the Albertans to live up to the contract they had tacitily agree to in the '60s. It didn't work. As a result, of this and other abrogations of honour as .com mentality proceeds apace, we're going to eventually be carrying pistols, becasue we cannot trust our neighbours, because we all live in fear.>
There's another question here too: What does "Canada" get in return for the oil? Yea. But what if it were honest money instead? Would you feel the same way? Why or why not?
< I don't understand this question. Are you asking what if it were gold? If it were, then I say the compact we have as Canadians is to share our wealth, our good and bad times, and honjour our contracts with each other. That's the meaning of citizenship. Same as the meaning of family, brother or sister.>
Of course things are incredibly more bolixed up because of lack-of-universal-trade-value-standard.
Regards,
Journeyman
P.S. What really obfuscates the thinking along these lines is what I sometimes call the "map mentality." That is, people tend to act as if those lines on maps signify real dividing lines between people, and they act accordingly. I remember my mother's story about the first time they told me they were going to take me across a state border. As near as I can figure, I was about four at the time. She said my eyes got big and I asked if it were safe and what would happen. Someone joked and said the car would drop ten feet and have to crash through a barrier. Everyone laughed. That was the border between Pennsylvania and Maryland. - - - - Now think about Alberta, Montana and Quebec. And the Berlin Wall. And the barrier part.
@GOLDFAN...re: Alberta
I find your comments concerning Alberta's oil windfall to be emblematic of an Ontario culture long accustomed to getting its own way within the confederaton.
Nothing upsets the Ontario crowd more than the concept of an economic power shift away from Toronto to Calgary or Edmonton.
Somehow, the fact that Ontario has controlled the Canadian economic destiny since 1867 and exploited the remaining provinces to the advantage of Ontario is defensible, but now that Alberta is moving into the catbird seat in Canada somehow in your mind that is not allowable.
< I'm not defending Ontario. What I ask is, so what if Alberta gets the catbird seat, what will they do with it that's any different from the might is right power stuff we've had for the last 10 000 years? I guess I'm really asking, can any nation long endure that has a monopoly of something others need for their survival, if they insist on charging so much, everyone has to be bankrupt to pay them? I remember a long time ago, when my then wife had a series of very expensive surgeries, most of which were due to the incompetence of the first surgeon, me complaining in the presence of a doctor of how much this all cost, and he saying "what is your wife's life worth any way?" I felt like punching him out. >
Well, I say, "Get used to it," I do not empathize with your viewpoints in any way shape or form.
Albertans are becoming the economic leaders of Canada, and that is no more or less offensive than the former Ontario dominated status quo in Canada.
< I agree, so I don't really care which of them continues on with the same dysfunctional neurotic power plays.. I want a different attitude altogether.>
I happen to love Alberta, I think it's a great province, the people are wonderful. For almost a century, Alberta had to suffer the slings and arrows of Ontario hegemony (e.g., most foreign industries were strongly urged to set up plants in Ontario before other provinces were considered) and it is great to see a little underdog province like Alberta supplant Ontario as the most important province in Canada.
< Ontario is wonderful Province, the people are great, it's the leaders and the banksters and the system of Western Economic thinking, that aren't so hot IMHO. Also, Alberta has benefitted by being part of Canada. I remember when we in Ontario in th 50's-60's agaareed to pay more than the world price of petroleum products, in order to support the fledgling oil industry in Alberta, by buying their oil, rather than importing it. We did this on the understanding this would be a Canadian resource.So, now it costs Albertans a bit of money to honour their contract tney want out. >
It gives hope for gold investors that maybe someday, the underdog goldbugs may supplant the bullion bank owners as the economic leaders of this country.
< I don't want any more economic leaders, we have enough of them already.>
Your post raises numerous disparate points that deserve a rebuttal.
Your statement:
"Sure the risk-takers and finders etc. deserve all the profits. This is just another way of saying might is right."
My response:
It is quite the opposite IMHO. The risk takers and creators deserve protection from those who, by might, seek to confiscate their productive results.
--------------------------------
Your:
"Surely there is a difference morally, in the ownership of money got from theft or from inheritance, compared to that got from hard work or ingenuity?"
My:
Why would you seemingly equate inheritance with theft? Inheritance is likely the product of someone's hard work or ingenuity. It strikes me as an act of theft to declare this wealth as belonging to someone other than the bequeathed. Further, the act of an individual passing on his wealth to his progeny is an effective means of wealth preservation, in that the inheritors will most likely attempt to carry on the business in the family's name.
-------------------------------
Your:
"What if the price of oil goes to 500 $ per barrel, not because of the ingenuity of the finders or producers of oil, but merely because the overinflated US$ and US military might, controls all sales of oil everywhere."
My:
If the US militarily "controls all sales of oil everywhere" why would they allow $500 oil? If the price does rise to this level, it will be certainly due to US inflation, past and present, and certainly out of the control of the US.
-----------------------------------
Your:
"In Canada, even if the owners of oil in Alberta wanted to, they could not do deals to supply other Canadians with lower priced oil, even though the prices are not fair market, but are rigged market, because the NAFTA and WTO forbids this "unfair" favoritism."
My:
As I understand it, the trade deals cited do NOT prohibit an oil company from selling to anyone they choose, at any price they agree to. What is prohibited is a Canadian legislation, for example, that prevents a US buyer from having equal access to that oil.
---------------------------------------------
Shermag
Human rights will depend on the time, the conditions and the circumstances. They will always be in step with the revolution and its principles. Saddam Hussin
Apollo's golden chariot (10/21/2000; 17:57:20MT - usagold.com msg#: 39611)
Inquiry of Sir Trail Guide
---Specifically what I had in mind was the broader political economic implications from the decline of the US dollar as an international numeraire that you perceive will occur in the future.-------
=========
Hello and welcome to the golden vehicle upon which Apollo is the Charioteer!
Oh how much indeed does your driver's fame precede you, sir. Few here count a god of poetry, music and most importantly prophecy as their close advisor. (smile)
I enjoyed your post, as it's content showed no indolence of spirit. Certainly a quality inspired during your streaks across the constellation. Yes, we have all seen bright starlight before.
Apollo,
The political and social ramifications of the changes before us would take a large book of posts to discuss. Perhaps titled the History Of The World, vol. 6 thru 8. But for the benefit of brevity can we just keep it down to something in the order of a James Chavell novel? I think Gai - Jin (foreigner) would do. OK, I'll work on it. Nice to talk with you.
We are well into earnings season now on Wall Street and one thing is clear. The weakened euro and higher oil prices are messing with results for American multinationals.
Did everybody notice Greenspan's remarks last week about how rising oil prices have not infected general prices yet? To be fair, he then warned that they still may. But, if they haven't yet, then the Fed Chairman might want to ask himself why one corporation after another has lately been reporting a reduction in margins due to higher costs?
By the way, this notion that somehow corporate managers will just keep eating cost increases flies in the face of reason. Were it not for so much distortion in official inflation reports, you can bet we would be seeing even more price increases than we already have. And, believe me, as the weeks tick by, more and more companies are realizing all the talk about how the consumer won't accept higher prices is just silly. Demand pull is what got us in this fix, boys. Just look at debt lebt levels throughout the economy. Look at the trade imbalance. This is where the proof is. Americans can hardly restrain themselves nowadays. Companies which continue to buy this nonsense about consumer resistance are going to have more lowsy earnings reports and still lower stock prices in the months directly ahead.
Almost a year ago, in these pages, I scoffed at the fuel "surcharges" being levied by the various package delivery services. I said then that the "surcharges" would be here to stay and that management at these companies were acting out of timidity because they just couldn't believe the times were actually a-changin'. Well, we haven't seen any of these "surcharges" rolled back yet, and I promise you we won't. Come to think of it, judging by the revenue numbers just released by UPS, we haven't seen any sign of consumer resistence to the increases, either.
But you ain't seen nothin' yet. There is a break in the dollar coming. When that happens, then you will see inflation rise even from its current levels.
Hello amply rewarded Fellow Founders,
First the Victory and now the Spoils. Maybe we can get the Wizard to make good on a few of Govt's hollow promises since he is so gracious! You don't think fellow Forum members are going to associate us in their mind with flakes, do you? You know none of them are going to be able to sleep tonight knowing that they missed this once in a lifetime opportunity for FREE GOLD. Green??? Why did they ever doubt???
Regarding housekeeping Sir Peter; it was post #39243 from nickel62 that made you, once again, mention a Hall of Fun. Would like to know your original request #, months ago, if you can come up with it {for posterior sake}. As mentioned, it was not so much youthful exuberance {do you have to be young to be impetuous?} as it was boordom {spelled correctly} that caused the frontal assult. You see, the wife and children were away for 4 days. Apparently zaniness can take on a life of it's own given sufficient opportunity and nutrients.
Cb2- I hope your computer comes back on soon, so you know you are now a {rich} hero. Regular mail may beat E-mail this time.
Regarding all the various contacts with the Castle- this gives new meaning to the term secret diplomacy! Hope they aren't too hacked to take my next {enormous} gold order. Wonder what I can get for a bottle of flakes............NEVER!!!
Fellow Bravehearts, Founding Founder, Most Generous Wizard, Esteemed USA Gold Forum Hosts, Future Entrants into CLHE-HoF, this esteemed place will never again be the same!
Godspeed,
auspec
@CanuckI'm glad you found the site interesting. I've been keeping up with it for around a year now. Jeon Veon is a very informed person. She attends all the conferences of the UN and other NWO meetings. At the end of the article she concludes that the CB's are driving the small countries out of business. Seems like once a 3rd world country gets tangled up with the IMF they really go down hill and have to sell the very assets that pay the bills. A lot of the 3rd world countries are the very producers of gold as well as other materials. But that is how big business works! Drive the little guy out so it can be controlled by just a few. Once just a few have it they make the rules. Have you ever read "The Protecols of the Elders of Zion"? There are 24 protcols and 4-5 times they state that they will have all the gold. They claim that Europe will be the power to be reckoned with. Some claim that it is propaganda but after one reads it as far as I can tell it all has come true. Europe will be the power and they will have all the gold. I wonder if they have been getting the gold these last 20 years.
Tokyo is down a little this evening... not following Wall Street higher. Oil is up another thirty-something cents and gold is higher by another 20 cents.
If trouble in the Middle East is an obstacle for the markets, I have a hunch there's plenty more to come.
Barron's ran a very detailed examination of Cisco's books this weekend. The author, a highly respected retired CPA, argues persuasively, and in great detail, that this most sacred of all tech bellweathers uses accounting gimmicks to report earnings when in fact it is losing money. Cisco's PE, with such tricks as seller financing and pooling of interests included, is still somewhere north of 150. But now we are told the company doesn't even have a PE because it doesn't have an E. It will be interesting to see how the crowd reacts tomorrow, but this can't be good news.
**********
I am now the owner of six hard-earned three-foot post holes in my yard. I wondered if it might be smarter just to bury my Philharmonic in one of those holes, but then I realized I would have to dig it up again in a few weeks. Anyway, thanks to all those who advised me on this project. It really was helpful. Tomorrow, it is off to the lumberyard for me.
Based on experience, I can suggest a method to remove those fenceposts, if you ever need to. (smile) I, in a younger day thought it would be neat to own a horse for me and the family to ride etc. So I built a modest corral, after building a modest barn. After a few years, a lot of shoveling and several family members getting pretty sore bones and muscles, we got rid of the fellow. I turned the corral into a play court, but first had to remove the fenceposts. Since mine had to be totally removed and not just chainsawed, and not wanting to do any digging, I simply flooded the spots until the soil was so soggy that I just lifted them out. You might want to buy some garden hose, get your W$J out and smoke a stogie and let them get loose themselves. That is IF you ever do decide on removing them.
"What we really need today is NOT less government, rather we need the RIGHT government, and
that would be a government that is responsive to the public's interest, NOT the corporations'
interests." -Farfel
Only problem is that that will rarely happen and never persist. The closest was the original U.S. Maybe Switzerland. The reason it won't persist is that there is simply too much money to be had by the government-industrial complex, gotten at gunpoint or threat of same. Just ask yourself how the fascist amalgam which is today's U.S. got this way given it began so well 224 years ago.
Given that insight, the best we can do for our posterity is to move as far toward no government as we can. That means, if you think voting will help at all, vote Libertarian.
Questions, QuestionsLady Leigh asks (10/22/00; 16:28:00MT - usagold.com msg#: 39655) "Gandalf, do you think Trail Guide's going to send in his address for the gold flakes?"
*****ONLY IF he wants them ! <;-)>>
But the Bravehearts Founders addresses come E-mailing in !!
Thanks all.
<;-)
http://biz.yahoo.com/rb/001021/c.htmlI just read the above referenced article, entitled "The Perfect Storm Plays On Wall Street". I think it is worth a read as it shows how much of what we have discussed here at the forum the last couple of years (inflation, weak Euro, etc.)is now showing up in main stream reportage!
There is no question that the U.S. is now headed toward recession. Case in point: Denmark just paired back an aircraft order from the U.S. by 25% because of the strong dollar. But whether we actually have a recession in the near term or not is, of course, a matter of whether the Fed will actually let one happen. That is a political determination more than an economic one. (Gosh, it's complicated being a prognosticator). But recent statements by various Fed members lead me to believe that they are still underestimating the inflation threat. Furthermore, like dentists, they all want a reputation for getting the job done without any pain. Ergo, look for the Fed to retreat this time before the task is complete. Higher inflation, here we come.
***********
Al, thanks. I think I have enough now for a book on posts. Your message will make a nice epilogue.
Dave
"According to the free market crowd, an efficient marketplace is supposed to correct those
aberrations and prevent them from happening. Yet such is not the case, and that is because all
variety of inefficiencies exist in the marketplace, preventing desired results in terms of proper
allocation of capital and resources." -Farfel
I'm trying quick answers for a change. I have little hope they will be adaquate, but here goes anyway.
1. First we don't have a free market. (Greenspan to Ron Paul) So what ever abberations indeed happen can't be blamed on non-existent free markets.
2. Second, it is a perversion of free market principles to say it will correct all inefficiencies and be perfect. It is typically a socialist distortion to make that claim. Free market advocates just say that as imperfect as free markets are, reflecting an imperfect reality, they're better , far better, than any of the alternatives.
3. Third, resources "allocated" to a burn unit, etc. aren't available for, say, firefighting squads -- or aids research.
4. Fourth, it's really easy to decide there was a mis-allocation AFTER the fact. "Prediction is very difficult, especially of the future." -Yogi Berra
5. Fifth, there are two sides to allocation. Who's going to be forced to spend the hours of their lives providing what YOU think they should be allocated for. Who are going to be the involuntary slaves to your perceptions of what should be?
6. Sixth, what is the alterntaive to having the market allocate scarce skills, hours, and money? The government? Look at government's record anywhere. How about how it was done in Russia? The U.S.? The reason is simple: an economy involving the individual tastes of hundreds of millions of people in constant flux is simply too complex for any accurate forecasting, and "central planning," always done by stodgy bureaucrats, simply isn't and can't be nearly nimble enough to compensate and adjust.
All the latest talk here of voting for Nader and any Libertarian candidate amuses me. Especially the latter. No the former does too . But the latter is the one that puzzles me. Why would such smart people as Libertarians ever leave the Republican Party? While it can be said that the current Republicans themselves have abandoned so many of the principles this country was founded on, they DO have a viable political network.The only one that can at least keep foreign and domestic enemies at bay. And since there are so many races countrywide that have few or even no candidates running for office, why would these smart Libertarians stop trying to reinvent the wheel. Follow me. It would be easier for them to invade the Republican party and establish positions, both elected and non-elected ones, in order to further their agenda. Further, they would be responsible for re-establishing the good name Republican. Perhaps, they are just a bit too elite? Too intellectual?
If, present Libertarians are waiting for the rest of the electorate to catch up to them, they will have to wait for history to beckon a need for them. Instead, they could initiate their usefullness, by recognzing the common ties that they and the Republican party DO have.
Sometimes, some people who have a better idea won't bring it to the market if they feel their customers are too dirty for them.
The short answer is: because Republicans aren't. The Republican platform sounds fine, for the most part, but unfortunately has absolutely nothing to do with the behavior of Republican candidates for president (or almost any other office). Since the Republicans refuse to pay any attention to their platform, other than at their conventions, I see no reason why libertarians should take it seriously either.
The idea of a "commons" is, unfortunately, while embedded in our archaeological (and probably genetic) past, apparently unworkable, or at least very dangerous in the current highly populated but ideationally primitive or biased era.
As the native americans learned too late, "common property" (or "common wealth" as in "Commonwealth of Pennsylvania" for example, etc.) ensures major disadvantage vs. those groups who believe in ownership of land. In the case of the term "commonwealth," it dates back to the time of what was called the "enclosure movement" in Europe and echoed somewhat in the west when ranchers began fencing their land as an antidote to over-grazing, a classic "tragedy of the commons."
I don't pretend to know the answers to this tension, however in the modern current world, "commons" is the foot in the door for government. While government claims they only husband the commons --- someone has to --- not only do they do a poor job because of a lack of adaquate financial motivation, but they actually control "commons" in a way equivalent to owning it outright.
In short, in the long run it turns out to be better if so-called commons are "owned" outright by some private entity that receives gain. Which forests are managed better -- government controlled forests, or Weyerhauser's forests. ANSWER: Weyerhauser's. Who channelized streams, causing incredible environmental damage. ANSWER: The Army Corps of Engineers. Who did a supposedly controlled burn near Los Alamos during high winds? ANSWER: The National Forest Service.
I'm not particularly fond of this situation, but it is what it is.
It seems commons only work in very small (by today's standards) groups. In larger groups, commons serve as an excuse and target for plunder by governments, or at best, inept bureaucratic management in perpetuity.
Regards -- and condolences to us both,
Journeyman
P.S. You interpreted "honest money" as I hoped. I indeed meant gold.
I have always been attracted to the libertarian ideals but have never had any interest in voting for any of their candidates because of the futility of it. Your idea is an excellent one.
I have watched many elections where they can hardly even get a republican to run because the electorate is so overwhelmingly democratic in this area. To splinter it further is a little silly. I do appreciate that the Libertarian party is needed to focus the issues but they could then move under the Republican banner to accomplish more of their goals.
I believe your model of America is basically correct. At the highest levels, America IS a fascist state. Although it is often advertised as a business-government "partnership", it is nothing of the sort. The corporations are in charge.
However, at a secondary level, the corporations request, allow, or perhaps permit the government structures to emit and experiment with all manner of socialist schemes. This allows corporations to either gain a persistent consumer base, at best, or perhaps to somehow absolve maintenance responsibilities for the lives they are enslaving. This setup is very much along the original Nazi model. The error the pure socialists (commies) made was to invert the relationship, forcing government control of business. This, as logic would dictate and as history has proven, is a non sequitur, as government is incompetent in conducting "business" in any long term sense.
The request for a "stronger" government to counterbalance the corporations is similar to the Teddy Roosevelt, trust-buster rhetoric at the turn of the century. Although not without merit, this approach contains the real danger of moving the entire system into top-to-bottom socialism, which, to say the least, is no improvement at all.
Since government is among the primary tools of the fascist corporate state. The ideal answer is less government, as this leaves the corporations with much less of a hammer with which to bludgeon the people.
The corporate state, on its own, is essentially a coward. It does not want to do its own dirty work. It much prefers to keep its hands lily-white, operating through proxies. It needs a strong government to point the guns, but not so strong a government that it threatens them, or, in a fit of incongruity, a government that actually enforces our constitutionally-guaranteed, individual rights, thereby empowering the very people for which the government was formed.
My only conclusion is to vote for less government and, by extension, weaker corporations. That means Libertarian, Natural, or maybe Constitution Party candidates, though the latter have a streak of theocracy running through them.
P.S. Isn't it interesting how the media tells us the only third parties of note are Buchanan and Nader? Also, keep in mind that if the public demands a "viable" third party, the corporations will either co-opt the most threatening one and run it aground (a la Reform Party) or invent or cultivate one under their indirect control. Sometimes, it sounds like Ralph is in this second category. Can you imagine the corporate interests raising up a candidate condemning corporate interests, while preaching even more government socialist control? They've done similar things before.
In fact, various Libertarian factions have tried taking over various Republican party chapters quite a few times. A group of California Libertarians had an organized plot for several years, headed originally, if I remember correctly, by Eric Garris and Justin Raimondo. It may yet be going on. As often as not, this didn't work -- although Ron Paul, who gave up his Republican House seat to run for President as a Libertarian, did rejoin the Republican party and got his House seat back.
The problem is at least three fold.
1. The Republican establishment doesn't want to be taken over and, usually controlling the purse strings and party establishment, squashes the attempt in short order.
2. There are few libertarians in relation to the number of Republicans, making a ballot-box putch to take over a chapter very difficult.
3. Even theoretically, libertarians only agree with about half of the usually ignored by Republicans Republican Platform. A friend once asked, "If Democrats are all heart and no brains and Republicans are all brains and no heart, where would libertarians stand." In a rare instance of "brilliant comeback on the spot," I somehow answered, "That's easy: A libertarian is the perfect balance between heart and brain." That is, libertarians believe you have an absolute right to spend BOTH your time AND your money anyway you wish -- free markets and strict respect for civil liberties.
In their washed-out spinned into the ground manner, democrats supposedly believe in civil liberties, but not so much free markets, while Republicans theoretically in free markets, but not so much in civil liberties. So libertarians often claim the Republicans and Democrats are each half right. From this perspective, you can see that theoretically at least, libertarians have as much in common with Democrats as they do with Republicans, which is to say, they agree about half of the time. Theoretically, at least.
If you believe voting will help, the clear choice is Harry Browne.
Does This Sound Familiar.?.==============================================================
Once upon a time, far far away, in a Southeast Asian village,
there was a small open air marketplace. Local farmers would
bring their harvested crops and handcrafted items there for
sale daily on their little cubicle tables and mats. Each had
over the years, earned enough to have a small truck. One was
painted Red. The other was painted Blue. They drove in from
the North. Where the rice paddies were located, their homes.
For years, these two farmers setup their two competing tables
for their bags of Thai Sweet Rice. Each usually brought about
50 bags of rice. And each posted his price on a little sign
atop his own stall's pile of rice bags.
As the day wore on, each farmer would glance over at the other
farmer's sign and it's dwindling pile of rice. And each would
adjust/re-write his own price to be a tiny bit lower than
the competitor's price. The prices fluctuated, mostly downward
until by the end of the day, each farmer had sold all of his
rice. At which time each closed up and went home in their trucks.
Then one day a funny thing happend. A newcomer came to the
marketplace, on a bicycle. No truck. And he proceeded to setup
his sales-mat nearby the other two rice merchants. He placed
only a single bag of his example Thai Sweet Rice upon his mat.
It was of identical quantity and quality as the other farmer's
50 bag stacks.
Then, to their amazement, this newcomer placed a sign upon his
otherwise empty mat: "Rice for Sale -- Lowest Price Guaranteed --
U-Pickup at My Warehouse Tonight".
And as an initial price, he'd glance at the other two farmer's
signs, then write his own price in big numerals, 10 Baht *lower*.
Curious shoppers, couldn't resist his low price and upon examining
his single rice bag's quality and taste, would happily place an
order with the newcomer for one or two bags, whatever they had
intended to purchase that day. Each customer received a "chit"
from the newcomer, guaranteeing availability, later that night,
at his nearby "warehouse" at an address just south of town.
As the day wore on, the two competitor farmer's kept re-pricing
thier own stacks of rice lower and lower. To try to lure the
customers back to their still stacked stalls. But they had
virtually no customers. Everyone was buying instead, from the
newcomer, and happy as larks walking home with their rice-chits.
For, nomatter how much lower the two farmer's marked down their
own bags of rice, the newcomer always re-priced his to be lowest.
Needless to say, at the end of the day, the two old time farmers
had sold none of their rice. Yet the newcomer had sold 100 bags
of his "example rice" and had alot of Baht to show for it. Then
the newcomer closed up shop and rode out of town on his bicycle
an hour before the other two farmers normally would close.
Relieved that this newcomer had departed, the hapless oldtimers
remained at their rice-stacked stalls hoping against hope that
a few more customers might come late to buy at-least some of their
piled-high leftover un-sold rice.
And fortunatly, a customer did showup.!. With a cute Yellow truck.
And this customer first went to one of the two farmers and looked
at his by-now rock-bottom re-priced sign. He then bought all of
that farmer's unsold (50) bags of rice. The farmer was delighted,
and even helped to load the bags onto the Yellow truck. Then that
farmer went home.
Next, the Yellow truck customer went to the remaining farmer's
stall and was pleaded-with to purchase all of his unsold bags
of rice too. And at an equal or sometimes even lower price. And
since this seemed fair and acceptable, the consumer proceeded to
purchase those 50 bags as well. And the farmer was delighted to
assist in loading them upon the Yellow truck. And went home.
The Yellow truck departed as well, but towards the South.
In the cool of the evening, one by one, the customers who'd
bought individual bags of "chit-rice" showed up at the warehouse
and were greeted pleasantly by the newcomer. Each presented his
chit and received promptly and courteously a full bag of rice
of the identical quality and quantity they had seen earlier as
his "example" bag in the marketplace. One hundred chit-buyers
each received their rice and happily went on their merry way.
A satisfied customer, spreads the news to others. And soon, the
newcomer had a regular clientel each day in the marketplace.
And each day, the same ritual ensued. The hapless competitor
farmers kept marking down their unsold rice and by the end of
each fruitless day, were always amazed and relieved to see the
miraculous arrival of the mysterious Yellow truck arrive to
purchase all their unsold bags.
As weeks progressed, the newcomer's business grew, and soon he
was selling 300 chit-bags of rice daily, at guaranteed lowest
prices. But the two competing farmers were not disturbed much
by this. Because, fortunately for them, each day the mysterious
Yellow truck buyer bought up all their unsold rice. And indeed,
even arranged for each farmer to bring 150 bags of rice each day
instead of their usual 50 bags each. Which they were delighted
to do, even if they only got a rock-bottom and ever-lower price.
After one year of this brinkmanship, one of the farmers told
the Yellow truck that he wouldn't be bringing anymore rice to
the marketplace. He just couldn't afford to grow and harvest it
any longer at such dismal prices. He would sell his rice farm and
move away to Bangkok. At a meager price too, as he no longer cared.
Upon hearing this, the Yellow truck buyer offered to buy his rice
farm from him. And the farmer agreed. And did so. But the Yellow
trucker knew nothing about rice farming. Instead he just let the
farm go fallow. Meanwhile he was able to get the remaining rice
farmer to bring a full 300 bags of rice daily, to makeup the short-
fall. Which he did. For another year.
But by the second year, that farmer too had found rice farming to
be uneconomical at such continued low prices. He would sell his
farm to the Yellow trucker as well. And at a meager price.
Now the Yellow trucker owned two wonderful, but fallow rice farms.
The next day, the newcomer arrived in town at the marketplace
and setup his usual stall mat. But today, his sign was different.
It simply said:
"Rice Workers Wanted -- Minimum Hourly Wage Guaranteed -- Apply here"
Several unemployed rice paddy workers immediately applied, and
soon the newcomer was bringing 300 bags of rice daily into the
marketplace, where he was the lone remaining rice seller.
And his new sign said:
"Highest Quality Thai Sweet Rice -- New Crop -- New Price"
"Buy now -- While Supplies Last"
==============================================================
ThaiGold@OperaMail.Com
===============================================================
Somewhere in the good book, there is a verse that says "All your gold and silver are dross". Yes, they will own ALL the gold (and silver, since it's market behaviour as been similar to that of gold) because it is important to them. I will try and find that verse again and see the context. I have to go to work now, flight to catch. Perhaps lady Leigh or anybody else can help with this.View
Yesterday's Discussion.
< I'm not defending Ontario. What I ask is, so what if Alberta gets the catbird seat, what will they do with it that's any
different from the might is right power stuff we've had for the last 10 000 years? I guess I'm really asking, can any nation
long endure that has a monopoly of something others need for their survival, if they insist on charging so much, everyone
has to be bankrupt to pay them?>
I say:
For decades, Ontario had a monopoly on the political power in Canada, and it used that power to allocate industry across the land.
Naturally, it favored allocations of industry to Ontario first, then second to Quebec (in order to appease the Separatist elements there).
All the while, the Western Provinces were treated like a "slave class" by the Ontario government. The Western provinces were deemed to be "resource provinces," their primary role to be the providers of cheap raw materials for Ontario or Quebec industries.
The main reason Alberta is still primarily an oil and gas province is NOT for lack of intellectual capital nor lack of raw materials needed for industry. Rather it is a result of the chronic Ontario monopolization of political power that starts with the electoral division of the entire country. Naturally, Ontario elects the most seats to government, even today when its population is now increasing at a much slower rate than the Western provinces. When will Ontario redesign the electoral division to reflect its diminishing representation/importance to Canada? Answer: Never, if Ottawa or Toronto have anything to do with it.
When auto firms from Detroit went looking to locate in Canada during the past century, they were encouraged to build only in Ontario. When European or Asian companies came looking to locate manufacturing facilites (TV's, stereos, chemicals, etc.) in Canada, Ontario politicians aimed them in the direction of Ontario first, Quebec second, British Columbia last. The Western provinces (excluding B.C.) had to fight Ontario for the few manufactured goods/hi tech industries located there. NEVER did Ottawa/Ontario strive to entice industry to locate in the Western Provinces; rather the Western Provinces struggled for what little industry they have.
Now finally, Alberta is in a position to reap a much deserved windfall for its depleting oil and gas resources, and the Ontario crowd is screaming, "Hey, let's share these resources equally, you should not reap most of the windfall, we should split it equally across the provinces."
And you say, "Hey, I don't want that type of inequality of wealth, I want an enlightened egalitarian distribution of revenues that benefits me as much as anybody in Alberta."
You offer all variety of intellectual rationalizations when the reality is that it boils down to your own self-interest, you do not want to pay for higher priced essentials such as gasoline, heating oil, etc. and I ask that you admit it. You do NOT live in Alberta, yet you wish to ensure that your comfy standard of living is not upset by the developing re-distribution of wealth taking place in Canada.
Well, guess what, after years of living off the cheap resources of the Western provinces and developing a much higher standard of living, Ontario now gets to experience how it feels to be a second banana in Canada...because that is where the province is headed, Alberta is becoming the new power center in Canada, the new source of surplus capital, vital ideas, and yes, finally, NON-oil and gas industries are beginning to locate there in abundance.
Alberta is taking over the leadership role in Canada, and Torontonians best get used to it.
IN conclusion, I will restate that it is amusing to see how entrenched elites (in Ontario) have been quite happy to exercise economic and political dominion over others for over a century, yet once they see their base of power and wealth eroding, all of a sudden they urge the creation of egalitarian measures (like the NEP) designed to preserve their long time hegemony.
You may suggest your ideas are based upon enlightened political philosophy, and I would suggest that they are based primarily upon self-interest. Nothing wrong with that fact, as long as you admit it, however, in this particular case, I am rooting for Alberta, NOT for Ontario.
First, I believe the correct term for describing the political system in America today is "Fascist Democracy."
I define fascism as "government controls everything." And of course democracy is two wolves and a sheep deciding what to have for dinner.
"Hence I do NOT believe the main issue of the election is the one that you (and all other Libertarians) see, namely the individual vs. government. That is because, since the government today is no more than a subsidiary of the corporations, then the main issue in the coming election is this: the individual vs. the corporation."
I agree with this. The government today acts on two levels: 1) an interventionist level to get citizens and corporations do move in the direction the government wants and 2) an enforcement level, enforcing what the corporations want when it benefits the government.
"What we really need today is NOT less government, rather we need the RIGHT government, and that would be a government that is responsive to the public's interest, NOT the corporations' interests."
This is disagree with. We need both. But since we already have an interventionist government, why would I want to elect MORE interventionist. You obviously do not believe that the US should live by the principles outlined in the Constitution.
By electing Libertarians, you take away the BOTH of the levels of government I described: interventionist and enforcement. What remains is a government that will UPHOLD the Constitution AND the rights of the individual against both the government and the oligarchs.
What I do not understand is how someone can think Nader would be good for America and at the same time believe that most of his ideas would not be implemented anyway. What's the use?
For JohnDoe, if you go to the UN web site "Our GLobal Neighborhood," www.cgg.ch.contents.htm, you will find the same language about "UN/corporate partnerships."
I believe the current historical struggle, like the church/monarchy of old, is the government/corporation (oligarch). It will all end very badly unless the citizens of the US take back their government. Unfortunately, I also do not think they are ready to do that.
I could go on but I have work to do. Until later, go gold!
If yesterday you went out and bought an ounce of gold, and today the price of gold went down, can you insist that the trade is reversible?
If the currency you gave for that ounce of gold, wildly inflates today, thus dramatically reducing its purchasing power, will you entertain a reversal of that trade?
Of course not, that is the way the world works. Parties, freely entering into an agreement, and a transaction, are bound to that agreement, and all the ramifications that flow from that.
However, when one party is much stronger than the other, AND has a mind to, (say by using a gun) they can compel a unilateral change in the rules, and force another result. That is how the world works. Agreements are binding, except in the face of power.
**FARFEL 39647
Two parties, Alberta, and Canada, freely entered an agreement as to what each would give and receive, in order that Alberta would join the larger union. The terms were clear.
In the early 70's, when Canada decided that Alberta had more assets than they needed, (read assets that Canada wanted) they came in and effectively stole the oil resources of Alberta. Similarly, the Crowsnest pass agreement was a condition of Albertas entry into the larger union. The Feds decided it was no longer convenient to honor that agreement either. Among others, Alberta now has 2 very legitimate grievances.
There is no such thing as a free market if any powerful players exist. Powerful players will always have a disportionate influence. Moral questions are not an issue. It is an issue of power.
In addition, certainly since WW2, Albertans (and to at least some extent, Ontrians) have had their substance sucked away through various ploys such as "equalization payments".
I have long thought it much more likely that Alberta would separate from Canada than Quebec. They have more legitimate grievances.
However, as DAVE C said in an earlier post; "They got away with it once, and they think they can get away with it again".
If you think that Alberta will get into the catbird seat simply by playing by the current rules of the game, as set up by Albertas opponents in this particular game, IMHO you are badly mistaken.
Alberta, in my mind, has only one possible course of successful action, and since they have little or no debt, they can probably play this particular game longer than the other players.
Alberta must quietly cease to issue any further licenses to explore, lift, and/or transport hydrocarbons. That is totally within their power to do, and while this action would probably be damaging in the short run, it is unlikely to be very damaging to either party in the long run, and might even be profitable.
Saddam baby has very astutely, and I think successfully, attacked the US dollar in the same basic way. He has indicated that he will not sell for US dollars. Period. He will shut down the pumps before selling for dollars. He will even sell for the floundering Euro, but not dollars. (and I have also long thought that the Euro was destined for failure) The feeling seems to be spreading in the middle east. What will happen to the US dollar if it loses its place as the de facto medium of exchange in the oilpatch? What percentage of world trade is represented by oil?
You can speak of this internationally. A specific line on a map is freely agreed to in return for peace, and other consideration. (One of which is absolute governance) While people just across the border undoubtedly have more in common with each other than they do with people at the other end of their own country, the agreement reached was that, on either side of this artificial line, each side will have absolute governance, and all the advantages and disadvantages that flowed therefrom. Break one clause, and the whole agreement is broken. Only raw power, or a new agreement which considers the value of what each side has to offer and needs, will alter the rules of this game. Value for value.
I have seen posts that bemoaned the fact that the US has gone from 600plus CAPITAL ships to 300 decks of all kinds. True or not, the balance of power is always shifting, and with its debt load, the US cannot stay at the level it has been accustomed to in the past.
In the communist world, where theoretically everything is owned by everybody, the theoretical sharing of resources might be possible. In our property owning western society, when the Alberta government conditionally sells the right to its interest in, for example, oil in the ground, Albertans no longer have the absolute right to that oil. It is in private hands. (still conditionally) One of the conditions is that the province can say, within limits, we do not wish this oil to be sold to the following list of parties, which theoretically may include up to 100% of the world populace.
**ORO 39641
Not that I basically disagree with it, but that is a pretty wide statement, and one that I would feel to be very debatable. I personally do not wish to enter a debate on it, because I feel the debate would quickly contain, or center on what I feel are moral arguments that are largely a whine that "this is not fair" and which tend to reflect an attitude that "what is yours is mine, and what is mine is my own".
It is my opinion that such whines are often used by the stronger party to justify the use of force to take what they want. On the other hand I am pragmatic enough to have long expected the US to use such arguments to justify the invasion of Canada, either economically, or militarily. Until recently I thought the issue would be fresh water. I note too, that the US is not offering to share its water resources with areas that have considerably less. This is not meant to be in any way insulting to any one individual. It is simply the way the world is.
At this point, such an invasion does not make sense when considering political, moral and economic factors, providing Canada freely exchanges its resources for pretty, colored T Tissue. It is a point that the US very shrewdly negotiated into NAFTA. I think most Canadians are aware of this. (or at least, should be)
If Canada should suddenly decide that these resources are needed for home consumption, and none were available for sale, what do you think would happen? I can predict the results fairly definitively. So can you.
**Goldfan 39640
No, according to the original agreement, the resources belong to the province, who can do pretty much what they want with them. If you insist on reopening the original agreement by saying this clause does not apply, then all parts of it, including the part about Alberta being part of Canada, are also open for discussion, where ever that may lead. That is not to say that there was not a largely implied assumption that we would look after "family" first, at the original signing.
** 39658
After composing this in my one fingered way, I notice your new post, before I posted this, and wish to insert;
I lived in the east during the 60's and 70's, and have heard all the propaganda about paying Alberta high prices for oil. I have studied the matter, and traveled a good deal to and from the west, but I was never able to find any evidence that supported this stance. That was a story that was making the rounds in the East, particularly the propaganda before Trudeau went in to steal Albertas oil. If you have any concrete evidence that does not concern the "pipeline/security of eastern supply" issue, I would like to know of it. I might join your side of that debate.
Regarding your last paragraph about your neighbours. In the final analysis; In the real down and dirty, this is what it is all about. Are we our brothers keeper, to what extent, and in what circumstances?
There are a lot of good people out there, and I suspect a far higher than normal percentage on this forum than in the general population. Such a thought does you credit.
I suspect that we may debate, or even argue, perhaps loudly, over whether we are going over, or around, or through this particular mountain, but I would think, particularly among the long time posters, that we post to share; to advance the common USAG community in its ability to cope with (potentially disastrous) coming events and change. Personally, it is a lot easier for me to lurk or discuss with people I know by phone. My only possible reasons for posting are to bring up a train of thought that I might want others to comment on, and to share/polish ideas. In the end, that is how I see our dialog, as being non confrontational.
**Peter Asher
36950 Loved it, will email on another subject.
39632-Regarding; This is not the gold standard of your fathers, savings bonds, and wheatfield, grinder, and oven;
I am in a constant state of wonder at humanity, and the blinders we all wear. Not that I don't do the same thing, but I can't see mine.
For instance it bends the mind that such intelligent people as one finds on this forum, continue to somehow believe that the world will go on much as it has if fiat hits the wall. They still mentally count it as profit in dollars if gold goes up in dollars. But I expect the reality to be profit in "golds" when the game is done. It is why I hope gold stays down in dollar terms for years to come. I want more golds.
I have stated that I own insurance in the form of options, but do not really expect to be able to convert it into physical when the time comes. To many are not thinking beyond; "fiat hits the wall and gold goes up and I am rich". If I cannot convert to physical, guess what, I intend to buy "wheatfields, mills, and bakeries". (possibly literally)
I have tried to get thinking started along these lines started by making some posts sort of "what if" arguments, but no go. I hope your way is successful.
In short I suppose I agree with WOLAVKA in 39662
And now I see I have ignored my bed again. NITE ALL
http://www.rense.com/general4/polls.htmDubya Now With Commanding
Lead Over Gore In Polls
CNN/USA Today/Gallup Presidential Preference
10-22-00
�
�
Bush 50%
Gore 40%
Buchanan 0%
Nader 4%
�
ABC News Tracking
�
Bush 48%
Gore 43%
Buchanan 1%
Nader 3%
�
Voter.com Battleground 2000 Daily
�
Bush 44%
Gore 40%
Buchanan 1%
Nader 4%
�
Portrait of America Tracking
�
Bush 46%
Gore 41%
Buchanan 1%
Nader 4%
�
�
Reuters/MSNBC/Zogby Daily Tracking
�
Bush 45%
Gore 44%
Buchanan 0%
Nader 4%
�
NewsWeek's Weekly (Oct. 12-13)
�
Bush 44%
Gore 44%
Put in mathematical terms, this boils down to: D=G2, where D is the amount of Doing (in energy units) and is equal to G, the amount of getting, squared. It shows that any amount of doing results in an exponential amount of getting. If you're doing all that, you might as well be doing what you want.
Absolutely doing what you want in all circumstances will also make others fear you, because they know that when it comes right down to it, you don't give a shit. And not giving a shit is a big mojo.
not giving a shit is made up of 3 parts.
1. not being afraid of what other people think;
2. not caring about their feelings;
3. keeping your eye on the prize.
Focus;
Saddam Hussein is an attorney. He has no intention of allowing failure to occur. Anyone have any doubts should know that when he showed up for his bar exam he kept a pistol within full view.
``The central bank would be faced with a very difficult problem because it cannot lower interest rates when inflation, even oil-related inflation, is rising,'' Sinai said. ``The Fed would have to wait until there is a deflationary effect coming from a weaker economy before it takes a shot at lowering rates.''
Is this a characteristic of stagflation? Can't lower interest rates (dollar fall-out and anti-inflation fighting)
and can't raise them (murder economy)?
#2 We see reports from the EIA and API that oil inventories
are XX percent lower than last year. Also heating oil and other distillates are YY percent lower than last year. I posted a link some time ago from the EIA called The Chronology Of Oil 1970-1999 which, in their view suggested overstocking of oil and such in 1999 was due to Y2K fears.
Therefore my question is, are todays levels low (as indicated by the percentage lower than last year) in comparision to 1999 or are they actually low in comparision
to say 1998,1997,1996 etc.?
#3 We see and hear alot of 'offical' selling of gold. We don't hear anything on the buy side. We speculate who is on the buy side. The selling, selling, selling and the overhang of 'officaldom' is what has brought us to our current situation; a low gold price and negative sentiment.
We understand that the fiat kings want fiat to look strong and gold weak. We are pretty much certain that they is a co-operative amongst central bankers to maintain this initiative. So ...try this one on. What if Central Bank A sells (and actively 'announces' this), Central Bank B quietly buys. Central Bank C vocally sells to quiet CB D.
E to F. Then the merry-go-round, B to C, D to A, etc., etc.
The individual quantities of gold do not have to change much but the plot of SELL, SELL, SELL, buy, buy, buy serves its purpose. Too far a left field thought?
This euro,we must find a way to discredit it.(USA)
This reserved currrency/trade settlement functions will force the $ to a "HI death". The higher it goes, the crazier it becomes as all scramble to come to terms with it.
Dollar for Oil, Dollar as Reserve: Couple Clarifying Questions -- Oro? anyone?
Forgetful I am at 4 AM, or maybe a good refresher/intro for newbies...
OK, oil is priced and maybe paid for in dollars. That creates dollar demand. But if oil producers dump dollars on the back end in greater quantity, it attenuates the effect of initial demand, right?
Anyone know what SA, ME, OPEC spend their money on (Lockheed, Bechtel, Mercedes, Rolex?), or what dollar quantities they save it in (in Chase, Citi, etc. -- didn't that lead to 3rd world debt crisis awhile back? and how did they wiggle out of that one?) I know Saudi Arabia has not had the surpluses (starting again?) in recent years, even falling into debt(?), but their role is pivotal once more, I would expect.
RESERVES: Dollar as reserve would be affected by changes in those levels. Have they just been piling up faster than anyone can spend 'em, or have European exporters been taking their profits off the table and spending them down? It's hard to imagine the Euro ECB nations upping their dollar reserves if they have any expectation of displacing the King as world's reserve.
No answer here, but it keeps coming back to "Do we know who these guys are?" The old de Gaulle true believers in gold, or a new generation who are totally embarrassed by the "barbarous relic"?
Or something in between, clever (cynical?) organization (chess?) players who see what the dollar has gotten away with for 50+ years and want a piece of the action, seeing dollar's past or eventual mis-steps as an opportunity to at least take back their own territory from foreign "occupation" if not "conquer" the world with their own fiat.
Fiat is potentially so much more "profitable" to an elite than hard money, they'd be totally out of their league not to try it, and all they have to do is "outrun you, not the bear" to have a shot at it. Using gold as a convincing "shadow on the wall" to claim legitimacy for their fiat, as well as a fallback Plan B in the direst circumstance. (Although seems to me their bullion is not much more percentage-wise than US's. FOA mentioned some legal encumbrance US needs to watch out for, that perhaps I need reviewed...)
Getting umpteen countries together to claim some of that advantage (as Mundell probably helped convince them to do) must be a monumental task. Especially without any "smoking white papers" being leaked that detail exactly that strategy. A lot of loud whispering had to go on (and still does)...?
Arafat's drive fueled by leverage of oil interests?
Hi All, I'm back from my stint and non-participatory pergatory wherein I assumed the persona of Bascom Toadvine due to inaccessibility of my USAgold password. Thank-you all for your indulgence. I am now compelled to utter this between the lines (between the buttons) query into recent events in the Mid-East.
I was struck by the sight of Arafat surrounded by a significant showing of ME oil ministers and his newfound belligerance. Perhaps he is playing the oil trump (or are they playing him?) Was this a dream? Where does a player like Arafat get the testicular fortitude to say "go to hell"
to Barak? Is it Barak's tentative leadership position that gives Arafat this audacity...or is it something more? Perhaps the oil ministers are applying pressure to the western financial wizardry (and I use the term loosely...sorry Gandalf) in more ways than just oil pricing. Perhaps they feel they can get anything they want at this point and are using the Palestinian state issue and Jerusalem as capital to see just how much power they can really wield without the focus on the oil markets. Is this a move called "check" on the international political chessboard? What options do the western powers have now to counter this bold move? If the West caves on this issue does it mean we have toppled our King in capitulation? What will be the next move of the Oil Ministry? Having won the day and lost the board, how will their power next be demonstrated? Will there be any stopping them? Do we indeed have sufficient capacity to recover in 2-3 years from this power play of higher oil prices by tapping the Athabasca reservoir and consolidating the NAFTA battle lines? Where the rubber meets the road is in the fiat exchange rates.
It seems to me that the BIS stands in very good position to profit quite handsomely in fees from the management of the Swiss and Euro-zone bullion transfers. Could the move to buyout the private shareholders who have property but not voting rights be a move to cut-out investment partners who have no ability to defend themselves with vote (minority holders though they are) before the profits show on the books? Unbelievably, the BIS books show a lower amount of bullion on hand compared to the previous year as of the time the valuation studies were conducted. Will the private shareholders take their case to the Hague? Do they have any recourse at all? Perhaps not.
But history repeats itself . ME will not have peace according to some, until the last jew is in New York or the Mediterranean. Sad sick world where hitler repeats himself.
In a scurrilous article in New Yorker magazine (July 7, 2000: Gold People: Will They Ever Be Rich
Again?), author James Collins doesn't think so.
"Let's say that for some reason you decided back in 1980 that you wanted to lose money on your
investments over the next 20 years. Succeeding in this would have been very difficult to do as it
turns out.... There was, however, one investment that would have lost your money, causing not only
financial distress but also shame and humiliation. That investment was gold."
Terrific. Reminding the reader that gold lost its luster as an investment, never matching those highs
of 1980, is not the kind of investigative reporting that wins Pulitzer Prizes. The market realities are
dismal enough for the gold investor. We don't need Collins, a former senior business editor at
Time magazine, using distortions and/or deliberately slanted figures to make it appear worse.
Collins: "... On January 21, 1980, the price of gold on the New York Comex was $825.50. Today
its price is about $280 per ounce... . In other words the value of an ounce of gold has fallen about
seventy per cent."
Blumert: This is not unlike the fellow in a balloon who is lost. Spotting a farmer working below, our
wayward balloonist shouts down: "Sir, I'm lost. Where am I?" The farmer, with clear voice,
responds, "You're in a balloon."
The information may be correct but of no value. The likelihood of an investor buying gold, one
time only, on January 21, 1980, is sixty-eight million to one. (Ok, I made this number up, but it
seems about right).
Why not arrange for our mythical gold investor to buy on January 21, 1976, when the yellow metal
was $124 per ounce? In the year 2000 he would have been ahead 240 per cent. Or, pick any other
year that helps make your point.
When he describes the gold investor as suffering "shame and humiliation," it's evident Collins has
constructed a hit piece, not a serious article.
Rather than deriding the gold investor, Collins would do better to provide his reader with an
understanding of those critical events twenty years earlier, and their impact.
The winter of 1979-80 was not a good one for super-powers. While Soviet troops were being
drawn and quartered in the mountains of Afghanistan, the daily parade of blindfolded embassy
hostages by the Iranians provided the best evidence of a futile US foreign policy.
Back in the US of A, interest rates were approaching 20% and double-digit inflation was plaguing
consumers and terrorizing politicians. The Dow Jones Industrial Average had failed several times to
reach the magical level of 1000 and was languishing at about 800. Investor confidence was at low
ebb.
From November 1, 1979, through January 21, 1980, reflecting the prevailing malaise, the price of
gold soared from $372 per ounce to $825. In less than ninety days the "gold rush" made the front
pages of newspapers around the world.
For Americans, holding gold was illegal from 1933 to 1974. In 1974 all restrictions on gold
ownership were lifted, and it was amazing how quickly an efficient American gold market
developed. To a large extent, brand new companies provided the consumer with quality products at
low premium with instant liquidity. Gold sales reached fevered levels as the yellow metal filled its
historic role as a "fever thermometer" reflecting the society's political and economic ills.
From its high of January 21, 1980, the gold price headed lower, and for the next two decades
ranged between $250 and $350 an ounce on average. The rallies were infrequent. What happened?
One dark view believes there are conspiratorial forces working against gold. That the king doesn't
like gold, never has, never will. That gold reveals truth, and that kings, along with prime ministers
and presidents, can't handle too much of that. The evidence of a war on gold is very compelling,
but that is a subject for another time.
Some credit former Federal Reserve Chairman Paul Volker's monetary policy with de-emphasizing
gold's role. Baloney. That's as arrogant as the Democrats and Republicans taking credit for the
economic boom of the past decade. They are irrelevant.
The computer revolution is a pure American offspring. It has provided the boom along with the
unprecedented strength of the US dollar against all currencies AND gold. As long as the dollar
retains this dominant position, gold will remain lackluster.
Back to Collins, his relentless attack on the gold investor, and his distortions.
Collins: "In 1980, the Dow Jones Industrial Average was at 800. Today, it is around ten thousand
five hundred."
Blumert: It's one thing to look at averages, another to speak of individual investments. Many of the
companies that flourished in 1980 no longer exist.
I won't dwell upon some of the devastating losses we have seen recently on the NASDAQ. Stocks
that were one hundred seventy dollars per share in March 2000, are four dollars today. How many
stock certificates printed in the last twenty years are worth nothing, zilch, zero, bupkis? I imagine
they provide enough "shame and humiliation" to go around.
Collins: "Bonds bought in 1980 would have soared in value as interest rates came down."
Blumert: The economist, Dr. Franz Pick, once defined bonds as "certificates of guaranteed
confiscation." I recall a holder of certain junk bonds who ultimately used them as wallpaper in his
den.
Collins: "Paintings... UP... Comic books... .UP... Snuff boxes, stamps, coins, manuscripts,
majolica, it seems that no matter what you bought in 1980 your investment would have increased in
value by the year 2000... "
Blumert: Is that so? As a gold dealer who also has handled numismatics for forty years, I can attest,
with absolute certainty, that collector coin prices have never come close to matching 1980 levels.
My stamp dealer friends say it is pretty much the same in their world, and I would warrant comic
books, toys, and manuscripts are similarly checkered in their performance.
Collins: "In the 1980s the one hundred and eighty-five hundred thousand-dollar home is nine
hundred thousand in the year 2000."
Blumert: Real estate is the king of all investments, but bitterly disappointing to some. REITs (real
estate investment trusts) left some investors nothing but lawsuits, and even when market values
soar, many realize that finding a qualified buyer is not always an easy matter.
The Collins piece disintegrates into a narrative on the life and times of "goldbug" Michael Levinson.
It's the sorry saga of the New York City boy, educated at Harvard, who becomes interested in
gold, and makes a killing selling gold mining shares.
As the price of gold tumbles, then stagnates, Levinson loses his money, and is now the tragic
figure, broke, a pariah to his customers but clinging to a belief system that is obsolete and
irrelevant.
Actually, Levinson doesn't even qualify for the "goldbug" fraternity. Gold dealer/brokers, as
professionals, do not have parity with the true "goldbug". Which now brings us to the real
question. Why does Collins choose to do his article on gold at this time? The commodity is
certainly not in the news, and could never earn any space in a current issue of Time magazine. The
characters, would, at best, be "quaint" to the New Yorker readership.
I've got the answer. What's bugging Collins is that these people that he marginalizes are in fact a
"cut above" and principled.
I have dealt with gold investors for over forty years. Their checks are always good; they honor
every commitment, stay informed on current issues, and have a profound understanding of history.
They provide for their families, and they don't go broke. I can assure you that many, many of them
have done very well with their gold investments.
Our present culture of totalitarian liberalism is hostile to any criticism of the regime. Whenever a
group of people like the "goldbugs" rejects a key element of the modern state, such as managed
"funny" money, it's no surprise that the senior editors from Time magazine and the New Yorker
find the need to subject them to ridicule.
More likely von Braun reading FOA. Our friend IS remarkably consistent with his typing bloops. (I suspect he had a secretary most of his business days.) He's probably not an editor at The New Yorker.
@Farfel et al on the matter of Alberta and Ontario
To the greater extent these arguments seem to personalize political entities, territorial entities and one should always endeavour keep a more dispassionate position when discussing the subject in terms of value judgements suggesting a "good guy, bad guy" approach. Ontario's position in the great scheme of things economic has been a function of geography, demographics and history.
Geography: Even as an interior area of the country, the Great Lakes has been pivotal to establish numerous international ports from Lake Ontario to Thunder Bay. The raw materials are both received and shipped from such ports, and, of course, this activity evolved Ontario into THE industrial heartland of the country. That Ontario is also a centre of primary industries from the agricultural sector, mining and forestry are also an important factors.
The political centre of the country quite naturally followed from this...
History: immigration is the glue that cements the whole in Canada. Ontario has overwhelmingly benefited from the influx of peoples over the years - and now receives some 250,000 plus immigrants per year - far more settle in Ontario than emmigrate elsewhere in Canada. The reasons are quite simple: opportunity.
This process has been a passive one with only minor impetus from the political side to favour Ontario over the other provinces. The arrangement with the auto industry and the US is one example. The resource grab of oil by Ontario is a specious simplification that is overshadowed by the NAFTA Agreement. The percieved economic benefits and political control over the rest of Canada are natural outcome of this geography and history.
On the political side: we are just entering a national election campaign. The two main combatants are the Liberals, presently in power, and the Alliance Party of Canada. Although it is not said (too loudly as of yet) the latter is quite right wing and has an agenda of "Americanization" of the country. There are some who fear this (I am one); others think this inevitable, even to the point that it could lead to a political union. I am mystified by this attitude that so many would treat this so lightly. One wonders if an American would be as dispassionate if the situation was reversed.
Got me a copy of Oil God and Gold by Anthony Cave Brown
One of the many interesting points in this saga of Aramco and the house of Saud is that of dual gold prices.
1940-1946
Dispute over royalty in gold pounds (sovereigns, about 1/4 oz each) which was 1/20 oz per ton oil, as per the original concession, that being the payment to the crown. The Americans (Aramco) insisted on paying the official rate of $35 per ounce. The Saudis want the Jidda rate of $70/oz, which was the post war non-central bank free market rate of 1947.
The concession was to expire in 1993.
The compromise of $51 + a package of "goodies" was accepted by both the US side, Aramco (Exxon 30% Mobil 10% SOCal 30%and Texaco 10%) and the State Department (who had a legation to the negotiations to deal with payments and strategic issues) and Ibn Saud, who was the Saudi side, represented by Crown Prince Saud.
Goodies included a 357 mile rail line and port facillities, as well as an airport (from the previous round of "goodwill" being purchased).
This dual exchange rate lasted from 1947 till
The fear expressed by the Aramco consortium during WWII was of Saudi moves towards the Sterling for additional monetary support, which the government constantly sought because of its constantly expanding leakage of funds throughout the court and later through its bureaucracy. Britain had US assistance funds from lend lease that could have been used to buy the Saudi government, who would then either transfer the concessions to an English firm, or Aramco would be forced to move to British jurisdiction. Obviously not where they wanted to be. The US won Saudi to its side through nearly $100 mil in fundings throughout the war, and made it part of the Dollar block rather than the Sterling block. This was the matter of most importance after Bretton Woods, since oil would be the most heavilly traded item of international trade for decades to come, and whomever had oil pricing on their side would increase substantially the likelyhood of becoming the currency of global trade, and thus enjoy a subsidy that would enrich the people, businesses and the government of the reserve currency at no direct cost and negligible investment.
Another dispute came with the Saudi demand that the royalty be paid twice: on oil as it comes out of the ground and as it leaves the pipeline. That was eventually settled with a lump sum payment and a new royalty.
In 1956, following the Egyptian seisure of the Suez canal the first official threat was posed to nationalize Aramco. This following a prior threat by the initially successful attempt by Onassis to obtain all the transport rights to Aramco oil on exclusive contract in 1954 through a bribery scheme that got to the king's foremost advisors. Next in line was the 1960 erection of OPEC, followed closely by the breaching of the Aramco line by the demand for executive decision participation by Saudi's Yamani. By 1967, all major oil producers but for Saudi and Gulf emirates had taken over the foreign oil companies.
In the gold-oil deals, still ongoing through the 60s but being paid in dollars up front, gold being secured indirectly, the Qatari Emir was surprised to find his agent having squandered $90 mil on copper futures instead of obtaining the gold he was supposed to purchase.
It should be noted that the Saud familly had seen the oil as its own private property, as well they saw themselves as protectors of the tribesmen and the holy places. The royalties on oil are passed on through generations and are not necessarilly viewed as "state" property, owned by "the people" much less the "Arab Nation". Thus funds were stashed everywhere around the globe both in specie and as investments in financial media by private parties of the royal familly and by the various merchants and mercenary courtiers and bureaucrats.
Another point of interest is the Saudi view of the relationship with the US as being preferable to the relationships with much hated former colonial powers Britain and France. Aramco was the filter through which Saudi grew to view the US. As a business partner, and a damn good one, but for the problem of the perrenial US financial overextension.
http://go-here.to/secret_historyThe "dual gold exchange rate", as you call it, began in 1939 when WWII opened and the London gold market closed. Aramco was no longer able to obtain gold for it royalty payments to King Saud. On top of that, gold prices began to diverge in various exchanges around the world on account of supply distortions, all the while the official US price continued to be $35. And while it is true gold was $70 in Jidda, there is some doubt that there was enough liquidity (that is dollars) in Jidda to facilitate many gold sales. See the above link for documents Brown used in his book.
In reverse order:
Joureyman msg # 39683,
Now I didn't know that it was being tried already in CA. I should have guessed that mine was not a new idea Thanks for clearing that up. You made some other points, I would like to address. One was that it doesn't work. Well here in New Hampshire it is having partial success. In fact, one of my two state reps finally realized she would never get elected unless she changed parties. She did and she was elected as a Republican. She is no more a Republican than I am a Democrat (or a fascist..eh Oro?) Anyway she and others have used this ploy to gain seats and we are getting dangerously close to losing our LIVE FREE or DIE attitude. It is getting more and more like Massachusetts every year. And get this, people who are losing their welfare status in MA are moving up here in droves to gain the same status up here.
Secondly, you point out that there are too few Libertarians to Republicans to make a difference. Well that situation exists NOW, even with a third party. The only consolation I see in the Libertarians remaining seperate is that for now, nothing can be blamed on them and as history approaches THEM, their usefuless can become clear. But there is a danger in waiting for history to come calling. The house could be burned to the ground and while some would dare say that that is exactly what may be needed, I would say I agree only if we did not run the risk of being carved up by outside nations before our Libertarian friends had a chance to do their surgery.
Nickel62 msg # 39684
Thanks we do agree.
Hugh Akston msg # 39679
I may missed you before this. Glad to talk with you. I still think the point I make above to Journeyman is valid. Do we run the risk of total deterioration? We are getting very close to that now and with 4-8 years of Gore under our belt, Libertarians may have nothing left to help save. I would treat the situation the same as having a young child. Work in a language he or she understands, hold their hand when crossing the street etc. There are too many dangers to not take the careful approach right now. That is just my opinion.
In reverse order:
Joureyman msg # 39683,
Now I didn't know that it was being tried already in CA. I should have guessed that mine was not a new idea Thanks for clearing that up. You made some other points, I would like to address. One was that it doesn't work. Well here in New Hampshire it is having partial success. In fact, one of my two state reps finally realized she would never get elected unless she changed parties. She did and she was elected as a Republican. She is no more a Republican than I am a Democrat (or a fascist..eh Oro?) Anyway she and others have used this ploy to gain seats and we are getting dangerously close to losing our LIVE FREE or DIE attitude. It is getting more and more like Massachusetts every year. And get this, people who are losing their welfare status in MA are moving up here in droves to gain the same status up here.
Secondly, you point out that there are too few Libertarians to Republicans to make a difference. Well that situation exists NOW, even with a third party. The only consolation I see in the Libertarians remaining seperate is that for now, nothing can be blamed on them and as history approaches THEM, their usefuless can become clear. But there is a danger in waiting for history to come calling. The house could be burned to the ground and while some would dare say that that is exactly what may be needed, I would say I agree only if we did not run the risk of being carved up by outside nations before our Libertarian friends had a chance to do their surgery.
Nickel62 msg # 39684
Thanks we do agree.
Hugh Akston msg # 39679
I may missed you before this. Glad to talk with you. I still think the point I make above to Journeyman is valid. Do we run the risk of total deterioration? We are getting very close to that now and with 4-8 years of Gore under our belt, Libertarians may have nothing left to help save. I would treat the situation the same as having a young child. Work in a language he or she understands, hold their hand when crossing the street etc. There are too many dangers to not take the careful approach right now. That is just my opinion.
Al Fulchino (10/23/00; 11:13:05MT - usagold.com msg#: 39716)
Are the Libertarians waiting for history to come to them?
From the web site:
The number of Libertarians serving in public office around the USA has passed the 300 mark for the first time in party history, LP Political Director Ron Crickenberger has announced.
As of mid-September, the party had 313 members holding office at the state, county, or local level -- an increase of almost two dozen officeholders over the past few months.
The surge in officeholders came from several special elections, from a spate of local appointments, and from officeholders discovered by the California LP's "Operation Breakthrough," said Crickenberger.
Of the 313 officeholders, about 170 were elected and the remainder were appointed, said Crickenberger.
By comparison, the Reform Party has seven elected officeholders, the Green Party has 72, the Constitution Party has one, and the Natural Law Party has zero.
They are also running 1500-2000 candidates in November elections, including a majority of the house and senate races.
I don't think they are waiting for the country to come to them. Let's just hope the country doesn't get too lost first.
Headlines in Ottawa paper refer to '...earliest call for a federal election in 90 years...'.
The Prime Minister has called an election for late November (27th I believe). Varying editorials speculate on the timing of the call; current government in power less than 3 and a half years.
So now a guy has got to think; why is he calling an election so soon? Very obvious to me; first, logically he believes his chances of winning now are much greater than at the end of the 4th year, June of 2001. So now why does he think that? What does he fear on the horizon? It's very crystal clear to me.
1. The Canadian economy has peaked.
2. The U.S. elections are a week and a half away, is he going to wait until next summer? Not a chance, what will happen to the US economy, policy, dollar? Canada is joined at the hip to our American friends, which way is the PM leaning?
3. He fears the ME situation. Wait and see, not a chance.
4. He fears the oil situation. Call an election next spring after this winter? No way.
Our Canadian Prime Minister fears a collapse of the economy,
a falling USD, war in the Middle East and a oil problem/crises this winter. Are my speculations correct?
He's taking alot of heat for calling it early. The risk of an early call outweigh the risk of waiting to see in his eyes.
Hard to ignore isn't it? Trail Guide so consistently uses "brought" in place of "bought," I expect he does it deliberately. Why? It is a curiosity.
Where does Prof. Von Braun post? The name is familiar to me, and I associate it with gold market commentary, but I've forgotten where I've read Von Braun. Also, could it be that "Von Braun" is another alias? Wasn't "Von Braun" a German rocket scientist the Americans co-opted after WWII?
James Turk explores the "Invisible Crash" at the Gilded Opinion
http://www.usagold.com/gildedopinion/TurkFedReserve.htmlIn his latest commentary, "The Federal Reserve's Worst Nightmare", our friend James Turk discusses the stock bubble and the dollar bubble, and gives weight to the conclusion that stock prices may continue upward while losing real value.
Click the link given above to see the commentary from which these following excerpts were drawn:
--------------------------
"...the Federal Reserve is contending with two different bubbles -- one that has inflated stock prices and one that has inflated the Dollar. In both cases, values are well beyond prudent levels, but the Dollar is the biggest bubble by far. . . . . .the market is bigger than the Federal Reserve and the US government.... The Fed cannot force people to hold Dollars if people want to dump those Dollars, which I believe they (mainly foreign holders) will do in mass as the Dollar bubble pops. Those Dollars will be spent everywhere imaginable because popping the Dollar bubble will cause a flight from currency, just like occurred in Weimar Germany.
+
Inevitably much of that money will end up in the stock market on the premise that good stocks will always represent a refuge from bad money. So the Dow Industrials will rise in nominal Dollar terms, but not in purchasing power terms, continuing the trend that began in July 1999..."
http://www.bep.treas.gov/figures.htmI hadn't checked this yet this year. Look how they boomed on 100s and 20s last year, for y2k withdrawals. They're making up for the ratty-looking 1's this year, aren't they?
Worried? Sure they were. It would have gone down as one of the colossal blunders in financial history to have the world hooked on your paper money, and then not to print enough of it to meet an unusual demand. (b-e-e-e-e-g smile)
I should find the production figure link, but it's more an impish observation.
Notice the absence of the new "collectible" state quarters from circulation? Collectible tokens is about all they are -- trying to get us to buy them like stamp collectors buying mint stamps from USPS, to paste in albums -- pure seignorage-times-10 profit for Treasury.
But if they create a shortage in use down the road, it may tug at the fiat money supply at the ground-level users' view. One loose thread...
We now have a "national" drunk driving law courtesy of the outgoing administration. Look, I am as much against drunk driving as anybody but why do we need the federal government to legislate this!!!! This is an issue for the 50 states to deal with.
This is another reason why I am becoming more a Libertarian day by day.
I have conversed with Mr. Von Braun and while I have was impressed the two times we exchanged emails I do not think he is on the same level of FOA. These subjects are so difficult to convey however, you can never really tell when someone is giving you the simple version of the problem because the (correctly) perceive that you can only absorb so much. I would tend to doubt it though. He posts on the Gold-Eagle forum,and occassionally on Le Metropole Cafe.
In your 39696 today
"oil is priced and [IS] paid for in dollars. That creates dollar demand. But if oil producers dump dollars on the back end in greater quantity, it attenuates the effect of initial demand, right?"
ORO: Dynamics dominate this. So long as dollar prices of oil are rising more quickly than the flow of dollars into oil exporter's hands, there is a rise in the dollar:
Say the dollar POO rises by 100% over 6 months from $15 to $30, and 40 mil bl/day are exported. If the importers have not changed their purchasing volumes (actually they have increased them, but lets not deal with that now) and they target having reserves sufficient for a 1 year supply:
Then at $15 POO they needed $220 bil. And now, at $30 they need $440 bil, then dollar balance demand has grown by $220 bil.
If the increase was steady (linear) then the average price paid during this period was $22.5. Which comes to $165 bil flowing into the pockets of oil producers during that period.
Thus $220 bil increased dollar demand less $165 increased supply = $75 bil net increase in demand.
If the exporters use all of the increase in their cash flow to pay off debts accumulated when prices were lower then at $15 per bbl we had exporters with balanced cash flow at $110, so they use the balance of the revenue, $55 bil to pay off debt. This decreases the supply of dollars, as these go to "money heaven" as the loans are paid down.
Thus the net increase in demand is $220 - $110 = $110
Only when the rate of increase in the POO slows to the point of the exporters receiving dollars more quickly than importers are increasing their balances and exporters are paying down debt is the dollar supply going to exceed demand.
Say in the next half year, POO increases only $5/bbl.
Demand for dollar balances increased by $73 bil.
During this same period, oil exporters got another $183 bil.
They spend the usual $110 bil as before and use the rest to pay debt and accumulate reserves.
Thus, demand increased $73 bil and supply did not increase (oil exporters are still spending as much as before).
Net demand has increased $73 bil.
If the oil exporters no longer have debt they want to pay, and don't want further reserves, they will spend the new excess dollars, thus supplying to the markets the full $183 bil of their revenue. Thus the supply would increase by the change in their revenue: $73 bil
Since in this case new supply and new demand are equal, the effect of the dollar demand due to increased POO will be balanced completely by the increase in supply. If oil prices stop moving up then dollar supply due to higher oil prices will catch up to the demand it induces and the dollar will lose this contribution of a temporary net demand, just as the dollar supply has increased permanently.
"...what SA, ME, OPEC spend their money on (Lockheed, Bechtel, Mercedes, Rolex?), or what dollar quantities they save it in (in Chase, Citi, etc. -- didn't that lead to 3rd world debt crisis awhile back? and how did they wiggle out of that one?) I know Saudi Arabia has not had the surpluses (starting again?) in recent years, even falling into debt(?), but their role is pivotal once more, I would expect."
ORO: So far, the main spending item was debt repayment. Mexico has finished. Saudi should be done this year, and Venezuela is already spending. The Kuwaitis and other less indebted oil exporters from the gulf are just now beginning to buy up the luxury "stuff" and personal services as they used to. Saudi has already put in some military hardware orders. But the interesting twist is that Saudi, because of the shift away from Iraqi, Palestinian and Iranian workers due to the Philipinos, Pakistanis and Indians, have actually imported some industrial and entrepreneurial talent which started manufacturing there using imported labot, thus increasing their spending on capital equipment and on raw materials, instead of just increasing their spending on fine consumer goods. Funny thing is that some of the stuff is even exported into the US. Even local Saudis and residents of the UAE are starting to see results from the years of misguided industrial education and investment in that as their allowances from oil revenues have shrunk, they finally had to make use of these newfound skills and they are producing some of their own stuff.
"RESERVES: Dollar as reserve would be affected by changes in those levels. Have they just been piling up faster than anyone can spend 'em, or have European exporters been taking their profits off the table and spending them down? It's hard to imagine the Euro ECB nations upping their dollar reserves if they have any expectation of displacing the King as world's reserve."
ORO: First, the EU is dumping dollars out of reserves slowly. The Japanese are still sopping it up. Chinese and Koreans are not increasing their accumulation significantly. EU businesses are quickly buying up stakes in US industries in order to be able to retain markets when the dollar slides and their home markets can no longer compete with local US manufacture. Even Japanese are doing it for most of this decade - e.g. Accura (Honda) has moved the bulk of its supply to the US markets from Japan to the US as the Yen/$ rates are no longer favorable.
In the meantime, debtors are accumulating dollar reserves that assure sufficient supply to meet obligations (as Korea Mexico and China have done)
I have conversed with Mr. Von Braun twice before and while I was impressed when we exchanged emails I did not think he was on the same level as Trail Guide. However, that said these subjects are so difficult to convey , you can never really tell when someone is giving you the simple version of the problem because he (correctly) perceives that you can only absorb so much.
I would tend to doubt it though. Von Braun posts on the Gold-Eagle forum,and occassionally on Le Metropole Cafe.
Fixes marked by **ORO (10/23/00; 13:13:30MT - usagold.com msg#: 39729)
Mr Gresham - dynamics
In your 39696 today
"oil is priced and [IS] paid for in dollars. That creates dollar demand. But if oil producers dump dollars on the back end in greater quantity, it attenuates the effect of initial demand, right?"
ORO: Dynamics dominate this. So long as dollar prices of oil are rising more quickly than the flow of dollars into oil exporter's hands, there is a rise in the dollar:
Say the dollar POO rises by 100% over 6 months from $15 to $30, and 40 mil bl/day are exported. If the importers have not changed their purchasing volumes (actually they have increased them, but lets not deal with that now) and they target having reserves sufficient for a 1 year supply:
Then at $15 POO they needed $220 bil. And now, at $30 they need $440 bil, then dollar balance demand has grown by $220 bil.
**If the increase was steady (linear) then the average price paid during this period was $22.5. Which comes to $165 bil flowing into the pockets of oil producers during that period. That would be up from $110 bil in 6 months at $15 oil. So oil revenue, and potential supply has grown by $165 - $110 = $55
**Thus $220 bil increased dollar demand less $55 increased supply = $165 bil net increase in demand.
**If the exporters use all of the increase in their cash flow to pay off debts accumulated when prices were lower then at $15 per bbl we had exporters with balanced cash flow at $110, so they use the balance of the revenue, $55 bil to pay off debt. This decreases the supply of dollars, as these go to "money heaven" as the loans are paid down. Thus the net new supply from petrodollars is 0.
**Thus the net increase in demand is $220 - $0 = $220
Only when the rate of increase in the POO slows to the point of the exporters receiving dollars more quickly than importers are increasing their balances and exporters are paying down debt, is the dollar supply going to exceed demand.
Say in the next half year, POO increases only $5/bbl.
Demand for dollar balances increased by $73 bil.
During this same period, oil exporters got another $183 bil.
They spend the usual $110 bil as before and use the rest to pay debt and accumulate reserves.
Thus, demand increased $73 bil and supply did not increase (oil exporters are still spending as much as before).
Net demand has increased $73 bil.
If the oil exporters no longer have debt they want to pay, and don't want further reserves, they will spend the new excess dollars, thus supplying to the markets the full $183 bil of their revenue. Thus the supply would increase by the change in their revenue: $73 bil
Since in this case new supply and new demand are equal, the effect of the dollar demand due to increased POO will be balanced completely by the increase in supply. If oil prices stop moving up then dollar supply due to higher oil prices will catch up to the demand it induces and the dollar will lose this contribution of a temporary net demand, just as the dollar supply has increased permanently.
**Over the 1 year period, we have oil revenue increasing from $220 bil to $348 bil, or by $128 bil.
**Dollar balance demand has grown from $220 to $513 bil or by $293 bil.
**If all is used to pay down debt/accumulate reserves, then we have only the increase in demand.
**If none is used for debt reduction/reserve accumulation, then the net increase in demand was 293 - 128 = $165 bil.
** If over the next year, prices are steady, then dollar balance demand stays as it was at the end of the prior year, increased by that same $293 bil over the 2 year period. But supply (if it is all spent) will have increased by (348 first year + 513 second year - prior rate for 2 years @ $15, which is 440 = $421 bil. Thus the net increase in SUPPLY would be 421 - 293 = $128 bil over 2 years.
Additional comment:
The point at which the supply demand picture flips is probably going to be that when oil exporters have paid down enough debt and accumulated sufficient reserves for their comfort, they will place any further excess dollars into the markets. This will be a rather sharp turn of events for this contributor to net dollar demand, but the fact that it would most probably coincide with non-oil exporters freeing themselves from debt burdens at the same time or very close to it. That would make the break in the dollar that much more pronounced.
I was looking at a composite calculation for a "stock misery index" which is calculated from factors thought to have a negative effect on corporate income. These are the oil price, the dollar index, interest rates.
The index starts at 106 in mid 97 and falls to 93 in Dec 1998 and Jan 99. From that point, it rises steeply to 100 by May 99 and 105 in Jul 99, then to 112 by the end of 1999. By Mar 2000 it is at 117, and increases to 126 at the May 2000 stock rebound, under which value it stays till the middle of Aug 2000 Peaking at 134 at mid Sep. Then it drops with the stock market from that time till the last day of september, where is hits 126 at intervention's ebb and resumes its upward course to revisit the area above 132 at the Oct 12 bottom in stocks. From there it has dropped back to 128 and started back up last Friday. It hit 131 today, nearing its highs. The chart is remarkably similar to the chart of the inverse of the SP and Nasdaq PE, just that it seems to precede the moves in the stock indexes.
YUP!You said:"He's taking alot of heat for calling it early. The risk of an early call outweigh the risk of waiting to see in his eyes".
But why should he be the only one? The Can. Alliance wanted this timing too. The Tories, at least, have grounds for complaint with their internal problems not likely to get better under election pressure. The NDP, well who is going to listen to their line? However, so far the latter have asked the most serious questions to date about the Lib. gov. performance.
If Stockwell Day had a clue, he would have been chastizing the governement for the early call. His chances (like all far right parties) are always favoured as they are better at exploiting hard times better than good ones. So from our point of view he is out of the loop or just plain naive.
Just went over to Gold Eagle to review the Von Braun pages and came away with the indisputable impression that he is not FOA. A facile writer with an original and attention-grabbing turn of phrase, the professor does not begin to exhibit the depth and overall understanding of the issues that FOA does. This would be a very hard deception to pull off. Believe it or not, it is very difficult not to let slip what one knows while trying to elucidate a point to further the understanding of others. I doubt very much that FOA could do it. At the same time, he (FOA) would find it very difficult to supress the natural turns of phrase and liquid prose style that von Braun exhibits while writing as FOA.
Both writers are very consistent in their writing styles. Mispelling the same word in the same way does not overcome that fact. FWIW!
Looks like this site does not support the "does not equal" character that one gets (Mac OS) by typing "option =". The title of my previous post should read: "von Braun does not equal Trail Guide".
"It's only a matter of time, I sense, until the same financial talent is turned to nifty ways at repackaging default receivables."
ORO: Thanks for response. A lot in your post. A 2nd or 3rd read is required, for an hour's rock-shoveling outside in the legendary Northwest October sunshine (not!) has addled the math side of my brain. Later.
Regarding the dollar's past ability to baffle economists who have predicted collapse at the hands of a swelling currenct account deficit, Paul Lambert, director of currencies and bonds at Deutsche Asset Management said, "Each time international appetite for one class of US asset has started to wane, another has taken its place."
Jim O'Neill, head of currency research at Goldman Sachs, admits, "It is increasingly difficult to see what will come to the rescue of the dollar this time."
And Mr. Lambert has the last word with the conclusion "It looks like the dollar bull run may have entered the final straight."
@Galearis thanks for the insightful analysis.
@Journeyman, thanks for the discussion, and read on if you're so inclined.
@ET thanks for the links.
@ORO I guess I was a little clumsy, but don't think I deserved the boot-stomping re " it's plain thievery for a government to take away somebody's Oil".
I referred to the actions in the 50's trying to cap oil sales by the Federal government only because it seemed the issue might be coming our way again, due to the windfall profits on oil these days, and I am wondering what the denouement might be for Canada, given we can no longer do a Fed action to stop the sale of oil outside Canada, nor can we rely on the "family solidarity" feelings of Alberta to help the rest of Canada, after we helped them out of our personal pay cheques, to get their oil business going in the '50s and 60s. So what will happen?
Incidentally, if my neighbor is upstream of me, on a stream I need for irrigation, is he justified in suddenly damming the stream, selling the water to someone else entirely? Especially, when I helped him get his garden going, on the understanding we were in this thing together, and he wouldn't likely do something so drastic as selling away all the water in a short period of time.
What is the meaning of citizenship and community, if not these sorts of agreements? Maybe Alberta would be better not to join the bad old Ontario club, just changing its name to the bad old Alberta club. Maybe they would actually benefit, by seeing Canada as one whole, rather than a lot of little fiefdoms, each dominated by its own rapacious oligarchs. (I�m not holding my breath for this.)
Personally, I hope the Alberta and the Ontario governments continue their policies of supporting only a handful of business elites, ignoring all environmental and community health and education issues except those that relate to more cutting of governmental costs and less governmental regulation. This is the only way we will be impelled to get a proper understanding of how much work we have to do, how much compromise we have to make with each other, to have a civil and viable society. IMHO.
@justamereBear
In the early 50s Oil had just been discovered in Alberta. Pipelines were built from the west to Ontario. A pipeline already existed from Montreal to Sarnia, Ontario, and maybe further west, I don't remember. This brought imported oil from Portland Maine, all we had in those days. About 1956 or so, the Federal government mandated that the pipeline be reversed from the West, up to the Quebec border. This meant Ontario, but not Quebec citizens, would have to pay more for their gasoline and heating and aircraft fuel, and plastics feed stocks, etc. than would Quebec and the Eastern provinces, who could continue to use the much cheaper imported oil .This was done to help Alberta and Saskatchewan get their oil business going. Here in Ontario, we paid daily at the pumps, an extra amount, without too much fuss. Because we thought it would be good for Canada. Ontario has always transferred far more equalization payments to the rest of Canada, than ever we received. In fact, I don't believe( could be wrong) we've ever been on the receiving end. People here are more willing to talk about Canada than they are in other Provinces. Function of size I guess, we have 1/3 the country's population. I guess we're complacent. Attitudes are changing. Maybe the size difference between Ontario, Quebec and all the others is too much to overcome with civility.
@Farfel
@Shermag
I was attempting a discussion, not trying to shoot you. You both have attributed motives and beliefs to me I do not have, and picked selectively at what I said, ignoring other explanatory passages. I see you don't want a discussion .You want to be right.. OK. You're right.
http://www.gold-eagle.com/gold_digest_00/vonbraun102400.html The professeur might not be FOA or TG or even a rocket scientist but he has written a very pleasant, short, logical, and easily read article that will make you feel good.
Best part (IMHO)
"Gold does not declare a 10 for 1 reverse split as some Nasdaq listed dot. coms have done of recent times. Once you own physical metal, it does not have to be watched every day to see if its lost weight, gone out of business, lost its listing, failed to report on time, or subjected itself to the humility of name your own price."
However, don't forget where it's hidden!
Gold, physical and futures, for wealth and paper wealth! Rich
HEADLINE --- Banks: Why create foreign currency liabilities at all?
http://www.hindubusinessline.com/stories/062433t2.htmThis thought-provoking piece from the Hindu Business Line is in english, but just barely , so feel free to read it and provide your own insightful translation.
The text is in regard to the interplay between foreign and domestic assets and liabilities in India, and of special note is this passage:
"...bias and skewness which has been evident in the banking sector's handling of its foreign liability fund base. That bias, which has gathered strength in the past decade, has been towards safety and conservatism in handling a non-domestic currency fund base. This has meant a fairly high and increasing degree of reluctance to create domestic currency assets out of a foreign liability fund base and therefore a declining level of net foreign liabilities of the banking sector...."
+
"This is a very serious issue in the overall external sector management. For, if banks merely retain abroad whatever hard currency deposits they mobilise -- at a clear negative spread which could even be a full percentage point -- not only is there a net forex drainage at the micro level. It also points to the larger disadvantages which the domestic economy may suffer on account of the non-repatriation of foreign currency deposits. Indeed, if the underlying and larger rationale behind schemes such as the FCNR is to access the pool of international savings and supplement domestic savings, the extant practices roundly defeat that objective...."
+
"As can be noted, between March 1992 and March 1997, the total foreign assets of the banking sector increased by as much as 300 per cent -- from $1.9 billion to $7.27 billion. View that massive surge in the foreign assets in the backdrop of the comparatively minuscule increase of around 11 per cent in the total foreign liabilities of the banking sector in the same period -- from $15.05 billion to $16.81 billion. The net foreign liabilities, therefore, have seen a fairly sharp drop of 27 per cent -- falling from $13.12 billion as of March 1992 to $9.5 billion at the end of March 1997."
for immediate information on any ASX listed company, visit this site:
www.tradingroom.com.au
current trading prices,high,low,volume,announcements,index movements etc all detailed in this excellent website. And its free!
with so many of the leading Australian miners at all time lows, the low gold and $A dollar is likely to encourage more takeover and intercompany activity.
Goldfan, in my younger years, I worked for Dome Petroleum, Calgary, and assisted in computerizing their accounting system (That was some seven years before I got involved in the film business). So my knowledge of Alberta and the history of Canadian oil development is fairly substantial.
Now if you wish to continue believing that Ontario helped Alberta develop its oil industry, you go ahead and continue subscribing to those Ontario fairy tales.
Here is the reality:
Ever since I can remember, a huge chunk of Calgary's population consisted of American oilmen. When I lived there, some 20% of the population consisted of oilmen from Texas, Oklahoma, etc. They purchased houses and lived there, always with the intent of returning someday to their American homes. Many did, many stayed.
In fact, it was the Americans who really developed the Alberta oil patch, and they would have developed it much faster and efficiently EXCEPT for the self-interested interference of Ontario elites who constantly devised regulations to benefit Ontario and Quebec at the expense of Western provincial interests.
I find it singularly amusing when you state that Ontario helped Alberta get its oil business going during the 50's and 60's from proceeds derived from Ontario citizens paycheques.
In reality, Ontario's measures to move Alberta oil to Ontario then were no less exploitative than those measures enacted by industrialized nations to grab cheap oil from the Middle East "camel jockeys" (as they used to call them).
In other words, the Ontario crowd saw a cheap, essential, domestic resource and preferred to exert its political control over that resource, NOT from any altruism, but rather from complete self interest. The Ontario crowd knew it had little to no influence over the Arab nations or the huge US multinationals who controlled the Mid East supply...so back in teh 50's and 60's, Ontario moved rapidly to exert strict control over Alberta and its vital commodity.
Frankly, any subsidization of the Canadian Confederation by Ontario pales in comparison to Alberta's subsidization of that very same union.
The most glaring example concerns the "french-ification" of Alberta. Here you have a province in which a total of some 500 French-Canadians lived, yet Ontario forced Alberta to adhere to the bilingual philosophies of the Trudeau government. That meant forcing French/English language on every aspect of Alberta culture, from its highway signs to its cereal boxes, even though hardly a French-speaking person lived there. Alberta spent many millions of dollars "going bilingual," even though finding a French-speaking person in Alberta was akin to looking for a needle in a haystack.
With respect to your analogy of a neighbor upstream who dams your stream in order to sell water... Alberta is NOT preventing Ontario from buying its oil, it is NOT damming Ontario's oil supply. Rather it is simply stating that Ontario should pay the world price for oil, no differently than Ontario compelling Albertans for many decades to pay world prices for autos manufactured in Windsor or chemicals, plastics created in Sarnia, etc.. What special subsidies did Alberta receive for decades of Ontario-manufactured products? Answer: none.
Furthermore, Alberta is NOT insisting that the irresponsible citizens of Ontario join their American imbecile brethren in placing an SUV in every garage, heating the Ontario swimming pools all year round, etc. and taking no notable measures to conserve oil and reduce demand. After all, face facts, DEMAND is a major source of the problem, NOT simply supply.
Finally when you state that Ontario has always transferred far more equalization payments to the rest of Canada than the other way around, well, la dee da dee dee.
First of all, Ontario always had a much larger population so naturally the equalization distributions were larger.
Most importantly, Ontario did NOT make those transfers for altruistic reasons, they did it to exert POLITICAL CONTROL, no different than the IMF making abundant US dollar loans to Third World nations in order to exercise control and influence over those nations internal affairs and force them to do things "the American way." (e.g., preserve US dollar global hegemony).
So spare me your absurd homilies concerning Ontario's altruism toward Alberta, it is simply sickening in its absence of Truth.
My spelling and punctuation is not right? I don't know what you mean? (smile)
This reminds me of an old reply someone put to me when I asked him to clarify himself on a strong position. "What do you want, he asked? Good flavor or good taste? Because you can't have both from me at these wages! (Ha! Ha! What a guy!) He later took time to explain everything.
You know, hearing every comment today and with posters comparing my speech here:
I used to give talks at small meetings all the time and they never complained about my spelling! (laughing again)
You see, one of you was right, in that I have never tried to publish or write anything. My notes from meetings are what I work from and they are an outrageous hodgepodge of foreign writing no CIA agent or secretary could ever crack! (still laughing).
I'm much more of an eye to eye, face to face, quietly making my position known, kind of fella. Take MK or Mr. Turk; these men can write. Im not kidding when I say that in their presents or in the company of other smart / important people I would typically blend into the shadows.
First and foremost, my reasons here are to simply keep the path warm until the real play comes into view. If my poor writing skills don't make things clear enough, it's ok because soon enough events take a hand and clear the path enough to follow. True, talking to me in person, you would say the same thing others do; "Trail Guide, you don't sound anything like you write"! (smile)
Well, that reminds me of the guy with an extremely large nose. He went into a plastic surgeons office to get his leg burns fixed and they asked if they could also fix his nose? He said absolutely NOT! If you did that, I wouldn't be me!
So,,,,, in that light,,, if I gave these posts to someone to edit, or had someone else translate most of Another's thoughts to english, it wouldn't be me. (smile)
===========
Holtzman wrote a good piece some time ago and I lost it's location. In it he made the distinction about how we were arguing about the difference between paper gold and physical gold, along with all our other debates. I think he said that it was all useless and some of us risked embarrassing
ourselves if paper / real gold spiked together. We should just diversify and watch the show, he said. ( I think that's what he said?)
To a degree I do exactly as he mentions, except that I don't trust paper gold at all when the going gets rough. Our differences is the same valley that separates PGAs (Physical Gold Advocates) from many modern hard money followers. It's a difference of "learning location".
You see, it all has to do with how one orients oneself in the world today. Indeed, understanding the word "orient" provides some of the answers. Interesting word, orient.
The old romans didn't have compasses and they depended on the position of the sun to gain location and direction each day. Every morning they would watch to see where it rose. They gave the name "oriens" to this location. In other words, the east. Later, "oriens" obviously a latin derivative, was slipped into english and it became orient. Not only was orient used to describe one's positioning in the world, it also referred to all the lands east of Europe. The Asians, etc..
In time, most of the world's thought could be broadly divided into Western and Eastern. How well one understood such thought and the people forces that created them, depended very much on how well we could orient our own thinking! Are you still with me? (smile)
For myself, I have placed my feet squarely on the ground that faces East to gain a better understanding. Because from here not only do the majority of the world's people live, there also resides most of the reserves of oil. Remember, "oriens" became "orient" and that traditionally was all the lands east of Europe. The Middle Eastern oil fields included!
Now, over time and across the space of human experience, Europe has become much better "orientated" to the "orient" way of trading and thinking than the West. To this end they will always meld better with them economically than the US can.
Indeed, this is something Mr. H had better "orientate" himself with because I suspect he is British. You see, I say this because only the Brits use "orientate" and that back - formation of a word has been in use there for about a century. Truly, plenty of time for him to understand why the Duke of Edinburgh once said,,,,,,, "the English are much more culturally and emotionally "orientated" towards Europe". Check it out for yourself? Perhaps that fine gentleman also knew the "oriens" from where oil did flow!
and that my friends is why their English paper gold is going to one day burn.
Now, did I get those letters and dots in the right places? (smile) I don't think so!
PLACER DOME POSTS $34 MILLION PROFIT IN THIRD QUARTER (all dollar amounts in U.S. currency)
Vancouver, Canada - Placer Dome Inc. is pleased to report on its continuing strong financial and operating performance. Consolidated net earnings were $34 million or $0.10 per share in the third quarter of 2000,compared with $17 million or $0.06 per share in the same period last year.
Cash flow from operations amounted to $146 million in the third quarter,up from $99 million in the third quarter of 1999. Mine operating earnings increased to $101 million from $83 million in the corresponding period
last year.
I know, sounds real hokey - maybe if I make a list of things that look strange...
1. Al G. and Summers are almost begging Congress to move quickly on reform involving derivitives. It really smells like trouble brewing from the wording of their statement.
2. The corporate bond market is flopping around "like a fish on the ice" as the Russians say. Ominous.
3. Financials are starting to get hit...as brain dead as this market has been the past few years, you KNOW things must already be on the way to crunch time.
4. The selling pressure in even the largest cap stocks is serious. Big money wants OUT. Nifty little rally we've had the past few days doesn't look too good either.
5. Oil just doesn't want to stay below $30 a barrel. Imagine that!
6. The Middle East looks like its gonna blow. That means higher oil and possibly (just possibly) the shackles on gold are forced asunder. Can you say d-e-r-i-v-i-t-i-v-e-s, Mr. Summers?
7. Look around -- the big money knows it's over. Gates and Paul Allen began dumping MSFT back in February...still selling. GE is trying to use its overpriced stock now while it still can to buy Honeywell (anyone notice all the talk today on CNBC about how GE is really about $10 per share UNDERVALUED? Ethics, anyone?) High priced real estate is now up for sale -- Rockefeller Center, Chrysler Building, World Trade Center (all from this week's Barron's). Boston Red Sox for sale...get it while it's hot 'cause it may not be hot much longer.
8. Defense stocks still on a roll. Hmmm.
9. Easy Al can't lower rates...would hurt the dollar (and as we know, the dollar is the lynchpin). What a box, eh?
10. My cousin, who's been in banking for 37 years, says he's never seen debt and credit overextension like today...he expects it to all unravel (no timetables, sorry).
11. Nearly everyone is invested and fascinated with the markets. 'Nuff said!
I liked to preach at one time, and still have the inclination some what, but I am losing it for many reasons. First if ones heart is in the right place things will work out perfectly accordingly know matter in the end. Especially when one might judge my ability to understand due to my lack of "Formal Education", for that has little to due with my ultimate understanding. You can not judge a heart, so certainly dont judge one by there lack of ablility to communicate through writting.
I want to know about something. I want to know what the IMF is up to, and how they are going to use this time of history to benifit them introducing "their"(is that the right spelling) world currency so that they are able to enslave all folks of the world through debt. That is where we are heading. The IMF is going to enslave this whole world through debt, for their ability to capture peoples energy for themselves. Go for it good ol IMF, you are built to fail, so get the game on.
To spend two hours with you would be worth its weight in gold. Thank you for teaching me how to think. Never judge a book by its' cover eh? I was a masterful speller of english and french words; yet, "think clearly" I could not. Now, my wife accuses me of being an "anarchist" and, some of my friends accuse me of thinking like a "european". (smiling broadly and 'lovin every minute of it) We are on the same side of the valley you know:>).
"I used to give talks at small meetings all the time..." Trail Guide.
FOA:
Please put my name on any invitation list you might complile for your next appearance. (Big smile!!)
All:
Since we have taken to commenting on English prose styles, may I offer the following passage from the users manual for an ether-net hub I recently bought (brought home) to connect two computers together in my house? When I read it by phone to tech support, the guy at the other end was speechless!
Under a heading of "Connectivity Rules", (I just wanted to know which hole to plug the wire into) the following was accented in bold-faced type:
"...And be attention, you have to using 10Mbps Ethernet repeaters to connect in your network segments to avoid the limitation of Fast Ethernet. Because if you haven't use pure 10Mbps Ethernet repeaters in this network segments then it would be under the rule of Fast Ethernet Standards in this 5-port 10/100Mbps dual speed Hub products that you used now."
(Please be aware that I introduced no typos into the above, either!)
It got me to wondering about what's happening to all the monies gained by gold producers hedging.
What's the bet that all these extra monies garnered heads back to banks as interest on debts
Rather than being steered towards the investors who own the stocks.
A gold producer used to deliver profits to investors or increase their investors wealth.
Nowadays it seems more the trend that they sell forward their future earnings
Taking their profits and borrowing evermore to expand.
Growing an ever increasing amount of debts
And feeding the banks ever increasing debt repayments.
We all know how banks profit from lending the masses phenomenal sums - RE
The end sum is that the masses rarely get to own their own homes and have indentured their lives earnings to paying back the banks.
So here we now see the same with the gold producers.
Sure the banks will lend the producers gold to sell forward to garner monies.
But only if they'll engage in expanding through debts which are borrowed from the banks.
In the end the banks have grown an income stream
Backed by the asset value of the future production
Gaining ownership of the companies in case of default.
What have the investors gained out of all this?
Seems to me that the gold companies have sold their investors short.
Their loyalties no longer focused towards growing their company for their investors.
But rather indenturing themselves to the banks
Digging themselves deeper into debt - to ensure a steady income stream for the banks.
The greater the debt one takes on then the more assured that the banks will be on the receiving end.
Through dividends for the life of the project
And if/when the company goes belly up the banks end up with what's left.
The same logic pervades all businesses controlled by banks through debt.
And of late we've seen new laws introduced to protect the banks in case of default.
So as we plod along this weary road we see the largest producers taking out all the companies below them through debt.
As the companies filter forward through this pyramid the ones left at the top are the ones who own all the gold.
So we have ended up with a dozen top producer behemoths who own the greatest % of reserves and resources worldwide.
And they've achieved this through borrowing gold and selling forward and taking on ever increasing amounts of debt.
They are now indentured to the banks
Their gold is indentured to the banks
Their assets stream is indentured to the banks
Their dividends are indentured to the banks
And in the case of default the whole company is the property of the banks.
In the case of a derivative meltdown the end result will be that the banks end up with the assets
And the investors will end up with sad memories.
The bankers system is currently rewriting the rules to ensure themselves of this.
Now in light of this who in their right mind would care to consider a piece of paper as a promissory note That they own a share in a company as an asset to ensure them wealth
When the dividends are going to the banks
When the company though expansion of debt has indentured themselves to the banks
When the company folds through the derivatives it's taken on with the banks.
Essentially the gold companies have sold out their integrity to the banks
And the banks will end up owning the gold.
One has only to peruse this list
http://www.sharelynx.net/temp/ProductionRanks.htm
To see the pyramiding the producers have attained.
5% of the companies now produce 90% of the gold.
And through debt the banks have gained control of these companies.
All that is needed now is for the banks to pull the carpet out from underneath the companies
And they've ended up with all the gold.
Who would wish to invest in an industry such as this?
Paper gold assets are a joke
And all who invest in them are blindsided to what is really going on.
To my mind this industry's future has already been planned out and mapped forwards.
The investors will end up with naught
And the banks will have the gold.
Paper gold sucks
If you wish to hold gold as an asset -- buy physical... ... ... .
ACCORDING TO CBS.MARKETWATCH, TODAY COMEX WAREHOUSE STOCKS SIT AT 1,865,577 OZ. OF GOLD AND 95,991,943 OZ. OF SILVER. SO I WAS CURIOUS TO SEE EXACTLY HOW MUCH THIS WOULD COST AND I CAME TO A FIGURE OF $513,033,675 @ $275 PER OZ AND $470,360,520 @ $4.90 PER OZ. MY QUESTION NOW, CAN ONE ACTUAL BUY OUT THE COMEX WAREHOUSE SUPPLY OF BOTH GOLD AND SILVER FOR AS LITTLE AS 1 BILLION? AND IF SO DOES COMEX HAVE THE ABILITY TO REPLACE THESE STOCKS IN AN ADEQUATE AMOUNT OF TIME TO AVOID THE DISRUPTION OF PHYSICAL DEMAND, ASSUMING PHYSICAL DEMAND IS THERE?
Good points and I'm not disagreeing with any of them.
My one comment is - a $350 POG would be a better time to evaluate the leverage of mining shares than $270. At this quoted POG...of course everything looks ultra-gloomy.
I don't think they are waiting for the country to come to them. Let's just hope the country doesn't get too lost first.
Me: You offered up some good numbers for the party's existing office holders. I will have to agree then that they are not "trying" to wait for history to beckon them. Yet even those numbers would be better utilized by insuring a Bush win over Gore. Even a few points could insure that your last sentence above doesn't come to fruition.
The no subject post was very good,I commend you for it. Here is a quotation I think of eevery now and then,"Every normal man must be tempted, at times,to spit on his hands,hoist the black flag,and begin slitting throats."[smile]H.L.Mencken
ORO (10/23/00; 08:46:08MT - usagold.com msg#: 39711)
"By 1967, all major oil producers but for Saudi and Gulf emirates had taken over the foreign oil companies."
Brown is incorrect here. Much of the nationalization took place after, and in response to, Nixon's default in Aug '71. Some examples:
1971
Jul 31 - Venezuela's Hydrocarbons Reversion Law mandates gradual transfer to government ownership of all "unexploited concession areas" by 1974 and "all their residual assets" by 1983. (This is the one I consider to be the "trigger" event for the run on American gold.)
Dec 5 - Libya nationalizes BP concession.
1972
Jun 1 - Iraq nationalizes Iraq Petroleum Company's (IPC) concession owned by British Petroleum, Royal Dutch-Shell, Compagnie Francaise des Petroles, Mobil and Standard Oil of New Jersey (now Exxon). The concessions were valued at over one billion dollars.
Sep 30 - Libya acquires a 50 percent interest in two ENI concessions.
Oct 27 - OPEC approves plan providing for 25 percent government ownership of all Western oil interests operating within Kuwait, Qatar, Abu Dhabi and Saudi Arabia beginning on January 1, 1973, and rising to 51 percent by January 1, 1983. (Iraq declines to agree.) Agreements signed on December 21.
1973
Mar 16 - Shah of Iran and Consortium members agree to nationalize all assets immediately in return for an assured 20-year supply of Iranian oil.
Jun 11 - Libya nationalizes Bunker Hunt concession; Nigeria acquires 35 percent participation in Shell-BP concession.
Aug ? -Libya nationalizes 51 percent of Occidental Petroleum concession and of the Oasis consortium.
Sep 1 - Libya nationalizes 51 percent of nine other companies' concessions: Esso, Libya/Sirte, Mobil, Shell, Gelensberg, Texaco, SoCal, Libyan-American (ARCO), and Grace.
I would hazard a guess that if the POG was steady at the price of $350 that much of the industry as we know it would be in a position of changing.
I also think that the price wouldn't be steady at this level as derivatives would be cutting in.
I agree that today we have a gloomy price & sentiment.
Perchance at the higher price you mention the sentiment could be far worse (for some)
I think it would be interesting to plot the liabilities & leveraging down at these levels and then to compare such changes that a rise to $350 would bring on.
Which companies would be in a better financial position
And which ones would be worse off.
The point I was attempting to get across was not so much the hedging/leasing.
But rather the tendency these last few years to taking on excessive debts.
Debts & interest rates eat profits alive and leave little of value for the investor.
The banks by virtue of lending to gold producers are aligning themselves for eventual ownership.
By default the investors in goldstocks are ending up with very little of value.
Townie
Once attaining familiarity with Indian approach to English language one is finding great charm in same. You are agreeing with this excellent sentiment? Good good.
Goldsun
You know that many of us hold the fond hope of meeting you in person some day. Meanwhile, we share a lot, and humor helps bridge the gap of our disappointment that our meeting cannot be sooner.
But maybe in all things you ARE the teacher, with emphasis even by accident: after all, I've "bought" several investments before, by sending my money off to somewhere in New York or such. But at your inspiration as a PGA, this is the first time I've actually "brought" anything home that I could keep.
Although I missed the battle I'd like to contribute a battlecry and if that's not nonlinear thinking I'd like to know what isn't.
Halfwits Unite - for two halves are better than one!
Goldsun
* 709,000 regular (active duty) service personnel
* 293,000 reserve troops.
* Eight standing Army divisions
* 20 Air Force and Navy air wings
* 232 Strategic bombers
* 2,000 combat aircraft
* 13 strategic ballistic missile submarines
* 3,114 nuclear warheads on 232 missiles
* 500 ICBM's with 1,950 warheads
* Four aircraft carriers
* 121 surface combat ships and submarines, plus all the support bases, shipyards and logistical assets needed to sustain such a naval force.
Is it Russia? China? France? Great Britain? Wrong. USA? Wrong. This country no longer exists. It has vanished.
The above is the American military forces that have disappeared since the 1992 election of Bill Clinton & Al Gore.
Al Fulchino (10/23/00; 21:17:31MT - usagold.com msg#: 39757)
I sympathise with your comment but I don't agree. Insuring a Bush win would accomplish nothing for the idealistic Libertarian. In fact, it may have a reverse effect as the Libertarian voice would get drowned out by the self-serving and much stronger modern-day Republican voice. Consequently the Libertarian voice would be heard by no one.
How do you eat an elephant? One bite at a time. I guess we have to convert each individual one at a time. The writers of the Constitution took 10 months and 85 essays to persuade the American people that they needed a Constitution.
It is hard to believe that just 200 years later we are seeing political parties rise that literally want to turn America into a totalitarian state. That is my reading of the Green Party platform. Government controls everything and everything is subjective.
No, the Libertarians must stay independent. IMHO, it's the only chance we have.
I have started an education experiment with friends and family. When the subject of stocks or money come up, I ask them if they know where money comes from. Try it sometime. The look on people's faces when you explain the debt game to them is incredible. I believe we just have to keep educating them one at a time.
I was born and raised in Alberta, and came east in the 50's, leaving all of my immediate family there. Of course I visited fequently, in addition to limited business travel.
In the late 60's, I attended a funeral for a relative. This was before the NEP. I was standing with my brother and sister, who still live there. An old classmate spoke to my brother. I thought he didn't recognise me and said Hi. He looked me up and down, and spewed out a load of invective to the effect; "why don't you eastern bastards just stay away, the stench in here is intolerable," and left. I tried to talk to some other school chums, who were barely civil, and the phrase "you eastern bastards" popped up frequently.
During the NEP "crisis" I was reading the Calgary Herald, the Edmonton Journal, the Globe, and the Montreal Gazette, on at least a weekly basis. I never saw ANY of the Alberta points published in the eastern papers.
How do you say S P I N M E I S T E R ?
I saw the same thing during the Korean War. I got ahold of some Indian Enlish language newspapers, (which one would think to be fairly neutral) and compared them with ours. Not only were we not talking about the same war, I doubt we were talking about the same planet.
That TransCanada pipeline was not about helping Alberta. Alberta would much rather have shipped its hydrocarbons south. Much more profitable. It was about many things, including security of supply for the east, and maybe a little freeby from "family".
Near the end of the NEP "crisis", I got caught at a public gathering in a situation, in which I got shoved around a bit, and, which was so ugly that I feared for my life, or at a minimum expected to wind up in hospital. Most of these people were people I knew, and the words "eastern bastard" popped up often.
These people were, and to some extent still are, bitter. REAL bitter. SUCH BITTERNESS DOES NOT ARISE WITH ABSOLUTELY NO CAUSE.
I'm sure the media in the west had its own spinmeisters at work, and I will accept that it may have been overdone there too. However, no one who saw both sides, even briefly, can accept the sheer propaganda that came out of the east. To be sure, Ontario and Quebec got tarred with a brush that belonged in part to the Federal Government. But then, Albertans also could not get their points heard at the Federal level because of the HOO HAW that was coming from the heavily populated, and heavily represented, provinces of Ontario and Quebec.
I am sure that at any point, and certainly from about 1954 onward, that Alberta was of the opinion; "Please don't help us. With friends like you, who needs enemies"?
Alberta did not need or want help. They had BLACK GOLD.
.... The Bangkok Connections ....==============================================================
As you read previously, the two oldtimer (ex) rice farmers were
forced out of business by a Newcomer, who entered their small
and serene village marketplace with nothing but his bicycle;
barefoot; shirtless; and an equally poor but cooperative helper
with a Yellow U-Rent-A-Truck. With rented bamboo hut as warehouse.
Clever Newcomer was able to, not only corner the market in rice;
drive the two competitors out; but even became owner of their
two prized rice farms, all with little effort; no capital; and in
a very short time. And was able to raise the prevailing RicePrice
to whatever he deemed the consumers would bear thereafter.
The story continues now, as we learn of what became of the two
hapless (ex) rice farmers: All they had left was their little Red
and Blue trucks. And a small pittance they'd received from the
sales of their wonderfully productive rice farms north of the
small village to that devious Newcomer.
Each farmer migrated to Bangkok to start a new life. One opened
a Topless, STR8 Bar. And the other opened a Bottomless, Gay Bar.
In booming downtown Bangkok. Where Business is Business.
Both became friends in their newfound barroom enterprises as
they were no longer in competion, and indeed often visited each
other's Bar for afternoon chats and convivial drinks. Coffee.
During one of these sessions, one introduced the other to a
wealthy regular bar patron who was a Rice Exporter, with a very
large warehouse on the riverfront. And to another patron of
the other bar, who was similarly a wealthy Papaya Exporter with
a similar riverfront warehouse. Bangkok bars are a melting pot.
During the conversation the (ex)farmers related their woes about
how they'd been manipulated out of their rice farms and previously
self-sustaining marketplace. The two wealthy warehouse owners
listened intently and with empathy. The patrons both liked these
two hapless (ex)farmers (now Bar Owners) and wished to help them
"get-even" with that coniving Newcomer, as well as make it possible
for them to return to their beloved farm village. Which they missed
greatly. Afterall, village life is far more pleasant than Bangkok.
So they hatched a plan. A two-part plan. One farmer would become
once again the dominant rice farmer. The other would become the
dominant Papaya Orchard/cannery owner. In that village.
Here's what they devised. A flawless scheme. Perfectly legal.
The wealthy Rice Exporter noticed that he always had way-more bags
of rice accumulating in his riverfront warehouse than could be
loaded onto the freighters. And it was a problem for him as it
just consumed alot of wasted space and he got no revenue from it
during the sometimes lengthy storage periods.
And likewise, the wealthy Papaya Exporter had a similar problem
with excess inventory of his canned Papayas. Their plan would
solve both these exporter warehouseman's problems as well.
The two Exporters offered to loan 10,000 bags of first-quality
Thai Sweet Rice to the (ex)farmer who owned the Red Truck. And
they offered to loan 10,000 cans of Papayas to the (ex)farmer
of the Blue truck. And for these "leases" they'd only require a
modest 1% annual "interest" payment. The Rice and Papayas would
of course "someday" need to be returned, but the Exporters felt
that was irrelevant because they were eager to move it out of
their inventory and earning at least a meager 1% return. The time
it spent away from their warehouse, out of their control, was not
bothersome to them whatsoever. Their main objective was to help
their Bar Owning friends return to the village. And who knows,
they might even make them an offer to purchase their thriving
Bars from them at some later date. At reduced prices of course.
Meanwhile, the Bars might serve as "collateral" for the leases.
So both Bar Owners agreed immediately. Then each signed the lease
papers and partially loaded their booty into their respective Red
and Blue trucks. At the riverfront warehouses. And departed for
their prior village far to the north. Laden with leased commodity.
Upon arrival, they combined their Baht and rented a modest size
bamboo hut nearby the village marketplace. Actually so-nearby
that people in the marketplace could easily see it and walk to
it and even peek inside at the contents. It was real. Consumers
would be bolstered by the legitimacy of that nearby "warehouse".
Then the (ex)farmers proceeded to bring their Red and Blue trucks
into the village and with much fanfare, hired some local boys to
help them unload 10,000 gleaming bags of (leased) Thai Sweet Rice
and 10,000 colorfully labeled cans of (leased) Papayas. This was
accomplished over a period of several consecutive days, since
their trucks were small. Eventually the entire 10,000 bags and
10,000 cans were hauled into their newly secured warehouse.
The next day each (ex)farmer came into the village marketplace
and setup their UpStart stalls. Directly across the narrow street
from Newcomer's monopolistic rice stall. And a few stalls away
from the market's two (hapless/targeted) Papaya oldtimer farmers.
And they glanced at the prevailing price signs of each, and then
methodically hand-letterd their new signs accordingly, but of
course with respective prices a hefty notch *below* their targeted
competitor's.
Consumers came throughout the long day and as expected, prefered
and bought, their Rice and Papaya needs from these two UpStart,
but proven reliable (come see our warehouse -- see for yourself)
new marketeers. Sure, each consumer received initially a simple
paper Rice-Chit / Papaya-Chit for his Baht. But it was a simple
and convenient process to redeem their chits immediately or even
at any later date at the UpStart's warehouse. Which saved the two
the inconvenience of carting 300 bags/cans daily to their stalls.
Economies of scale... Or what.?. Consumers liked the nearby and
chit-convenient method as well. They could continue to wander
the marketplace doing their shopping for other items, then just
stop by the warehouse on the way home to pickup their heavy rice
or Papaya cans later. No fuss. No muss.
And as expected, the targeted competitors continued throughout
the day to unsuccessfully low-bid and reprice downward their own
Rice and Papayas. But to no avail. They had no customers because
the UpStarts were able every-time to decrease their prices to
be the lowest. Afterall, they had 20,000 Bags and Cans sitting
in their new warehouse to back them up and deliver from. Price,
to them, was irrelevant. They had other objectives than "profit".
And besides, their Rice/Papaya inventory had cost them virtually
nothing (but 1% of it's value) to obtain and maintain. Low cost.
At the end of that marketing day, the competition was left with
all their unsold bags and cans. And the UpStarts had cornered
both markets in virtually one fell-swoop. Imagine that.!.
And much to the chagrin of Newcomer, the UpStarts did *not* offer
to buy any of his unsold Rice. Nor the unsold competition's cans
of Papaya. They would be stuck with their unsold goods for
the next several days. Each suffering insufferable losses. All a
part of the shrewd plan to flood the market and force prevailing
prices to ridiculously low levels. A new concept for sure.!.
Eventually the UpStarts relented somewhat and agreed at the
end of each day to purchase some (but not all) of those hapless
unsold commodities. This was "helpful" to the Newcomer and the
oldtimer Papaya farmers. As it "allowed" them to stay in business
a bit longer, even as their profits and discounted prices dwindled
to ever lower benchmarks. It was all part of the UpStart's charade
and agressive behind the scenes tactics. They had become ruth-
less and determined. They would be the 800 Lb gorillas of price.
And too (while some didn't realize it) enabled the UpStarts to
replenish their high daily turnover of Rice and Papaya in their
warehouse. Indeed, They carefully managed their "buybacks" so as
to maintain their dominant 10,000 bag and 10,000 can inventory.
Remember: Neither had a producing farm nor orchard. And it was
a long trip to Bangkok to buy replenishments. Better to simply
buyout the competitor's products instead, at whopping discount.
Commodity commonality. Isn't it a wonderful thing.
Within a short time, the oldtimer Papaya farmers could no longer
afford to sell at below their production costs and (as in the
previous saga) eventually were relieved to sell their entire
Papaya Orchards and canneries to the UpStart with the Blue truck.
Blue Truck (ex)farmer UpStart had now achieved his goal: He was
left as the only remaining Papaya source for the village. And
he was able to set his price and worker wages at whatever point
he felt the market would bear. And did so. And also repaid his
10,000 lease of Papaya cans to the Bangkok warehouseman exporter.
He now had a comfortable life with his two new Papaya Orchards.
And to boot, he still owned his Bangkok Bar. Collateral released.
Similarly, the previous/devious Newcomer was forced out of his
business with his own tactics used relentlessly against himself
by the UpStart with the Red Truck. And was himself relieved to
be able to sell both his ill-gotten Rice Farms back to the (ex)
farmer with the Red Truck.
And the 10,000 bags of rice were lease-fulfilled back to the
Bangkok Rice exporter. Plus the minimal accrued interest. Now
he was once again the village's only rice source and farm owner.
How magically his assets have grown. Two Rice farms and still has
his thriving Bar in Bangkok. Capitalism, Asia-style. It's great.
That should be the end of this saga. But isn't. In future chapters
we will learn of whatever became of the beaten/despised Newcomer.
He (being shrewd and brash) of course knew or suspected how the
two farmers had beaten him with this new game tactic. But at the
time was powerless to overcome their strategy. Mostly because he
didn't have the required connection to big Bangkok warehouses. He
wasn't an insider nor privy to their carefully conceived plans.
And besides, the cooperating Bangkok exporters would certainly
have brushed him aside all as part of their empathetic plan.
Can you say r-e-v-e-n-g-e.?.
And of course he didn't own a coveted Bangkok Bar to add punch
to the whole scheme. Recall that the Exporters expected the two
Bars at a favorable "friendly" price from the two (ex)farmers.
Do you suppose they may be a bit irked at not (yet) becoming
the owners of those Bars.?. Hell Hath not the Fury of a wealthy
Exporter scorned. Can you say c-o-n-s-p-i-r-a-c-y.?.
And we will learn of a curious discovery the UpStarts made when
they realized some consumers were not (daily) redeeming their
chits at their warehouse for actual Rice bags nor Papaya cans.
Amazingly, their inventory kept growing. What to do with it.?
Can you say r-i-s-k-y.?. or d-e-r-i-v-i-t-i-v-e.?.
We'll also be surprised to learn of another revolting development:
The unexpected return of the mysterious Yellow trucker. Who now
has a business card that says simply: "Have Truck -- Will Travel"
Can you say e-n-t-e-p-r-e-n-e-u-r.?.
And what of the local "Mayor" and "Regulators".
Can you say p-a-y-o-f-f-s.?. or c-o-m-p-l-i-c-i-t-y.?
==================================================================
Stay tuned...
ThaiGold@OperaMail.Com
==================================================================
Phantom Rice Merchant: Part 1: [RePost from Sunday]
Does This Sound Familiar.?. [for those who missed it]==============================================================
Once upon a time, far far away, in a Southeast Asian village,
there was a small open air marketplace. Local farmers would
bring their harvested crops and handcrafted items there for
sale daily on their little cubicle tables and mats. Each had
over the years, earned enough to have a small truck. One was
painted Red. The other was painted Blue. They drove in from
the North. Where the rice paddies were located, their homes.
For years, these two farmers setup their two competing tables
for their bags of Thai Sweet Rice. Each usually brought about
50 bags of rice. And each posted his price on a little sign
atop his own stall's pile of rice bags.
As the day wore on, each farmer would glance over at the other
farmer's sign and it's dwindling pile of rice. And each would
adjust/re-write his own price to be a tiny bit lower than
the competitor's price. The prices fluctuated, mostly downward
until by the end of the day, each farmer had sold all of his
rice. At which time each closed up and went home in their trucks.
Then one day a funny thing happend. A newcomer came to the
marketplace, on a bicycle. No truck. And he proceeded to setup
his sales-mat nearby the other two rice merchants. He placed
only a single bag of his example Thai Sweet Rice upon his mat.
It was of identical quantity and quality as the other farmer's
50 bag stacks.
Then, to their amazement, this newcomer placed a sign upon his
otherwise empty mat: "Rice for Sale -- Lowest Price Guaranteed --
U-Pickup at My Warehouse Tonight".
And as an initial price, he'd glance at the other two farmer's
signs, then write his own price in big numerals, 10 Baht *lower*.
Curious shoppers, couldn't resist his low price and upon examining
his single rice bag's quality and taste, would happily place an
order with the newcomer for one or two bags, whatever they had
intended to purchase that day. Each customer received a "chit"
from the newcomer, guaranteeing availability, later that night,
at his nearby "warehouse" at an address just south of town.
As the day wore on, the two competitor farmer's kept re-pricing
thier own stacks of rice lower and lower. To try to lure the
customers back to their still stacked stalls. But they had
virtually no customers. Everyone was buying instead, from the
newcomer, and happy as larks walking home with their rice-chits.
For, nomatter how much lower the two farmer's marked down their
own bags of rice, the newcomer always re-priced his to be lowest.
Needless to say, at the end of the day, the two old time farmers
had sold none of their rice. Yet the newcomer had sold 100 bags
of his "example rice" and had alot of Baht to show for it. Then
the newcomer closed up shop and rode out of town on his bicycle
an hour before the other two farmers normally would close.
Relieved that this newcomer had departed, the hapless oldtimers
remained at their rice-stacked stalls hoping against hope that
a few more customers might come late to buy at-least some of their
piled-high leftover un-sold rice.
And fortunatly, a customer did showup.!. With a cute Yellow truck.
And this customer first went to one of the two farmers and looked
at his by-now rock-bottom re-priced sign. He then bought all of
that farmer's unsold (50) bags of rice. The farmer was delighted,
and even helped to load the bags onto the Yellow truck. Then that
farmer went home.
Next, the Yellow truck customer went to the remaining farmer's
stall and was pleaded-with to purchase all of his unsold bags
of rice too. And at an equal or sometimes even lower price. And
since this seemed fair and acceptable, the consumer proceeded to
purchase those 50 bags as well. And the farmer was delighted to
assist in loading them upon the Yellow truck. And went home.
The Yellow truck departed as well, but towards the South.
In the cool of the evening, one by one, the customers who'd
bought individual bags of "chit-rice" showed up at the warehouse
and were greeted pleasantly by the newcomer. Each presented his
chit and received promptly and courteously a full bag of rice
of the identical quality and quantity they had seen earlier as
his "example" bag in the marketplace. One hundred chit-buyers
each received their rice and happily went on their merry way.
A satisfied customer, spreads the news to others. And soon, the
newcomer had a regular clientel each day in the marketplace.
And each day, the same ritual ensued. The hapless competitor
farmers kept marking down their unsold rice and by the end of
each fruitless day, were always amazed and relieved to see the
miraculous arrival of the mysterious Yellow truck arrive to
purchase all their unsold bags.
As weeks progressed, the newcomer's business grew, and soon he
was selling 300 chit-bags of rice daily, at guaranteed lowest
prices. But the two competing farmers were not disturbed much
by this. Because, fortunately for them, each day the mysterious
Yellow truck buyer bought up all their unsold rice. And indeed,
even arranged for each farmer to bring 150 bags of rice each day
instead of their usual 50 bags each. Which they were delighted
to do, even if they only got a rock-bottom and ever-lower price.
After one year of this brinkmanship, one of the farmers told
the Yellow truck that he wouldn't be bringing anymore rice to
the marketplace. He just couldn't afford to grow and harvest it
any longer at such dismal prices. He would sell his rice farm and
move away to Bangkok. At a meager price too, as he no longer cared.
Upon hearing this, the Yellow truck buyer offered to buy his rice
farm from him. And the farmer agreed. And did so. But the Yellow
trucker knew nothing about rice farming. Instead he just let the
farm go fallow. Meanwhile he was able to get the remaining rice
farmer to bring a full 300 bags of rice daily, to makeup the short-
fall. Which he did. For another year.
But by the second year, that farmer too had found rice farming to
be uneconomical at such continued low prices. He would sell his
farm to the Yellow trucker as well. And at a meager price.
Now the Yellow trucker owned two wonderful, but fallow rice farms.
The next day, the newcomer arrived in town at the marketplace
and setup his usual stall mat. But today, his sign was different.
It simply said:
"Rice Workers Wanted -- Minimum Hourly Wage Guaranteed -- Apply here"
Several unemployed rice paddy workers immediately applied, and
soon the newcomer was bringing 300 bags of rice daily into the
marketplace, where he was the lone remaining rice seller.
And his new sign said:
"Highest Quality Thai Sweet Rice -- New Crop -- New Price"
"Buy now -- While Supplies Last"
==============================================================
ThaiGold@OperaMail.Com
===============================================================
Hi Trail Guide (If you're still around),
It never occurred to me that you and Prof. VonBraun could be the same person. Instead, I figured you both to have come from German families. Where I grew up (southwestern Pennsylvania hills), using "bought" and "brought" interchangeably was a common characteristic in the language of folks who grew up with German heritage or in an area settled predominantly by German immigrants.
Not looking to expose your identity. Just thought I'd bring up a more likely reason for the language similarities.
simply me
Tonight, I will address the inflation or deflation debate that was highlighted this weekend by the formidable and never to be dismissed Trail Guide. Forgive me as I tell you my view from 30,000 feet. Much closer and the details would get in the way of full understanding by many here.
First, I thank Trail Guide for referring to me as a smart hard money thinker. His companion comment that I and many others walk forward down the gold trail but are looking backwards is similar to saying generals always fight the last war during a current conflict or that you can't see the economic pot holes down the road if you are always looking in the rear view mirror. Fair enough.
I however reply with a well-known admonishment from Lord Acton. This Cambridge historian of the 19th century wrote that those who do not know history are doomed to repeat it. I have devoted a professional life and investing life to knowing "something" of economic history - both domestic and international history. My summary viewpoint as expressed @ 39423 is reproduced below.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
The economic lesson is ... ... ... ... ... .
Deflation is everywhere and always a monetary phenomenon -- a lack of sufficient currency and CREDIT in the economy to support prices. When the growth in credit slows or turns negative due to higher interest rates and higher default rates, then the above illustration [about the collapse of real estate] plays out.
Some wise ones here state inflation is the curse waiting for us over the horizon. I doubt it because we are already highly inflated. I point you to the NASDAQ's PE, home prices and auto prices for but three easy references. For hyperinflation to occur, even more credit would have to flow from Mr. Pump. But to whom? The consumer is over leveraged already. The consumer has binged on easy credit to the point that debt service now takes more than 90% of disposable income for 80% of consumers according to the St. Louis FED. See why the economy has soared. If the above illustration does play out, most consumers -- still anguished by their recent credit traumas - will avoid the credit trap and thus Mr. Pump will be "pushing against a string".
Remember, the consumer represents 65% or so of the GDP. As credit goes so goes the economy.
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Our worthy Trail Guide declares in his fireside chat along the Gold Trail @ message 43 that it will be different this time. It may be but as Cavan Man, a Missouri resident, might say: "Show Me". In part, Trail Guide states:
The US cannot walk away from hiking our ""gold trail"" now. Because "this process" is one of the few tools available to them for keeping the dollar perception in a good light. In effect by slowing the currency transition process they are doing exactly what world dollar holders need the[m] to do. They will inflate these derivatives until in effect; our modern gold market bankrupts itself as supply is exhausted. I say, good! (smile) But once we get to that stage, I expect that a super US economic downturn will ensue.[*] Then the fed will go wide open and cover everything in sight to keep us going! The ongoing price inflation will be driving everything from physical gold to real estate through the roof.
[And a paragraph later... ... .]
Yes, it eventually breaks everything! But this is nothing new for us gold history buffs and it's what has happen in countless modern national fiats around the world today. Nations that don't have a reserve currency to play with. We will do like their citizens do, continue to use dollars but carry in our pockets whatever new reserve is in fashion, as a backup! Be it gold or Euros or both. In addition, our entire financial structure (like in these other nations) will change to operating in an inflation economy. Money will be lost, big time and made big time, but things will still be financed, brought and sold. Houses will double, triple then double again in price, even as financing rates approach 35%, 40% or whatever. We will also follow the (then) prevailing world policy concerning physical gold, solely because it will make economic sense to our officials.
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Do read the complete message for a fuller context and more vivid understanding. Your wealth and your grandchildren demand this of you.
Perhaps the point of debate between us is: (A) Does severe deflation come next at [*] above followed sometime later by inflation and eventually hyperinflation, or (B) Does the US go directly to hyperinflation? This debate has many, many dimensions and is complicated to map. But let's give it a whirl.
ORO @ 39481 has stated that the FED will do the bidding of its owners (the banks) if events don't get too far beyond their control. I agree. Do banks and other holders of debt instruments (loans, mortgages, gov't and corporate bonds) want their wealth withered by hyperinflation? I don't believe for a moment that the creditor class is this egalitarian.
According to the IMF, foreign holders of dollars (including Central Banks) have a $6.5 trillion stake (roughly 60% in debt instruments) in protecting the value of their dollar holdings. Do they wish to see their purchasing power drop TO 25% or so under a hyperinflation adjustment or increase TO 175% or so under a deflationary adjustment? If those wise monetary strategists and Euro creators thought that the dollar would go "up in smoke", why do they continue to hold on to the US$ at an INCREASING rate of accumulation? The ECB holds nearly 80% of its assets in US Treasuries (with 15% more in gold and 5% more in Yen). Is this the position of a shrewd central banker or wealth builder who is nervous about the future purchasing power of the US dollar? Why have not foreign dollar holders transitioned more rapidly away from the dollar and into the Euro, gold and other vehicles that would protect their wealth from the confiscation of inflation and later hyperinflation. Given that its "ShowTime", one would think that the transition would be more complete than still having $6.5 trillion "At Risk" of going up in smoke. (Actually, it is "ShowTime" but physical gold is a sideshow in the unfolding three-ring circus). I suspect all those foreign held dollars are still in the USA because of an explicit promise -- Your dollars will increase further in value as we deflate the debt bubble and you are able to buy hard assets for dimes on the dollar.
To RossL, Nickel 62 and others, your question is thus answered. Those dollars sent overseas by the trade deficit have ALREADY returned to the USA in the form of capital flows into debt instruments (60% or $4 trillion) and to a lesser extent equities and other assets. This gleeful repatriation of dollars is historically unprecedented and has been done for a reason. Like those of "Giant" domestic wealth builders whose dollars are now sitting in debt instruments, these instruments will be converted - in the fullness of time - into currency to purchase hard assets ("old economy" companies with captive customers, positive operating cash flow, little debt and little remaining CAPEX, or trophy real estate or certain other proven factors of production) once the deflationary spiral has exhausted itself and driven the price of all these factors into the ground. ORO stated that the banks want the gold mines and telecoms on the cheap. The above is the process for setting up the BUYS of the CENTURY. Perhaps a real time illustration would serve us well at this point.
A Denver based gold mining company has a proven US prospect that can produce gold at a cash cost of $134 per ounce assuming a POG of $325. It also has a 43% ownership in a Canadian junior exploration company that has a proven Peruvian zinc prospect and other promising South American prospects. Unfortunately, it has limited revenues, little cash and $15 million in unsecured bonds that are due and payable in 8-01. A well-regarded gold stock analyst picked this miner in 1995 (a watershed year for the US$ - see my post @ 39276) at $3.38, backed it to $7 and now moans about it at 40 cents. The chances are good that the bondholders will own this company following a structured settlement that converts the debt into stock and retains current management with reset strikes on their options. Current shareholders could thus be diluted to 10% or less of the company. If you had $1,000, would you buy a bond at par or common shares in this company at 40 cents.
In the late 80's and early 90's, some banks liquidated land at an average 24% of the then CURRENT appraised "Fair Market" value, incoming producing properties at 50% of replacement cost or about 60% of then CURRENT appraised value and residential homes at 81% of the then CURRENT appraised value. Less than a decade later, most properties had handsomely appreciated from the FED induced credit expansion. Boom then bust then boom is the age-old cycle of wealth transfer TO the plutocracy.
Next, ... ... ... ... ... .
Does the US Government want hyperinflation? A close call depending upon timing and how events unravel. It could silently default on its outstanding debt and contingent liabilities (such as EXIM and SBA loan guarantees, FDIC insurance, etc.) by passing out wheelbarrows of FRN ala Weimar Germany. On the other hand, so many middle class welfare programs (the Big 5 are about 48% of total outlays) are indexed to inflation. They could never be met from the current tax code which has indexed rate brackets -- Thank you Ronald Reagan!
Many models have been run and are being run trying to estimate the impact on the Unified Budget assuming many conflicting variables such as (1) higher unemployment resulting in reduced FICA and income tax receipts and higher outlays for "safety net" expenditures, (2) the sharp reduction in capital gains taxes resulting from a sick equity market, (3) the use for several years to come of NOLs by corporations which no longer pay taxes but are receiving refunds because of their losses, and (4) higher (inflation) or lower (deflation) interest on the current debt (nearly $6 trillion) plus new trillions of debt issued soon to balance sharply lower tax receipts and sharply higher outlays.
In a period of hyperinflation, could the US issue more bonds and notes in order to balance the budget? Perhaps, but at what rate and in what currency? Would a 50% APR every 28 days like the Mexican CETES in 1995 be acceptable to the pride of the only superpower? Or would 3% on funds borrowed in Euros be more understandable to the apostles of Jenny, Jerry and Ophra.
Physical Gold Advocates fear not. Gold historically has done ITS BEST during a deflation! Yes deflation. When all other assets were spiraling down in value because defaults soared and collateral sales pressured the prices of all hard assets, gold alone increased its value. It has no liabilities (no one to default) and is portable to destinations without domestic deflation. See Professor Roy Jastram's The Golden Constant (Wiley & Sons, 1978) for a 416 year history of gold under four major deflationary periods of the past. If you are a bit lazy or pressed for time, simply recall that gold in the 1930's went from $20 to $35 during that deflationary depression. One caveat: All four were under some form of the gold standard.
Is not deflation the very outcome that the Austrian economist Mises predicts following periods of rampant credit excesses? Furthermore, if one has escaped indentured servitude (being a debtor) through hyperinflation, how likely is one to "re-up" by borrowing at floating rates of "35%, 40% or whatever". What could one invest in and reasonably hope to make a positive spread (return on investment) if this is your cost of capital?
With respect to Trail Guide's "living in many, many lands and have witnessed and used such inflating systems," I would point out these key differences in economic profiles.
Unless he was economically alert during the last time a reserve currency "fell from grace" (the pound sterling following WWI), then the experience of Mexico, Argentina, Russia and other commodity based economies are not on point.
Furthermore, hyperinflation is difficult to introduce when a country's government, businesses and citizens are already overly leveraged and are having trouble meeting debt service obligations ($2 trillion annually as recently posted by ORO). Total debt in America is often quoted in multiples of record high GDP. It is one thing for the FED to pump money vigorously into the economy. It is another matter all together for the banks to find credit worthy or semi-credit worthy users of this fresh tidal wave of liquidity. By some estimates, corporate America has already leveraged up from a conservative ratio of 25% debt to 75% equity to a precarious 75% debt to 25% equity ratio. That is almost a 10 fold (1,000%) increase in debt!
In summary, he who has the gold makes the rules. The creditor class -- both the domestic plutocracy and their foreign cousins, has the gold -- both literally and in the form of debt claims. They would rather convert their paper claims into foreclosed hard assets following a deflation and at worst loose a billion or two from poor collateral valuations while reaping trillions in new purchasing power. That beats passively loosing 20% - 40% - 60% of the value of the entire debt portfolio from hyperinflation. Furthermore, if the word came out that hyperinflation was the policy of the USA, who would lend their funds for the prospect of receiving less purchasing power later? I for one would rather take my chips overseas to an economy that is stable and offered good returns for definable risks. Domestic usury laws can only be raised so high and bankruptcy laws tightened so tight before the great unwashed revolt.
The major risk to the scheme of the plutocracy is a revolt of the masses -- whether politically through election of populists who pass legislation such as foreclosure moratoriums or violently though protests, strikes, lynchings, pogroms and the like. Thus inflation followed by hyperinflation will be instituted by the FED at the instruction of its masters once the fear of loosing it all exceeds the greed of gaining another prized asset on the cheap.
Lastly, consider this. Current wealth of creditors only increases during deflation as each dollar now held becomes more dear. Inflation is a wild card for everyone. For example, my one ounce Maple may be worth $20,000 or $30,000 once deflation is turned into hyperinflation (and former creditors have switched to being net debtors). But what is that $30,000 worth in today's purchasing power - $3,000 for a 10 to 1 return or $300 for a big waste of time and energy?
Truly, what waits for us economically just over the horizon will be calamitous and stunning for all but a few.
Black Gold, Yellow Gold - the only wealth worth physically owning.
Now, those are both posts that touch me where I live. Questions like these are the substance of why we are here. Excellent
Rockgrabber, formal education does not a brain make, and the degrees handed out by the school of hard knocks, when combined with some grey matter, are much more valid than the other kind. I sat on the board once with a guy who claimed he had only a grade 3 education. He was without a doubt, probably the most effective board member I have ever seen. An absolute delight.
I like your thoughts. In fact, I would be very hard pressed not to deeply respect your thoughts about staying the course and fighting for what you believe one voter at a time as you say. I just hope this excercise isn't like keeping a book about a cure for some illness on a shelf. And we wait for people to recognize that we have that cure on shelf number nine. I wonder why we can't just keep knocking at the Republican door and stay the course on educating one votor at a time there. And as simple success is added one at a time, we also pick up the residual vote of less ideolgical or principled Republican voter as they vote with you against a Democratic opponent. Can't you just see Trent Lott looking at the balance of power some day and seeing that first member of the Libertarian segment of the Republican party make his way through a primary. He then sees that this one candidate helps him keep his power and any majority? It is how the Newt Gingrich party, as I call it, made their way up the ladder.
Anyways. Best to you and yours. It has been a good discussion and I have learned some things from yourself and others about this.
My mixup, Brown did not date the events which, as I should have remembered, were not concurrent, and he was referring to future events when talking of current and past events.
Was not the move to $35 POG a "command event" and devaluation of the dollar? My concern is that a deflationary event will bode ill for POG.
I've often wondered out loud here what the US strategy is in defending our markets and currency. Well, intervention in a cloak and dagger context is relatively evident yes. Moreover, the foundation is a "too big to fail" series of tactics--like Thai's 800# Gorilla.
No countries can exist in a vacuum but, the Euro zone perhaps in conjunction with additional key, strategic partners is relatively closed is it not?
Here's my call: Escalating inflation accelerating from the point oil producers agree to more widespread use of the Euro in exchange for their resources. The inflation will ravage the economy and evolve into a deflationary cycle. Ultimately, full recovery is ten years forward.
Sir JustamereBear Thanks for your long thoughtful post. I have been a bit reluctant to continue, since I seem to be drawing so much vitriol for my few maybe clumsy atempts to understand what might be coming to Canada in the event of further major increases in US$ oil prices, and why oil should be priced in US$ anyway. But I have decided I have a right to carry on a civilized discussion, no matter who is screaming outrage from the sidelines. And I am greatful for your support in this.
When we sit around the campfire, each of us sees that fire from a different point of view, yet, it is still only one fire. I have to struggle sometimes to remember this.
Canadian Life and the oil business
I was born and educated in B.C., Chemical Engineer.
One of my grandfathers emigrated to Canada from Italy in 1900, worked on the railway, became a Vancouver hotel owner, quite wealthy, and lost it all in the 30s crash. On my mother's side they were United Empire Loyalists, from the Old World to Boston in 1700 or so, then to Canada in 76. My great grandfather lived for 20 years with the Innu in Labrador, 1860's, and then wound up a scout on the Prairies, for the Feds against Riel. My grandfather, a medical doctor, was a pioneer in public health and hygiene, and was simultaneously chief medical officer for Manitoba, AND Minnesota, in about 1900. (No borders then!!!) His entire family, except my mother, wound up back in the US.
I'd rather be called a Canadian than anything else except a human being and a good man (grin).
All my early life I heard stories about the wicked East and the nefarious French Canadians. I think now it must have been hard to have been a French speaking Canadian, visiting B.C. and be subjected to such mindless prejudice. When I graduated from UBC I deliberately accepted a job offer from a major Oil company to work in their Montreal refinery. I wanted to see for myself what Quebec was like. I found the people of Quebec to be utterly charming and fun. Much more like what I understood the Italian half of my family to be like, than the British half, which was the environment I'd known in BC.
Transferred to Toronto, back to the British! I stayed with that oil company for about 15 years. By the late 50's it had become apparent that unless you were either American, or had spent a lot of time in the exploration and production department iin Calgary, you weren't going to have a chance to be president. By 1960, the centre of financial gravity was already shifting from Toronto to Calgary. By 1976 or so, the head office was moved to Calgary.
There was a bigger centre of gravity in the USA though, and the biggest of all was still in Europe. At one point, we wanted to establish a potash business in Saskatchewan, selling to the US. The project was stopped, because the US branch of the company said it was their market, and even though they weren't planning to exploit it, we couldn't. In that multi-national oil firm, it was ok for the US to sell in our Canadian market, refined oil and insecticide etc. But it was not ok for us to sell in their markets.
It's frustrating to me that we have such different views of what happened. I see the TransCanada Pipeline as a government sponsored, private enterprise that was just like many of the oil companies, government sponsored, tax rebates for exploration and so on, like the original Canadian Pacific railway, designed to keep Canada together, out of the hands of the Americans, make it possible for Canadians coast to coast to have our resources when others ran out, and to deal with each other. In Ontario, for the period of about 1960 to 1970, we paid more than world oil prices to Calgary branches of multi-nationals, and to other smaller local oil producers, to fill that line, so they wouldn't send their oil south. I guess we paid closer to world prices from about 1970, to 1980 when oil went from 1.75 to 37 $ per barrel.
Then in 1980 the NEP which so annoyed the people of Alberta, and the local oil companies. I had left the oil company in 1970, so I don't know what the reaction was internally. Most of those big multi nationals were already dealing with having their assets nationalized by various governments in Africa and the Middle East, so what happened in Canada must have been relatively small potatoes to them.
All this stuff as I see it is the interplay between powerful corporate people, banking people, and government people. And the ordinary people, of whom I am one, get caught up in their machinations and often shout their battle cries, without knowing who is our real enemy.
It is no surprise to me the Globe and Mail didn't publish the views of Calgarians in 1980. They don't publish my views now about gold and world economics and the forth coming disasters to people's so-called savings, the way the banksters and our governments have conspired to create the illusion of wealth while setting us up to steal yet more of the little we have. And they have got us screaming at each other, when we should be joining forces against them.
I guess I resent being made responsible for the Globe and Mail editorial policies, just because I happen to live in Ontario. They don't listen to me either, I assure you.
I have in my past flirted with the corporate power elite, some of the biggest names in Canadian finance, and I found them all the same, sort of "clubbable", clearly the same kind of people, with the same viewpoints on most things. I don't think these people are members of a conscious conspiracy. I think they just do what they have always done, with the people they are most comfortable with, because they know no other way.
They can't be reached with the kind of reasoning I espouse, any more than can the people who who want to dump S on me, just because I live in Ontario. I couldn't run with that crowd, lack of ambition, and their kind of smarts. Also, I had other stuff I wanted to do with my life.
Right now, I am really keen to understand when and how the whole economic edifice we place so much faith in, will come tumbling down, fearful for the effect these events might have on my children's daily life and hopes, hopeful a better, more "community-oriented" way, more respectful of each other, and our environment, will come out of it.
I'd rather debate economics, and fundamental values, than this or that environmental or corporate or political issue, which seem to me to be putting the cart before the horse.
At the centre of it, in ways I don't undrstand but am trying to learn here and elsewhere, is gold, what it means, why it endures.
A fascinating read...I would like to wait for ORO's and Trail Guide's take on your post, but in the meantime I ponder what "debt instruments" you mean in reference to the repatriation of US dollar assets? I am not nearly as familiar with the fiscal side of the world as many are here, however, I am even more confused than ever with your contention that US$ debt, some 4 trillion $s are probably already comfortably back home in the US. One would think that for geo-political reasons (freezing of foreign assets and accounts)for foreign countries that have perpetrated transgressions against the United States would pose a security problem for fairly large population blocks out there.
Would you expand on why "they" want telecom specifically, in addition to precious metals?
I find this especially interesting in light of the fact that Deutsche Telecom is spending $50 bil to buy a U.S. telecom company. This cannot be explained, as you hypothesize, by Europeans snapping up American assets so as not to lose market share when the dollar crumbles.
Because one may not have had an attent focus to understand things the way schools wanted them to, does not mean they are not bright. I would actually argue they can be more bright, due to being less currupted by the schools (goverment). If you are the goverment and you want to have everyone see things the way you wish them to, you start in school. Why do you think this school system is screwed?? = Cause its designed to be.. Its the goverments school system, its almost as failed as there prison system. They dont want these things to work, they just want them to look like they work (sort of the same as the money system). Everything built by man was destined to fail. A little more time, and we will have had enough time to accomplish our foolishness. Its all on the table to see, pretty soon it will be time to eat what is on the table. you can go to school for your hole life and not come up with ansers (They dont teach right and wrong). The more you go to school the more likely you will be to see things "their way". You will end up your hole life striving for things that are in vain, if you go where school directs you. School is good for learning some things, like facts, but all else is there just to direct you going where they want you to walk. So dont get out of line!!
Snippets from last week's Credit Market Commentary of Noland @ PrudentBear.com
This week, Moody's announced that it expects corporate bond defaults to rise to a staggering 8.4% during the next twelve months. During the third-quarter, Moody's downgraded $44.3 billion of junk debt, compared to upgrades of $19 billion. There were 82 junk downgrades versus 29 upgrades. Also during the quarter, Moody's placed 62 US corporate issues under review for downgrade, compared to 37 for possible upgrade, and 50 for downgrade during the second quarter. Dow Jones quoted Moody's John Lonski, "we ought not to be quick to assume that the worst is over for the high-yield bond market." There should also be no mystery why junk bond yields are at the highest in 10 years and why they will not be narrowing any time soon.
Another news release from Moodys caught our eye this week. "The number of downgrades in the U.S. asset-backed securities market significantly exceeded the number of upgrades by 122 to 23 during the first six month of 2000." We continue to see cracks in the foundation of Wall Street "structured finance," with the highest probability of a serious break in US and global financial markets since 1998. An acute liquidity crisis has developed in at least the equity derivatives and junk bond markets, with quite negative implications for liquidity throughout the US financial system generally. Again, the focus is on the impairment of the leveraged speculating community and the inevitability of forced liquidations. It's all about liquidity, or the lack thereof...
Consumer credit excess runs unabated. After a huge month of issuance ($30 billion), the asset-backed market is on track for total issuance of almost $230 billion for the full year. This compares to $217 billion last year. Year to date, 27% of issuance has been for home-equity loans, 19% for credit cards, 20% auto loans, and 34% for "other." The "other" category includes manufactured housing, aircraft leases, student loans and equipment leases. Only time will tell as to the quality of these loans, particularly in the "other" category. Obviously, the asset-backed market is a key source of funding for the continuing consumption binge. With its earnings release, we see a 26% year-on-year increase in managed receivables from credit card powerhouse MBNA. Capital One experienced 30% loan growth during the third quarter, up from 23% during the second-quarter and 13% growth during last year's third quarter. There is little mystery behind today's stronger than expected report on retail sales - it's all about credit.
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The Traveler (10/24/2000; 0:25:21MT - usagold.com msg#: 39771) Deflation Scenario II
Greetings and warm regards to all.
Tonight, I will address the inflation or deflation debate that was highlighted this weekend by the formidable and never to be dismissed Trail Guide. Forgive me as I tell you my view from 30,000 feet. Much closer and the details would get in the way of full understanding by many here.
First, I thank Trail Guide for referring to me as a smart hard money thinker. His companion comment that I and many others walk forward down the gold trail but are looking backwards is similar to saying generals always fight the last war during a current conflict or that you can't see the
economic pot holes down the road if you are always looking in the rear view mirror. Fair enough.
I however reply with a well-known admonishment from Lord Acton. This Cambridge historian of the 19th century wrote that those who do not know history are doomed to repeat it. I have devoted a professional life and investing life to knowing "something" of economic history - both domestic and international history. My summary viewpoint as expressed @ 39423 is reproduced below.
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The economic lesson is ... ... ... ... ... .
Deflation is everywhere and always a monetary phenomenon -- a lack of sufficient currency and CREDIT in the economy to support prices. When the growth in credit slows or turns negative due to higher interest rates and higher default rates, then the above illustration [about the collapse of real estate] plays out.
================Mr. Traveler: conversely: the "real" inflation I point to is largely a cash phenomenon, where all the past massively over created credit instruments are brought up by the money making authorities and paid for with printed cash or allocations to the owners digital cash
accounts.================= more
Some wise ones here state inflation is the curse waiting for us over the horizon. I doubt it because we are already highly inflated. I point you to the NASDAQ's PE, home prices and auto prices for but three easy references.
================ Sir, your three examples are the beginning "price" results of our highly inflated financial credit structure. However, as I pointed out above, that structure today is in the form of "highly reproduced" (inflated) credit instruments. In addition add to that mix all the vast
paper derivatives in place and we can see how very different our present money inflation has been. Even as it only begins to raise prices.=============more
For hyperinflation to occur, even more credit would have to flow from Mr. Pump.
============Not true, sir. As your own examples pointed out above, rising prices in your examples above indicate how we are already receiving the effects of a hyper inflated credit system. Again, these are only an advance example of price inflation that's beginning to reflect the "real" amount of "credit money" we have created over 20, 30, 40 years. ============more
But to whom? The consumer is over leveraged already. The consumer has binged on easy credit to the point that debt service now takes more than 90% of disposable income for 80%
of consumers according to the St. Louis FED. See why the economy has soared. If the above illustration does play out, most consumers -- still anguished by their recent credit traumas - will avoid the credit trap and thus Mr. Pump will be "pushing against a string".
Remember, the consumer represents 65% or so of the GDP. As credit goes so goes the economy.
=================Good point! It's one we have used to explain why deflation in a credit inflation is always a real possibility. But, hyperinflation cannot happen in a credit society unless the credit starts being made into cash.. Our (yours and mine) "pushing on the string" scenario is
predicated on pumping more credit to those that don't need it.
However, in the real hyperinflation that's coming as it follows our current credit inflation phenomenon it's not the borrowing class that's liquefied, it's the lending class! Remember, out there in our vast dollar world, for every dollar a consumer has borrowed, some entity holds the other
side of the credit instrument. Our classic deflation begins when these holders are no longer being paid, resulting in the write down of their assets. Across the land, banks, credit unions, citizens with lend able funds and every other form of lender no longer own a credit instrument that's sellable at par. That's 100 cents on the dollar.
Hyperinflation begins when pushing on the string no longer is an option. As you pointed out; "the consumer is binged out"! But there is more (smile).
We would not embark into such an obvious currency destroying process if we could drag the rest of the world with us into a cleansing recession. Call it an "almost deflation" where we start the inflation / deflation circle over for one more credit cycle. This is our record from most the dollar's
life.
No country ever hyper inflates for the pleasure of the ruling class, as many want to believe. They / We inflate to keep the domestic system in use and do so because it's the last resort. In other words you are forced into it! Today, the advent of the Euro has created a currency competition that will allow world investors to run from any deflationary, restrictive policy the US can offer. Our
currency will be lowered to non reserve status no matter what route we take. Just as in many other historic examples and present examples around the world, nation states always choose hyperinflation when no other way out is offered. No nation on earth has ever cascaded themselves into deflation once they are off the gold money system.
Below Traveler addresses some of the very aspects I detail in the above.======================== More:
Our worthy Trail Guide declares in his fireside chat along the Gold Trail @ message 43 that it will be different this time. It may be but as Cavan Man, a Missouri resident, might say: "Show Me". In part, Trail Guide states:
The US cannot walk away from hiking our ""gold trail"" now. Because "this process" is one of the few tools available to them for keeping the dollar perception in a good light. In effect by slowing the currency transition process they are doing exactly what world dollar holders need the[m] to do.
They will inflate these derivatives until in effect; our modern gold market bankrupts itself as supply is exhausted. I say, good! (smile) But once we get to that stage, I expect that a super US economic downturn will ensue.[*] Then the fed will go wide open and cover everything in sight to keep us going! The ongoing price inflation will be driving everything from physical gold to real estate through
the roof.
[And a paragraph later... ... .]
Yes, it eventually breaks everything! But this is nothing new for us gold history buffs and it's what has happen in countless modern national fiats around the world today. Nations that don't have a reserve currency to play with. We will do like their citizens do, continue to use dollars but carry in our pockets whatever new reserve is in fashion, as a backup! Be it gold or Euros or both. In addition, our entire financial structure (like in these other nations) will change to operating in an inflation economy. Money will be lost, big time and made big time, but things will still be financed, brought and sold. Houses will double, triple then double again in price, even as financing rates
approach 35%, 40% or whatever. We will also follow the (then) prevailing world policy concerning physical gold, solely because it will make economic sense to our officials.
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Do read the complete message for a fuller context and more vivid understanding. Your wealth and your grandchildren demand this of you.
Perhaps the point of debate between us is: (A) Does severe deflation come next at [*] above followed sometime later by inflation and eventually hyperinflation, or (B) Does the US go directly to hyperinflation? This debate has many, many dimensions and is complicated to map. But let's give it
a whirl.
ORO @ 39481 has stated that the FED will do the bidding of its owners (the banks) if events don't get too far beyond their control. I agree. Do banks and other holders of debt instruments (loans, mortgages, gov't and corporate bonds) want their wealth withered by hyperinflation? I don't believe for a moment that the creditor class is this egalitarian.
==============No Traveler, I doubt the creditor class as a group is seeking to remove the financial inequalities that separate people through this coming process of hyperinflation. Far from it. As I stated above, the credit hyperinflation has already occurred. It's there, in place as we speak.
What is now faced by this non egalitarian lending crown is the choice of: having their debt instruments defaulted on and losing everything,,,,, or playing let the fastest runner win the game!
My friend this is the choice you get when the currency your assets are denominated in hits the end of it's "timeline".
Human nature has followed this path for thousands of years. You know the old joke about out running the bear? Well, these lenders will influence our financial policy as such. They will try to get their debt securities liquefied first, spend the fiat and in this process out run you and I. Leaving anyone they can beat to the mercy of the hyperinflation bear eating their remaining fiat assets.
Your point above about deflation and then inflation is still valid; if we cannot get the borrowers to borrow more and in doing so stop the economy from serviceing "OUR DEBT SECURITIES",,,, ! But we cannot risk the markets, in this particular time and place to make that decision.
Here, we and the world would for the first time make a "judgment call"; ---can the "dollar fiat system" our wealth is stored in endure the deflation / recession that must
follow?---
To date, everyone stayed with the only reserve currency available. Tomorrow they will not because they have a choice.==================more
According to the IMF, foreign holders of dollars (including Central Banks) have a $6.5 trillion stake (roughly 60% in debt instruments) in protecting the value of their dollar holdings. Do they wish to see their purchasing power drop TO 25% or so under a hyperinflation adjustment
============Again, dollar holdings by foreign CBs are worthless anyway when the nation issuing them does and must run a constant trade deficit. The money can never go home, only build further on digital account.
This is the reason most Hard Money Advocates fall so short in evaluating our present gold values using only the commodity use of gold. They completely miss the fact that current dollar pricing of gold vastly understates it's wealth asset value.
Especially to CBs if their dollar assets dissolve in bookkeeping form, the way they would do in a hyperinflation. No, the billions in assets they hold in dollar debt instruments would not disappear, only be transferred through a massive devaluation of the dollar against gold.
================== more
or increase TO 175% or so under a deflationary adjustment?
=======================Again Traveler:
My above explained why a deflation cannot be in the cards. But if so, foreigners holding even government guaranteed paper debt in a deflating currency is little more than bookkeeping wealth if the actual goods buying power of the currency is compromised.
Yes, our US would continue to print dollars to service it's debt, making the accounts look good. But, in such a deflation situation, foreign exchange controls are a 100% guarantee. Foreign held dollar assets would not come home, at least not at the same exchange rate one needs to become
financially whole!
When the world begins to abandon a currency at the end of it's reserve timeline, deflationary gains on debt instruments are an illusion of bookkeeping. There would be no 175% real purchasing power gains allowed. ========================more
If those wise monetary strategists and Euro creators thought that the dollar would go "up in smoke", why do they continue to hold on to the US$ at an INCREASING rate of accumulation?
The ECB holds nearly 80% of its assets in US Treasuries (with 15% more in gold and 5% more in Yen). Is this the position of a shrewd central banker or wealth builder who is nervous about the future purchasing power of the US dollar? Why have not foreign dollar holders transitioned more
rapidly away from the dollar and into the Euro, gold and other vehicles that would protect their wealth from the confiscation of inflation and later hyperinflation. Given that its "ShowTime", one would think that the transition would be more complete than still having $6.5 trillion "At Risk" of going up in smoke. (Actually, it is "ShowTime"but physical gold is a sideshow in the unfolding three-ring circus). I suspect all those foreign held dollars are still in the USA because of an explicit promise -- Your dollars will increase further in value as we deflate the debt bubble and you are able to buy hard assets for dimes on the dollar.
====================Traveler, I addressed this in the above. Still, their asset base is safe in any circumstance.Their gold sales are largely to each other and much of the very gold they are delivering to certain clients will return for Euros once a dollar transition begins. Indeed, there has
been massive ongoing physical gold buys the world over. Who do you think has been buying all the gold non official "Paper Gold Advocates" have been divesting themselves of? The key to understanding the scope of this is in seeing through the dollar paper gold pricing system. Had the
prices of paper gold been rising all these years, it would have indicated a continued support of the dollar based gold markets. As such, the world today expects this currency system to fail, taking it's paper bullion markets with it!
These "shrewd central bankers" are no fool to the economic world nor the political world. The US is still a major military and political force and will continue to be for some time. Allowing the US to destroy our own system and offering an avenue of escape for investors worldwide is a master political play. Why dump your dollar reserves when such an action would make you the bad guy? Buy some gold quietly, yes. But, better to let your dollars dissolve and have your assets transformed by a dollar / physical gold devaluation. FreeGold will do just that! ======================more
To RossL, Nickel 62 and others, your question is thus answered. Those dollars sent overseas by the trade deficit have ALREADY returned to the USA in the form of capital flows into debt instruments (60% or $4 trillion) and to a lesser extent equities and other assets. This gleeful
repatriation of dollars is historically unprecedented and has been done for a reason. Like those of "Giant" domestic wealth builders whose dollars are now sitting in debt instruments, these instruments will be converted - in the fullness of time - into currency to purchase hard assets ("old economy" companies with captive customers, positive operating cash flow, little debt and little remaining CAPEX, or trophy real estate or certain other proven factors of production) once the deflationary spiral has exhausted itself and driven the price of all these factors into the ground.
ORO stated that the banks want the gold mines and telecoms on the cheap. The above is the process for setting up the BUYS of the CENTURY. Perhaps a real time illustration would serve us well at this point.
================= Your presentation shows a lack of understanding about how exchange rate risk works during unsettled times. Failing nation states that have opted for a fully """""fiat currency"""""" (the US dollar) do not simply stand by and allow ownership of everything in the country to be transferred to foreigners. Or even local creditors for that matter.
Truly, the vast bulk of overall debt assets standing against US credit extending institutions dwarfs our ability to service with real goods. Even at vastly deminished prices. These debt structures are held for further fiat accumulation only. Truly a Western Thought concerning wealth. Once an
economy begins to get into trouble, everyone flees these very instruments you stand by in your analysis. Truly, people understand political risk as it pertains to the fleecing of constituencies. It doesn't happen in powerful states and investors know it.==============more
A Denver ========"Traveler's example"====company at 40 cents.
In the late 80's and early 90's, some banks liquidated land at an average 24% of the then CURRENT appraised "Fair Market" value, incoming producing properties at 50% of replacement cost or about 60% of then CURRENT appraised value and residential homes at 81% of the then CURRENT appraised value. Less than a decade later, most properties had handsomely appreciated from the FED induced credit expansion. Boom then bust then boom is the age-old
cycle of wealth transfer TO the plutocracy.
========= These cycles end when the currency timeline ends! ==========more
Next, ... ... ... ... ... .
Does the US Government want hyperinflation? A close call depending upon timing and how events unravel. It could silently default on its outstanding debt and contingent liabilities (such as EXIM and SBA loan guarantees, FDIC insurance, etc.) by passing out wheelbarrows of FRN ala Weimar Germany. On the other hand, so many middle class welfare programs (the Big 5 are about 48% of total outlays) are indexed to inflation. They could never be met from the current tax code which has indexed rate brackets -- Thank you Ronald Reagan!
===========This is exactly what many people see and are preparing for! ==========more
Many models have =======more of Traveler's examples of possibilities=====apostles of Jenny, Jerry and Ophra.
Physical Gold Advocates fear not. Gold historically has done ITS BEST during a deflation! Yes deflation. When all other assets were spiraling down in value because defaults soared and collateral sales pressured the prices of all hard assets, gold alone increased its value. It has no liabilities (no one to default) and is portable to destinations without domestic deflation. See Professor Roy
Jastram's The Golden Constant (Wiley & Sons, 1978) for a 416 year history of gold under four major deflationary periods of the past. If you are a bit lazy or pressed for time, simply recall that gold in the 1930's went from $20 to $35 during that deflationary depression. One caveat: All four
were under some form of the gold standard.
=============== OK, now you say: """"One caveat: All four were under some form of the gold standard.""""
Boy Traveler, that's some caveat! (smile)
Four hundred and sixteen years of history examples can be toppled by one little caveat. Truly, that little point is exactly "the point" for today's time!
Our modern dollar world has created a fiat debt structure money system of biblical proportions. Nothing like it has ever been produced in the annals of time. We got to this point because our money was gold in the beginning. Then we allowed our confidence in gold as wealth to grow into
the abilities of mankind to continue such a money system without gold. The result is a massive debt against every thing except gold! Every asset that exists in the USA is fully covered by such debt several times over. Either directly or indirectly through various official government debts.
There is simply no historic example in the history of mankind that shows where everyone surrendered their assets to satisfy such debt. Yet, this is the process you Traveler, fully well expects from a deflation. A deflation by the way, that no gold standard today says must happen?
Truly, had the dollar advocates allowed it to be devalued against gold long ago we would all know where we stand. Free trading Physical gold would have slowly risen in dollar prices in an ongoing process that would have taken gold prices into the heavens. But, it didn't happen and an imploding debt structure (caused by pushing on a string of consumer credit demand) will be "QUICKLY" countered with debt instrument purchases from the official level. The old 1980 monetary control act is already in place and allows our fed to buy everything down to your shoe laces in order to stop any debt defaults. ===========================more
Is not deflation the very outcome that the Austrian economist Mises predicts following periods of rampant credit excesses? Furthermore, if one has escaped indentured servitude (being a debtor)through hyperinflation, how likely is one to "re-up" by borrowing at floating rates of "35%, 40% or whatever". What could one invest in and reasonably hope to make a positive spread (return on investment) if this is your cost of capital?
============Well Traveler, if you go to just about any third world country today, there are many extreme examples of what "re-uping" is all about.
Further, deflation's following the credit excesses Mises talked about only happen when people believe the currency system will last and opt to stay with it.--- OR -- They escape the bad credit risk inherent in remaining in such a deflating system by jumping to another system of younger
stature. Still, it leaves the choice of hyperinflation as the only route after a fiat expansion.
When such processes unfold today, people look for security in a fiat. One that will back itself with gold valuations conducted in an ongoing nature. Something the US fought so very hard to avoid all these years!===========more
With respect to Trail Guide's "living in many, many lands and have witnessed and used such inflating systems," I would point out theseom2�^�3y�The above is1C� process for setting up the BUYS of the CENTURY. Perhaps a real time illustration would serve us well at this point post @ 39276) at $3.38, backed it to $7 and now moans about it at 40 cents. The chances are good that the bondholders will own this company following a structured settlement that converts the debt into stock and retains current management with reset strikes on their options. Current shareholders indexed rate brackets -- Thank you Ronald Reagan!
(So hard to get a workday started when you're self-employed and stuff like on this forum appears every morning...)
(Also amazing to find out that USAGold board seems to be about 83% Canadian lately -- me, 25%, PEI/N.Scotia)
Your essay matches with what I have learned and thought through study of economics since the 70s. Those would have been my scenarios, too, until I started reading FOA here. As you mention, ("Physical Gold Advocates fear not. Gold historically has done ITS BEST during a deflation.") you two are not too far apart in direction, only in degree.
I am now going to have to read you both side-by-side to see what special cases he has brought to us that make such a difference. I believe it is mostly in the realm of losing exclusive world reserve currency status, something which most of us did not think or learn much about anywhere else, and would be a unique event. Any precedents with the British pound's retreat we can look at? That's why I've looked or asked for numbers that show the amount of dollars that could come this way.
(my 4-year-old has just entered, with demands for attention, so my train of thought is evaporating rapidly)
Any precedents in the 70s inflation? Beginning any loss of reserve status? Or was that mostly a _price_ phenomenon caused by oil, as opposed to money supply booming? (And thus bound to fall to earth with Volcker poking at it.)
I had expected that gold performed well in a down cycle only because of the default ("chaos on all sides") possibility, but didn't see FOA's level of multiplied value, (times 100) unless the Fed monetizes everything in sight. The deflationary impulse is for *Everyone* to pull in their horns, and only certain asset classes would benefit if the surviving money flees disproportionately to them.
Before I run, Traveler, I wonder if the exploration should be along the lines of time horizons of liquidity preference and the workout of lenders' disintermediation at present. If borrowers can scratch up the cash for payments, expecting asset values to recover more quickly, then the lenders asset-feast may have to wait. If deflation grinds on, well, we're not Japan here with its amazing covering up, and they'll grab more, IF, as ORO points out, they can themselves survive their illiquidity.
Can the Fed liquefy only to favored parties? (Silly question, of course, but give it a thought.)
Debtors and regular folks will be scrambling for liquidity themselves, but bankers and FDIC and Treasury will be trying to string them out with federally-"guaranteed" long-term obligations, perhaps forced, as in, your unreachable savings account or CD is now "rolled over" as part of your Social Security "account", to be collected whenever. Would this stave off hyper-inflation (after destroying the bond market)?
It's hard to see real estate multiplying many times more, unless the printing presses (Immediate liquidity, as opposed to disintermediated credit) are cranked to Smokin' velocity. Or, everyone sells their Beanie Babies and all surviving savings run to it. But that type of promiscuous money-production has been with us in several forms for several years now. We just haven't seen the full inventory of all the "money" that exists, and in all its forms (a la Doug Noland's Prudent Bear essays). FOA must think (1) there is more of it than anyone thinks, (2) it is all going to rush for the exits at once, and (3) the Fed will have to accommodate everyone's desire to cash out in order to keep certain structures intact.
Just posted and I see what's come in below, all of us typing simultaneously, and I have to drive off to pre-school and clients now. Damn! It's kind of a torture when you get what you want, but can't enjoy it immediately. (Well, maybe I could lop off "A" from today's schedule, and just do "B" and "C"...)
http://uk.news.yahoo.com/001024/80/amzv2.htmlBank of England Governor Eddie George said during a speech in Paris, "The euro is substantially undervalued in terms of the medium-term 'fundamentals', so in the same way sterling is on most calculations substantially overvalued against the euro."
While speculating over the likely effect had the UK opted to participate in the Monetary Union from the outset, he said, "the likelihood is that we would have experienced something of an inflationary boom -- as they have, for example, in Ireland though I am not sure one can generalise from the Irish experience." Despite the relative strength of the pound versus the single currency, the UK has managed to run a trade surplus with the EU in August, the first such surplus in nearly five years. The article concludes with the telling comment:
"Economists say there is evidence that British exporters have been cutting their prices in sterling terms to maintain their competitiveness in European markets in spite of the strength of the pound. That has hit corporate profits."
How about "Dagnabbit!" Or any other semi-curse words that won't offend sensitive eyes? (I probably know some, but I can't think of any at the moment.) Know how you feel, though!
The program that facilitates posting to the forum has an upper limit to the size of any given single post that it can accommodate and process. If you see that the tail end has been shredded during its trip in cyberspace, simply identify and resubmit the missing portion from your original...which you've hopefully created and saved in another file.
I hope that was not your password that appeared at the end of your "reply to Traveler" message.
These are excellant discussions! I am following most of it and yet it still seems a bit "over my head". I now am less confused than this morning after reading Travelers counterpoint message. I can't quite tell whether it is because I have my roots in western thought or I am looking backwards toward the future.
One thing worries me in the extreme though and that is that you too have seen the rods! (smile)
I'M AN AFFILIATE OF ROCKGRABBER AND I'M VERY PLEASED TO SEE THE ADDITIONAL POINTS OF VIEW ON THE SUBJECT OF A FAILING SCHOOL SYSTEM. I'M 24 AND HAVE BEEN GOING TO SCHOOL NOW FOR QUITE SOME TIME ONLY TO FIND OUT THAT ALMOST EVERYTHING THAT ONE IS TAUGHT IS PRACTICALLY USELESS. THE PROBLEM DOES DON'T LIE WITHIN BAD PROFESSORS OR TOO LARGE OF CLASSROOMS BUT RATHER THE CONTENT OF WHAT IS BEING TAUGHT. FOR EXAMPLE, HOW MANY OF US KNOW SOMEBODY WITH A DEGREE, YET THAT INDIVIDUAL IS WORKING IN A LOW PAYING JOB THAT HAS NOTHING TO DO WITH THEIR "FORMAL EDUCATION" IF THEY ARE WORKING AT ALL. I NEED MORE HANDS TO COUNT-GOOD THING I LEARNED HOW TO USE A CALCULATOR. FUNNY, BACK IN HIGH SCHOOL CALCULATOR MATH WAS DEEMED FOR DUMMIES; HOWEVER, AT LEAST THIS CONTENT WAS PRACTICAL AND CAN BE USED IN EVERYDAY LIFE, WITH EASE. ISN'T THAT WHAT SCHOOL IS SUPPOSED TO DO FOR US - GIVE US A FOUNDATION OF VALUABLE INFORMATION THAT ONE CAN TAKE ON IN LATER YEARS AND APPLY THIS INFO IN A PRACTICAL WAY IN EVERYDAY LIFE FROM THE WORKPLACE TO THE HOME TO MAKE OUR LIVES EASIER. IF THIS IS THE CASE WHY AREN'T WE TAUGHT ON HOW TO DO OUR TAXES. THE ANSWERS ARE VERY SIMPLE AND IT HAS TO DO WITH WHAT THEY (GOV'T) WHAT YOU TO KNOW AND WHAT THEY DON'T WHAT YOU TO KNOW. IF WE'RE SUPPOSED TO FILE TAXES WHEN WE START WORKING, WHICH FOR MANY OF US WAS DURING HIGH SCHOOL, WHY AREN'T WE TAUGHT ABOUT THIS SUBJECT AT ALL; YET, I CAN FIND THE COSINE OF A TRIANGLE AT AGE 16. DOES THIS HELP IN ANY WAY TO UNDERSTANDING MY OWN PERSONAL FINIANCES? HELL NO. THE GOV'T NEEDS AN ENORMOUS FLOCK OF SHEEP, PREPROGRAMMED GOING INTO COLLEGE TO ONLY BE LEAD FURTHER DOWN THE ROAD INTO THE ABYSS OF USELESS INFO. WHAT DOES ALL OF THIS EQUAL, LOTS OF MONEY FOR BIG BROTHER. YOU GOT THOUSANDS OF PARENTS POURING THOUSANDS OF DOLLARS INTO UNIVERSITIES SO THEIR KIDS CAN GET USELESS DEGREES IN PSYCHOLOGY TO NAME ONE. NOT TOO MANY CLASSES ON THE STOCK MARKET, FUTURES, OPTIONS, BONDS, AND EVEN REAL ESTATE CLASSES ARE MINIMAL. IF ONE IS GOING TO LEARN ANY PRACTICAL AND REVELANT INFO ABOUT THESE SUBJECTS YOU NEED TO DO IT ON YOUR OWN AND IT DEFINITELY HELPS TO HAVE A FRIEND AND WEBSITES LIKE THIS ONE, WHETHER PRO OR CON, TO FULLY COME TO AN EDUCATED CONCLUSION USING BOTH THEORY AND REALITY. ACCORDING TO MY DAD I'VE DROPPED OUT - ACCORDING TO MYSELF I'VE JUST GONE BACK TO SCHOOL.
www.kitco.comI like the last paragraph especially. Only 10-kids killed per year under 5 with firearms. 600 drowned. Our priorities are messed up.
Date: Tue Oct 24 2000 13:33
Bigred (Why are the citizens of the Western World not up in arms about oil prices? ) ID#117231:
-
This is not intended as political debate ( although one can certainly go there ) . It's been 43 years since the writer sat in a classroom studying International Economics in Graduate School and there has certainly been a lot of water ( and effluent ) flow under the bridge since then, including a lot of secret agreements and protocols and the creation of the IMF, WTO. etc. I'm struck with the serious imbalances in currency valuations World-Wide and why we are not characterizing some as depression ( deflation ) and some as excess valuation ( inflation ) . If you lived outside North America you might justifiably conclude that the U.S. Dollar is experiencing rampant inflation and, as measured by the stock market valuations at 1.5 times the value of the underlying assets, you would be correct.
The World trade in oil is certainly a serious question now that Saddam Hussein has stated publicly that he is shipping arms to the Palestinians ( which can only realistically be done with the complicity of Jordan ) . A further question is why are the citizens of the Western World not up in arms about oil prices this time around. The last time this happened in the U.S., truckers parked their rigs and farmers and truckers drove down the streets of Washington demanding action. This time it has only happened in Britain ( which, you'll see why in a minute, has really been "bitten."
I crunched a bunch of numbers and came up with the following data ( Source: Last Friday's financial data in Monday's Wall Street Journal ) .
Oil is paid for in U.S. Dollars. The exchange ratios of the national currency to the dollar for selected currencies are shown based on long term valuation in percentage terms. The higher the number, the more
unfavorable the exchange rate.
Canada ( 1.0 )
Mexico ( 1.0 )
Korea ( 1.0 ) fixed by Korean Law
Germany ( 1.44 )
Euro ( 1.22 ) not in actual circulation yet but used to settle accounts.
Japan ( 1.19 )
Britain ( 1.94 ) .
The actual commodity prices for the products are ( shown as the New York Cash Price with the increase in valuation compared to a year ago shown after the slash ) :
Arab Light $27.37/1.34
Arab Heavy $25.06/1.30
West Texas Intermediate $33.75/1.46
Alaska North Slope $32.30/1.45
#2 heating oil $.9719/1.61
Diesel $.9849/1.57
Unleaded Premium ( non-oxygenated ) 1.0009/1.50
Unleaded Premium ( Oxygenated ) $1.0484/1.55
Unld Reg ( non-O2 ) $.9972/1.57
Unld Reg ( O2 ) $1.0434/1.60
Natural Gas $4.85/1.61
In the US there's an average of about 35 cents a gallon applied as tax on road fuel grades. "Red" diesel for
farms and off-road use is not taxed by the federal government and usually not by the states ( it is dyed red ) .
By now one should be able to see where I'm going with this. The result of the multipliers shows that the countries shown are actually paying the following percentages for crude oil based on their long- term currency valuations and, of course they are paying in U.S. Dollars.
Canada ( 1.34 )
Germany ( 1.93 )
Euro ( 1.63 )
Japan ( 1.59 )
Mexico ( an exporter ) ( 1.34 )
Britain ( 2.60 ) .
The European countries have onerous tax burdens on fuels with the tax actually mitigating the rise in fuel prices when the tax is per unit rather than "ad valorem." There are some very serious distortions which could go "off scale" with continued problems in the Middle East. For example, the U.S. is supporting Israel while the Arab League Summit just concluded with a joint statement soundly condemning Israel signed by 21 of the 22 nations attending. The other country ( Libya ) had walked out earlier because they asserted the resolution was not strong enough.
Conclusion: There is very little good news these days. Realistically, the rest of the World is in or facing serious economic distortions which reflect that the dollar is seriously overvalued. There is reason to
wonder what other "skeletons" might lie in the closet after the disclosure ( by the Liberal New York Times ) last week of the secret protocols to the Nuclear Non-Proliferation Treaty between Gore and Russian Premier Chernomyrdin which the White House has refused repeatedly to even share with the Senators on the Intelligence Oversight Committee as required by law.
The 1995 agreement reportedly gives the Russians immunity from sanctions in U.S. Law so they can continue to deliver arms to Iran through 1999. The traffic continues because the Russians are simply concluding we are too weak to do anything about it.
The major issue here is the most advanced diesel powered submarines in the World that could, according to military experts, put the Persian Gulf battle fleet out of business in about four hours. These have been
delivered.
There is also the matter of advanced energy research involving the Russians which should give the Iranians the ability to produce enriched uranium in less than two years.
Meanwhile at home, we continue to be distracted by rhetoric of the number of kids killed by firearms every year and other issues which are relatively minor. The figures for 1998 have just been released. The
number of children under age 5 killed by firearms ( in all categories ) was ten, more drowned in a bucket of water. Almost all the juvenile deaths were in the 17-19 year old group involving something already
illegal, i.e. drugs. For comparison, 600 children under age five drowned in swimming pools.
Thanks, Leigh, for your patience and understanding. "Merde!(?)" My rods (and cones) are tired, too.
Henri -- you gotta wonder did we get cross-posted with a UFO website, or are Another and his Friend from farther "East" than we had previously guessed. (I'm smilin', oh yeah, he's smilin'.)
Trail Guide -- you made quite clear answers to my questions as you answered Traveler. I smell some homework ahead for us.
I was just rolling up through the posts and came across the tail end of mine. I thought it was some kind of reply from someone else. I thought, what in the world is he talking
about with all that Rods business?????
Then I saw it was mine. Guess it was too long and got cut off. Don't know where the rods in the sky stuff came from? Must be those funny people in Colarado or is it Calf.? (big smile)
Oh well, here is the rest of it from where it went haywire:
****************
With respect to Trail Guide's "living in many, many lands and have witnessed and used such inflating systems," I would point out these key differences in economic profiles.
Unless he was economically alert during the last time a reserve currency "fell from grace" (the pound sterling following WWI), then the experience of Mexico, Argentina, Russia and other commodity based economies are not on point.
==============Well, the pound opted to have the dollar back it's "transitioned" currency so the effects are not the same. Further, their debt structure had not come anywhere close to what we currently have. So they muddled through. The same could be said for the dollar if it took the Euro
as it's reserve backer. However, comparing the debt levels of Britain then and the dollar now is like comparing a baseball to the universe!===============more
Furthermore, hyperinflation is difficult to introduce when a country's government, businesses and citizens are already overly leveraged and are having trouble meeting debt service obligations ($2 trillion annually as recently posted by ORO). Total debt in America is often quoted in multiples of
record high GDP. It is one thing for the FED to pump money vigorously into the economy. It is another matter all together for the banks to find credit worthy or semi-credit worthy users of this fresh tidal wave of liquidity. By some estimates, corporate America has already leveraged up from
a conservative ratio of 25% debt to 75% equity to a precarious 75% debt to 25% equity ratio. That is almost a 10 fold (1,000%) increase in debt!
============= Traveler, every time you bring another log to our "Gold Trail" fire, I pour gasoline on it and burn it before it becomes of use. But keep trying, sooner or later I'll run out of fuel. (smile)
Again, hyperinflation in our economy will (as I demonstrated in the beginning) begin with our government buying the debt from creditors and changing the terms of it's payment for over leveraged citizens and businesses. Further, a rising price structure of an extreme nature, such as this, quickly raises all wages and income levels. Allowing everyone to service easily what seemed like a mountain of debt before. No different than looking back to when minimum wage was $1.00 and now is $5.00+/-. Only happening on a super accelerated scale. =======================more
In summary, he who has the gold makes the rules. The creditor class -- both the domestic plutocracy and their foreign cousins, has the gold -- both literally and in the form of debt claims. They would rather convert their paper claims into foreclosed hard assets following a deflation and
at worst loose a billion or two from poor collateral valuations while reaping trillions in new purchasing power. That beats passively loosing 20% - 40% - 60% of the value of the entire debt portfolio from hyperinflation.
=============== Exactly who in the voting public do you think is going to sit still for this paper conversion? You,,,, me,,,,that man behind the tree? Ha! Ha! """NoONE""" leaves their debt claims laying around in a country where their citizens are being economically tortured by huge, all
consumeing debt claims! At least not without massive risk returns. That's why rates soar so high. You either run for it or take a big chance in staying,,,, most run if a stable medium exists. Providing that medium in either Euros or a Free Trading gold market is where the ECB / BIS can play the
good guys============more
Furthermore, if the word came out that hyperinflation was the policy of the USA, who would lend their funds for the prospect of receiving less purchasing power later? I for one would rather take my chips overseas to an economy that is stable and offered good returns for definable risks.
Domestic usury laws can only be raised so high and bankruptcy laws tightened so tight before the great unwashed revolt.
The major risk to the scheme of the plutocracy is a revolt of the masses -- whether politically through election of populists who pass legislation such as foreclosure moratoriums or violently though protests, strikes, lynchings, pogroms and the like. Thus inflation followed by hyperinflation will be instituted by the FED at the instruction of its masters once the fear of loosing it all exceeds the greed of gaining another prized asset on the cheap.
================Very good!=================more
Lastly, consider this. Current wealth of creditors only increases during deflation as each dollar now held becomes more dear.
=============That used to be true before the volumes of debt securities began to dwarf the universe. Today, most asset holders are true to nature players of the trading mentality. If inflation becomes the risk, they will exit the door in an attempt to out trade you and me (and that man behind the tree (smile))! Most of them will simply run up the inflation ladder seeking the next higher return. In the process marking the market down in existing holdings until the government must also buy those items at par. ===============more
Inflation is a wild card for everyone. For example, my one ounce Maple may be worth $20,000 or $30,000 once deflation is turned into hyperinflation (and former creditors have switched to being net debtors). But what is that $30,000 worth in today's purchasing power - $3,000 for a 10 to 1
return or $300 for a big waste of time and energy?
==============ALL:
This is one of the major flaws in Western Hard Money thinking. We tend to view the dollar price of gold in a static purchasing power light just because it's bookeeping priced through paper accounting deals.
Lost in our perception of all this is the fact that current bullion prices must rise into the thousands just to reflect the US credit inflation that existed 20+ years ago! Much less reflect it's value relationship to the current trillions of debt.
Our modern dollar paper gold derivatives have masked the true gold values all this time. Start with a base of gold holding it's international wealth value at $3,000 to $10,000. Then extrapolate that to handle any future money printing to buy our already hyper inflated debt! Now you have an idea why PGSs (Physical Gold Advocates) are so quiet as they buy bullion today.
The current marketplace has so understated it's true dollar value, physical gold must rise far beyond any price inflation that's in our future. Only Western commodity traders using a thought process that says; """the dollar market price of anything is correct because the dollar price says so"""" think gold today is a "one - on - one to price inflation" proposition. Nothing could distort the picture more. ==============more
Truly, what waits for us economically just over the horizon will be calamitous and stunning for all but a few.
===="""We watch this new gold market together, yes?"""=====
Black Gold, Yellow Gold - the only wealth worth physically owning.
=======Absolutely, Sir Traveler, Absolutely!!!!=============
This is the longest message I have ever posted here at the Forum. I would not have done this except that I believe it is also the most important post I have made. Those who have already read Sunday's Financial Times article about the dollar can skip it and save some time. I include it here because it is important to my sumation below and because some members of the room may have missed it. Thanks.
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Below are excerpts from three newspaper articles which appeared two days ago in the Chicago Tribune, the Salt Lake Tribune and the Financial Times of London, respectively. My remarks appear at the bottom.
The Chicago Tribune, Sunday, October 22, 2000 by Bruce Japsen
HEALTH-CARE INSURANCE BILLS TO JUMP
Next year's health insurance bill might make even the hardiest individual a little sick. Premiums are expected to take their biggest jump in a decade.
Major employers report that health-care costs are rising at least 10 percent to 13 percent, and workers are likely to see a similar increase passed along to them, according to a new study. Most employees will pay at least $125 more in premiums next year.......This year, health care costs rose an average of 9.4% nationally (according to a study to be released this week by benefits consulting company Hewitt Associates)... Hewitt's study of 320 companies with 1,000 employees or more comes from a database of 3.5 million employees and their dependents... No matter what health plan a compny provides, employees are not likely to escape higher rates. On average, companies say their healthcare premiums are going to be up about 10% for preferred provider organizations and point of service plans; 12% for traditional endemnity plans; and 13% for health maintenance organizations.
The Salt Lake Tribune, October 22, 2000 by Lesley Mitchell
Home Prices Up On Wasatch Front
The average value of new home permits issued throughout Utah continues to rise. The average new permit totaled $133,315 - not including the lot price - for the first six months of this year, up 5.3% from the same period last year and 25% from 1996.
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3LJ30LOEC&live=true&tagid=IXLMS1QTICC⊂heading=global%20economy
Funding fears add currency to doubts on the US dollar
By Christopher Swann
Published: October 23 2000 20:14GMT | Last Updated: October 23 2000 22:25GMT
Like the proverbial cat the dollar has had many lives.
For more than a year, economists have been predicting that the currency would soon succumb to the bloated US current account deficit, which looks set to reach $440bn this year. Until now the appeal of its assets has enabled the US to suck in 70 per cent of the world's capital account surpluses.
"Each time international appetite for one class of US asset has started to wane, another has taken its place," says Paul Lambert, director of currencies and bonds at Deutsche Asset Management.
But once again analysts are beginning to ask whether the dollar is running out of lives.
"It is increasingly difficult to see what will come to the rescue of the dollar this time," says Jim O'Neill, head of currency research at Goldman Sachs.
Of particular concern have been the seemingly unrelated problems of Europe's telecommunications companies and technology stocks more generally.
These companies have recently been the driving force behind the boom in cross-border merger and acquisition activity, which has been lifting the dollar ever higher.
Last year $73.6bn - or nearly one-third of cross-border M&A inflows to the US - came from the telecommunications sector.
Now it looks as though this particular source of dollar support is likely to dry up.
"US technology media and telecoms companies are still something of a bargain for their European counterparts," says Paul Meggyesi, senior economist at Deutsche Bank in London.
"The question is whether European telecoms companies in particular can afford to pay even bargain prices any more," he adds.
A spate of merger activity, coupled with the princely sums being paid to governments for third generation licences, have saddled European telecoms companies with huge debts.
Indeed, lending to telecoms companies has reached such proportions that European regulators are examining whether banks are overexposed to the sector.
Credit rating downgrades for Deutsche Telekom and British Telecommunications among others - along with recent falls in share prices - have left European telecom companies less able to make further US purchases.
"A lot of these companies have completed their expansion phases and are thinking about consolidation," says John Montgomery, senior global economist at MSDW in New York.
This is not the only cloud on the dollar's horizon.
Corporate bonds - an even more important source of dollar support than foreign direct investment - have also been losing their shine.
A recent stream of warnings from such bellwether companies as Intel, Motorola and Apple, have helped sour the outlook for corporate earnings.
Meanwhile, the National Purchasing Managers index recently fell below 50 - the boom-bust line for the US industrial economy.
Against this backdrop many investors have been selling corporate bonds.
Pimco, the world's largest bond fund manager, has urged investors to avoid corporate bonds at all costs. "Spread product (corporate debt) is in for some grim reapings in the next month and the next few quarters," William Gross, managing director of Pimco, warned investors last week.
"Even a slowdown in the inflow into the US corporate bond market would leave a gaping hole in the funding of the current account deficit," say Mr Lambert, pointing out that flows in 1999 represented around 60 per cent of the deficit.
Nor can the dollar any longer rely on the outperformance of US shares. After several years of outperfor-mance, US stocks have actually lagged behind those in Europe - with the Standard & Poor's index down 5.5 per cent on the year to date, compared with a5per cent fall in Germany's Dax and a 3 per cent rise in the French CAC-40.
Even so, the dollar's recent habit of pulling rabbits out of hats has left economists reluctant to rule out the possibility that it will manage to attract new flows.
"Crisis in the Middle East and rising oil prices - if sustained - would generate continued demand for US Treasuries as a safe-haven asset," says Avinash Persaud, head of global research at State Street, the Boston-based investment bank.
One further possibility, argues Joseph Quinlan, is that Japanese companies - who have recently stood back from the cross-border merger boom - will swoop down on US companies.
"This could be the dollar's tenth life," quipped Mr Quinlan.
But most think these are wild card options.
"It looks like the dollar bull run may have entered the final straight," says Mr Lambert.
With negative factors for the currency continuing to accumulate, the dollar can not be expected to defy gravity for much longer.
**********
David Davenport's remarks:
In addition to the above, last week, the Social Security Administration announced a 3.5% cost of living increase, the biggest benefit inflation adjustment in a decade. Such reports as these clearly demonstrate how wrong government reports, claiming little or no inflation, really are. For the past two years, the Clinton administration has been telling us that price increases have been limited almost entirely to oil and tobacco. Because these increases were deemed to be more political than economic, Americans have been encouraged to believe that inflation is tame. (This, despite the fact the Gore campaign has been railing against high pharmaceutical prices all year, and the Fed has already raised interest rates six times.
But the important thing to remember is that, when excess paper money is created, prices inevitably rise. And, in the past three years, money has been created in America to a degree which is almost unprecedented. First it was to deal with the $100 billion collapse of Long Term Capital Management. Then, it was to respond to the Asian Contagion of 1998. And finally, it was to protect against the potential of a y2k calamity.
The results of so much money creation are all around us. You see it in the tech bubble which occurred last winter. You see it in the very high debt levels which exist in all segments of American society. Perhaps most worrysome, you see it in the trade deficit which is discussed in the Financial Times article above. And, finally you see it in oil prices and rising inflation. Americans have been beguiled by prosperous times into spending like there is no tomorrow.
Morgan Stanley's chief economist now believes that the chance of a recession developing soon is rapidly rising. Whether we have one or not will depend upon the Fed. Will they have the courage to defeat rising prices, or, fearing a slow down, will they turn on the jets by creating even more money? In recent weeks, they have been creating more money.
This question truly is political rather than economic. But, whatever the answer, we are headed for higher inflation. Why? Because, either the Fed will create even more money to keep already overextended consumers spending, or the economy will slow, and cause the dollar to fall. And because Americans import $30 billion a month more than they export, a serious drop in the dollar would make all imports cost much more.
Unfortunately, these problems are developing precisely when stock valuations are higher than they have been in any previous cycle in history. This is why we are in a bear market this year.
STOCK COMMENTS
Exxon Mobil announced their quarterly results this morning. In contrast to the many earnings disappointments coming from tech land, Exxon's reported an increase of 96%! Of course, like last time, the stock immediately went down a couple of points. People have been told by both Washington and Wall Street that high oil prices are only temporary. So they sell the stock on any good news. Still, we are making progress here, and I expect the stock to go to new highs soon.
Gold has dropped about 1% this month, but the mining stocks have been hammered. Many mutual funds sold stocks during the big declines this year at a profit. October is the last chance mutual funds have to take offsetting losses. The impulse to take such losses is especially acute this year because fund manager's do not want to report taxable gains to their shareholders in a year when the shareholders have lost money. This tax loss selling turns any stock which is down for the year into road kill at least for another week.
The argument for owning gold and some gold mining shares is still very persuasive. As inflation continues to unfold and as the dollar begins to weaken, long-suffering gold should be one of the few places to hide. The rally, if it comes, may be very sudden and very dramatic.
Al Fulchino (10/24/2000; 7:27:47MT - usagold.com msg#: 39775)
I think that the "token" Libertarian has been allowed in by the Republican establishment. His name is Dr. Ron Paul.
Any other Libertarian may not be allowed money to finance a campaign. That is the first thing that comes to mind, unless there is no handy "normal" Republican around.
I too would like to see the Republicans actually live up to what their web site says about being the party for smaller government. But it has not happened in the 90s and I don't see another Ronnie on the bench. At least Reagan was able to stem the pace of the growth of government. I don't think GW is quite up to snuff.
Today's climate does not allow for anyone who even comes close to being idealistic. But the pendulum will swing back soon, I hope.
U.S FORCES ON FULL ALERT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Gold now up 10cents????????????????????
Who needs GOLD anymore?
The masses have been so dumbed down and blinded by the deceiver who appears as a light know as Technology.
Well its about to reveal it's true nature DEATH,DEATH,DEATH i've always said it's going to take a Nuclear explosion to move GOLD,Holy,Holy,Holy is the Lord God Almighty!
Get ready for the P.O.G to really BLAST off and soon,even then the Manipulators will try, but in vain they will FAIL.
RE: "U.S FORCES ON FULL ALERT!!!!! ... Gold now up 10cents???"
Elementary, my dear Watson. The price discovery mechanism is based on such items as gold derivatives (and notably the gold futures market) and the status of the balance sheets (and evolving sentiment) within the bullion banking sector. The performance and desirability of this paper gold requires both confidence and anticipation of *normal* market operations, not much unlike that required for paper currencies to function.
Given the state of domestic and global affairs, what element do you expect would prompt smart money or big money to move into these paper gold arenas so as to bring to bear an upward impact in the price? Would it not be more likely that the instruments and markets that we have all come to rely upon for price discovery of the underlying metal (as duly adjusted to reflect interest rates, etc.) would themselves fall into discount and perhaps ultimate discredit?
Much of this has been widely discussed here on the Forum and at the Gold Trail page, so I will not burden anyone further with my echo of those thoughts.
If you will quit bad mouthing derivatives (Comex Gold Futures/options), I will promise you that said futures will help your "precious" precious coins and "dealership" make more money than you can imagine...
You see, despite the "local talent" viewpoints around here, these futures will lead your coins up and away when the current trend is reversed...
Big Money, Mr. Crier, will be long again someday...and they will be long futures, and coins too...
Your and others' bashing of derivatives is wasted energy, as we are all on the same team!!!
While not really wanting to get into the topic - so eloquently chewed over by our friends, teaching the true blue and only solution - I do concur with the "necessity" of holding physical at this important juncture.
As many of you know, I am from a small country, having joined the euro-zone (- another topic, which may become explosive in Nice in Dec.) and are happy for our advantage in export revenues and probably unhappy to accept the double whammy of US $ contract pricing in oil and other important commodties. I'm also unhappy, since I'm still not fully accepting the true outcome of the political will of the EU, which will be challenged again in Dec. - 10 smaller vs 5 big contenders to change the rule of hitherto equality.
As I may accept that even some of the inflated EU EGO's may come to their senses in view of the reality of economic turmoil, in the aftermath of potentially severe global repercussions by the overextended $ and all of its financial markets and accept their responsibility - again in a global sense ... and a global chance to come to the rescue of free trade. Even, or even better as it would be a blow to globalization, something I can't fathom anyway, since the cards have been dealt by the master cardsharp - the US$, the single most important currency today.
As it may only be a question of time, when the superior performance of the US economy will be unmasked as the charade it is and the new (as well as the old) economy's fabled earnings will be dragged to the scrutiny of the reality of the new light of tomorrow's dawn - the inherent problems of inflated financial and RE assets, propelling this jet-stream of misallocation of newly created funds to loversupp;y FRN's to the detriment of public debt are sowing up in company earnings. Even the most advanced CA ingenuity, together with political(?) relaxed regulatory over- or better hind-sight, will not forever ide the fact - corporate earnings have been on a decline for at least 5 qu's.
My take, where to hide as the $ -bow finally cracks, before shooting the final arrow. Well, of course physical gold, some euro's, or trying to be a contrarian some liquid OZ and CDN. holdings and again, coming back to topic of course, some gold in the ground - uninhibited by BB's.
....And finally, as Traveller stated "black and yellow gold - the only assets worth holding" - I may add shut in oil reserves are seeing the light of the day - ... look for the few potential "shut in" gold reserves - not up for grabs by the greedy! - Thank you - cb2
The sweet potatoes are on the boil and the wings upon the grill. I'll have just one pint and make a fine salad. Why, do wish you were coming over for dinner. We'd set an extra plate.
It is quite apparent to me that we live in a world where not only the "markets" are dislocated but, humanity as well. Never have been a gloom and doomer but in my view, the future is very clouded. I'll not let my family be taken captive by events so easily diagnosed.
Unemcumbered assets are the very best kind. Remember, "location, location, location". Kind regards...CM
@CM - meant the land of the Aussie and the CDN. $ -
- That's probably western thinking - there still is the "Nugget" and the "Maple"!
- Lot's of typo's too - can't blame to the old computer - sorry - would love to join your cook out - maybe next time --
Thanks for the kind 'invite' - best regards cb2
So, according to trailguide, stay highly leveraged and be in as much debt as possible(preferably fixed interest)and buy stocks, gold, real estate or whatever because the upcoming hyperinflation will make those assets fly in value and your debt will become relatively negligiable.
So under traiguides scenario, blackgold & yellow gold won't be the only sources of wealth, so will any asset that is not a dollar note
I can't buy that scenario.
You say trailguide, that the upcoming financial storm will be like nothing before. That reminds me of what investors were saying about the new economies.
History does rhyme
Thanks for explaining about the long post cutoff limit. I think in the future I will address other posts with short clips of their items in mine. Then none of these will get so long.
TC, I'm going to read all of your recent clips as they do address a lot of the things happening now.
I also want to summarize my discussion with Traveler as it came across too broken. I do accept many of his points but am really trying to explain clearly what forces are in play now that will alter those same.
Thanks for all your work, Trail Guide
-------------------
Hello TG,
I saw your msg#: 39809. No that is not entirely what I said. I think if you read the latest James Turk article here in the USAGOLD system you will see different. He does a nice job of explaining some of it. You see, assets can go up very big in an inflation but still come no where near to keeping their purchasing power. I'll cover this more when I post a summary on the Gold Trails.
Please provide an excepted quote to serve as a supportive example of the truth behind your contention that I have been "bad mouthing" derivatives.
In anticipation, I would ask, do you also accuse a geologist of "bad mouthing" gravity or erosion when he explains why a rock rolls down a hill?
You have offered this bit of wisdom for our consumption:
"these futures will lead your coins up and away when the current trend is reversed..."
By making this comment, it stands to reason that you also stand able to offer a supportable explanation regarding the nature of this current trend, how it developed, and what is likely to be its undoing. Please do so, or be not so hasty to shoot down that which you do not understand.
In your view, why aren't quality mining shares moving ahead in advance of the gloomy inflationary outlook? Second; what will ignite a rally in mining shares? See 'ya soon...CM
Trail Guide brings the idea that a massive debt buildup threatens the dollar. Yet many who comment see debt as a trap that forces acquisition of the denominating currency.
I'm trying to think of this in another way that might move a few of us closer to seeing which way the possible shakeout is likely to go.
Debt is a short position on the dollar. You expect to be able to return less valuable dollars later, or at least it less valuable than what you bought with the debt today.
Lenders are long dollars. They expect greater value later, through a combination (or offset) of appreciation and interest.
Debtors have a default option, both individually and in the security of a mass default. Lenders have the repo option on collateral. (Could we say they are long the collateral, too?)
If an overwhelming short position has built up on the dollar through debt, that is an expectation of its decline. But what power do those market players have to enforce such an outcome?
If they keep making payments, they strengthen the dollar? If they default, they weaken it? There are incentives in both directions, depending on the player. But it looks like the "short squeeze" will be on everyone who is in debt to stay on the good side of the shakeout.
It seems to me that debtors get the first move, and force lenders into reactive mode, especially if they are long-term. The guess may come down to: how valuable are repossessed assets, vs. a workout with debtor-in-possession, and how valuable is one's good credit rating, if so many well-respected neighbors are going down, too?
I guess the Fed would be a part of circling the financial wagons, attempting to set up the next era of "good credit risks" within a process of who the financial community thinks should get to own/manage the repo'd stuff. A further concentration toward the favored ones, no doubt, but still some big tumblers. A real snakepit.
The recent talk of inflation and dollar destruction has brought with it discussion of derivitaves and leveraged instruments, low LTV mortgages and other means to play the inflation game. This seems to be the "western thinking" that has me wary.
There could be pockets of inflation and deflation swirling around in the markets. The cash chases the hot asset while the next one is cold. One neighborhood could see inflated housing prices while the businesses in another city fail, driving housing prices go down due to the lack of liquidity. This seems to be a fairly good description of the stock markets right now.
tg, you may find yourself in the position where you need to liquidate one of those highly leveraged assets at the worst possible time... My take on the discussion recently is that the big banks may be bailed out when the debt bomb explodes, but that in no way means that every consumer will be given debt relief.
IMO, Someone who is bringing highly leveraged assets into this poker game better worry. Someone who is debt free and has liquid, portable, and non-encumbered assets will not have to worry much. Later, there will be some good distressed assets to purchase with those gold coins.
Maybe, Mr Crier, the price of gold has been in a downtrend because when someone buys a gold eagle coin for say...$285.00, they can 'only get" $279.00 when they want to sell it back?
Or maybe the reason for the downtrend in gold is because all that bought coins for Y2K have sold out after minor consequences were reported in Jan of this year...
Maybe the price of gold is in a downtrend because gold coin dealers are doing FAR LESS advertising then Securities Dealers...(stock brokers)
Maybe we are having a downtrend in gold because SIMPLY, not enough people have seen the light...I'm doing my job to help...folks at this forum are truly wasting energy pissing others off...Are we Bull Market Supporters or Not?
There truly is no difference ...futures/physical will move up in tandem...Watch it unfold...
FOA physical/futures report card due here Dec 1, 2000...I keep score...Do you?
A mine start out as unimproved land. Money is raised to explore the land, invest in equipment, and pay the workers to extract the ore and refine it. After a while, it might produce enough gold to make a profit. Sooner or later, the gold ore runs low and the mine must be closed, leaving a big hole in the ground and possibly leaving an environmental liability.
Question: exactly when is it a good time to buy and when to sell?
In the spirit of your post, and notably this passage:
"But it looks like the "short squeeze" will be on everyone who is in debt to stay on the good side of the shakeout.
+
It seems to me that debtors get the first move, and force lenders into reactive mode, especially if they are long-term,"
do we see a significant picture if we look here? ------> Peering into the accounts of foreign national central banks we may see a ponderous quantity of U.S. Treasury bonds. It is certainly in that light that we must ask your avove question as we identify "who" it is that is in this particular debt, and what options are available to "them" (and available to the bond-holding "lenders") with regard to making first moves and the expected reactions to such events.
It would be helpful to the Lord of The Tower if you would please follow through with my previous request that you cite the passage in which I have "bad mouthed" gold derivates. It might facilitate an objective decision to have me permanently ejected from this seat on the rooftop. It would seem that such an action could be warranted, particularly if you would also cite the disruptions for which you claimed : "folks at this forum are truly wasting energy pissing others off." Given the business credo that the customer is always right, if you insist on jeopardizing my position here with your remarks, I ask that you at least provide a solid basis to your fitful offerings.
Can you objectively see why I must reject the four speculations you offered for explaining the current situation and trend of the gold market? I will review them one by one.
1) You blame the buy/sell spread on gold coins for the downtrend.
Were you able to type that with a straight face? There is necessarily a buy/sell spread on nearly every tradable asset, and for some assets, there are additional brokerage fees applied each time a trader enters and exits their position...these fees are on top of the spread! (These extra fees do NOT apply to gold purchases and sales.) With your logic, all financial insturments should be in a downtrend, with some moreso than others.
2) You blame the non-event of Y2K for the downtrend as the gold buyers have become sellers.
Were you able to type that with a straight face? Even if I were to overlook the fact that last year's North American sales volume failed to provide the expected (under your Y2K logic) increase in gold prices, I cannot overlook the fact that this Y2K hiccup fails to even bear witness to the factors behind the decades-long downtrend in the gold market.
3) You blame the gold market downtrend on poor marketing on the part of coin dealers, not competing adequately with stocks.
Were you able to type that with a straight face? Enough said.
4) You suggest the downtrend in gold prices is simply because not enough people have seen the light.
Were you able to type that with a straight face? The World Gold Council has reported continuing demand for gold at record and near-record levels on a global basis, and further, that annual demand outpaces annual supply of new production and "scrap" by a significantly wide margin. It appears to me that many people are indeed seeing the light...the yellow light reflecting from the metal in their possession.
But I will agree with you on this in another regard. Simply not enough people are seeing the light that the ample and artificial supply of paper gold has facilitated over the course of many years an adverse effect on gold price discovery, and subsequently, the adverse popular perception of the metal's value.
Time will tell if I am guilty of upsetting your emotional apple cart enough to effect my removal, but I can not be faulted for your stubborn and naive perceptions of global gold market dynamics.
It seems to me that the intent of this post is a bit off topic, so I will only make this one post.
Yes it is true that you have indeed changed schools. And there is no doubt that you will learn in this new school. In order to survive you must.
However I question the assumption that is made, that education is to give you practical training for your life outside.
In my mind, particularly in an ever faster changing world, formal education is more about giving you the basis, or the tools, or a method of thinking, to solve the unknown problems you will be faced with.
Why train you on this years tax form, when it is going to be out of date next year. Better to teach you how to read, and add, and subtract, and multiply, and divide, and let you use your brain to figure out the changes, or whatever you need to work out. Once you understand how the cosine of a triangle works, you can deal with any kind of triangle that you run across. Believe me there are lots of triangles in the life ahead of you. (although you may never use cosine again)
A degree does not say that the individual will use the knowledge, or use it to best advantage. A degree means little. I have a few letters that I can put after my name, but I certainly don't have them on my business card. (or anywhere else for that matter) About the only thing I value more than gold, is knowledge.
I am reminded of an adage. Give a man a fish and you feed him for today. Teach him how to fish and you feed him forever. The education system is trying to teach students how to fish by giving them problem solving abilities. You are demanding they give you a fish in the form of a course on tax forms.
There is no doubt that day to day living will give you knowledge. And while the education system does not give you the in depth knowledge that the school of hard knocks gives you by smacking you occasionally, or all to often, it does give you a look at a wide variety of problems, the reaction to these problems, and the result. You can take in 20 or 50 problems, and see the results in the time it takes to work through the same problem in real life. Why reinvent the wheel?
The formal education system is about learning a lot the easy way. If you don't understand that, then I would say you are right. The formal education system has little more to offer you.
Cavan Man's Question - Why Aren't Gold Stocks Reflecting The Inflation Threat?
Cavan Man - As I said earlier today, bear markets happen because a lot of investors, including mutual funds, are selling stocks. Many of those sales undoubtedly result in taxable gains. This presents a problem for any fund which is under water this year. To wit: How can we tell our shareholders, whose money we are losing, that we are also going to stick them with a tax bill? The only way out of this is to unload any losing positions we have and use the resulting loses as an offset. By law, such sales must be completed before the end of October. Ergo, goldminers and a lot of other recent "dogs" are simply being thrown overboard this month.
Additionally, I don't believe the inflation argument is widely accepted yet, though that day is coming. When I first started predicting inflation in these pages 20 months ago, not one other poster agreed with me. Many, in fact, argued that I was wrong. Now, however, even the popular media are at least beginning to see the danger, and many in the Forum take it as a given.
But, frankly, it is not just gold which seems to be ignoring the inflation threat. Government bonds are doing so also. Historically, long governments have tended to yield at least the inflation rate plus 300 basis points. You know that the official 12 month CPI, as reported last week, is currently at 3.5%. Add 300 basis points to that and you get 6.5%. Yet long govies are below 5.75% right now.
If you buy bonds at 5.75% your after tax, after inflation rate of return is bound to be zero. Yet people are buying them anyway. In the year ahead, as inflation becomes more and more self-evident, I predict that such people will be sitting on losses.
The problem really is that most investors drive with their eyes firmly trained on the rear view mirror. When I was a young stockbroker in 1982, America was at the threshold of the greatest bull market ever. Yet I had a dickens of a time getting prospects even to consider buying stocks. Businessweek had recently run a cover story entitled "The Death Of Equities" and the most popular investment book of the era was Howard Ruff's "How to Survive and Win in the Inflationary Eighties". In it, Ruff argued that gold and silver were most assuredly the best place to put one's money.
It takes a lot of reading to see important changes in the landscape before they happen. Most people find it easier just to always expect more of the same. Much of the time, such carelessness works pretty well. You might call it momentum investing. But, sooner or later, it is a great way to get taken to the cleaners.
Who is the Howard Ruff of today? Take your pick. There are lots of them. Gary Shilling is a good candidate. His book, "Deflation" was a top seller last year, though it is all but forgotten now. My personal favorite candidate for the Wrong-Way-Ruff award, however, has got to be Abby Joseph Cohen. Many's the investment club of little old ladies whose savings are now seeping away thanks to this woman's air of sweet self-confidence. Surely she'd never steer them wrong.
If Sadaam gets this off the ground, and the arab contingent of OPEC get a little more upset with the U.S's backing of Israel, we could see a euro/dollar reversal that would turn markets upside down. (BTW in real world circumstances, the Euro's backers would be forming a sweetheart deal to win over Iraq and the arab states. Never happen. Slaves don't rebell without consequences).
The politics of the U.N. are big in this instance (for a change). Even with the U.S. delinquent in dues (with my sincere thanks to the Congress)it won't mean diddly. The U.N. does almost nothing without first checking in with American interests, especially with Sadaam involved. He will need political backing from other arab states to pull off such an anti American move.
Unless of course he really does turn off the taps next week. (Nov 1) and forces the issue. This could be a doozie should arab oil producers, upset with pro Isreali interests, unite for euros. What a leveraged whipping stick to hold over the infidels. ****************************************************
October 24, 2000
Technical Issues Key As UN Mulls Euro Account For Iraq
By MASOOD FARIVAR
Of DOW JONES NEWSWIRES
UNITED NATIONS -- The United Nations is mulling an Iraqi request to open a new account to enable its oil revenues to be paid in euros instead of dollars, a concession Iraq says must be made or it will interrupt its exports
of oil.
U.N. diplomats played down the possibility of political objections to the unconventinal plan, but said there were important legal and commercial issues that had to be resolved.
"We have discussed it informally, but we have not made a decision," said a Western diplomat who sits on the 15-member U.N. Iraq Sanctions Committee. "We think it is not in line with regular market practices, so we
referred it" to the U.N. Treasury and Office of the Legal Adviser.
The sanctions committee maintains strict control of Iraq's 2.2 million barrels a day in oil exports. Proceeds are kept out of Iraqi hands in an escrow
account maintained by BNP Paribas in New York. Foreign suppliers of humanitarian goods are paid out of the account, which currently holds about $10 billion.
Calling the dollar the "enemy country's currency," Iraq earlier this month asked its oil customers to make payments in euros beginning Nov. 1 and called on the sanctions committee to establish a euro-denominated escrow account to collect the proceeds.
The U.N. Treasury and the Office of the Legal Adviser are studying whether U.N. procedures would allow such a move and are examining how the switch would affect revenue into the program, which is used to provide
aid to 22 million Iraqi civilians.
Crude oil is bought and sold internationally in dollars, so Iraq would have to lower its oil price to cover the transaction costs buyers of its crude would incur by dealing in euros, said a diplomat who is familiar with the issue.
Converting the escrow account's deposits into euros would incur further transaction costs, as would conversions needed to pay suppliers of humanitarian goods in currencies other than the euro, the diplomat said.
"The question is, how is it going to impact revenues from the oil-for-food program," the diplomat said. "How are they going to pay the transaction cost? Is it going to come from the escrow account?"
U.S. Not Seen Opposing Plan If U.N. Office Gives OK
Diplomats said the sanctions committee will take up the issue again once it receives the recommnedations of the U.N. Treasury and Office of the Legal Adviser, which are expected in the next two weeks. The U.S., a proponent
of sanctions against Iraq, is not likely to oppose the move if the Treasury recommends it, Western diplomats familiar with the U.S. position said.
The oil-for-food program's coordinator in Iraq, Tun Myat, said the plan wouldn't pose a political problem.
"It's a question of dollars and cents," he said.
Since its inception in 1996, the oil-for-food program has generated an estimated $36 billion in revenues, according to the U.N. Office of the Iraq Program. With the recent surge in oil prices, Iraq is expected to earn about $18 billion in oil revenues this year alone. About $5 billion of the funds in the escrow account have been earmarked for various expenses, including humanitarian supplies sent to Iraq.
Even though the program constitutes an important source of revenue, Iraq has been highly critical of the program, saying it does little to feed its people and that it is used by the United States to justify keeping sanctions on Iraq.
Diplomats said the demand to open a euro account is the latest attempt by Iraq to politicize the program.
"It is superfluous to the operation of the program," a Western diplomat said. "This is clearly a political move."
With one week left before Iraq's deadline, it remains unclear whether Baghdad will follow through on its threat to halt exports if the U.N. turns down its request.
"That's something we should prevent," one Western diplomat said, referring to a potential halt in exports.
Asked whether he was concerned over the Iraqi threats, Myat said, "I have read about it in press reports. I don't think there is anything more to it than that."
Since its launch in January 1999, the European common currency has weakened about 29% in value against the dollar, dropping to a new record low of 83.24 cents last week. Though euro bills will not start circulating
until 2002, the common currency is widely used in international transactions.
State and private banks in Iraq have started dropping the dollar in favor of other hard currencies in business transactions. The decision has led to a surge in the value of the local currency, the Iraqi dinar.
-By Masood Farivar, Dow Jones Newswires; 201-938-2094,
masood.farivar@dowjones.com
Trail Guide/Traveller et al re Inflation/Deflation
I seem to be missing, or confusing something.
Some of the arguments I see seem to confuse (whatever your definition of each) M1 and M3.
First off, I agree that many of the surplus US dollars are snugly back in the US. Where else do you have a larger natural market for US dollars than in US entities?
As I read history, it is possible for M1 to inflate dramatically, at the same time M3 is deflating darmatically.
I believe that comes about for 2 reasons. 1) Fear, largely by the lenders, that any money lent, will not be repaid, and they cease to lend, reducing the "fractional banking multiplier". 2) Assets, ie loans on the books, become worthless, thereby reducing M3.
It appears to me that governments (and central banks) live largely in an M1 world. Citizens live largely in an M3 world.
The problem I pointed out before in thinking through a deflationary spiral is two fold. First is the issue of bank liquidity, second is the quality of the money.
The banks themselves can not survive a credit crunch where more than 10% of debt is unrecoverable (that is the difference between bank asstes and liabilities). That would wipe out the whole of the banking system. They need at least one of the following to occur: (1) Defaults are small/limited in scale. (2) Security retains enough of its nominal market value to cover the outstanding balance on the loan (accrued interest and principal - remember that the bank liabilities pay interest too and the bank's take is only the margin between them).
In order to save the banks, the Fed must print enough funds to bring back the banks to a point where they are at least liquid, if not solvent. Meaning that as banks sell surviving assets to meet withdrawals (banks with a greater level of non performing loans have more money coming out than coming in). The market value of these assets from distressed sale will fall substantially below what it otherwise would have been. In order for the banks to survive, the Fed must pay above market prices for bank assets till bad bank assets are at a low enough level that they cover remaining liabilities. Since the market value of bank assets (not the fictitious book value) under current circumstances (higher general interest rates and high spreads) is falling, while bank liabilities are still growing at an interest rate similar to that of treasuries, Bank capital is falling at 10 times the rate at which bank assets are falling - and at the same dollar amount, then if last year banks had a 10% capital base vs assets, they can only survive a 10% drop in market value of their assets without becoming insolvent (which does not make them bankrupt - they are only file for regulatory takeover when they are illiquid; when they can't meet a withdrawal, or their insolvency is so obvious that a bank run is treatening and the regulators come in to take over - at tax-payer expense - which is borne out through bond issues).
Essentially, the Liquidity saving operation is such that the banks must sell the Fed (or Treasury, which holds cash balances at the Fed) enough securities to meet net asset loss and interest on liabilities. Thus interest rates must be kept below the market preference - meaning that they must be low enough to induce substantial growth in borrowing demand by consumers. That is, under these distressed conditions, the rates which would keep the banks in one piece are also the rates that would cause people to run out and borrow.
There are also a few things that banks do on their own in order to stay afloat. For example, in order to entice their liability holders to maintain accounts, they move to raise their own long term rates so that people close up their accounts in longer term CDs instead of treasuries, money market funds, regular savings etc.. The 1 year CD rate quoted by many banks is already well above the Fed funds rate and above the treasury rate, best top rated banks are offering over 7.1%. The banks are finding that their CD rates have to be greater than Eurodollar rates and greater than LIBOR - meaning that there is nowhere within the global banking system where funds can be had. Thus the Fed Funds and discount rates are still nicely below the market, meaning that they can't lower rates without triggering another consumer borrowing binge and with it a price inflation spiral.
Let's try to assess the current conditions:
From end 1998, bond funds have dropped 10%, not counting accumulated interest payments. Adding in the bank spread as 2.5% per year (gross spread is 3-3.5%), the market value of bank assets would be down 9% if they are as good as diversified bond fund managers. If they are somewhat better, say they outperform by 1% per year, then they would have lost only 7%. Leaving them with a 3% margin of safety on average. Some banks should already have seen some damage on the REAL front (not necessarily on the books) Some of the more aggressive commercial lenders should already be at the point where they are forced to sell assets.
The Fed is already buying assets through its 28 day repos and through occasional purchase of treasuries from the banks. But they try to minimize this because everyone knows to follow these figures to tell whether the Fed is adding funds (which everyone knows is inflationary). The better way is for the Treasury to use its balances at the Fed to buy back long term treasuries and inject Fed money that way. It actually has some positive connotations associated with it. If Treasury actually buys long bonds and issues short term bills then banks are in a position to have the flow of bond redemption funds fall into their hands (which will happen because the banks can pay higher rates than treasuries because no one can offer a better guaranteed return than a bank when the Fed funds rate is above the whole yield curve). Thus the banks have an incoming flow of funds to use in meeting withdrawals. The Fed and treasury, with the assistance of the Government sponsored debt aggregators Fannie Mae and Freddie Mac are buying up securities from the banks at above market rates, while issuing tons of their own high grade paper into the money market funds.
Now look at the issue of the quality of money. The quality of debt money is as good as the current credit quality of the outstanding debt. The default of a loan removes forever the future demand for the funds borrowed into existence in the past. Thus leaving behind the bank liabilities (dollars) that were then created. When this happens in the debt securities markets, the debt securities are discounted - those that had defaulted are heavilly discounted but those that have not will discount too because of banks having to dump them in order to raise liquidity. With the bank liabilities covered by the Fed and FDIC (i.e. government), the possibility of bank default is ruled out, leaving the bank liabilities but without the initial demand.
Thus the quality of credit money drops with defaults. It also drops without defaults.
It should be noted that money causes prices to rise well after it is created. Even credit cards don't raise prices at once, it takes time and requires the money thus created to fall into someone's hands as business profit or income. It is their decision as to what to do with the new money you created by borrowing to purchase their product/service which will decide the course of prices. As long as this fresh money is not circulated through the real economy to buy new production or build new plant capacity, but flows instead into investment vehicles, prices will stay under control, limited to the effects of initial contract lending.
Initiation of borrowing does have a direct impact on prices, but it is still less than the full impact of credit creation as a whole.
It is only when some borrow now for the purpose of purchasing a future good that credit directly causes prices to rise. As when you sign a contract to purchase a NEW home and borrow in order to pay the contractor before each stage of construction is finished. Your INTENTIONs to borrow will raise the prices of items you and other intended borrowers will pay - even before the money was created. The bulk of future production contracts with borrowing causing direct price increases is limited mostly to NEW home building and business investment, though custom furniture orders and the like are similar.
Back to the people who earned the new money you borrowed into existence and invested it in financial media. So long as they and the sellers of financial media do not take the funds and spend them in the real economy - either through investment in plant or R&D, or through spending on consumer goods, prices will not rise. However, if there is a change of heart on the part of investors as to the profitability of these investments in financial instruments, they will take the funds out and deposit them in a bank. At that point, the bank has to find something to do with those funds so as to pay interest, it will end up lowering rates or credit quality till a borrower is found for it. More likely, however, the bank will use these same funds to purchase existing debt from the markets, or lend the funds to a hedge fund or leveraged investor. Most likely, the interest rate that the investors get will be lower than that expected, and they will take some funds out and spend them.
The big point here is that the quality of credit money falls when it is created (even before it is created) and then courses through the economy from the initial point of spending to the rest of the economy. Even funds that are invested raise prices when they hit the actual economy in real investment in labor and goods. The funds then raise prices again when the financial instruments are sold and funds moved into banks, where they are again used to raise prices. Then again when the deposits are spent.
Like a bond, the dollar is a credit receipt, if the bonds are bad, the dollars created in order to "save the markets" after the fact of borrowing, and the funds circulating throughout the economy that were created at a bank will all fall as well.
You said, "It appears to me that governments (and central banks) live largely in an M1 world. Citizens live largely in an M3 world."
Could you breifly elaborate on your meaning?
And in your thoughts of M3 category assets being deflated through monetization into M1 category currency, it would be well for us all to recall that the vast supply of U.S. Treasuries held in foreign central banks (as I recently alluded to in a post to Sir Gresham) are completely off your M3 radar screen. Thus far, the feedback mechanism of the U.S. balance of trade dollar payments in exchange for the yield to be found in U.S. Treasuries has been the secret behind the U.S. "deficit without tears". The very same dollars can cycle through many times, in the process creating these non-M3 assets/liabilities (depends on your perspective) that could potentially be offered up en masse for "relative monetization" via the bond markets, or for REAL monetization through direct channels via the Federal Reserve. It is that particular "overhang" that has the Fed chairman surely thinks about as he lies awake at night, and it is the secondary reason the bullion bankers are nervously wringing their hands.
Outside the US, the dollar does not have a central bank to print it. The closest thing there is is the IMF. What they do is maintain the debt load on a debtor nation. They bail it out temporarilly at the price of lengthening the period of indebtedness. Thus the only way we see default occur on a great scale is when a "rogue" like Russia decides to do away with its debt rather than roll it over and try to service it. It is this, and the political decision to absorb excess dollars from the market that has kept the dollar in deflationary mode abroad - on the demand side. On the supply side, the decline in dollar borrowing abroad has created a shortage of supply. Thus we have sustained demand and reduced supply.
There is also increased demand abroad because of the need for dollar assets in order to purchase oil later. (see post on the matter from yesterday or the day before)
Inside the US there is a central bank that can print any amount it wants. So long as money is created at a sufficient rate within the markets, the markets "self supply". When borrowing is insufficient to cover interest and principal payments coming due and lenders are unwilling to roll over debt at interest rates that the borrowers can afford (because of the low credit quality), then the Fed, Fannie Mae and the Treasury can inject fresh funds to buy up securities at a higher price than other market participants would pay. Thus they keep the markets injected with money and replace fresh "non-financial" borrowing with their own borrowing or with freshly printed dollar book entries.
Since they are buying securities above the price that the market would otherwise dictate, the sellers are obviously going to put their money into something other than what it is that the government side is buying. Therefore, the government is pushing, with the help of its semi-private partners, funds that will have to end up being spent.
Well, I would say that now we are at least reading from the same book, if not the same page.
Jumping to your paragraph "I see the TransCanada pipeline as a government sponsored....". That certainly was the view that was put out at the time, and there might be some truth that that was a major reason. You will note that I made caveats in my posts regarding "security of supply" issues.
It may also be true that the multinationals saw, and seized upon an opportunity to make a bit more profit, while placing the blame elsewhere. It may also be true that a bunch of rednecks, who had just won the lottery, had a mistaken view of their importance in the scheme of things, and reacted to slights that were minimal. (I am rich, ipso facto, I am smart, and/or I should get respect). Why else would I have been shoved around? On the face of it, I personally was not responsible for Ottawas decision.
It may also be true that there was exploitation, because that is the way the world works. In my opinion, when and how much may be debatable.
As to the Globes publishing policies, I certainly was not trying to imply you were responsible for their policies, but was pointing out that what we usually regard as an unbiased source, often is manipulated to be completely the opposite, as witness my Korean war example.
I also have no problem with the idea that the corpoate elite is "clubable". My 20 years experience with the banking elite tends to come down on the side of them being all cut from the same sheet, using the same cookie cutter. But then accountants also tend to view life, and make decisions heavily weighted by the tax act, rightly or wrongly, pertinent or not. That defining line is there because that is how they are trained (brainwashed), that is what they are experienced at, and know best.
You indicated the point of your post, (and what this forum seems largely about) is the when and how and why this economic edifice will come tumbling down. I see most of these political and other factors as noise. My view can best be shown as an anology.
In my mind, life consists of the daily putting off of the inevitable. We are all mortal, or at least I think that everyone I have met is. We do our best to stay out of the way of fast moving objects such as trains and trucks. Hopefully, I will go at about 80, by stepping in the way of a fast moving bullet launched by a jealous husband. Even better would be a 20 year old jealous husband. But I digress.
The mortality is a given. The struggle to put off the event takes various forms, one of which is medicine. The medicine is noise. It may vary the time of the event, but it will not effect the eventual outcome.
You may go to the doctor with an exotic disease, and because (s)he is human, (s)he may or may not interperate the symptoms correctly, and (s)he may or may not perscribe the appropriate medicine. Even if the medicine is right, the medicine may or may not react in the normal, or hoped for way with your system.
However, on balance, most doctors diagnose correctly, and perscribe the currently best known medicine, which on average produces the expected results. This does not imply that the current best known medicine is the best medicine.
I don't think the time, and how of your death is predictable, just as I don't think the end of the economy as we know it is predictable.
All we can do is to look at the patient and say: Heart problems, Liver problems, Cancer, And the heartbreak of psoriasis; I don't think there is big odds that he will last long. But sometimes they do. I don't know how many times I was called, you had better come, your father has only hours to live. He lived under a maximum of 6 months to live for 24 years, 364 days.
As to the oil question, it is but one disease, one dominoe in a whole row, that has the potential of failure of the system. If one goes, IMO they all go. However the Fed is certainly administering as much medicine as it can.
Off the record, and with no logical reasons, I am very worried that the stock market will crash prior to Nov. 12. However things do not seem to be quite in place for that. Confidence is currently to high IMO. This is evidenced by high retail sales. If there is a drain of investment dollars from the US, IMO the seeds are in place for a failure of the US dollar. On the other hand, a) the volume seems to be dropping, and that is usually what causes a crash, THE BIDS DRY UP. Lots of offers, no bids. b) The nasdaq is down what, 38 or 39 % from its peak? Is this not a crash?
The next time frame I am concerned about is the Feb./Mar. area, when I think there could be a lot of pressure on the dollar. Not that any of these scenerios would happen in one day, but I think the potential is there. Failing those two, I would be concerned starting the middle of Sept. next year.
Virtual Confiscation: Draft Memo to the President-Elect
The Full Text: Economic Rescue and Reform Essay for 2001====================================================================
Virtual Confiscation: Draft Memo to the President-Elect
=======================================================
The Full Text: Economic Rescue and Reform Essay for 2001
====================================================================
Draft Memo
==========
Dear Mr. President-Elect:
First of all let me congratulate you on your overwhelming victory.
Next, I thank you for this opportunity to present to you the full
details and context of my Economic Rescue and Reform Essay for 2001.
Here it is:
====================================================================
[Background]
During the past administration, major imbalances have built up in
the US economic structure. Some of these even predate the current
era by many years. And the imbalances extend as well to the entire
worldwide economic structure. Both are in grave jeopardy of instant
collapse, if not addressed quickly and with precision.
This plan may be implemented at any time, either before or during
such a period. It is a multipronged soloution which will be both
painless, transparent, honest and fair to the American people as
well as citizens, governments, and other institutions worldwide.
It will result in continued economic growth worldwide, under much
more stable financial conditions. The USA will remain the source
of worldwide stability. And the US Dollar as it currently exists
will remain the predominant Reserve Currency of preference. Indeed,
it will become an even stronger base by a sixfold factor. Citizens
of the USA will continue to use our present coin and currency. The
purchasing power of the US Dollar will remain unchanged both here
and abroad. Foreign currencies, likewise will stabilize in their
respective regions. With commensurate economic stability/growth for
them as well. Nobody will be left behind. All will move forward.
And most importantly, implementation of this plan will be simple,
inexpensive, and workable. With few exceptions, the average USA
or worldwide consumer; investor; businessman; or corporation will
see little change in their accustomed financial activities and
operations. Yet there will be a new stability and confidence which
they have not seen since much earlier eras. Most will welcome this.
[Implementation]
The plan will commence upon the regular Friday (USA) closing of NY
markets. You choose the date. The following presumes a date nearby
your post inauguration.
As President, you will have previously requested from the major TV
Networks an opportunity to address the Nation from the Oval Office
to announce some "essential reform and stability actions" intended
for the benefit of "continued" USA and world financial health. It
will not be an alarmest, spur of the minute/unexpected address:
[The Script]
Good evening my fellow Americans. I am speaking to you tonight from
here in the Oval Office to announce to you, as well as to those of
our worldwide economic partners and citizens of all nations, some
minor reforms and new regulations required to maintain and improve
the integrity of worldwide financial markets and institutions. This
telecast, being carried by satellite worldwide, and in all of the
G-11 nations, will be followed immediately by a local address from
their respective leaders and/or financial ministers. For we are all
in coordinated agreement for these measures to be quickly brought
into place worldwide. So as to maintain a smooth transition with no
adverse affect upon the majority of worldwide markets and business.
As many of you know, there have, over the past many years built up
various imbalances and instabilities within worldwide commerce,
financial markets, and institutions that could if allowed to remain
unchecked, possibly result in further complications that would not
be in the best interests of any of our nations. And so we are now
taking these pre-emptive steps to maintain and strengthen those
functions that are so essential to worldwide stability and growth.
The IMF; World Bank; BIS; and G-11 nations will all implement at
the same time, a coordinated, similar and interlocking plan. There
will be no surprises to any of them nor to Central Banks worldwide.
I will now itemize for you these measures and enactment schedule.
Please be aware that similar measures (by agreement) will be taken
at the same time by other worldwide governments and counterparts:
[Banking Pause]
(1) A 3-day Banking pause is declared, during this implementation.
(2) This is simply to restrain any who would try to profit from
temporary realignments being implemented. And prevent confusion.
[Price Freeze]
(1) I am also declaring a temporary 60-day safeguard period of
price controls during this transistionary period. Same reason.
(2) The IRS will monitor to insure that prices of all goods
and services remain at their current figures, as of Friday.
(3) Hopefully these controls will be lifted much sooner.
(4) These controls are to insure that the playing field remains
level, calm and clear of any unwarranted price manipulations.
[Stock and Bond Markets]
(1) Here and abroad, a 3-day moratorium (closure) is declared.
This, is to allow brokers/traders to adjust books and settlements
to be calculated and adjusted as of today's closing positions.
(2) The SEC will ban purchases of Stocks/Bonds on margin or credit.
(3) Existing law bans borrowed money from purchasing stocks/bonds.
These laws will be strictly enforced by the SEC/FRB/IRS.
(4) The SEC will ban all "short" sales of any security. This will
prevent rampant speculation and price manipulations in the future.
These measures alone, will result in immediate market stability.
Wild swings/price variations will be a thing of the past. Upward
growth is favored. Where the fundamentals will be determinant. No
longer will the markets be at the mercy of a few speculators who
have the power to profit by driving prices downward on a whim.
[Commodity Futures Markets]
(1) A 3-day market moratorium is also hereby declared. For similar
reasons as just mentioned.
(2) The CFTC will ban all futures-trading on margin or credit.
(3) Borrowed funds of any sort, likewise are banned for purchases.
(4) The CFTC will ban all "short" sales of commodities. With the
exception of bonafide producers. These will be strictly controlled
and existing laws enforced. Only a single year's (documented) net
estimated production may be sold forward by any commodity producer.
(5) The CFTC will immediately halted permanently, the trading of
Gold and Silver. Existing long/short positions will be frozen and
unwound in an orderly process by the CFTC. Settlements will be
adjudicated in US Dollars. Existing warehouse Gold/Silver will be
deposited into the National Treasury. (More on this later)
These measures will immediately stabilize commodity markets to more
truly reflect producer/consumer requirements. Speculation for the
sake of speculation and/or price manipulation will become a thing
of the past. These markets will return to their intended functions.
They are no longer to play a role as sanctioned pseudo-casinos.
[Options and Derivitives]
(1) The CFTC will ban forever, Options/Puts/Calls of any sort.
(2) The CFTC will ban forever, so-called "Index-Futures".
(3) The SEC and CFTC will ban forever, "Derivitives" of any sort.
(4) Existing positions in any of the above will be frozen and be
unwound in an orderly manner under uspicies of the CFTC and FRB.
Perhaps, more than any other entity, such Options and Derivitives
have contributed-to if not singlehandedly caused the majority of
the world's financial problems. Those institutions and speculators
who have overindulged in such risky and reckless initiatives will
not be favored nor bailed out as "Too-big-to-Fail". These measures
I put forth to America and the world tonight, are intended to help
our overall stability and growth. If some have been contributory
to the opposite in the past, they will certainly be so recognized.
Whatever they've gotten themselves into will have been their own
fault and have been frequently warned by regulatory authorities.
If they have continued such market abuses and recklessness, then
they alone must bear responsibility and their ultimate burdens.
[Market Interventions]
(1) I pledge that the US Government nor any entity associated or
disassociated with it shall in any way whatsoever henceforth enter
into any tactic or trade that could in any way manipulate markets.
(2) Foreign leaders of the G-11 have agreed to similar principles.
This may or may not have occured in the past. But some people have
speculated that to be the case. All I can assure you at this time
is that we intend to investigate such claims and possible abuses,
and if found true, will be made fully public. And I can assure you
that such will never occur again. If necessary, stringent measures,
penalties and oversight methods will be enacted into place. Those
found to have violated the law of our land or the implied ethics of
responsible government or business will be punished accordingly.
[Usery and Interest Rates]
(1) A National Usery-Point is declared. It shall be 10% per annum.
(2) All credit-card issuers are required to immediately adjust
their consumer credit fees to the 10% Usery Limit or less.
(3) Likewise, all Banking and commercial lending is Usery limited.
(4) All government and private Bond rates are similarly limited.
(5) A Savings Interest rate minimum is mandated at 4% per annum.
(6) Private lending/Mortgages/real estate contracts Usery limited.
(7) Existing debt instruments, if they exceed Usery limits may
remain due and payable. But cannot be re-sold nor exchanged unless
the interst rate is revised to the Usery limit or less.
These measures are meant for the stability and orderly growth
of credit. And to prevent intended or unintended abuses. Credit
is one foundation of a healthy expanding economy. It shall be
the policy of this government to foster its orderly and fair
expansion and/or contraction as necessary to maintain stability
yet prevent excesses and/or lending just for the sake of lending.
Make no mistake about it. Credit is a good thing, when targeted
for bonafide economic projects and expansion. The FRB will not
tolerate lending in any arena that is simply credit speculative.
[Coins/Currency/Legal-Tender]
(1) Existing coins and currency remain our standard Legal Tender.
(2) Their face valuations and purchase power remain unchanged.
(3) No devaluations nor revaluations of currency is intended.
(4) Public use of Gold Eagle and Silver Eagle coins as minted by
the US Mint is encouraged, and Legal Tender at minted face value.
(5) The US Treasury shall issue a new $50 Gold Certificate.
(6) The US Treasury shall issue a new $1 Silver Certificate.
(7) The US Mint will continue to issue Gold and Silver Eagle coins.
(8) These may be obtained by (only) any US citizen at PostOffice
or Federal Reserve Branchs at face value, plus a 1% excise fee.
Initially, quantities will be in short supply. A national wait
list will be maintained. One-per customer. Then you go to the
end of the wait list. Or you may accept Gold/Silver certificates.
(9) Export of US Gold/Silver coins/certificates will be prohibited.
(10) Import of foreign Gold/Silver coins/certificates probibited.
(11) The US Mint will again issue small denominationSilver coins.
(12) The US Mint will reformulate the $1 coin with a Gold content.
Please understand: Similar Gold and Silver coins wll be authorized
and minted by all cooperating G-11 countries for similar local
circulations and have Legal Tender status in their respective area
including the ECU. Those coins will be denominated in their local
units of currency, and with a local face value equivilant exactly
to our Gold/Silver ($50/$1) as a world standardized exchange rate.
It is the intent of this, and those, governmnets, to mint-at-will
using their national Gold and Silver reserves. This process is to
have the effect of disgorging the currently "useless" national
and central bank hoards of large bullion bars into coinage of/for
their citizens. Returning their national wealth and the sovernity
it represents, to those citizens, who indeed are/were the ultimate
owners. Since each country will prohibit exports of their national
coinage, their national treasure will remain a foundation of their
respective ecomomies. We're just going to move it all out of those
dusty CB vaults, back into a more viable/visible money for citizens
of all the world's countries to use daily.
[Gold/Silver/Bullion Markets]
(1) As mentioned earlier, COMEX/CBOT/FOREX/etc futures markets will
no longer be allowed to trade Gold nor Silver. Nor "spot" markets.
(2) All current gold/silver bullion not in the form of national
Legal Tender coins will be required to be sold to the national
treasuries of each respective country. At a standardized price that
is equivilent to US$ 50/oz, plus or minus, depending upon purity.
That's for Gold. For Silver, the standardized price shall be $1/oz
(3) Coins having bonafide documentable numisimatic collector value
may be kept by their current owners. Or may be sold to others of
similar hobby, with a simple permit certificate for each intended
coin, obtainable from a postoffice or Federal Reserve Branch bank.
(4) Such coins must be reported annually, regardless, upon those
individual's IRS tax return. A 1% excise fee will be imposed.
(5) Legal Tender Gold/Silver coins shall be exempt from such IRS
inventroy/reporting/taxation if the quantity does not exceed 100
coins of either style. Or 100 oz, whichever is greater. We want
these coins to be in free circulation, not hid under the mattress.
(6) It shall be unlawful to buy/sell/trade Gold coins or Bullion
in any other manner without an explicit government authorization
permit. Penalties will be severe: $1000 fine per ounce and 1 month
in federal prison per each ounce so-marketed.
(7) National treasuries may from time to time export Gold/Silver
to their respective counterparts in other countries. All such
exports will be duly reported publicly, timely, and precisely.
(8) Gold/Silver producers (mines) are required to sell their output
to only the national treasury of respective countries. They will
receive a standardized US$ 50/oz price in their local equivilent
in the case of Gold, or US$ 1/oz for Silver. Depending upon purity.
All such metal will be immediately utilized by local mints to
fabricate into the coins of their realms. None shall be exportable.
(9) Industrial gold fabricators (Jewelers etc) will be permitted to
purchase their bullion needs directly from the Treasury. These will
be rigorously scrutinized and licensed transactions. Their cost is
to be $50/oz for gold, or $1/oz for Silver plus a 1% excise fee.
(10) It shall be unlawfull to melt any US coin. Severe penalties.
Coins will be metalurically DNA imprinted. Melters will be caught.
(11) No national government of any nation will be obligated to
redeem it's accumulated offshore currencies for Gold nor Silver
payable to a foreign government nor entity. That right is reserved
only to individual citizens, and only within their own countries.
In other words, there are no international "Gold Windows".
(12) Such trade surpluses must be redeemed only as re-investment
securities, bonds, products, or services in the obligated country.
[Mining Industry Assistance]
It is generally believed that Gold and Silver cannot be brought
to market at such standardized prices. In some cases that is true.
In others, it isn't. The government plans to assist bonafide USA
precious metals producers with several initiatives. These will
include corporate tax exemptions, minor subsidies, and exemption
or relief from certain environmental costs, where applicable and
where safe. We may find in many cases, mines will be relieved of
considerable burden if it can be shown they have been manipulated
unfairly by other institutions and to have sold forward their
future outputs at predatory prices and schemes. Such mines will
be made whole by fines, refunds, and adjudicaments as the CFTC
unravels the various derivitive excesses. But I can assure most
of our well intentioned miners, you shall be treated fairly and
you shall be allowed to operate at a legitimate profit.
[New Tax Exempt Infrastructure Bond]
(1) Each country will issue a new Tax Exempt Infrastructure Bond
with a coupon rate of 6%. Proceeds from such bonds will be used
only for infrastructure improvements to benefit all citizens of
their regions. And, in some cases may be used to fund similar or
new infrastructure/industrial development in 3rd world countries.
(2) Interest and principle payments will be paid via a new import
and export duty of 1% levied equally upon all international trade.
(3) These bonds may be purchased by foreign
Educating others about firearms is hard work. It's not glamorous, and it generally needs to be done one person at a time. But it's a very necessary and important task. The average American supports freedom of speech and freedom of religion, whether or not he chooses to exercise them. He supports fair trials, whether or not he's ever been in a courtroom. He likewise needs to understand that self- defense is an essential right, whether or not he chooses to own or carry a gun.
Cutoff/try again: Virtual Confiscation: Draft Memo to the President-Elect
The Full Text: Economic Rescue and Reform Essay for 2001====================================================================
Virtual Confiscation: Draft Memo to the President-Elect
The Full Text: Economic Rescue and Reform Essay for 2001
====================================================================
Draft Memo
==========
Dear Mr. President-Elect:
First of all let me congratulate you on your overwhelming victory.
Next, I thank you for this opportunity to present to you the full
details and context of my Economic Rescue and Reform Essay for 2001.
Here it is:
====================================================================
[Background]
During the past administration, major imbalances have built up in
the US economic structure. Some of these even predate the current
era by many years. And the imbalances extend as well to the entire
worldwide economic structure. Both are in grave jeopardy of instant
collapse, if not addressed quickly and with precision.
This plan may be implemented at any time, either before or during
such a period. It is a multipronged soloution which will be both
painless, transparent, honest and fair to the American people as
well as citizens, governments, and other institutions worldwide.
It will result in continued economic growth worldwide, under much
more stable financial conditions. The USA will remain the source
of worldwide stability. And the US Dollar as it currently exists
will remain the predominant Reserve Currency of preference. Indeed,
it will become an even stronger base by a sixfold factor. Citizens
of the USA will continue to use our present coin and currency. The
purchasing power of the US Dollar will remain unchanged both here
and abroad. Foreign currencies, likewise will stabilize in their
respective regions. With commensurate economic stability/growth for
them as well. Nobody will be left behind. All will move forward.
And most importantly, implementation of this plan will be simple,
inexpensive, and workable. With few exceptions, the average USA
or worldwide consumer; investor; businessman; or corporation will
see little change in their accustomed financial activities and
operations. Yet there will be a new stability and confidence which
they have not seen since much earlier eras. Most will welcome this.
[Implementation]
The plan will commence upon the regular Friday (USA) closing of NY
markets. You choose the date. The following presumes a date nearby
your post inauguration.
As President, you will have previously requested from the major TV
Networks an opportunity to address the Nation from the Oval Office
to announce some "essential reform and stability actions" intended
for the benefit of "continued" USA and world financial health. It
will not be an alarmest, spur of the minute/unexpected address:
[The Script]
Good evening my fellow Americans. I am speaking to you tonight from
here in the Oval Office to announce to you, as well as to those of
our worldwide economic partners and citizens of all nations, some
minor reforms and new regulations required to maintain and improve
the integrity of worldwide financial markets and institutions. This
telecast, being carried by satellite worldwide, and in all of the
G-11 nations, will be followed immediately by a local address from
their respective leaders and/or financial ministers. For we are all
in coordinated agreement for these measures to be quickly brought
into place worldwide. So as to maintain a smooth transition with no
adverse affect upon the majority of worldwide markets and business.
As many of you know, there have, over the past many years built up
various imbalances and instabilities within worldwide commerce,
financial markets, and institutions that could if allowed to remain
unchecked, possibly result in further complications that would not
be in the best interests of any of our nations. And so we are now
taking these pre-emptive steps to maintain and strengthen those
functions that are so essential to worldwide stability and growth.
The IMF; World Bank; BIS; and G-11 nations will all implement at
the same time, a coordinated, similar and interlocking plan. There
will be no surprises to any of them nor to Central Banks worldwide.
I will now itemize for you these measures and enactment schedule.
Please be aware that similar measures (by agreement) will be taken
at the same time by other worldwide governments and counterparts:
[Banking Pause]
(1) A 3-day Banking pause is declared, during this implementation.
(2) This is simply to restrain any who would try to profit from
temporary realignments being implemented. And prevent confusion.
[Price Freeze]
(1) I am also declaring a temporary 60-day safeguard period of
price controls during this transistionary period. Same reason.
(2) The IRS will monitor to insure that prices of all goods
and services remain at their current figures, as of Friday.
(3) Hopefully these controls will be lifted much sooner.
(4) These controls are to insure that the playing field remains
level, calm and clear of any unwarranted price manipulations.
[Stock and Bond Markets]
(1) Here and abroad, a 3-day moratorium (closure) is declared.
This, is to allow brokers/traders to adjust books and settlements
to be calculated and adjusted as of today's closing positions.
(2) The SEC will ban purchases of Stocks/Bonds on margin or credit.
(3) Existing law bans borrowed money from purchasing stocks/bonds.
These laws will be strictly enforced by the SEC/FRB/IRS.
(4) The SEC will ban all "short" sales of any security. This will
prevent rampant speculation and price manipulations in the future.
These measures alone, will result in immediate market stability.
Wild swings/price variations will be a thing of the past. Upward
growth is favored. Where the fundamentals will be determinant. No
longer will the markets be at the mercy of a few speculators who
have the power to profit by driving prices downward on a whim.
[Commodity Futures Markets]
(1) A 3-day market moratorium is also hereby declared. For similar
reasons as just mentioned.
(2) The CFTC will ban all futures-trading on margin or credit.
(3) Borrowed funds of any sort, likewise are banned for purchases.
(4) The CFTC will ban all "short" sales of commodities. With the
exception of bonafide producers. These will be strictly controlled
and existing laws enforced. Only a single year's (documented) net
estimated production may be sold forward by any commodity producer.
(5) The CFTC will immediately halted permanently, the trading of
Gold and Silver. Existing long/short positions will be frozen and
unwound in an orderly process by the CFTC. Settlements will be
adjudicated in US Dollars. Existing warehouse Gold/Silver will be
deposited into the National Treasury. (More on this later)
These measures will immediately stabilize commodity markets to more
truly reflect producer/consumer requirements. Speculation for the
sake of speculation and/or price manipulation will become a thing
of the past. These markets will return to their intended functions.
They are no longer to play a role as sanctioned pseudo-casinos.
[Options and Derivitives]
(1) The CFTC will ban forever, Options/Puts/Calls of any sort.
(2) The CFTC will ban forever, so-called "Index-Futures".
(3) The SEC and CFTC will ban forever, "Derivitives" of any sort.
(4) Existing positions in any of the above will be frozen and be
unwound in an orderly manner under uspicies of the CFTC and FRB.
Perhaps, more than any other entity, such Options and Derivitives
have contributed-to if not singlehandedly caused the majority of
the world's financial problems. Those institutions and speculators
who have overindulged in such risky and reckless initiatives will
not be favored nor bailed out as "Too-big-to-Fail". These measures
I put forth to America and the world tonight, are intended to help
our overall stability and growth. If some have been contributory
to the opposite in the past, they will certainly be so recognized.
Whatever they've gotten themselves into will have been their own
fault and have been frequently warned by regulatory authorities.
If they have continued such market abuses and recklessness, then
they alone must bear responsibility and their ultimate burdens.
[Market Interventions]
(1) I pledge that the US Government nor any entity associated or
disassociated with it shall in any way whatsoever henceforth enter
into any tactic or trade that could in any way manipulate markets.
(2) Foreign leaders of the G-11 have agreed to similar principles.
This may or may not have occured in the past. But some people have
speculated that to be the case. All I can assure you at this time
is that we intend to investigate such claims and possible abuses,
and if found true, will be made fully public. And I can assure you
that such will never occur again. If necessary, stringent measures,
penalties and oversight methods will be enacted into place. Those
found to have violated the law of our land or the implied ethics of
responsible government or business will be punished accordingly.
[Usery and Interest Rates]
(1) A National Usery-Point is declared. It shall be 10% per annum.
(2) All credit-card issuers are required to immediately adjust
their consumer credit fees to the 10% Usery Limit or less.
(3) Likewise, all Banking and commercial lending is Usery limited.
(4) All government and private Bond rates are similarly limited.
(5) A Savings Interest rate minimum is mandated at 4% per annum.
(6) Private lending/Mortgages/real estate contracts Usery limited.
(7) Existing debt instruments, if they exceed Usery limits may
remain due and payable. But cannot be re-sold nor exchanged unless
the interst rate is revised to the Usery limit or less.
These measures are meant for the stability and orderly growth
of credit. And to prevent intended or unintended abuses. Credit
is one foundation of a healthy expanding economy. It shall be
the policy of this government to foster its orderly and fair
expansion and/or contraction as necessary to maintain stability
yet prevent excesses and/or lending just for the sake of lending.
Make no mistake about it. Credit is a good thing, when targeted
for bonafide economic projects and expansion. The FRB will not
tolerate lending in any arena that is simply credit speculative.
[Coins/Currency/Legal-Tender]
(1) Existing coins and currency remain our standard Legal Tender.
(2) Their face valuations and purchase power remain unchanged.
(3) No devaluations nor revaluations of currency is intended.
(4) Public use of Gold Eagle and Silver Eagle coins as minted by
the US Mint is encouraged, and Legal Tender at minted face value.
(5) The US Treasury shall issue a new $50 Gold Certificate.
(6) The US Treasury shall issue a new $1 Silver Certificate.
(7) The US Mint will continue to issue Gold and Silver Eagle coins.
(8) These may be obtained by (only) any US citizen at PostOffice
or Federal Reserve Branchs at face value, plus a 1% excise fee.
Initially, quantities will be in short supply. A national wait
list will be maintained. One-per customer. Then you go to the
end of the wait list. Or you may accept Gold/Silver certificates.
(9) Export of US Gold/Silver coins/certificates will be prohibited.
(10) Import of foreign Gold/Silver coins/certificates probibited.
(11) The US Mint will again issue small denominationSilver coins.
(12) The US Mint will reformulate the $1 coin with a Gold content.
Please understand: Similar Gold and Silver coins wll be authorized
and minted by all cooperating G-11 countries for similar local
circulations and have Legal Tender status in their respective area
including the ECU. Those coins will be denominated in their local
units of currency, and with a local face value equivilant exactly
to our Gold/Silver ($50/$1) as a world standardized exchange rate.
It is the intent of this, and those, governmnets, to mint-at-will
using their national Gold and Silver reserves. This process is to
have the effect of disgorging the currently "useless" national
and central bank hoards of large bullion bars into coinage of/for
their citizens. Returning their national wealth and the sovernity
it represents, to those citizens, who indeed are/were the ultimate
owners. Since each country will prohibit exports of their national
coinage, their national treasure will remain a foundation of their
respective ecomomies. We're just going to move it all out of those
dusty CB vaults, back into a more viable/visible money for citizens
of all the world's countries to use daily.
[Gold/Silver/Bullion Markets]
(1) As mentioned earlier, COMEX/CBOT/FOREX/etc futures markets will
no longer be allowed to trade Gold nor Silver. Nor "spot" markets.
(2) All current gold/silver bullion not in the form of national
Legal Tender coins will be required to be sold to the national
treasuries of each respective country. At a standardized price that
is equivilent to US$ 50/oz, plus or minus, depending upon purity.
That's for Gold. For Silver, the standardized price shall be $1/oz
(3) Coins having bonafide documentable numisimatic collector value
may be kept by their current owners. Or may be sold to others of
similar hobby, with a simple permit certificate for each intended
coin, obtainable from a postoffice or Federal Reserve Branch bank.
(4) Such coins must be reported annually, regardless, upon those
individual's IRS tax return. A 1% excise fee will be imposed.
(5) Legal Tender Gold/Silver coins shall be exempt from such IRS
inventroy/reporting/taxation if the quantity does not exceed 100
coins of either style. Or 100 oz, whichever is greater. We want
these coins to be in free circulation, not hid under the mattress.
(6) It shall be unlawful to buy/sell/trade Gold coins or Bullion
in any other manner without an explicit government authorization
permit. Penalties will be severe: $1000 fine per ounce and 1 month
in federal prison per each ounce so-marketed.
(7) National treasuries may from time to time export Gold/Silver
to their respective counterparts in other countries. All such
exports will be duly reported publicly, timely, and precisely.
(8) Gold/Silver producers (mines) are required to sell their output
to only the national treasury of respective countries. They will
receive a standardized US$ 50/oz price in their local equivilent
in the case of Gold, or US$ 1/oz for Silver. Depending upon purity.
All such metal will be immediately utilized by local mints to
fabricate into the coins of their realms. None shall be exportable.
(9) Industrial gold fabricators (Jewelers etc) will be permitted to
purchase their bullion needs directly from the Treasury. These will
be rigorously scrutinized and licensed transactions. Their cost is
to be $50/oz for gold, or $1/oz for Silver plus a 1% excise fee.
(10) It shall be unlawfull to melt any US coin. Severe penalties.
Coins will be metalurically DNA imprinted. Melters will be caught.
(11) No national government of any nation will be obligated to
redeem it's accumulated offshore currencies for Gold nor Silver
payable to a foreign government nor entity. That right is reserved
only to individual citizens, and only within their own countries.
In other words, there are no international "Gold Windows".
(12) Such trade surpluses must be redeemed only as re-investment
securities, bonds, products, or services in the obligated country.
[Mining Industry Assistance]
It is generally believed that Gold and Silver cannot be brought
to market at such standardized prices. In some cases that is true.
In others, it isn't. The government plans to assist bonafide USA
precious metals producers with several initiatives. These will
include corporate tax exemptions, minor subsidies, and exemption
or relief from certain environmental costs, where applicable and
where safe. We may find in many cases, mines will be relieved of
considerable burden if it can be shown they have been manipulated
unfairly by other institutions and to have sold forward their
future outputs at predatory prices and schemes. Such mines will
be made whole by fines, refunds, and adjudicaments as the CFTC
unravels the various derivitive excesses. But I can assure most
of our well intentioned miners, you shall be treated fairly and
you shall be allowed to operate at a legitimate profit.
[New Tax Exempt Infrastructure Bond]
(1) Each country will issue a new Tax Exempt Infrastructure Bond
with a coupon rate of 6%. Proceeds from such bonds will be used
only for infrastructure improvements to benefit all citizens of
their regions. And, in some cases may be used to fund similar or
new infrastructure/industrial development in 3rd world countries.
(2) Interest and principle payments will be paid via a new import
and export duty of 1% levied equally upon all international trade.
(3) These bonds may be purchased by foreign entities or citizens
using only verifiable accumulated trade surpluses.
(4) These bonds may be freely traded or swapped amongst nations
to assist in stabilizing or reducing trade imbalances.
[Conclusion]
So there you have it, my fellow Americans. A swift, workable and
fair soloution to some nagging problems. This isn't a return to
an old outdated "Gold Standard". It's a new standard. A Standard
of Integrity. With the US Dollar as strong or stronger than ever
before. Will your dollar be as good as before? Yes. Will it buy
as much as before? Yes. Is it inflationary? No. Is your gold or
silver worth any less? No. Not in reality. Consider this: Prior to
these conventions, it took nearly 300 of your hard earned dollars
to buy a single ounce of gold. Beginning on Wednesday of next week
you can purchase that same coin of Gold for only 50 of your dollars
and what's more, you can use it in the marketplace or keep it in
a place of honor. For the US Dollar is once again As Good As Gold.
We are not devaluing the US Dollar. But we are ReValuing Gold and
Silver to their historic norms. No more will these precious metals
be inflated to outrageous unwarranted values by speculators and
manipulators. These can, indeed must, always remain as a firm store
of one's wealth. To that end, we now include the US Dollar itself.
Under these historic improvements, we attain a stronger dollar;
good as gold itself; and we retain unlimited banking flexibility;
international agreement and standardization. Local currencies are
wholly unaffected. Worldwide prices and trade remain unaffected,
indeed, ready to flourish in this new era of monetary stability.
Thank you for your understanding, cooperation and patience while
we implement these changes, to benefit all citizens, everywhere.
Good night, and may God Bless America.
==================================================================
Thank you for expressing an interest in my essay Mr. President.
I wish you well in your new administration, one for All the People.
I suggest that you rethink your plan in the following direction:
Eliminate the possibility of the president and congress ever having authority to decide when how and where any market operates, any bank operates, what money is, what its value is, and disallow the government to hold any property not in use, excepting property donated into government trusteeship.
This would include
Ban on government guarantees of private contracts including banking.
Ban the CFTC
Ban the SEC
Ban the Fed
Close the department of commerce
Close HUD
Privatise social security and medicare
Close the department of labor
Close the department of energy
Close the bank regulatory agencies of the Treasury
Close the department of education
Eliminate "progressive" taxation.
Eliminate the "war on drugs"
Reform the EPA into an advisory role to the Justice department and state attorney generals.
Close the DEA, BATF, and eliminate all government powers associated with their functions.
Eliminate all FBI authority and turn it into a consultative and assistive body for state and local level police.
Mr TRAIL GUIDE & Mr TRAVELLER - an important development
I have a question for both our learned friends which i think is important to the inflationary/deflationary debate.
Mr Greenspan and Mr Summers have writen a letter to Congress urging them to pass a "stand alone" bill regarding derivatives contracts in bankruptcy proceedings.
A bill accomplishing that has just passed the House of Representatives on a "voice vote".
How do you Mr Trail Guide & Mr Traveller, see that fitting in your economic scenarios.
the bill to be passed specifically relates to finding ways to protect the nation's banking system in case a major financial institution should go bankrupt.
The one thing behind the bulk of economic problems of the past century is infinite credit. Without a "lender of last resort" no credit money can work. But with a lender of last resort the system is prone to problems of "moral hazard" as past errors are swept under the liquidity rug. The liquidity balm saves all but the worst offenders and lowers the value of the credit money in every cycle. The true choice in credit money is expand or perish, and there is scant middle ground.
Close down the credit money system and the Fed that makes it possible to survive and you have solved most of the problems.
Your approach is not going to solve any of the problems, but would probably destroy the functioning of the existing system.
Though I understand that you are trying to emulate the flailing hands of officialdom at its most useless in this, there is still the point that officialdom is pulled pushed and prodded by various interests. One must identify in a proposal like that which interests these are that the program targets for benefit, and who is going to pay for it.
By my calculation, there has been a hole developing in the debt markets, as current US borrowing has been growing at too slow a pace and the deficit is around 300-350 bil. That hole is being plugged by funds coming from abroad. These funds are created abroad in other currencies then the funds are exchanged for dollars and thus supply the ravenous credit markets.
Having said that, I'd really (really) enjoy it, if sometime in the
not too distant future you could use your skill, background,
and insights to write for us all, a "plan" or "scenario" that
would or could be effectively implemented upon a moments
notice, worldwide, that would rescue the world financial arena
from an impending multi-bubbled systemic meltdown.
That's all I'm trying to get people to think about, or vision, if
(as expected) worse comes to worse. Which seems to be
the case. Witness, tg's just-posted:
tg (10/25/2000; 3:15:19MT - usagold.com msg#: 39841)
regarding the apparently fast-track push of FRB and Treasury
to get a handle on the impending derivitive bubble burst. I'm
sure they are, as I write, trembling in their WingTips hoping
that legislation will pass both houses and be signed off by
Mr. Clinton before being engulfed in a major financial disaster.
Come on. I know you must have some thoughts along the line
of what could happen and what could be done to resolve it.
Those in the forum would, I'm sure be delighted to read your
own analysis and as-always well written plan or scenario.
Why does everyone in the forum leave all this dirty work up
to me alone to resolve. Gosh, I can't do everything around here
and besides, it's time for Rain_Dog's nightly run.
Just abit curious, whom has read Socrates re: "big and small" and or Alexander Pope " A essay on critisism "? and I ask why do these two enter the head spontainiously , before I actually try and nut this out ,or shoulkd I follow the gut through vague premise of understanding ? but at this stage round and round it goes ; any helpers ?. In the mean time I intend and act on as the hunches permeate .
Sir Peter Asher . I lean't back in the chair and bellowed a hearty laugh and my wife squealed out after showing her the email and mentioning a comment or two a heartier one , the morel of the story was the cause of some generated discussion at the dinner table and then the children joined in.
It was good to sit back and listen to their ears and minds working ...the right equipment. big :)s. night night all.
http://www.sharelynx.net/Markets/Charts/GlobalGoldSentiment.htm That is an interesting chart, although it is a stretch to try to derive timing information from a sentiment chart. The gold sentiment is at multi-year lows, but it may keep going down for who knows how long? Until all the weak hands have sold all their gold.
"But I will agree with you on this in another regard. Simply not enough people are seeing the light that the ample and artificial supply of paper gold has facilitated over the course of many years an adverse effect on gold price discovery, and subsequently, the adverse popular perception of the metal's value."
Ah, we're getting someplace...your quote above gives "credit" or is that "blame" to the futures actually setting the price for gold...a "ours are joined at the hip" approach...an "us with them" united approach, not too different from what i have been trying to get through to you...It reads like you finally "Get It"...
On the reasons why we are in a downtrend...I wish you or FOA or anyone REALLY knows...certainly the "more sellers than buyers" notion is too simple.
What this market needs is a change in perception (and evidence) that GOLD futures AND Physical, will "cost" more next month/next year, and holders will have confidence to add to "winners" and not have their "heads" and wallets handed to them.
Adding long in a downtrend is not very productive unless/until that trend changes...
I understand, I think that the money supply has been greatly increased since at least the mid ninties to allow a liquidity based boom in the international markets, but I would greatly appreciate a detailed description of how the US dollar was boosted roughly 30% above the other currencies. Is this because they were able to mark down the price of the spot gold market by this amount, or is that just something they had to do to keep from drawing too much attention to their scheme? Was the use of derivatives in the currency markets the way in which this was achieved? Did they just issue so much dollar denominated debt that the trading partners were forced to compete for dollars in the market place to pay down their dollar denominated debt? Was it implicit capitulation of the currencies that needed the exports, like Europe and Japan, that allowed the US dollar to rise by not converting their US dollar earnings from trade back into their own currency but instead bought US securities with them so as to not have the exchange value of their currencies rise and undercut their competitive position in international trade? OR Is it all of the above?
"The World Gold Council has reported continuing demand for gold at record and near-record levels on a global basis, and further, that annual demand outpaces annual supply of new production and "scrap" by a significantly wide margin. It appears to me that many people are indeed seeing the light...the yellow light reflecting from the metal in their possession."
I'll tell you with a straight face that downtrends in anything are because of either too much supply at a given demand, OR not enough demand at a given price...
Almost every ounce of Physical gold ever mined is out there today and you know it...That's the supply Mr Crier and you know it...the fancy dance that this forum does about physical gold never addresses THE Large Physical Supply...
Great post buddy! Remember Abby Cohen's earthshattering statement last year advising to lower equity holdings from 70% to 65%, now there's stellar advice.
My favorite north of the border is Sherry Cooper. Hard nosed bull all the way. Another that will go down with the ship.
Watch NT today, analysts were all bent out of shape over NT's 'mixed bag' earnings report. I am pretty sure I heard one guy say NT was down 21% in after hours activity. TSE might get murdered today and because NT is the 'gorilla' up here most funds to be beaten as well. But who knows, these guys may work it the other way; we shall see in a couple hours.
Is it that there is more supply than demand because the central banks of the world have mobilized their supplies through either direct sales or "leasing" that results in sales into the market? IF so the point is well taken. Or are you saying that the store of wealth value of gold has been brought into question by the realization that if the central banks don't hold 31,000 tonnes of it then the value of it in the future will be so low that no one will have had his wealth protected by his investment but rather signigicantly diminished. The gold holding public having come to this conclusion have decided to sell and liquidate their holdings? Please be specific about what you think has allowed the demand to be swamped.
My opinion is that the confidence in holding gold long, has been "tarnished". The evidence shows breakouts have been sold into, and banks, goldholders, and futures holders have not helped the bull advocates when they sell.
The perception will change at some point...commercials (smart money?) seem to be covering shorts/adding longs for the past few months, and Mr. Kosares is doing his job in promoting gold to us all (newsletter, website and more?).
I also feel that hedging by mines is foolish at these prices, and, actually, hedges should be bought back soon. They may be waiting for the uptrend to start.
Trends do change. And when the uptrend starts, the futures folks are going to add "gasoline to the fire". They did it in oil, and they will do it in gold.
The lower lows and highs of a downtrend are either supply or demand specific. The higher lows and highs of an uptrend are too. For the past years, supply and demand has been losing to the bears...
Pick your own causes, but it's not futures.
With these two sets of charts I've attempted to view the markets (gold & fiat) from a global perspective.
Though the Dow/Gold ratio has topped & stalled these last two years.
My Fiat/Gold Sentiment charts show the ratio as still rising.
One fault with my gold sentiment index is that most of the inputs are measured from stocks & their indexes (fiat)
In the chart set you first posted (fiat/gold sentiment ratio) it's interesting to note the two spikes in the ratio that occurred - one in 1998 & the next one in 1999.
Time for the next spike.
And it should prove to be the reversal for the fiat/gold ratio.
(Unless gold stocks plunge ever lower)
I read your proposal to the president-elect with interest in the first few paragraphs, but the bottom of my stomach fell out when I read the last bit. I have a problem (being a strict constitutionalist) with the government arbitrarily setting the price of anything, be it gravel or Gold.
Your plan, if it was enacted, would result in, rather than a "war on drugs," a war on Gold. Gold manipulation by any other means is still Manipulation.
However, you have given us a starting point from which to consider this question, maybe from a new angle.
HOw would I do it? I don't know. I think, though that there is no easy way, people would lose much. The game has gone on too long to prevent this.
The Idiots say there is no place to hide??? How Goddam stupid are people nowadays???
This proves it's a herd mentality, soon the herd will turn.
If they are not slaughtered first,welcome to the slaughterhouse people.
Canadian dollar also opened 4/10's of a cent lower now under 66cents. GOT GOLD SUCKERS?????
Hello, tg, got an e-mail this morning from Bill Buckler, who predicted this rapid request from Greenspan/Summers to pass this Bill in favor of Banks and Brokers, which may become insolvent due to derivative problems of their counterparies.
There must be huge problems looming in derivative land to account for such action. What do AG/Summers know, the markets don't, at least not yet?
"We believe that this is an opportunity for government to take an important, tangible step to mitigate systemic risk and improve the integrity of our financial system", Summers
and Greenspan urged .... very opportune, if not opportunistic - says I -cb2
If I understand you correctly? You think that the down trend in the spot gold price has been primarily due to the pressure of physical gold holders world wide, public and private voting with their feet and selling more physical gold than the demand in the market and thus forcing the price lower. You also say that the forward sales of the gold producers have added pressure to the downward price movement , but you expect that to stop at these levels. Is this correct? You make a destinction that it is not futures that are doing it. Do you mean that the total supply that is being sold is not being effected by derivatives of gold being sold into the spot market? Thanks for your responses.
Sandwiched in the middle of a politically motivated press conference on the dead-locked U.S. Budget situation, Bill Clinton announced an agreement to extend "debt relief" to poor countries.
Apparently both Democans and Replubicrats agreed. So --
QUESTION OF THE DAY: What's the REAL motivation behind this "debt relief" agreement -- which everyone signed on to -- right in the middle of otherwise dead-locked budget negotiations?
Quote "You make a destinction that it is not futures that are doing it. Do you mean that the total supply that is being sold is not being effected by derivatives of gold being sold into the spot market?"
Some short futures contracts result in delivery, but it does seem to be or have to be a result of a futures transaction...Does this help?: A futures holder long, hopes to profit from an expected increase in the price of gold diring the term. At the end of the contract, the long can pay up at the contracted price and receive physical from the "short" or liquidate and repurchase another contract to benefit if the price rallies.
It has been the general practice that a minor number of the total open interest, or number of contracts actually result in delivery...certainly less than 25 tonnes every other month by the Bank of England, or a tonne-a-day from the Swiss...so in reply to your question above, Some (minor amounts) of futures may indeed hit the spot markets, but probably not enough for folks at this forum to tell us that futures/paper gold is THE reason for the downtrend.
A "good while ago" you did a post explaining how futures figured into the price of gold -- or something closely related. Possibly how the spot price of gold was calculated. At least I think that was you. (Else, "Duh!")
Could you direct me to that post -- I stupidly, apparently, didn't archive it -- or incompetently just can't find it.
Maybe debt relief is necessary in order for the game to continue. If one player holds all the money at the table, then that player must lend some to the other players or the game is over.
Or perhaps some debt relief lowers the outstanding balance and the monthly interest payments to a level that can be paid. Some payment (even if less than what is due) is better than no payment.
In my younger days, when the little woman a I were newly married, I sometimes paid part of many bills with a note that I would pay in full as soon as I was able rather than not pay at all. It worked, no one tried to foreclose and the power company never shut off the electricity. Those were the days, my friends. We were too poor to be unhappy!
Still not rich, but we manage to pay the bills.
Dow, Duck and S+P all down right now.
The general concept, with some detail was given before in a post some many months back.
The trimmed down version is:
Continue inflating as you are - as necessary to keep the banks from insolvency as their borrowers are keeling over. This is so as to keep the settlement systems essential to trade functionality.
As part of this inflation, make gold and the other precious metals legal tender for disposal of debt at market value. This would produce the necessary amount of cash needed to pay down dollar debt without needing to create dollars into existence through loans in order to pay down prior debt.
Once stability has been restored in the banking system and the credit markets, close the Fed. With a commodity money to supply the credit markets, there is no need to have a "lender of last resort". At this point, FDIC and the government authority to bail out banks should be eliminated so that no "Emergency Orders" are possible to save any banks at taxpayer expense.
Bank regulatory functions should be streamlined so as to avoid having all banks reading from the same playbook. Meaning that no minimum reserve requirements, capital adequacy ratios or credit quality regulations are needed. In fact, they are counterproductive since they do not allow banks to compete in these critical areas of importance to bank depositors. Because of the regulatory discipline, the banks can not effectively separate into conservative and aggressive strategies and compete on safety as well as rates of return and service/fees. One size never fits all. Regulations force this "one size" strategy on all banks. In today's strong information availability, the banks can be effectively regulated by the marketplace.
Taxation policy should stop attempting "targeting" since it is a market deforming process which assumes that government can successfully replace the markets in judgeing how to satisfy the various needs and wants of people. Governemnt should focus on its need for income rather than attempt to use its revenue raising function for the purpose of "rewarding" and "punishing" particular activities. First, end the double taxation of corporate income so that earnings are taxed only once and at the same rate as personal income. Eliminate the differential tax treatment of capital gains and dividend income as well as interest income.
The Federal government may assist state and local governments in their income as it does now, however, it must not attach any conditions as to how the funds are to be used, for what purpose, or under who's discretion. Any attempt to do otherwise would end up stealing control of the state governments from the state's people - whos main tool of control is their ability to vote out those who take tax policy in unpopular directions or those who target spending towards unwanted goals.
Finally, adjust the tax burden on income with the tax burden on property (both real and financial) and sales so that both are taxed at the same level of eonomic significance. This would require coordination of tax policy with school district and municipal level government.
Dollar index is 118.44. The yen is also up but barely and the rest of the world, well...
Euro is 0.8282.
I think we're approaching maxim warp and the dilithium crystalls can't sustain this uptrend forever. The trade deficit has been about $30 billion per month but if the dollar keeps climbing, I don't see how any nation will be buying anything from us. All the grains, cotton and things like orange concentrate along with high tech manufactured goods are going to suffer unless the expensive American product can only be obtained here. Unfortunately, this isn't the case for American farmers.
The main point is that SOME debt remain to provide demand for dollars. Allocations of funds to the IMF and World Bank are no longer politically acceptable, so that any "debt relief" must be provided directly. The indebted poor nations would otherwise default, thus eliminating their debt loads forever. After repudiation of this dollar debt, terms of trade would go from provision of credit for purchase and sale to cash and carry. Exports to these nations would stop until they had enough dollars on hand to purchase imports (our exports, among others) and they would no longer be able to provide dollar credit to the clients of their exporters. Thus our imports would have to be purchased with cash rather than credit. As some of these nations export crude goods (including gold) the temporary elimination of their supply to market because of financial terms of trade would cause rather disproportionate price movements.
The considerations in this move are as follows:
1. Some debt would remain, with no dispute as to how much is owed to whom, vs. the alternative: no dollar debt remaining with prolonged dispute as to who may attempt recovery, how much, and how.
2. Avoid damage to some US exporters who would not only be suffering currency conversion problems, but would be completely shut out of the markets for anywhere from 3 mo. to a full year.
3. Prevent a price hiccup from which there is likely no future recovery as a result of disruption of supply during the move from trade credit to cash and carry, some 3 months in initial adjustment, and 6-12 months till supply is back to normal.
Vote Libertarian in all your elections where such a candidate is available.
Why not run for office on a Lib ticket yourself?
Where a non Lib is elected keep tabs on him and bug him like a swarm of gnats. Arrange as many "recruitment" and organizational neighbourhood meetings to find the like minded and to coordinate attempts to pressure politicos to take Lib positions.
We don't need to be a majority and we don't need money. We need a loud voice.
Funny you should ask that question, my wife and I were just involved in a long discussion concerning debt in third world countries.
Your post:
<>
Discussion:
The poorest of the un-developed nations have "NO" way to generate any excess income, most live off the land in what is called subsistence farming, similar to what all of our ancestors did at one time.
If money is lent to them, generalizing,most don't understand the difference between a gift and a loan,I'm speaking about the subsistence farmers.
So, what has happened, IMHO is; better educated Government bureaucrats in third world countries negotiated international loans,from the IMF/World Bank to improve local infrastructure(roads, sewerage, etc.) and at the same time figured a way to tax these same subsistence farmers into paying off these loans in U.S. dollars..... As U.S. dollars become progressively more expensive in local currencies(because of fluctuating exchange rates) the local subsistence farmers cannot and will not pay any more taxes, which in turn are used to pay off existing loans.
This in turn leads to debt restructuring, so countries don't default on IMF/World bank loans, causing a snowball affect on the whole dollar system.
Who benifits the most from a strong U.S. dollar?
Answer: The IMF/World bank!!!
Who benifits the most from a weak POG.
Answer: Again the IMF/World bank.
FWIW......beesting.
PPTToday we may be witnessing what the PPT may not be able to do for the markets: the Canadian TSE is down over 800 points. This is significant as it gives a direct and public contrast between a market in which intervention by a PPT is prevalent (allegedly) and one that is next door that a PPT is either not working or is non existant. I can't help but think that this will have a "rub-off" effect and open a few eyes as to the seriousness of the "bubble" and the odd behavior of our markets.
To Trail Guide regarding (10/23/00; 19:26:57MT - usagold.com msg#: 39745), oh dear, I'm afraid my earlier (10/10/2000; 12:02:06MT - usagold.com msg#: 38687) post gave you nearly the reverse of the impression I was trying to convey.
You and I are in perfect agreement that paper gold vehicles (whether options, futures, derivatives, or even deposit chits) are best run away from. Those who reach into a lion's mouth to snatch at quick profit all too often discover that the potential reward was simply not worth the wrist (I know it's a bad pun, but I can't help making off-hand remarks).
Physical gold is several orders of magnitude safer than paper gold in my opinion. But then again, fiat currencies deposited in traditional bank accounts are also vastly safer than paper gold. What I'm less certain of is, of course, whether physical gold is any safer than a fiat currency. Certainly it will prove safer than most fiat currencies, but will it come out on top during our lifetimes?
Let me put this into simple numbers: go out to-day and acquire one gold Sovereign and �51 and e88 and $74. Now tuck them away under the stairs and come back in 2007. Which of the four will be the most valuable then? I have no earthly idea. I mean, it's a pretty strong bet that at least one of them will have tanked against everything else, but will it be the euro maintaining its decline into obscurity, or will it be the dollar crashing from on high, or will it be the pound remaining independent and therefore unwanted, or will it be gold succumbing to one of the various precious metal bogey-men such as central bank divestiture? From where I sit to-day, I read the odds at about even for any of those possibilities.
But, what I can say with a phenomenal amount of confidence is that the sum purchasing power of that unattended little basket of four assets will, come 2007, not have slipped tremendously from its value to-day. Indeed, if the fiat banknotes were instead kept in traditional bank accounts earning interest from now until 2007, I would sleep like a babe in perfect confidence the basket of four would maintain most of its purchasing value. Realise that I am confident of this even allowing for the total collapse of any one of the four, because the growth in purchasing power of the other three is highly likely to rise in at least partial compensation.
Now expand that little basket by adding �51 or maybe �102 of some stock fund which owns thousands of stocks around the world, including gold mining stocks as one of its many industry representations. The odds of this larger basket's combined purchasing power being less in 2007 than it is to-day is incredibly tiny because, in order for the sum to fall, it requires that the entire world convulse in all significant industries and in all significant economies all at once. And even if that sort of systemic shock does occur, there's always the Sovereign, which in such an eventuality would almost certainly rise in purchasing power.
That's asset allocation. It's not gambling. It's putting your hard-earned wealth in places where their combined total purchasing power will at least survive and hopefully thrive over long periods of time, pretty much regardless of what the future chooses to hurl at you.
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Capital Siege
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So why not include paper gold in that basket of allocated assets?
Well, first off, because it's a form of gambling (or at best a form of insurance), not a form of savings nor even a growth investment. But second off, because paper gold will be among the first things to go in any sort of debacle. Indeed, events are already headed that way.
Market commentators love to rattle on about the distinction between Wall Street and High Street, and it's a distinction well taken. Paper gold is a creature of The City and of Wall Street. The average patron of a book shop or cafe is no more likely to pay for his purchase with paper gold than he is with a futures contract for coffee. Both sorts of instruments are highly esoteric and are never intended for high street shops or high street consumers. But domestic banknotes (fiat currencies) most assuredly are intended for everyday consumer transactions.
Governments exist to maintain order. To achieve that, governments are quite willing to allow the few to suffer so that the many will carry on contentedly. If ever a government is presented with the choice between preserving either domestic paper gold or domestic fiat currency but not both, there shall be no choice at all. Millions of registered voters must at all costs be kept content. Indeed, the comparatively few who suffer in the forsaken market will be portrayed by the government as having gotten their just desserts. They'll be described as get-rich-quick gluttons for whom the hard-working citizenry need devote no sympathy. This is classic Machiavelli, and it will work next time as it has worked countless times in the past.
The first step in avoiding a trap is knowing of its existence. The next step is simply Not to step in it. Rather, you'll fare best if you identify the vested interests of the powers above you, then take up positions in those areas which they are likely to defend at all costs in times of crisis. Back in the bad old days of feudalism, those peasants who settled themselves nearest the castle gates tended to fare better than those who had longer to run ahead of an approaching army. Those massive stone walls were put there to shelter the person and property of the lord, but they granted the same shelter to any peasant who had the foresight to position himself well.
To-day the walls are not so obvious, but the vested interests of the mighty are still able to be identified and turned to one's own advantage.
Paper gold is as risky as a casino wager under normal market conditions. During periods of severe market stress, however, its riskiness approaches the infinite because that's not where serious vested interests lie. One look at the Bank of England's gold sales will tell you that they regard gold (both paper and physical) as a minor (and expendable) part of the equation. Vastly more important to the BoE is maintaining a favourable pound/euro exchange rate.
In castle terms, the farms before the gate do have value, but the lord almost always allows the invading army to burn them without resisting overmuch. Why? Because their value is insignificant as compared with the value of maintaining the castle walls. And surprisingly, those few who watch their homes and crops burn at the beginning of the siege are seldom angry at the lord who generously held his gates open just long enough for them to seek his protection. Rather, they become his staunchest allies against the invader.
A nation's domestic paper gold market is, in to-day's terms, one of the many farms before the gate. It may be burned in some future siege, or it may not, but in any event its government will not neglect more vital pursuits to rescue it.
The walls of to-day's castles, and the siege engines rolled up to break them, are both made from fiat currencies.
From any one government's point of view vis-�-vis another government, the walls are being held whilst there is trade balance, or at least favourable trade imbalance, from one side of the wall to the other. One of the most visible indicators of success or failure in this pursuit is the exchange rate between the two fiat currencies. Another indicator is the gross volume of trade. The true measure is, of course, the balance (or imbalance) in that trade.
For example, it is to Iraq's advantage to avoid direct exchanges between its fiat currency and the U.S. dollar because the U.S. wishes there to be an extreme imbalance in the U.S.'s favour. Iraq finds itself in the position of the computer in that 1970s U.S. film "War Games": the only way to win the game is not to play. Iraq may not be admired in Euroland, but it isn't quite so feverishly hated there either.
Realise, though, that this siege mentality affects allies as well as mortal enemies. The UK has every reason to wish to maintain a reasonable balance of trade with Euroland. Lose LBMA (one farm before the gate) and yes there'll be inquests and grief in The City. But lose too many employers to lower cost Euroland and the newly swelled ranks of UK unemployed will make this summer's petrol protests look like a holiday outing.
UK decisionmakers realised long ago that the pound/euro exchange rate was vastly more crucial to national health than was the pound/dollar exchange rate. They've spent the time since then doing anything they could think of to keep the pound from following the dollar rather than following the euro. You may rest assured that, when the BoE began its gold sales, it expended not the least bit of worry over what might befall the dollar/gold exchange rate.
Indeed, selling gold was one of the comparatively few "subtle" options the BoE had available to devalue the pound against the dollar. That's why one pound to-day buys only about $1.45 whilst a year ago the figure was closer to $1.65. I say "subtle" there because at all costs it should not be made blatant that the BoE was trying to devalue its own domestic currency versus the dollar. By making it appear in public that some stuffy bureaucrat was stupidly throwing away what he described as a barbaric relic, the true thrust of his gambit went largely unnoticed.
Notice, by the way, that whilst you in the U.S. have been agonising over a dollar POG languishing in a tight trading range for over a year now, the pound POG has actually been in a comfortable up-trend, from slightly below �160 to its present �186. Of course, I'd still have been better off if, last year, I'd purchased a double portion of dollars rather than dollars and physical gold. However, who's to say the coming twelve months won't more than reverse that trend? Again, we come back to asset allocation: spread it out wisely, rebalance it every year or so, but otherwise leave it where it is because a sure way to lose money is to thrash back and forth.
The key question in all of this is, "What will keep most of the population from rioting?" Find out how the powers above you are currently answering that question, and you'll have a much better notion of where to place yourself so you don't get burned.
From my perspective, you and R Powell nailed THE QUESTION OF THE DAY. Of course.
But how exactly does this "debt relief" work. Does the U.S. government hold IOUs from all these governments? -- I ASS-U-ME that this is all govt. to gvt. debt?
Or does this also DIRECTLY involve debt to banks and other quasi NGOs, etc.? (We all know banks, etc. are the INDIRECT beneficiaries. Since money is thoroughly fungible, the money "forgiven" is now available for payments to other creditors.)
How do governments make sure the money gets to the "other creditors" they want to get it? How do they divide up the spoils amongst the banks, since this is a coordinated effort among several governments, including Britain, Germany, etc.?
- to investment hell - Canada's premier TSE index tanking 10% in an hour (Not even the Bre-X fraud - blamed to the western cowboy X-Changes, came close to this kind of meltdown affecting a nations premier capital market - blame it to index funds ... and it still needs the explanation, why BRX was included without standard scrutiny of the regulators), - the too big to ignore, or more to fail has arrived ... a prelude of what's to be expected, by the unsuspecting ... Go(l)d help America - there may be no gold left to shore up credibility tomorrow - when tomorrow comes
and Greenspin exchanges Summers for Winters - as meltdowns usually occur in warmer climates, this may be saving a day or two - feels cb2
.
I think that all futures contracts, are sold and bought in the spot market, which is the current (today's) market. So today, I have the choice of buying some physical gold, which is priced somehow off the POG published by LBMA or Comex or whoever, at something like 270 $ per oz. plus whatever premium I have to pay for whatever market and amount I am buying . Or I can buy a futures contact or an option on such at much less cost than this, but which is only a bet, sealed by a contract which is only as good as the counterpartie's word. My bet being that the contract will be worth more at the date it expires than what I paid for it. This worth is predicated on the notion that the contract really is for physical, if I want that, and not just a piece of paper like a gambling token with no money in the cashiers till to pay me off, if I want to leave the joint. It is also predicated on the notion that the market for this bet will still be there, will still have "liquidity" on the day I want to cash it in.
Consider some gold certs bought on margin. At the time of purchase, the premium paid was $10 over spot, because the market was thoght to be rising by the bank that sold them, and guarantees they can be redeemed for physical. Now there is a fast down market. POG is dropping, you are severly underwater and want to bail out. The broker doesn't take your calls, too busy, the whole market is crashing. You get a margin call after trading hours. You get sold out, at any lowball price the bank offers. Totally at their mercy.
If this were indeed a gambling casino, then it would be one where the gamblers very seldom ask to cash in their chips. Secondly, the chips outstanding vastly exceed the capacity of the cashier to redeem them, if more than say 1% or so wanted to cash them in.
How could such a casino be kept going? Only if the game had become such, that the chips were being used to trade for stuff needed for life outside the casino. So that few cared any more to actually cash them at the cashiers window in the casino. Chips are a lot easier to handle, quicker to put in play, easier to borrow and lend, and trade, than the real stuff.
However, maybe there will be a run on the casino bank, when the players become aware that chips are being manufactured and put into play in ever increasing quantities by the casino owners, who are doing this because they must supply "liquidity" to their dealers who are so inept at the game, they constantly lose.
In addition, the owners have a bias towards allowing the patrons to win, so as to keep them in the game, avoid a run on the bank, and keep their own chip salaries and rewards at high levels which they are using to buy up lots of hard assets, outside the casino. The owners of those hard assets are stupidly willing to sell their assets for chips, because they too are part of the game, and have long lost sight of the goods they ought to be demanding in return for their own real goods.
TG--I read your letter with interest. You have spent a lot of time thinking about your points and it was a good read. Like Christopher, my problem with your letter is with the manipulation of PM's under the new currency standard. If you suspend the free market mechanism by outlawing gold, what is the difference in what we have now?? I say, outlawing gold because with your suggestions of outlawing the holding of more than 100oz., outlawing selling bullion to anyone but the USG, and a tax on any physical held by people, you have outlawed gold and what it stands for. I would rather stay with what we have now and let it implode the economy. I will have the protection of PM's to offset the rape of my wealth by the fascists of the govt/corporate cabal. More control of anything by anyone is anathema to people who seek liberty.
goldhunter for give me for this, but I am pondering Au and other market forces these days.. oOu said
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My understanding is that ALL futures are sold in the spot markets. So whatever they sell at, is the current price of gold, plus or minus whatever premium the gamblers are willing to pay, or not. Since futures contracts sell at the rate of maybe 1000 tonnes per day, while the pure physical only sells at some 10 tonnes per day, what is the POG pricing? Surely, whatever the physical is actully selling for, the POG is going to be the number the gamblers are interested in, the number reflecting the price that 1000 tonnes per day of paper gold is being denominated at. Only stands to reason, nobody is going to do any particular research to find out what physcial is selling at, when it is ony 1% of the market. So, physical sellers have only one way to check the validity of what it is they're being offered, to look at the paper POG, and that can be influenced downward by anyone who has a printing press, and no care whether he loses money or not.
Same old song and dance -- An inferior product shows itself to all willing to see
On today's drop in Gold prices: I've said it before, and I'll say it again. One form of paper Gold, the COMEX Gold futures contracts, are being sold down the river as necessary.
This comes as no surprise whatsoever. It's been explained here at the forum in full, so those of you reading along who aren't blinded by the trader mentality can take comfort in your understanding of why events are unfolding this way. It simply stresses the underlying real market and ushers in the day when physical Gold will not be priced as a "derivative" of the paper gold markets.
If you don't have the metal, you can't participate in the all-important breakaway price/value adjustment. Somebody else will be cashing this fat reality check.
The futures and optiuons market, particularly the OTC markets, have a price discovery function as more promises of title to gold are traded there than in the physical arena, where title to gold is traded.
The promise of gold is not gold, and as many promises can be printed up as one wants, so long as the portion asking for delivery on these promises is too small to make a difference.
In turn, the buyers of paper gold are assured of delivery so long as they receive their gold smoothly when delivery is requested. So long as this happens, gold is delivered against contracts at a 1:1 ratio to the nominal amount on the paper. This is a trade at par. The relative size of gold paper outstanding delivery to gold requests can expand so long as delivery at par can be maintained.
Breaking par.
When delivery demands against paper overwhelm the current stock and producer supply, then some will not obtain delivery on the contracted date, or will be asked to delay their delivery requests. When this happens, there is a loss of confidence and all jump to the delivery window to claim their gold for delivery. This is a future event.
Before breaking par.
Market participants will understand the potential predicament of delivery on an overwhelmingly large overhang of paper gold commitments. It would be expected that the delivery commitments be restructured to whatever extent possible so as to minimize the amount needed for delivery in each period in time.
In order to find out if the market is under duress and is trying to lower its annual gold debt payments, I ran a calculation that takes into consideration the overall outstanding commitments taken from all available sources Howe has found, and a couple he has not reported yet, and interpolated between the figures for dates where no information is available from some sources. I looked at this in terms of annualized commitment by dividing by the average maturity to obtain the average annualized gold volume that comes due. Since some of these obligations are within the banking system itself, I assumed that if netting is used (the practice of counterparties trading commitments so as to minimize the amounts that have to be transferred among them at maturity) it would be used to the same extent as in the rest of the derivatives arena.
Here are the results, please ignore the many digits and round the numbers to (barely) 2 significant digits:
The raw commitment moves from about 1500 tonnes per year in 95 to a plateau of 3000 tonnes per year in 1996-mid 97, to a peak of 4000 tonnes per year during the Asian crissis, when leverage was at its highest among the hedge funds and the bank trading desks (investment and commercial). From there, we drop to the 3000 tonne level in early 99, from which point there is growth to record levels before the Washington agreement and after the Placer announcement, both of which brought about rallies in the POG.
When netting practices in other derivative markets are applied to the gold derivative markets, the possible netted commitments are provided in this data. From 95 there is steady growth till late 96, from 1000 tonnes to 2000 tonnes. From that point, there is a dip during the period prior to the Asian crissis breaking out to 1500 tonnes per year, and a return to the peak commitment levels of 2000 tonnes per year at the end of 97, when panic in the Asian markets was at its peak. From there, annual netted commitments fell to 1000 by the end of 98, as the realization must have set in that the gold market was over extended, from which the amount climbed up towards the second gold price peak in the first quarter of this year, which seemed to require a greater number of delivery obligations in order to get it under control. The commitments have fallen steeply since, to about 1200 tonnes per year in the second quarter.
I believe the most revealing figure is the netted estimate, as it shows that paper gold supply is approaching the point of all committed ammounts being put to delivery demands, as reported by the WGC supply demand deficit figures, now at some 600-700 tonnes including scrap (which is not new production). I believe WGC and George Millings Stanley are underestimating demand for physical by a substantial margin, because not all gold movements are recorded in their appropriate slots, and much of the gray market is completely ignored, though it is not very difficult to gain some idea of its scope of activity and direction, a similar problem is inherent in ignoring movements in bank-client-user gold positions.
www.kitco.comDate: Wed Oct 25 2000 11:51
permabear (dollar strength) ID#170184:
Copyright � 2000 permabear/Kitco Inc. All rights reserved
The explosive dollar strength we are seeing may be our first
sign of runaway deflation. Alot of nonsense is often
written by folks concerning how Treasury is printing money
hand over fist and how runaway inflation will soon develop
in the United States. Actually, the dollar is a managed debt
currency and must be borrowed into existence for it to
circulate. The natural tendancy for dollars to "disappear"
as debts are paid down is usually opposed by continuous
expansion of the money base through deficit spending and fresh
credit expansion via the private sector. The monetary structure
can figuratively be depicted as an inverted pyramid according
to Exner.
The top of the inverted pyramid has to be huge at this point in
the credit cycle. The surge in dollar strength at this point
in the credit cycle most likely means that not enough fresh
borrowings or monetary expansion is occurring to keep the
inverted pyramid from collapsing. It has the smell of
runaway deflation. If this develops it will be EXTREMELY DIFFICULT
to reverse. As absurd as this sounds--it may be simply paper
money that really takes on value from this point forward.
----"Ah, we're getting someplace...your quote above gives "credit" or is that "blame" to the futures actually setting the price for gold."----
Gold hunter, nobody here has any doubt whatsoever that paper gold sets the price for real Gold at this stage of the game. That was thoroughly discussed and understood long before you made your appearance at this forum. Moving on, clearly you too are demonstrating an acknowledgement of that fact with your comment above, but then you go on to say this in a later post--
----"I'll tell you with a straight face that downtrends in anything are because of either too much supply at a given demand, OR not enough demand at a given price... Almost every ounce of Physical gold ever mined is out there today and you know it...That's the supply Mr Crier and you know it...the fancy dance that this forum does about physical gold never addresses THE Large Physical Supply..."----
Ok, gold hunter, let's put two and two together. If the market of paper gold derivatives (futures) is what sets the price for Gold (as you acknowledge in the first point,) and if the price is a reaction to supply and demand (as you make in the second point,) then doesn't it stand to reason that the downtrend in prices is purely a function of the abundance of paper gold supply coupled with disinterested demand for that same paper gold?
Until the market making elements of this paper-based method of price discovery go bust, the existing quantity of physical Gold and the global demand value of that same Gold will not be truly reflected in the official market "price." Rising premiums on Gold for delivery will likely be the first sign that things are about to snap--if things move that slow, that is.
To be sure you are clear on the greater context here, allow me to offer a repeat of an important element I offered previously---
Long positions in paper gold are not used, as you might like to think, as a "fire insurance policy" among institutions that have a vested interest (due to their financial positions) in maintaining the status quo -- whereby in your expectations such a long derivative position would be acquired and used to compensate them for any adverse changes to the status quo (rising Gold prices and weaker dollars.)
No. It doesn't work that way. Instead, these institutions use the offering (and selling) of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.
As history has shown us, such imbalances do not last forever, and it is the ultimate discounting and default of the paper substitutes for Gold that sets the metal free from the paper illusion to seek its proper valuation.
You said:"then doesn't it stand to reason that the downtrend in prices is purely a function of the abundance of paper gold supply coupled with disinterested demand for that same paper gold?"
No! You can say on a down day that thedemand was "disinterested"...but what do you say on an up day? Is the demand "interested"? on an up day? You play word games to convince some, or try, and you miss the concept...
Twice a day a group "gets together" and sets the price...after that moment, futures markets world-wide react to fundamentals/technicals such as suppl, demand, US Dollar,wars, inflation rates, etc. Coin dealers may or maynot adjust their prices accordingly...Aristotle, did your pounds and kilos go up today? Doubtful.
The price of both move together based on the above...believe it or not, it does not matter...there is NO magic futures genie taking your money away...there is a marketplace that trades/adjusts concurrent with fundamental events.
People can make up their own minds on what they believe...When both are at 340 or $640, you will see where the truth is...
Look at oil for an example...Crude was 12.50 or so about 18 months ago...Now crude oil is around $33.00 spot/cash or whatever you want to call it...guess where front month futures are? Tell them Aristotle.
When one says futures are acting as a "wet blanket" to hold the price down...just does'nt hold water...
As folks know, the futures contract can "make" 100 dollars for each dollar gain in the price of the underlying gold price...exactly the same as 100 oz of physical gold...
So, if you can see that the upside for gold is unlimited, versus the downside being limited to say $250 (cost of production for a few), you can clearly see that the short at this price, is pushing his/her luck...yes they're winning today, but for how much longer?
A down day is an adjustment to the day's world story...today could have been a stronger dollar/weaker euro, or another variable. I have yet to read the price of gold went down because of a wet blanket...you're dreaming.
Thanks for an excellent presentation of different investments either gaining or lossing value but maintaining value in total. However I wonder if 100% of investment should be dedicated to only "safe and secure" with the goal of preservation and hopefully a reasonable gain. Can't we take 10%of it, okay 5% of it, to try for the big hit?
Of all the markets available that I have any knowledge about (that eliminates a whole pile of them), the potential upside move in the price of gold is unparalleled. The means for truely spectacular gains with limited initial investment is through futures' options. This is done through the leverage of options. When/if the jackpot is hit, the payoff will be in fiat currency (not gold) as was the initial option cost. Is the buying of time wasting gold options prudent? Not as long term (for retirement type) investments, no. Is it a safe bet? Yes, it is probably more bet than investment but it is safe. The option's value will skyrocket along with the price of gold.
Phycical in hand is always such regardless of the Comex price and is not a time wasting vehicle but when POG doubles, gold in hand doubles in currency value. An at the money option purchased for about $500-800 (depending on time till expiration) will be worth $27,500-27,800 when POG doubles (assuming a doubling from $270-540). Leverage, this is called or as I've read Richard 640 from the G-E forum call it-- the big casino!
Gambling? Of course it is. Blind luck? Not if your research tells you that POG should be higher. A matter of timing? Most assuredly!
I agree 100% with asset allocation but is there not room for say 5% of investable funds for "the paper gold" market?
It sure was fun when the Washington Agreement turned some $200 and $300 options into $4,000 and $5,000 options almost overnight. Maybe that's where this fish swallowed the hook? Maybe, it will happen again!! Soon I believe, but I wished I knew just when.
Regards Rich
Sir Holtzman, you are a joy to behold -- especially with your "off-hand" Halloween gore, slashing, and burning
Your metaphor was marvelous--
------------
In castle terms, the farms before the gate do have value, but the lord almost always allows the invading army to burn them without resisting overmuch. Why? Because their value is insignificant as compared with the value of maintaining the castle walls. And surprisingly, those few who watch their homes and crops burn at the beginning of the siege are seldom angry at the lord who generously held his gates open just long enough for them to seek his protection. Rather, they become his staunchest allies against the invader.
A nation's domestic paper gold market is, in to-day's terms, one of the many farms before the gate. It may be burned in some future siege, or it may not, but in any event its government will not neglect more vital pursuits to rescue it.
The walls of to-day's castles, and the siege engines rolled up to break them, are both made from fiat currencies.
[....] The UK has every reason to wish to maintain a reasonable balance of trade with Euroland. Lose LBMA (one farm before the gate) and yes there'll be inquests and grief in The City. But lose too many employers to lower cost Euroland and the newly swelled ranks of UK unemployed will make this summer's petrol protests look like a holiday outing.
-------------------------
The only thing I would offer at this time is in regard to your example of placing a basket of Gold and various currencies under the stairs for a period of time with the expectation that the net purchasing power will be maintained. Granted, the overall timeframe is vital as it may or may not include the day of reckoning in the bullion banking realm in which Gold will compensate for all other losses, but with respect to solely the national currencies over any given timeframe, it seems to me that you lightly discount the general trend that fiat currencies are apt to march arm in arm into a future of lower values against real goods. That is to say, over time, isn't it the general trend that prices tend to rise in all countries as denominated in their national currencies?
Again, thanks as always for sharing your comments.
---Aristotle
PS. To MK, I wanted to let you know that I found your market commentary today to be particularly excellent. Thanks for your daily efforts and insights.
To me it is real simple, and confirms my thoughts re
-why Greenspan is begging for congress to move on derivitives.
-the corpoate bond market is flopping like a "dead fish"
-Financials are starting to get hit
_etc., as laid out in LAMPREY_65's 39747 Oct 23/00
Quite aside from the origional attitude that got the commercial bankers into this, (ie countries can't go broke, the greed of making loans without adequately considering risk, and the moral suasion by government to keep the good old USA great by helping exporters, through financing importers and/or their governments to buy US goods and services) the bankers are inherently pretty stupid. For instance they borrow short and lend long.
So what does the question of the day tell me?
Somebody (in the US) is panicing BIG TIME.
The commercial banks are at least semi aware that these 3rd world loans are never going to be repaid. (historically, no country that ever defaulted on its loans has EVER repaid.) What percentage of the capital on the books of the commercial banks do these third world loans represent? In most cases it represents well in excess of 100% of the "paid up" capital of the commercial banks. Is the commercial banking system in the US bankrupt? For some time I would think.
With the current account deficit, the huge quantity of hot US dollars floating around the world, the increasing price of hydrocarbons, a declining stock market to reverse investment flows, and many of the other things spoken of in this forum, and what do you get? Outflow of capital, and huge pressure on the US dollar, the seeds of a run on the US dollar.
This whole thing is unravelling.
I am beginning to think Clinton wants to lose this election, so his party is not saddled with the historical black eye that the collapse will bring to the party in power. (not to mention his own personal name)
If they can keep this charade going, Nov. 7 is not the date to watch for, it is in the new year when somebody elses name is president. "Oh look how their mismangement screwed up our world in only X days".
The POG outside of the dollar is doing very well thank you. Though not doing as well as oil, it is still doing well.
Oil was 14 on the dollar index adjusted price, at its bottom in Jan 99 (as opposed to the bottom in $ prices which ocurred 2 months later in Mar). It then rose rapidly through June 99 to stabilize at about 20 "undollars". From there, it has doubled to reach near 40 in Aug. Since then, it has held in the range 35 to 40.
In gold, The steep downtrend from 1997 culminated with a bottom of 268 "undollars" in Jul 99, and continued rising to Jan 00, where it had stabilized at 320 and where it still holds today, thus reocuping half the loss from 380 in early 1997.
The process of gold price decline involved a printup of gold derivatives during this period that had doubled the amount outstanding from some 10,000 tonnes in 95 to 20,000 tonnes at the end of 1997. The $POG continued down as outstanding derivatives grew to 23000 tonnes (all notionals by the way, based on BIS data and OCC data), after the BOE statement, from there, the price followed expansion of derivatives AFTER each price spike, bringing the end of quarter prices to a steady progression of downward prices and upwards derivatives positions. from $307 at 23000 tonnes, we have a fall to $290 with the addition of another 3000 tonnes of derivatives at Q4 99, and the rise by over 3500 tonnes through end Q1 00, with the $POG dropping to $277, followed by a rise of $POG to $288 in Q2 00 BECAUSE of a BUYBACK or expiration (of unexercised paper) of 2000 tonnes of derivatives.
Over the whole period of available data, the derivatives price correlation gives that an issue of about 130 tonnes of derivative notional value drops the $POG by $1. Over the period of "distress" of the Asian Flu and its aftermath, the proportion was 200 tonnes per $1 price drop - meaning that the public was buying more gold - both paper and physical, therefore making the amount of paper gold needed to drive the price down that much larger. The peak in this ratio was in the secondary bottom of the Asian Crisis in Apr-Sep of 1998, where over 300 to 350 tonnes of paper gold were needed to achieve a drop in gold prices of $1. The period after the WA shows a steady proportion of about 150 tonnes of new paper supply per $1 drop in price, indicating a period of relative complacency on the part of the public.
Though there remains much uncertainty in the numbers, the trend is so very conspicuous that to deny it is not different from calling up down.
So we have the following behaviour:
Meet all gold demand with paper supply at a price sufficiently low for the buyers to take it instead of physical gold.
In order to avoid being caught too short, lower the delivery rate at which you commit to something closer to what you can expect to put your hands on. (see prior post)
When you are on your deathbed, drowning in your own fluids with lung cancer, and with the death rattle in your throat, there is no plan that can save you. You should not have started smoking in the first place.
As I told a group of Ayn Rand fetishists, who were bound that they could "save humanity" if they could reverse some of the trends that were going on, and somehow communicate their valid concerns, which any thinking man would agree with, "Forget it. It is already to late. Better to spend your energy mitigating the effects on humanity of the coming crash by getting in a position to rebuild."
Not that I think that there won't be a plethora of draconian measures enacted, and REAL hoary theories, to attempt to turn back the clock.
Could I ask a couple questions please...
Is you data Comex and therefore US dollar specific?
Also, may it be explained that as prices are falling (dollar gold), that more speculators as well as "coin" buyers step up the marketplace as bottompickers?
The shorts may be adding to a winner in a downtrend...the long may be guessing a bottom, one of each resulting in an additional open contract...Does it make any difference to your opinion if volume/open interest is increasing or decreasing?
Holtzman
And you have the audacity to pile bad puns on bad puns? Loved it
Thankfully your analysis has better moments, although I can't say I agree 100%, but the points are minor.
@anyone. I would like to know what William Jennings Bryan back in 1896 thought about the gold standard. From what I understand he was against Gold (the Cross of Gold Speech)because the Money Powers of the time demonitzed silver. Silver was the money of the people. When silver was demonitzed the people (the southerners and westerners)had no money to trade or to pay their bills. So we had a land of plenty but the people starving. So William Jennings Bryan wasn't really against gold as money but using gold only he was against. Is this a right conclusion?
?-2 Were 20 silver dollars back then equal to a $20.00 goldpiece?
?-3 If the world was to go on a gold standard would not silver have to be included in some kind of ratio to make it work? Since there would not be enough gold for everyone to use? If they were to use gold only this indicates to me that they want to keep the masses as slaves. Comments please. Turkey Hunter
Supply and demand of paper - trading at 1000 tonnes per day would most definitely overwhelm a physical trade of 2500 tonnes of new supply per year and perhaps 10000 tonnes changing hands per year.
So long as bankers have a warehouse that delivers physical gold against a paper claim, then the futures market is setting 90% + of the price. The banks are already behaving as if their warehouse is emptying. The price is indicating a discount on gold obligations rather than a lack of demand for either gold or its paper subsittutes. Basic economics teaches us that a speculative player expecting prices to fall will directly or indirectly cause an emptying of inventory if he is incorrect. The clear process of emptying the banker's warehouse is the reason for the bankers looting all the central banks. The gold derivatives show a distinct tendency of banks in general to be short on gold, at least by a 2:1 ratio - the ratio of a gold short position that is delta hedged.
As for your insistence that a market like the gold market can at any time be an actual market dominated by supply and demand expectations, I wish you good luck in bankruptcy court as you try to get something paid out from the futures and options you bought thinking that this market was "real". I expect you will milk as much from this as you would from a paper cow.
Data is from Treasury and the BIS on OTC contracts in the US and internaitonally, aided by info from a couple of European banks.
The US OTC market is 10 times greater than the microscopic COMEX. Therefore, COMEX can be ignored but for the fact of its reflecting a little of what is occurring in the larger markets.
The history of gold as a political entity makes it highly unlikely that governments would not push banks into a net short position (not that banks would not do so on their own). Remember that there was a London gold pool operating for over a decade, with gold flowing from all of the US partners into the market in an attempt to keep the dollar at par of the delivery contract - $35 per oz.
On the way there, the US and G-7 governments sold out some 12000 oz. (some of it was bought back by Germany and France.)
The paper gold calls itself an ounce but is backed only by 1/10 th of an ounce. 90% of paper gold buyers will see nothing come of their speculation.
The difference in volumes of traded gold, physical vs derivatives may be explained by leverage and by ease of transfer...
Also, a bank holding gold (in a downtrend) would be expected to be short futures for adverse price protection...
These banks have an interest in being risk-averse, therefore as physical is sold off, appropriate shorts are covered...
Mr. Oro's statement about "counter-party" risk his paper cow idea is a good one...No counter party risk with a miss graded coin, or a stolen or lost cache of coins I presume.
Comex confidence remains intact today. Expect it will open tomorrow too.
Your statement: "The paper gold calls itself an ounce but is backed only by 1/10 th of an ounce. 90% of paper gold buyers will see nothing come of their speculation."
This is fiction...In an uptrend, most longs will make money, just the same as coin longs will make money...To say otherwise is a distortion...Your statement absolutely false.
As far as being backed by 1/10 oz for each oz, again, not factual.
If you are long a futures contract into delivery, and you stay long into last trading day, you will be delivered 100 troy oz. .999 fine gold.
Your previous post is entirely mis-leading at best.
I might add, every gold holder (long) lost money today...100% cash AND futures holders.
I would like Oro or anyone to explain to me how all the longs that are in at 280 will be losing money at 325...
In talking with my clients on the telephone today here at Centennial, some of them were just astonished at how the so-called invulnerable high-tech darlings (Nortel Networks, JDS Uniphase, Ciena, Sycamore, et al) were finally smashed 25%+ today. They were the lone holdouts in what has been a good thrashing of the NASDAQ since the top in March around 5000.
If you read any of the commentaries on the web or listen to the pundits on CNBC, they all point the accusing finger at Nortel Networks. If Nortel Networks (NT) hadn't come in below expectations for growth in sales revenue, then today would not have happened and "x" billion of market cap would not have been lost. I have a simplier explanation why investors dumped NT today. They have been saturated with those catchy TV commercials which use the theme song "Come Together" by the Beatles. One too many airings and they all woke up today and said, "That's it. I've had it. I am selling all of my holdings in Nortel Networks." And sell they did. Volume today was a gargantuan, monstrous 123,779,296 shares--about nine times normal volume of 15 million shares!
After today's debacle in the high tech stocks--all caused by Nortel Networks--perhaps the lyrics of the theme song should be revised as "Come Apart Over Me." Parting thought: Expect more darling stocks to be hammered as margin calls go out to investors today and tomorrow. Also the next lunar phase--the new moon--starts this Friday, which could result in a final spike selloff to much lower levels.
gold hunter, you are seemingly beyond the reach of any effort at education
Your words to me--
------"You can say on a down day that the demand was "disinterested"...but what do you say on an up day? Is the demand "interested"? on an up day? You play word games to convince some, or try, and you miss the concept"-----
It is YOU who are playing word games and missing the concept. The concept was all about the fundamentals behind the TREND. One day up or one day down does not a trend make. We are talking about a course of action and the effects over months and years here.
You also tried a "brand new approach" (for you) by bringing up the London fix. Good! You must be out there trying to learn new things despite my skepticism. (By the way, I'm still waiting to hear you admit that Bretton Woods paper gold didn't hold up very well against real Gold. They didn't continue to trade "in tandem" as you would like us to believe is the eternal way of the world. In truth, the separation is what was inevitable then, and is inevitable now.)
Reviewing the exchange in yesterday's commentary, I can see that Townie's post to Golden Truth addressed the London Fix issue, though you were not inclined to see it or understand its meaning. Townie wrote--
-----"The price discovery mechanism is based on such items as gold derivatives (and notably the gold futures market) and [***here it comes, gold hunter****] the status of the balance sheets (and evolving sentiment) within the bullion banking sector. [****did you catch that, gold hunter??***] The performance and desirability of this paper gold requires both confidence and anticipation of *normal* market operations, not much unlike that required for paper currencies to function."-------
Let me spell this out for everyone else trying to follow along, because you have exhibited no desire or propensity to learn. (And it's not just my "opinion" against yours. What have you to say ORO's many elaborations on the matter?)
What Townie's post did was to go the extra step to provide this additional context and foster awareness regarding the affairs in London, lest the reader overly focus on just the New York paper influence. Here's the London situation that was being alluded to, whether you grasped it or not. The procedure of the London fix is to facitlitate the bullion banks settling their affairs only AT THE MARGIN of their TOTAL ACCOUNTS as necessitated by the latest sentiment and subsequential banking-related behaviour of their clientele. While were not talking COMEX futures here specifically, it is this other form of paper gold that takes its toll on the market price with respect to the London fix. It is this body of bullion banking paper gold in the total account that is only settled on the margins (depositor withdrawal) which results in the understatement of Gold's true scarcity and proper valuation relative to national currencies.
Bill and Reg........give her bullets, shooter!......I (we?) support you all the way.
"Reg Howe will be the final speaker at the Committee
For Monetary Research and Education Dinner at the
Union Club in New York City this Wednesday, October 25.
Cocktails start at 5 and the first session begins
at 5:45.
It is real simple - no 3rd. world country ever repaid its debt - historically - ever - did the US of A ever repay their own citizens on the gold/$ confiscation/default in 1934? Or more to the point internationally in 1971, the year of Bretton Woods- funeral, or better default of the $/gold relation internationally!
In case I didn't misunderstand your post, I must conclude
there's either another 3rd. world country, or a new imperialsm, colonialism or worse "dirigis'm " emerging. Another country, not being able to repay the world for their excesses "in kind", ever!
Welcome to the globalized 3rd. World - Economy based on the basics of Fiat Money Flows - a concept, which the old Romans have proven to last until the empire succumbs to the "weight" of overextension.
The "barbarians" - eventually picked up the crumbs and evolved from chimps to chumps and (some) eventually to champs (see:Ari) ... before the latter elected to build their new constitution of personal liberty in a brand (german for fire) new land.
As all of man's achievements are subject to evolution and - thinking about the Reagan Era - global politics culminated in Ronnie's purging the world of the communist devil - now, whats left to purge?
... I probably don't have to spell it out - the new Imperialis'm of the old colony - reigning the globe by military
and, worse, by currency dominance!
... To insure this dominance - as a shortcut to a multi faceted issue - the predominance of the almighty (next to deity) is ab-used, until nothing, not even the sacred constitution is sacrosanct.
The Rise and Fall of great Empires is playing out now -ironically, right after winning the war against the perceived Anti-Christ (- the population being more Christian than
its protagonist populus) by usury of the predominant global currency. And all under the pretext of enhanced productivity, by technological advances, bringing a new "Messiah" to the rest of the world in the form of globalized free trade - utiilzed only by its inventor - in order to utilize newly created serfdom.
Call it globalized Feudalism - or George Orwell's nightmares coming true - Big Brother, don't ever bother, I'll be perfectly Able to figure out Cain.
See U - cb2
I like it when you're MAD i learn way more, unfortunately
at your expense and blood pressure. :-)
Thanks for your perpective, every gold coin has two SIDES!
G.T
goldhunter - because it is not likely to happen that way
While your speculative idea of selling short with the trend a couple of posts ago would make sense if banks were speculating on a downturn, I will point out that their behavior is not that of a speculator playing momentum but of a market manipulator directing price to an intended value.
I should point out that gold accounts were not considered in the data before, and those are unreported gold obligations that are not known to anyone. Using currency trading practices (about which there is detailed data on outstanding accounts) as a guide to the behavior of the bankers, it is probable that there are about 60000 tonnes of total bank commitments denominated in gold.
Bank capital available officially to close this in terms of dollars allows for only a 25% rise in POG before banks start having regulators run them and at 50% POG rise their obligations get entangled in court.
The problem of banks is not just the price exposure, they themselves have delta-hedged among themselves and have also taken long positions against some hedge funds which are now suffering from the crissis of the corporate and foreign debt markets, where spreads have nearly doubled, which would put the average hedgie following the standard rules of carry trading deeply in the hole. They are not likely to be able to fulfill any of their obligations.
As a result, the banks have mostly their own capital at risk. Considering the default rates on their assets - a third of which is corporate and foreign debt, they have an additional risk. In the same kind of crissis period that would cause heavy purchases of gold, they would also see the market value of their assets fall substantially. Therefore, the banks in question, who seem to be able to withstand a 10 fold price rise before crying uncle, would actually find that they can't maintain capital adequacy ratios required by international treaties on banking if the dollar, stock market, and corporate bond market tank in either of the following extents within one or two months: 10%(?), 20%, 5%, respectively. These would be the same kind of conditions that would cause a spike in gold purchases - what would presumably bring about a rise in paper gold markets. The dollar and gold are particularly inversely correlated, while stocks are slightly lower in correlation and bonds are correlated inversely to gold as well.
Therefore, the likelyhood of their having any practical access to the capital needed to cover losses on a gold blowup is unlikely. Even in something as small as Palladium and Platinum, the markets have been destroyed. There is no way to make a leveraged bet in these markets. In these metals, that trade at about 2% of the dollar volumes of gold, prices rose 2 fold over 1 year to arrive at destruction of the markets. To arrive at the dollar loss tolerance on gold, we can take the 100% 1 year price change figure and multiply it by the dollar proportion of the markets, to obtain 2% as the 1 year price rise the banks and exchanges would tolerate without shutting down the leveraged trade. If we look at the whole period in which Pd rose 6 fold, some 3 years, then we have 10% over 3 years, or 3% per year. Even allowing for 10 times the risk capital, one would come to the conclusion that the market can't survive a rise beyond 20-30% in $POG over the space of one year.
By my calculations, bank capital, at market value, is possibly as low as only 40% of its stated value, at a generous 60% allowance for actual relative to official bank capital, if the banks involved suffer no further losses during a gold spike, they are capable of supporting only a 28% spike before they hit regulatory problems at the end of the quarter. At a more realistic (less optimistic) set of criteria, they can not sustain any substantial move in gold prices that actually holds under the same conditions that would see a gold spike - when their risk capital is already consumed in covering dollar derivative losses, stock derivative losses, and interest rate spread losses. Allowing 1/4 to gold and each of the other arenas, one has an official capacity for the banks to survive a 35% POG price spike that does not fade quickly. At actual levels, they can only take a 17% rise that sticks.
During the spike, banks can see up to double the 17%, perhaps slightly more, so long as it does not last through a whole quarter.
If we are considering the cost of maintaining a long position during this 1 year period, we stand to lose about 6% of POG in time premium. This leaves 14-24% of POG as the maximum probbable upside in the futures market. If you are quick enough, you will see a 100% to 200% return on your speculation. If you make any errors in timing you will have lost most of your gain and perhaps lose part of your speculative funds.
Most of the winners in the gold options when the WA explosion ocurred did not get much of their money out. And subsequently they lost it.
If you are a trader, and a good one, you may make it. If you are an investor with a long time horizon and no judgement as to rapid market movements, then you should not play any gold derivatives, no matter how conservative your strategy.
"Methinks he protesteth too much"
Goldhunter:
You are certainly entitled to your opinions, and to making or losing money based on your opinions. I hope you make a lot of "money" - I use quotation marks as IMO what passes for money is not really money, although AT PRESENT useful as such.
You may and doubtless will, continue to post messages on this forum, which are philosophically distasteful to the majority of those who post or lurk here. But not matter how hard you try, - and you try so hard it almost seems as if you are working for the parties inimical to gold - I am quite sure you will not change the ideas held by those who consider that gold is something that is tremendously undervalued, and that the world has gone mad in pursuing pure number in the form of fiat money.
We so-called gold-bugs have taken so much opprobium, so much in the way of condemnation, that we are utterly immune to any of your arguments. Please understand we are diehards and proud to be diehards.
Make our life a little easier, if you please, and allow us this forum to exchange ideas among individuals of congenial temperament.
http://www.sharelynx.net/Markets/Charts/GlobalGoldSentiment.htm Sorry, I originally interpreted your sentiment index as something like the measurements of consumer confidence. Those consumer confidence measures will remain high well into a recession, then finally drop down. They will stay down well after the economy recovers, providing an extremely lagging indicator. This is one of the factors usually attributed to the reason why Joe Sixpack usually makes the wrong investment decisions.
Your use of gold mining shares, mutuals, and indices may give an overweighting in your sentiment index towards gold mines versus the physical price. There was a discussion here a while back about whether physical will lead the shares up next time, or vice versa. In many rallies in the past, shares and lease rates have led the physical. Some of us here have argued that it will not be that way when T.S.H.T.F. I don't recall exactly when that discussion occured. Anybody?
How can anyone in their right mind defend the price of gold by using things outside the dollar as a guage for how "good" it has done ? I could't believe my eyes when i read that here today.
First of all, 90 % of the people here have likely bought pm's with dollars. Second, who here that uses this guage has used things outside the dollar to buy PM's? Some, true...not many. And if that guage is to be used, what would u have gained by selling a dollar a year ago to buy an equivalent in a euro and then bought his fraction of gold at today's price? You could have stayed with your silly dollar.
This will not likely be answered here. Perhaps it will be viewed as a personal attack I don't know. I just ask that readers here think for themselves and remember worship and deep respect is reserved for another.
Gold will rise, when it is time. Gold may even be a risk to own at that point. You buy gold for one reason. You paper currency is tampered with. You seek protection. I am but a simpleton.
The omision - re last post ... almighty (deity..} 'US-$ '
- to insure the validity of the former, you've got to supress
all other -even market - forces, until - yes until natural cycles of human behavior overtake the ingeniously implanted manipulation.
Allan, as we start to read between your lines - leave it to Larry, a guy neither his students, nor anybody else ever wll figure out!? ... fortunately, I must admit.
Larry - the mystery man, the oracle - or Larry the "other" inventor of the new conomy - or the scavenger of same! He will be to blame as the insane valuations of my retirement game is obscuring the Baby Boomers - no risk,. no gain - long term virtual belief in their sun belt security.
Well, think again -all, including the new prosperity was virtual - though Al/Larry shrink the rest of US. - Best cb2
Tis true. Holding physical gold is to appease that silent
witness in us all, that wakes at times at 3 o'clock in the
morning, and in whose icey stare we stand as specks of awareness before infintety. Naked and vulnerable the gold
soothes a little our short stay.
Date: Wed Oct 25 2000 20:56
shell (sharefin, ski) ID#286383:
Copyright � 2000 shell/Kitco Inc. All rights reserved
I got this from sinclair in response to my asking for scenarios under his view of possible gold up/shares down-
"It is great to hear from you again. I hope all is well with you and yours. Things have changed Shelly. The use of gold for the cheapest finance in the world has as its sponsor the central banks. you know banks in major $ centers are using the gold loan technique to raise $ for consumer loans. Yes, amazing.
1/ I would imagine that if POG rises then gold share will rise with the lower or non hedgers in the lead after about 30 days of bullion price strength.
2/ A steady slow rise would not be damaging but is unlikely in the face of the enormous hedge positions covering requirement. If gold does rise it probably will be in fits and starts.
3/ Physical gold on margin is too dangerous. Gold calls not exceeding 10% of free capital staged over a one year period is a rational speculation. The key here is limiting loss potential in the speculative format.
4/ Gold might shake the troops by rising to major new highs and shares falling from say 1/2 the range of that rise. That is a more likely scenario. At the beginning they will rise together in my opinion.
Shelly, we all should do all we can to prevent this calamity. Gold is the only hope finance has of being sane again someday. A rise say to $1450 based on a short squeeze of this huge hedge position is not goo for anyone. Timing it will be so hard that even the pro of pros can be slaughtered. The gold companies are the culprits with this nonsense hedging. Who needs more production as the price day after day on balance for 21 years goes into the pooper. There is so much more here than just the price of an investment. It seems like the revenge of all the paper traders and socialist now defunct that their activities bring a death sentence to gold as a monetary item. Believe me Shelly a blast up ands flop down will kill it forever.
I am flattered that you remember me. I wish you the best of good fortune.
Date: Wed Oct 25 2000 20:56
shell (sharefin, ski) ID#286383:
Copyright � 2000 shell/Kitco Inc. All rights reserved
I got this from sinclair in response to my asking for scenarios under his view of possible gold up/shares down-
"It is great to hear from you again. I hope all is well with you and yours. Things have changed Shelly. The use of gold for the cheapest finance in the world has as its sponsor the central banks. you know banks in major $ centers are using the gold loan technique to raise $ for consumer loans. Yes, amazing.
1/ I would imagine that if POG rises then gold share will rise with the lower or non hedgers in the lead after about 30 days of bullion price strength.
2/ A steady slow rise would not be damaging but is unlikely in the face of the enormous hedge positions covering requirement. If gold does rise it probably will be in fits and starts.
3/ Physical gold on margin is too dangerous. Gold calls not exceeding 10% of free capital staged over a one year period is a rational speculation. The key here is limiting loss potential in the speculative format.
4/ Gold might shake the troops by rising to major new highs and shares falling from say 1/2 the range of that rise. That is a more likely scenario. At the beginning they will rise together in my opinion.
Shelly, we all should do all we can to prevent this calamity. Gold is the only hope finance has of being sane again someday. A rise say to $1450 based on a short squeeze of this huge hedge position is not goo for anyone. Timing it will be so hard that even the pro of pros can be slaughtered. The gold companies are the culprits with this nonsense hedging. Who needs more production as the price day after day on balance for 21 years goes into the pooper. There is so much more here than just the price of an investment. It seems like the revenge of all the paper traders and socialist now defunct that their activities bring a death sentence to gold as a monetary item. Believe me Shelly a blast up ands flop down will kill it forever.
I am flattered that you remember me. I wish you the best of good fortune.
www.kitco.comThe domino theory as applied to the Euro.
Another one topples.
(Jordan to ditch dollar in trade with Iraq) ID#284255:
Copyright � 2000 sharefin/Kitco Inc. All rights reserved
http://www.arabia.com/article/1,1690,Business|31953,00.html
The move is in response to an earlier Iraqi decision to stop trading with the US currency
October 25, 2000, 02:25 PM
BAGHDAD ( Reuters )
- Jordan has decided to stop using the US dollar in trade dealings with Iraq and replace it with the euro or another European currency, the state news agency INA reported on Wednesday.
The move is in response to Iraq's decision, announced in September, to stop trading with the US currency, head of the Jordan's Trade Centre in Baghdad Ma'an Al-Azizi told INA.
Announcing that decision, the official Iraqi news agency said it had been taken to confront "daily American-Zionist aggression" against Iraq.
"Jordanian companies which have dealings with Iraq started to make offers to Iraq with the euro or European currencies," Al-Azizi said.
Al-Azizi said Jordan's Trade and Industry Minister Wasef Azzar would head a 150-strong delegation of businessmen to Baghdad on Monday to participate in Baghdad International Fair, which opens on November 1.
Iraq was Jordan's biggest trading partner before United Nations trade sanctions imposed on Saddam Hussein's regime after Iraq's 1990 invasion of Kuwait.
An oil-for-food programme has allowed Iraq since December 1996 to sell oil to buy food, medicines and other humanitarian needs for the Iraqi people.
However, Jordan's exports to Iraq under the programme are only a fraction of what they were before the sanctions were imposed.
"Iraq is Jordan's main trade partner... the volume of trade exchange with Iraq had exceeded one billion dollar since the beginning of Iraq`s oil programme," al-Azizi said.
Baghdad remains Jordan`s main energy supplier as it delivers annually over $600 million worth of crude and products to the kingdom under undisclosed concessionary terms that ease the burden on the kingdom`s deficit-ridden budget.
Iraq's oil supplies to Jordan are exempted from United Nations sanctions.
The newly appointed Jordanian government recently put out feelers to Baghdad, hinting that it sought better ties after a number of misunderstandings over the last few years.
www.kitco.comDate: Wed Oct 25 2000 19:25
scorp54 (WOW!!!) ID#233298:
European central banks might increase gold reserves
Tokyo--Oct. 25--European central banks might increase their future gold
reserves and reduce exposure to the "risk-free" assets available in the global
market, Herve Ferhani, head of the foreign exchange division of Banque de
France said on Wednesday at the Nikkei Gold Conference in Tokyo. He said he
sees United States bonds and gold as global risk-free assets and added that
gold is one of the few options available to replace the US bond, or even the
only option.
ALL:
I'm fighting a cold bug,,,,, trying to write a small novel of a reply to Appolo's #39611,,,, preparing a summary to Traveler,,,,,, and then I smell the stench of paper gold burning! So, I hurry up and look under my chair cushion (need a ladder to climb up and get in it now because of the mound under it) to see if it my gold bullion had also burned up in the flames,,,,,, it didn't. Boy, that was close (smile).
Mr. Holtzman, thank you for that reply and excellent explanation. I'm glad to see that you have "orientated" yourself into a position of understanding. My position in the currencies is a bit more thin in the diversity department.
I am now down to just the Dollar and Euros. Having recently changed the ratio far into the Euro's favor (around .88/.86). My advantage, of course is that I can just spend them there for any number of fine, much better valued assets if the dollar never goes south again. You know, in poker they say "anything is possible, it's just not probable". So, I do give the Dollar a .00000001% chance of never going down to Euro par again (smile).
I heard Eddie George is also becoming "orientated"! He went out of his way in Paris not to rock the dollar boat too much. Calling the Euro "substantially undervalued in terms of the medium-term 'fundamentals'. Oh boy, it must be killing them as the Pound is clearly in the same pickle the dollar is in and that trend is in motion.
Suddenly everyone must talk out of both sides of their political mouth and the ECB has got to love it. England / USA need to sell to Euro Zone or their already tiny profit margins are going to completely disappear. Not only that, the Euro exchange rates sets the competitive margins everyone else must mark against. Soon, if the dollar doesn't drop, taking the pound with it, we are going to have a very hollow backing behind an already sky high economic
structure.
To back up that contention, the same Reuters article said " Tuesday showed Britain enjoyed a trade surplus with the rest of the EU in August for the first time in almost five years, despite the strength of the pound versus the euro."! But then confirmed that "there is evidence that British
exporters have been cutting their prices in sterling terms to maintain their competitiveness in European markets in spite of the strength of the pound. That has hit corporate profits."
So, Americans openly display their strong dollar saying the Euro is week,,,, while knowing full well that EuroZone is outperforming on a long term basis and their currency is really strong in that fact. The pound is being drug up with the dollar, yet both countries know their money's overvaluation is a bad sign. Killing their markets.
It won't be long now and everyone will be talking out of only one side of their mouth,,,, and it will be saying drop those interest rates Alan, you must get that dollar down. Big inflation, here we come!
I bet the UK is into the Euro before we know it. They missed their chance (worried about a little minor inflation) and now will come up with some ad-hock tracking system, you watch! Eddie is already throwing off hints; "For the time being our best bet, it seems to me, is for both the Eurozone and the UK to continue to pursue macro-economic -- both fiscal and monetary -- stability in parallel" Did you hear that one? Trail Guide
ORO,
you have placed so much fine information out here and I never go into as much of it as I would like. I saw your #39804 "Debt to equity, according to Noland, is at 83%". Not good, my friend!
I'm doing an abstract fiat money example and hope to use it as a base to construct some discussion with you. It' so hard to talk here with everyone using such closely related terms, we often don't get our point across. At least I don't.
Story:
Was traveling a while back. I stopped and tried to tell a fence post (there are a lot of those scattered across this great planet of ours) that there is a difference between "the price" and "the value" of things when fiat markets are involved.
I said that the efficient market theory is skewered
when there is an unending supply of new fiat credit for people to bid with. In such paper markets, the paper money price cannot represent the real value of things in the course of our lives. Take away the ever expanding paper pricing mechanisms and replace it with a fixed amount of bidding units and the real worth of things in our lives becomes known. Of course I'm not just talking about gold vs paper gold. It's most all things, except gold is the most extreme example today.
Know what? That post didn't say a word. Just stood there holding the fence up. Either I'm dumb as a "____ post" for talking at all or that sun-of-a-gun is smarter than it looked.
You see, I think it knew something was wrong below him that we couldn't see,,,, because next morning he was at a
phone booth calling Colorado about something. This really happened!
The moral of this story is:
"you can't turn a wood post into paper then gold,,,,when even "knot heads" know it's rotten two feet into the knoll"
"Most of the winners in the gold options when the WA explosion ocurred did not get much of their money out. And subsequently they lost it.
If you are a trader, and a good one, you may make it. If you are an investor with a long time horizon and no judgement as to rapid market movements, then you should not play any gold derivatives, no matter how conservative your strategy."
End.
Hey, very simple game mon amis. If you can time it go for it. Doesn't matter if it is gold or grey poupon. If you are looking at the END result WITHOUT a time frame, well, then play it that way.
The paper argument versus the physical one is RELENTLESS, IRRELEVENT. The long shot, big pay-off, time dependent paper gold bet is one avenue and the physical, we win through attrition route is Another.
You guys bore me, play a new record.
Bet the money or buy the physical, time your 'bet' or don't.
I went to the physical store yesterday and scooped 130 oz. of silver. They gave it to me. Now if silver goes up tomorrow or 2001 or 2010, I win. If I have 'timed' this wrong then I give it to my son. He wins. But there is no expired clock. What about the paper silver bets, who cares.
The big basket of Y2K gold ounces I have, same deal.
So if the paper boys time it right and make a killing, good.
There are playing the odds, I am not.
I hope GoldHunter makes money because I know I will.
Yours "If we are considering the cost of maintaining a long position during this 1 year period, we stand to lose about 6% of POG in time premium. This leaves 14-24% of POG as the maximum probbable upside in the futures market. If you are quick enough, you will see a 100% to 200% return on your speculation. If you make any errors in timing you will have lost most of your gain and perhaps lose part of your speculative funds."
Does not look like 90% of the speculators loosing to me?
Also, you are "light"...a 24% increase in the price of gold from say 270 would be about a $6700 increase. At a margin of approx 1500 per contract, my math shows 500% return...
Any more "enlightening" information you care to mis-spell?
In case anybody missed it, or anyone still cares , the WSJ editorial page today recognized some other choices and published articles written by Harry Browne and Ralph Nader.
Depending on who translated the French person I just wonder if increase gold reserves meant increase the value of the gold reserves (by setting a higher price of gold)? Naw!, Must have translated correclty -- more ounces not more value. (that would come later)
TG,
I am not smiling. I grew up in a strong America where the dollar was king. If this is playing out like you have been saying and there is every and I mean every indication to believe that this is so (where do you get such advanced info [rhetorical]?) then we are indeed in for some big suprises. Funny, human nature is? You know, one day we were all putzing around minding our business and there was an Iron curtain, and the next thing you know it was being torn down. And now this.... I keep hopeing you had just a great storyline but damn if those events just don't keep confirming it all, again and again. Wake up all.
The Euro and the dollar are at war. And the dollar appears to be loosing (sadly, no smile)and in a way that makes it look to most like it is winning. And the CNN's of the world just keep parading bozos who have no clue what is going on. "Oh yeah, the next four quarter are looking very strong." The CEO conference in Boca Raton "are very concerned about the oil picture, but are generally confident that the economy is going strong..."
Then we have the comments like those Gold mines and their crazy hedge programs (with the unspoken "...and no, I have no clue that the reason for this is to keep oil cheap in terms of dollar/gold settlements...."). It is as much more about what is not said vs what is said. It is also no coincidence and a godsend that all of this is occurring with the full vision of the internet. Traditionalists who ignore these sites get there news from CNN, Bloomberg, and CNBC and the Wall Street Journal who would only print a 1/4 of this poppycock stuff if it hit them in the face, because the pair of dimes needed to shift their thinking hasn't struck them yet. GATA is just too radical for them and they have been hitting home runs on great gold market intel for over a year. Yeah, it is scary and sad both that neophytes to world politics discuss world politics only to find out that those who should be discussing it either have no clue or are in complete denial or couch things is such esoteric terms that if there were clues of lights being on they are lost in the dazzle of brilliance through obfuscation -- no greens-pun intended. Got info?
Over at ezboard.com there is an article that makes mention of a high level China/SA "tea" recently. The Saudi representative's name was a Prince Sultan.....(don't recall). Sounded like he was #3 in the official sector. Also sounded like relations were very warm between the two countries. FWIW
www.gata.org"Last May I interviewed Congressman Ron Paul, M.D.
and member of the House Banking Committee for my
newsletter, J Taylor's Gold & Technology Stocks. In
a letter to Congressman Paul, Bob Rubin said the
following. "We have long recognised that helping
prevent extreme market fluctuations from generating
self-fulfilling losses of confidence that could
unnecessarily destabilise the real economy is an
appropriate objective of government policy. We also
recognise that government action is often required
to create the conditions for markets to work at
their best."
"A nation is surely in a wretched condition, when the principal object of its government is the increase of its revenue. Such a state of things is in reality a perpetual warfare between the few individuals who govern, and the great body of the people who labour. Or, to call things by their proper names, and use the only language that the nature of the case will justify, the real occupation of the governors is either to plunder or to steal, as will best answer their purpose; while the business of the people is to secret their property by fraud, or to give it peaceably up, in proportion as the other party demands it; and then, as a consequence of being driven to this necessity, they slacken their industry, and become miserable through idleness, in order to avoid the mortification of labouring for those they hate."
"The art of constructing governments has usually been to organize the State in such a manner, as that this operation could be carried on to the best advantage for the administrators; and the art of administering those governments has been so to vary the means of seizing upon private property, as to bring the greatest possible quantity into the public coffers, without exciting insurrections. Those governments which are called despotic, deal more in open plunder; those that call themselves free, and act under the cloak of what they teach the people to reverence as a constitution, are driven to the arts of stealing. These have succeeded better by theft than the others have by plunder; and this is the principal difference by which they can be distinguished. Under these constitutional governments the people are more industrious, and create property faster; because they are not sensible in what manner, and in what quantities, it is taken from them. The administrators, in this case, act by a compound operation; one is to induce the people to work, and the other is to take from them their earnings."
"In this view of government, it is no wonder that it should be considered as a curious and complicated machine, too mysterious for vulgar contemplation, capable of being moved by none but experienced hands, and subject to fall in pieces by the slightest attempt of innovation or improvement. It is no wonder that a church and an army should be deemed necessary for its support; and that the double guilt of impiety and rebellion should follow the man who offers to enter its dark sanctuary with the profane light of reason. It is not surprising that kings and priests should be supposed to have derived their authority from God, since it is evidently not given them by men; and that they should trace to a supernatural source claims which nature never has recognized, and which are at war with every principle of society."
Joel Barlow
appx 1792
from
Advice to the Privileged Orders in the Several States of Europe - Resulting from the Necessity and Propriety of a General Revolution in the Principle of Government
I get the feeling that we may soon sense the proportion that is taken from us, which is probably in some magnified proportion to what we have been enabled to take from others over a long period. There is undoubtedly (smile) some thermodynamic equation that clearly and unambiguously spells out the functional relationships between energy throughput per capita, creative allocation of surplus "free energy", and the systemic turbulence when entropy comes home to roost.
Gold is for sure a consolidated and dense means of preserving the "free energy" generated by work. Its warm color is symbolic of energy and fire, and its weight is very existential. Happily, there is a way to easily "secret" ones' property. It's great fun to carry it around as well.
Will there ever be gram weight coins available or are there already? Seems useful in future.
www.gata.org"Last May I interviewed Congressman Ron Paul, M.D.
and member of the House Banking Committee for my
newsletter, J Taylor's Gold & Technology Stocks. In
a letter to Congressman Paul, Bob Rubin said the
following. "We have long recognised that helping
prevent extreme market fluctuations from generating
self-fulfilling losses of confidence that could
unnecessarily destabilise the real economy is an
appropriate objective of government policy. We also
recognise that government action is often required
to create the conditions for markets to work at
their best."
From Sierra Madre (39917), "We so-called gold-bugs have taken so much opprobium, so much in the way of condemnation, that we are utterly immune to any of your arguments."
Please don't include me in your "WE" group. The idea that only thoughts and views that concure and reinforce what "We so-called gold-bugs" believe and cherish should be posted stinks of censorship. What is to be gained or learned from repeatedly hearing only that which pleases you and makes you feel good. These will become repeatedly heard as this "utterly immune" or closed mind attitude will not tolerate or even consider anything it does not percieve as a old, friendly, wellknown and correct thought. Perhaps ignorance is indeed bliss but please don't include me in your group even though I am a goldbug. A mind is a terrible thing to waste and an "utterly immune" (closed) mind is (IMHO) brain dead.
Agree or disagree, or simply ignore what displeases you but please don't condemn from the point of view that you speak for "We so-called gold-bugs".
I happen to think both Aristotle and Goldhunter are partly correct and partly not so but I would never take sides with one and ask the other to stop posting because I didn't like his viewpoint. Freedom of expression for the Furtherment of enlightenment.
Remember all the financial dislocation caused by the old monetary view of global finance? Look here; we've no overt political agenda behind our currency. In fact, we have so much confidence in it (the Euro), we even benchmark it to THE PRICE OF GOLD. We just want to do business.
Well, it's never as bad as it all seems. Remember, people, nations and empires have been doing this from the beginning. We are, as a people much stronger and tougher than we think ourselves to be. Us Americans and all North and South Americans will survive and be better for it. So the
Europeans may come out on top for a while? Good for them. They are good people too!
As I said long ago; most everyone takes our thoughts as major gloom and doom. That is totally wrong. I expect the US to change, not die my friend. Great doses of reality force us into a better life, a stronger life.
Again, the secret to navigating through changing times is in not allowing others to control you. Indeed, 90% of that power comes by controlling your own financial assets. None of us has to lose to experience change, but we must change not to experience loss!
This chess game is a long one and we will have time to discuss this further. Until then, consider following a conservitive trail that puts you in control.
I am assuming that margin requirements would rise and that you would take a 1 year position, but if they don't and you take a current month position, you are right at that 500% figure on a 1500 per contract margin for current month. However using 4 current month contracts per year, you raise the cost of participation relative to POG by raising the number of transactions to 8 per year and paying 8 bid/ask spreads. Though the possible outcome gives you a 500% possible profit, it raises your sure cost of participation to 12% of POG. Thus on a year's worth of exposure you have a 12% of POG cost on which you can gain at best some 500% over an occurrence - on a single contract you will have 500%, on the rest you will have a participation cost with no profit (I am assuming that you try once per active month and do not return to current month once you are stopped out) which brings your actual max return over the full year with one event to 125% if you manage to time it perfectly.
As to spelling, I don't run my posts through a spell checker and I don't read them. All in the effort to post prompt replies when I have the opportunity to post them. If the mis-spelling and the many occasions where gobledygook syntax appears are a problem to more people than yourself, then tell me and I'll make an effort to clean up the posts.
Firstly, I am not quite sure what you mean by "monetization" in this context, which would go a long way toward making my response more intelligent, if in my case intelligence is possible. However taking my assumptions into account:
Firstly, I oversimplified to dramatize 1 aspect, the local effect in the US. When I made the post I thought about all those treasuries in the hands of CB's around the world, and decided it made my comment to complex without adding appreciably to the point.
When you say these foreign held treasuries are completely off my M3 radar screen, in the sense that they may have been purchased directly from the treasury, (and to be sure the following does not properly consider those CB's whose countries are in trade deficit to the US) you are right. However, the effect is there through the US trade imbalance, financed through the commercial banks. The transaction of purchasing treasury bonds is merely one step of many. The treasuries merely bring the paper known as dollars home, in exchange for another paper known as treasuries. Admittedly, my brief argument was far to brief, although I would argue that the net effect was largely there.
As to the question of who lives in M1 and M3:
The average citizen does not understand the banking/monetary system at all. Speak to them about fractional banking, and you get a blank look. The corpoation, or anyone who goes in for a loan, does their transaction in M3 dollars (s)He lives in an M3 world.
The central banks cannot directly influence M3. They control M1 almost completely. They can only rely on the system to use M1 to INFLUENCE M3, therefore they live in an M1 world.
This comment was related to my confusion over the inflation/deflation discussion.
In the 30's, the US CB, and more recently, Japan, "pushed on a string" by "printing money" and pumping up M1 to try to get more liquidity into the system. In the 30's there were times when there were NEGATIVE interest rates, ie when it was profitable for the banks to simply borrow from the CB, and do nothing else, rather than the usual way, where the commercial banks had to pay an interest to the CB in order to borrow. In Japan there have been effectively zero interest rates over a significant part of the decade.
Thus M1 could inflate, but because the banks were fearful of lending, that had no effect on M3. On the other side, (M3) two things were happening. The fearful of lending banks were not only desperately trying to collect whatever loans were outstanding, lest they to become uncollectable, they were making very few new loans. M3 was also shrinking as the banks wrote off those bad loans already on the books. It is a self reinforcing circle. Which leads to my definition of deflation, "a massive asset destruction".
It appears quite feasible to have inflation in M1 at the same time as deflation in M3. I expect that scenerio to play out this time as well.
There now, I saved myself a bit of typing by being cryptic, and spent a lot of 1 finger typing to explain myself. Could it be I am related to a banker?
I understand why the "Giants" want to keep a good thing going but what I don't understand is why an independent minded investor with deep pockets who prefer USD (and I'm sure there are many) doesn't bust the gold market wide open with hugh buying. Why?
I am glad to see your running discussion with Trail Guide. It is very good for the Forum. I believe Trail Guide has left me behind along the dusty trail; left me in fact for the buzzards! Well, I probably deserve it for asking so many dumb questions. He'll be surprised when I end up at the trail head with the rest of the group! You've a better mind than me. Please keep up the good work. Many thanks
"You see, I think it knew something was wrong below him that we couldn't see,,,, because next morning he was at a
phone booth calling Colorado about something. This really happened!"
----------------------------------------------------------
Trail Guide,
Why do you talk in riddles from time to time? What is your motive? From an outsider I can't make heads or tails from this post. At the end you ask Stranger if he acknowledges/understands your statement. What are you saying in the above paragraph? You have inside informative that you tease the 'average Joe' with. What are you really saying? You talk of economy, fiat, commodities, the Euro, and an endless array of subjects that we debate endlessly and sprinkled in amongst is a 'story', an analogy, a 'play -on-words'. Never have you stated who you are. Never have you stated your credentials.
I've been here since Nov. 98. I watch for innuendoes and 'slips of the tongue'. I have seen a few and I don't know what they mean, it is inside information. There is a poster on this forum that made a brazen slip a few months ago.
You see FOA, I am John Q. Public and I am investing in gold.
I am loosing my shirt. Since Nov. 98 I have lost half of my lifelong savings in gold; it is my own fault, I have been flip-flopping from stocks and investing in physical and unfortunately was buying on the way up during the W.A. announcement and even my physical is 15-20% underwater.
I NEED more of a sign that 'a fence post called Colorado' to keep the faith. You are the man on this forum. I am going to put you in an unfair popsition FOA. Gold is at a do-or-die situation; it has broken support of $272. You need to step up to the plate and SHOW us the money. Show me the money man. Sink or swim. Is this an ultimatum, not at all, tell me and dozens, maybe hundreds of lurkers or thousands of lurkers why you, personally are a physical gold advocate. I don't know if you are my mother or Alan Greenspan.
FOA, I am not unhappy, I am not mad, I am not anything. I AM at the crossroads of gold. You have the power to sway me, I am a servant of your word. Tell us, who you are and what is your affilation with gold.
Before I respond to the comments of our esteemed Trail Guide made @ 39784, I believe that our august Forum would best be serve by some preparatory remarks. This will require me to glide down from 30,000 feet to 10,000 feet and circle for a while. Hope I don't run out of fuel. Tonight, a lesson on the mechanics of trade flow or how the US$ moves around the world.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$
I want to import casing and tubing for my 100 well drilling program in South Louisiana. I send out RFPs to a dozen steel mills located domestically and around the world giving each the footage, diameter, strength and other specs of the tubing and casing that I want as well as a request for the bid price to be quoted FOB New Orleans in US$ and in their local currency.
When my deadline is up, I open the bids and see that a steel mill in France can meet my specs and is the lowest bidder at a price of US$10 million or 12 million Euros. For a variety of reasons, I choose to pay in US$ once the pipe hits the docks in New Orleans (perhaps I think the US$ will slip against the Euro and I will profit. My bank is more than willing to arrange a FOREX transaction and buy E12 million for me now if I don't want the exchange risk.) Thus I contract with the mill and post my letter of credit for US$10 million. The pipe arrives a month later and after inspecting it and counting it to verify that the cargo conforms to the terms of our contract and the LOC, I accept the cargo. The Whitney Bank then wires US$10 million to the Paris bank of the mill. DIGITAL US$ arrive in Paris and the transaction is complete.
From a microeconomic perspective, this transaction has widened the trade deficit of the USA (dollars went overseas). The final net TRADE deficit or surplus will be settled from millions of other import and export transactions made with many countries (the macro perspective) and reported a month or so later by the financial press. This is the $30 billion monthly figure that we now read is the USA's net TRADE deficit.
A side note. The USA runs net surpluses with some countries � Mexico, while it runs net trade deficits with other countries - Saudi Arabia for its oil. It is the deficits that get the most press and political grandstanding � Japan in the 1980's (auto import restrictions, tariffs, etc.), China today (WTO membership, calls for market liberalization so that the USA can export more to them).
Roughly 30% of the USA's total import bill is for foreign oil. At $30 net, the daily import of 10 million barrels causes a $9 billion monthly charge to the TRADE account. Higher oil prices will increase the trade deficit while lower prices will shrink it. This point will have profound consequences on America when the US$ looses its reserve currency status. Call it the Achilles heel of a society that has been spoiled and enriched by cheap energy and loose credit.
Now the mill must decide what to do with its US$10 million. If the mill is flush with Euros, then it calls the trading desk of its Paris bank and instructs it to buy a US$10 million US Gov't note maturing in 5-01. The bank calls its branch in NYC (or its correspondent bank � say Chase) and orders the trade. When confirmed, the Paris bank wires US$10 million DIGITAL dollars to its NYC branch so that the NYC branch can pay the seller of the note and take delivery of that note. The owner of that UST note (paper claim) is the French steel mill. It invested a portion of its equity/ wealth (not just profit) in the USA.
The repatriation (return) of those DIGITAL US$ is captured in the CAPITAL account flows that are less reported or understood. At the end of the day, the net trade account and the net capital account MUST balance and the DIGITAL dollars MUST eventually return to the USA. (Some minor leakage does occur, however). As we shall see below, there are many ways to balance the trade and capital accounts.
If the mill decides to convert the US$ into Euros so that it can pay its local vendors, make payroll, and pay taxes and dividends, then it instructs the Paris bank to do a FOREX transaction. The bank does one for its own account and the mill's bank account is credited with E12 million less a fee. Now the bank is holding the US$. It checks its cash flow needs and decides that local needs are covered.
For the US$10 million, it now has three options. It can buy a US note in the same manner as described above for its own account, it can loan the US$ to a French or German client wanting to buy a private or public US company or asset, or if all external needs are satisfied, it can send the US$ to the Central Bank and have E12 million credited to its account at the CB.
The Paris bank decides to send the US$ to the Central Bank. Historically, all Central banks shied away from currency risk and so after forecasting its reserve currency needs for payment of imported oil and other imported commodities (copper, wheat, etc), it simply sent the unneeded US$ back to the FED/Treasury in exchange for an equivalent amount of its own currency.
Oh, you have no Euros to swap for your US$, Mr. Secretary? Then send us your gold bullion. Oh, you closed the window in 1971. Then how about settling with SDRs (special drawing rights). Hold it, we are full up on those too. Since you can't settle, we will go into the open market and sell your US$ at any price needed to clear the trade. Currency devaluation follows if after the net�net trading of all private and central bank transactions more US$ still need to be sold. Alternatively, currency appreciation occurs if more US$ are wanted than are available. This is basic supply and demand balancing and price discovery.
$$$$$$$$$$$$$$$$$$$$$$$$$$
In 1995, when the dollar dropped rapidly to 80 yen and to 1.2 Swiss francs because the supply of digital dollars exceeded the demand for digital dollars and thus a lower exchange rate (equilibrium price) was needed to clear the FOREX market, Rubin created additional demand for the US$. He offered the Central Banks, effectively the holders of last resort, a deal they couldn't refuse. Call it the Rubin put. Buy our 2-year notes instead of crushing the US$ in the FOREX markets and the USA will honor the following "make whole" promise��
The CBs reluctantly accepted the offer because an alternative reserve currency (the Euro) was not yet born much less crawling, much less walking, much less running. As ORO has commented, the ECB needed to create a big Euro float. The absence of a functioning reserve currency would have collapsed worldwide trade and caused global financial turmoil if the CBs had laughed and gone home. Besides the "make whole" promise though shaky beat acknowledging to their citizens that the world had transferred $5-$10 trillion dollars worth of its collective wealth (pipe, oil, wine, Toyotas, etc.) to the USA for near worthless paper and America's protection from the evil empire.
Yes,the USA is the "mercenary" defense force of the Free World. Top cop on the block! It has bases everywhere including many in their homelands. Stop paying the mercenaries and what happens?
This is the unprecedented event that I referred to in my post @ 39771 - the CBs didn't swap US$ for their own currencies or gold or SDRs anymore. They bought US Treasury notes!!!! UST notes held in custody at the NY FED for the account of foreign central banks tripled to almost $800 billion in just 5 years. Do CBs own any INTC or MSFT? No. They hold US$ denominated debt instruments (paper claims) backed by the full faith and credit of the US Government which is further backed by its broad and getting broader taxing powers. It is paramount to understand that the USA borrows from foreigners in its OWN CURRENCY. More on this huge settlement advantage soon.
The yen carry trade and the gold carry trade also implemented under Rubin created additional demand for the US$ so that further UST notes could be bought. This incremental demand shows itself in the capital account as a surplus. If it is bigger than the net trade deficit, the dollar rises. If smaller, the US$ clears in FOREX transactions at a lower price. The net trade and net capital accounts are once again balanced.
All this new demand for the US$ and UST notes created the Rubin/Clinton strong dollar AND lower yields on UST notes. All other private debt instruments are priced above the "risk free" UST note. Falling yields means cheaper borrowing costs and lower debt service requirements for all. Furthermore, the Capital Asset Pricing Model said earnings of traded companies are thus worth more due to a lower discount rate on their earning streams and BOOM the equity markets soared. This causes more CAPITAL account transactions into the US$ so that foreigners can get in on the action.
This virtuous cycle of prosperity was thus born because CBs took the currency risk that they had historically avoided. Why? The Rubin put or "make whole" provision was persuasive. Poor us when the virtuous cycle of prosperity reverses and turns into the vicious cycle of poverty. We will then start down the road to serfdom. Actually, Bubba deserves little blame � he was too busy behind close doors to supervise Rubin.
The rapid rise in energy prices this year is but another tool in the Treasury's tool box to create incremental demand for the US$ and avoid for now having to honor the put. Assume that the non-US, net importers of oil need 40 million barrels of oil each and every day to power their economies. Raise the price by $15 over a short period of time and an additional US$600 million DAILY must be kept at home by central banks in order to pay for their respective imports of oil. Yes, this is inflationary to all countries, but does the USA want the flu or pneumonia?
Want a shred of proof? Recall that someone posted here recently documents of the LBJ Administration that showed that the US conspired with the British to disguise the net US trade deficit with Britain back in the 1960's - when the gold standard was the disciplining force for international trade.
When France pays Kuwait for its latest tanker of oil, Kuwait must now decide what to do with the US$. It could deposit them in a NYC bank or buy a UST note or buy gold or buy fighters or pass it out to its citizens so that they don't rebell. It too could sell in the FOREX market.
In 1991, did the Bush Administration encourage Iraq to invade Kuwait so that the demand for the US$ would increase from higher oil prices? Ask Ambassador Gladney. Was this also a market clearing scheme perpetuated in order to partially repatriate billions in US$ accumulated by Saudi Arabia. Remember, it compensated (paid) the USA and other mercenaries to fight the Gulf War. See the positive spike in 1991 on the chart of our trade deficit? In prior months, the deficit had been accelerating downward as trade deficits widened.
Are the current tensions in Palestine yet another tool in the USG's tool box used to create incrementally higher demand for the US$ and perhaps another market clearing scheme? I don't know, I'm just speculating based upon prior history and USG behavior. Of course publicly, the USG sells two days worth of imports from the SPR to show Americans that Uncle Sam cares about them. If only oil was not the blood of the modern way of life. It is at the heart of everything - trade, warfare, international intrigue and more.
See why the Euro had to be created? No foreigner wants to be abused forever. In time, it will sprint as the US$ stumbles. The Free Gold Market is said to be the mechanism that will prevent the same abuse in the future by the Euro. The Euro will let gold find its own international clearing price and then mark-to-market its holdings of gold bullion. Too bad the Euro is only 15% backed by bullion.
In summary, I am confident that Trail Guide, ORO, Aristotle and other wise ones here would GENERALLY agree with the above to this point. A thousand minor technical differences wouldn't change the thrust of this distilled analysis. The proper point of current debate then is: What happens to the USA's economy (and thus to many of you) when the Rubin "put" is called? How will the USG make holders of its debt instruments whole? To inflate or to deflate, this is a choice that will create big winners and rabid losers. I'm on record @ 39771 with my viewpoint on who wins. Trail Guide has expressed his viewpoint.
I'm running very low on fuel. I will return tomorrow with other lessons all must struggle to grasp before my response to Trail Guide can be posted.
Black Gold, Yellow Gold, the only wealth worth physically possessing!
Time to chill man. Why is Trail Guide the "man" to you?
your "You have the power to sway me, I am a servant of your word", I hope was a bit in jest, right? Right? TG may have his reasons for being cryptic. But I wouldn't be betting any part of the house on someone who I do not know and his or her cryptic writings. As totally honest as the man might be or wish to be, should you place any of your life in his hands? Ask yourself what YOU understand. Bet on that. And that only. If TG or anyone else is too cryptic for you, then use your gambling money on that instead. You will sleep much better.
Question please for Stranger, Cage Rattler, ORO, Town Crier or anyone/everyone with any insight into why the U.S. dollar is soaring so much against the world's other currencies?
Is this growing divergence caused by inflation, real or percieved? The Fed. has not changed interest rates for a while, is this $ strength a delayed reaction to previous rate increases? How much is related to GDP of the nation's involved? Have these things nothing to do with the Dollar index now above 118? Then what? And what happens if this continues. Do we export only those things that can be had absolutely no where else? So many questions, so little knowledge! TIA for any responses
Someone mentioned that the way the dollar is appreciating, it's a wonder POG hasn't sunk to $220. If the dollar index was still a 100 as it was not so long ago, would POG be $320 now? ??? Thanks Rich
What you just posted, was a good read. Thanks for sharing. Bells of truth were ringing for me. It was a very coherent effort on our part. The only part that I held back on was your:
"In 1991, did the Bush Administration encourage Iraq to invade Kuwait so that the demand for the US$ would increase from higher oil prices? Ask Ambassador Gladney. Was this also a market clearing scheme perpetuated in order to partially repatriate billions in US$ accumulated by Saudi Arabia. Remember, it compensated (paid) the USA and other mercenaries to fight the Gulf War. See the positive spike in 1991 on the chart of our trade deficit? In prior months, the deficit had been accelerating downward as trade deficits widened.
Are the current tensions in Palestine yet another tool in the USG's tool box used to create incrementally higher demand for the US$ and perhaps another market clearing scheme? I don't know, I'm just speculating based upon prior history and USG behavior. Of course publicly, the USG sells two days worth of imports from the SPR to show Americans that Uncle Sam cares about them. If only oil was not the blood of the modern way of life. It is at the heart of everything - trade, warfare, international intrigue and more."
But you DID say it was speculation. And I am glad. I perhaps naively would still hope Mr Bush would not have sent men to war to create demand for greenbacks.
justamereBear 39831
In light of today's TSE, you look like genius at forecasting( by Nov. 12 did you say?)!!!
Thanks for your long post. I'm working on some thoughts about inflation/deflation, which might help me understand what is likely coming our way. I'll likely not be able to post these soon. Going to be travelling 'til early next week.
Your notion of medicine that only prolongs, but doesn't cure, the illness is entertaining. I do agree. It's also a bit like a situation I'm aware of in northern Ontario. where the local one and only doctor is married to a woman who is the local one and only pharmacist. I have heard a lot of interesting stories from my friends who live there, about the length and varieties of illnesses, and the quantities of expensive medicines prescribed, etc.
I think after this whole economic thing implodes there are going to be many hundreds of former"financial analysts" whose resumes will say nothing at all about this last ten years in their lives, and won't even mention the words. I started my dabbling in investing a few years ago with some notion there was something resembling a science of it to be learned. By now, I understand there is no science, anymore than the science of trying to predict the journey of a single molecule across my room, hour by hour judging by where that molecule was yesterday, and trying to guess whether someone might suddenly open the door, and what will be the effect of the ensuing draft.
Canuck (10/25/00; 21:16:56MT - usagold.com msg#: 39960)
@ Al F.
You've been around for a while,; we've talked.
Here's your punch line and my question,
"TG may have his reasons for being cryptic".
I what to know why. I don't pay my broker to be such.
me: It should not matter what his reasons are to you or me. In time, he can show his reasons if he so chooses. I would assume he would claim to be hiding priviliged info and maybe identities of associates of some type. That would be the assumed good reasons. Now lets assume the possibility of not so good reasons could possibly exist too. I have no thoughts either way on this subject. I also have not invested because of his/her thoughts. Why should you? How can I verify his sincerity? I can't. Can you? And this is no character assassination of TG. I simply don't know and since much of the aura around him is based on the mysterious ANOTHER, I end up thinking I should visit a local psychic and see if she can conjure ANOTHER up. Now I do read his stuff and there is enough meat for me to know there is some animal there hiding in the bushes. But I am holding my shot since I cannot see what it is. I am turning and looking for game I can see.
Do you have a right to know why he is being cryptic? Nope you don't. Neither do I. Do you have a right to ask why he is? Yep. Remember, you said you pay your broker. You have rights there. Here it comes to you in the ether. What does your soul say? Does your heart talk with emotion or common sense? Hopefully the latter. But i suspect you are a worrier..we all are at some point btw. I would say also that I have seen many so called experts in the financial community say gold's day has arrived, just look over the nearest knoll. Others say 2-5 years. even here amongst sincere gold enthusiasts we see "Jump spot, jump! and the such. To what end do we wait? Why do you wait? You already have gold in your breath. Enjoy your day. We get 365 for about 80 cycles. I hid my pm's and haven't looked at them since . I would love to help you hide them Can I?
By Yulia Latynina This week State Duma deputies planned to start discussing President Vladimir Putin�s changes to the law on the Central Bank.
Now, if you look in any economics textbook you�ll read that the classic definition of a central bank is a financial institution whose main function is the issuance of a national currency. However, historically central banks have never been created for this noble purpose.
The Bank of England is a classic example. Created in 1694, it was granted the right to issue bank-notes. In exchange, the bank promised to use those notes to finance the state budget deficit. Over the next two years, the bank printed �760,000 sterling against its reserves of �36,000. Naturally, the currency rapidly lost its value and the government had to allow the bank to refuse to exchange the currency for gold. This measure was a boon to the Bank of England and its shareholders, which included about half of the Cabinet of ministers.
Since then, central banks have become much more civilized. Except in Russia.
Our Central Bank bears a strong resemblance to the early Bank of England. Although it is not a private bank, it does own a whole network of private banks -- the so-called Sovzagranbanks, created in Soviet times to launder Party money abroad. One of these banks had a subsidiary called Fimaco, through which the Bank�s reserves were diverted into the state securities market.
In spring 1998, the Central Bank and the now-defunct Tokobank got into a dispute. The cause was a Sovzagranbank called Ost-West Handelsbank. Part of its shares belonged to Tokobank and the Central Bank didn�t like this. So, when Tokobank got into trouble and ran to the Central Bank for a stabilization loan, it was denied. Tokobank was told it would get the credit only if it put up the Ost-West Handelsbank shares as collateral.
Having no choice, Tokobank put up the shares. Toward the end of April, Tokobank received the loan. On May 4, Tokobank was put under temporary administration, but the bank did not collapse.
But Tokobank owed about $150 million to its foreign creditors. They were upset that the Central Bank, instead of putting the bank back on its feet, was simply holding it down. They sent a letter to major Western banks telling them not to extend any more credits to Russian banks. Since Russian banks at that time survived simply because of Western loans, as soon as the flow was stopped, the August 1998 ruble crisis occurred.
Of course, the August crisis had many objective causes, and Tokobank had many objective problems. But when deciding to use Tokobank in order to advance their own interests, the directors of the Central Bank should have at least paused to think about the larger consequences.
So, what about Putin�s amendments? They represent a fundamental change in the status of the bank: It will be converted into a federal institution and all the banks controlled by the Central Bank will be brought under the jurisdiction of the Property Ministry.
That is, if the changes are adopted, the bank will no longer be able to be misused by its directors. Only the federal government will be able to do that.
Yulia Latynina is the creator and host of "The Ruble Zone" on NTV television
I'm afraid I don't understand where you are going with this post. You will have to be a bit more simplistic for some of us poor farm boys.
Just guessing from your post, but I thought you might find the following interesting.
First we had a shooting war, then we had a cold war. When that was over we had a lot of spies out of work. They took their information gathering/analysis skills to the major corporations, who were receptive, insofar as they already had embyonic intelligence gathering units, at least in their marketing departments. (called market research)
Today we have an economic/intelligence war going on, even if the guy on the street does not realize it. And, it is every bit as intense as the other kind.
Some of this war is cross border. Particularly the French have devoted a goodly percentage of their former military intelligence machine to commercial intelligence for use by French national enterprises.
It has been estimated that the Japanese have as many as 55,000 "economic spies" in the US. Almost without exception they are just doing a job, but they do send back information, just like what sometimes happens with US firms. It is just that theirs is a bit more organized. What are the latest developments, who is doing what to whom? Back home it gets assembled with all the other data coming in and analysed. With lots of parts to the jigsaw, a picture can be seen.
The Koreans are particularly scrappy in this arena.
However a good deal of this war is borderless. Major corporations are heavily involved with competetive intelligence. Nothing illegal, just systematic gathering and analysis of public domain data. Firstly there is absolute mountains of data, and secondly, public domain extends much further than the average person realizes. For example, in one case, a very accurate estimate of a companies shipments was made by measuring the rust on the railway track siding leading to their plant.
The chairman of Nutrasweet has estimated that their very small intelligence unit adds $50 million to their bottom line. PER YEAR.
There are mountains of data out there. The problem is mining it to find the significant bits.
The thing that tied all my research togeather as to where we might go was a book "Moscow Days, Life and Hard Times in the new Russia" by Galina Dutkina. She is a jounalist in Russia who wrote on the everyday happenings of recent life (about 1995) in Moscow. I bought the softcover that is considerably less expensive than the hardcover.
This fit well with my quest for information as to what happens in a modern arena when a major power goes bankrupt, such as I expect the US to do. I had thought that technology would play a different role.
DUBAI, Oct 24 (Reuters) - Lifters of Iraqi crude risk becoming bogged down in a procedural wrangle as they try to honour Baghdad's request for payment in euros, leading some to predict hiccups in export sales from next month, industry sources said on Tuesday.
``The euro payment issue could trigger a disruption in Iraqi oil sales,'' said a major customer. ``We are in for fun and games.''
Iraqi oil marketer SOMO notified customers officially by telex late last week that from November 1 all letters of credit for crude oil payment must be opened in euros rather than dollars, lifters said.
But the U.N. is still studying sanctions-bound Iraq's recent request for a separate euro account.
``I get the impression this is not going to be resolved quickly,'' an industry source said.
Baghdad has been exporting some 2.3 million barrels per day (bpd) of oil under the current eighth phase of the U.N. oil-for-food exchange which ends on December 5.
Oil-for-food revenues are currently deposited in a dollar U.N. escrow account at Banque Nationale de Paris (BNP) in New York. That account, after nearly four years of the programme, now stands around $10 billion, said industry sources.
But BNP cannot issue a new, standard euro format for letters of credit until instructed to do so by the United Nations, customers said.
Those lifting Iraqi barrels in the early days of November must now get the necessary U.N. mandated paper work in place.
``We have been told informally by the U.N. to open a letter of credit in dollars for our early November lifting,'' said one major customer.
That is likely to get Baghdad's back up.
``SOMO will make some noise when this happens,'' said an oil executive. ``They will react because Iraq is in no mood to compromise.''
Iraqi oil officials could not be reached for immediate comment. But industry officials said last week that Baghdad planned no change to its policy of maintaining oil exports.
The Iraqi government decided last month to halt trading with the dollar and replace it with the euro or any other currency.
Baghdad has said the move was to confront the ``daily American-Zionist aggression,'' an apparent reference to U.S. support for sanctions.
Some industry sources said Washington, dead set against euro payment, was proving the main stumbling block at the U.N.
But Baghdad was also playing politics as well, they added.
``Even if the euro issue gets resolved, Saddam could come back with something else,'' said an oil executive.
From a practical perspective, lifters of Iraqi barrels saw no problem with the switch from dollar payment to euros.
``It's perfectly justifiable,'' said one big customer.
Iraq's oil exports at current prices fetch around $60 million a day.
The U.N. oil-for-food deal lets Iraq sell oil over a six month period on a renewal basis to buy food, medicine and other humanitarian goods for the Iraqi people reeling under stringent U.N. sanctions imposed for Baghdad's 1990 invasion of Kuwait.
Attn: jinx44 (10/25/00; 13:22:36MT - usagold.com msg#: 39885)To: jinx44:
You said:
[quote]
If you suspend the free market mechanism by outlawing gold, what is the difference in what we have now?? I say, outlawing gold because with your suggestions of outlawing the holding of more than 100oz., outlawing selling bullion to anyone but the USG, and a tax on any physical held by people, you have outlawed gold and what it stands for.
[unquote]
Whereas, I said in my:
ThaiGold (10/25/2000; 1:10:23MT - usagold.com msg#: 39835)
[quote]
(3) Coins having bonafide documentable numisimatic collector value
may be kept by their current owners. Or may be sold to others of
similar hobby, with a simple permit certificate for each intended
coin, obtainable from a postoffice or Federal Reserve Branch bank.
(4) Such coins must be reported annually, regardless, upon those
individual's IRS tax return. A 1% excise fee will be imposed.
(5) Legal Tender Gold/Silver coins shall be exempt from such IRS
inventroy/reporting/taxation if the quantity does not exceed 100
coins of either style. Or 100 oz, whichever is greater. We want
these coins to be in free circulation, not hid under the mattress.
[unquote]
=== Methinks you misread my entire post. Nowhere in it,
is gold "outlawed" outright. In fact, there are specific points
to enable the people to retain and use their gold, freely, in
widespread circulation. Afterall, that's one of the key points.
=== So all I can say, is I didn't say what you say I said I said.
Attn: Christopher (10/25/00; 07:09:29MT - usagold.com msg#: 39861)To: Christopher:
You wrote:
[quote/snip]
I have a problem (being a strict constitutionalist) with the government arbitrarily setting the price of anything, be it gravel or Gold.
Your plan, if it was enacted, would result in, rather than a "war on drugs," a war on Gold. Gold manipulation by any other means is still Manipulation.
However, you have given us a starting point from which to consider this question, maybe from a new angle.
[unquote]
I write:
It's hardly a "War on Gold", nor "Manipulation" of any kind.
In fact, it's a Victory for Gold, because it will conquer all the
previous manipulation wars against gold. And free it to it's
rightful status as a monetary unit in the hands of citizens
everywhere (worldwide) at it's historic real value.
Just the reverse is true today. Manipulators have mounted a
considerable war against gold, and they have essentially won.
As I've said before, today's gold has been virtually confiscated
already. Just that nobody realizes it. The powers have locked
it at $275 whether you like it or not.
Attn: justamereBear (10/25/00; 16:03:02MT - usagold.com msg#: 39899)You wrote:
[quote/snip]
"Forget it. It is already too late. Better to spend your energy mitigating the effects on humanity of the coming crash by getting in a position to rebuild."
Not that I think that there won't be a plethora of draconian measures enacted, and REAL hoary theories, to attempt to turn back the clock
[unquote]
I write:
It may not be too late. If such draconian measures can be
enacted soon enough. I'd much rather have stable US coins,
& currency, forever referenced to intrinsic $50 gold than to try
to exist in a chaotic serfdom and crashed environment where
there is nothing to spend my $300 or $30,000 gold upon.
Think about it. Economic stability and a pleasant living
environment must be worth something to us. Or is it all just
better to think of ourselves sitting down each day/night to
selfishly eat alone, a hearty meal of hot porridge gold.
The current accounts don't close. They contain a "discrepancy" figure that can reach the size of the whole deficit figure.
The dollars that are sent abroad in payment for trade do not have to equal the dollar assets purchased here through the capital account. The theorists who put this together in the 50s ignored interest rates because they were at the level of 2-3% for long term debt. The reality of today with 13-17% interest on the dollar debt of a Thailand and a rate of 7,5% on mortgages is not reflected in the theory behind the compilation of the accounts. They also ignored the possibility of third party loans or transfers in the Eurodollar or foreign interbank markets.
It should be understood also that dollars are liabilities of Fed member banks. Eurodollars are dollar denominated liabilities of non-US banks. Eurodollars are created when a foreign bank lends into existence new dollars in the amount its clients have on deposit from other banks (0 reserve fractional reserve lending).
In the case of the US, the accounts don't balance. Same goes for IMF statistics compiled from similar data from other nations' data. The IMF records a US import that is greater than the world's exports to it. Much of the outgoing volume of dollars that come through the current accounts are used to pay interest on some very high interest foreign dollar loans. Much of the dollar inflow through the current accounts is from dollars created abroad through Eurodollar lending.
The dollars can also just leave the country and circulate abroad, leaving some US bank with a liability to some foreign bank. The foreign bank may lend Eurodollars backed by the dollars owed it by your US bank to a third party whether or not the French exporter has decided to convert to Euro or not (your supplier may decide that it should keep the dollars on account in order to pay for the next couple of month's fuel bill). The records may show your bank still owing the French bank the $10 million dollars 20 years later, after they had compounded at the interbank rate for the whole of that period.
Your account at the US bank was a Fed system liability. When you sent the check abroad and your vendor deposited it in its French bank, the French bank would become liable to the French Mill to the tune of those same $10 mil. It will serve the transfer to your bank for collection (if it has a relationship with your bank) or to its central bank. The French central bank would serve the demand to the BIS, who would serve it to the Fed, who will serve it to your bank. The Fed would transfer $10 mil to the French CB account at the BIS.
If there is a relationship between the two banks involved, the French bank can keep the $10 mil at its account at your bank.
The French bank would also be able to lend into existence dollars which are lent to a third party. The only requirement on it is that the dollars clear through the BIS or an American international clearing bank when they are spent.
The French created dollars are recorded as a liability of the French bank (at this point only the French bank and the client knows that there is a loan), and the loan is spent by the third party, the borrower.
The banks serving the vendors where the borrower spent the funds will send the checks or transfers to their central bank for collection.
The third party central bank would then contact the BIS, who would clear them with the French CB who can clear the account with the French bank.
The $10 mil would move from the French CB account at the BIS to the third party bank's central bank's account at the BIS. The BIS would have $10 mil drawn on the Fed, and $10 bil owed to the French CB.
In the case of the French lending bank keeping funds at your bank, it would be able to clear the borrower's spending by writing a transfer from your US bank to its own central bank who would go to the BIS, who would clear the transfer through the Fed, who would credit the BIS $10 mil.
The Eurodollar system is extremely deflationary because there is no lender of last resort. The main method to obtain dollars to pay net interest on the Eurodollar debt is through export from the rest of the world to the US. The interest payments are at a higher rate than US interest rates, often by a spread of many %. Thus the Eurodollar debt market is often the more attractive one for dollars flowing out of the US. But today, and since 1995, there has been a movement from lending Eurodollars to directly putting them into the US, probably urged by the BIS and the ECB, who likely didn't want to accumulate more treasuries. The result is that the Eurodollar market is starved for dollars because lenders in that market prefer to lend/invest dollars in the US after the Eurodollar market and the foreign trade in US Treasury securities had grown to a combined total of over $6,7 tril - greater than M3 in the US.
Trail Guide claims that the ECB and the BIS want to see the Fed inflate like crazy. By inducing a dollar deflation abroad, they are pressuring the Fed to do just that. How? the deflationary pressure abroad destroys dollars as they are used to pay down debt. These dollars can't come back into the US capital markets, and therefore can't be used to pay down US debt, thereby forcing the Fed to increase its RP and permanent fund additions - to buy anything that moves through open market operations.
Because the Treasury has a big positive balance at the Fed with as yet no earmarks on it, the Treasury is being used to hide the monetary injection under the buyback plan's blanket. This is in an attempt not to appear to be inflating.
You are to be commended for taking the extensive time to debate the paper Gold reality with Goldhunter. It appears to be a case of "Don't confuse me with the facts, my minds made up!"
My observation Goldhunter, is that you are not looking at the *Quantification* of what is being described. It is true that Calls and Futures will turn 10, 20, 40X profits in a gold breakout: Until the bank is broken! Whether or not cash settlement is forced when demand for exercise cannot be fulfilled, would only alter the time and price of the collapse.
The 60,000 tons of Bank commitments at ORO's $67,000, (On a rally to only $335) comes to 25l billion dollars of obligation, and do I understand that to be just Bank paper BEFORE we count Comex, OTC and LBMA?
However much cash and credit and Hard Metal is available to the writers of paper Gold, determines the POG that breaks the Bank.
Trail Guide:
***
Again, the secret to navigating through changing times is in not allowing others to control you. Indeed, 90% of that power comes by controlling your own financial assets. None of us has to lose to experience change, but we must change not to experience loss!
***
I knew that! But it sure is nice to have my thoughts affirmed, and stated so well. It's like, spiritual. (smile)
The 60 K tonne is the overall estimate. 36% is US banks
Bulk of them is Morgan and Chase (2/3+)
Chase:
BALANCE SHEET ITEMS
(Millions of U.S. Dollars)
.................... YEAR ENDING........ QUARTER ENDING
.................. 12/31/98.. 12/31/99.. 09/30/99.. 09/30/00
Cash and Due..�.....17,068....16,229....16,490....19,403
Interest Assets�....318,306.. 350,005.. 317,160.. 352,279
Fixed Assets............ 4,055.... 4,439.... 4,306...... 0
Other Assets............26,446....35,432....33,088....54,134
Total Assets..........365,875.. 406,105.. 371,044.. 425,816
Depos & Int
Bearing Liabs.�.. 213,660.. 242,367.. 220,351.. 229,601
ST Debt & Curr........56,659....63,802....56,921....76,533
Other Liab............. 55,531....58,717....54,787....66,085
LT Debt & Cap Leases...... 16,187....17,602....16,644....24,157
Other LT Liabilities..........0...... 0...... 0...... 0
Total Liabilities...... 342,037.. 382,488.. 348,703.. 396,376
Preferred Stock.......... 1,028......928......928......828
Common & Paid In Capital....10,718....10,596....10,517....10,623
Retained Earnings........ 13,544....17,547....16,210....19,626
Other Equity............
-1,452....-5,454....-5,314....-1,637
Total Equity.......... 23,838....23,617....22,341....29,440
Chase has 29 bil of equity to put up against the same amount in gold derivative notional value - meaning that they are probably over $40 bil of total gold liabilities, balanced by an unknown amount of gold assets and lotsa dollars.
Morgan has $12 bil in equity and way more than that in gold obligations.
Needless to say, the whole thing is not viable upon a substantial gold move, particularly after the counterparties to the bank's longs are so distressed.
In the debate about gold and its future role, I have been wondering for some time whether I have been missing something. I find a key issue in the debate is the extent to which technology is a major driver, as alluded to by Allan Greenspan. One can probably safely assume that everyone is aware that computers have changed our world, but do we really the extent to which it has? For instance, if I go back in my own experience to 1989, only 11 years ago, I was involved in evaluating the financial return of a major hydrocarbon project. There was open scepticism when I proposed using a Lotus 1-2-3 spreadsheet for the evaluation. The concensus view was that it was not possible to use a spreadsheet to do the evaluation. Why?, you may ask. Well, in those distant days, the Lotus spreadsheet had a major problem with circular calcs. In doing the evaluation, in which I linked my income statement to my balance sheet and cash flows, I found the calculation to be unstable, whether I used "row-wise", "column-wise", "natural", etc methods of calculation. After two weeks of frantic work, I found a solution in cutting all links in the spreadshhet by developing a macro to iterate the calculation. This was possibly the first time such a methodolgy had been used. I coined the term "iteration" for the methodology. By mid-1990, when I started using the Excel spreadsheet, iteration was a built in option in excel, although very few people appeared aware of it. Today, iteration in financial analysis is passe. Just to put everything in total perspective, back in 1980 (ie 20 years ago), some beancounters were still using sliderules (anybody recall sliderules?). What will people be doing in 2010? (provided we are still around then!). Our ability to analyse information has expanded and continues to expand by quantum leaps in a very short space of time.
My point realy sums as follows: aren't we under-estimating the impact of computers on our world? If so, then maybe gold is destined to become a "barbaric" relic of the past. But, does human nature ever change? How does this impact on the price of gold (as well as other commodities, assets and the price of labour)?
Finally, it appears to me that with the ending of the cold war in 1990, a cutback in military spend globally enhanced the likelyhood of a global deflationary phase. With a relative shift in resources to the more productive private sector, one would expect the productivity of capital to improve.
MANILA, Oct. 26 (AFP) -- The Philippine government has decreed 52 to the dollar as the level at which it will intervene to rescue the plunging peso, a senior finance minister said today.
As the besieged currency slipped past 50 to the dollar mark to a new all-time record low of 50.30 in early trading from yesterday's close of 49.65, Economic Planning Minister Felipe Medalla said: "We'll do everything to make sure the peso doesn't fall to that level (52 to the dollar)."
The peso has fallen steadily from 40 to the dollar at the beginning of the year, and its decline has accelerated since September as investors sold down the currency over allegations that President Estrada took bribes from illegal gambling syndicates.
Without elaborating on any measures the government would take, Medalla said he was confident the administration had more market muscle than currency dealers.
"Speculators should be warned. The moment we resolve this crisis, the peso will recover and they'll lose out," the minister said.
But Bangko Sentral ng Pilipinas Governor Rafael Buenaventura ruled out the imposition of capital controls to stop the peso's decline.
"That's a non-starter really," he told businessmen at a meeting today.
The central bank has raised banks' reserve requirements, jacked up its overnight rates and sold dollars on the spot market but all have done little to arrest the currency's fall.
Last week, the central bank said it was considering raising its key overnight rates again but decided against such action this week.
Traders said the central bank's decision to hold off on any rate rises probably contributed to the peso's weakness.
Mr. Estrada said yesterday that "the central bank is independent" and "they know their job."
The president, who has dismissed the allegations against him, is facing impeachment charges in the House of Representatives.
I did not buy gold and silver solely on the FOA 'platform'.
That would be outrageously overzealous. Yes, I beleive I have performed the due diligent research and yes I still believe some day and I hope soon gold and silver will get their day.
I found a site where I have one of those fictious portfolio's and I do well. The amount of money fictiously traded is far beyond my means but the point is I do think I am seeing the game currently being played.
I have set a timeframe for gold. At that juncture in time I will begin to dispose of these assets. I suppose I am loosing confidence, ie, "gold will have it's day by XX,YY,ZZZZ or I am out of here"
Perhaps asking FOA of his 'personal data' will add confidence to my slipping opinion of gold.
Is that fair? I may be asking alot but I don't think it's an unfair question.
Gold @ Inflation Hedge & Herve Ferhani - Bank of France
INTERVIEW-Gold retains role as inflation hedge-BOF
Aya Takada
10/26/00
--------------------------------------------------------------------------------
TOKYO, Oct 26 (Reuters) - Gold prices may have fallen despite a surge in oil prices, but that does not mean the metal has lost its status as a hedge tool against inflation, an official at France's central bank said.
On Wednesday in London, gold slid to fix at $266.80 a troy ounce, the lowest since September 24, 1999 and not far above the 20-year low of $252.80 marked in July that year.
A bearish trend in bullion prices over the past two years -- during which crude oil prices have nearly tripled -- had prompted some gold market participants to believe the metal is no longer considered a hedging tool against inflationary risks.
But Herve Ferhani, foreign exchange director at the Bank of France, disagreed, saying lower gold prices were a sign that inflation was under control, in spite of the rise in oil costs.
``It does have a special role,'' Ferhani told Reuters in an interview this week. ``It must be an inflation hedge.
``Currently, inflation is by and large under control. And I would say that the market expects this to be the case going forward. That is what market prices reflect,'' he said.
However, Ferhani warned that a sudden change in the market's view on inflation could not be ruled out.
``We all know that the market can change dramatically from one day to the next,'' he said. ``We do not exclude, as a central bank, that such a thing might occur.''
Ferhani was in Tokyo to attend a gold conference.
Crude oil prices have recently risen to their highest level in 10 years. Light crude futures on the New York Mercantile Exchange (NYMEX) have so far averaged about $30 per barrel this year, against $13.40 during 1998's price crash.
CURRENCIES WON'T AFFECT GOLD
Analysts have said, however, that the recent surges in oil prices are not likely to have a major impact on the world economy as companies are depending more and more on natural gas and nuclear power as sources of energy.
Data from Japan's trade ministry shows oil accounted for 52.4 percent of the country's primary energy sources in fiscal 1998/99, down from 77.4 percent in 1973/74.
Ferhani said it was not surprising that gold prices had returned to levels recorded before 15 European central banks announced last September a watershed accord limiting gold sales and lending.
In reaction to the so-called Washington Agreement, gold prices had soared to a two-year high of $338 last October.
``The agreement was not designed to affect the price of gold. It was designed to make things more transparent,'' Ferhani said.
``The market up to then was not transparent enough. That was in no one's benefit because rumours would drive the price rather than the facts,'' he said. ``That was not effective any more. From this standpoint, the agreement has been successful.''
Ferhani said the euro's recent weakness was unlikely to affect European central bank policy on gold reserves. Currency depreciation would neither be an incentive for banks to accelerate sales or to rethink their plans to reduce gold reserves, he said.
``Gold sales are now covered by the (Washington) agreement. They are executed according to the plans. There are no excess sales,'' Ferhani said.
France is the world's third-biggest holder of gold after the United States and Germany, with 3,000 tonnes of reserves at the central bank
RE: Trail GuideThe dollar gold market is being sold down the river because in times of financial "troubles" and duress (like now; meaning obvious dislocations in various markets), the US desires for investors to run to US Treauries not gold. A run to gold is a signal that there is chaos afoot. That's the way the metal has been marketed here in the west; gold=trouble ahead. If investors run to gold, the dollar gets hit and from what I understand, there is a potential problem(s) with certain key players in banking industry. The dollar gold market will be sacrificed to save the dollar at any and all costs. I for one certainly support this being a US citizen. However, at the end of the day, the current mechanism for pricing gold will break and default as a result and then, the POG will be free. This is what TG is describing. Whether some extraneous event spikes the price higher in the meantime is unknown to all. That's what he is saying.
Hey Trail Guide, I'll bet this post will make you smile. It almost looks like I might know what I'm talking about
(Or maybe I just have friends in high (rooftop?) places!)
First things first--I'll build up to my point by answering a recent question along the way.
R Powell, you asked about dollar strength yesterday in your usagold.com msg#: 39957 --
--------"Question please for Stranger, Cage Rattler, ORO, Town Crier or anyone/everyone with any insight into why the U.S. dollar is soaring so much against the world's other currencies?"---------
Well, Rich P., as good fortune would have it, one week ago I answered a similar question from Rockgrabber. Let's take a look at the specific part from this old post that pertains to your question also.
------------
Aristotle (10/19/2000; 3:37:07MT - usagold.com msg#: 39377)
Rockgrabber--[...] As for your additional question, you asked--
"Now what about the dollar? ... Do they have a strong dollar system too? ... What are they doing in order to get this dollar like this??"
My thoughts-- to see this one (and the easy answer) one must be willing to look beyond U.S. borders to consider the global supply/demand dynamic for our currency unit. Being past its international usage prime and on the backside of its life, can you recognize how the international creation would wane, leading to supply tightness when dollars are sought on the forex for those with obligations to repay outstanding dollar indebtedness from prior years? It takes an obvious toll on external exchange rates lifting the dollar against all others, and would also express itself as an aggravation of the U.S. balance of trade--which is something we all see quite clearly. It also explains why loan repayment has become problemmatic and is being replaced with generous degrees of consideration for debt forgiveness for the Heavily Indebted Poor Countries. It also reveals some of the motivation behind the IMF's latest Gold scheme which did little more than to create new dollars for international use without going through the borrowing process that would put another on the hook for even more difficult loan repayment.
But don't fret over domestic deflation. The banking system will surely be saved at any cost--and that cost is hyperinflation, to be specific.
Gold. Get you some. ---Aristotle
--------------
Ok, Rich, did you follow all of that from a week ago, and particularly the final remarks? Great. Now let's have a look at something that I found today in the news, (Bridge News, to be exact) dated Tuesday, five days after my original comments were offered.----
**US lawmakers agree on bill granting $435 million of debt relief**
Washington--Oct. 24--U.S. House and Senate negotiators late Tuesday agreed on a $14.9-billion, fiscal 2001 foreign aid spending bill that provides the United States' full $435-million share of international debt forgiveness to the 30 poorest nations. The plan also allows the International Monetary Fund to continue using its gold reserves to fund its Heavily Indebted Poor Countries relief plan. ---END---
Wow. It's almost spooky to see confirmation that I **might** know what I'm talking about. I wonder if this credibility might carry through to my comments on paper gold, too?
ORO has done yeoman's work in explaining this deflationary phenomenom of dollar supply on a global basis in very clear terms in some of his most recent posts, particularly his usagold.com msg#: 39974 of today. I encourage you to have a look. And to conclude this thought regarding the green light for additional applications of the IMF Gold scheme, I hope everyone is prepared for the free infusion of new dollars that have no borrower standing behind them. Yes, the banking system will surely be saved at the cost I indicated.
On another note, as long as I'm in news mode, I hope everyone's seen this one by now, also from Bridge News--
**European central banks might increase gold reserves**
Tokyo--Oct. 25--European central banks might increase their future gold reserves because of reduced "risk-free" assets available in the global market, Herve Ferhani, head of the foreign exchange division of Banque de France said on Wednesday at the Nikkei Gold Conference in Tokyo. He said he sees United States bonds and gold as global risk-free assets and added that gold is one of the few options available to replace the US bond, or even the only option. ---END---
Now why would ol' Herve be saying such a thing? I believe that I haven't the foggiest idea.
Canuck, unfolding events reveal that Trail Guide has been on top of this stuff from the beginning. In this forum I believe a track record speaks louder than any litany of professed personal credentials. If you are insisting that in any dialog where one individual assumes the role of "counsellor" that he must provide credentials to continue speaking, would it also be fair for said counsellor to ask the "student" for credentials to ensure that the time spent on him won't be wasted? I hope not. So sit back and enjoy the unfolding show. The horizon is rapidly clearing for Free Market Gold to be visible and enjoyed by all.
Morning to you. Just saw your post today, after my morning newspaper walk. I was feeling that you were in a bit of frustrated period yesterday, and I can sympathize with that. I have even noticed an experienced investor such as our own very experienced The Stranger be a bit puzzled by gold's non-move.
As far as asking TG his personal history goes, you would be right to ask. I don't think he is going to give it though, so I hope your expectations aren't high. Would it be nice to hear? You bet we agree on that. The situation is like being stopped in a traffic jam and you are too far back to see what is causing it, so you ask the next guy in front who has asked those in front of him. And you learn that a woman gave birth while walking across an intersection. Later you see a police officer coming from the scene and he tells you there was a simple fenderbender and vehicles are now being towed. No woman giving birth. Who would you place faith in and why? Most would place money on the policeman. His position has given him credibility. Simple. And TG could do all that here if would so choose. In fact, I would ask that he would do so simply because if he was perceived credible, more people would likely be buying our precious metals. Now he does not owe us that, but it would be considerate < he like Oro tho will not touch certain subjects>. I, in his defense would have to remember however, that there may be a good reason for his tact. I don't agree with it, but who am I to tell him what to do? He is in his position, not me. Like us all here I will see eventually where his words lead.
One last point. In the bible there was a phrase concerning Jesus. It was said that he spoke as one having authority, yet he had none (earthly given) like the scribes and pharisees. Sometimes we treat TG as one who speaks with authority. Let your/our common sense watch over what he has to say. And the good in you will recognize his words for whatever they are.
Very good talking with you. I think I was able to use your concerns to also speak to others. Thanks for being who you are.
Further, the US wants the dollar to be "the money". The US does not want gold to be "the money" (Meaning to have any perceived monetary value; I am of the opinion that fiat does have a use albeit not to store value). Gold is a proxy for the Euro because of the ECB commitment to gold as a monetary reserve. Therefore, gold is being attacked. POG will be attacked unmercifully until it breaks (current pricing market). That is my opinion.
I'm John Q Public also. I think FOA would say that he is and has been here for guys like me and you.
Why isn't the gold market responding as norms and convention and history should suggest it should? I submit that there is something much larger brewing--much larger. Look around; do you see any markets behaving rationally?
John Q. Public always ends up as a bug on the windshield. Have and hold gold and stay behind the wheel.
Europe announcing they are thinking of adding to gold reserves? They are announcing what they are currently doing I bet. Think like a central banker. Think like a European. Think like an Asian. Think like a Russian. Force yourself. You can do it! This "announcement" is another move on the chessboard.
Guess what? Like you, I own both. But, I had to convince myself that mining stocks were a good idea. Got it? I had to convice myself about the stocks (and I picked some good ones) I am losing my shirt. What softens the blow for me is the fact that the stocks are in an IRA. Believe me, it still is a very hard blow. The ride is going to get rougher. Hang in there.
Forget about who Trail Guide is; doesn't matter. It's the ideas and thoughts that count. They are on the mark.IMHO
The day Lincoln gave his, "Gettysburg Address", he was not the main speaker on the dais. A man named Edward Everett was the main event. Everett was a prolific orator. I believe he was a US Congressman or Senator from Mass. Anyway, Lincoln sat patiently and quietly for over two hours while Everett kept the crowds spellbound. Everett was a popular figure. The masses were enchanted with him.
Lincoln's speech lasted what, maybe fifteen minutes at most? Lincoln as you might know was not a very popular President. Did it matter then and does it matter now who spoke those famous words? Whose speech was remembered; Lincoln's or Everett's? Excellent ideas, thoughts and words do matter for today and tomorrow. I believe there is a small lesson there.
Thanks for giving me an opportunity to address you. I've stayed here at the keyboard although I am late for work. I, like you am in anguish but hey, it's only money.
http://www.usagold.com Ive been reading a very interesting book: "Windswept House"
by the late Malachi Martin.Its very interesting reading and relates to the topics discussed here.For those of you who dont know,Malachi was an advisor to several Popes and a Jesuit and a Catholic Exoricist. Very interesting man.
At any rate, He gives some behind the scenes glimpes into Vatican Power Politics. The work is FICTION but before his death he said it was 95% true and he fictionalized to prevent being sued.
At any rate, he describes forces at work in Europe that are bent on establishing a New World Order and atttempting to use the Church towards those ends. They have even gone so far as to have Satanist rites within St Peters Basilica.
I am still reading the book and Im sure more will be revealed. However, what is clear to me is that powerful forces are at work in Europe seeking a Globalist government.
That being the case, there is a lot at stake with the Euro. In my opinion, they cannot afford to have it fail. Europe is tied by Geography but not by language or custom except for the Church.The Euro is an important binder in their plans. Look for the European powers to do everything they can to insure the Euros success.
One would assume if they are successful, the dollar will fall and gold will rise.
...for the crude language used inn last post to Canuck. I am mad at myself and taking it out on gold mining companies. My wife would say that is "displaced aggression". She is much smarter than I am.
I have not posted for some time but still try to find time to read those posters who I have found always provide educational value. This forum has been able to attract some very bright and knowledgeable people who obviously understand how the world financial system works. In the early days of the Forum one could read all the posts in a relatively short period of time, as the Forum has grown I find it difficult. However I would express thanks to all those who contribute their time, knowledge and thoughts for the benefit of persons such as myself.
I have found the recent discussion over the inflation/deflation issue between Traveler, Trail Guide, Oro and possibly several others to be particularly insightful. I would propose that once this series of exchange of ideas is complete, they be nominated for placement in the Hall of Fame,. I tend to think this series of posts is getting at the crux of major world, financial and economic events that are unfolding as we speak and will greatly impact all of our lives.
Traveler represents a very competent body of economic knowledge and analysis, and presents it in an excellent manner. TrailGuide is saying "Yes, but this time it's different."
If so, how different and why is up to us to research and grasp in order to decide, or synthesize, between them.
This is new stuff, that the world has not been through before. It's forgivable that we all don't get it immediately. There are pieces from past history, but not whole portraits we can draw from. We are all new here.
TrailGuide is our "insider", as Deep as a website for gold "nuts" is gonna get. (Anybody else got one?) He knows Mundell, and meets with people setting up the Euro's place in modern finance. He is connected to oil and banking, both in US and internationally. That doesn't mean he knows all the answers, or what's going to happen, when. The guys "above" him don't always get it right, and they don't always "win" their battles. But at least we get a seat at the table to overhear a bit of what they are hearing and saying.
He is like those "high White House sources" reporters cite in news reports. Later on, in the histories, you hear it was James Baker, or Robert Rubin, but for now it's: "You can have my name, or you can have my story, take your pick." I'll take the story today, while it's happening.
http://cbs.marketwatch.com/news/current/futures.htx?source=htx/http2_mwNEW YORK (CBS.MW) -- Oil futures prices climbed Thursday morning on concerns that Iraq may withhold oil exports if the United Nations doesn't approve its request to handle transaction in euros instead of U.S. dollars.
This is old new to the Forum........I know......Letting Iraq blaze the trail.
Edward Everett has a city named after him. Everett, Mass. Shares a border with Boston. Approximately 3 square miles. Low tax rate. Lots of industry paying more than their share. Lots of good neighborhoods. In the sixties it was 1/3 Italian, 1/3 Irish and 1/3 Jewish. The mix has changed some with new arrivals, but it remains largely a working class community. Why my interest? Was born there and lived their for about 24 yrs. Mom still lives there. Ciao.
Digital gold - or rather the miniscule costs of transactions done by computer allow us to break a couple of old "truths".
I. Banking must involve fractional reserves in order to be profitable. The idea has always been that demand accounts can't make a bank work because clearing services are not profitable - as people tend to use cash when charged as little as 1% for transactions. Thus the only way to cover transaction costs of the time (manual bookeeping, clearing by mail) was to lend a portion of the bank's demand and semi-demand accounts (i.e. checking and savings respectively) to generate sufficient profit so that transaction prices (not costs) can be reduced and people would use the banks. In free banking systems during the gold era, one could use a 50% reserve and meet 1% of the account in annual transaction costs with the 2-3% interest earned on that 50% of "invented/created" money. It even allowed the provision of noticeable interest on deposits of size or on small deposits that are never used (small savings accounts often accumulated interest for decades without a single withdrawal.
That was never quite the case, however, as the better banks could make a 1 time profit of about 6% from the issue of banknotes instead of coin. The banknotes, entitling the holder to a particular amount of gold were traded at a premium to the actual physical because they were much more difficult to ocunterfit, and very easy to confirm as they were all numbered and the bank could check whether the number was real, and whether the note is inside the bank or outside it.
Today, transaction costs are miniscule by comparison. Title to gold can trade at substantially less than 0,1% and possibly at 0,01%. A very small general fee can cover all the transactions, leaving only the vault, security and transport costs, which with today's computers can be minimized because of the availability of optimization algorithms and statistics which were unknown at the time of free gold banking, and until the recent drop in computation costs (read 25 years) were too expensive to apply on a small scale. Overall, the costs are substantially less than 1% per year (say 0.2%) including vault and transactions for all but the most active accounts.
Thus, clearing and depository services are now viable business models. Services that cost much less than anyone could have imagined in the past (including Mises, who gave the initial historical argument presented above).
This means that banking operations can be separated from depository operations. This allows, for the first time in history, a clear and economically motivated separation between savings and investment. Putting bank accounts squarely where they belong, on the side of investment rather than savings.
II. Another outmoded thought is that of the need for an institution capable of guaranteeing a stable monetary or nominal value of accounts, which was only possible with fractional reserves and the fictions of bank bookeeping. Since this was, in itself, a function of the need to cover transaction costs with interest bearing accounts, it is no longer an issue.
Realizing the business opportunity at the dawn of the age of cheap computing in 1967-1970, money market accounts were invented. These accounts use clearing services from banks and hold their funds in carefully constructed portfolios of short term debt that purport to maintain a stable value despite (because?) there being no "reserve" requirement, no insurance fund (such as FDIC). Money market accounts have proven that stable monetary values can be maintained at interest bearing accounts without the fictional legerdemain of fractional reserve banking. Management of these accounts has now become extremely cheap as computer power has fallen in costs and models of financial flows have been refined.
III. Banks, as depository institutions are the outmoded service businesses. Their main usefulness is not in their clearing function, but in their judgement of credit risks at the "micro" level and in management of cash flows for clients. These same functions can be served by a "micro" money market fund and advisory services. Indeed, some banks have actually turned specialists in clearing, just as some have become specialists in debt origination - making loans and reselling them on the markets in "packages" or "securitizations" that are appropriate to "macro" level money and bond funds.
Furthermore, some banks are moving to investments in general, offering asset management services, not just savings and CDs. If it were regulatorilly possible, they would quickly outsource their clearing and demand deposit functions altogether.
IV. Currency is an outmoded concept.
This is at odds with TrailGuide's view that "digital currencies" will survive. The main raison d'etre of currencies is a dual purpose that is composed of (a)stabilization of the banking function, i.e. of fractional reserve banking systems; (b) allowing government to issue infinite debt and have the banking system monetize it. This has been the deal cut between banking and government:
1. Government provides banks with the monopoly on the issue of money, which allows banks to charge interest on the money supply.
2. Government provides banks with an enforcement mechanism for standard reserve levels and credit risk so that all banks can agree on expansionary and contractionary policy and all be forced to follow the agreement. (Of course, all banks found an expansionary policy to be much more profitable.)
3. Government provides banks with a risk free financial asset which is non-defaultable and provides a return without the excercise of judgement on the part of the banker.
4. Banks provide government with a permanent and captive market for its debts.
5. Banks provide marketing services for government debt.
6. Banks allow government infinite inflation of its debt while delaying the secondary monetary price effects - those that occur AFTER the initial dose of government deficit spending reaches the markets, and currency is under suspicion. This is done by leveraging government securities that are used instead of bank reserves. Such that each government security can have a private market debt issued against it at a higher interest rate. Thus public demand for money is greater than government's and government inflation is matched by a slower secondary wave of inflation by the private market, followed by a long term deflationary demand that allows government to pay its interest by the issue of more debt - because of the private market debt induced demand for the credit money.
7. Government gets a cut of seigniorage, and in the case of the US, uses the seigniorage and political leverage over trade partners to provide itself with the ability to run trade deficits "without tears" so that what it consumes is covered by discounted imports paid for by seigniorage over creation of the reserve currency and over beneficial interest spreads.
So, what have we here? What is it that is different?
(1) Banks do not need government anymore in order to provide a monopoly over the issue of money because the markets have made that impossible. The banks can no longer issue non-interest bearing money and receive interest on the loans that created the money. Today, they must offer a competitive interest rate on the money they issued, as well as on the loans.
(2) The costs of regulatory compliance for the traditional banking industry puts it at a disadvatage to its competitors in the credit markets - clearing specialists, investment specialists, debt origination specialists, debt securitizers, money market funds, bond and stock funds, etc.. All of which were made effective and cost efficient by the computer.
(3) The government securities money market and bond funds have taken the margin out of this business of playing the spread between savings and CD interest rates and government rates. Today they are all on a level field and government securities benchmark rates are close to bank CD and savings rates - though still lower, it is only by the margin that covers the management costs.
(4) The banks no longer control the "captives" who have fled to bond and money market funds, etc.. And therefore have little to offer government in this regard.
(5) Bond specialists outside the banks do so just as effectively, so that government has little use for the banks themselves.
(6) Political moods have swung away from government deficit spending. Fiscal conservatism has regained popularity as tax payers are much less willing to take upon themselves the burden of servicing debt. Therefore, the availability of the debt avenue is not as valuable to government as it once was. I.e. before interest payments became the main component of government expenditure.
(7) The US is just about ready to lose its seigniorage priveleges now that the costs of maintaining the US dollar reserve system are substantially beyond any service the US could possibly provide its trade partners.
V. Collecting interest during settlement. In the days of government ordained snail's pace settlement, money would sit unusable to its clients for 5-15 days. Today it is cleared within hours, if not instantly. The opportunity to collect interest over the length of transactions is gone.
Summary
The point has been reached where fractional reserve banking is not necessary. That, therefore, fiat credit currency is not needed by the debt markets. That government is no longer capable of retaining substantial benefit from inflating its currency.
Finally, there is no economic impediment to the use of fully funded specie accounts that trade title to the gold electronically at non-bank depositories that do nothing but provide a clearing and storage service. The credit and debit cards have a 1.5%-2.5% fee for credit allocation, funds confirmation, and multilevel clearing with temporary credit allocation involved at each stage of the clearing process. Small operations need to pay up to 5% and some nearly 10% for the service. E-gold has proven that the cost can be brought down to 0.5% even before any substantial economies of scale are obtained.
Bottom line, oilman, is that currencies and traditional banking are outmoded by the computer age, not gold.
http://www.cyberclass.net/turmel/dinar.htm"The Sharia also prohibits the commercialisation or multiplication of a debt without the means to guarantee it, as in fractional reserve banking. Thus, the banking business as such cannot exist in Islam; the only function it could have would be to restrict itself to being an institution for transferring money, but without the capacity to expand the amount of credit, writes Vadillo"
A Cliche Ridden Post For Peter Asher and JA / Fever appears to have broken on Wall Street
Peter - Danged if I know. The problem for you and me and everyone else in here, of course, is that we tend to think we can improve performance if we sit here and watch every moment of the action. We start missing the forest for the trees. We forget that a watched pot never boils. (Are you reading this, Cavan Man). But if we have confidence in our research, and I do, then patience is what's required.
JA - you are a sight for sore eyes, buddy!
*****
Wall Street is ready to roll on the upside for awhile, but you've got to own the right stocks. I think goldminers are going to do fine. Did you notice the strength in that sector today? No more tax selling for another 6 weeks or so.
Re your >>>> Title to gold can trade at substantially less than 0,1% and possibly at 0,01%. A very small general fee can cover all the transactions, leaving only the vault, security and transport costs, which with today's computers can be minimized because of the availability of optimization algorithms and statistics which were unknown at the time of free gold.<<<<
Therefore my theme of msg #40,000 is much more limited, affecting only smaller holders of physical in hand. I gather from your above, that Gold CAN be used as a currency within the banking system, without being �taxed' by a bid/asked spread.
An energy expert just said on CNBC that, out of the trillion dollars that trade on Forex every day, only some $90 million are attributable to Iraqi oil. Maybe that's your answer.
DXH march dollar index high 118.72 open and high, low and close 118.00
This sucker is gonna fall out of bed tomorrow.
It breaks 117.20 which is the extended resistance/ now support of the last 5 days 10-18 thru 10-24; thus the breakout up (yesterdays run and when gold got hit).
The mines that have a well functioning direct marketing plan, like Harmony, which has its branded Tolla (sp?) bars, can expect to survive well enough during the "twilight period" where the official markets and the "street" markets are well out of sync.
There is also the issue of having "windfall taxes" on the mines. Hopefully, the SA government will realize that it has more to gain from allowing capital flows back into its mining sector at full blast rather than limit the profitability of the mines, and thus the incentive to invest in them. But I would not be holding my breath.
US mines are a more difficult issue. Though there would definitely be a tendency to take a "widfall tax" on them in leftish circles, I am not sure there would be such popular support for this. So my Jury is out, so to speak.
So there should be some period of profitability between the closure of the paper gold markets and the windfall taxes, but it depends on the marketing ability of the miners.
"...Ferhani said the euro's recent weakness was unlikely to affect European central bank policy on gold reserves. Currency depreciation would neither be an incentive for banks to accelerate sales or to rethink their plans to reduce gold reserves, he said...."
Please read that carefully!In their (ECB) Gold policy,it doesen't matter what the euro currency exchange rate is (opposite to the dollarsystem).No manipulation of the goldprice to influence the euro's strenght/weakness.To proof that:
``..The (WA) agreement was not designed to affect the price of gold. It was designed to make things more transparent,...''
It's Official CNBC just announced IRAQ dumping U.S dollar!!!!!!!!!!!!!!!!!
What really amazed me was the absolute Arrogance and pompus pride openly displayed. When they mentioned that it would not "sink" the $$$, because IRAQ switching to the EURO :-) only amounts to $91,000,000 million out of 1,000,000,000,000{trillion}dollars, in OIL payments!!!
What it really TELLS ME is that the u.s $ is backed by OIL payments and nothing else. F.O.A brought that up along time ago some posters? had trouble with the CONCEPT!
Now the real BOMB if OIL can be purchased for cheaper in EURO,S than a stupid high exchange rate in u.s funds. LOOK OUT! I'll be converting Canadian "Loonies" into EURO's to pay for ALL my Energy Costs TODAY!
So goodbye u.s dollar as a World reserve currency and hello less expensive EURO,S. Just wait till this really catches on, with other OIL consuming countries,which now already includes JORDAN!
P.S IRAQ said Nov 1st is the deadline then they shut the VALVE!!!!!!!
---------------Cavan Man (10/25/00; 20:41:58MT - usagold.com msg#: 39953)Trail Guide has left me behind along the dusty trail; left me in fact for the buzzards! ----------
Cavan Man, you know full well that neither I, you or anyone else can possibly talk with everyone here. I have a certain amount of time allocated for this. Some days more, some days less. There are other things to be taken care of and without limits, one could stay here all day. (smile) As this forum
has grown and events progressed, there is even less one on one dialog between all of us. In the end, we will all be reduced to mostly reading and watching facts as they unfold.
to continue further:
---Canuck (10/25/00; 20:53:44MT - usagold.com msg#: 39954)
@ Trail Guide From your 'fence post' story,--------
Canuck, if I could deliver this message in 50 dialects, write 20 books on the subject and use every possible literary devise, it still may not spread the word in it's fullest understanding. There would always be people that must conduct a disquisition after reading and even then still never grasp it.
This is not said to disparage you, it's a recognition of the vast diversity of how our minds work. To reach a diverse group one must present their thoughts in diverse ways. You must already know this? In addition, some people and cultures grasp a riddle faster than plain speech!
The fence post story had many meanings, none of which were conveying a secret message to someone and certainly not inside info. The fence post analogy came to me naturally. In the past I have sat around campfires, under the stars, late into the night where the whole conversation involves the passing of riddles.
The use of "fence post" as in; "hard headed as an old post" or "dumb as a post", etc. is an old American wild west expression. Maybe even Euro/Asian, I don't know! It's often used today. During yesterday's discussions, I got the distinct impression in several of the exchanges that one of
them was acting like said post. The usage was done with that double meaning and also portrayed how wood is used to make paper and paper gold is traded for physical. Somewhere below the surface (post below ground,,, knoll) that which becomes paper (gold) was rotten to the core and even the (paper players, BBs, etc.) knot heads (as in knot in a tree or post) knew it. Stranger's only part in this was that I tied it to his "new fence" making he and everyone here talked about the other day.
Further:
So, you need to know my status in order for any of this to gel? Well I can tell you that a lot of high powered people through out the entire currency and gold world have had it all figured out for a long time. And they didn't mind telling you about how to play it with leverage, I might add! Yep, serious credentials, had they,,,, of a kind that one could just follow their thoughts without even a doubt. Know what it got them (followers)? Smack dab in the middle of a currency war and a very diminished portfolio to show for it.
Think of me as the garbage collector that you talk to every wed. over the back fence. That way I am sure you will not take what I say as an absolute. Like SteveH or Sharefin put it; they kept thinking (hopping) I was just a good story teller. You see, it's not knowing me or my level of
involvement in this that will make you any difference or do you any good. It's the process of turing around your thoughts to see all sides in this game,,,,,,, and that will place one in the best position to make decisions,,,,,in the end.
ALL: I willnot in a nutshell just tell everyone; Hi, I'm Mr. Main Man and I know the King of England, Frank Sinatra, Ton Cruise and Jane Seymor (no I don't really know them!),,,,,, and I am buying gold bullion so don't you think you should too? Not much of a foundation building in that is there? That's right, it's just a bunch of unneeded buildup that hollows out ones credibility far more than building it.
So, on this forum, in this format we bounce from point to point along the way and try to explain our reasoning. This whole game has a thousand parts and everyone wants to see their least understood bit discussed. Now, there are a lot of talkers on this and other stages and everyone has their
position to explain. Good! But in the end, all this discussion will get more and more distilled down into just one,,,,,, the right one. The one Another said that time would eventually prove. Knowing my private life (or anyone else's) will add nothing to further this learning experience..
I (and much more so Another) said one should consider buying just gold bullion and only gold bullion for what is coming in our future. Not any of the white metals, not paper gold, not paper gold substitutes in the form of gold mines, not even leveraged gold contracts from dealers. But every time we (or anyone else) said gold would soar, most listeners just heard that one "bit", then used their own understanding from the past, to further invest for the future.
Another always said to buy bullion in proportion to your understanding of the changing market! And that learning became relative to unfolding events. For anyone not listening that was a "forward looking statement". We were supposed to watch and perceive and learn how our new gold market was evolving differently from how traditional hard money thinkers thought it should. People heard "thousands per ounce" and their brain stopped working right there. They immediately raced to buy the same outdated products used to track gold advances in the past. They didn't want to hear the rest of the story, preferring to invest first and ignoring the points we further made. Didn't want to hear about what could happen between "now" and that "thousands per ounce" later! Knowing my background now, is not going to change those mistakes.
Now many "Western Gold Bugs" are deep in the mud with no easy way to reconcile to the changes we said were coming? Who knows? Especially as things keep progressing right along these lines. In their position it's hard to reverse yourself. If one sells out all his paper for bullion now, then some spike guns the stocks and such you just sold,,,,,whether a meltdown later happens or not,,,,, it's a
killer for you mentally!
I don't know exactly where it will go from here, never said I did. This could be the lowest point, futures stay together and track an easy advance over a month or a year? Or, as we have been driving home for a long time,,,,,, the political situation may develop into a full blown currency war. Then we may find official institutions literally dumping margin money into paper gold so as to sell gold paper worldwide. What all the "fence posts" out there don't realize is that a few billion in short margin can have the effect on derivatives of hundreds of billions,,,,,, and they just need cash to do it,,,,, no gold at all. Are they at risk of being called? HA! HA! You be the judge? If you got caught buying 2,000 contracts for example at $250 an ounce strike price (and even had the money to take it) would you stand strong for delivery if the price got hammered to $100 in two weeks or so? I don't think so! You would be like all the rest of the trading crown,,,,,, dumping your position and reestablishing,,,, over and over!
Further, at that point, everybody and their brother would know that a cash only fixed settlement was coming, because enough gold wouldn't exist to make everyone whole! That very thought would drive a premium into the bullion price that every paper trader in the world would swear was a conspiracy by the coin dealers (and bullion only dealers). I can hear it now on CNBC:
" Once again on Cemex, Landon and other major gold centers bullion trading (they won't say paper trading) was tightly controlled to limit the effects of what is believed to be manipulation of gold in Europe and by coin dealers worldwide. In an effort to help the market makers cope with the constriction of gold flows, trading is allowed for 30 minutes a week. During that time only some 300 contracts could be settled each day for cash at a fixed spot price . As a result of this limited trading, the premium on physical gold has been driven up well above it's real price designated on official markets. In some areas it's over $2,000 an ounce. Virtually shutting off all official center
gold trading,,,,,, on to other news!!!!!!
The above sounds like a joke doesn't it?
Lastly,
I have said this before and will again for the last time. I want all paper gold to soar. Such an outcome would be the very best thing that could happen. None of us hard money or gold industry advocates would lose with this. However, as a private individual I am not planing for that outcome. I am not, because of all the reasoning I have laid out in the past and will continue to do in the future.
...it wasn't tape painting. I was buying stocks all day long, and I am sure a lot of others were too. I don't know how strong this rally will be, obviously, and I doubt the final bear market bottom is in place yet. But, for the time being, the bloodletting has exhausted itself. Look for a generally higher Dow for the next three months or so.
Thankyou for posting here as i learn so much from you.
Thankyou from a lowly person.
P.s I hope your "coldbug" is soon finished with you and moves on real soon!
God bless you!
G.T
http://business-times.asia1.com.sg/5/news/nfrnt05.htmlIn its latest publication the WGC points out that unlike nations such as France, Germany, Italy, U.S. and Switzerland that hold over 40% of reserves in gold, most Asian countries have less than 5 per cent of their reserves in gold.
"So it might be prudent for all advanced countries to hold at the very least 15 per cent of their reserves in gold," they said.
Mr Aristotle, thanks for responding with, "...supply tightness when dollars are sought on the forex for those with obligations to repay outstanding dollar indebtedness from prior years." I appreciate this all the more as you took the trouble to repeat material already discussed.
I wonder why the rate of the exchange deficit between the U.S. dollar and most every other currency has just recently accelerated? U.S. dollars have been needed for years to pay debt and buy oil but the current devaluation of the world's currencies (especially the Euro) vs the greenback seems to be progressing more quickly. The disparity is widening at what appears to be an unsustainable rate. Dollars are being bought and so are costing more but dollars have been needed for years. Why the sudden and violent increase in demand? Fewer dollars to be had? Is something happening here that can be and should be understood or is this what a currency trader might describe as just one of many dollar strengthenings to be offset by a coming downtrend? I wonder if there's more to this and where it will lead and I wonder because I don't think the world economy can continue to function normally (whatever normally is) with this. And what happens if the currency disparity grows more?
My understanding is limited but I sense that something has to "break" if this continues. Trade between the U.S. and the rest of the world will become simply our buying their goods and we won't have buyers for any exports, even corn at $1.80/bushel. I'm not sure there are answers for these questions but I can't help wondering.
Can you envision our country as functioning prosperously for years with an ever increasing trade deficit? Will the dollar become the world currency? I know there are already days' worth of forum reading on this so I'll search there for answers. Why is it that three satisfactory questions reasonably resolved always lead to twenty- six new questions?
Thanks again Rich
Congrats on the usagold. com msg# 40000 post! I'm not sure but I think I heard some rumors of a gold brick doorstopper as the prize but I don't think you get 40,000 of them. Maybe?
Including merger and other one-time charges, JDS reported a loss of $1 billion,or $1.07 per share.
Source CNNfn
I don't subscribe to the new paradigm of simply showing revenue growth. Gold companies can buy and sell gold and show ever increasing revenues. I go for profit.Show me the money!
This is not exactly in the usual vein, but is a continuation of Tedw's remarks on Europe and the New World Order.
If any of you want to read the most profound and illuminating expos� of what has happened to the CAtholic Church in this century - a book highly praised by Malachi Martin himself - you must read "The Undermining of the Catholic Church" by Mary Ball Mart'nez.
Send her a check for $20.00 US to Rio Po No. 37, Apt. 410, Mexico City, ZIP 06500, Mexico City, Mexico.
The book is worth every penny, absolutely enthralling.
After reading an arrogant editorial page article in the Financial Times on Pope John Paul II, which I sent her, she wrote me a letter, from which I excerpt. Some passages cannot be presented on this page, though truthful:
"The Financial Times piece opens dramatic possibilities - let me mention the only one that makes sense to me:
"The present(.......)"pope" is soon to be LIQUIDATED. The Conspiracy is impatient to get on with the next "pope", probably Martini of Milan. Wojtyla has served his purpose. By blackening him now, his successor will come as an angel of light, of democracy and ecumenism. JP II has outlived his usefulness, so one of these mornings he will fail to wake up."
We keep hearing for calls for JP II's resignation. Fits in with the above. "Resign or die in your sleep"?
Let us not forget that the demise of JP I was totally questionable...rather like Vince Foster's? These things do happen....
Re: Tony BennettSeveral years ago I played a charity concert for a small group of invited guests among whom was Tony Bennett. Afterward, he gave me some drawings he made of me while playing, signed with his artist's moniker "Bennedetto". I kick myself because for the life of me I can't find them anywhere, although I'm sure that someday they will turn up. As you may know, he is quite a fine artist. We had a lenghty chat that evening and he seemed to be a genuinely nice person. I'll bet he even owns some gold...
www.kitco.coma commentator on CNBC talked of the markets' tapes being painted today, which is to say they were pushed hard to bring them to a positive close or a close on a high for the day. Then I read this respost:
Date: Thu Oct 26 2000 19:07
The Infidel (Well, here is the on story how the gate was defended.) ID#368286:
Copyright � 2000 The Infidel/Kitco Inc. All rights reserved
MORNING REPORT
Late Buying Saves Nasdaq
By Geoffrey Transom, 27 Oct 2000
Last night saw the 'pea and thimble' trick played yet again; the Nasdaq Composite was muscled up in the afternoon to prevent a failure of the retest of the year low on both the Nasdaq Composite and the Nasdaq100. To give you a flavour of how aggressive the buying was, the Nasdaq100 futures hit is contract low - at 2978 - bang on 1:15 pm Chicago time; that is, a fall of 180 points from the previous 'posted' close ( the number at the end of the previous New York day session ) .
In the next 18 minutes, the futures contract rose over 120 points. An hour and a half later, it had risen 240 points. That doesn't happen - not even on the Mother of All Short Squeezes.
I'm not complaining - Blind Freddie could have forecast that this was going to happen, and could even identify the Nasdaq100 stocks that would be used to drive the physical into synch with the futures. It was easy for intra-day traders to be on the right side of the trade; everybody I know was short prior to 1:20 pm, and long thereafter.
The dramatic move upwards was all about the Penguin community having something to squawk about at the end of the session. And so it happened - every TV Ramp show was replete with commentary about how last night the Nasdaq "re-tested its lows, and passed". Remember they tried that load of hovno ( as our Czech friends would say ) about a week ago? That was supposed to have been the bottom.
Let me tell you - that is absolute baloney. You are not witnessing a successful retest of the recent low. What last night was about was a heap of money being spent to prevent the necessity for dramatic write-downs on house trading accounts and junk bond portfolios. The only people who stand to make money from the 'save' are people who were prepared to join the same side of futures market, and people who daytraded stocks and options in the Nasdaq big-caps. People who buy-and-hold stock based on this rally will get hurt, because the stocks are not going to stay where they finished last night.
As I mentioned above, the Nasdaq100 futures hit a contract low at 2,978, and the physical market fell as low as 2,956 - lower than the previous low set on October 18th ( the last day that was touted as 'the bottom' - recall that I didn't believe that event either ) . Lower lows, and lower highs, is a Dow-Theory recipe for further declines, regardless of how much the major houses are prepared to 'paint the tape'. The only saving grace was that the low last night in the physical market Nasdaq100 was about 60 points higher than the May 25th low ( at 2,897 ) .
The Nasdaq Composite printed a higher low, however that is to be expected since, within technology stocks, there is already a rotation away from the highly-priced Nasdaq100 toward other Nasdaq components. This rotation 'muddies the waters' as far as Dow Theory-based technical analysis of the Composite is concerned. However the '100' is going lower from here, which in turn means that the Comp is going lower.
Having said that, the next day or so ought to see some strength; the touts have something to squawk up, and will mercilessly and shamelessly try to talk clients into buying stuff that is dramatically overpriced.
The catalyst they will use is JDS Uniphase.
JDS Uniphase reported earnings which met its 'whisper number' and beat the consensus estimate by 2c. Revenue growth - at 23% sequential - was at the top of the range of expectations, and the conference call was quite positive. My take on it, is that like Nortel and Lucent before it, JDSU will experience slowing demand. It said as much during the conference call, stating that it expects revenue growth in the "high teens" for the next year. JDSU also raised its EPS forecasts for the next quarter to 19-20c a share ( from 17c ) and its full-year expectation for 2001 to 80c from 70c a share.
Well, that will not be good enough if the US economy is slowing. First, 'high teens' is a slowing of revenue growth. Second, 80c a share for next year still puts it at a PE of 100 ( higher actually - JDSU has risen $10 in the aftermarket ) .
A stock with a PE of 100 to forward earnings has to grow revenue at much more than 'high teens' in order to be considered fair value!
Last night saw the release of the Employment Cost Index, which showed that employment costs continue to grow in line with productivity, and thus the additional employment being generated is in no way inflationary. I have been saying that for two years; employment and wages growth don't cause inflation; printing money causes inflation. As Friedman said, "Inflation is always, and everywhere, a monetary phenomenon".
The number - an increase of 0.9% - was about in line with expectations, and didn't move the bond or equities market much.
And now, to the numbers.
The Dow Jones Industrial Average was moderately stronger after the open, but spent almost the entire session trading around the UNCH line, until buying went berserk in Intel late in the day - Intel's chart just screams "painting the Nasdaq tape". At its high, the Dow had gained 128 points, thanks largely to its technology compoentns - and then, only the tech components listed on the Nasdaq. However despite the fact that the Dow's high was set at 3:42 pm Eastern, it was unable to hold that level and gave back more than half of its maximum gain, finishing with a gain of 53.64 points ( 0.52% ) to close at 10380.12 points.
The S&P 500 only saw a gain at two points in the day; the first half hour of the session, and from 3:45 to 3:56 pm Eastern. Between those periods, it had been as low as 1,337.77 - 27 points lower than yesterday's close. However thanks to Intel, Microsoft and the other technology components listed on the Nasdaq, the index managed to claw back almost all of its losses b ythe close, winding up printing a loss of just 0.47 points ( 0.03% ) to close at 1364.43 points.
The NYSE Composite dropped 3.02 points ( 0.47% ) to close at 633.48 points.
NYSE Volume was strong at 1.3 billion shares, and breadth statistics on the NYSE were positive, with advancing issues in excess of decliners by a margin of 1455 gainers to 1394 decliners. Volume was moderately concentrated in decliners with 600 million shares in advancers compared with 640 million shares in stocks which were down for the day.
After being as much as 4% lower during the session, wanton buying ( motivated by things other than sound investment principles ) drove the Nasdaq back up through the UNCH line. The Nasdaq Composite printed its low - 148 points lower than its previous close - at 2:15 pm Eastern, however by 3:20 pm it was back to unchanged. The 'push' buying - in the big caps - continued to drive the Composite right through to the close, with the index finishing with a gain of 42.61 points ( 1.32% ) to close at 3,272.18 points.
Nasdaq Volume was very strong at 2.29 billion shares, and breadth statistics on the Nasdaq were only just negative, with advancing issues falling short of the number of declining issues by a margin of 1919 gainers to 1987 decliners. Volume was concentrated in the advancers with 1.19 billion shares in advancers compared with 1.03 billion shares in stocks which were down for the day.
The Wilshire Total Market Index rose last night, gaining 5.15 points ( 0.04% ) to close at 12,738.87 points.
www.kitco.comDate: Thu Oct 26 2000 19:01
reinvestit (miner stocks versus physical) ID#409209:
Copyright � 2000 reinvestit/Kitco Inc. All rights reserved
Anyone notice the so called "expert analysts"
at usa gold keep harping on the fact physical
gold is the only way to go ? Not silver coin or bars
and certainly not gold miners stock or ANY gold paper
options, futures ect. ect.
Don't they know that in 73 74 stock crashes that the
gold mining sector was one of the best places to be positioned ?
Don't the better miners have large gold reserves?
Does this not matter?
In a market meltdown are the miners just going to fall
by the wayside while the POG skyrockets.
I don't think so.
Appreciate any comments on mining stocks versus physical.
reinvestit
http://biz.yahoo.com/rf/001026/n26550694.htmlsnippet -- With two-year notes trading more than a half percentage point below the funds rate, many analysts have noted that the bond market had begun to expect the Fed's next move would be a rate cut and that it could come soon.
I enjoy humor. Irony is one of my favorite vehicles to do so. All this talk of "painting the tape" .... Painting is simply not acceptable. CHANGING THE TAPE, to put the best face on it, is the prescribed method to keep the marks pouring their retirement dollars into the game. I couldn't resist doing an "Askjeeves" search to find a history of the DJIA to post here for the lurkers who may not know the story .
HURRY, HURRY, HURRY, ...STEP RIGHT UP,.... SEE THE GREAT INVESTMENT MARKETPLACE.
A riddle from old Bonedaddy.
(If you have the curiosity for it.)
What is the dow worth based on the valuations of the stocks removed from the DOW lately because they weren't performing properly. (Hint: Home Depot will not raise the average.) Don't go too far back in history or it will be depressing, ever hear of Studebaker Motor Company?
Gold is Gold.
Unless I am planning to sell some soon, which incedentially, I'm not. I don't care how many paper U$ Dollars I can sell it for. I would however, like to continue to accumulate it in small amounts, as my budget permits. The trick, for me, is to avoid leverage of any kind. Just buy as I would beenie babies, baseball cards, guns, or whatever I like to collect. (I really appreciate the "no minimum purchase" offerings.)
If you're interested, please see the results of the askjeeves.com search below. Do a few internet searches of your own, but please don't worry about anybody "painting the tape".
Subject: Stocks - The Dow Jones Industrial Average
Last-Revised: 11 Apr 2000
Contributed-By: Norbert Schlenker, lott@invest-faq.com
The Dow Jones averages are computed by summing the prices of the stocks in the average and then
dividing by a constant called the "divisor". The divisor for the Dow Jones Industrial Average (DJIA) is adjusted periodically to reflect splits in the stocks making up the average. The divisor was originally 30 but has been reduced over the years to a value far less than one. The current value of the divisor is about 0.20; the precise value is published in the Wall Street Journal and Barron's (also see the links at the bottom of this article).
According to Dow Jones, the industrial average started out with 12 stocks in 1896. Those original stocks, for all of you trivia buffs out there, were American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling and Cattle Feeding, General Electric (the only survivor), Laclede Gas, National Lead, North American, Tennesee Coal and Iron, U.S. Leather preferred, and U.S. Rubber.
The number of stocks was increased to 20 in 1916. The 30-stock average made its debut in 1928, and the number has remained constant ever since.
The most recent change was made effective 1 November 1999 when Home Depot, Intel, Microsoft,and SBC Communications were added, replacing Union Carbide, Goodyear Tire & Rubber, Sears, and Chevron. Also, on 1 December 1999, Honeywell merged with Allied-Signal and the merged company
kept the Honeywell name. In 1998, Travelers Group merged with CitiBank, and the new entity, CitiGroup, replaced the Travelers Group.
The most significant change before that was made on 17 March 1997 when Hewlett-Packard, Johnson & Johnson, Travelers Group, and Wal-Mart joined the average, replacing Bethlehem Steel, Texaco, Westinghouse Electric and Woolworth.
here's an alternative point of view from the same site... especially the last two sentences!
sharefin (Uptick) ID#284255:
Copyright � 2000 sharefin/Kitco Inc. All rights reserved
Gold as an investment has been going up all around the world ( EX US ) for over a year now.
http://www.sharelynx.net/Markets/Charts/GoldCurrency.htm
Why do you keep intoning that physical gold is a bad investment.
I bought some kilos last year as insurance and also as a long term investment ( five year hold )
And it has been going up strongly ever since.
Many countries all around the world are showing the same.
In these countries gold has fared a lot better than gold stocks.
You keep repeating that gold is a bad investment.
Tell that to those who sold their Euros for gold?????
www.gold-eagle.comrepost (and this isn't even about gold or its affect on the dollar):
Dr. Kurt Reichebacher opines on the dollar
(richard640) Oct 26, 18:29
CANNES, France - "Bear markets do not last unless coinciding with and independently induced by depression in general business."
- Joseph Schumpeter, Business Cycles
Earlier this month we were greeted with several 'shocks' that kicked off a wave of uncertainty in the markets: unexpectedly, the major central banks intervened to support the euro; The U.S. government rocked the oil market by announcing the release of some of its strategic oil reserves; And a profit warning from chipmaker Intel prompted a heavy global sell-off in technology stocks.
News since then has simply begun to reveal the truth underlying the real US economy.
If the central banks are fortunate, they may have put a floor under the euro. While America's participation is a great surprise, U.S. Treasury Secretary Lawrence Summer was quick to soften its bearing on the markets by repeating that the long-standing U.S. policy on the dollar had not changed: 'As I have said many times, a strong dollar is in the interest of the United States.'
In fact, U.S. policymakers are sternly opposed to any lasting reversal in the fortunes of the dollar. What may have caused them to join the intervention could have been the threat of the European Central Bank to raise its interest rates still further, risking weakening economic growth in the region.
Five Minutes To Twelve
Nonetheless, we continue to wait and to look for the dollar's impending collapse, like in 1985. Principally, what has been happening these days between the dollar and the euro is amazingly similar to what occurred in the first half of the 1980s. At the time, the world was bombarded with stories that the U.S. economy was enjoying miraculous, structural improvements owing to 'supply-side Reaganomics.' In line with it went the contemptuous story about Europe's economy, dubbed 'Euro-sclerosis.' Everybody agreed that the dollar's strength was well-grounded in the U.S. economy's lasting superior growth performance.
We have vehemently assailed these views, pointing out that in reality, the dollar derived its strength from unbridled government and consumer borrowing, while investment spending was going downhill. We warned that the first weakening of U.S. economic growth would initiate the dollar's collapse. In fact, stopping the dollar's surge in 1985 by joint intervention actually cost the central banks less than $10 billion of their reserves. But to prevent the dollar's freefall in 1987, they had to buy almost $100 billion in a single year and several hundred billions in the following years.
The Critical Difference Today
What is the difference between then and now concerning the U.S. economy and the dollar?
Today's talk of 'new paradigm' miracles is just as empty as the talk in the 1980s of supply-side miracles from Reaganomics. Yet there is one very important difference: The credit excesses of the late 1990s have been many times worse than those in the 1980s, and so are, accordingly, the imbalances in the economy and the financial system. Just think of the zero personal savings rate and the stupendous trade deficit. To speak of the U.S. economy's excellent fundamentals in the face of these disastrous facts requires a lot of stupidity.
The dollar's decline and eventual collapse will start once the economic news begins to disappoint. As we will continue to expose, there is already far more weakness in the U.S. economy than the headlines suggest. But right now, nobody cares to take notice.
I'm only 42 but have been a fan of TB since I was 20. Also, I've been a classical music lover since the tender age of 18. I am looking at a picture of Tony Bennett on top of my rolltop desk taken 9-9-87. We are both featured prominently in the picture. At this concert he displayed his original artwork and, included a slide show. I might add that he was very gracious; spent a lot of time speaking with our group, taking pictures and signing autographs etc. I get a good chuckle when people talk about him being a favorite of the MTVers.
I might add that he has grown older more gracefully than I. Thanks for the comment.
Any discussion of the conversion of funds ($US 1 Bn) or so from USD to Euro? Dollars will be sold for Euro under this scenario. I'll bet this doesn't happen.
http://www.e-gold.com ORO's msg: #40010 "Oilman - Gold in the computer age" reminded me
of one section of an as yet unposted installment of the "Free
Trade Series," the first parts of which I posted in the following
USAGOLD messages:
Rather than wait for muse and free time to finish said series,
(which may never happen) ORO's post seemed an enticing excuse to
post it now. So, here it is!
Live the following fantasy with me for a few minutes - - -
California has successfully and bloodlessly seceeded from the
united States, declaring it's own fiat currency. California
calls it's currency the "collar" (for *C*alifornia d*ollar*) and
pegs it originally one collar = one dollar. So far so good.
The new California government, naive, infiltrated by
libertarians, and making a big mistake from the viewpoint of
potential future bankers and successor government cliques,
declares free banking. Most Californians, being highly
sophisticated and not liking the yearly 2% to 5% (sometimes more)
tax (in the form of "inflation") they had been paying for
_anything_ they held denominated in Federal Reserve monetary
tokens, quickly opt for convertible gold backing for the portion
of their assets they decide to save for later use.
The "free-banking institutions" offering "collar" certificates
with this gold-backed option flourish. Of course, Californians'
addiction to the convenience of "plastic" payment, causes the
natural extension of the popular gold-backed option to electronic
accounting "book-entry-only" (megabyte) collars as well. On-line
E-GOLD.COM (link in header) becomes one of the favorite banking
institutions because they provide verifiable on-line
certification for their E-collar-to-gold ratio.
Since there can be no practicle "legal tender law" coercion under
free banking (too many different banks and certificate types
among other things), reverse Gresham's Law quickly drives out the
non-gold-backed "collars." In the "school of hard knocks," most
Californians quickly discover these non-gold-backed collars
"aren't worth the symbols printed on them" because no one wants
to accept them in trade at face value!
Good collars drive out the bad. The remaining "collar"
certificates, issued by banks offering the gold-backed option,
cause the collar to become, de-facto, a gold-standard instrument.
The traditional rate evolves to be 500 collars per gold oz. thus
one collar is worth .002 oz. of gold. As the collar becomes the
standard of "hard money" (a moniker previously applied very
loosely to the U.S. dollar as a hold-over from before 1913 when
it too was married to gold by free-banking competition) some
problems begin to develop as more and more world-wide trade is
conducted in collars. But that's a post for another time and
hopefully another poster.
Because of the convenience to the user (and efficiency to banking
organizations) of electronic banking, more than 97% of the
"circulating" collars quickly become megabyte rather than
physical in nature, leaving only 3% paper collars. Unlike
physical paper, the costs to issuers of megabyte collars is
negligible. Less efficient and more expensive paper collars
(they must be replaced when they wear out, etc.) become a loss-
leader for the various organizations engaged in free-banking and
it's projected by insiders that these paper collars will
eventually be phased out almost completely. Because of this
fact, banking over-head is greatly reduced and banking
organizations find ingenious ways to pay for the small gold
storage and shipment fees incurred in their normal operations.
For example, pioneered by legendary organizations such as
Tanaka's Bank And Grill on the corner of La Cienega and Smith,
businesses, unhampered by regulations like those in the U.S,
begin to offer investment services. Their more adventurous
customers not only maintain their buying power, but if they want
to take a chance on the "bank's" lending quants' gambling
expertise, they can put their gold-backed savings to work in
trying to make "interest." Gambling on people paying their
mortgages (loaning money to folks for houses) becomes the
specialty of many former bank mortgage "quants."
Because gold-backed collars are stable, such interest really is
an increase in buying power, not just a keeping-up-with-inflation
scam -- which those poor saps in the U.S. still get taxed on
anyway. Californians are not forced to let banking institutions
gamble with their savings just to stay even.
Some hard-money "purists" argue this investment gambling practice
is inflationary. Proponents claim bad effects are kept in check
because people don't think of this money as savings anymore --
it's expressly an investment gamble, they know they can't spend
it -- and that it _could_ be lost. It's like a time deposit that
really means it. And there's a limit on what can be lost (no
more than what is loaned.) Eliminating this practice is a moot
point since free-banking is the order of the day and there's
nothing anybody can do about it as long as the details of the
gambling, unlike the misdirective practices in the neighboring
U.S., are open and above board and stated in the bank-customer
agreement.
Gradually, since unlike the situation in the old U.S., there are
no laws or regulations preventing it, banking services, that is
money storage and transfer functions, become "courtesy" services
offered by many different businesses as part of their over-all
customer retention programs. The era of banks as distinct and
separate businesses fades into the murkey smog of "history."
Because there's no central bank in California, there can be no
"systemic risk." As in the pre Federal Reserve free banking era
in the U.S., banking is spread over a large number of independent
organizations. Only in very rare instances do any of these
institutions fail -- depositors keep an ear and internet eye out
for problems and this intense scrutiny from the many depositors
and their deopsitors' organizations proves much more effective
than the scrutiny by a small number of corruptible government
"bank examiners" -- and the expansionist Federal Reserve -- it
replaces in keeping those institutions which include banking
services in their product mix honest.
And in the rare instances when one _does_ fail, the effects are
mostly local. Such isolated and sporadic failures go almost
unnoticed except by those losing some of their savings with the
failing organization's gambling quants. Regular depositors who
haven't signed up for the gambling-interest option get all their
savings back except in cases of outright fraud or robbery.
Over time, it's discovered that this arrangement (in combination
with newly mined gold) accomodates just enough flexibility in the
money supply to foster what they call in the U.S. "optimum
sustainable growth." This is true because with a non-ballooning
money supply, such loans in the aggregate must increase
productivity in some form or at some point in order for the
"interest" to be paid.
This "optimum sustainable growth" rate proves to be in the
neighborhood of 7% per year for California. This surprises
everyone until Tanaka points out that Hong Kong's economy had
grown at a similar rate since 1948 --- for a period of more than
50 years.
-30- -30- -30-
What say you ORO, TG, Townie, ALL? Pure fantasy? Should I go
see a shrink?
Regards,
Journeyman
P.S. The forum is too big! And too good to miss. HELP!!! Yep -- need a shrink!!
Well, California secedes as a matter of "history." I was writing this for a series I started awhile back on free trade, inspired by the discussion over Buchanan's platform.
I am using the secession to demonstrate the problems caused by floating exchange rates, particularly to milk producers in California and Nevada as the currencies fluctuate. I think the "secession" perspective will make it easier to understand the fluctuation problems since they obviously didn't exist until the currencies separated.
The re-evolution of a defacto "gold standard" as a result of competition under "free banking" is another pet notion of mine --- yours too it seems -- and the free trade piece allowed me to kill several birds with one stone. Didn't have time to re-write it after seeing your post, so, well, California seceded. Thus the "history" in the message title is the history -- of the piece I'm working on! (sporadically.)
Your posts lately have been totally awsome. And I don't mean that lightly. Looking for holes as you asked -- but barely able to keep up with the reading, let alone give them the study they deserve. Maybe after the crush!
http://www.duesberg.com Hey Strad - I want to thank you for recommending Dr. Peter Duesberg's book, "Inventing the AIDS Virus". After reading this book I now understand why I've never heard of it. It is a scathing rebuke of modern medicine and the money that flows through its coffers. The HIV/AIDS scam will no doubt go down in history as one of the greatest examples of the corruption that comes from fiat currencies. Without the lure of "government largesse", this episode would not have injured, maimed and killed so many. This book should be read by all.
From the last page;
"Ironically, HIV-positives actually have no reason to fear. As with
uninfected people, those who stay off recreational drugs and avoid AZT
will never die of "AIDS." Antibody-positive people can live absolutely
normal lives. Worldwide, seventeen million of the eighteen million
HIV-positives certainly do. Those at real risk of AIDS could help their
fate if they were only informed that recreational drugs cause AIDS. And
those with AIDS could recover if they were informed that AZT and its
analogs inevitably terminate DNA synthesis, and thus life.
"When the public finally catches on to these deceptive tactics [the
promotion of HIV as the cause of AIDS and the promotion of AZT and
cocktails as cures], the HIV hypothesis of AIDS and its proponents will
find harsh judgement...
"This time the public may hold biomedical researchers and public health
experts accountable, and misguided microbe hunting will meet its
long-overdue judgement."
To my eyes the continued low and falling price of the POG looks like a COMEX default. Higher COEX premius to get in the game and a dropping $ value of gold would indicate that the system is breaking down.
Of all the States that should leave the Union it should be Alaska.
They have 25% of US market in oil sales, gold mines, coal mines, forests, fish and game.
Stationed in a military strategic position on the globe.
What would happen if Alaska demanded payment in gold as royalties for letting oil companies drill for oil?View
Yesterday's Discussion.
Fiat currencies were a government imposed element of the markets. We talk much of the benefits of fiat currencies to governments that employ them on the grounds of their use as a taxing mechanism to provide government with more palatable means to confiscate the resources of the people than official taxation. We also discuss heavily the aspect of old line banking's benefit from fiat currencies in the collection of interest on the money supply, of the driving of business into the banks (where one can obtain interest on cash balances and thus escape some of the effects of inflation), of the benefit bankers could provide clients in the clients being the first to spend new money.
What we have not spoken much of is that the period of time where currencies were instituted worldwide was a very narrow slice of time, altogether 2-3 decades. Among the changes that took place in government policy at the time was the expansion of government accommodation of union interests in general and of trade unions in particular. Licensing was, till then, limited to very few occupations. The purpose of it then (and now) was not to assure capable professionals were plying their trade, but to restrict the consumer's choice as to who they can hire, and thus improve the licensed groups income through the imposition of state sponsored monopoly. Part of the game was that upon instituting registration and licensing procedures there was a "grandfathering" of existing practitioners, but further licenses were only granted to those who passed a test. The test was designed by union people and applied by the licensing agency of the state so as to be nearly impassable without prior knowledge of the answers. The union provided answers to the test questions to friends and relatives of the "core members".
In similar fashion, the state brought into existence what were formerly less common and less intensive tariffs intended to protect unions and their employers from foreign competition. The state itself instituted currencies as part of the mechanism by which citizens, their trade, and their organizations were separated from those of other states to assure complete government control of them. Such were tariffs in purpose in addition to raising revenues and "protecting" local industry. It was part of the process of delineating borders, and imposed a generalized cost on international trade. Since trade volumes are inversely and exponentially tied to trade costs (say a 20% rise in trade costs causes a 40-50% drop in trade volumes over time), the uncertainty of exchange rates due to currency fluctuations imposed such a cost, and brought about a severe drop in international trade volumes together with tariffs.
The US today is still trading less with the rest of the world, relative to its overall economy than it had in the gold standard era prior to the creation of the Fed. And that is despite the dollar being the reserve currency that is used by all nations for international trade.
The adoption of a non-government monetary system would benefit the world's people in improving everyone's lot in life. I would expect that the markets, once given an opportunity, would do so.
As to what constitutes an opportunity, it is likely a condition of currency flux such as experienced in the emerging nations repeatedly over the last few decades. Such as we went through once in the 70s, once in the 80s, and right now once again, in the millenial transition. I expect the popularity of gold settlement of trade both domestically and internationally (particularly the latter) to grow by orders of magnitude during a complete global currency crisis now that transaction costs can be reduced well below those of currencies because in gold settlement, credit is not allocated for the clearing and settlement functions.
Better make that a gold PLATED brick door stop. Right after I posted my grand theory about the bid and asked spread demonetizing gold, ORO posted how that didn't occur in bank held bullion.
Just once, I actually agreed with Goldhunter and got blown out of the water.
http://www.skolnicksreport.com/boterrorists.htmlOver at http://www.skolnicksreport.com, a Chicago court reformer named Sherman H. Skolnick has a great deal to say on subjects tangential to gold. His investigations lead to evidence of corruption outside of Chicago and into international politics, economics, and, sometimes, gold.
In one of his more recent postings, in which he claims: "For well over a hundred years, J.P. Morgan & Co. have been the Queen's agents headquartered in New York." And later states: "To show their loyalty, J.P. Morgan & Co. traditionally have flown the Britsh flag at their Wall Street location."
Can anyone here please tell me if J.P. Morgan & Co. actually does fly the British flag at their Wall Street location? I am intrigued with this point. I'm not sure how I can verify this without going to Wall Street, and I think that maybe some of you who post here may have been to Wall Street often and remember noticing the British flag at J.P. Morgan & Co.
Here are some excerpts from the link posted above:
***
Through cryptic and little-understood derivatives, through oil futures, and other exotic gambling instruments, the Morgan interests and the linked banks and their holding firms, bet hundreds of billions of dollars that they could force up the price of oil, to their mutual corrupt benefit. In September, 2000, oil reached just short of $38.00 per barrel for crude. When the price nevertheless declined to about $31.00 per barrel, in October, 2000, Morgan and their gang and some 18 banks and their holding firms were in danger of collapse. About a trillion dollars was needed to bail them out, including reportedly Bank of America and their foreign exchange gambling units.
.
.
.
To divert attention from the threatened melt-down of Morgan and their oil gambling, Morgan's assets in brokerage, in the press, in government, began a concerted campaign to trigger-off old-timers, even younger types, of the possiblity of a later-day type of 1929 Crash. [In its simplest explanation, the Crash of 1929, was caused by the British withdrawing huge amounts of "call money" from Wall Street which had been financing margin accounts, Americans gambling on stocks at ten cents on the dollars. At the height of the deluge, Winston Churchil was sitting in the gallery of the New York Stock Exchange, keeping an eye on matters and personnally profitting by the instigated calamity.]
***
Pardon the "Shot from the hip" just now, I just got to the top of yesterday's page.
I don't see anything about where that gold is coming from and how a quantity of it can exist to back the ongoing unspent demand of the ROC's economy. The Gold backed Nation-state money supply would have to equal the gross ROC product produced during the time span of the median rate of transaction turnover.
I'd like to dedicate my first !holler to a man who taught me much about the markets� the monster, as he calls it. I call him FISH �he puckers his lips when he ponders a question. Now somewhat frailer, he still gets up early each morning to put in his trading orders. Part of his daily routine is to listen to his wife reading news stories and yes, the discussions on the USAGOLD forum� periodically interjecting, with his severe Russian accent: HOGWASH! or BRRRILLIANT!
I first met him a year after he had jumped off a Russian freighter into the icy waters of the Pacific Ocean, in the days when iron curtains and concrete walls were still standing. Fish was a day-trader long before there was an internet. He showed me then� he's still showing me now.
FISH loves good questions� he says, they make more sense than answers. Just yesterday we spoke on the phone and he said: WHY GOLD GOES DOWN AND GOOD MINERS' STOCK GO UP, !ON THE SAME DAY? �I think he wants no answer.
THANK YOU FISH.
May my first time entr�e be the signal for the yeller's turnaround.
Friday October 27, 1:57 am Eastern Time
Oil Slips As Worries of Suspension Ease
SINGAPORE (Reuters) - Oil prices steadied on Friday as fears of an imminent halt to Iraqi exports eased slightly on expectations the U.N. will allow Baghdad to be paid in euros, a condition Iraq has laid for continued flow of its crude.
U.S. benchmark crude futures stood at $33.64 per barrel at 0429 GMT, edging seven cents down from the day-earlier close.
The contract surged 75 cents higher to $33.71 in New York after an Iraqi source said Baghdad would likely suspend oil sales from November 1 if its proposal for euro payments was rejected.
Iraqi crude flows, controlled by the U.N. under sanctions imposed on Baghdad following the 1990 invasion of Kuwait, account for about five percent of world exports.
Baghdad has been exporting about 2.3 million barrels per day of crude under the current eighth phase of a U.N. humanitarian oil-for-food exchange.
At current prices, the exports are worth about $60 million a day.
The U.N. sanctions committee will meet on Monday to discuss the Iraqi proposal for euro-denominated payment.
U.N. diplomats said on Thursday members of the Security Council appeared likely to allow payment in euros.
``In principle, we have no problem with it,'' said one member of the council's sanctions committee on Iraq. ``There's nothing in the resolution that says what currency is to be used.''
The United States said it made no difference what currency Iraq used.
``That fact is whether it's in euros or dollars, we have control of his (Iraqi President Saddam Hussein's) pocketbook so that we can make sure that the revenue from the oil-for-food program is used for food and medicine and not for tanks,'' said White House National Security Council spokesman P.J. Crowley.
Iraq was the sixth biggest crude importer into the United States in August and any stoppage of Iraqi exports would strain the U.S. supply system, where crude stocks are already near 24-year lows.
A U.S. government official said other major oil producing nations had given reassurances they would pump more oil in the event Iraq halted exports.
OPEC SPARE CAPACITY LIMITED
Oil traders are also waiting to see if OPEC will implement its yet-to-be tested price band mechanism and hike output in the coming days by 500,000 bpd.
The informally-agreed mechanism stipulates a half a million bpd rise in cartel production if the price of a reference basket of crudes stays above $28 a barrel for 20 consecutive working days.
The trigger for the mechanism is Friday, but any announcement is unlikely to come before Monday.
But analysts believe the Organization of the Petroleum Exporting Countries (OPEC) will struggle to deliver fresh supplies as most members are already pumping at full throttle.
Only Saudi Arabia has any significant spare capacity, but it is already producing 500,000 bpd above its official OPEC ceiling and is not expected to pump beyond that, analysts and lifters of Saudi crude say.
``I don't think the hike will lead to any significant increase in barrels. All the countries are virtually at capacity. The one country not at capacity, Saudi Arabia, is already producing above its allocation,'' said Gary Ross, chief executive of Pira Energy Group.
Peter said:
"I don't see anything about where that gold is coming from and how a quantity of it can exist to back the ongoing unspent demand of the ROC's economy. The Gold backed Nation-state money supply would have to equal the gross ROC product produced during the time span of the median rate of transaction turnover."
Journeyman #: 40050
"The traditional rate evolves to be 500 collars per gold oz."
The rate of collars to gold would float to the equilibrium rate of exchange, would it not? (implying that 1 oz. of gold would have a lot more worth in Journeyman's scenario than it does now in the u.S.)
I'm out of country so I have not been able to post. My services were required in SE Asia again. I certainly have a lot of catching up to do so I will have to print out several more pages before I head into the field again. I just ordered some Uruguayan Pesos from the castle so they should make a nice addition to the collection.
I see that the Invisible one has just reported on the UN allowing the Iraqis to use Euros in their transactions for oil. What will this do for the Euro? I'm afraid not much unless the other oil producers follow suit. Iraq is still considered a rouge nation by it Arab brethren. The 8-year war with Iran didn't win many friends among even those considered pariahs in the Arab world. The Turks just as soon Saddam go back to murdering Kurds with biological weapons. The Kuwaitis and Saudis among other moderate Arab nations are scared s%#$-less of Saddam should he amass another large army. The list goes on. However, should other large producers do the same by accepting Euros for oil, then the ball could be taken out of the US court so to speak. Saddam gave the UN until Nov. 1 (this coming Tuesday) to comply with his demands before he turned off the spigot as he said: "the dollar is the money of the enemy." Of course, the US is losing whatever influence and friends that it has in the region because of its support for Israel to the detriment of the Arabs (it is an election year after all). Personally I think that the US should just wash their hands of the whole mess, besides, the best Moses could do was lead his people around the Middle-East for 40 years and then pick the only place without oil ;-) Sorry, bad joke. The point is we need the supply of cheap oil to fuel the economy, and we support Israel at the same time. This is a very slippery tight rope act. After a few thousand years of warfare, I very seriously doubt that there will ever be peace among these peoples. Perhaps the best thing to do is to let them duke it out to the finish so the rest of the world doesn't have to deal with their insanity. But I digress.
I wrote a few thoughts about some articles that I read on the flight about the Euro and though they may have been addressed in other postings (I still have a lot to catch up on), I may be pilloried for my thoughts on the subject. I am not am expert in the area of currency speculation. But I have written a couple of posts about currency (especially the Euro), and perhaps the learned knights will help me clarify my thoughts on the subject. Hey that's what it's all about right, thanks in advance. I will try to check in when time permits but I no longer have a satellite link and must use the office internet link when I'm not in the field. I will be back in a couple of days though.
I am not nor do I pretend to be an expert in international currencies, currency trading, or currency arbitrage. I do look at the big picture of world events and the world around me. I have come to the conclusion that the new currency called the Euro has several problems to overcome. The new currency called the Euro looks as if it may prove to be a failure. There are several reasons for this. It is difficult to understand how 11 or more countries with different languages and cultures can agree on anything, let alone a single currency that is accepted across borders and relies on all member countries adhering to agreed policies as outlined in the Maastricht Treaty. For the Euro to work as a strong currency, it would appear that Europe must be politically united. There have been two attempts to force the issue of a united Europe, once under Napoleon Bonaparte and once under Adolf Hitler. Obviously no one in his or her right mind would like to see such a repeat of history. The question is: Can Europe peacefully unite economically and politically?
The larger countries will likely have grater control over fiscal policy regardless of the desires of the smaller countries. The Danes recently refused to give up their sovereignty by refusing to join the EU. There is little interest on behalf of the EU to back up and strengthen the Euro in light of the recent Euro devaluation. This is similar much in the same way that gold has suffered at the hands of gold producers. The major problem being a lack of confidence. Just as gold producers have shown that they have no confidence in their product � gold, the guardians of the Euro have shown that they have no desire to support the Euro. European Central Bank President Wim Duisenberg has all but admitted that there will be no support for the Euro and that has essentially given the green light for speculators to grind down the Euro and flee toward perceived safe haven currencies such as the US Dollar and Swiss Franc. Even the Swiss are prone to tie in the franc to the Euro. Confidence in the Euro has been shaken and it appears that the damage has been done where the Euro is not likely to have a significant role as a reserve currency. This was an opportunity that was missed and Europe is likely to fall back into a confused tangle of multiple currencies and trading partners that lacking fiscal discipline. Does this mean that the US Dollar is destined to be the world's reserve currency? What about the role of the second most powerful currency � gold?
NO CONFIDENCE:
On September 28, the Danes voted in a referendum against joining the EU Euro currency and giving up their sovereignty to what appears to be another nail in the coffin for the Maastricht Treaty. It looks as if the Danish Krone is here to stay. Who could blame them? The Swedes and Brits appear poised to follow in the Danes footsteps as well. The rejection is likely to boost anti-EU sentiment in Norway as its government is preparing for eventual EU membership. The vote is also a disappointment to Finland, an EU member, as it could delay the Swedish vote and possibly membership, as Sweden is Finland's most important trading partner. Denmark is one of the few countries where the people were allowed to vote. Obviously this is a wake up call for the EU. The EU should pay attention and wake up to what the people of Europe are thinking. They have no confidence in the Euro.
Denmark's rejection of the Euro is likely to make politicians in Britain and Sweden think long and hard before presenting this turkey for a vote by the people. There have been difficulties with several EU members keeping to fiscal guidelines that are outlined in the Maastricht Treaty (most notably Italy). The EU is coming apart at the seams and will probably collapse under the weight of the restrictions of the Maastricht treaty as member nations find themselves either unable or unwilling to comply with demanding fiscal policies. This problem will only intensify as the multitude of European governments change hands over time. The Euro may just die a slow death as the EU will have to live for several years with a split between the 11 EU members that have adopted the Euro � 12 when Greece joins in January, and the three that haven't, Denmark, Britain, and Sweden.
NO EU SUPPORT (WHO IS THIS DUISENBERG ANYWAY?):
The Euro fell sharply against the dollar to be on par with the currencies of other emerging markets. The comments by European Central Bank President Wim Duisenberg caused currency traders to debate the likelihood of intervention should the Euro lose ground in face of Middle-East tensions. He suggested in an interview with the Times of London that it wouldn't be appropriate to intervene if the Middle-East crisis sparked a sharp fall in the Euro. Excuse me! Just what does Mr. Duisenberg think his duties are as guardian of the Euro? He also suggested that participation by the US in an intervention is less likely as the US November elections draw near. Well, what clearer signal do you need to sell short the Euro? Is it any wonder that the Germans and French were initially opposed to this buffoon taking over as the ECB president? He in effect gave a green light to currency speculators by suggesting that the ECB would sit on their hands. Duisenberg and US Treasury Secretary Larry Summers are at odds as how to describe the failed September 22 currency intervention. Now we learn that the FED was opposed to the intervention, but were "persuaded" by VP Al Gore.
Duisenberg said to Larry Summers: "Couldn't you say that the strong dollar is in interest of the United states, but an ever strengthening dollar is neither in the interest of the United States nor in the interest of Europe?" According to Duisenberg, Summers replied "I'll think about it." Of course there are other reasons for the apparent failure of the Euro such as the dollar's perception as a safe haven currency and oil, which is priced in dollars. David Gilmore, a partner of Foreign Exchange Analytics, an Essex, Conn., firm that advises institutions on global currency markets put Duisenberg's inept leadership in perspective: "He seems to relish controversy, fails to learn from his mistakes and ultimately invites the market to come bury, not praise him." Obviously, the removal of Wim Duisenberg is a step in the right direction toward salvaging the Euro.
Perhaps Duisenberg should take a queue from Cheeta's (AG) playbook when talking publicly about the Euro. At least Cheeta has enough sense to talk in convoluted riddles so nobody knows what the hell he's talking about. The problem is so dire that Germany's Chancellor Gerhard Schroeder has had to come forth to state that the Euro is undervalued based on EU economic strength. The Bank of France Jean-Claude Trichet also came out of his cave and said a strong Euro was in Europe's best interest. The Euro looked to rise on rumors of Duisenberg's possible resignation, causing some traders to buy the Euro. If anything, that is an indication that he has lost credibility and damaged his market standing. To save the Euro, it may be necessary for the EU to meet and discharge this buffoon.
WHAT THE HELL IS AN EURO?
Has anyone ever seen an Euro? Is it coin, scrap of paper, or digital electrons floating around the ether? I don't know of anyone who ever saw one. They are as rare as leprechauns, gnomes, or chicken lips. This does not inspire confidence among the people, who are used to deutschemarks, lira, francs, pesetas, etc. The Euro was officially launched in January 1999 and since has lost 30% of its value. Delaying the minting of coin and scraps of Euro notes for three years was a huge mistake. It appears to have some success as it works for trade across borders as local currencies are tied to the Euro, however, something tangible would build confidence better among the peoples of Europe than this lackluster approach to a currency that is expected to rival the US Dollar or Swiss Franc as a reserve currency. As it is, the Euro has about as much relevance as the Baht, Ringgit, or Rupee, and could be on par with those currencies in short order.
HOW TO SALVAGE THESE DAMAGED GOODS:
Significantly raising interest rates on the Euro along with sopping up excess Euros couldn't hurt either. Interest rates at 4.75% are not competitive with the US Dollar interest rates north of 6%, and reducing the supply of Euros would help balance supply with demand. Even selling foreign assets such as US treasuries, bonds, etc. when those foreign currencies become too strong relative to the Euro. The higher interest rates for the US Dollar vs. the Euro is also not good for attracting investment in the Euro. The point is to create a strong Euro currency that can compete with the US Dollar as a reserve currency and to attract foreign investment. Of course this begs the question: What to use as a reserve currency (or commodity) to back the Euro? I think you already know where I'm going with this, but I'll continue on. The Euro is supported with reserves of various currencies and about 25% gold. The Euro was initially launched with 15% gold backing, however, with the devaluation of the Euro that percentage of gold reserve backing has risen. There was speculation about a year ago that the gold reserve backing would be increased to 30%. It is doubtful that the increase in gold backing was intended to result from devaluation though. The best of all possibilities of course would be to back the Euro completely with gold as the Swiss franc once was � the IMF be damned. That is not likely to occur of course, but it would significantly strengthen the Euro and result in the Euro as a safe haven currency. With all-important commodities such as oil and gold (OK, I said commodity but bear with me on this) priced in US Dollars, the Euro is at a distinct disadvantage.
The US markets have become increasingly volatile, and foreign as well as domestic investors are now becoming aware that their investments are at risk. In the event of a market meltdown these same investors will begin a flight to quality. A gold-backed Euro would be a safe haven (as good as gold!). Unfortunately the socialist oriented societies of Europe simply do not have the discipline required for a gold standard. Even the Swiss have chosen to take the path to the servitude by unlinking their Franc from gold. If the EU were to use a gold standard and price gold in Euros, this would be interesting to see if they could take the ball out of the US court. Some will say, "but we are bound by agreements and treaties." The US and many other countries have never adhered to treaties when they were not in their best interests, so why start now? I do not know if such an arrangement could succeed and this is not my area of expertise. As my houseboy in Myanmar (formerly Burma) is fond of saying: "Sir, I am but a simple man." Perhaps Dr. Robert Mundell, 1999 Nobel laureate has an answer to the Euro Dilemma. His speech on "Exchange Rates, Currency Areas and the International Financial Architecture," (also found in the Gilded Opinion) attempts to design a method for firming up the Euro through pricing bands. Though he does not advocate a gold standard (he advocates a fix exchange rate band). He also suggests the minting of a 100 Euro gold coin to heighten interest in the Euro. This would help give a stamp of credibility to the Euro.
CONCLUSION:
The Euro is toast. There is a severe lack of confidence in the Euro currency, and confidence in any currency
is most important. The EU is not unified in it's support of the Euro currency and does not have the unified support of the people of Europe. The inept ECB leadership (Duisenberg) has failed by not supporting the Euro. Without a unified plan of support and EU leadership committed to defend the Euro, then at best, the Euro is destined to be on par with other third world currencies, but ultimately it is most likely destined to fail. Am I wrong here? Is it just that the US Dollar isn't strong, but rather the rest of the world's currencies are so pathetically weak? Regardless, Gold has performed very well against the world's currencies except against the US Dollar. Gold appears to be the best competitor against the US Dollar and this would certainly explain why there are so many US interests who are against a rising gold price. When the US Dollar plummets, the rest of the world will follow. That leaves gold (maybe even with silver and PGMs) as the only real alternative since it is not based on faith or credit of some country's debt. Obviously the Euro is not going to be much of a threat.
"you must be crazy to demand payment in a weak currency like the euro" said the interviewee in today's 10:30 GMT BBC World Radio World Business Report concerning Saddam's decision regarding oil payment.
I made of course a mistake by headlining in msg#: 40065 that the UN had allowed Saddam to be paid in euro. The headline had to be that it is expected that the U.N. will allow Baghdad to be paid in euros.
Are the UN sanctions on gold (smile) to be lifted?
The following makes a refreshing change from all the conspiracy theories and international financial dealings being talked about on the forum.
" To be a good technical analyst you have to be a bit more twisted
than the average. You can't see good news as good, you have to
see how bad is good and good is bad. Another way of expressing
it, you have to be contrarian. Stocks are bouncing back today
and gold is in a freefall...so what's not to like?
We have long held the view that gold must make New Lows
before a secular bull mkt in gold can begin. In fact we have a "Panic Cycle Week" due for gold & oil the wk of 11/06. So if gold sells off, making New Lows into wk of 11/06, it may very well end the bear mkt in gold and set the stage for a new secular bull mkt!! If gold does not make New Lows, ironically that's bad news for gold bugs. Failure to make New Lows could set up another false rally that will again give way to more selling.
One of the intriguing things that caught my attention a few weeks
ago is the fact that our system shows a Panic Cycle Week indicated for
both the DOW and the S&P the week beginning October 30th.
Just one week later ( wk of 11/06 ) we have a Panic Cycle Week due on
both oil and gold ( as I have already noted above ) . Put your thinking
caps on for a minute. This should have your brain spinning.
DEFINITION: "Panic Cycles" are the name we give to specific
periods in time when you can expect higher than normal volatility.
Typically the market will swing violently from one extreme to another.
Sometimes panic cycles will bring days when the market moves
strongly in only one direction. But it is more often the case that a
panic cycle brings wild swings in both directions.
It is very rare to have a Panic Cycle Week indicated on 4 major
markets within the span of two weeks. For you options traders
out there, this means you want to buy volatility over the next
few weeks. You don't really want to be selling vol in the near
future.
Let's assume for a moment that stocks continue to rally on Friday
and into early next week. You know darn well that CNBC will
bring on various "experts" ( read: brokers who want you to buy! )
to argue the point that we have seen the Lows in stocks and that you
should take advantage of the wonderful opportunity to buy stocks
on the cheap. This is what they do every time. They are predictable,
though rather sleazy in their approach.
We are saying you need to exercise more caution than normal
over the next two weeks. A lot can happen in a very short space of
time. You have to ask yourself why both gold and oil are indicated
for a panic cycle week the same week of the election! And if the
Panic Cycle Weeks on both the DOW and S&P are to bring
"panic buying," does it follow that you should be an eager buyer??
First, we don't know for sure that next week will be panic buying
in stocks. It could be panic selling! Second, you have to wonder
how this week could possibly be the Low for stocks if both gold and
oil are due for panic cycle weeks the week of 11/06. Remember
if gold continues to sell off into the week of 11/06, making New Lows,
this is bad....because it ends the bear market in gold.
It dawned on me a few weeks ago that Saddam might very well
take advantage of the extremely low inventory picture to stop
Iraqi production---right before the election. It just did not seem
accidental to me that we have a panic cycle week for oil the same week as the election. Now, today we see in the news that this indeed may happen. Saddam is reportedly threatening to halt production of Iraqi oil
unless the UN agrees to Iraq's demand to allow payment in EUROS
instead of dollars.
Panic Cycles are like over-the-horizon radar. They can tell you things long before the event takes place. This may explain why the CIA
were so intersted in our models over two years ago. PEI made a public
forecast of the impending Russian default two months before the event.
You're thinking that was luck....apparently the CIA didn't think it was
luck.
Could stocks rally strongly next week? In other words, could the
panic cycle week indicated for both the DOW and the S&P bring "panic
buying"? Yes, this is clearly possible. In fact today's retest of
support may have set the stage for a strong rally, perhaps more so in the S&P and the Nasdaq, less so in the DOW. The DOW did NOT retest
support today, and is now bumping up into Daily Trendline Resistance.
Only if it breaks out above this DownTrend line, can it manage to continue a rally.
By now I hope you are completely confused. That would be good.
What you need to realize is that Panic Cycles can bring either or both
Panic Buying and Panic Selling. You can't lock your mind into one view
on the market. You have to maintain an open mind.
But one market that I will be watching very closely over the next few
weeks is gold. If we do get New Lows, then as I've said before,
it suggests the Secular Lows are not that far off....in time. In price
terms we cannot rule out a move to $195-215 area. In any case,
picking the bottom in price is not so important. It is sufficient to
know that once you've seen New Lows ( below $252 ) you probably are getting
close...in time.
Why is that important? If gold is about to bottom and start a
secular bull market, what does that tell you about stocks? Can
stocks continue to rally at the dawn of a new bull market in commodities
with gold finally chasing after Oil?
The answer is Yes and No. Our view is that the next few years will
be much more of a "stock pickers" environment. Throwing darts
to pick your stocks will no doubt outperform the broker recommendations
on CNBC, but that still wont' leave you very happy. You will need
to pick your stocks carefully. Pick stocks that can do well in a
rising inflationary environment. Some of them can do very well, but
others will get killed.
You might be wondering, "What if gold doesn't make New Lows?
Does that mean the commodity bull market is not going to happen?"
The answer is no. Commodities can still rally while gold trades down.
We've seen that already in the last few years as oil tripled and gold
meandered sideways and down. But I believe commodities would
have a more impressive run once they are all in sync...ie once they
all go up together.
One of our stronger long-term predictions is that oil will
conservatively reach $60-100 range no later than November 2002. 2002 is a Panic Cycle Year. If you just think for one minute how much chaos
can occur during a Panic Cycle Week, imagine what a Panic Cycle Year can bring!!! It is the difference between one standard
deviation and 3 standard deviations from the mean."
E-UROYou wrote well, imo. One thing I kept thinking about while reading is that the E-uro isn't week because of Europe, rather because of the strong dollar. And what makes the strong dollar strong is its demand as a reserve currency and its scarcity above debt repatriation. Your argument stated that it won't become the reserve currency or couldn't because it was toast. I believe the logic is slightly flawed but nonetheless compelling. I believe that the trump cards have not been played yet. There are several trump cards, one which is simply time. The other two are what makes a currency a reserve currency and that is oil settlement. With all its flaws that you speak of, none of them would hurt the Euro if it become the currency of oil settlement. Finally, you presume that a doubling of gold reserves (official) wouldn't have the same affect as 100% backing. It would.
Somewhere recently I saw a note to the effect that the island states of the North Atlantic have all done really well past 50 years or so, Iceland, Isle of Man, Jersey, Channel Islands, etc. while Newfoundland, and Prince Edward Island have only suffered since joining the Canadian confederation. Food for thought?? The Federal government in Canada has long thought it's ok to barter away access to Newfoundland fish for Saskatchewan wheat sales overseas.
Re : Trail Guide : Does a name give any credibility at all ?
An extract from Trial Guides' message 40028. "Now many "Western Gold Bugs" are deep in the mud with no easy way to reconcile to the changes we said were coming? Who knows? Especially as things keep progressing right along these lines. In their position it's hard to reverse yourself. "
Having made a request in one of my earlier posts for some clarification on "who" is behind the move to help shed some light on world developments - it occurred to me that it is really not important. It is far more important that this information is being made available to the world's public for their CONSIDERATION. This is greatly more important than from whom it comes. As a man thinketh, so is he. Consider the thoughts, not the thinker !
Above all, become a thinker for yourself. The sooner people start thinking (and acting) for themselves, AND for the general good of ALL society - the sooner we will see a world that is free from racial, religious, financial, political, gender and other "prejudices". They are all illusions - just as the derivative market as an indicator of "value" is an illusion. The "busting" of the financial illusion is most probably going to be a great revealer of many other illusions - as well as being a precursor to returning society to more fundamental concepts of "basic humanity".
South Africa is a very good example to draw from in this regard. A political system was in place that was obviously unconstitutional, unfair, and designed to "protect" the interests of a "minority". The words of wisdom, compassion, foresight and aspiration for the "common good" of ALL the people in S.A. - were sprouted from the minds and souls of people like Archbishop Desmond Tutu, Mr Nelson Mandela and others. They were considered "Terrorists". Would it have helped you to know who had spoken Their words. Definitely not. You would have discounted them immediately. In fact, some still do (smile). To be a critic : "In their position, its' hard to reverse yourself"
Equally, as everybody is becoming more and more aware, it does not mean that when a person like President Bill Clinton, Mr Greenspan, Mr Summers or Goldman Sachs spokespeople speak - that they are really speaking for the "common good" - or that they are qualified to speak on behalf of "humanity as a whole". Who's council would you take in hindsight - that of the "terrorist" Mr Nelson Mandela, or that of the "people's choice" - Mr Clinton ? Do you take Mr Greenspans' - Pro-gold view, or do you take Mr Greenspans' apparent Anti-gold view ? Does the name give any credibility to the "thoughts spoken". Apparently not.
Are Trail Guide and Another : "Terrorists" ? Maybe, maybe not. Are Trail Guide and Another : "Anti-Terrorists" ? Maybe, maybe not.
One of my favorite expressions is along the lines : When you are right - Time is on your side. Consider all the information presented to you - and act accordingly.
Trail Guide and Another : my impression is you may have all the time in the world (grin). Thanks for sharing some of it - with us. As you alluded to - once things really get going - there will be even more time - just to watch - and be silent.
To all the other posters - not mentioned - thank you too. Sitting here in the middle of the class as a lurker enables one to listen to the comments from those at the front of the class, those at the back of the class, and to take little notes as required.
Remember, its your thoughts that count ! Keep them coming.
I have been told by a friend that gold will stop trading if it hits $250.00 per oz. Any thoughts on this?
Also I have not heard anyone discuss PINK MONEY. I heard about the USA having pink money all printed for an emergency. That was about 10 or 15 years ago. Any thoughts on this one?
It's official: those who want euro payment for oil are mavericks!
Friday October 27, 7:31 am Eastern Time
Oil Steady As Wary Dealers Watch Mideast
LONDON (Reuters) - Oil prices held above $31 on Friday as cautious dealers awaited formal confirmation that the United Nations will allow maverick producer Iraq to be paid in euros, a condition Baghdad has set for continuing crude exports.
Iraq's rejection of the dollar for its oil sales is widely regarded by diplomats as a politically-inspired protest against U.S. support for U.N. sanctions against Baghdad.
Tension between Israelis and Palestinians contributed background support for market sentiment amid warnings of more suicide bomb attacks by militant Palestinian groups.
Benchmark Brent crude was 17 cents off at $31.75 a barrel after settling 60 cents higher at $31.96 on Thursday.
U.S. light crudes were 24 cents off at $33.47.
Iraq was the sixth biggest crude supplier to the United States in August and any stoppage of its exports would strain the U.S. supply system, where crude stocks are already near 24-year lows.
Markets were wary ahead of a weekend break in dealing, noting the world body will not rule until next week on Iraq's demand for euros rather than dollars, the currency of oil trade.
Some said prices would ease only when the world body makes an official ruling.
``Perhaps some of the sell-off will occur when the change is formally confirmed, but more likely the gains stayed because of a realization that Saddam is willing to use oil for political gain,'' said London brokers GNI.
An Iraqi source told Reuters on Thursday Baghdad was likely to suspend oil sales worth five percent of world crude exports from November 1 if Washington objected to a plan by Baghdad that it be paid in euros rather than dollars.
The move followed an Iraqi government decision last month to halt all dealings in the greenback to confront what it called daily ``American-Zionist aggression,'' an apparent reference to U.S. support for the Gulf War curbs.
The International Energy Agency said an Iraqi suspension of exports of 2.3 million barrels per day worth some $60 million would shock the international energy markets.
But the White House said it did not matter in which currency Iraq was paid for its U.N.-monitored sales because under Gulf War sanctions Iraqi revenues are controlled by the world body.
``The fact is that whether it's in euros or dollars, we have control of his (Iraqi President Saddam Hussein's) pocketbook, so that we make sure that the revenue from the oil-for-food program is used for food and medicine and not for tanks,'' said White House National Security Council spokesman P.J. Crowley.
Diplomats at the United Nations said the Security Council appeared likely to allow the euro payments.
An assurance from an OPEC delegate that Saudi Arabia and other producers would be ready to fill the gap if Iraq sales were lost also helped undermine the rally.
The U.N. sanctions committee will meet on Monday to discuss the Iraqi proposal for euro-denominated payment.
``In principle, we have no problem with it,'' said one member of the council's sanctions committee on Iraq. ``There's nothing in the resolution that says what currency is to be used.''
Oil traders are also waiting to see if OPEC will implement a price band mechanism and hike output by 500,000 bpd.
The informally-agreed mechanism stipulates a half a million bpd rise in cartel output if the price of a reference basket of crudes stays above $28 a barrel for 20 consecutive working days.
The trigger for the mechanism is Friday, but markets may have to wait until Monday for an official announcement.
The OPEC basket stood at $31.14 a barrel on Thursday.
But analysts believe the Organization of the Petroleum Exporting Countries (OPEC) will struggle to deliver fresh supplies as most members are already pumping at full throttle.
Only Saudi Arabia has any significant spare capacity, but it is already producing 500,000 bpd above its official OPEC ceiling and is not expected to pump beyond that, analysts say.
Isn't the Euro just the basket of 11 currencies pegged together at a fixed exchange rate? Their may be new difficulties imposed by such a convergence, but beyond that is the ability to buy European goods/services/assets at bargain prices. The market should take care of speculators who have only a short-term short-selling view.
I was surprised when I saw the real estate booklets this Spring in Italy for hilltop farmhouses (yes, fixer) in Tuscany for $80,000. I always had thought Europe was more expensive than USA in every category, especially real estate. Thank you, Euro, I sez to meself -- I'll be back with a pocketful of dollars. (In my dreams)
I picture it as a balloon being pulled underwater, the farther it goes down, the higher it jumps up.
Euro now may seem a cheap way to get DMarks, the former semi-reserve currency in many places outside Germany (Eastern Europe), so I would be watching Germany to see if they are backing away from the Union.
SteveH: Good to hear from you. As I said, I'm out of my environment on this issue. There appears to be a confidence problem with the Euro. I tend to agree that perhaps it isn't that the US Dollar is strong, rather it is that all else is so weak in comparison. Still, I find it hard to imagine that 11+ countries with different languages, cultures, etc. and ever changing governments can keep this union together. For their sake, I hope they can. I guess that all they really can do is accumulate gold and US T-bills for reserves, as other currencies look really weak. I'm still trying to figure all this out though. Thanks, Black Blade
Goldfly: I think you're right. I knew that I heard that somewhere before, but my jewish friends tend to get a bit peeved, and then say "But Israel is the land of milk and honey." Hmmmmm..........
Mr. Gresham: I think that the currencies are linked to the Euro, but that was also based on agreements that national debts would be below certain levels, and various other agreements in the Maastricht Treaty. It appears that the rules don't apply once you're in. Italy has already fallen outside the guidelines in regard to the national debt, and I believe that Spain has a few problems in that regard as well. A falling Euro is definitely good for US tourists. I might even go visit friends in Barcelona, Valencia and Taragon before long. I will add an interesting study in currency confidence tonight (US Time) if I get the chance. - Black Blade
PS, wouldn't you know it. The day I land in SE Asia, I end up contending with a bout of malaria. I'm shaking off the effects still, but am a bit tired. I'll check in later tonight. Cheers - Black Blade
Iraqi being allowed to accept Eros for Oil is the Camels nose under the tent. Could this be the beginning of the EVENT we have discussed to bring the Dollar down? Would other oil producing countries then begin to say me too/ They would have a good argument. The EURO is a serious threat to the dollar and as many have said on this forum it is not that the EURO is weak but that the DOLLar is to strong. The strong Dollar policy of the US can't continue much longer. What happens when that policy changes? White Hills
PEI is "Prince Edward Island", a province of Canada...north of Nova Scotia and west of New Brunswick on the Atlantic Coast. Beautiful place which I visited this summer with my family.circa 46.5 degrees latitude/68 degrees West Longitude
the EECTry thinking of the European community in terms of what is the reality of Canada. Essentially the countries within the union become provinces. Europeans should be used to this mix (up) and that is perhaps why the Danes rejected the joining - they have their own multi-cultural quagmire within their own little country and may not be as open to adding to the whole (turmoil). The difference (and perhaps the weakness of this process of unification) IS on the cultural side. In Canada we KNOW about the instabilities caused by cultural/dominance tensions. In a word: Quebec. In Quebec it is cultural autonomy within the rest of Canada. In the rest of Canada it is Canadian autonomy (stability) with Quebec as the nationalistic rogue.
The country of Europe will be an interesting experiment, indeed!
BlackBlade - Euro and gold as non government funds
Gold of the gold standard times was used as currency by a large number of nations of differing customs and languages, with separate governments... Yet the non-nation-specific means of exchange worked very well. The same "problems" you point out for the Euro would have applied to free market money as well.
The point of the matter is that having a currency outside the direct control of a single government used throughout a diverse grouping of nations is a positive in encouraging trade by lowering inter EU trade costs even relative to fixed exchange rates. Lower trade costs would bring increased volumes of trade and better productivity as actual advantages are no longer masked by government manipulation of exchange rates withing the EU. Consider that internal tariffs within the EU were eliminated some time ago. Up till a couple of years ago, EU governments were very quick to capture the increased trade through heavier tax burdens. This is changing now as governments of the EU states are pressed to lower tax burdens in order to attract business investment and avoid entrepreneurial immigration.
Eventually, the EU countries will benefit due to increased trade whether or not the Euro is strong internationally or not. Considering that the main causes of Euro declines are carry trades and heavy international borrowing (ex EU borrowers), this weakness has to be temporary - since the Euro debt situation is inherently structured to reverse.
...or should I say "the thought-provoking Black Blade.
Good to see your handle BB. I think your paragraph below deserves some embellishment.
"I see that the Invisible one has just reported on the UN allowing the Iraqis to use Euros in their transactions for oil. What will this do for the Euro? I'm afraid not much unless the other oil producers follow suit. Iraq is still considered a rouge nation by it Arab brethren. The 8-year war with Iran didn't win many friends among even those considered pariahs in the Arab world. The Turks just as soon Saddam go back to murdering Kurds with biological weapons. The Kuwaitis and Saudis among other moderate Arab nations are scared s%#$-less of Saddam should he amass another large army. The list goes on."
Stranger's Remarks:
I don't think it is splitting hairs to say that Saddam is still considered a rogue nation by other arab LEADERS but not necessarily, as you imply, by most arabs.
Virtually all arab OPEC nations are ruled by dictators, who, like all dictators, rule by means of suppression. As such, these guys may fear Saddam not so much for his army as they do for the heroic status he sometimes enjoys in the hearts of their citizens. He is, after all, the one arab leader who has dared to stand up against the west.
Anyone tempted to underestimate this internal political threat implied by Saddam's popular support need only consider the civil unrest which erupted in many arab cities during the Gulf War. The Sadat assassination, the overthrow of the Shah of Iran and the current fighting in Ramallah are all examples of what can happen when disinfranchised moslem extremism boils over.
Particularly in Saudi Arabia and Kuwait, we have examples of lightly populated countries ruled by plutocrats who control some of the world's most critical natural resources. This circumstance alone makes for a constant threat of political instability - even without Saddam in the picture. But, WITH Saddam - and the veneration he can command in the streets, no arab ruler can afford to be dismissive.
Of course, some Arab leaders are forced to juggle these concerns with the important financial and/or military support they get from the United States (who, by the way, really is considered a pariah by many common arabs). For this reason, I think it is wise always to watch what is DONE in the Middle East rather than what is SAID.
What does all of this imply with respect to the potential for proliferation of Saddam's Euro oil-pricing scheme? Not much, perhaps. But, because of the issue's capacity for popular support, I wouldn't reject it out of hand.
Don't you think it normal that ECB global reserve growth would occur at a discount to the FRB as it approaches equilibrium reserve status in volume.
Moreover, from a demographic point of view, don't you think it has the potential to surpass FRB liquidity considering the potential of washing into the balcans and former soviet states.
The Euro is alive and well, at any time the puppet masters can swing the digits towards it as the gold flow goes to zero.
Get yourselves the real thing while you can!
$1.5 million in gold discovered missing at Chicago's O'Hare airport
This is a headline from earlier today...Seems the thieves must read this site too...humor...
Oh by the way, Aristotle, Oro, FOA, what is that you were saying about the "counter-party" risk and the safety of physical gold? Seems like a physical owner is "short some" today...
Thanks for tickling my fancy on the relative prosperity of those areas who have disassociated from empires and distant governments. Never thought of that before. Will look closer if I ever get the time.
I suspect secession is always in order -- if you don't want you and your neighbors looted by the elitists in a city far far away. Who DON'T know better what's good for you -- "He can't even run his own life, I'll be damned if he'll run mine." as the lyrics go.
There are more and more secessionist movements around the world every day. There are, for example, three serious ones in Italy I believe. No doubt everyone here knows about the Quebec sessionist movement. There's also a healthy one, or so I've heard, in Canada's western provinces.
Northern California wants to secede from Southern California -- or is it the other way around. Recently The Valley, etc. are trying to secede (dis-incorporate) from Los Angeles. There is, I understand, serious talk of the South seceding from the "union" for the first time since the First American Civil War.
This is all understandable when taxes are correctly understood as "user fees paid by someone other than the user." Governments broker the deal as to who gets the loot, and it usually goes to the geographical areas with the most political clout. For example, in the small town I live in, which has many severely blighted areas, the "Redevelopment Authority" chose to redevelop my neighborhood, one of the nicest in town.
People are beginning to catch on to the fact they're being looted and want to secede. There are other good reasons too.
The trouble with the Euro, and the rest of the garbage that passes for money today - I am inpired by Black Blade's comments earlier today - is that the Euro, to be specific, is the product of PhD minds. These people are a menace. They live in ivory towers where reason is divorced from everyday life. Thus, they can invent all sorts of intellectual contructs and feel quite at ease with them. They are, one and all, UTOPIANS.
Not so with the great unwashed. The mass of the great unwashed, general humanity, is not composed of intellectuals. It is composed of very plain and simple people who will have nothing to do with theorems.
That is why silver and gold will forever remain money. They are tangible, which means touchable; they do not have to be visualized, they are touchable. This is money which the most ignorant of the great unwashed can understand.
The great unwashed will prevail, this is unquestionable. They always have, and always will.
There will be a return to reality, as the whole edifice of our debilitated world economy crumbles, and it will probably be accompanied by a bloodbath like none ever seen before, as crazed masses of the unwashed riot, rape, burn and pillage whatever they can. That is where the Utopians are taking humanity.
Out of the ruins, perhaps a new civilization will emerge. The present one is done for.
See "The Gods of the Copybook Headings" by R. Kipling.
Your latest 40085 - PEI - is Princeton Economic International (I believe), where the former boss Martin Armstrong is awaiting prosecution - if justly - is anybody's guess ...
Personally, without any prejudice as to any wrongdoings, I would believe, since most of his analytically derived predictions have been not only close, some even too close to today's reality, that M.A. acted accordingly may have been his demise. ... There's much more out there happening, which won't be answered in any court - as it may well be too big for even the court to survive - ... and so I'm sorry for Martin, smartin(g) in a dungeon, may it be, that MA is guilty, or not. The question is - is he guilty of being too smart - in the sense of seeing through the collusion "pro US-$" at all costs - or did he talk to openly about whaat he's seen?
cb2
PS: justamereBear ... I apologize, using you for hanging myself in my own rambling thoughts a couple of days ago -
I would offer to explain, though don't, I beg, always take me too seriously - kind regards - cb2
Get well soon, Black Blade! Malaria is nasty and hard to get rid of; hope you don't have a bad case. Why don't you send your e-mail address to Peter so that Gandalf can send you your vial of gold flakes? Gandalf has offered them to all Founding Members of the new Hall of Fun! WHAT, you didn't realize you were a Founding Member???
.Don't know about the "pink money", although there were rumors of it years ago (early 80s I believe).
As far as gold not "trading" below $250.00, my only question would be "why ?". Certainly nothing magical about the $250.00 level, although I can see problems when "production equilibrium" is reached, i.e. average cost of production.
No doubt the greatest majority of au is traded on the commodities markets, but let's not forget all the physical "traded" daily in the form of Krugerrands, Maple Leafs, Eagles, Philharmonics, fractional Europeans, etc. I don't see "the price" (any price) putting an end to such trading for the average Joe, and actually buy the majority of my own holdings in just those forms, week in and week out at the local coin dealer's shop (most at or very near spot by the way).
I think too often that we all continue to see the forest but not the trees, and surprisingly there is alot of good and useful information bumping around on the street at most friendly neighborhood coin dealers and pawn shops when it comes to the gold markets. These guys have a finger on the pulse of the market via the public, other dealers, refiners, comex, and pretty much any other source you care to mention (including this forum....grin). There is alot more to the term "trading" than what might usually be observed, whether 100 ounce contracts in "The Market" or street selling of a Sovereign or two here and there.
Throughout most of the 80s and 90s, I dealt alot with a particular shop in a nearby city, and became well acquainted with the owner, who kept a good stock of coins and bars for the most part. These ranged from 1/4 ounce waffers and coins through the standard 1 ounce pieces up to 10 ounce Suisse Credit bars and an occasional kilo now and then. Orders were placed out on a weekly basis to keep "stock" in line with sales, but one could almost always guage the market sentiment based on what was available in the display case (remember, no internet - instant access information age before about '95). By watching "local markets", premium spreads, and most of all supply-demand factors, it was not difficult to predict most of the major run-ups in the spot prices along the way. In my 20s and 30s then, there was a group of us who had formed an "investment club" of sorts, pooling 10 ounces each au and "trading" our base in and out of price moves, eventually liquidating the pool at the rate of almost 45 ounces each over a period of some 4 years. Not too shabby considering spot prices closed considerably lower than they had opened at the beginning of the endeavor.
Still accumulating......and watching for $250.00 ! (smile)
http://www.lemetropolecafe.comAzteca de Oro is back. (Interesting guy!) He thinks the only way out of the dollar mess is to crash the system and start over with a new reserve currency: Euros or...gold.
Black Blade
I have never believed that so many cultures, with so many languages, with so many political forces, and so many long term irritants could, in practice, make the Euro work on a long term basis.
Sorry to hear about the malaria. Be Well.
Henri 40092 Thank you.
CoBra(Too) 40105
Thanks, that was the information I needed.
Don't particularly recall you hanging yourself. I suppose I enjoy debate, but I am resposible for my own decisions and make up my own mind, despite what I might or might not say in debate. I doubt there are many people here that walk on water. Getting opposing viewpoints is why I, at least, am here. Composing ones thoughts sufficiently to articulate them does wonders for clearer thinking, and I need all the help I can get. No offense offered or taken.
That Princeton economic department is becoming more and more interesting to me. They seem to have a great deal of what appears, on the surface, to be eccentric thinking. When you look closer, it seems to work in practice, and, in the end, you can't argue with that. (especially in the airy fairy economic field.) They have done some fascinating work on cycles as well.
I bow to your superior knowledge and respect your opinions. However I will point out the determination and planning that went into the EU and their launch of the Euro. I will critize them for not issuing actual currency in a more timely manner which has hurt their immediate objectives. Who would have thought 30 years or so ago that not only would they build a tunnel under the Channel but would have united East and West Germany into one country again and lead the way to a new Europe(except Another)? My point being that the objectives of the EU are well planned and one should look at the results so far and judge them on those. White Hills
Question for Lady Leigh, and all those who follow the Gold jewellery market.
Since 1996,when I obtained my first Krugerrand, I have been close-ly following all these Gold forums.The Gold forums talk mostly about bulk Gold and numismatic Gold coins, and the POG. However, according to Anglogold 80% of the yearly Gold sold is in the form of Gold jewellery.
Here are some approximate figures from the WGC on 1999 world Gold consumption:
2550 tonnes produced.
Under 4000 tonnes consumed.
Now if we use the 80% jewellery figure supplied by Anglogold we get about 3200 tonnes used for jewellery and only about 80 tonnes used for dental, coins, and other.
In 1999 the U.S. Mint alone sold 61 tonnes of American Eagle Gold coins, so that leaves 19 tonnes for, other, Gold coins, and dentists worldwide in 1999.
Here is my question:
Does anyone know if retail or wholesale prices of Gold jewellery have been dropping in U.S. dollars the same as bulk physical Gold and Gold coins, and paper Gold???
Observations:
In the last 10 or so years I've seen more and more men wearing Gold.
In the U.S. lots of people display their personal wealth in the form of vehicles and fine homes.
In many other countries, with populations far exceeding the U.S., personal wealth may be displayed in the form of Gold jewellery....and some speculation......I think China and South Africa know very well the annual Gold consumption figures, and China's small 15 tonne per year amount purchase is calculated so the current supply demand factor = "POG" is not affected.
Wouldn't anyone in a long term buying mode want the best possible prices? A 50 tonne per year order could cause a short squeeze in world supply, sending prices higher.Also of note; the Chinese want physical Gold, they don't trust normal channels,LBMA,COMEX,OTC, or the BIS, buying directly from the South African Gold Mines.
Hi, beesting! I wish I could help you, but with the exception of the little gold bracelet I bought last year at the Vietnamese store (the one in Cranston), I've bought almost NO jewelry since I got married. That's what happens when you turn into a wife and mom!! I seldom go out, so there's no place to wear it.
One thing I always notice though, is how often jewelry counters have "sales," often as much as 50% or more off. Could that mean something?
Are any USAGOLDers going to the Baltimore coin show tomorrow? My son has a recital in Gaithersburg, and I am thinking of swinging by the show in search of state quarters.
Jewelry Gold..... It's important to remember that wholesale and retail jewelry markets are worlds apart as far as pricing is concerned.
First, you have wholesale "base pricing" which includes the basic cost of production, i.e. the metals involved in a piece, cost of casting and finishing, and labor. Normally, at the wholesale level, this is based on the spot price x pennyweight of the particular alloy plus a small profit in the materials, casting, finshing, and so on. This for a "blank" or unset piece of jewelry. This pricing factor is usually tied directly to the current spot price of gold or other metal involved for most wholesale establishments.
From this point, the "blank" or unset piece of jewelry goes to the retailer who sets stones, does final finishing, sizing, and other needed work to make a "saleable" piece of jewelry. This is also where the vast majority of the "cost" of the finished piece is added. Each step in the process, from the casting of the metal, mining and cutting of the stones, middlemen involved in marketing any or all of the components, etc. adds to the cost and a profit margin is obviously figured at each level. But it is "usually" the final retailer that adds the greatest expense or profit to the final price, running from perhaps 200 to over a thousand percent mark-up. So when you consider such mark-ups, it is easy to see why jewelry at the "retail" level may show little if any price variation as spot gold prices rise and fall. Fact is, the gold content of most jewelry pieces, and especially the higher-end pieces, is but a small fraction of the "cost" or "value" of the piece. The "mounting" is often the least expensive component in the mix, and so it takes a pretty significant increase or decrease in the spot gold price to effect the overall price of the final product. As a quick example, an engagement solitaire sporting an "average" 1 carat diamond may retail in the neighborhood of $4000.00, while the gold mounting itself may cost the jeweler less than $100.00, very insignificant in relation to the total.
Most pricing differences seen with the rise and fall of the spot markets are at the wholesale level, but even there, an average mounting (a 14 karat ring for example) contains but a small fraction of an ounce of gold, so the total final cost of the jewelry piece is only slightly effected. With most jewelry pieces with a retail price under about $500.00, there is more of the "cost" attributed to the labor and mark-up involved than the actual materials used in it's production. This even tends to carry through to much higher priced items until better quality and higher value precious stones come into play at somewhere along the $1000.00 retail level. Just general guidelines of course.
Saw your mention of the state quarters series below. Wish I was in the area for the Coin Show, but unfortunately will be on the opposite side of the country. Have been noticing many "error" state quarter pieces on one of the auction sites of late......very interesting off center strikes that I thought would make a neat collection, perhaps one for each state, all struck off-center ! Gee, so much time, so many things to play with, and so little money......(grin)
In Canada, and I presume the US as well as most of the west, price mark-up of low end mass produced gold jewellry (not the true objets d'art) tends to be on average 10 times gold metal content. This also factors in purity, of course. Used jewellry is generally marked up 3 times etc. Most of the time the stones, if any, are of such a poor quality as to be a negligible factor in the price.
One wonders often why many just don't jump on a plane to Singapore for a buying spree. It would pay for the trip if one bought in any weight. The sightseeing would be a bonus.
The fun part at home is to find used gold jewellry and buy at spot. Oh what a challenge!
Has nothing to do with price action but, I am beginning to loathe "gold" despite my solid belief in its purity, honesty and financial utility even, I dare say, necessity. Something is terribly wrong. I can feel it in my bones. Yet, the risk of not owning gold is simply too great. Good night and I am taking a few days off and away. Kind regards...CM
Hey, CM, you've got to put your money somewhere, and would you really want it in the stock market these days? Think of how owners of Intel or Cisco or Microsoft "loathe" thinking about their investments right now.
Remember what Golds Revenge (whatever happened to that guy?) wrote last spring - something about "gold hates nobody; it just sparkles and shines."
No Joy In MudvilleAll the key players are slowly losing control. There are large icebergs straight ahead. These "giants" are not infallible. The game is being played by all so as not to upset (too badly) global stability and global financial equilibrium. Each is playing to win without wrecking the board game for the future enjoyment and enrichment of all. At some point though, one player or a combination of players will break ranks.
Their concerted actions are in violation of natural law and order. May God have mercy on us all.
Financial instability abounds for markets both at home and abroad. Stocks and indices are demonstrating historic volatility, with the NASDAQ100 trading in astonishing intra-day ranges of 4% Monday, 5% Tuesday, 6% Wednesday, 8% yesterday, and 5% today. It is not, however, just tech stocks as the S&P Bank index traded in a 4% range Tuesday and 3% yesterday and today. From last Wednesday's lows, the Dow has surged 935 points, or 10%. Yet it took the NASDAQ100 only a few trading hours to rally 11% off of yesterday's trading low. For the week, the Dow gained 4%, while the S&P500 declined about 1%. The Transports gained better than 2%, the Morgan Stanley Cyclical index 3%, and the Morgan Stanley Consumer index rose almost 4%. The Utilities dropped 2%. The small cap Russell 2000 and the S&P400 Mid-cap indices declined about 2%. The NASDAQ100 dropped 8%, the Morgan Stanley High Tech index 6%, and the Semiconductors 9%. The Street.com Internet index lost 5% and the NASDAQ Telecommunications index declined 8%. Even the Biotechs succumbed to a bit of selling, declining 2% for the week. The financial stocks outperformed, with a strong rally in the banking sector seeing a 4% gain for the S&P Bank index. The Bloomberg Wall Street index had a marginal advance for the week. Year-to-date, the New York Financial Index has gained 16%.
Conditions were unsettled in the credit market as well, although selling in Treasury securities helped take the edge off of the widening spread dilemma. For the week, 2-year and 5-year Treasury yields jumped 12 basis points, while the key 10-year note yield added 8 basis points to 5.71%. Long-bond yields increased 2 basis points. Mortgage-back yields increased 11 basis points to 7.45%, while agency securities outperformed with yields generally rising six basis points in the range of 6.6%. The benchmark 10-year dollar swap spread was unchanged at 114. There continues to be little good news in the battered junk bond market, with liquidity nonexistent and spreads continuing to widen for many issues. The dollar index ended the week unchanged after a virtual "meltup" early in the week gave way to selling into week's end. Many currencies have been under intense pressure, especially throughout the emerging markets, and we continue to see generally dislocated global currency marketplace.
Importantly, but certainly not surprising considering the environment, bank credit growth has come to a halt, with loan growth stagnating and bank security holdings actually down a notable $32 billion during the past five weeks (to $1.3 trillion). At the same time, broad money supply (M3) expanded $25 billion last week, with savings deposits increasing $20 billion and "repos" rising $5 billion. During the past 3 months, broad money has grown at a rate of 8.9%. For 12 months, M3 has expanded by 10.2%. The growth in broad money supply is unrelenting and money market instruments are major fuel for this historic monetary expansion. Since the end of June, money market fund assets have surged $120 billion, or at an annualized rate of 23%. For now, I assume the aggressive Wall Street-sponsored non-banks have "pedal to the metal," as the increasingly cautious (impaired?) banks are forced to think more about risk control. From recent earnings releases, we see the subprime credit card lender Providian increased managed receivables 34% year on year, and at American Express, lending receivables surged 33%. And with mortgage refinancings running at the most rapid pace since last December, there is a particularly convenient mechanism for the GSEs to aggressively expand system "money" and credit � to "reliquefy."
We'll begin with a bit of "compare and contrast." First, an excerpt from Challenges for monetary policymakers, a speech given last week (October 19, 2000 ) by Alan Greenspan:
"Whether we choose to acknowledge it or not, all policy rests, at least implicitly, on a forecast of a future that we can know only in probabilistic terms. Even monetary policy rules that use recent economic outcomes or money supply growth rates presuppose that the underlying historical structure from which the rules are derived will remain unchanged in the future. But such a forecast is as uncertain as any. This uncertainty is particularly acute for rules based on money growth. To be sure, inflation is at root a monetary phenomenon. Indeed, it is, by definition, a fall in the value of money relative to the value of goods and services. But as technology continues to revolutionize our financial system, the identification of particular claims as money, near money, or a store of future value has become exceedingly difficult. Although it is surely correct to conclude that an excess of money relative to output is the fundamental source of inflation, what specifically constitutes money is a notion that has, so far, eluded our analysis. We cope with this uncertainty by ensuring that money growth, by any reasonable definition, does not reach outside the limits of perceived prudence. But we have difficulty defining those limits with precision, and within any such limits, there remains significant scope for discretion in setting policy.
Evidence began to accumulate in the early and mid-1990s that prospective rates of return on capital were rising. This was implicit both in the marked rise in investments in high-tech equipment and in the updrift in estimates of the growth of long-term earnings by corporate management, which were reflected in the projections of securities analysts. Nevertheless, we could not be certain whether what we were observing was a short burst of productivity gains or a more sustained pickup in productivity growth. The view that we were experiencing a sustained pickup gained plausibility when productivity growth continued to increase as the expansion lengthened. But importantly, only after we could see evidence in other economic behaviors and in readings from asset markets that were consistent with accelerating productivity did we begin to develop confidence in our analysis."
Now, a bit of "contrast." While traveling in Australia in September, Dr. Steve Keen (a good mate and very gifted and iconoclast economist and writer!) from the University of Western Sydney was kind enough to share with me a research paper written by Dr. Perry Mehrling from Barnard College titled "The Vision of Hyman P. Minsky." It was published in the Journal of Economic Behavior & Organization Vol. 39 (1999). At the time, Dr. Keen stated, "I think you will like it." Well, I loved it. It is an outstanding piece of research as Dr. Mehrling splendidly illuminates key aspects of the brilliant thinking of Hyman Minsky; a vision of the world of finance that could not be more pertinent to the present environment. It could also not be further from the thinking of our present central bankers and most of the economic community. Particularly now that we have entered a period of acute financial instability both domestically and internationally, it is most opportune to delve further into Minskian analysis.
Dr. Mehrling's paper describes how Minsky was an "institutionalist" and, critically, how the economy was "monetary in character." The key is to focus on individual economic units � companies, individual households, financial institutions, governments and countries � and concentrate on monetary flows between the various units. Using a Minsky perspective, one would certainly ignore the current "New Era" fixation on new technologies, productivity and GDP growth, in favor of rigorous analysis of money flows, credit creation and, particularly, the status of various debt structures. Importantly, money is the "most real thing" - "the veil of money is the very fabric of the modern economy." And as Dr. Mehrling points out, money is nothing more than a form of debt � someone else's liability. Indeed, the stability of the entire system hinges on the soundness of individual liabilities and the overall debt structure. This is a fragile arrangement, as it is subject to self-reinforcing � boom & bust - debt and institutional dynamics. "There is nothing underneath, as it were, holding it up." As we have discussed in previous commentaries, Minsky saw recurring cycles fostering a drift from "sound" to "Ponzi" finance, and inevitable collapse. Since Dr. Mehrling does such a wonderful job expounding Minsky thinking, better to let him do it in his own words. I've excerpted four paragraphs from his exceptional 23-page paper.
"In these (capitalist) economies, so (Minsky) seems to have thought, financial processes take on a life of their own, so that their logic effectively becomes the logic of finance. In Minsky's own early words: "Capitalism is essentially a financial system, and the peculiar behavioral attributes of a capitalist economy center around the impact of finance upon system behavior" (Minsky, 1967). This is the core insight that underlies all of Minsky's work, and distinguishes his work from that of other economists. According to Minsky, we need to understand finance not because it is an important part of our modern economy, but because it is the very heart and motive force of that economy."
"Generally speaking, the tendency is to move from robust finance to fragile finance � this is the Financial Instability Hypothesis � and this is so because in a world of uncertainly, especially endogenous uncertainty, expectations about the future have little objective foundation so that mistakes are inevitable. To be sure, economic units have their own understanding of how the economy works � they have a �model of a model� as Minsky liked to say � that they use to form expectations about future cash flows. The important point is that any attempt to forecast which of the myriad possible futures will actually be realized come down to an attempt to forecast the forecast of one's fellow economic units. Concretely, the cash commitments of each unit depend on the cash commitments of every other unit. The whole web of interlocking commitments is like a bridge we spin collectively out into the unknown future toward shores not yet visible. Mere ideas about the future become realities as they become embedded in financial relations, but inevitably over time the reality embodied in the pattern of cash commitments diverges from the reality embodied in the pattern of cash flows. Inevitably our ideas about the future are wrong, even when we all agree, indeed especially when we all agree. Just so, widespread belief in the 1960's that economists had learned to tame economic fluctuation led units to the �euphoric� view that future cash commitments were relatively unproblematic, and once this view became embedded in the structure of debt contracts, it became a constraint on future action. The bridge of commitments reaches far out into the future as units (understandably) mistake their common model of reality for reality itself. Robust finance gives way to fragile finance as �margins of safety� are eroded and commitments leave less and less room for possible shortfalls of cash flow."
"In Minsky's vision, business cycle fluctuations of employment and income are mere surface manifestations of the deeper fluctuation in financial conditions along the scale from robust to fragile and back again. Like Schumpeter, Minsky understood fluctuation as the way in which the capitalist system grows, but for Minsky the underlying process was not absorption of technological change but rather the expansion and validation of financial commitments. What worried Minsky was the prospect that, left to its own devices, the financial system would operate to amplify rather than to absorb the naturally cyclical process of growth, as each commitment provides the support for others on the way up, and as default on some commitments undermines other commitments on the way down."
"One might think that asset prices are the most obvious symptom (of financial conditions turning from one of balance to imbalance), but Minsky focused first on what he viewed as the more direct symptoms that appear in the mechanism of refinance. By definition, speculative financing arrangements require periodic refinance, at which point both borrowers and lenders get to take a second look at the balance between the borrower's future cash flows and future cash commitments in light of the changed financial conditions in the economy as a whole. Any evolution toward fragile finance is therefore bound to show up as increasing difficulty rolling over debts as they mature, difficulty that may manifest itself in various ways depending on the institutional framework, but which ultimately shows up as increased demand for bank lending because banks are the lenders of last resort to non-financial economic units. Significantly, banks are themselves speculative financing units that face their own problems of refinance both because of their extreme leverage and because of the short-term character of their liabilities. Thus, the ability of banks to help other units refinance depends on their ability to refinance their own positions. Problems of refinance generally are thus bound to show up as problems of bank refinance particularly. It follows that one way to track the state of financial conditions is to keep a close eye on the operation of the mechanism through which banks refinance their activities."
Talk about "hitting the nail on the head!" "Any evolution toward fragile finance is therefore bound to show up as increasing difficulty rolling over debts as they mature�"
We find this final paragraph fascinating, and believe it is critically pertinent to the increasingly hostile current environment. We have written extensively on the explosion in money market assets (short-term corporate debt obligations), with particular focus on asset-backed commercial paper and other sophisticated vehicles that have been used to finance this historic credit bubble. We've highlighted how the major money center banks have created hundreds of billions of "leveraged loans" (much of this very weak credits to finance the historic "telecommunications arms race") that were then syndicated throughout the system. We have also discussed how, through "structured finance," Wall Street had created an amazing alchemy for turning risky assets into "money." And, of course, we have discussed the vital role played by derivatives throughout this the entire crazy process to disguise risk, while in reality systemic risk grew exponentially.
The bottom line remains that enormous quantities of poor credit were created in an episode of "Ponzi Finance" that not even the great Hy Minsky could have envisioned. But to keep this scheme running requires unwavering confidence and a continuous feeding of speculative credit excess. Today, however, confidence is waning, investors are fleeing risky assets, and financial market liquidity is faltering. Importantly, it appears that risky credits are increasingly losing access to the commercial paper market, with some borrowers apparently struggling to roll short-term debts. This is a big problem - the inkling of a severe liquidity crisis. First, this is bad news for bankers that have provided back-up lines of credit. Not surprisingly, it appears that nervous bankers are now scrambling to reassess their bank lines. This, then, comes as quite disturbing news for risk-averse commercial paper investors and money market fund managers, as they now scramble to assess which of their borrowers may lose their bank lines. So it becomes a dangerous game of "hot potato" � or who gets burned holding the bad paper. This is a much different game than it's been in awhile.
We continue to believe that the commercial paper market � a key source of monetary excess during this cycle � is a likely "hot spot" susceptible to serious trouble. As of last week, there was a total outstanding commercial paper of almost $1.6 trillion, having increased $190 billion (16% annualized rate) so far this year. By category, the financial sector has issued $1.25 trillion of commercial paper, with $122 billion (13% rate) new issuance so far this year. Non-financial commercial paper has expanded at a rate of 30% so far this year to $347 billion. There is $595 billion of Asset-backed Commercial Paper in the marketplace, up from $521 billion at the beginning of the year (17% growth rate) and $382 billion at the end of 1998. "Tier 2," or below-prime rated commercial paper, has expanded at an almost 70% rate so far this year to $130 billion. We would not be surprised if this extraordinary expansion was related to faltering liquidity in the junk bond market. This is an alarming amount of short-term borrowings for less than stellar credits, borrowers we would see as increasingly vulnerable in this environment. We see this as a critical weak link for the U.S. financial system.
Xerox, of course, has experienced trouble rolling its commercial paper. And, according to Bloomberg, Armstrong Holdings "failed to renew its $450 million one-year credit line as mounting asbestos-related claims led some banks to refuse to lend to the maker of vinyl flooring." Apparently some lenders backed away from Armstrong after Owens Corning filed for bankruptcy due to asbestos liabilities. There are 47 banks on the hook for $1.8 billion lent to Owens Corning. Quoting Bloomberg, "banks are also concerned that Armstrong might draw on a new backup credit line should the company be unable to tap the commercial paper market�Armstrong has used $350 million of its $900 million commercial paper." Yesterday, Moody's cut Armstrong Holdings commercial paper rating. The stock has lost about 75% of its value this month, falling to $
3. At June 30th, Armstrong Holdings had total liabilities of $3.4 billion with shareholder equity of $694 million. There are also a myriad of highly-leveraged finance companies that remains at the edge, many with significant short-term debt outstanding.
And with banks on the hook for loans, derivatives, bank lines, security holdings, and such, it is of little surprise that investors are increasingly nervous holding bank debt. This week, lower-rated bank and finance sector debt spreads widened as much as 14 basis points, while spreads for mortgage-backs and agency securities narrowed. There was no relief, however, for the beleaguered corporate debt market as spreads widened across the board between 2 and 8 basis points. It doesn't help that the list of problem corporate credits grows by the week.
Kudos to Dow Jones� Joe Niedzielski for his article "Chase Transfers $920M of Credit Risk With LANCE Deal." "Chase Manhattan Bank has become the latest global banking group to shed a portion of credit risk from its huge loan portfolio with the completion of a $920 million operation know as a synthetic securitization of commercial and industrial loans. These deals, a product of Wall Street financial engineering, have become increasingly popular in the past 12 months�In its latest deal, announced Monday, the credit risk on a $920 million portfolio of commercial and industrial loans was transferred to a special purpose vehicle, or trust, known as Leveraged Asset Notes for Credit Exposure, or LANCE 00-1�The transaction is further supported by the issuance of $46 million of credit-linked notes that were sold to investors. The notes were rated triple-B-minus by Fitch."
Basically, such a structure allows Chase to transfer credit risk from a pool of credits to "investors" willing to purchase lower-rated but higher-yielding securities. In many of these types of sophisticated structures, securities are largely immune from credit losses until "settlement" at the end of a designated term, such as three or five years. Such structures conveniently create securities that are both difficult to value and quite sparingly, if at all. We worry that such securities are susceptible to abuse and hold potential to be destabilizing for the system down the road, like so many other securities and structures that have been created during this protracted credit-induced boom. Coincidently, just a few minutes after Mr. Niedzielski's article was posted, Bloomberg ran an article "Pension Changes for ABS, CMBS, Coming Soon, Morgan Stanley Says."
"Changes to the rules limiting pension fund investments in commercial mortgage bonds and asset-backed securities may come at the end this month or early next month, according to Morgan Stanley Dean Witter & Co. The changes were proposed to ERISA, or the Employee Retirement Income Security Act, and were entered into the Federal Registry for a 45-day comment period, which ended last week�
Once the Labor Department publishes the rule changes, they become effective, Morgan Stanley wrote. The changes in the their original form would allow pension plans to buy bonds rated as low as ``BBB-'' backed by pools of residential and commercial mortgages and auto, manufactured-housing and home-equity loans, a market estimated at $100 billion. Pension funds are currently limited to investing in ``AAA''-rated mortgage and asset-backed securities."
Interestingly, then only a few minutes later another headline pops up on my Bloomberg screen: "Labor Department Expects Little Delay in Pension-Plan Changes."
The Labor Department expects to publish and enact proposed changes that would allow private pension plans to buy lower-rated asset-backed debt either next week or the week after, a Labor Department official said. The changes were proposed to ERISA, or the Employee Retirement Income Security Act, and were entered into the Federal Registry for a 45-day comment period, which ended last week. The Labor Department received three comments, none of which were ``earth-shattering'' or likely to give rise to any changes in the original proposal, said Ivan Strasfeld, director of exemptions at the Department of Labor.
The proposal will allow purchases of bonds rated as low as ``BBB-'' backed by mortgage, auto, manufactured housing and home-equity loans, of which there are about $100 billion outstanding. They were originally seen as too risky, though investors now say lower-rated asset-backed securities have proven to be at least as safe as the stocks and junk bonds pension plans can buy."
All I can say, is "I don't like the smell of this." First, there is Chase Manhattan (and certainly the other aggressive lenders/securities firms/derivative players) working diligently to create sophisticated structures and securities that transfer the risk of their ill-advised lending onto the marketplace (let's not forget the Orange County bankruptcy fiasco caused directly by positions in GSE structured notes sold to a county official with insufficient skills to recognize and appreciate the extreme risk embedded in the securities!!!). At the same time, the Labor Department is quietly working to change the rules allowing pension money to purchase risky securities. Again, this just doesn't look right, and this will be an absolute outrage if institutions now try to offload credit risk onto the unsuspecting. While it is quite likely too late in the game to protect the American taxpayer from risky lending by the GSEs, can we at least keep ERISA pensions free from high-risk securities?
GSE Watch
Going forward, it is certainly our expectation that the government-sponsored enterprises will take extraordinary measures to perpetuate the current bubble. We also expect, in an environment fraught with increasingly tumultuous financial markets, that Wall Street will "circle the wagons" and work diligently to support the GSEs - their ever faithful "liquidity backdrop." Today, the stock of Fannie Mae traded to a record high and Freddie Mac is not far behind. The message is loud and clear, "Fannie and Freddie, get out and buy securities, lend aggressively, and expand your assets!" We read with curiosity the sanguine comments from one major Street firm: "We favor Strong Buy-rated Fannie Mae and Freddie Mac as the best defensive stocks in our sector in the face of a slowing economy. Not only are their mortgage portfolios insulated from credit risk by layers of private mortgage insurance. But also widening spreads, which might accompany uncertainly over the economy, would allow them to accelerate portfolio growth."
This week, Bloomberg ran an article "Fannie Mae Sitting Pretty Atop Mortgage Mountain � for Now," where it quoted Franklin Raines, FZ� �Lt�2 ��3;p2o 2qX NA�0��2o ��x�p2o N� .$ ` > ���� 2q��` � ��x�p2o`D B N� Lt� > 2p 2o� ����2o��|Y ���2o�D B�--�" �
Cavan Man Alert- Careful my friend, you sound like you are on the brink of CAPITULATION!!! It is very much in vogue in our arena these last few months {summer is over and gold/mining shares are supposed to be rising, right?}, yet this temptation is to be denied. This is the market bottom at final capit of longtime goldhearts.
The hypothalamus takes over and tells us to SELL, SELL, SELL, yet this is typically the best time to BUY {call Colo}. As hard as it is to see the monthly statements down month after month, it is also a tremendous opportunity to be able to accept these "market gifts" and hope they will continue into the future, as a lifetime's wealth is accumulated. If you see $200 POG is that the time you are planning on selling or loading up the truck? My wife will consider having me taken away, but if we see Au that low we will be looking at a 2nd mortgage on house.
Hold that line there left flank!!! Best to the Faithful!
auspec {am now pretty much rested up and celebrated out from CLHE-HoF campaign and looking for the NEXT CAUSE}.
Journeyman, Good day!.. All your secession talk has reminded me of the man who predicted the "Balkanization of America". Yep, you and others probably guessed it. Pat Buchanan.
Why is Libertarian style secession any better than the fascist or socialist style secession. Oh, maybe someone has the idea that they have re-invented the wheel? While their ideas are better, they still miss the point. And they practice intellectual self righteousness.
Secession can come in two ways most of the time, both movements, if ultimately successful will leave us, first like a Russian Federation of States, and later even less than that. Buy your gold now if that happens. And run for the hills. The first group of secessionists hates all that is good. Things like real money, and real men. People who fit in this category, are Bill Clinton and Louis Farahkan. The second group sees what is wrong with the current system of things and resent what they see. The trouble is that they are willing to get rid of much good to achieve their goals. People who fit in this category are some from this forum and the Libertarian crowd. The people in the middle see what is wrong with the first group and like much of what the second has to offer, with the exception of one important thing. They recognize that that second group lives mostly in their mind via intellect and resentments. The second group is willing to risk losing the strength that comes from a singlularly strong and moral United States. They think in their intellectual ecstasy that all will be wonderful if they can just stay by themselves in the corner of one state or region of the country and practice their philosophy as if no outside force will ever resent their freedom and try to overrun them. Their ideas are good they think to themselves. Too bad no one understands their good ideas, they muse.My secessionist friends and my libertarian friends, you have your best chance in a strong, United States, that extends from the shores of the Atlantic to the coasts of Oregon, Washington and California. And from Canada to Mexico. Cut up this best chance mankind has ever had at you and your offsprings own risks.
Lastly, someone is going to come at me and lecture me on the American Revolution/Secession. When in history has a Secessionist movement been led my men of such moral moderation? Neither fascists or socialists were they. Guided by an inner knowing....a confidence (con - fidio), with fidelity to a spirit of Truth were these men and women.
At that watering hole I leave you. Drink or walk on by.
Thanks,Galearis,aunuggets, and Lady Leigh,for the help in understanding the other market for Gold. So, if the public is buying about 3200 tonnes of Gold per year for jewelry
a "short squeeze" in Gold has to come, at some point!
Patience is a virtue!
P.S. ANOTHER predicted all Gold paper would lose value, before Gold will rise, so far right on the money, only the timing is uncertain.....beesting.
Good to see your name again Mr. Soloman Weaver!
Very interesting information which I'll have to read again in the morning as I'm half asleep. It's after midnight here in MA.
I'm always looking for small signs that will foretell when the bubble will burst and from what you've just given us, I'll add that when Providian Bankcorp stops sending me checks (simply cash the check for any purpose and we'll automatically increase your credit limit) on a weekly basis, then I'll know it's time to short the market and stock up on groceries.
Good post, thanks and good night.
Rich
Libertarianism is the psychology of freedom. It is LIBERTY.
First, I am a libertarian. I am not a republican. I will not vote for "w"
Second, I ask you what exactly would be wrong if the US were to split up into independently governed political zones that honored the constitutional interstate free trade provisions.
more thoughts on the deflation/hyperflation debate.
From aztec d'oro at metropole cafe.
"The Future Inflation Gauge is a lead indicator on future inflation.
Lead time is 10 months, it is consistent 91% of the time, never has missed a turn in the cycle of inflation.
Also it has only a 9% rate of false alarms.
Overall, it is the best and most trustworthy economical indicator with regards to inflation.
Its smoothed annualized growth rate dropped to -1.1 in September down from 1.5% in August from 3.7 % in July from 7.5 % in June, after 8.3% in May, 14.4% in April, 13.7% in March, 14.2% in February, 14.7% in January and 15.9% in December 1999.
The institute said the gauge was pulled down by factors as purchasing manager's deliveries and slower growth of real estate loans.
The trend is clear; within the next 10 months, the indicator is telling us that US Inflation will be negative or close to it, barring any earth-shattering occurrences in the meantime, like oil going to $50 or $60.
This is the real inflation expectation...The government will not need to hedonize this figure if current trends continue."
Looks like a deflationary enviroment to me.
My take on this. Look around you, how many of your friends and relatives are up to their eyeballs in debt. We all now that the U.S public have a negative savings rate. People are spending more than they can afford.
Good times dont last forever, we all know that at least a recession will come. And what do people do when they lose a little confidence in the economy? They dont go out and borrow more, they are already mortgaged to the hilt. They are more likely to stop spending and sell some of their assets, driving prices down. Such a cycle tends to have a snowball affect. No matter how much the Fed pumps up the money and loosens the credit, you cant make a horse drink if it is already over quenched.
Japan is a prime example of how a goverment is trying to induce its public to spend and borrow. Interest rates are close to zero, and it is spending astronomical amounts of money on civil utilites that are not needed, just to get the public to spend and borrow. Regardless of all this effort, Japan is still in a deflationary spiral.
What I have writen is overly simplistic and devoid of the depth of knowledge of say Traveller and Trailguide, but human nature and actions are simple and predictable. The public will not borrow more and will panic in the next economic downturn.
One more note. A survey was carried out to determine how often so called economic experts got the next move in the economic cycle correct.
They were right only 30% of the time. In other words, if you tossed a coin you would have a better chance of predicting the future.
When two intelligent minds like trailguide and traveller cant agree, then you should start listening to your own instincts.
http://www.bloomberg.com/welcome.htmlCheck GSR and Goldfields LTD (GOLD) at Bloomberg.
They show GSR @ .56 up .06 and volume @ 40,600
Goldfields @ $2.88 up .06 volume 93,000
Most of the time I watch on the AMEX site . They show no volume today.
Also re your 40136, personally I go along with that kind of thinking. Seems to work as well as anything, but you sure have to watch and listen a lot to insure you are indeed getting the right picture.View
Yesterday's Discussion.
As for gold trading stopping at $250. The guy that has told me that is my local coin guy. He has said it in passing more than once. I never did ask him what he bases that on.
I will ask him when I see him again.
No bright future for gold says
AngloGold as it posts results
THE world's largest gold producer, SA's AngloGold Limited has posted a 1,7%
increase in gold production to 1,83-million ounces for the quarter to
end-September, from 1,799-million ounces in the previous three months.
However, the company said increased costs and increased spending on
exploration and corporate activities, together with lower income from associates,
saw headline earnings decline 11,3% to $0,55 from $0,62. Headline earnings a
share amounted to R3,99, from R4,29.
The group's operating profit also slipped 3,4% to $115,1m from $119,2m as a 9%
wage increase took effect at the SA operations, and which affects about 54% of
working costs.
However, cash costs were steady at $209/oz from $207/oz previously, while total
production costs were also maintained at $240/oz from $239/oz. Net capital
expenditure was 21% higher at $62,6m from $51,8m.
The group said the current narrow price range for gold is likely to prevail into the
future until some major dislocating event in other financial markets occurs to
move investor interest back to gold.
In its review of the gold market for the third quarter, the company said the paper
market for gold remains thin, with limited interest and this has contributed to a
narrow price range for the metal.
A setback in equity markets, or in the value of the US dollar could lead to more
favourable interest in gold.
The physical markets for gold remain largely in balance, AngloGold said.
Countries which support the Washington Agreement have shown every sign of
adhering to that agreement, but countries and institutions that are not signatories
have felt free to sell gold from their reserves, it said.
The market has had to absorb opportunistic sales of gold from a number of
official sellers outside of the Washington Agreement during the past nine months
and total official sales of the metal for this year look likely to be higher than last
year.
To balance this, physical demand has been good, although uneven in some
important markets.
AngloGold said it was encouraging that gold producers appear to be more aware
of the need for the marketing of gold, and it must be hoped that this awareness
will translate to more widespread support for gold promotion by gold producers
than has been the case in the past.
The gold market was quiet for much of the third quarter, and the price drifted
lower. The average spot price of $276/oz compares with the average for the
second quarter of $280/oz.
Support for the price from physical demand around levels of $270/oz was evident
again in the quarter; the price closed the quarter at $274/oz at the low end of its
recent trading range.
In SA, the average price for the quarter of R62,176/kg was up slightly on the
second quarter, but since the end of the third quarter, we have seen historic
record rand prices for gold of over R67 000/kg.
The lower spot price of gold and the limited price range have made it necessary
for AngloGold to increase further the levels of hedge cover for new projects in Mali
and Tanzania, and for existing capital projects in SA.
This cover is consistent with the company's policy of actively managing revenue
risk in the short to medium term, and with the company's commitment to paying
appropriate returns to shareholders on capital invested in the company.
Hedge cover remains concentrated primarily in the two years immediately ahead,
with relatively low levels of cover in place for the company in the period thereafter.
Kaplan (Leonard not Steven), suggested that gold is simply seeing too much technical selling pressure. "I still believe that gold is a captive of the dollar, but when it breaks support like it did yesterday, technicals reign supreme," he said. Kaplan went on to say that gold is in a bear market and under these conditions, "any positive news is interpreted negatively or is ignored." Now that gold has broken key support there is nothing holding it back from hitting $262-263, he said. If after it manages to stabilize, then external factors will start to impact the market once more. "It loosened the shackles of the dollar, but it was not good because of the technical aspects," Kaplan added.
RE: Galearis, ORO, Stranger, Leigh, justamerebear, and White Hills
Thank you all. Your responses give me some ideas to reflect upon. As I said, this is not my area of expertise, but I certainly had some thoughts (maybe concerns) about the viability of the new currency with all the attendant problems of European diversity and confidence of the people.
Stranger: Good to see your still around. I have to agree with you on your assessment of the Arab world. BTW, I was in the SLC area not long ago, I ate at an excellent little place called "The Red Iguana". Excellent selection of Mole. Thanks.
Leigh: Thankyou my good Lady. I still down my Lariam and other medications. Gold Flakes for malaria, Hmmmm..... Who woulda thought ;-)
A story about currency that I condensed from the WSJ
An Italian Tale � Banking, it's not just for bankers anymore! It's all about confidence in the currency!
From an article in the WSJ, Oct. 6, 2000 (sorry about the inserted comments and interpretations)
In a small town called Guardiagrele, there is an interesting experiment in Central Banking and currency printing taking place. Obviously, the bankers are not happy, the people are happy, and the government is not in a position to argue. A new currency called the Simec has appeared on the scene. What is a Simec you may ask? The Simec is the Italian acronym for "econometric symbol of inducted value." It is the brainchild of a wealthy local retired law professor named Giancinto Auriti. In most places the Simec would not be worth the paper it is printed on, yet many local merchants accept the new currency and are reimbursed in Lire at the rate of 2 for 1. This gets strange but at the same time it has exposed the Italian Central Bank as much as counterfeiters as the good professor, perhaps even more so. The strange part of this experiment is that the citizenry pay for Simecs with Lire at the rate of 1 to 1 and effectively double their money.
The good professor can well afford it as he spent much of his fortune to finance the Simec in an effort to prove his theory about money and the vast banking conspiracy. So far his experiment ha produced a frenzy of consumption (wealth effect?) in Guardiagrele, a rupture in the local business community, a rebuke from the Bank of Italy, and even a legal victory! The premise of the professor's experiment is to convince people that central bankers are the biggest con artists in modern history. His main thesis is that the central banks rob the common man by the method that they place new currency into circulation. Hmmm�.. where have we heard that before? Rather than inject the cash directly into circulation, they lend it through the banking system while charging interest. The professor claims that this practice makes the Central Bankers the owners of the currency, and everyone else their debtors. I must admit, his experiment is quite the novel approach to proving this theory. He concludes that this debt-based money has roughly half the purchasing power as it would if it were directly injected into circulation. Thus, the 2 for 1 exchange rate.
Originally, he tried to challenge the bankers in the courts but was rebuffed in his efforts to sue the Bank of Italy Governor Antonio Fazo, and former Governor Carlo Azeglio Ciampi for fraud. Yeah, that could be a problem. So the good professor conceived of another means to prove his point. He first hired a local printer to produce several boxed of Simecs. Each is emblazoned with a hologram and an image of an eagle. They come in violet, green and mocha depending on the denomination. Each carries the statement that identifies it as property of the bearer. Next he convinced about 40 local merchants to accept the Simec that he would redeem for a 2 Lire each.
Soon people lined up to exchange their Lire for Simecs, even raiding their savings, in order buy purchase goods. Daily volume reached about $40,000 per day. Even neighbors for communities throughout the Abruzzo Region came to partake of the experiment. They stormed stores to purchase smoked prosciutto, designer shoes, and other goods at half the Lire price. For the participating merchants, every day was Christmas. The professor was good to his word as every week he exchanged the Simecs for Lire and everyone was happy except the bankers and government. Oh yeah, and the non-participating merchants weren't happy, as many customers went to the stores that accepted Simecs. The local business association was split in two and its pro-Semic chairman was forced to resign. It came to a head last August as non-participating merchants and the mayor, Franco Caramanico, asked local magistrates to intervene with a ruling on the legality of the new currency. Eventually, the non-participating merchants were demanding damages from the professor. By mid-August, there were about 2.5 billion Simecs in circulation.
That's when the local magistrates called in Italy's Finance Guard, a militarized police force that deals with crimes such as smuggling and tax fraud. They carted off box loads of Simecs prompting protests from angered citizens. However, the opponents were shocked as a local court found that the professor did nothing wrong. A real dilemma eh? What to do � since the Central Banks could conceivably face the same charges. Meanwhile prosecutors are considering a ruling from a higher court. The experiment is now on hold, however, there appears to be enough Lire to make redemption's, also the Semic has become a collectors item with numismatists from all over Italy seeking to purchase the new currency.
But the Bank of Italy isn't amused (more fun when your bank is a monopoly). Organizations are generally opposed to competition, whether it is the Mafia or the Central Bank. In a statement released by the bank, the CB reminded Italians that the "collection of funds among the public, emission and management of means of payment are, in the best interests of the public, reserved to subjects authorized by law" � and those don't include Prof. Auriti. Seems they got just a wee bit testy over this little experiment. Regardless, the Prof. ruffled a few powerful feathers. He has attracted a lot of support from various quarters. A Franciscan Catholic college in Abruzzo's capital L�Aquila. Plans to open a school on monetary values dedicated to the professor. The Northern League, a political party wants the professor to address its mayors on how to spread "local money" nationwide. The professor looks forward to 2002 when the Euro is scheduled to replace European currencies. He says that "a storm is coming", and he thinks that Central Bankers will use the occasion to provoke an artificial cash crunch turning Europeans into monetary slaves.
I don't totally agree with the professor, but I think he may be on to something. It really is about confidence in the currency. The Euro could be facing some very shaky times ahead. Ah, OK, shakier times ahead.
It looks as if ECB President Wim Duisenberg has been given a new nickname by the European financial press. They call him "Dim Wim." The question is how long this old boy can continue to be effective. He has lost the confidence of the people, the financial media, and the very institutions that he has to deal with in his official capacity. Now he is being mercilessly ridiculed by the financial markets, analysts, and the press. Probably for good reason as the Euro tanks again the US Dollar and the Yen (OUCH!). The weak Euro is an embarrassment for the ECB, and increases the risk of accelerated inflation. The ECB has previously stated that they are concerned about a rate of inflation in excess of 2% (note: the US doesn't seem concerned about a 3.5% rate��Hmmmm). But the concern is that rising oil prices (in dollars) and exchange rates that are collapsing against the US Dollar will show up as a strongly accelerated rate of inflation. This is the ECB's greatest fear, rising inflation on face of rising oil priced in US Dollars, where the Euro oil price is rising even faster. The only positive factor that I can determine is that exports are more attractive to foreigners.
I notice on this Great Forum a lot of wide ranging opinions about Euro. As one who lived in Europe for an extended period of time I have to state that the Euro is here to stay and will prosper. Simply from a practical point of view, just imagine traveling through Europe and having to exchange currency in every small country. Keep in mind that also involves exchange charges, which in some cases, were between 10 % and 25%. The Euro eliminates this. Also, the inconvenience of having to go through customs and border checks is something that has been eliminated. No more long line-ups.
With a EU passport (which notes the individuals nationality as well) people are able to travel and work in any of the EU countries. Another bonus.
Just to finish off, I noted someone yesterday stated that the EU government is immune from any kind of recourse for actions while in office. I think you will find this situation exists with most elected governments.
http://home.columbus.rr.com/rossl/gold.htm Could it be a scenario such as we are seeing with gold stocks? volume is very low because the owners of the stock aren't selling, the price is too low. Nobody is buying because the price keeps drifting down. There is a deflationary lack of liquidity. Gold miners are not profitable and are hedging as Zenidea #40141 has posted.
Shifty- thanks, I didn't think to check if GSR was still tradng on the TSE.
Netking -#: 40139 Possibly you have confused liberty with anarchy.
Would it not be easier and more effective for saddam to take Gold instead of euros? Is he allowed to use the money in the fund at all, or is it all just savings? If it is being used to buy food I suppose he will need to use a currency of some sort to purchase food. Its illigal to use anything but fiat I guess (nobody would use it otherwise I guess)((Actually people dont seem real bright, they would probably still use and save fiat. ))
Its to bad most items in this world have somehow been priced in dollars and not GOLD. Gold should be the real international currency, how we got on this ship is just crazy.
Why does Saddam not make any requests towards Iraqs money being saved in Gold?
I guess Euros are better then dollars. Something has to get shaken up here.
oooohhh ya its only 2 hours 57 minutes untill my local Gold dealer is open! Its to late the market cant change the price yet, I have at least this weekend. And from the way things go next week may even be a better price, if it is I will be stocked eitherway.
I'm with you. Waiting patiently for Trail Guides insights and comment on Reg Howe's legal manueverings RE the BIS private shareholder freeze-out. Could this really force the liquidation and reconstitiution of the BIS? I think it should be heard in the Swiss court system. The US is so corrupt, the cabal will have their way if it is heard in US court.
Did anyone else notice that glorious word EXIT used in the same sentence as our pres? I'm starting to feel better already, regardless of who comes next and whatever havoc they bring!
Got HOPE & HARD$?
Netking, if this guy was half the technician he claimed to be he would state that a break of support requires confirmation.
I, as a speculator in the futures market, like to see three closes above/below resistance/support levels before I believe the move to be real. If you stare at enough charts, you will find that this is very good confirmation and that the failure of this shows a good chance for a reversal.
He would also know that markets do not go down because of too many sellers, but that they go down from LACK OF BUYERS. The inverse is true also.
If you look at the OI and volume of COMEX gold you will see that the numbers are very low. There is no one playing the game, thus a lack of buyers.
I prefer Austrian Philharmonics, as I live in Italy.
I think the answer to your question is best stated in the phrase "baby steps."
And the Iraqi idea here, as reported anyway, is to hurt the US. Since the current "new era" investor knows little or nothing about the significance of gold in a monetary system, going for Euros is something even the ignorant masses, after all the anti-Euro propaganda, will understand.
Black Blade (10/28/00; 05:20:34MT - usagold.com msg#: 40145)
"Dim Wim"
BB, Remember "irrational exuberance?"
Easy Al survived. So will Wim and the Euro.
I think ORO said it best when he stated that gold is also a "money without a country" in that it is/was used across borders regardless of culture, language or customs.
That argument won't hold up. The US is headed for, or is already in, a debt trap. That is why the players are converting foreign digit they can into dollar digits.
Unfortunately all good things must come to an end. It's going to be ugly.
Have fun in SE Asia. Ask about their monetary union. Stratfor says the US is really trying to stop it.
It isn't really currency! It is more like a form of two-for one discount coupons for a group of stores, subsidized by the professor. The consumers and merchants aren't earning and spending them as a monetary unit in their working lives .
Imagine George Soros, as a promotion for the products of the EU, offering to give two Euros to the dollar. Until his money ran out there would be an economic boom, but it would just be a function of his gift, not of currency.
If the authorities that got upset by this had the intelligence to understand the reality, they would have ignored it. But then if they were intelligent, they wouldn't be going through life being aut!orities.
To add to my comments on the viability of the EuroUnion:
Ironically, in our own country of Canada it is easier in many areas to trade with the USA than it is to trade between our provinces. We have inter-provincial tariffs in place that have been delt away with much more effectively in the new Europe between member countries.
We also have pseudo socialism and equalization payments to address some of the regional disparities partially caused by this stupidity. However, the right is on the march in the Alliance Party, and this particular equalizer is now in jeaprody. A weaker Federal Government (as is their platform intent) will not address this tariff problem (a provincial problem) whereas equalizations will be done away with.... Another irony: the farming sector will also tend to support the Alliance in the west (and in Ontario); this will do away with their subsidies (FarmAid), a subsidy, that while is inadequate under the present Federal system, will be shut down entirely should the Alliance come to power. Canada cannot afford to subsidize farmers as well as is done in the US. Its monetary policy is not out of control.
Recalling the view from another moment on the same Gold Trail
"...Remember the mid-80s when the dollar was off the charts, making today's strength look weak in comparison?" Trail Guide-Today's Gold Trail post #44
Trail Guide:
I guess we should interpret that in terms of an "inflation-adjusted" dollar (whatever that is), (wan smile). Because, in 1984-85 I clearly recall that the Spanish peseta made its all-time low of 185/$, an unheard of number. Last week the same peseta/$ made a new all-time high of 201/$!!!!
I offer this observation not to disagree with you but rather to underscore how truly out-of-balance today's dollar/euro(peseta) relationship actually is. In 1985, 185ptas/$ meant that my first meal in Spain, (on that memorable trip on which I met my future wife) after an exhausting journey by planes, trains and taxi, cost me something less that $2.00. That, even though the taberna's owner brought out several courses, served me a bottle of wine and finished with an excellent coffee served with flan, etc. (as the Spanish are accustomed to doing.) As you can imagine, the tourist in me was overjoyed. Actually, when the cuenta (bill) came, I almost couldn't believe it!
How difficult it always is to look ahead in this amazing existence we call life. Are we at another high point, now? Or is it up, up and away from here? Sure wish I knew. (Actually, you probably wish you knew, too.)
To the central banks of the world ,without whose cooperation the manipulation of POG,currencies etc,would not been possible. Let us not forget the billions of victims of inflation who,for obeying the law have been punished by the law. As long as corruption seems to be the main feature of the day ,there is little hope for paper of any sort.
Fredrich Knapp, a long dead Prussian economist beleived that money was an instrument of
The first leg of the bull-move in commodities, as measured by the CRB Index, has ended. This move began in July/August 1999 with a low of 182.67 on the CRB. The high so far for the move was 234.38 intraday on October 12, 2000. This leg lasted for nearly 14 months.
Now, for the first time since last July, the CRB has broken significantly below the uptrendline and closed this Friday at 219.26. I'm looking for support at the 50 and 200 day moving average - right around 215. There is the possibility that it may go lower, however.
This is all very normal. Although first leg in a bull market can be explosive - as this CRB move has been with a high to
low percentage move of 27.5+% in a little over a year - they are nearly always looked upon as destined to fail by the
majority of market watchers. Just listen to those looking for mid-twenty dollar a barrel oil.
The second phase of the commodity bull should commence once the CRB closes above the October 12th high and
holds for several days...this should occur before the end of the year.
The second phase of bull markets are when more mainstream money begins moving heavily into that market. Up until
now, it's been mainly the "sharp" money...the Jimmy Rogers, et al. who have made money on this move.
The second phase should see the CRB test, if not take out, its highs from 1996 (near the 257 mark...at least another
10% and probably more from this month's high).
We should then see another break of that trend line and then the beginning of the third bull phase. This phase is when all the dumb money pours in and we see a "blow-off top" lasting no longer than about 6 months.
Remember how the internet bull market started? The very smart money identified companies like CMGI and bought in
for peanuts. The mainstream money thought internet companies were a joke...until they could no longer ignore the gains,
then they too bought in. Then we had a correction last year until September, after which we had a spectacular blow-off
top from October '99 until March '00. This is when the dumb money got fleeced.
Next post --- how gold/silver falls into this scenario.
First, let me state that I am in the camp that believes that both the gold and silver markets have been negatively
manipulated for several years. Let me just list a few reasons why I hold this opinion:
1. In the past, gold has led or moved in tandem with the CRB Index. The fact we have not seen the pattern continue demands answers.
2. Reginald Howe and GATA have built pursuasive arguments for manipulation, in my opinion.
3. Watching the trading in COMEX gold shows heavy selling not consistant with other gold paper markets. Very
suspicious.
4. Esteemed technical analyst John Murphy has claimed that "gold is not a free market". I respect his opinion.
5. Ted Butler's work on silver speaks for itself.
So, those are my main reasons for suspecting manipulation... now on to the possible future.
Gold should have moved to between $335-$360 during this first phase of the commodity bull --- it did not. This means it has quite a bit of catching up to do and I suspect we will see this happen once the CRB begins its next move up...which may very will coincide with a falling dollar. Of course, if gold is being manipulated, no one really knows what it will take to break this manipulation, or when it will happen. All I know is the longer it takes to break, the more explosive the move, as gold must catch up with the underlying fundamentals.
So, gold ( and probably silver ) should see a substantial move some time into the next phase of the CRB Index move
higher, and it should be explosive. Picking the low is luck - nothing else.
Remember, very few have believed that this commodity bull is real...the next leg changes all that. Since they did not
believe in the move, they had no reason to hedge their portfolios with PM's. All this is about to change.
I expect a final, blow-off top in gold at no less than $1000 an ounce. I base this on the DOW/Gold ratio which has
worked very well for over 100 years of market history. At the trough of this charted ratio, we see ratios of 2:1 or even 1:1. So, 2000 on the DOW would mean at least $1000 per ounce gold....4000 DOW at least $2000 an ounce gold and
possibly $4000 gold etc. You get the idea. ( Personally, I'd like to see the DOW only fall to 6000! ) The DOW has
never broken the uptrendline established since the early 1930's. This trendline would have the DOW test the 2000 level. I hope it doesn't, of course, but it has tested this trendline several times in the last 50+ years.
I expect silver to move much, much higher from its current level. I have no ability to even estimate how high it could go.
I say the time to move into physical gold and silver, and lightly hedged to non-hedged PM stocks has never been better.
Hello Trail Guide. I'm just a newcomer to the trail so I'm a bit winded. If I understand what you are saying you believe that the US$ is going to lose it's reserve status. When this happens you believe that the nations holding these $ will send them back here to the United States. So my question is; will they come back to be invested in the stock market,or will they want to buy something that they could use right now such as food, blankets, bycylces etc..? I would think that they would want to get something tangable right now. This in turn would cause inflation, because to much money chasing to few goods. Thanks in advance. Turkey Hunter
I NEVER take offense at an intellectual attack -- only in-person attacks with firearms, blunt instruments, or possibly thingeys with sharp points and edges!
I was just using a hypothetical situation to illustrate some ideas. But your objections got me thinking. THANX!! (My second favorite indoor sport!) I know the issue of "have and have-not nations" from the viewpoint of gold as a major transactional medium has been addressed here before, but never in such a personal manner for me -- after all, you used it again'me, as they used to say in my part of the country!
Some good will come of it.
By the way, loved your comment "If the authorities that got upset by this had the intelligence to understand the reality, they would have
ignored it. But then if they were intelligent, they wouldn't be going through life being aut!orities."
"libertarianism is really just hedonism in disguise &
carries within it the seeds of its own destruction. Libertarianism is fundamentally a "Trojan Horse" of human/moral entropy and has always shown
itself to be such." -Netking msg:# 40139
Sir Netking,
You might want to do some research into libertarianism. With all due respect, you're completely wrong.
I'm curious how, exactly, you arrived at your conclusions. If you care to indulge? I often find people with such conclusions about libertarianism have gotten them from somewhere other than the source -- as in hear-say, etc.
Have you ever read the Libertarian Party Platform? I'm no longer active in the LP, but the platform's still a fairly good formal representation of the practical application of the philosophy. If you have, what part of it qualifies libertarianism as "hedonism in disguise" or marks it as a "'Trojan Horse' of human/moral entropy" and could you indicate a few specific libertarian occurances which moved you to suggest that libertarianism has "always shown itself to be such"?
For that matter, which parts of "liberty" do you particularly dislike?
It seems to me that almost all of the recent decline in the euro ,as well as in various other currencies around the world, might be explained by the increase in oil prices that has occured during this time . Since all these currencies must be sold for dollars to buy oil their value would decrease with any increase in the price of oil and the value of the dollar would increase. Since the value of gold is inversely correlated with the value of the dollar this would also explain the decrease in the value of gold over the same time period..
If this turns out to correct then as the price of oil declines over the next few months the euro shoud rise, the dollar fall and gold increase. Barring a general war in the Mideast, oil will not reach $50 per barrel by Christmas as has been so loudly proclaimed on this forum. Saudi Arabia still has nearly 2 million bpd excess capasity, and the huge drilling boom that is presently occuring will bring new non-opec oil on the market over the next year or so.
As the price of oil falls we should begin to see an increase in economoic activity around the world and a continuation of the general prosperity. If Bush is elected his policies of big tax cuts and investment of social security funds will provide rocket fuel for the stock market so I wouldn't expect a crash any time soon, allthough it would force interest rates up again to cool down the economy.
Hanging over it all of course is the fact that the end is near for the era of cheap oil, with many responsible scientists such as Cambell predicting a peak in oil production toward the end of this decade. Along with gradually decreasing supplies of oil, demand is increasing because of increasing population and the desire of many developing countries to emulate the highly mobile western lifestyle. The interaction of these two trends should result in fairly dramatic increases in the price of oil and a gradual unfolding of the high inflation scenario.
In addition the switch to the euro as a settlenment for oil transactions that was predicted on this forum by Another and Trail Guide several years ago is now transpiring before our eyes. This seems to be an idea whose time has come and as it becomes more widespread it should increase the value of the Euro and gold and decrease the value of the dollar,as in the above formulation, allthough the extint to which this actually cascades into total financial catastrophy remains to be seen.
Sometimes it seems that we think that" the powers that be" will simply stand paralyzed like deer in the headlights while the world collapses around them. To quote the great American philosopher, John Wayne, " not likely".
Production thats the problem causing the raise in oil prices, I don't think so! In my mind transportation and refining or at least as much to blame. And, don't overlook the fact that just maybe the oil producing countries are saying " We don't want dollars but if we have to take them we want a lot more of them".Like the current US government they are saying what we want to hear but not really doing anything about it. White Hills
Hello Sir Henri, I see you've been elephant hunting again...
Your last post..."2 US gold Eagles and one Harmony 10 tola bar Clink, Clink, Clunk"
I'd like to say that you certainly have shown by example, what I believe to be, the proper approach to this business of acquiring gold (at ever better prices). Clearly, your methodology reminds me of the oft repeated phrase...the race doesn't go to the swiftest or the smartest...but the one who perseveres.
Your post that I reference, and many similar posts you have made in the past should not be quickly scrolled by without contemplation by even the casual observer, for these "clink" posts of yours demonstrate that gold acquisition can and must be kept in the proper perspective. All in the fullness of time through a disciplined program of purchasing gold on a regular basis with disposable income.
All to often, we see poor souls share or vent the frustration and anxiety they are experiencing because the price of gold (or their gold shares) isn't going the way they would like in the time frame they would like. What I find most interesting is that, for the time being, for me, and you, and anyone else who is truly interested in gold with a long-term perspective, the price of gold is, in fact, going the right way! Yes, the race doesn't go to the swiftest or the smartest...but the one who perseveres.
You know, I think Harmony offers those tolas in 100s and 500s, if I'm not mistaken...Clink, Clink, D-Ohh, floor repair!
You raise too many issues for my poor tunnel-carpled fingers to handle.
I'm not exactly a secessionist -- I just think the smaller and closer the government, assuming you're going to be stuck with one, the better. There's always room for and the possibility of "personal diplomacy" if they screw-up as badly as the feds have. Which usually means they don't quite.
Unfortunately I'm not one of those ivory tower folks -- I've seen a relatively large part of the world from street level and I haven't been part of the establishment for over 25 years. But I HAVE read a lot.
Balkanization is a propaganda term. As RossL alluded to in his msg:# 40135, the only problem with so-called "Balkanization" is that the borders are used to interfere with trade. This is a BIG problem though. I think ORO quantified it somewhat in his first post yesterday. But why not Balkanize with free trade preserved, at least throughout the current States, as it is now?
And USA Corp. DOESN'T make us safer. There are Islamic fundamentalist "cells" thruout this country -- and undoubtedly many of them have "poor man's nukes" (biological weapons), and Allah only knows why they haven't used them yet.
The reason Iran celebrates "Death To America Day" and a common moniker for America in the Arab world is "The Great Satan" (and South Americans refer to us as "The Colossus of the North) is that the US Government meddles in everyone's business, usually in the interest of US Big Business -- these days, Big Banking.
This pisses folks off, especially the killing and "disappearing" taught by US advisors and at places like "The School of the Americas" (before it was recently closed). Eventually they do something about it.
Just think "poor-man's nuke" the next time you see those mad-dogs in DC shooting Tomahawk missiles -- in your name -- at a Sudanese pharmaceutical plant or a tent city in Afghanistan - - - or for that matter, Serbian civilians. Pray at night that "they" blow holes in enough military vessles to molify their more radical followers here in "the states."
Unfortunately, I can't hide from biologicals -- I can only hope they don't find their way out of the nearest large city to my little berg. The kind of "safety" provided by the US Government today will work just about as well as the Maginot Line worked in protecting France from the Nazis. Actually the kind of defense provided by USA Corp will CAUSE the "war."
On the bright side, a couple of these bio-attacks might kick the POG in the direction many are hoping for.
Sorry to be so serious on this issue, but as my friend Bill Brannon, author of "Let Us Prey" (and two sequels) and I echoed back and forth several times when we saw the facts on the biologicals, "Why haven't they done it yet?" My son and grandaughter live in one of the big cities and these elitist megalomaniac cretins - - - - You get the idea.
If you think I'm over reacting, and you have the stomach for it, check the unfortunately well documented article in the link in the header.
If my state seceeded, would the Islamic radicals make a distinction and leave us out? In an interview with Diane Sawyer, bin Laden originally declared Jihad against the US Government and the US Military only. Maybe he'll leave the rest of us out of it? Naw.
By the way, SIR Fulchino, I'm not venting specifically at you - - - as far as I'm concerned, you're one of the good guys!
Mr. Lamprey. I believe you've got the CRB index figured out very well. It includes many commodities other than precious metals and oil and most of these are priced by supply and demand. These include things we export such as grains, cotton, and frozen orange juice among others.
Most of these are priced on a reasonably simple formula.
To last year's leftovers, add this year's production, then subtract this year's useage to determine this year's coming leftovers. Carryover (leftovers) as a percentage of total useage gives a number that can be compared to previous years for price comparisons. There are more things to concidered, but that's the basic idea.
One can see right away that gold doesn't fit into this formula very well as gold isn't consummed like corn or soybean or beef cattle. But you're right (IMHO) about the CRB index turning up if the global economy doesn't disintegrate and the CRB will be a possitive force for POG as well.
Most commodity analysts are forecasting a bull market in all commodities and many seem confused that it isn't already much stronger. From what I've been able to determine, the world demand is indeed increasing but world demand is buying from every sourse except the U.S. Our grains are dirt cheap but not cheap in foreign currency. I think the next leg up in the CRB that you spoke of will be delayed until world demand has exhausted available supply outside the U.S. Then we'll become the only store in town. When the world is forced to buy our grains, cotton and meats. This may make the CRB rise sudden and violent but the currency exchange is holding it back for now.
When POG does break free, it may double in dollar terms just to catch up to where it should be now. Then it will rise with the rest. Gold's fundamentals are such that, like currency exchange, it doesn't really fit the category of a commodity, but I believe it will rise with the rest as so many think of it as a commodity. I like you're speculation of Dow at 6000 with Gold at $3000. I'll enjoy seeing this!
Rich
... The Local Currency of First Resort=======================================================================
EURO: A Cute Little Fiat and ...
... The Local Currency of First Resort
=======================================
Today, were posted two very interesting posts. And all are encouraged to
read them... Both were exceptionally well written and well thought:
Both postulate the EURO becoming the Reserve Currency of the World, to
displace the US Dollar, in quicktime, or sometime. Mostly for purchasing
people's "oil-needs" everywhere, everyday.
Myself, disagree, and for the following reasons:
(1) The world is awash in US Dollars, obtained by their massive exports
to the USA, ... the Consumer of Last Resort.
(2) Thus, foreigners have never ending supplies of US Dollars. What to
spend them on.?. Aha... Let's use them to purchase our OIL. From OPEC.
(3) So, why should they bother to convert their Dollars to EUROs, to
buy their oil, when they already have more than enough in Dollars.?.
(4) They won't. It's a self-defeating thought. It would drive up their
EURO (by driving down the Dollar). If that happens, their exports to
the USA plummet. It would be shooting themselves in the foot. And wallet.
(5) Hence, I feel the EURO (if they ever print/mint any) will simply be
what it was originally intended to be: A convenient and cute little
currency of first resort for local purchases within their own little
European Communities of floundering socialistic bent. Nowhere else.
(6) And Saddam of Iraq may just be stuck with alot of UnSpendable, but
very cute, EURO paper. When what he (will soon realize) really needs
is bonafide US Dollars, to purchase his country's basic food, medicine,
and indeed, even his military stuff. Oh... And he may even wish to buy
some Gold somewhere. Which is always marketed in US Dollars.
As for me, I remain unconvinced that the US Government would ever allow
the US Dollar to fall from favor as the world's reserve currency. The
one of First, Last, And Final resort.
Imagined currency-wars notwithstanding. It just ain't gunna happen.
I do hope that I am not intruding on a private conversation re your question in 40168.
It occurs to me that there is another option that a foreign holder of US dollars might be interested in. (s)he might want to buy his own currency, after all, that is where he buys his groceries. OR gold.
RossL (10/27/00; 23:11:37MT - usagold.com msg#: 40135)
Al
Libertarianism is the psychology of freedom. It is LIBERTY.
First, I am a libertarian. I am not a republican. I will not vote for "w"
Second, I ask you what exactly would be wrong if the US were to split up into independently governed political zones that honored the constitutional interstate free trade provisions.
Ross, How are you? First of all, we already have 50 independently governed political zones. Are they messed up some? Yes. But there is already a good framework with which to work. Certainly better than anything else the rest of the world has to offer. If Libertarians would take their good ideas and their energy and help stave of the enemy from within, they would have many more years with which to advance their cause. Unfortunately, they, in my mind have gotten caught up with how right they are and forgot the price that could easily be paid if Al Jr gets in.
Further, there are enough Libertarians to make their presence known in a small state. Why not do what so many people in the past have done? Move there. And demonstrate what it is you wish, all the while at least keeping the Gore's of the world from ruining what is left our freedom.
Best wishes. And there will be only a semblance of Real Liberty if we do not buy time now.
Hello to the Faithful!
Word is now in from GATA that a large battle looms dead ahead, excitement on the horizon. Our resourceful and ever present enemy has let their guard down, giving THE CAUSE opportunity for the long awaited victory. We must fund this campaign fully in order to send forth Knight Reginald Howe to his predestined triumph. Please join us in sending coin to this worthwhile endeavor at the following address;
Gold anti-Trust Action Committee, Inc.
c/o Chris Powell Sec/Treas
7 Villa Louisa Rd.
Manchester Conn. 06043-7541
Donations are tax deductible, please be generous. ACTION it will be!!! Thank you in advance.
"libertarianism is really just hedonism in disguise &
carries within it the seeds of its own destruction. Libertarianism is fundamentally a "Trojan Horse" of human/moral entropy and has always shown
itself to be such." -Netking msg:# 40139
Gentlemen.
And you both are. I hear where Netking is coming from. There IS and element of the Libertarian party that is hedonistic. Case in point a prominent Boston talk show host, who espouses all manner of wonderful ideas, but also cloaks his own immoral behavior under this tent. Now do I believe all Libertarians are hedonsitic? Certainly not. But he is not the only member to rationalize his personal actions with Libertarian sing song. And Netking has captured in his writing a very important aspect of that party's being.
ECB strains to revive the euro
Kirstie Hamilton
...
The ECB is also preparing to cope with stock and bond market chaos next week if Iraq carries out its threat to suspend oil exports. Iraq has demanded that its oil exports should be priced in euros rather than dollars, but so far the United Nations has resisted. Iraq has set a deadline of November 1. If it does suspend oil exports, the oil price is likely to rise sharply, sending share prices down.
...
"Fear of Gore." This factor is no small matter. The Gore regime would be worse than the
Clinton administration: even more fanatically socialistic and steely eyed, with even less
connection to the real America. Gore is capable of demolishing what remains of the rule of
law to impose his egalitarian, environmentalist, thought-control agenda, and he is an
aggressive imperialist to boot. Bush, in the old phrase, is the lesser of two evils. But a lesser
of two evils is dramatically lesser when the alternative is social, cultural, and political ruin.
The better years to run 3rd party were 1996 and 1992, when the stakes weren't seen as
enormous.
---- To the central banks of the world,without whose cooperation the manipulation of the POG,curriences,etc,would not been possible.Lets not forget the billions of victoms of inflation who, by obeying the law are punished by the law. AS LONG AS
Lots of good stuff there. Lots. And I suspect, in the end, you and I would not only be able to do business on nothing more than a handshake, but share many of the same ideas, and concerns for our families when all was said and done.
Also I didn't take your comments as venting, but thanks for caring.
Lastly. I am in full agreement about the poor man's nukes. And if you are concerned, I would recommend a book by Joel Skousen....LIFE AFTER DOOMSDAY...there may be others like his book, but this one details likely fallout patterns and safe places to reside in...or should I say, expected safer places.
ET (10/28/00; 21:42:46MT - usagold.com msg#: 40188
Bravo, good Man! Excellent article . The writer understands well. As do you....at least "somewhat" as you say .
Hopefully that part that you don't agree with is not to significant of a difference.
---To yhe central bankers of the world, without whose cooperation the manipulation of POG ,curriences,etc would not been possible.Lets not forget the billions of victoms of inflation who ,by obeying the law are punished by the law.As long as corruption seems to be the feature of the day,there is little hope for paper of any sort.Fredrich Knapp a long dead Prussian economist beleived that money was an instrument of state order,that its value reflected the public's attitude toward the state,and that--given man's failings and thus the state's--the only road a currency can go is down.
====Roosvelt prohibited the teachings of monetary theory in this country, and today there is no chair for monetary theory anywhere,not even in Switzerland.Why?Because no government wants its people to know the truth.
----I think This forum at USA Gold is the next best thing to a chair on monetary theory, What say you fellow posters ,lurkers? How about it. Lets hear some comment.You to Trail Guide.
You summed it up well, by writing:
"As long as corruption seems to be the feature of the day,
there is little hope for paper of any sort."
==============================
But along the same (market/government/corruption) lines,
the most difficult thing of all, is to convince a GoldBug that
his Gold is worth only what the government allows it to be.
Mehrling on Minsky quoted by Noland -- Don't MIss!
http://216.46.231.211/credit.htm(Noland:) Since Dr. Mehrling does such a wonderful job expounding Minsky thinking, better to let him do it in his own words. I've excerpted four paragraphs from his exceptional 23-page paper.
(Mehrling)"In these (capitalist) economies, so (Minsky) seems to have thought, financial processes take on a life of their own, so that their logic effectively becomes the logic of finance. In Minsky's own early words: "Capitalism is essentially a financial system, and the peculiar behavioral attributes of a capitalist economy center around the impact of finance upon system behavior" (Minsky, 1967). This is the core insight that underlies all of Minsky's work, and distinguishes his work from that of other economists. According to Minsky, we need to understand finance not because it is an important part of our modern economy, but because it is the very heart and motive force of that economy."
(Mehrling) "Generally speaking, the tendency is to move from robust finance to fragile finance � this is the Financial Instability Hypothesis � and this is so because in a world of uncertainly, especially endogenous uncertainty, expectations about the future have little objective foundation so that mistakes are inevitable. To be sure, economic units have their own understanding of how the economy works � they have a �model of a model� as Minsky liked to say � that they use to form expectations about future cash flows. The important point is that any attempt to forecast which of the myriad possible futures will actually be realized come down to an attempt to forecast the forecast of one's fellow economic units. Concretely, the cash commitments of each unit depend on the cash commitments of every other unit. The whole web of interlocking commitments is like a bridge we spin collectively out into the unknown future toward shores not yet visible. Mere ideas about the future become realities as they become embedded in financial relations, but inevitably over time the reality embodied in the pattern of cash commitments diverges from the reality embodied in the pattern of cash flows. Inevitably our ideas about the future are wrong, even when we all agree, indeed especially when we all agree. Just so, widespread belief in the 1960's that economists had learned to tame economic fluctuation led units to the �euphoric� view that future cash commitments were relatively unproblematic, and once this view became embedded in the structure of debt contracts, it became a constraint on future action. The bridge of commitments reaches far out into the future as units (understandably) mistake their common model of reality for reality itself. Robust finance gives way to fragile finance as �margins of safety� are eroded and commitments leave less and less room for possible shortfalls of cash flow."
*Mehrling) "In Minsky's vision, business cycle fluctuations of employment and income are mere surface manifestations of the deeper fluctuation in financial conditions along the scale from robust to fragile and back again. Like Schumpeter, Minsky understood fluctuation as the way in which the capitalist system grows, but for Minsky the underlying process was not absorption of technological change but rather the expansion and validation of financial commitments. What worried Minsky was the prospect that, left to its own devices, the financial system would operate to amplify rather than to absorb the naturally cyclical process of growth, as each commitment provides the support for others on the way up, and as default on some commitments undermines other commitments on the way down."
("Mehrling) "One might think that asset prices are the most obvious symptom (of financial conditions turning from one of balance to imbalance), but Minsky focused first on what he viewed as the more direct symptoms that appear in the mechanism of refinance. By definition, speculative financing arrangements require periodic refinance, at which point both borrowers and lenders get to take a second look at the balance between the borrower's future cash flows and future cash commitments in light of the changed financial conditions in the economy as a whole. Any evolution toward fragile finance is therefore bound to show up as increasing difficulty rolling over debts as they mature, difficulty that may manifest itself in various ways depending on the institutional framework, but which ultimately shows up as increased demand for bank lending because banks are the lenders of last resort to non-financial economic units. Significantly, banks are themselves speculative financing units that face their own problems of refinance both because of their extreme leverage and because of the short-term character of their liabilities. Thus, the ability of banks to help other units refinance depends on their ability to refinance their own positions. Problems of refinance generally are thus bound to show up as problems of bank refinance particularly. It follows that one way to track the state of financial conditions is to keep a close eye on the operation of the mechanism through which banks refinance their activities."
Noland: Talk about "hitting the nail on the head!" "Any evolution toward fragile finance is therefore bound to show up as increasing difficulty rolling over debts as they mature�"
The weekend is here� away from all the action. It's been quite a week, eh? The Euro/US$ war was top-of-mind on this forum. I picked up two statements in threads I read the past few days �don't remember which threads. The first idea was about Van Duisenberg as Dim Wim, the other about some young 'eccentric thinkers' inside one of those fancy universities' economics departments. �so, what better than a good read like an Ivan Illich paper from 1974, about imposition of paralyzing monopoly. Let me tell you: there's nothing more thought-provoking than literature of which each page takes me half an hour to read �and grasp some of it! Give him a read. It's poetry.
�from Illich's Energy and Equity:
"Radical monopoly is first established by a rearrangement of society for the benefit of those who have access to the larger quanta, then it is enforced by compelling all to consume the minimum quantum in which the output is currently produced." And " The magnitude of voluntary limits is a matter of politics; the encroachment of radical monopoly can be pinpointed by social analysis."
I asked FISH (who I introduced before): So, how will it all play out?
He said: if money talks, count ALL the money in each bank, identify it's nationality and line'm up. The answer will show. And remember, count the IOUs. It's THAT simple!
I'm not finished counting yet, but so far it looks like Germany and France don't want England to join, yet.
Hey, just give Wim some more time. He's fighting on all kinds of fronts. He DOES have a great idea... an idea which in many other regions of the world would have been fought with blood and bullits.
And... be careful where you read it� the term 'Dim Wim' is only comical in the English language.
View
Yesterday's Discussion.
My English is very poor, so I opened the dictionary � the Collins College Dictionary 1995.
Dim
1. badly lit
2. not clearly seen, faint: a dim figure in the doorway
3. not seeing clearly; eyes dim with tears
4. informal: mentally dull
5. not clear in the mind, obscure: a dim awareness
6. lacking in brightness or luster: a dim colour
7. to take a dim view of: to disapprove of
Only the fourth definition seems negative. All other definitions imply that the goal or purpose is not yet outlined (to the outside world?}, but there doesn't seem to be anything negative in those definitions. Or is my English really that poor?
www.financialsense.com/series2/rogue.htm I know Zenidea posted this link, but it is so important, I felt it worthwhile to repost it. It starts off slow, but as I read, the hair on the back of my neck slowly rose.
Thanking your goodness :), I have been waiting for someone to pick up on its paramount SIGNIFICANCE and perhaps elaborate.
All I can say is Sheech !, wheres my de-fibrilattor ?
Combine this, with HR4541, and Greenspans hurry, and the governments hurry, and the major banks hurry, and it does not look favorable to us chickens.
The bill is confusing, but as I see it, it lets the banks off the hook almost completely unless they are totally naked. Guess who gets stiffed?
Another thing that nobody seems to have noted; While the central banks are PLEDGING/LEASING all this gold, physically it still sits in the same vaults that it always sat in. What happens when the governments decide to reneg on their lease pledges? They still control the vaults. BUY PHYSICAL
I have long thought that physical was a good thing, but also tried to top up my coverage with options. Sort of a fire insurance. I also knew it was dangerous in the way that Financial Sense website says it. I just didn't know how bad. Insurance is only as good as the insurance company, and if your fire occurs 1 day after the insurance company goes under, do you have any insurance?
What country are you in? Drop me a note at currie@mqcinc.com on another matter.
A thought why the BIS might still participate in Gold manipulation.
The current Gold trading system is the "conspirative price setting" one.There is a new one coming,the free physical trading.We are in transition phase now according to TrailGuide.The WA started the move with a wild spike.Central bankers (and of course their CB BIS)of europe and the USA,hating disorderly market on that time'started to cooperate and tried to "smooth the move" and switched back to the old system for a certain time (controlled burning).COMEX/LBMA volumes decreased around 30-40% starting last Oktober,BB's fixed some Gold properties (?),CHASE/JPM merge,insiders selling out of (Gold)stock market,buying more physical, etc. (certainly more but unknown)
A little less painful COMEX default will be the next mark.And then FreeGold,I hope,( FOA knows).
BTW,the value of a BIS share was figured out last year by a analyst here,his number was 30'000 sFr. (currently traded at 8000 sFr.,BIS bids 16'000 sFr.)
http://federal.gallerywatch.com/news/articleviewer/displaypressrelease.asp?PRID=8663 I guess the Chase is on to get someone off the hook quick. Mor gan that which might be comprehended really. Soooooo, The Mercantile Exchange found the bill's passage appalling.
Someones had their snout in the trough to long I suspect and someone knows somethings amiss.
Bank-bubble-rupture imminent? Zzzzzz time for me and thanks for the invite Sir.
I am glad to see that you both have taken interest in the Bankruptcy Netting Bill. I thought i was the only one on this forum that thought it was of major importance.
I posted about the bill when it was first passed on a voice vote and asked TG and Traveller what ramifications it may have. None took any interest.
Perhaps neither foresaw such a move
"Some day, this new form of leverage which has permeated the tony-world of Wall Street will be regretted. With an almost religious faith, bank and brokerage trading rooms have adopted the mathematical certainties of the academics' models. As if the world and the mindset of investors can be contained by the certitude of the professors' "black box." Most investment bank trading floors are staffed by PhDs who have studied and believe in the "Holy Grail" of the Black-Scholes model. The conceit and hubris of Wall Street is unfathomable. It is the ultimate deception that their mathematical models could eliminate wars, pestilence, stupidity, and being struck by lightning in the real world."
�"There will come a day unlike any other day,
an event unlike any other event and a crisis unlike any other crisis.
It will emerge out of nowhere at a time no one expects.
It will be an event that no one anticipates � a crisis that experts didn't foresee.
It will be an exogenous event � a rogue wave."
"About the only bad scenario economically that might help gold would be one that is truly cataclysmic--a Financial Armageddon. If the dollar bubble were to burst spectacularly, other currencies and markets would surely follow--though in the end maybe not in direct proportion. What would have to occur here is a sea change in the public's very perception of money and trust; an historic shaking of faith in the credit and paper money regimen that had led to a complete annihilation of the world's economy. As newsletter writer Jim Grant correctly pointed out in an op-ed piece in the July 10 issue of the Financial Times, "The flip side of investors� persistent lack of interest in gold is an unquestioning faith in (fiat) money." Only when this faith in today's banking and credit regimen is shaken in an almost unprecedented way will gold have a chance to stage a comeback as a monetary asset--though at this moment the odds against that are long."
-----------------------------------------------------------
Is this view (fundamentally) correct?
A review of *The Power of Gold* by Peter Bernstein
I haven't seen any major discussion or review of this book on this forum, so I thought I might try. Fair warning: I'm not a literary critic, and my spell checker isn't working. Moreover, I don't post much on this forum since most of my thinking would be more suited to the �Hall of Fun� than to serious and dry discussion of financial matters of the day. Example: To summarize the book in 3 words, like the biochemists say, "it's amino world."
I recommend this book to anyone seriously interested in gold. I always like to read a long history perspective in a few sittings. The sweeping view one gains of the connectedness of the world, and the similarities to today is truly amazing, especially for people like me who never liked history in school. This review will be more a stream of conciousness of takeaway items I have found.
I was struck first by the thought of why I am so lucky to live in a time of peace and prosperity ( living in the USA )? The bulk of the history covered by this book was rough on the common folks.
The book makes the point that rich people often think that its their cleverness or beauty or force of personality which causes their wealth, and also the appeal they extend to onlookers is really a function of this, and not their wealth. Gold fits in wonderfully with this need for display.
Spain in the mid 16th century is a good example of this. To quote from the book, "Once the gold began arriving in quantity, the Spanish were far more proficient at spending than at producing. The massive imports of gold and silver stimulated the spending skills at the same time that they stifled Spain's incentive to produce."
More than anything, this reminded me of present day America, where "consumer" spending, consisting of mostly non-essentials, drives the economy.
The end of the book is troubling � but not like you might think. The book is written as a history cast in stone, generally related without bias. But the events of the last 29 years are treated as basically, "Well, that's it. Gold is now a commodity. Get over it." For example, no mention is made that American's could after 1975 again purchase gold. The concept of mine forward sales is mentioned, but no estimate of the magnitude is given. No observation of sustained individual's gold purchases in the face of central bank selling is noted. Its not a good ending. Especially, in light of the mentions earlier of the book of long periods of unsettled times, where things drift until something snaps.
That is the final takeaway item � the inability of those in charge to influence in an intended way the grand course of events. The law of unintended consequences is hard at work in the history related in this book.
What follows is more of my reaction to the book, and I'm not unbiased. I read this book because I am always eager to discover compelling arguments and reasons why I'm wrong in my thinking and conclusions.
To me gold is stored labor; a hedge against future problems. Our current world seems to be converging to a one world government, ruled either by nations or corporations, take your pick. Gold, as a store of value, is nobody elses liability. That is unlike any fiat money scheme. It strikes me after reading this book that nations, corporations and their rulers always look out first for themselves. Gold gives the individual an independence from the results of that which can be otherwise hard to find in our increasingly interdependant world. Gold and freedom are intertwined. Gold in the hands of the masses is a good thing, except to the ruling class.
I remember when the USSR in its dying days told its people that 100 rouble notes would no longer be legal tender. No way of converting them was offered. The savings of most Russians, outside of the official banks, was often in the form of these notes. All gone. In our digital age, it is easy for those in charge to punish a non PC person by the confiscation or taxing of their digitially represented assets. Gold is a way around this. This means that it is very non PC.
I personally, am not worried about the sustained price of gold going much lower. It is already near the cost of production. Twisting the criteria of the usefulness of a fiat currency, gold is still useful as a store of value, because it should only lose value at a slow rate! That of course is the worse case.
In light of the current view of the world presented by FOA and others on this forum, the last chapter of this book reads like a propaganda piece approved by the current dollar world leaders. Approval of the US establishing a central bank is assumed, which brought the US up the the level of Europe. The oddity of the recent gold price action in dollars is noted, but manipulation is not mentioned.
I conclude that gold is still a good place to park excess earnings. People on other forums bewail the decline of the gold price, and offer all sorts of technical analysis as to when to buy. I must confess, my criteria of when to buy is more humble. After the bills are paid, and charity is given, I take whats left and buy coins.
As some people say about buying stocks, its more important what you buy, then what price you pay. I'm not a short term trader, and have been buying gold since before my adult life started. I've really appreciated this forum and FOA's and Another's thoughts. They have confirmed my perceptions, and reinforced my convictions.
Having said all that, I'm still most pleased when my 3 year old takes a running leap and jumps into my lap.
Gold is a tool, and I don't forget to have a life filled with not just gold, but people.
So what are they doing? Setting up an insurance deal for anybody who deals in derivitives? If Minsky is right about finance being right at the heart of it, and they want to put all the risk under one roof (inside one hull)--well the boat gets pretty long and seems to be just that much more vulnerable to the unexpected "rogue wave". Maybe misery loves hostages but the smaller the boat the better in my book.
This relates to the secession discussion in a way. The size thing, thickness of the hull (principles), freedom to maneuver. Maybe Schumacher was right about smallness and beauty after all.
Looks like the bill is meant to legalize actions the Fed may use to liquify bank assets that, otherwise, in an illiquid state, could deflate the economy. Passage of this bill supports the prediction that our economic system is headed toward failure by inflation rather than failure by deflation.
Newest weird thing yet to be explained in the FOA/Another scenario, still, is the contention that the BIS has been helping to hold down the POG.
I liked your post. It stimulated some thoughts. Especially the part about the way the Russion people were plundered. Nasty business that. Get the hampsters running on the wheel for a few decades, capture that negentropy in a bottle, then see how long it glows. The hampsters see the light as it is leaving.
I think the way it is done here is that the non-essentials keep most from watching the real balls of Property, Gold, Power, Freedom - which get "stolen" in our system through a simple sleight of hand trick. Non-essential distractions.
If the 'fluff' (wasted activity, fruitless motion, useless manufactured goods etc.) gets monetized, and the hampsters will freely trade same for trinkets produced, maybe the monetization itself is the means to convert hampster wheel-spinning into long-term wealth.
So in that sense the non-essentials drive the economy in the same way that a carrot on a stick will coax work from a horse. Only in this case it's a plastic carrot.
I like your definition of gold being saved labor. So after a lifetime of going around and around, those of us who know these things will have some Rounds and some more Rounds.
tg
I appologise for not giving you credit. I suppose I am like many others here, and in the pressure to earn a few bucks in order to by more golden coins, I sometimes just skim what I know to be a whole bunch of librarians working on my behalf. Sometimes I think the people on this forum are far to polite. I developed this independantly from a sharefin post on the farside, and went back to see if anyone else had spotted it. Turns out I had missed Zenidea's post too. That is why I posted in such a strong manner, to bring more attention to it.
Turl 40209
Thank you for your post. I had spotted the book in my ramblings, and while I found it interesting, had simply made a mental note, and had done nothing about it. Guess I will have to go out today and buy it.
And now, having spent most of the night with HR4541, I think I will nap a bit.
I am not an economist, nor do I even consider myself to be overly intelligent. My knowledge comes mostly from what I observe happening in the financial markets. It is difficult for me to know, if my own understanding of events is limited by my naivet�. To suggest that my interpretation of economic forces is correct, would be overly presumptuous. That being said, I would like to give a little of my own thoughts. Please excuse any spelling or grammar mistake that I may have made. Also much of what I am about to say has already been presented in a more than able way.
My first area of concern, began a few years ago with first oil crisis. The price of oil began dropping like a rock. All of the analysts began telling us, that this was the beginning of a new paradigm in the world of commodities. The supply/demand picture suggested to us, that the volatility of commodity prices could easily be managed, and that the only reason why price would increase was due to hoarding. If you stop hoarding, the price was likely to remain low. In a world of increasing demand for efficiency, reducing inventory was an incredibly powerful cost cutting measure.
The general feeling being, that most countries would continually increase supply to offset the revenue shortfall due
to low prices. Commodity producers would have to find their own efficiencies to remain competitive.
OPEC it seems, in a dramatic show of unity, realized that this was a futile way of running a business. If they could convince all member countries to somewhat reduce supply, they could increase rather dramatically the price of oil. They were extremely dependent on that money, and losing revenue, dramatically reduced their ability to fund production. In essence I believe that OPEC's move, saved the world from an almost certain oil crisis. The problem is that instead of seeing the probable value of investing in oil companies, the market seemed to be punishing these companies, by selling their stock. It was after all creating an inflationary situation that was would have a negative effect on the price of their "new economy" stocks (the nerve of these people). What they still don't seem to understand, is that without a boom in the oil business, this oil crisis is yet to emerge. It is no wonder considering the new world analysts seem to be completely ignorant of the old world realities.
The even bigger problem in my opinion, is this misguided belief that productivity increases have come as a result of the technology revolution. People for too long now have been under the belief that if only they worked hard enough, they were on the road to mass riches, and it was hard to blame them, when they were making money hand over fist in the stock market. People were exchanging real money (please excuse the term) in exchange for the promise of even bigger money in the long term in the form of options. This has changed quite dramatically in just a short period of time. Many companies are experiencing something totally new to them, angry disgruntled workers. People do not work for free.
My third and final point is this nasty problem of an ever increasing US dollar with respect to the Euro. The US dollar is becoming increasingly overvalued. This cannot continue, but right now the US is in a catch 22 situation. If the dollar continues to increase, it will choke their ability to export. If the dollar decreases, it creates a situation where commodity prices begin to accelerate upwards. This increases inflation. We saw this quite dramatically, when the Euro intervention had the nasty effect of driving up the price of gold. It would be only a matter of time before all other commodities followed. At this point it does not matter which avenue is finally taken, the results will be the same. Massive inflation, and a crippling of the world economy. Hiding this from the masses may postpone the inevitable, but it can only make matters worse in the long run.
If people still don't believe this is happening, all they need to ask themselves is why the US dollar is rising so dramatically. It is considered a safe haven. This means that already people believe a crisis is coming the only problem is that the US is not immune to it. Just as the price of gold leapt to new highs versus the US dollar and subsequently fell, so will the US dollar reverse when panic sets in. A depression, I believe, is just around the corner. I'm surprised that both presidential candidates are not trying to lose the election.
The investment portfolios of our nation's largest banks have turned into casinos. Credit exposure, as a percent of risk-based capital, has increased; while trading profits, as a percent of gross revenue, have also gone up. Derivatives allow institutions to leverage up their investments by enabling them to control a larger amount of an investment product. Going back to my example of IBM, an option contract can control the same amount of shares of IBM versus owning the shares outright with less money. Add leverage to these contracts and you can control vast amounts of investments or markets. Consider LTCM, which had under $4 billion in equity, $140 billion in debt and controlled $1.25 trillion in notional value derivative contracts. That is leverage carried to infinity!
Rogues at The Wheel
Originally, the derivative business began as a way of insuring against risk. In the 90's the world of derivatives turned into a business of speculation used by institutions, hedge funds and well-heeled investors to leverage their returns. The hedge funds, in particular, remain almost exclusively the domain of the wealthy. They are unregulated investment pools that aren't registered with the SEC. They can concentrate their portfolios, use leverage, and bet the ranch without prudent concerns for diversification. When they blow-up, as in the case of LTCM, they create nuclear shock waves throughout the financial system.
Some day, this new form of leverage which has permeated the tony-world of Wall Street will be regretted. With an almost religious faith, bank and brokerage trading rooms have adopted the mathematical certainties of the academics' models. As if the world and the mindset of investors can be contained by the certitude of the professors' "black box." Most investment bank trading floors are staffed by PhDs who have studied and believe in the "Holy Grail" of the Black-Scholes model. The conceit and hubris of Wall Street is unfathomable. It is the ultimate deception that their mathematical models could eliminate wars, pestilence, stupidity, and being struck by lightning in the real world.
Derivative Positions - A Telling Story
Credit Equivalent Exposure of the 25 Commercial Bank and Trust Companies
With The Most Off Balance Sheet Derivative Contracts
June 30, 2000 in $ millions
Commercial Banks & Trust Companies Total
Assets Total
Derivatives Total Credit Exposure to Capital Ratio
#1 Chase Manhattan Bank $320,476 $13,927,622 /428.6%
#2 Morgan Guaranty Trust Company of New York $173,606 $9,535,288 /817.6%
#3 Bank of America $604,683 $6,990,993 /158.9%
#4 Citibank $356,826 $4,702,375 /165.7%
#5 First Union National Bank $236,103 $964,552 /35.4%
#6 Bank One National Association $95,795 $892,706 /105.7%
#7 Fleet National Bank $147,334 $377,209 /18.2%
Total for all 25 Commercial Banks $2,867,338 $39,026,989 /84.63%
Source: Office of the Comptroller of the Currency
Just look at these tables. They depict the derivative position of our nation's leading banks. Even more disconcerting is the fact that most of these derivatives (95%) are concentrated in just seven banks. The two graphs below depict an alarming picture of risk being undertaken by our chief financial institutions in the pursuit of profits. Another aspect of this picture is the degree of credit exposure these banks have in relation to their capital ratio. For Chase Manhattan Bank and J.P. Morgan it is over 400% and 800% respectively. Also, consider the fact that these two banks represent more than 50% of the banking systems' derivative holdings � and now the two banks are merging. In other words, over half of the banking systems' derivatives will be in the hands of just one financial institution. Could this be another Long Term Capital Management in the making? [ iv ]
In the potential meltdown of LTCM, whose derivative book consisted mainly of interest rate, foreign exchange, equity, and credit derivatives, there was a ready supply of the paper assets such as bonds, equities, and currencies in relation to their derivative book. In the case of the bullion banks, the world of physical gold is far smaller than the world of gold derivatives. The annual production of the world's gold mines is roughly 2,500 tonnes. The total supply of gold in the vaults of the world's central banks is only 33,000 tonnes.[ vii ] The problem becomes apparent when a financial or geo-political crisis erupts as to where the gold exists in the vaults of central banks or in the form of jewelry. This problem of paper gold and physical gold could become the central banker's worst nightmare.
As if anticipating that problems are afoot, Treasury Secretary, Lawrence Summers and Federal Reserve Chairman, Alan Greenspan, have been lobbying Congress to approve legislation dealing with a potential derivatives crisis before they adjour. As a result of those efforts, the House passed HR4541. The bill is designed to reduce risk to the nation's banking system should a major financial institution experience a derivative explosion. This piece of legislation being promoted by the Clinton Administration would allow a bank or investment firm that becomes insolvent due to derivatives to use the net value of its losses rather than the gross value. The purpose of which would be to avoid tying up trading contracts in bankruptcy proceedings.
The New York Mercantile Exchange found the bill's passage appalling. In effect, HR4541 removes the energy and metals markets from public scrutiny and regulatory oversight. Could the Administration know something that the financial markets don't yet know? Usually, where there is smoke, there is fire. With tensions in the Middle East rising, oil prices escalating, inflation on the move and the stock market in turmoil, the price of gold is going down as a result of the bullion banks and their derivative book. Maybe Washington and Wall Street are preparing for the next bailout.
The price of gold is declining along with silver, at a time when they are both in short supply. World crises abound every which way you look. Our financial markets remain shaky, and John Q. Public is waking up to the fact that inflation is becoming real as he pays his bills the first of every month. Washington is intervening in the oil markets, the stock market, the bond market and the currency markets. The moral hazard argument is now at work. We know about bank deposit guarantees. Now it looks like we'll have financial market guarantees. Hold on to your wallets � this is going to get interesting.
If you don't want to be struck by lightning, you don't stand under a tall tree in an open field during a lightning storm. The same wisdom can be applied to the world of derivatives. Our financial markets hang on a thin thread of probability and belief in a bell-shaped curve that such an event will never occur. Yet history reveals otherwise. The lesson of this last decade tell us that rogue waves and rogue traders do hit the financial markets. So far we've managed to survive them. The academics will tell us that their models will help us to avoid them. They have endeavored to convince the financial world of their mathematical certainty. But the real world isn't full of certainty.
There will come a day without warning, at a time when nobody expects, when that rogue wave will appear. It will be a day when events overwhelm the financial markets... when the house of paper will fall... when our financial institutions will be put to the supreme test... when the mettle of a man is tested... when faith in our institutions will be called into question. It will only be on that day and in that hour, that we will know if the Holy Grail of Finance truly exists.
Thanks for you comment concerning my question. I'm new to this field and never have invested in anything in all my life. All I know is the dollar ain't going to be worth what it says, so I have exchanged all my savings for physical gold and silver minus some cash I've kept for emergencies. I bought my first treasury tube of gold last June. How does one go about buying into another couttries currency such as Euro's? I know a person who is in the financial business. He went to Europe 2 years ago and wined and dined with the big boys. He said the Europian bankers are going to pull the rug out from underneathe the United States and the Euro will be #1. There just not quite ready to do it yet. Turkey Hunter
The Car That Runs On Air
http://members.theglobe.com/Mary226/top_secret/science_news.html
October 26,2000
According to BBC News urban transport could soon be revolutionized with the launching this week in South Africa of a prototype new car which designers say runs on air.
It is being predicted that the e.Volution will be able to travel up to 200km (120 miles) for only 30 US cents at 60 miles an hour. The car, which resembles a small minibus, is being promoted by the slogan "Simple, Economic and Clean", but details of how the vehicle will work remain sketchy. The e. Volution prototype will be unveiled at Auto Africa Expo 2000 in Johannesburg this week and is being touted as the first viable alternative to cars that run on conventional fuels. Researchers have been working for many years to produce 'eco-friendly' cars, but so far these attempts have not been successful. Some models already in development use hydrogen as a fuel. It is expected to sell in South Africa for about R74, 000 ($10,000) which is on a par with a medium-sized saloon car.
Helen Brown whom heads "Zero Pollution Motors", the company which has the rights to manufacture the car locally, says it will be ideal for urban transport. A former French formula one engineer Guy Negre, who has spent 30 years searching for an alternative to the traditional oil-fuelled engine, pioneered the compression engine technology.
The piston engine is powered by the release of compressed air, which is stored in tanks, very similar to scuba diving tanks, attached to the underside of the car. A compressor driven by an electric motor connected to a standard electric outlet does the recharge of the compressed air tanks. A rapid recharge, using a high-pressure air pump, is also possible, In little as 3 minuets. The designers of e. Volution say it will be possible to merely plug the vehicle into any electrical power source to fill it up.
In addition to air, also function with the use of traditional fuel. Petrol, diesel, natural or town gas, at very low consumption levels. The change of source of energy is handled electronically based on the speed of the vehicle; e.g. below 60 km/h it runs on air and higher speeds it runs on fuel.They are expected to be available for public sale in 1 to 3 years de [ending on what type of vehicle you wish to purchase. The first commercial sold vehicles will be for the urban markets, with products including taxis, delivery vans and pickup trucks.
The body of the vehicle weighs only 700kg and the engine itself are a mere 35kg. This means that the vehicle can theoretically be driven for up to 10 hours in an urban environment at an average speed of 80km/h.
If the e.Volution lives up to all the hype, it could offer a serious challenge to the current motor vehicle market. There are currently two factories in France, with the first models expected on the streets later this year. There are five factories planned for Mexico and Spain, with three in Australia.
But South Africa will be the second country after France to open a factory and begin production. Helen Brown says her company aims to set up a production line in the province of Gauteng by next year, with the first cars off the production line and onto the salesroom floor by early 2002.
" It's really an anti-globalization production idea," she said.
"The aim of the project is to cut costs and create jobs locally, serving the consumer market directly." With petrol and diesel prices going up, and the price of oil subject to fluctuations, the Middle East crisis and occasional shortfalls, motorists might be only too happy to "go green" if it means a lifetime saving on fuel costs.
---------------------------------
If the cost is true to be around $10,000 I'll Be thinking about buying it. It would be my first new car. The heck with the oil companies. No longer will they be getting rich from me.
Mary
"...half of the banking systems' derivatives will be in the hands of just one financial institution. Could this be another Long Term Capital Management in the making?" YGM
YGM:
My own read on this is that by concentrating everything in one institution's portfolio, they are all (banks, congress, BIS, etc--see below!) actually preparing cold-bloodedly for the big one. When it happens, they can either let just one big player go down the tubes and sanitize the rest, or (more likely) just bail out the one "rogue" bank that just "happened" to fail "for reasons beyond anyone's control" (ha, ha!). That new legislation requested by Greenspan (and just passed so quickly and casually by acclamation) is part of that same preparation. Also, the attempt to exclude the private investors from the BIS looks suspicious to me, too. If it is (suspicious), it sort of points towards a time frame scenario. They seem to want to be ready for serious changes as early as January 8, 2001, don't they? Could come at any moment after that... Makes you kind of wonder what effect a lawsuit from Reg Howe might have. Delay the big one? Probably not, when you think about it. They'll just go ahead and do it now and then spend as many years as it takes to make it final in the judicial process. These guys aren't stupid... but it sures makes them look bad to have so much attention trained right on them while they pull their strings behind the scenes!
Hello to the Faithful!
Word is now in from GATA that a large battle looms dead ahead, excitement on the horizon. Our resourceful and ever present enemy has let their guard down, giving THE CAUSE opportunity for the long awaited victory. We must fund this campaign fully in order to send forth Knight Reginald Howe to his predestined triumph. Please join us in sending coin to this worthwhile endeavor at the following address;
Gold anti-Trust Action Committee, Inc.
c/o Chris Powell Sec/Treas
7 Villa Louisa Rd.
Manchester Conn. 06043-7541
You may make an online pledge at www.GATAComm@aol.com
See posts from yesterday #40180 & 40181.
Donations are tax deductible, please be generous. ACTION it will be!!! Thank you in advance.
Hey Al - I hate to disappoint you, but frankly I'm not in agreement with either you or the esteemed intellectual Lew Rockwell. I was trying to point out that all intellectuals are not quite so self-righteous as you had mentioned in a previous post. Rockwell is a great read all the time.
I actually have little use for the Republicans as I see them as having demonstrated their contempt for liberty and free markets. Their 'War on Drugs' is nothing more than an assault on the Bill of Rights in the name of protection. It results in confiscation of assets without de facto due process. Further they are no doubt the party of imperialism and I'm philosophically opposed to war. Lastly they are no friend of small business/free markets as they have been the architects of the corporate socialism we see today. This isn't to say I find anything useful regarding the Democrats either. It seems to be a one party system in most regards.
I'd like to reiterate a truth that FOA mentioned yesterday regarding the human experience. He wrote;
"But in a fractional reserve fiat system, people make and break these money rules and use whatever advantage
gained to overlord others. Some of us explain this by saying it's this faction or that faction doing it to all us in
another faction. But power groups-are-us and indeed our whole political process is but the playing of factions
against each other. So, I leave out the blame placing, preferring to see our actions as a people's will. Or
political will in the end.
"It seems that in our human experience, there is no end of reason why we should not avoid most losses and
expand credit just a little more. War, special circumstances, social need, emergencies all add up to a
constantly expanding debt system and changing the debt creation limits to meet those special needs. Simply
put, a fiat system run by humans will not cut off the arm of single dynamic group when it (the system) can be
engineered to cut off the finger of everyone! This is the monetary loss phenomenon we must understand and
deal with today. It's the only deck of cards we can play with if staying in the game is a desire.
"Every time excess credit is created it robs one of us of a finger of our wealth. Even though we cannot
immediately see the general price increases such a money expansion creates, it's dilution of our own wealth is
all the same and very real."
I concur totally w/ your comments....on the bigger picture. Although the net is and has, had such an awesome effect on shared conciousness of these events, the end result may only be that a very few wisened individuals will be in a position to profit from, or a least survive the coming financial armegeddon. Many believers will find themselves vindicated one day soon and the praise for foresight and understanding passed on to these few, will belong to a handful of dedicated individuals
whom we all knew and listened to with open minds....Best Regards...YGM.
currie@mqcinc.com The short answer is that my advice very much depends on what your ultimate purpose is. I am prepared to post a generic respose here, or if you want a more specific one you can email me at the above address. (plus I have an ulterior motive that is off topic but pertinant to my plans as they regard the future that I see.) (I am trying to collect a list of like minded people, which may or MAY NOT be of use depending on how things shake out. Anyone at the forum is invited to email me. I am especially interested in widely spaced geographic locations. Please include your handle, preferably in the subject line.)
In either case it is going to take some while, as the answer is going to be lengthy, and I only type with 1 finger, so I'm talking some hours of work. Then again I also have a couple of other things to do tonite. If you have not contacted me I will post here.
Just finished watching a 3 hour very educational video with the above title.
What the video is about:
It goes into great detail on how banking has influenced world events through out history, and gives a political history of banking in the U.S.A.
The video suggests President Lincoln's "Greenbacks" were the greatest form of money the USA has ever used.(Unbacked paper currency issued by the U.S. Dept. of The Treasury)
The video also mentioned President Jackson(after Lincoln)was the only President in history to pay off "The National Debt."A huge debt at the time because of the Civil War.
The video ends by saying:
The (private Bank)Federal Reserve System should be abolished and replaced by the U.S. Treasury who would issue a form of paper money similar to Lincoln's "Greenbacks."
beesting comments on the video:
1.The video failed to mention that the U.S. Constitution specifically states that; "Make anything but Gold and Silver coin a tender in payment of debts."
2.The video failed to mention how to honestly value the proposed U.S. money when it comes to trading with other countries.
3.The video failed to mention the Equalization Stablization Fund part of the current U.S. Department of the Treasury.(I think they didn't know about it's existence)
4. The video failed to mention a fool proof method of keeping the Department of Treasury honest.
A further observation:
Many years ago I lived in Japan for about 5 years. At that time the crime of housebreaking(breaking and entering) was punishable at the SAME level as murder, many, many years in jail if convicted. No ones house that I knew of was ever broken into. ANY Government employee was forbidden to enter a house without the occupants consent.
What do we have today in the USA?
Housebreakers(1st time)get their hands slapped, 2nd offenders a slightly harder slap. Housebreaking is considered a "MINOR" crime! A few years ago our house was broken into and value-ables stolen, and I knew who did it,and reported who did it to local law inforcement. End results; No arrests! No returned property!
The" War on Drugs" is used as a further abuse of Amendment IV of the U.S. Constitution:
The Right of the People to be Secure in their Persons, Houses,Papers, and Effects, against unreasonable searches and seizures, Shall Not be Violated!!!! Is that Plain English or Not???
Now lets examine who would benifit the most from a society where valuables may or may not be safe!
Why, it would be the BANKERS, because the general population would be inticed to keep all valuables(GOLD, Silver, etc.) in perceived safer places than their home.(Bank vaults)
But, would these valuables really be safe?
Answer....NO,,, because, I don't know the exact number, but there are many, many agencies, Government and others who can and do freeze all assets, at the drop of a hat!
Why am I writing this last part?
Because last week I had the pleasure of talking to a lady who was interested in buying Gold but didn't know how to keep it safe,a common concern in the USA!
Thanks for Reading...Those in the Know...are Buying Gold....beesting.
That was a fine fine posting and much more than just a review of Bernstein's book. Your own thinking and writing are excellent and I look forward to reading more from you.
London based GATA fan and supporter David Guyatt has
a new book out and it is my pleasure to bring it
to your attention. It can be located on the
internet at:
http://www.solari.com/goldtreaty/.
"THE SECRET GOLD TREATY is
an extraordinary investigation into the discrete
world of the "black" gold market - a market that
does not officially exist but which trades spectacular quantities of bullion on
a secret and private
basis. The story contains stunning revelations about
the way our governments do business and lays bare
numerous hitherto secret aspects of the way money
works in the world of elite power and corporate
hegemony."
THE SECRET GOLD TREATY...
is by David Guyatt, one of the top investigative
journalists in the world of high finance. David
spent twenty-eight years as an investment banker in
the City of London, before deciding to use his skills
and training within some of the most powerful
financial institutions in the world to bring the
truth of what is really going on to readers around
the world.
THE SECRET GOLD TREATY is....
based on thousands of pages of confidential
documents, numerous interviews and other significant
material collected over a four and a half year
period of intense investigation, and blows the lid
on the most explosive secret of World War II...GOLD!
War gold has been used since the end of World War
II to fuel the Cold War and to pay for narcotics,
it has been "borrowed" to stabilise shaky national
currencies and to create undreamt of riches for
the few. Above all, it is now the "noble" lever
that is engineering a new "cashless" global
financial system designed to effect control over
the world as never before.
I can't wait to get this book in the mail!!! The above description was "borrowed" from the GATA Gang, hope they don't mind my taking this liberty. Auspec
Gee! I was hoping you were in agreement too. And to suprise you, I will say that all YOU SAY about Rebpublicans is also true. Yet they still are not Gore. Why, did Naderites pull some ads in California? Answer to prevent too much Gore support from being drained over to Nader, leaving them partly responsible for a Bush win. They see it! They see that Bush winning is is worse than Gore winning. To them anyway. THAT is the part of the essence of politics, my friend.
In regards to your quotation of FOA. We, all three, agree.
You may have little use for Republicans. That is your choice. But will you and FOA choose to use Euros with their partial gold backing, if you can, over the use of a nothing backed dollar? I would love to see you say no to this. Or will you wait for your ideal. Full gold backing? And use the dollar in the meantime.? The euro is better than the dollar if it is backed at least partially by gold. The Republicans are better than the consequences of a Gore administration. It gives you four more years to push the fully backed gold agenda. Try to get Gore to listen to you.
I actually don't know why you are missing the point. OK. I havw mentioned that I developed the iteration process back in 1989, to solve a serious hydrocarbon economic evaluation in South Africa. Even a leading global oil company (maybe Shell?), was not able to solve this problem. A leading stockbroker here in South Arica (read: Merrill Lynch) was not able to solve the problem of iteration, in spite of employing a leading South African Professor in mathematics for three years, and paying him substantial (very substantial!) fees. The problem remained unsolved. I solved it in Feb 1989, before I was employed by Merrill Lynch!. Ever wondered why there was a miracle in South Africa in 1990? So why did the Berlin wall fold in 1989? Maybe the Soviets also used iteration to forecast their future for the first time in 1989 (ever heard of an input-ouput economic model)? So who exploded serious bombs in the South Atlantic in 1979? I guess that the Federation is mighty powerful. OK?
http://www.usagold.com I am glad to see that Reg Howe (with the supoort of GATA)
has decided to take legal action with the BIS.
You may recall some time ago, I suggested a legal battle was appropriate and what was GATA waiting for. Chris Powell at that time responded by saying the money wasnt there for a legal fight.
It really doesnt take all that much money, although I will certainly send a donation to Reg Howe. All it take is a knowledge of your rights and a willingness to stand up for them.
I have read some of Reg Howes legal work at his site,The Golden Sextant, and its first rate. He is a good attorney and a patriot at that.
I think we should all get behind his efforts.
At the same time, I am a little bit pessimistic for I have seen that the Court system is corrupt and when powerful banking institutions are involved legal principle will be bent for the sake of expediency (why else do we have a fiat money system?). Nevertheless, God works in mysterious ways
and I think we should all get behind the effort.
On another note I received a notice from Airborne that they are adding a 1% additional surcharge to their service. That makes 4% this year. Good thing there is no inflation.
"You may have little use for Republicans. That is your choice. But will you and FOA choose to use Euros with their
partial gold backing, if you can, over the use of a nothing backed dollar? I would love to see you say no to this. Or
will you wait for your ideal. Full gold backing? And use the dollar in the meantime? The euro is better than the dollar
if it is backed at least partially by gold. The Republicans are better than the consequences of a Gore administration.
It gives you four more years to push the fully backed gold agenda. Try to get Gore to listen to you."
Al, I think you misunderstand. The question is not whether I will use one currency or money over another, rather will whatever I use reflect the value of the good or service I'm willing to trade for that currency or money. I'm willing to use whatever medium of exchange is available but I must always discount that medium in my mind regarding its future purchasing power. There is no requirement that any currency be fully backed by gold to perform this function but gold is a handy 'standard' of measurement when comparing what you are giving versus what you are receiving.
As to your contention that the Republicans are better than the Democrats, I used to agree with you. Some time ago a friend pointed out that the socialists are after your labor and the fascists are after your rights. He further declared that it is exceeding more difficult to acquire more rights than more money. I had to agree. You of course can make up your own mind as to which parties fall into each category and to what degree.
I have no desire to push a fully gold-backed currency agenda. The trouble is that that should have been done back around WWI or so when it would have mattered. This problem will not be solved politically, it will be solved by the free market. I'll continue what I consider the good fight for free markets and take my chances.
I don't think you'll even get your local mayor to listen to you until the fallout from the current system's meltdown occurs but of course by then it won't matter as your town will be as broke as every other. Someone mentioned last night the History Channel's showing of the 'Crash' which aired last night. The story of the US from 1900 to 1930 narrated by Jim Grant. The 90's can't have mirrored the 20's any more closely. I suspect the result will be the same as the problem with the money is identical. I hope you get a chance to see it if you missed it.
The only question is what will those that think they control the free markets' response be? FOA says they will inflate until the money becomes meaningless unlike the 30's when money became dear. I agree, politically they have no choice. FOA is also right regarding the Euro being a choice today that wasn't around the last few times the dollar collapsed in relative value to assets. In the end however we will find ourselves SOL just like those in the 30's. Same problem - same result. That's the great thing about history - the road is the same, just the route taken varies with each trip!
Thanks again for the reply. We don't tend to agree on some things but you always make me think. Thanks!
In his entry in the Biographical Dictionary of Dissenting Economists... Hyman Minsky summarized 'the doctrines most associated' with him as:
1. The interpretation of Keynes as an investment theory of the business cycle and a financial theory of investment...
2. The 'financial instability hypothesis' which holds that over a period of good times the financial structures of a dynamic capitalist economy endogenously evolve from being robust to being fragile, and that once there is a sufficient mix of financially fragile institutions, the economy becomes susceptible to debt deflations.
3. The significance and necessity of Central Banks to be lenders of last resort in order to help abort and contain debt deflations and therefore the thrust towards deep depressions.
4. The cash-flow analysis of financial relations, which emphasizes the flows of incomes... from the productive part of the economy that can validate financial obligations...
5. The necessity and significance of big government...
6. The significance of financial innovations as reactions to perceived profit opportunities, and
7. The tiers approach to the balance of payments, which emphasizes the significance of international payments as shifts of profits and other incomes among national economies, and how balance of payments cash flows are necessary to validate the payment commitments on international indebtedness'
Actually, it's a .pdf document, so that's enough typing for me tonight. (Doug Noland at prudentbear.com obviously thinks Minsky is the economist to study for the coming meltdown) Now, off to read the rest...
Capitulation comes to those who can not reason about the future of the dollar, any more than when looking at dark clouds one can not predict rain.
What are we expecting? That paper gold will see immense gains, as denominated in dollars? Look, lets get it straight, the paper gold game is totally in the pocket of TPTB, and is used as a false indicator to show the dollar strong. They will not let that little game go free of their controls, not while the bigger game of one trillion traded dollars/day continues.
Gold, (I mean paper gold, and its price discovery mechanism)
is just the little issue, its just a little weather vane, with an arm from TPTB, twisting it around constantly so it points toward "No Inflation". (Even with oil going through the roof, and the spectre of war in the Middle East!) Uhm, gee, do you suppose the gold market is rigged? Nahh, couldn't be!
So dont any physical gold holders get despondent because the current price discovery mechanism we call Comex, doesn't show you as wealthy. Thats the illusion that will stay in place until something unseats the dollar.
And if the dollar goes "South", thats the time to worry and get despondent! Our rich material way of life will change drastically and permanently. As much as I beleive in a fair fiat money system, and free gold, I can't say that I would like to see our way of life change to get that fair system.
And physical gold holders should know that no amount of wealth can not keep you absolutely safe, and in fact may be a cause for worry in its self, if the "have nots" find out youv'e got it made. In Orange County, CA, its not uncommon for a violent residential burglary to occur in homes where the residents are known to have gold/other valubles stashed away. Usually, its sort of an "inside job". There are certain ethinic groups there that highly value non-fiat stores of wealth, and it makes them a target.
To me, the entrance of the Euro into the world in Jan 200 was like Rocky Balboa entering the boxing ring in the USSR with a russian crowd all around. Throughout the fight, Rocky is getting his arse kicked but is still standing. Right now the Euro is in I would guess the eighth round. Just as the russian crowd in the movie was against the American in the begining they switched sides at the end. Same will happen for the Euro. Be patient. The knockout blow will come soon enough. Iraq and Jordan were the first of the crowd to start chanting for the underdog. More will follow.
My take, is that indeed, inflation is covered up and rampant.
But we should all ask ourselves: What's REALLY inflated.?.
My answer to that, is: The US Dollar, of course. And by a
factor of about six times it's original (true/uninflated) value.
In other words, this example:
Gold at $300 / oz in todays faked/inflated dollars, should
really more realistically be: $50 / oz in UnInflated dollars. And
indeed, doesn't the US Treasury still carry all 8100+ tonnes of
our Gold on their books at a logical $46 / oz, even today.?.
The government knows this. And in the inevitable outcome of
the dollar going "south" is that, the only way they can quickly
and easily (and fairly) rescue the harsh situation is to freeze
some markets, ban some destabilizing derivitive gambling,
and peg the US Dollar to it's ultimate saviour: $50 GoldEagles.
It's not such an unthinkable think. Else why would those nice
coins have been minted at such an unrealistic (?) Face Value
in the first place.?. They've known it all along, and are keeping
it as their last resort ace in the hole life preserver. Life as we
know it, here in the comfortable USA. And consumer of last
resort to the world. There is no other nation nor group of them
(such as the ECU) that could step-in and take that place. We
(USA) are indispensible to the world. And they know that.
Talk of a EURO, or whatever, doing "better", is nonsense and
pure folly. Wishfull thinking at best, by agendized persons
who put forests before us, hoping we will not see the trees.
Do not, anyone, underestimate the US Government's power
and ability (devious or otherwise) to maintain world superiority
of their currency as the international standard of settlements.
I have previously put-forth a detailed scenario. Nobody has
seen fit to put-forth a more logical one, indeed, infact, none
whatsoever. I guess that speaks well enough to the issue.
I didn't see the movie. But in your analogue, I envision Rocky
as being the US Dollar. And the EURO being the USSR boxer
initially being narrow mindedly favored in a parochial way. And
the much-hated outsider (Rocky) eventually (re)gaining their
affection when their favorite is shown to be the wimp that he
really is. No staying power.
I'll bet you, a $50 Eagle to your 300 EURO's, that Rocky wins.
Next, ThaiG: One possible scenario would be a valuation of US gold such that 50% of it was marked to a value that would retire the US debt, leaving 50%. So, what would that make gold worth? 4,050 tons at $6Trillion? Anybody care to tell us what an ounce of gold would be worth under that scenario?
www.kitco.comCompGeek quote below:
**
To quote Emerson in this regard... "The ingenuity of man has always been dedicated to the solution of one problem, -- how to detach the sensual sweet, the sensual strong, the sensual bright, &c., from the moral sweet, the moral deep, the moral fair; that is, again, to contrive to cut clean off this upper surface so thin as to leave it bottomless; to get a one end, without an other end."
This then is the situation with derivatives. They have taken a device, designed to transfer risk, not realizing that risk/reward go hand-in-hand, and have cut off the reward part, and leave the risk go ito a corner. Woe be the holder of that risk-with-no-reward.
**
Attn: SteveH (10/30/00; 01:20:32MT - usagold.com msg#: 40238)...
..
.
SteveH:
Let me try to answer your math problem...
Hmmm.... 4050 x 32,500 divided by 6 Trillion ....
Ooops my calculator hasn't enuf LED's. I'll just
guess.. Yes.. Here's your answer: $50 / oz. Right.?.
Or better yet: Let's just monetize the National Debt,
in EURO's, than declare it ZERO, as they expire worthless.
techbull....
I think you may be on to something here; maybe both Gore and Bush don't want the job, cuz they've been told... they read USAGOLD threads.
All:
Canadians:
...if you love your country, vote for Ralph Nader. Oops, oh well.
Americans:
Please don't waste your votes. If you love my country�
All silliness aside� history books may mention Gore or Bush in footnotes but Ralph Nader will be described in bold as a major force of our time.
Fish's next question: once the Euro has stabilized, how long will be before the Canada/US border crossing stations are converted into precious coins-&-bars dispensaries?
Attn: SteveHHi again, SteveH:
The more I think about what you posted in your #40238,
the better it sounds..
You wrote:
"One possible scenario would be a valuation of US gold such
that 50% of it was marked to a value that would retire the US
debt, leaving 50%. So, what would that make gold worth?
4,050 tons at $6Trillion? Anybody care to tell us what an
ounce of gold would be worth under that scenario?"
So I just pushed my Roosevelt-Mode Think Button and here's
what I came up with:
I recall Roosevelt once said: [paraphrased]
"Don't worry about repaying the National Debt, because..
..We Owe It To Ourselves!"
Now then, using the same Roose-A-Logic, we apply that same principle to your suggestion:
ie: we payoff the National Debt with 50% of our gold.
To ourselves!. Great idea. We'd have our cake and eat it too.
Roosevelt would be pleased. He also Confiscated Gold.
At $35 / oz. However, were he still around to help us out, I'm
sure he'd adjust somewhat for modern times.
And opt for $50 / oz. It's a Virtual Certainty.
TRYING TO DECIPHER MANIPULATION MECHANISM
(Alpinegb) Oct 29, 16:45
I have been an assiduous lurker of this forum for the last four months. My hobby is studying, trying to figure how markets work and understanding maneuvers, manipulations and other official interventions for keeping them in line with present politico economical needs. I have been especially focussing on AU and here is my opinion.
One should not be overwhelmed by the role of the US $ nor depressed by the present weakness of the Euro. I believe we are now in the midst of an engineered stealthy massive devaluation of currencies, which has picked up speed in the last few days as a result of the stock market turbulence and other factors. The BIS freezing-out its private shareholders is one more sign. The BIS and CBs (G 20?), with the silent complicity of the media, bankers and influential gold + silver miners, have probably taken the opportunity of the launching of the commercial Euro for Jan. 1, 2001 to proceed with this massive devaluation. This most certainly for justifying part of the monstrous amount of fiat money around the world and to prevent the tumble of the DJ to "irrational exuberance" level (DJ 6400).
This requires a substantial amount of time, maneuvering or manipulating for fine tuning each currency and gold (+ silver) in order to reach a given objective. This procedure has, at first, followed a relatively free road, but things became more complicated with the nascent "bred & butter" inflation (no to be confounded with present money hyperinflation), GATA intervention and ME turmoil. One may wish to add the WA, but I believe this was a diversion and was part of a misleading maneuver to eliminate possible suspicion over the devaluation scheme and to gain time. Incidentally, the present oil crisis might have also been engineered to mask or provide an alibi for the massive currency devaluation. The dead line for this objective of convergence must have been set for the end of 2000 or beginning of 2001. Now things have been running off and the target date must have been anticipated. Now let me develop why I came to this conclusion.
One should first consider a fundamental fact: despite what is being hammered in the media, gold is still the universal standard, at least for BIS and for CBs. The unit of account of the BIS is the Franc Or equal to 0.29 grams of fine gold. It is this Franc Or which determines the value of an ounce of AU at US $ 208; it is not the contrary. A standard cannot be a "yo-yo" as all currencies are. The Franc Or is not a "yo-yo", though the currencies, especially the US $ might make it appear this way. I am sure Mr. Greenspan would agree with that. Once this is understood, let's consider the present situation of currencies. Almost all of them except the US $ have been heavily devaluated. Let's take the US $ and the Euro for demonstration:
1999 gold low = US $ 252 (rounded off figure)
current gold price* = US $ 266 " " "
difference = US $ 14 = or 5.6 %
1999 gold low = Euro 246 (rounded off figure)
current gold price* = Euro 322 " " "
difference = Euro 76 = or 30.9%
*Values of Oct. 25, 2000. This date is taken for demonstration, as it appears to have been the currency and gold conjunction point or a turn for another direction in the gold and silver prices.
This means the Euro has already been devaluated by 30.9 % against AU. The US $ is devaluated by only 5.6%.
See what one gets when one divides current Euro gold price by US $ gold price:
322 : 266 = 1.21
On Oct. 25, one US $ was equal to roughly 1.21 Euro. Consequently this obviously confirms that both currencies are linked to AU price.
The Euro was introduced at US $ 1.18 for 1 Euro. The current rate is US $ 0.82 for one Euro; that amounts to a decrease of 30.5% for the Euro. As one can see, it is almost equal to the devaluation in gold price. The slight difference is due to rounding off figures for calculation. This shows again the link with AU.
At this particular date, the price of the Euro should have been going down to 0.815 to be devalued by 30.9 %. One will admit that the lowest rate of exchange came virtually down to this value on Oct. 25. The small discrepancy is also probably due to rounding off figures.
The US $ is partially devaluated by 5.6%, but is still overvalued by 25.3% in accordance to the Euro. This might be the reason Mr. Fabius, the French Finance Minister, can say without taking a great risk that the Euro has a potential of increase of 20% in the future.
Now let's try to form a mental picture! Imagine a line, close to half way between the upper and lower stations of a cable car installation. At the upper station is the overvalued US $ at + 25.3%. At the lower station is the Euro at -30.9 % (as well as all other already devaluated currencies). When the cars will start running to reach this imaginary line � they seem to have already started � the US $ will come down and devalue against AU and the other currencies will come up and revalue to meet a converging point (the mentioned line). This point should be equal to a POG of US $ 333 (current US $ 266 AU price + 25.3%). Surprisingly, the AU price reached this level after the WA. One can assume that it will be the next level of currency convergence and probably the new future price per oz of AU to be settled by the BIS. At this point all currencies will be devaluated by 60% in relation to gold. When the ounce of gold was increased to US $ 36 from US $ 25 (44%) in the early 30s, the same procedure must have been applied.
After this "correction", I believe the trading average of POG has the potential to be increased from around US $ 400 to US $ 600 � 650. The boys will make sure of that, unless they wish to create another wealth effect.
Following the same reasoning and making the same demonstration with the Swiss Franc one gets the same result. The S.Fr. has been devalued by 28% and is overvalued by about 3% to the Euro, which makes the same total, i.e. close to 31 %. Surprisingly again, I noticed a study, on one of the gold sites, indicating that the sale of 1 % of the gold reserve of one given country will usually have a devaluating effect of 0.5 % on its currency. Switzerland plans to sell 56% of its reserve!!
As a gold bug completely invested in gold + shares, I am feeling very comfortable and I am waiting for the cable car to start moving. As mentioned above it might already have started four days ago, but I believe the motion will be more perceivable after the US presidential election.
I am sorry for this rather long and maybe fastidious reading, but I thought some of you might be interested to have the opinion of a confident overseas gold bug. This is not intended to lead anybody to invest accordingly; there are merely my own humble thoughts. Obviously any critic will be welcome.
The external portion of the US debt is under 3.5 trillion. Social security held treasuries is a bookkeeping trick and provide the SS future claimants no assets. Of that, about 560 billion (+) is in the Fed, and another 800 billion is in the banking system waiting to be monetized.
That leaves 2.1 trillion in the markets.
Of that, over 1.2 trillion is in foreign hands. Half of that in CB hands.
I don't believe the Fed and the bank holdings need to be backed by gold payment. Beyond that, I would expect that if such an idea were entertained, the purveyors would prefer to see these T bonds make their way back to the US before they are "cashed" in gold.
When I get there in 12 or 14 years, I think they're going to give me the address of a young semi-employed Hispanic father in El Paso with 5 kids and tell me to "go collect your $560 every month yourself."
If gold ends up backing USG debt in some form, you can bet it will be constructed and papered-up in some way that John Q will have no idea it is gold behind it. It will be presented as "this is our dollar, same as it has ever been, immutable, impenetrable, triumphant". Just like they kept the quarters looking the same after taking out the silver.
Only the foreigners and the central bankers will be in daily contact with the golden reality, and allow the American authorities to "save face".
Q for you, Oro, that I may have simply forgotten or we never vetted fully here:
What was FOA telling us about the US official gold being off-screen as far as backing due to prior legalities of the Bretton Woods era, sort of a legal limbo where claimants could appear with "old dollars" seeking $35 gold, I think it was?
Minsky did his work in the 60s, when the dollar was kept at par with gold by the defacto exchange maintenance by the London gold pool.
While his work on the formation and stabilization of credit bubbles is very informative, and is interesting, he does not realize that the debts to be repudiated are not formed by "capitalist activity" alone, but by the prospect of a monetizer of last resort standing behind the markets. Otherwise, the markets would not have taken these risks and would have taken out the weak players earlier rather than rolled over their debt. It is the infinite credit mechanism that credit money provides - by having government backing - that causes the trend towards fragility.
One can't build a house of cards on a shaking table, which is what gold does to the debt market. Debt money has an unstable cash component and a steady debt component. The gold system has a steady cash component and a fluctuating debt component. Since the debt market is constantly "shaking" in the gold system. Such financial fragility can not form.
Finally, while debt can deflate, prices of items produced by non-debtors do not deflate because non-debtors are not under pressure to repay debt "at any cost". While they might be under competitive pressures from debtors, they are more likely to stop production rather than produce at a loss because having low debt, they are not obliged to run the business.
When debt is deflating in the credit money system, the operations of defaulting debtors have no need to repay once their operations are given to their creditors in settlement of the debt claim. They are now a non debtor. However, the cash that was produced by the defaulted debtor when he borrowed is still circulating because of government guarantees to print up money to cover the obligations of defaulting leveraged creditors (like Fannie Mae and the banks).
Thus we have money with no demand, and operations that will close if prices do not allow profits, because having no debt, the operations previously owned by defaulted debtors are not obliged to repay debt. Thus, while the process of debt deflation occurs prices might drop, while settlement occurs, prices will go up. Remember the satelite telephhone system that went bankrupt? Creditors took control of the satelites. Seeing no prospect of profit, the sent the satelites, lifted at a cost of $20 billion, to burn in the atmosphere.
Long before the operation was officially bankrupt, the stock and debt lost 95-98% of their values. The lost purchasing power preceded the bankruptcy by months if not years. The portion of the debt held by banks was balanced with bank liabilities during the bank's taking on of the loan. The liabilities, are guaranteed by government (i.e. the printing press). These remain, but the satelites are gone, not having allowed anyone to sell any services.
While deflation of securities related to distressed businesses does reduce purchasing power outstanding, the operation produces no more product at a loss. Beside which, actual market experience shows that there is no possibility of substantial deflation in assets when the banks issue so much "price insurance" (derivatives) to assure just that. The only reason banks can sell such insurance is that their obligations are backed by the government printing presses (now in electronic form.
Bottom line, forget about substantial price deflation inside the US. It can't happen.
Perhaps you might want to think of a dollar as a receipt of debt. If the debt is no good, could the dollar be?
Listen to Greenspan. Greenspan says that he can't point out what financial assets exactly constitute money. If so, how can you conceive of backing any particular portion with gold?
When the time comes, if SS collection is actually attempted, the guy with the 5 kids will not be here, but in Mexiceo, together with your kids.
Govvie has already declared its intentions to (1) print up money for SS payment through private market inflaiton of the money supplies. (2) To hide the fact of the inflation from the SS recipients as much as possible, in the same way that Pravda used to print "news".
The official methodology is now set: cchain weighting to hide long term effects (SS recipients can't buy steak, and are therefore served equally well by hamburger, later to be replaced by dog food). Weighting adjustments to eliminate the components of CPI that are rising from the index. And Hedonic multipliers and deflators in order to dilute the rising components with artificial components that are growing in numbers and falling in price, like the number of dots your printer prints per square inch. 1200 you say? So what if you can't read letters that are 11/1200 of an inch tall (old dot matrix standard lettering of 11 dots tall letters).
Don't think they don't do this. They are doing it now with memory: each piece of memory needs an address, as your memory increases, the portion of it needed to manage the addresses grows more just as quickly. The actual usefulness of computer speed and memory grows with their log. The result of linear hedonic adjustments is an exponentially rising error in the data.
Well, then, I guess we got one of them Hedonic washing machines. Ver-r-r-y quiet, it is.
I still haven't figured out how they can Hedonize hamburger (but then if I did, I'd probably get offered a BLS consulting contract, and I'd be toast here forevermore).
Thought while driving: is Oro a "geek" (your term), as in computer, or as in Econ.? Probably both. You go back and forth, as do I, and it's a delight to watch you draw on your well of knowledge and experience in both.
However, all three of my programming jobs were with entities that went under or suffered a major loss upon my arrival or shortly after my departure.
"One can't build a house of cards on a shaking table, which is what gold does to the debt market". Sometimes, Sir, you do build a poetry of images. Product of a clear mind.
Sounds like you read Minsky in original, while mine so far is only "derivative", though his disciples do seem inspired by him. I thought you'd clench at the "lender of last resort" bit, which hadn't been as discredited 10 to 30 years ago, when Minsky wrote.
Malcolm Sawyer's Minsky-based paper (better than most econ works, but I get triggered at the first sight of an equation to go off to a good night's sleep) concluded that the Euro has a deflationary bias because:
1) Euro member nations are constrained in their fiscal policies, and
2) ECB is constrained in its monetary policy.
What do you think about that?
Sounds ideal, like it's doing what stable fiat ought to do with or without gold backing, but I think I remember seeing that Euro creation is at a 10% annual issue rate. While maintaining a 4.5% interest rate? How they do that?
Debtor-in-possession certainly can lead to price-cutting. Didn't Continental Airlines (or was it Eastern?) lead the fare wars after it went into bankruptcy, to the complaints of others that they only had to meet immediate cash flow and not their other obligations. Unfair competitive advantage. Some thought engineered to create just that.
With gov/Fed/taxpayer as ultimate backer, shouldn't we study the few upsets in the gov bond market for clues to fragility points? I remember being surprised at the "Jimmy Carter" bond market freeze-up (79? '80?) as being more of a psychological phenomenon than I thought such big (BIG BIG) money would have let itself be involved in. A few other cracks occurred over relatively small market players (Drysdale?) going down with obligations to big clearing banks. Why would such hiccups take Treasuries to the brink in relatively stable times?
So, obviously the Larry Summers buy-back is crucial in that there will always be a bid in on T-bonds. They are probably targeting all of the volatility measures to take them to historic minimum (have they succeeded? seems pretty quiet lately) and to remove all of the "Japanese selling Tbond", "CBs selling tbond" scares that have blown through.
That case was different in that operating cash flow at the time could be maintained positive, whereas prior to that time, cash flow was negative - that's how they got into debt - by bad investments with borrowed funds that produced negative cash flow.
Since the whole industry was leveraged, with no one participant of size substantially free of debt, there was a different effect. A look at many balance sheets of large corporations will reveal that many of them are not particularly in debt, but are using debt to maximize liquidity.
As for the Euro. You are right in the observation. That is why they need the book balancing trick provided by gold purchases with Euro, making gold infinitely inflatable. They can print up Euros to buy gold and thus inflate the value of gold on their books - to balance the books on the marked to market asset side. Something that can't be done with bonds, because of a financial and an economic reasons.
Financial - because lowering rates during (not after as the Japanese did) the initial stages of deflation would cause consumers and businesses to jump into debt again, thus making the future inflation needed that much greater.
Economic - because the lowering of interest rates saves the weak players with bad judgement instead of just saving the credit system.
Gold can be made into any shape - and any price. When debts are deflating, you just buy gold till enough Euro are injected into the system to clear the debt problem without reducing the interest rate. The clear beneficiaries would be the holders of bullion.
A simpler method would have been making gold and silver and whatever else is appropriate into legal tender again. Thus saving the holder the need to sell his gold into the market in order to pay a debt.
"No State shall ... coin Money; Emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts." Article 1, & 10, clause 1 of the United States Constitution.
As we are aware, President Roosevelt contravened this section of the Constitution by Presidential Order.
SURPRISE!!!!
The only way the Constitution may be lawfully changed is by Amendment.
Because a Presidential Order is not sufficient to alter a section of the Constitution, the Federal Reserve, its policies, as well as its currency, is founded on nothing more than an unofficial judiciary variance.
GOLD AND SILVER IS STILL THE LAWFUL MONEY OF ACCOUNT!
Let's face it, The Federal Reserve has its neck on the chopping block so long as the Constitution is accorded recognition as the Supreme Law of the land.
When Roosevelt, sans an amendment, criminalized the possession of the money of account, he did so under the color of law; the only thing changed was appearance, however, given the atmosphere of the created crisis, that
was sufficient to serve the purpose-----THINGS CHANGE!
The haunting words within the Constitution designating gold and silver as the only lawful currency, represents the sword of Damocles hanging over the head of the Federal Reserve.
Until Congress, by Amendment, recognizes this fact, and designates something else as lawful money, Federal Reserve script, though legal tender, is not lawful money; its survival remains at the discretion of the judiciary, as
always.
Should conditions arise in which it becomes necessary to ditch the Federal Reserve to restore order and even save
the government, given Holtzmans very appropriate commentary on sacrificing a lesser entity in order to save the primary, it would be a no brainer for the Supreme Court to kill the variance by ruling in favor of the Constitution.
If you think unwinding the gold carry trade will be a can
of worms, well these worms would have rattles on one end and fangs on the other.
As we are also all aware, in 1913 Congress created the Federal Reserve with legislation which has been under a cloud of suspicion in regards to the ratification process from the day of its enactment; the same is true of the 16th
Amendment which created the income tax.
These Amendments, coupled with the Presidential Order, is responsible for the creation of trillions of dollars in fiat currency.
Well guess what! It has also created millions of fiat criminals, and set the stage for real criminals with pens, to plunder a greater amount of wealth, from a greater number of people, within a shorter period of time, while residing
with honor among their victims--- than is possible by an army with guns.
While the ratification process may or may not be provable at this late date, perjury is.
Success in the election process is merely a ticket to the building. An oath to preserve, protect, and defend the Supreme Law of the Land--- in short the Constitution, is the price of admission to the office.
Thus, legislation in blatant disregard to the Constitution, constitutes perjury, is punishable as a felony, and may culminate not only by removal from office,but by serious prison time.
Legislation created under these circumstances is null and void per:
Sixteenth American Jurisprudence, Second Edition Section 177. A statement with many long years of lawful as well as legal standing: QUOTE:
" The general misconceptions is that any statute passed by legislators bearing the appearance of law constitutes the law of the land.
The U.S. Constitution is the supreme law of the land, and any statute, to be valid, must be in agreement.
It is impossible for both the Constitution and a law violating it to be valid; one must prevail.
This is succinctly stated as follows: the general rule is that an unconstitutional statute, though having the form and name of law, is in reality no law, but is wholly void, and ineffective for any purpose; since unconstitutionality dates from the time of its enactment, and not merely from the date of the decision so branding it.
An unconstitutional law, in legal contemplation, is as inoperative as if it had never been passed.
Such a statute leaves the question that it purports to settle just as it would be had the statue not been enacted.
Since an unconstitutional law is void, the general principles follow that it imposes no duties, confers no rights, creates no office, bestows no authority on anyone, affords no protection, and justifies no acts performed under it.
A void act cannot be legally consistent with a valid one. An unconstitutional law cannot operate to supersede any existing valid law.
Indeed, insofar as a statue runs counter to the fundamental law of the land, it is superseded thereby.
No one is bound to obey an unconstitutional law and no courts are bound to enforcement it. UNQUOTE
Persons who commit crimes such as robbery, rape, and murder etc. are criminals whether or not they elude identification, capture, or punishment.
The results of their actions do not vanish even if they are erroneously acquitted in a court of law; if they were guilty of the act, they are still criminals.
The same is true of people who gain power over their fellow citizens by deceit, lies, and perjury.
Thus when Roosevelt, in violation of his oath, by presidential order declared the possession of Constitutional money a crime, he in affect declared inanimate metal, (gold and silver) to be criminals, instantaneously creating millions of fiat criminals through the avenue of guilt by association. Who was the real criminal?
Hint: Although guilt by association was and is an abomination to our criminal justice system, it has since become part and parcel of it, and politicians now
routinely campaign on promises which will require a perjured oath to fulfill.
The 16th Amendment, a bastardization of the Constitution, was nothing more than the legalization of unlawful enabling legislation required by the Federal Reserve---legislation necessarily unlimited in scope and quantity, and free
from restrictions imposed by the Constitution itself.
Although the responsible "officials" are long in the grave, the system they instigated continues to enrich their progeny and the legal but unlawful legislation, flowing in unabated torrents, continues to create a new crop of fiat criminals daily, further corrupting our criminal justice system.
It makes no difference how dedicated, honest or sincere those currently elected to serve as representatives to the federal government appear, when they prostitute their oath of office in order to pay off campaign debts and promises, they become just one more turd in the political sewer.
100% of their time is devoted to raising and spending money thru legislation.
No one understands even a small part of this legislation, and by design, no one ever will.
It is convoluted, in constant evolution, and is intentionally written to be totally indiscernible.
Written over an extended period of time by language experts, and then approved by "representatives" too busy swimming in the turd pool, to even attempt to read it, it annually adds another layer of garbage their constituency must sort through in the yearly ritual of avoiding the latest list of fiat criminals.
With references back and forth to clauses and sub clauses, it is what any given agent of the IRS say it is, and is backed by judges with no desire to handicap "the system."
The enforcement arm of the Internal Revenue Service is only one part of the mountain of legislation comprising the national tax code.
By allowing officers of this agency to assume facts not in evidence, those unfortunate enough to be caught in its tentacles must prove innocence, turning upside down, the procedure known as due process.
Because the purpose of the proceedings is to legitimize the charge against the fiat criminal, not to ascertain the truth, in many cases the charge itself is allowed to constitute proof, as well as intent, thus proving innocence
becomes a mission impossible----a digression to the British Star Chamber.
Although the system, according to literature published by the Internal Revenue Service, is voluntary, those who fail to volunteer, or to produce records required by law, become instant fiat criminals, in direct contradiction to both letter and intent of the Constitution.
Talk about the Devil and the Deep Blue Sea; should the Supreme Court rule that the Constitution may be changed by presidential order, they will have left the nation with no semblance of either legal or lawful government.
Thus the government, on behalf of the Federal Reserve, has been very careful to avoid taking cases to court, in which
a review could conceivably focus on the question of whether or not gold and silver is still the lawful money of the
United States.
The closest the subject has gotten to the courts to my knowledge, was at the height of the tax revolt of the 70's, when the court responded in a case brought by the Internal Revenue in which the argument was the impossibility
of paying income tax, absent lawful money.
The court ducked the question by ruling that although FRN's are not lawful money, as legal tender, it is neither unlawful to offer, accept, or refuse to accept, but once accepted, taxes not only may, but are required to be paid,
using FRN's as the medium of exchange.
IT GETS BETTER !!!
On January 29th 1918, the 18th Amendment was proclaimed prohibiting the manufacturing, sale and transportation of alcohol.
Presto! One more inanimate criminal was added to the list, and as if by magic, millions more fiat criminals were created.
The Amendment armed the federal, as well as the state governments with the authority to ignore the Constitution while enacting enabling legislation, and this they did with gusto.
A taskforce was created within the Federal Bureau of Investigation for the express purpose of bringing these legislatively created criminals to justice.
Expediency replaced due process and suspicion supplanted the requirements set forth within the Fourth Amendment, unleashing an army of thugs, utilizing the legitimizing authority of law enforcement officers to break down doors,
destroy private property, and to even kill those with the audacity to object.
Our nation was under siege by those who were supposed to be the guardians of our freedoms.
Unquestioned obedience to authority became the rule, and agencies were created within the government for the sole purpose of directing and coordinating the effort aimed at destroying the right of personal choice.
JUST BEFORE THE NATION SUCCUMBED TO ANARCHY
Proclaimed on August 26th 1920, the 21st Amendment repealed the 18th.
It should have been declared unconstitutional.
Although previous legislation and Presidential orders had mocked the principles of the Constitution, the 18th Amendment was the first direct assault, and the most damaging.
Although it was very short lived, the precedents it set
have become the vehicle for the intended destruction of the Constitution itself.
Contrary to all previous Amendments, rather then preserve and extend the protection of rights required of self determining individuals,(the purpose, according to the Declaration of Independence for which governments are
instituted) the 18th was a denial of personal freedom.
Although the Amendment died, much of the enabling legislation remained on the books and active. The powers acquired by the federal enforcement agencies were not only not diminished, but were contrarily expanded.
Demon Rum, the embodiment of the Satan himself, became socially acceptable once the Federal Government secured a monopoly on its control, and a piece of the action.
The violent resistance, to the violence instigated by government enforcement of the 18th Amendment was used to knock a hole in the 2nd Amendment,just as it had been used to accomplish the same thing with the 4th, 9th and 10th.
Thus the government acquired the "right" to control certain guns, as well as dirks, daggers, knives, brass knuckles,
and firearm silencers.
They were not forbidden, but the right to own or possess them disappeared, to be replaced by purchased permission.
Because they, as well as Alcohol, and Tobacco became part of the revenue stream, another agency was created within the Treasury Department.
The Bureau of Alcohol, Tobacco and Firearms was given the tasks, as well as the police power, of determining who would be permitted to deal in the controlled items, and who, in an effort to avoid the label of "criminal" with
the attendant repercussions, would be allowed to purchase the permission to own the restricted items.
Because of the obvious similarities, intent, intensity, and results I am not going into the "war on drugs" other than one question and one answer.
If a Constitutional Amendment was required to legitimize the enforcement legislation necessary to fight the war on alcohol, why was an Amendment not required to legitimize legislation necessary to fight the war on drugs?
The answer: Legislation survived which should have died with the Amendment, thus establishing precedent for governmental right to create fiat criminal citizens, by merely creating fiat criminal objects--criminals who can
neither vote nor have any association with a modern firearm.
The nations prison system is now a growth industry, yet much of the American citizenry are incapable of associating the concept of assumed innocence, guilt by association, and destruction of the criminal justice system, with the loss of freedom.
Some either don't notice the loss, or, are too stupid to care.
Others, recognizing it as the corrupt, entrenched system it is, hurtling toward a concrete wall at 90 miles per hour, realistically feel powerless to even slow it down--we just brace for the impact, and prepare to rebuild the wreck.
Thus the prisons are overflowing with our fellow citizens with the audacity to associate with, or the mis-fortune to be caught within close proximity to the fiat criminal objects.
Who needs an archaic criminal justice system anyway; a system dedicated to determining the truth in a lawful court of law; through the procedure of due process, a procedure grounded on the principle of assumed innocence, when we can have--da-da--trial by press?
The government now must only demonize the intended target, and the press is only to happy to legitimize the action before, during and after the event.
We don't need the rules of evidence and witness qualification, they just get in the way in trial by suspicion, innuendo, hearsay, and character assassination.
Isn't it exciting to watch live television coverage of our fellow citizens being tried by the police on our streets
and in their homes?
To see doors splinter, people thrown to the street or floor, boots on the back of the neck, and a half dozen guns pointed at everyone in the car or house by a band of police clad in black terrorist uniforms and wearing masks.
Remember Ruby Ridge Idaho? How would we ever have survived the threat of a 14 year old boy and a woman with a baby in her arms, without the protection provided by the Federal government.
Why those criminals might have come out of that mountain cabin with guns blazing at any time.
And remember "Waco" the sequel. Man what a treat. For 51 days we were entertained by our government in action.
Real live coverage of our fellow citizens being attacked with automatic weapons, tanks, helicopters, and gas; with constant, detailed narration of the evils of one man serving to explain why the government was not to blame, and why innocent men, women and children were acceptable sacrifices for his apprehension.
And the climax! Who will ever forget the church compound
in flames, swept by strong Texas winds, and terror stricken people attempting to flee the fire.
Filmed on location in Texas with a special thanks to the United States Government, without whose participation this extravaganza would not have been possible.
Executive producer Bill Clinton--Director Janet Reno--Official Stooge Texas Governor Ann Richards, with a cameo appearance by Lloyd Benson, talking heads courtesy ABC, CBS, NBC, and other public "news" media.
Cast and crew compliments of the FBI, BATF, Delta Force, Texas National Guard, Texas Department of Public Safety, and only God knows who else.
Very entertaining, if you were not one of the reluctant participants.
Don't worry, if by some miracle the officers can't find some law they have broken, those who havn't been killed will be released--maybe; the survivors of Ruby Ridge and Waco were tried and imprisoned----no crime worthy of death was proven; a government operation simply required targets; they unfortunately were available, and justification for the raid demanded they be tried.
The officers won't apologize for violating: the rules of evidence, search and seizure, unlawful detention, and due process, because that would be admitting error; but they will release them-- just not on camera.
And who needs confidentiality and integrity anyway? Isn't it exhilarating to have intimate details of ongoing police investigations, privileged information, or results of grand jury proceedings etc. leaked by "trusted" insiders only
minutes after they occur?
Although the preceding examples of legislatively created criminals barely scratchs the surface, their numbers run into multi-millions; and you and I may be next.
The criminalization of objects, and legislatively creating criminals of people who possess them, has been indulged in by governments since the beginning of "civilization."
However, if the system enjoys so much merit, why have so many young Americans died on muddy battlefields in foreign lands fighting it, only to have we, their decendants, see it embraced as a prominent feature within our society, and to be victimized by it, as it became part and parcel of our
criminal justice system?
The list of victims is incalculable, and grows daily, even in the land of the free and the home of the brave.
NOW A QUESTION
If, in a nation whose government is said to be of, by and for the people, every person, at one point in time, is a governmentally created criminal, doesn't it follow that
you must, by definition, have criminal government?
If so, the time line has not only run out on the current world financial system, but in all likelihood, upon the American government as we know it.
Because change will occasion those who own and control the Federal Reserve presiding over a bankrupt empire, they will resist it at any and all cost, as we on the forum are aware--- to our consternation.
They are very cognizant of the fact, that given the quantity of weapons, and patriots alike in this nation, that an event of sufficient magnitude to trigger the Constitutional crisis is, in all likelihood, unavoidable.
If events transpire as planned, the crisis will be postponed until a means can be found to confiscate our weapons and engulf our citizenry in an enhanced, all encompassing form of oligarchic government; a system painstakingly
constructed over a period of time---embracing many centuries, many generations, and many nations.
If the plan is successful, a few people will own the rest, and few current politicians will rule as directed.
If they miscalculate the resolve of the American people to retain our soveriengty, the oligarchs lose everything, and
a few American politicians will be tried for treason.
In any event, the world is going to find out very shortly just how highly we Americans value our freedoms, by how many of us are willing to stand up and be counted....
The air IS fresh this morning, but that coffee was good! Together it makes me chatty, I admit, and I apologize for the length, but I won't be in company this good the rest of the day.
In msg #44, "we have the entire American dollar based contract gold market predicated on a limited commodity price range policy, pushed by the US, that kept gold in a pocket of dollar valuation. Not allowing it to leave this range allowed the growth of paper only gold because the outside extremes of price risk (both bottom and top) was known", you are basically saying that the official targeting of a gold price (via ESF or contract players like GS who were guaranteed a "sure thing" for long enough to make some big bucks even on low margins) was a game that could be played only until the remaining "goldbugs" woke up to the shell game, and stopped playing the Comex/LBMA markets. Betting their margins against officially-sanctioned and guaranteed margin money. The game would only be there UNTIL they caught on, and then the table would be folded up and moved. (Why do images of New York City streets stick in my mind when I think of those games?)
Is there any paper gold market in the rest of Europe? Any DeutschBank contracts, or Swiss, or anyone making those? Or has it all been Anglo-American? Everyone in Europe just buys physical, or dabbles in those markets? Until this moment, I just assumed the paper gold market was a normal phenomenon of markets instead of a recent put-up job just to absorb physical demand, but now I can't recall actually hearing of any other locations for it.
#46 : "Real wealth loss" :
So the debt holder has to calculate, along with everyone else, "what am I really holding here, and what will it stack up against when all things are squared together?"
I'm having trouble thinking of anything but real estate (already price-inflated and debt-supported) and gold (officially beaten-down). (Hmmm... What a choice!) I should learn more about art works, collectible coins etc, but they still vibe too much like baseball cards and beanie babies for me. Maybe hard business assets, but it's a hard gamble in uncertain times as all rush toward liquidity.
I guess that you and Another expect that gold will benefit from the extra push as wealth holders (or wealth losers) rush to the other side of the boat to try to make up for what's already disappeared, as they contemplate that short short list of real holdings.
It's clear that the flimsy rules of fiat "stability" have been broken, many times in many ways, so the current dollar strength is a market phenomenon (accident?) akin to the stock market (100+ P/E) mania -- "I can get out when I need to". Psychology at work in so many ways. Not logic, as much as they pretend. Not reality, as much as they "research".
One of the phrases I loved from Mehrling on Minsky (my #40197): "Mere ideas about the future become realities as they become embedded in financial relations, but inevitably over time the reality embodied in the pattern of cash commitments diverges from the reality embodied in the pattern of cash flows. Inevitably our ideas about the future are wrong, even when we all agree, indeed especially when we all agree." Following the crowd, market players get to be right for awhile, build up a self-image as "smart" guys, and lose it all in the deluge (at which they slink away quietly and you don't hear much from them anymore -- so most market chatter over time will be bullish rather than bearish).
My curiosity, FOA: The major institutions have created "funding corps" to securitize their risky debt, and protect their survival by cutting them loose in a crash. Do they expect the Fed to pick those up, if no one commercially is standing behind them?
And, is the Fed likely to set up some separate vehicle (like RTC was for S&L's) to hold private failed debts, in order to isolate that debt from dragging down T-bill and T-bond credibility and cash flows? Changes in psychology on those vehicles has major cash flow effects on govt. Or is the whole thing likely to get quickly lumped together by market players?
In your Barn Deed analogy, add another factor, four of those other deed owners got them on lousy credit standing (90% backing with the 10% coming from their margin account on Cisco stock which they bought with their 125% equity line on their home), and one of them was on his way over to the bankruptcy court directly from the auction. Hey, everyone gets to play the game, right? You can see more quickly how the $10,000 price has cheated you. None of those nine deeds should have been issued, but some are even worse than the others!
The boom in some real estate markets, however, says that some people have gotten this (subconsciously, at least) -- that the prices will never be allowed to deflate, or at least that the property will never be taken from them because of deflation, and so they have clawed their way into real ownership, however bad their credit or meager their income. Fragility.
From our point of view vs. gold, they just won't get much more dollar appreciation from real estate. The sellers got out with that. (What are THEY doing with their gains, I wonder?) The buyers just might get to slide on their debt payments, as they watch many big entities do in a crunch. That's their best hope of "appreciation", or getting something for very little, as we all hope to, right?
Check me on this: Many of the "deeds" that have been already created are those "non-money", off-the-books round robin of debt papers that have been written between the TBTF players, and will be monetized by the Fed against your meager holdings of paper dollars sooner than you can convert them into something solid.
Everyone's long-term, "buy and hold" commitment to future "savings" will telescope into short-term liquidity anxiety almost overnight. (It was always present in their psychology, because when they expect 26% annual stock gains, they are NOT patient savers with real math in their minds.)
It's the "Let's Pretend Awhile Longer" time horizon that keeps prices from jumping right now, and holds back the already-written money flood for now. The auction you mention is the return of the "long-term" to the immediate, and the squaring of cash flow realities. "Oh. I didn't think so many sellers would show up today."
Monetization won't show up in the M-1 statistics, I think you said. They'll try to balance the destruction with the new creation, but it will be the QUALITY of what it is going for that makes the difference. Monetizing the junk in place of more prudently-managed assets disappearing. Stagflation. Inflationary depression.
"Often, in order to slow things just a little before we start again the fed stops it's manufacture of deeds (err,,,,,, currency reserves)." Start WHAT again? If this one spirals unmanageably and they can't manage the statistics to look like stable management, will they cut the bottom half out of the pack and pick the favored institutions to bail out and carry capital forward into the "New Dollar" era? And who and what will that be? (After all, we'll still be living here, and not in Euro land.)
I think this is what they want folks to think = Yes the economy and the dollar are great, just look at how much gold the dollar is worth...
And you cant argue it, cause as of right now its actually true.
You dont have to believe it though. Just stay hush and trade the dollars for gold then. So I dont buy that the dollar is strong, but phycologically its strong enough to beable to actually purchase physical gold for under 270 for a short time here in history. Gosh darn they can fool them easy! DONT be a fool and be fooled.
"currencies have "timelines" that upon close examination are really just an expression of the changing social expectations of the society that uses said currencies"
Germany's social situaton really shows up in that story, all the way through it.
"Because our money has been built as a debt money system, if you only just carry or use dollars, you are part of the "lending class".
The whole "save for your Boomer retirement" propaganda campaign. And who has borrowed the money? Business institutions who can arbitrage the rate spread and expect bailouts -- heads I win, tails you lose.
It looks like this time, there are more intermediators to lending and borrowing -- financial institutions creating a daisy chain of risks and repercussions.
When I was 19, in college, I read up everything in the library I could find on Weimar. I thought 1969 seemed like a pretty good marker for American post-Versailles, er, post-Vietnam chaos.
That's why I always empathize with those bearish economists who've forecast "7 out of the last 3 recessions." It's hard to trust myself on putting this picture together, when I don't feel a whole lot wiser at 50 than I did at 19.
Organize people who think like yourself and make the words heard.
We are not in your various legislative election districts for anything from county comish through judges and legislators to state and federal houses and the Senate. The only thing we might share is the presidential election. Chew on this for a short while and ask yourself why the Federal government, with only one representative of the people at its head should have any power? Answer: it was not intended to.
So go and act within your various elective districts and get the right people elected. Then with one district represented in this way, to your liking, push into the larger districts and make them represented this way - in municipal (control police), county (controls sherif), school district (control what your kids are taught), if not part of the municipal government, then your state legislature etc... Also stay very active in your representative elections to congress. Find the right candidate and organize support for him.
If you move every 5 years, like most Americans do, don't complain that your "investment" in the district, municipality, county or whatever is going to be wasted, it won't. You can retain your influence there even if you have moved away.
Its good to be mad about things like these you complain about. Use this anger to energize your action. Teach people what is around them. They won't want to listen to the whole story, so start with a simple one, like you do for little children. Most people spent less time thinking about the political system (rather than politics and politicians) than they have about the color of Madonna's underwear. Therefore, they have the educational level of 4 year olds when it comes to the political system. Talk to people, don't write them. They won't read the stuff and they don't care because they think it does not matter and won't affect them. Teach them slowly and carefully, and they will care. But remember that their attention span is 5 seconds initially. As time continues, you will be able to expand on to the more controversial and "sacred cow" topics.
http://www.the-sun.co.uk/news/13124606I posted several weeks ago that the main reason there had been intervention to support the euro was because they didn't want a negative association with Denmark's rejection to joining the currency.
Now I read that a German group is taking a legal battle to dump the euro and restore the Deutsch Mark, the reasoning being that Constitutionally the DM can only be replaced by a stable currency.
In other words unless the euro starts regaining its lost ground to a large degree, the Germans might make a great escape.
The Germans never wanted this esperanto currency, and it would have never passed a popular vote. So in fascist German fashion which is the norm these days, the German people were never given a chance to vote on the matter by referendum.
The story below appeared in a British tabloid, The Sun, that has been the most influential paper keeping Britain out of the euro. The paper's links usually don't last longer than a day, so here is the article in full:
GERMANS FIGHT TO DUMP EURO
By TREVOR KAVANAGH
Political Editor
TOP German economists last night launched a legal battle to save the Mark and ditch the sagging euro.
They pounced on a 1993 constitutional court ruling that the Deutschmark can only be replaced by a "stable" currency.
Far from being stable, the euro has COLLAPSED in value by 30 per cent since its launch last year - and it is still falling.
Germany's former finance minister Hans Apel backed the challenge and said: "We should be like Britain and keep out of the euro.
"We have no worries with the Mark - let's keep it that way."
Professor Wilhelm Hankel, of Frankfurt University, is leading the battle to stop the Mark being replaced in January 2002.
He said yesterday: "I am preparing a fully-blown constitutional case. It's not too late to get out of this thing."
Prof Hankel warned there is NO sign of the euro stabilising. "It continues to perpetually fall," he said.
Lost its sparkle ... Germans
hail euro's launch last year
"When Greece comes into the euro zone, the currency will be further diluted and the Mark will become even weaker against the Dollar and the Pound.
"Prices for imported essentials like oil will explode and I predict next year we will have four per cent inflation - double the official limit."
Another economist behind the action is Professor Karl-Albrecht Schachtschneider of the University of Erlangen.
He said: "Great Britain has managed to keep its currency and economy strong while out of the euro."
Germans greeted the launch of the euro on January 1 1999 with fireworks and street parties.
But two out of three now say it was foisted upon them by Chancellor Gerhard Schroeder and are opposed to scrapping their currency.
The legal challenge was backed by Opposition CDU member Joerg Horny, a Berlin investment lawyer.
He said: "We have managed to become the world's third largest economy on the strength of the Deutschmark.
"To hell with the euro. It is going down the drain. I only hope it doesn't take Germany with it."
There are warnings of yet another collapse in the euro from the inflationary impact of more countries joining the 15-strong EU.
The Czech Republic, Estonia, Hungary, Slovenia, Cyprus and Poland are set to join. Latvia, Lithuania, Slovakia, Malta, Bulgaria and Romania may join later.
GERMANS FIGHT TO DUMP EURO
By TREVOR KAVANAGH
Political Editor
TOP German economists last night launched a legal battle to save the Mark and ditch the sagging euro.
They pounced on a 1993 constitutional court ruling that the Deutschmark can only be replaced by a "stable" currency. Far from being stable, the euro has COLLAPSED in value by 30 per cent since its launch last year - and it is still falling.
Germany's former finance minister Hans Apel backed the challenge and said: "We should be like Britain and keep out of the euro. "We have no worries with the Mark - let's keep it that way."
Professor Wilhelm Hankel, of Frankfurt University, is leading the battle to stop the Mark being replaced in January 2002. He said yesterday: "I am preparing a fully-blown constitutional case. It's not too late to get out of this thing." Prof Hankel warned there is NO sign of the euro stabilising. "It continues to perpetually fall," he said.
"When Greece comes into the euro zone, the currency will be further diluted and the Mark will become even weaker against the Dollar and the Pound. "Prices for imported essentials like oil will explode and I predict next year we will have four per cent inflation - double the official limit."
Another economist behind the action is Professor Karl-Albrecht Schachtschneider of the University of Erlangen. He said: "Great Britain has managed to keep its currency and economy strong while out of the euro."
Germans greeted the launch of the euro on January 1 1999 with fireworks and street parties. But two out of three now say it was foisted upon them by Chancellor Gerhard Schroeder and are opposed to scrapping their currency.
The legal challenge was backed by Opposition CDU member Joerg Horny, a Berlin investment lawyer. He said: "We have managed to become the world's third largest economy on the strength of the Deutschmark. "To hell with the euro. It is going down the drain. I only hope it doesn't take Germany with it."
There are warnings of yet another collapse in the euro from the inflationary impact of more countries joining the 15-strong EU. The Czech Republic, Estonia, Hungary, Slovenia, Cyprus and Poland are set to join. Latvia, Lithuania, Slovakia, Malta, Bulgaria and Romania may join later.
-----you are basically saying that the official targeting of a gold price was a game that could be played only until the remaining "goldbugs" woke up to the shell game, and stopped playing the Comex/LBMA markets. Betting their margins against officially-sanctioned and guaranteed margin
money.----------
You know, a certain amount of the action in these markets is very real and based on the give and take of actual legitimate metal trading. I think this is what gives so many of the convinced (paper = physical) paper traders fits in understanding how the other parts are little more than cash against cash bets. They don't see any of it going wrong just because someone is legally bound to deliver the goods. Yet, if push came to shove, there isn't enough material existing in the world to cover all this betting. The only way these guys will grasp it is when it all shuts down and settles at some forced fixed level while people outside the betting game bid physical prices through the roof. But, by then
these paper boys, along with everyone they talked into this game, will be out side, looking in.
In this process, large institutions can literally and very legally sell the daylights out of our paper arena with no gold at all. Hell, it's free money as long as the game has a currency to mark itself in. Mr. G, when you have a market that (relative to volume) almost none of the players execute against (take delivery), even when they are way ahead, it's a dead give-a-way that they won't execute when they are under water! You agree, right?
My goodness, even a lot of the mines settle their short commitments for cash and roll over to keep the game going. And they mine the actual gold! Some of the biggest (most vocal) Western Gold Bugs, run like mad to sell any bullion they get held up for in a delivery. They get stopped after last notice day, and unless the metal is for a commercial use, it's sold right then and there.
In this environment, one that has existed for some time, is it no wonder the major "political will" (in favor of the dollar) has such an easy time drafting paper sellers? Is it any wonder that with every player alive using their tools to dig this hole as deep as possible
(for the good old Red- White- and- Blue!), the ECB/BIS is standing back as long as able. Watching to see just how far (deep) we'll dig ourselves?
I have to smile when thinking how; one day, a few CBs and other dollar holders are going to place a serious bid on physical. Don't worry, at your age you'll live plenty long enough to see it (smile). They'll say, we want a little gold now. No, no paper, just all you got in your little warehouse. That's all you got? Good, take it all! Right now!
Ha! HA! Soo-Long entire dollar gold derivatives market, forever!
--------------------
You point out: -----Until this moment, I just assumed the paper gold market was a normalphenomenon of markets instead of a recent put-up job just to absorb physical demand, but now Ican't recall actually hearing of any other locations for it.----------
Good item Mr. G.! Stop and think and ask anyone that same thing. Truth is, the entire gold market on this planet is a huge derivative of just the LBMA! Even our Comex. They all mark themselves to dollar settled contracts and prices out of London. Just like oil. You want to know something
Another told me? The moment oil pricing begins it's full shift away from total dollar pricing, that very same moment, gold will do the same! Because oil and gold don't flow in the same direction, they can't settle in different reserves!
And if Euros become the predominate fix for gold, it will be based on predominately physical trade. What a change this is going to be, ha, ha!
------------(Hmmm... What a choice!) I should learn more about art works,collectible coins etc,---------------------
Mr. G., you read about the great German inflation's, read also about what they took when in Paris. When huge transitions of power mediums happen, money becomes things. Violins, paintings and antiques are good, but gold coins rule the roost! This idea about rare and almost rare old gold coins was not invented by MK or anyone else, the market made it so and will do so again.
-----------The boom in some real estate markets------------
Well, I expect that once "real inflation" comes to town, no one is going to have any problem holding onto their residential real estate. All other forms????? But individual houses will zoom right with the money meltdown and stay right with it all it's failing days. How long? Could take years.
But, remember, Real Estate will be hard to keep leveraged. You risk having the banking rules change as the whole economy switches into an inflation mode. Sure, houses will go up, but you may have to sell or refinance if it isn't paid up, full. In addition, houses will not come anywhere close to making you money once this starts. They will only keep up. Bullion, on the other hand must roar way way ahead, just to come up to the starting line! This is the real reason so many paper players cannot understand the leverage in physical gold today. But, boy, I'll tell ya,,,,,,, there are a few other quiet people out there that understand it.
So tell me, do you think I'm bullish on physical gold? Ha! Ha! (smile)
OK, enough for me, time for important things, gardening!
Mr Gresham - people expecting 26% -how right you are
There is indeed this issue.
However, the problem there is different perhaps from what you think in that investment flows from the high end consumer will reverse quite suddenly when returns are insufficient to keep them invested in stocks.
I have been working on modeling this for a while. Very interesting. Flows of funds from the model indicate that consumers will either sell or borrow against their investments (no such things as savings, those funds called by that title constitute a paltry portion of household financial wealth) if expected returns fall to 15% or less. By "borrow against" I don't mean margin debt, just that they will collect liabilities on the other side of that.
This is what is so interesting - only at much higher interest rates would people stop spending if there is no financial asset with a high enough expected return to absorb the flow of income. So long as expected returns (as trailing SP return on equity) are above 15% at current interest rates and inflation expectations would the spending stop.
Perplexed, you're somewhat in the position of Columbus telling TPTB that the earth is spherical when they believe it's flat.
And unfortunately, that extends into the court rooms of this once great and just country. See the link above for a VERY extensive and scholarly treatment of what happens when the "money issue" is taken into court. The article is by noted anti-establishment attorney Larry Becraft, and I believe someone on this forum (sorry, I don't know who) is the original source of the link.
It's long and worth the read but for those two busy watching their stock/fiat/gold gambles, here's my brief synopsis:
By massive legal, historical and pragmatic reasons, all thoroughly documented, here in the uS, gold and silver should be the only legal tender. Fiat should be prosecuted. But in the court room, the establishment ignores all of the above by any means available. As Becraft sums up:
The only case which has ever been plead the best was Solyom v.
Maryland-National Capital Park & Planning Comm., 452 A.2d 1283
(Md.App. 1982), and this is attributable to Dr. Edwin Vieira, the
most knowledgeable attorney in America regarding the money issue.
However, due to the adverse decisions then existing, Solyom was
unable to prevail.
Pro ses do not need to raise this issue.
Perry Mason must be spinning in his grave.
Which is why ORO is also correct. Very unfortunately, as Attorney Becraft has reluctantly suggested elsewhere, this is not the only example of how the courts, as an alternative to violence, have been rendered almost completely useless.
After lurking about the forum for a number of months now, keeping up with the discussions, but not feeling qualified to contribute due to their very technical and economics oriented nature, a number of thoughts have been weighing on my mind that I have not seen addressed. They were brought into focus while following the Gold Trail of 14th October where FOA wrote the following:-
"Further, do you see why even gold mines will suffer such a loss of share value as the paper price descends. Yet, once to it's (gold's) final destruction level (and the share prices follow it), the rise in physical will come in a full scale crisis that demands crisis nationalization of all paper trading. Not Physical trading, just paper contract trading! Paper market shut down for adjustments?
Because the new fiat competitor for our dollar system has based it's strength on a functioning free gold marketplace, every nation will be forced to do the same using bullion.
To compete they will have no choice but to free gold for their citizens, even as they lock down in ground reserves with grandfather "windfall profits taxes"! All enacted while share trading and paper bullion trading is halted for months on end."
These comments are primarily directed to FOA but all other thoughts would be welcome.
1. The first paragraph above appears to assume that the physical price of gold will follow the paper price down. Would not a point be reached when the prices of physical and paper gold diverge, at which point the value of mining shares would respond to the physical price rather than the paper price? Even now, there appears to be a floor under share prices, even as the gold price has been falling over the last few weeks while their prices do not appear to need much encouragement to rise.
2. Windfall taxes have not been introduced following the recent jump in oil prices. Why do you assume that goverments will impose grandfathered windfall taxes on gold profits?
3. After suffering years of depressed gold prices, do you think that shareholders will stand idly by while governments confiscate their investments? Most of these people have suffered enormous losses and would rightly expect to be rewarded for their years of patience and
loyalty to, and support of, the mining companies.
4. I just cannot foresee Michael Kosares continuing to trade gold in a quickly falling market because he would go out of business. The end game of your scenario would surely occur within a very short timeframe and at some point, all gold dealers would suspend business until the dust settled with the expectation of enormous windfall profits to come. However, if a windfall tax was imposed on mining companies, how could a government politically avoid imposing a similar tax on gold dealers and individuals?
My original post (directly below), addressing as it does only the first part, doesn't do your well justified rant justice!
I know how you feel -- but as Claire Wolfe said it her book 101 Things To Do Until the Revolution, "It's too late to fix the system but it's too soon to start shooting the bas****s." I ask her periodically if people think it's still too soon. For what it's worth, the consensus seems to still be that it is.
Wolavka
Even if the constitution is not, the US dollar is definitely the ultimate derivative.
Perplexed
It is said that plagerism is the sincerest form of flattery. I have copied your 40262, and with your permission, intend to use those arguments.
Did you get it reversed? I thought that what the survey showed was an historically phenomenal expectation (rightly deserving of your inquiry -- bring on your writing on this model!) and indicative of a very likely trigger-happy wave of disappointed selling when returns hit, as you said, 15% (or less). In other words a truly short-term emotionality hiding behind long-term rhetoric sold them by the dead fish on CNBC, etc.
They would tell us: "Yes, I'm a long-term investor, since I'm 35 and I want to retire at 52. I've got it all right here on my Quicken spreadsheet. I plug in 26% gains and it comes out just right for me." Chicken and egg problem. Or is it just software GIGO one more time?
Oro: "This is what is so interesting - only at much higher interest rates would people stop spending if there is no financial asset with a high enough expected return to absorb the flow of income. So long as expected returns (as trailing SP return on equity) are above 15% at current interest rates and inflation expectations would the spending stop."
In other words, they'll keep their credit cards (4% teasers rates with 13% followup, if they shop them well) pumped up, as long as they _expect_ stocks are worth 15% per annum. The Morning After comes, oh, say in January when they see Dow was -8% for 2000, S&P -6%, or whatever. Or in April when they pay capital gains tax on mutual fund distributions in a down year. That would dampen those expectations and cause them to switch 401k inflows, and finally transfer balances to money markets.
You mean then the consumer spending would then reverse toward retrenchment. End of "wealth effect" happens below 15% gains expectation?
I've heard of some expensive banking fees, but this one takes it... "We also must put a 6-month hold on your deposit."
HEADLINE: "Iraq oil currency switch to cost $270m a year "
Baghdad informed the UN that its State Oil Marketing Organisation would price Iraqi crude oil in euros after November 1st
October 28, 2000, 08:49 AM
UNITED NATIONS (AFP English)
- The switch from dollars to euros which Iraq wants the United Nations to make when billing customers for Iraqi oil would cost at least 270 million dollars a year, UN financial experts said.
This reflects only the cost of converting oil prices in a market dominated by dollar sales, and the lower interest earned by oil revenues held in a euro-denominated, rather than a dollar, account.
The expense would make less money available for humanitarian imports under the UN's oil-for-food programme, set up in December 1996 to lessen the impact of sanctions on the Iraqi people.
In a report to the Security Council's Iraqi sanctions committee, the UN Treasurer, Suzanne Bishopric, also warned that the switch would oblige the UN to open new bank accounts and could mean delays in settling accounts.
I am not quite sure if you were asking but the European gold option is quite a different creature by reason of one only major difference. You may not call your gold at any time, only at the date of expiry.
Thus the US option represents a gamble that gold will, in this case, go up at ANY TIME in the future, in which case you can call it. In Europe the gamble is strictly a one date gamble, and thus is pretty much restricted to, for example, a jeweller who wants to guard against a price increase after he prints his catalog, but before he actually manufactures.
Money Masters: Central Banks vs. Central governments @beesting, ALL
Money Masters: Great series --- except they suggest that we trust
governments to control the issue of paper currency. As the
record shows, this is a fatal error. Time after time history
shows that governments are the _worst possible_ choice for
"controlling" the money supply -- if your society is ill advised
enough to allow _anything_ except the physical difficulties of
producing gold and/or silver to control the _basic_ money supply.
... Though an indispensable requirement for the
functioning of an extensive order of cooperation of
free people, money has almost from its first appearance
been SO SHAMELESSLY ABUSED BY GOVERNMENTS THAT IT HAS
BECOME THE PRIME SOURCE OF DISTRUBANCE OF ALL
SELF-ORDERING PROCESSES in the extended order of human
cooperation. The history of government management of
money has, except for a few short happy periods, been
one of incessant fraud and deception. In this respect,
governments have proved far more immoral than any
private agency supplying distinct kinds of money in
competition possibly could have been. -F. A. Hayek,
_THE FATAL CONCEIT The Errors of Socialism_, [Cap.
emphasis added] (Chicago: The University of Chicago
Press 1988), p. 103.
Anyone looking closely at the current budget deadlock realizes
that, as several congressmen (Phil Gramm, R-TEXAS, Don Nickels,
and even 'W') have observed, ~"The government is going on the
biggest spending spree in over thirty years." And this is with a
supposedly fiscally conservative _Republican_ congress.
Nope, if you have the unhappy task of choosing a central bank OR
a central government to control money supply, the unfortunate
choice, hands down, (and I'm really sorry to say this) is the
central bank. And this, essentially, is the choice you're forced
to make if you don't have a freely convertible free-market gold
standard and free banking.
"I am not quite sure if you were asking but the European gold option is quite a different creature by reason of one only major difference. You may not call your gold at any time, only at the date of expiry.
Thus the US option represents a gamble that gold will, in this case, go up at ANY TIME in the future, in which case you can call it. In Europe the gamble is strictly a one date gamble, and thus is pretty much restricted to, for example, a jeweller who wants to guard against a price increase after he prints his catalog, but before he actually manufactures."
First, with US options, you may only call a futures contract any time, not physical...the short decides delivery date (only) in delivery period...
Second, both represent the SAME gamble or (risk) in the case of long call option
Third, Your example is wrong. Your jeweller is actually a long "hedge" example, and therefore a risk mgt tool, not a "gamble" in either US or Eoropean option.
Note: A US option holder is (usually) better off to liquidate his option (before option exp. date) rather than exercise the option because there is usually intrinsic PLUS time value in the option...If the holder exercises early, they give up any/all time value....
Also, an EFP may be done to receive the physical gold early if (absoultely) necessary...more fees however...option, futures, and EFP fees all assessed.
Looks like LGB from Kitco is losing his financial ass in Globalstar and Loral. They guy has been a superbull in that stock & Loral for years now, and all the while, he has been crapping all over gold investors, day in and day out.
Bad Karma is coming to visit him, big time.
Thanks
F*
-------
-
"Globalstar Telecommunications Ltd. ( NasdaqNM:GSTRF - news ) on Monday said its third-quarter loss increased more than five-fold, far more than expected, as the beleaguered satellite telecommunications provider's management described its growth in revenue, subscribers and usage as ``unacceptably slow.''
Globalstar's stock plummeted as much as 67 percent after the earnings announcement and a published report that said its co-founder and chief financial backer, Loral Space & Communications Ltd. ( NYSE:LOR - news ) , would provide it no further financial support."
The company's bond's also tumbled, falling to just pennies on the dollar...
Its stock was off $3-1/2, about 60 percent, at $2-1/2 in late-morning trading on Nasdaq. Earlier it had fallen as low as $2, a new 52-week low.
Globalstar's 11.25 percent notes maturing in February 2004, which are considered ``distressed'' were bid Monday at 8 cents on the dollar, down from 18 on Friday, traders said."
------------ [L]GB link: ------------
"Buy 40% Loral owned GSTRF Monday open ( Globalstar ) and watch the 20 to 60% gain you will make in LESS than three full trading days next week if you use a good stop loss strategy. Oops, it may gap UP 15 or 20% on the open Monday before you have a chance to get it at 6..."
http://www.kitcomm.com/comments/gold/2000q4/2000%5F10/1001027.171144.gbeeeeeee.htm
I mostly try to never even THINK about LGB for fear that he might show up here one day. Imagine all the mud we would have to dodge (and sling back at him) if that ever happened. (He seems to spend his intellectually valuable time at some Yahoo board, where ever that is.)
Actually, it was constant potshots at Another/FOA that was his most irritating behavior, as far as I was concerned. Since he was intellectually unable to understand anything said by or about them, he is most likely not even dimmly aware how clairvoyant their thoughts have turned out to be. And he's welcome to his opinions about Loral, whether or not he loses his shirt or not. because I doubt very much that he will comprehend the storm sweeping the modern world's financial terrains until it is decidedly too late. Now, THAT'S karma!
Actually, it seems there are three probable scenarios with respect to LGB's urgent BUY recommends for Globalstar and Loral:
1) He honestly believed that his beloved stocks would rally on bad news today, except never realized that in a tech bear market, bad news is always bad news, and all good news is always bad news too.
2) He knew bad news was coming and figured today he would dump his shares into the hands of naive gold investors who don't realize what a tremendous BS artist and sub-moron he truly is.
3) He hates gold investors so much that he would do anything to screw them, even recommending shares he knows are going into the crapper.
Anyway, LGB is certainly my top nominee for the "Bad Karma Coming" award.
"Debt is in trouble. William Gross, who manages the world's largest bond fund, has told investors to avoid corporate bonds at all costs. If they take his advice, companies will have to look elsewhere for money. There are only two other sources. Companies can borrow from banks or they can sell shares.
Until recently banks have been happy to lend. Things may be changing, with telecoms starting the rot. Banks do not want to lend to them anymore - in fact they want some of their money back. So far this year European telecoms companies have borrowed $171 billion (�118 billion) and they need another $100 billion to pay for their new mobile phone licences. This has made banking supervisors nervous and they are telling the banks to reduce their exposure to the industry"
Will the U.S. dollar still reign after next week's election?
PETER COOK
Monday, October 30, 2000
..............................................
What is being purposely avoided here? Well, one subject that has not been raised, because to do so would require the candidate to talk about a remedy, is the United States' world-beating current account deficit. Americans may know in passing that every month yields up a $30-billion (U.S.) trade deficit with the rest of the world and that, added up over 12 months, it amounts to a considerable figure. But do they know that -- at 4.3 per cent of gross domestic product -- the U.S. current account deficit is larger than Latin America's?
........................
Figures from Merrill Lynch in New York show that, since the launch of the euro, Europeans have invested $260-billion (which is actually 4 per cent of their GDP) in the United States, with half of it going to Wall Street. That, of course, tells us why the U.S. dollar stands where it does against the euro. But it also raises the question of whether such an immense flow of money will continue.
Remember that, without it, the United States cannot finance its deficit. So if the flow were to diminish, drastic action would be needed to try to maintain it -- such as raising interest rates substantially. And even that might not work.
Take a close look at how the United States has managed so far and it is not reassuring. A lot of foreign money has gone into buying U.S. corporate bonds but, with many U.S. firms facing profit declines, that market is no longer attractive. A lot has gone into buying U.S. telecom firms, but this market is drying up because European telecom firms have bought what they want. Huge sums have been going into Wall Street. But that, too, is becoming unattractive: U.S. stocks have been doing worse than European stocks.
In the world as it is, the U.S. economy and the U.S. dollar are king and Mr. Gore and Mr. Bush have no need to worry about a thing. But change the global economy by even a small degree and the United States becomes a nation struggling to pay its bills.
pcook
The threat of violence plays into the THUGS hands.
The new tools are TAX REVOLT, cival disobediances, ridicule
of the black hooded violence prone goons, subversive
intellectualism, political education campaigns, demostrations, and lawsuits.
Thanks for your reply. Very interesting points you have to make.
I think I remember you laying out your contrarian viewpoint on this forum, some months ago. Unfortunately, at the time I did not give it a good soild reading to properly acertain just what your views were.
Can you provide the message id in which you laid out your view? TIA
What do you make of Iraq accepting Euros for oil? And if the other Muslim OPEC nations follow suit, to strike a blow against the evil Satanic Empire, and its instrument of tyranny, the Federal Reserve Note, then what will save the dollar? It truly looks like a fight is about to begin, a fight which is long overdue, and one which the dollar might not win. It is possible, no?
Thanks for the thoughtful post. We honestly agree that the markets will decide. And like you, others will choose the euro, not because it is perfect, but because it,is better than other choices, closer to what you hope for, or even less bad than another choice. All the same in a way. Now. The euro and the dollar are the front runners for your wealth. You will likely trade towards the euro. And you are worried about your dollar. I associate Gore with that dollar and Bush with that euro. He ain't gold but he is a bridge for a better time.
The "Full Text" of my "plan/scenario" was posted as:
ThaiGold (10/25/2000; 1:10:23MT - usagold.com msg#: 39835)
====================================================================
Virtual Confiscation: Draft Memo to the President-Elect
The Full Text: Economic Rescue and Reform Essay for 2001
====================================================================
Next, you asked:
"What do you make of Iraq accepting Euros for oil?"
Answer: I feel he's in for a surprise. Saddam will be stuck
with a bunch of EURO's, when what he will find that he
really needs, is US Dollars, to purchase his country's
essential food, medicine, and even his military stuff.
So, he's just shooting himself in the foot. For spite.
Also, you asked:
"And if the other Muslim OPEC nations follow suit, to strike a blow
against the evil Satanic Empire, and its instrument of tyranny, the Federal Reserve Note, then what will save the dollar?"
Answer: It is unlikely they will follow suit, for the above
reason(s). Also, the USA is their major source of revenue.
But, if it somehow did occur, and it becomes necessary to
save the US Dollar, then my answer is, simply, my Plan.
Quickly/Easily/Fairly.
It's a worldwide stability/integrity plan that hurts nobody
yet helps everybody. What could be any better than that.?.
ORO thanks for the reply, however, I have tried that route
and it would be good advice, except for one thing, the political system is plagued by the same pitfalls as the gold market, only many time worse and over a far longer period of time. Most of us on this forum feel very strongly that the time line on this particular financial structure has a very short time left, and from the links posted to other information, we are not alone. If there was time to achieve meaningful change through the existing system, the postings on this forum would follow a totally different course, and the charts would make sense. Anyone on this forum that expects fair sailing if and when the dollar tanks, is living in a dream world. My posting, like yours, are derived from history, and my postulations, like yours, are the result of deductive reasoning. You and I are both libertarian to the core, and I see this political philosophy manifesting itself and making sense to many more of our fellow citizens once reality explodes on the scene.
Journeymen I have read enough of your posting to know your sentiments, and I appreciate the encouraging words. If I came across as a wild eyed revoltunary, it was not my intent. As the last part of my post stated, I see a major financial wreck in our future, created by the policies of government over an extended period of years. The worse thing that could happen at this time is for some group to start an armed insurrection. If a second amendment rally is to be held, then by all means leave the guns at home. The guns are an ace in the hole, and I believe will not be required simply because they are there. The monied and political elite cannot afford even a mild interruption in the river of fiat currency that even a protest the size of the one in France, when magnified to equal scale, just caused. And and when diesel hits $2.50 per gallon next summer, they will get their interruption.
HI HAT I agree whole heartedly.
mereBear Thank you for the kind words. And if the post will be of value you are more than welcome to use it my friend. I enjoy your post very much, your insight is terrific.
You once stated that you thought my characterization of things to come as messy and anarchy was too mild,I hope my last post clears it up. As the old saying goes "When you'r up to you'r a** in alligatiors, it's hard to remember that your objective was to drain the swamp"
Well I see alligators the size of locamotives, but I am sure not going to pick a fight with them. Just stay out of their way, let them die of old age or kill each other, and then drain the swamp.
UNITED NATIONS (AP) -- A United Nations committee gave Iraq the green light Monday to open a euro-denominated bank account to handle deposits from oil sales - a victory in Baghdad's campaign to stop using the hated American currency. The decision eased fears that Iraq would follow through on a threat to disrupt oil exports if its request to start collecting payment in the common European currency was denied. The U.N.'s sanctions committee on Iraq, made up of the 15 Security Council members, agreed Monday it could not object to the request because it had no legal basis to block it.
I certainly have done a fine job of using incorrect words, and therefore to some extent agree with most of the points you made.
I agree, the option will call the future, not gold.
I have long thought of the action in the futures market as speculating, or more bluntly, gambling. One has only to look at the open interest volume shortly before traditional rollover, and compare it with the number of contracts actually delivered, to form an opinion that there is a whole lot of speculating going on here and very little legitimate activity. To be sure the jeweller had a legitimate claim to the word "hedge", however it is also my opinion, supported by interview, that many of the "legitimate" users hide under the umbrella of "hedge" to speculate, or gamble.
I also agree that the option holder is often better off, particularly in todays gold markets, to liquidate as much of the time value as seems prudent. Most do, by calling it "managing their position". I see it as speculating that the price is not going to move against them as much as the time value remaining in the contract. (and I don't necessarily see that as wrong)
I do not agree, particularly in a practical sense, that the risk is the same for a European style option, as compared to an American style option. The risk, to the vendor of the option, that the underlying price will move up or down ANYTIME during the course of the time of the option, and thus make it viable for the holder to call away the future, is much higher than the risk that the price of the underlying will be in the money at a specific date in the future.
Nonetheless, the European style option is far more used by the "legitimate" operators, and comparatively less used for speculative purposes than the American style for the reasons stated. The balance of the post was badly done.
Of couse the timing of HR4541 and Irag's refusal to accept US $ for oil has nothing to do with each other . and I thought it was the elections, silly huh .
To Anyone: How will HR 4541 affect physical gold and silver owners? I understand that bullion banks get off the hook from having to pay back actual gold - that they get to settle in cash. Does that mean there will be no "mother of short squeezes" that will cause the price to soar? Is that the extent of the damage it does to us?
Professor Hankel argues that the currency has failed to meet the key constitutional criterion of stability
--------but-------- Professor Hankel --------(is the same gadfly)----- who lost a court case to delay membership to the single currency two years ago,
-----------so-------------While embarrassing for the government, his case is unlikely to succeed.
Consider these good points:
The German government has recently insisted that the euro was bringing stability and growth to the economy, in sharp contrast with the instability of America. -----------
Hans Eichel, the Finance Minister, told MPs in the Reichstag that the situation was the best it had been for a long time. He said: Economic growth remains strong, unemployment will fall and inflation will stay under control." -----------------
Mr Eichel suggested that the real problems for the world economy lay across the Atlantic. He said that growth rates in America were unsustainable. The danger was of an American "hard landing" that would bruise the global economy.-----------------
Mr Eichel said: "You cannot have sustained economic growth with such a high balance of payments deficit and such a low savings rate. I hope this problem for the world economy reaches a gentle resolution.-----------------
As Mr Eichel spoke, ======= Washington was preparing to announce a rapid fall in economic growth from 5.6 to 2.7 per cent in the third quarter of this year.
==German growth is expected to average three per cent. !!!=
(it's the dollat that's too high,not the Euro too low!!!!)
ALSO:
Wim Duisenberg, president of the European Central Bank, called on Germany to do more to end "structural rigidities" during a visit to Berlin last week.
-----------so--------------
Chancellor Gerhard Schr�der and Mr Eichel said they are reforming already. In July, they forced through the biggest package of tax cuts in German history. Changes to the notoriously costly German pension system are in the pipeline.---------------
Leigh, a comment in a min. (how is your foot / leg?,, broken still?)
Hi Leigh,
I'm kind of dumb, so guess that question fits my level (smile)!
You know,,, the world is awash in derivatives,,,,,,one of the biggest gambling paper schemes of all time,,,,,,and it's all based on the continued use and stability of the dollar! In fact, that is the one area no one ever questioned when derivative stability considered.
Now, suddenly we have a perfect setup and presentation of a Euro / oil trial balloon,,,,, using a country no one would fault for doing it (Iraq),,,,, and the US literally walks all over the heads of Congress,,,,,,,,,,, leaving shoe prints on their backs in the process,,,,, to get HR4541 passed????
Like Zenidea says,,, just couldn't have nothing to do with each other, right? ,,,, silly huh????
I think Zenidea smells the same thing quite a few others smell,,,, a rat.
Then we have smart Western thinking players like Goldhunter lining up support for investors to buy even more losing paper trades! Hello Goldhunter! (smile) Keep talking sir, this is all setting up very nicely. Yes, I still have those 3 December contracts for our experiment. Before this is all over, I'll be using your oratory just like some other people are using Iraq,,,, laying the groundwork for a big
surprise. Bet I play the game of chess better than you,,, specially political chess! (grin)
Now, if I can just get my French Sorrel to perk up in the herb garden, everything will be perfect. (smile)
Seems to me that HR4541 makes the game of musical chairs even worse. I wonder, if I was a bullion banker and HR4541 passed, would it be better for me to default before the other counterparties do?
Could it be that the US FED, seeing the "handwriting on the wall" as it were, has made the move it has because they will seek to further influence (damage control) events as yet to unfold? The BIS cannot stiff arm the world's most important CB so, they play along. You cannot play the game if you do not have a seat at the board.
Why continue to support the destruction of the paper gold market if it is widely accepted that the paper gold market is doomed as per FOA. These "Thoughts" are meant for others as well. Instead, if you were the FED, why not lobby for a controlled rise in the POG to include a lowering of the USD which in fact is wreaking havoc with global economic conditions? An additional benefit of this approach will be the hoped for goodwill of ME oil producers. Destroying the paper gold markets will not succeed. Controlling the rise in POG at least has a chance of succeeding and most importantly, prolonging the game.
When all else fails (if control is lost), plan B goes into effect. It is of paramount importance that the status quo in the gold market not change until after US elections and perhaps even after the new US President takes the oath of office. Above all else, an orderly transition in power here in the US MUST be supported by all (for obvious reasons).
Chris Powell (10/30/2000; 23:03:14MT - usagold.com msg#: 40295)
Iraq gets OK for euro account
Iraq Gets UN OK for Euro Account
Hello Chris,
I hope you guys keep following this because it's eventually going to open the books of more failed derivatives than any law suit ever could. This is it, right here,,,,, the whole play being laid out in the open. How fast this moves dictates how fast paper gold manipulation is destroyed as dollar use shifts.
Did you notice that little blip in the Euro,,,,, almost the exact same time the HR bill was passed and the reality of UN passage in Iraq's favor. Not much, just a little tremor in the ground marking the floor of the exchange rates. Actually, the HR bill may also mark the lowest point paper gold can trade. At least there may be very little pressure on the downside from new supply. In fact, the much more ominous side of all this may now begin to take effect. That being where real,, serious,,,, gold bulls that really wanted
the exposure to demand physical gold, find themselves holding HR paper instead. If they start dumping contract paper into a demand void, the price will suddenly plummet into a trading suspension.
On a larger view, this could happen the world over in any derivative that was created as a proxy for other items of real use. Not just cash settlement. Tell Bill to keep talking, I know it sounds thin to say this but he has already broke their credibility backs just by doing what he has.
On a lighter note:
I wish you guys could buy physical as you unfold this story (smile). A little of that alone would pay the bills and make up for all the aggravation. Ha! HA! Next time you're face to face with some of the paper boys, hold a gold coin up and say "when this hits HR 10,000 we'll be even". Oh, they will laugh at you, but watch em out of the corner of your eye as they run to the bathroom after you are gone!
Ho! Ho! Ho! (big grin)
The euro has staged its first three-day rally against the dollar since August following reports that Iraq will price its oil exports in euros instead of dollars.
������������������������ Earlier, the currency had rallied on positive expectations that the pace of US economic growth would slow to fall in line with the euro zone. But it fell back slightly in late trading as strong personal income data rubbed the gloss off last week's growth figures.
������������������������ European Central Bank council member Mr Ernst Welteke welcomed Iraq's decision and urged other nations to follow suit. Iraq's Oil Minister said the country planned to price its oil exports in euros from tomorrow. The UN sanctions committee meets today in New York to review the change.
������������������������ If it works, Iraq's President Saddam Hussein could be on ECB president Mr Wim Duisenberg's Christmas card list, said Mr Michael Derks, international strategist at Commonwealth Bank of Australia in London. Rising oil prices denominated in dollars have been a major cause of euro zone inflation and are at least partly responsible for recent interest rate rises. Euro pricing would rapidly hold back inflation in all 11 euro zone countries.
������������������������ Iraq informed oil customers to start making payments in euros from tomorrow. Baghdad has signalled it could stop oil exports if its request is denied. Baghdad's rejection of dollars, the currency of oil trading, appears part of a campaign against US support for the maintenance of UN Gulf War sanctions.
������������������������ UN treasurer Ms Suzanne Bishopric said there "should be no restriction on selling Iraqi oil in euros because it is an international currency and Iraq has the right to choose any currency it wants to trade with".
������������������������ The UN oil-for-food deal lets Iraq sell oil over a six-month period on a renewal basis to buy food, medicine and other humanitarian goods for the Iraqi people, reeling under stringent UN sanctions imposed for Baghdad's 1990 invasion of Kuwait. The eighth phase of the sale ends December 5th. Iraq's oil sales at current prices fetch about $60 million a day.
������������������������ The euro rose to $0.8420 from $0.8393 on Friday, but down from a high of $0.8528 after the US reported unexpectedly slow third quarter growth. The euro's rebound was dented slightly after US dealers said the trend remained firmly to sell the euro. Speculation that central banks would buy euros also helped, some analysts say.
������������������������ Intervention is more likely to strengthen a currency if it reinforces a market movement, rather than fighting against it. But this may not be the case if central banks believe it to be only a temporary blip. The markets are looking forward to US labour market reports this Friday for more evidence of a cooling off.
"Now, if I can just get my French Sorrel to perk up in the herb garden, everything will be perfect. (smile)"
How fortunate you are kind Sir! Only lacking in perfect French Sorrel to reach perfection? When next you journey to East Coast Australia, I can share a few valuable tips - then you too may have perfect French Sorrel. It is late here in the land of OZ - goodnight and cheers "S"
Cavan Man (10/31/00; 06:10:37MT - usagold.com msg#: 40303)
BIS/FED/Mr. Howe Revelations
Hi Cavan Man,
You make a good point. I thought a shift in American gold policy was in process summer before last, 1999. The fact is gold is still in somewhat of a range. Look at the (now old) IMF ploy, using gold at a market to market (marked to market) price and using it as a real currency asset. Can you
imagine, the IMF accepting gold as a currency payment while gold is not an international official currency anywhere? Now I hear they may do it again.
You are right, the US could be shifting itself towards the inevitable, a Euro / gold world.
I don't worry too much about the BIS being on the Anglo side of things. You know, boards all have factions within them and just because the US has two seats means nothing. The dollar ability to expand and represent all world commerce has limits and that board has know this for a long time. Long before Alan came on. They never wanted a "neutron bomb" transition, rather a recognition that it was time to go. The way our J. Welch is leaving GE. Nice and controlled.
But. the players have all taken the last stages of maintaining dollar use too far. They took the trend and ran it into the ground, especially gold. Now the only way to work it out will be some sort of cash settlement, but that is becoming sticky as most of that will be in dollars and dollars now look to be at risk.
The next stage of this will most likely come when the fed lowers rates in the face of our overheated economy and sets off a big dollar slide. Then watch oil line up, first behind partial Euro pricing, later followed with full pricing.
What a mess, yes? What an interesting event to follow.
This is a repeat post from yesterday because I get the impression it was overlooked. After lurking about the forum for a number of months now, keeping up with the discussions, but not feeling qualified to contribute due to their very technical and economics oriented nature, a number of thoughts have been weighing on my mind that I have not seen addressed. They were brought into focus while following the Gold Trail of 14th October where FOA wrote the following:-
"Further, do you see why even gold mines will suffer such a loss of share value as the paper price descends. Yet, once to it's (gold's) final destruction level (and the share prices follow it), the rise in physical will come in a full scale crisis that demands crisis nationalization of all paper trading. Not Physical trading, just paper contract trading! Paper market shut down for adjustments?
Because the new fiat competitor for our dollar system has based it's strength on a functioning free gold marketplace, every nation will be forced to do the same using bullion.
To compete they will have no choice but to free gold for their citizens, even as they lock down in ground reserves with grandfather "windfall profits taxes"! All enacted while share trading and paper bullion trading is halted for months on end."
These comments are primarily directed to FOA but all other thoughts would be welcome.
1. The first paragraph above appears to assume that the physical price of gold will follow the paper price down. Would not a point be reached when the prices of physical and paper gold diverge, at which point the value of mining shares would respond to the physical price rather than the paper price? Even now, there appears to be a floor under share prices, even as the gold price has been falling over the last few weeks while their prices do not appear to need much encouragement to rise.
2. Windfall taxes have not been introduced following the recent jump in oil prices. Why do you assume that goverments will impose grandfathered windfall taxes on gold profits?
3. After suffering years of depressed gold prices, do you think that shareholders will stand idly by while governments confiscate their investments? Most of these people have suffered enormous losses and would rightly expect to be rewarded for their years of patience and loyalty to, and support of, the mining companies.
4. I just cannot foresee Michael Kosares continuing to trade gold in a quickly falling market because he would go out of business. The end game of your scenario would surely occur within a very short timeframe and at some point, all gold dealers would suspend business until the dust settled with the expectation of enormous windfall profits to come. However, if a windfall tax was imposed on mining companies, how could a government politically avoid imposing a similar tax on gold dealers and individuals?
Thanks for the tip and invite. I didn't know you people knew anything about French cooking down there! (huge grin)
Watch those miners, they are really in a pickle now. If your dollar stays down as gold spikes they will be in a vise grip. The more time goes by the more I think good mine investing in the future will involve identifying solid reserves, selling equity, then never mining it. Just sit on it. Give us your thoughts and experience when back on line.
"Bet I play the game of chess better than you,,, specially political chess! (grin)"
Poker too, I'll bet. You know what they say, "When you sit down to a poker game, and you don't figure out in the first 15 minutes who the patsy is, the patsy is you."
I guess that's what we're all trying not to be by coming here, like getting the heads up on that 4541 thing, eh?
Gold supplies/mining.Both Trail Guide and myself Do share that common worry (although you folks have likely been worrying longer than I), and it underlines the possibility that confiscation could follow more than one course. The outright confiscation of bullion from the individual would be (IMO) the least likely scenario. The political fall-out (assuming the USA still is/will be a democracy in even the quasi-actual sense down the road)would be profound. Blaming gold mines for a mess not-of-their-making would have a kind of dumb logic to Joe Blow Public that would be more palatable to them. Some form of quasi-confiscation by punitive taxation etc could be in the cards. (However,does Barrick sound worried?)
As for bullion supplies for we wee people, my local coin and bullion dealer seems (as in subjective) to have less gold and silver bullion on display. The large 100 oz. bars of Ag are no longer proudly displayed. 1 oz wafers are still there, but the price is up. Gold was nowhere to be seen, and the dealer told me he had no more J/M wafers (except a 1/2 ozer). Engleharts he still had but understandibly was not giving me stock numbers. He was also talking more about keeping a private hedge. I too am wondering how a bullion dealer like this makes out in a derivative world of gold. Perhaps M.K. can enlighten?
Accepting your perspective (as I do indeed) on current events and those as yet to unfold then, vis a vis an unbroken chain of logic; I would expect for the POG to be allowed to rise in a controlled fashion. The history of POG is all about "control" and the losing of it. Make sense?
Thank you for answering my question. My foot's all healed up, now, thanks!
----
"...There are two times for making big money, one in the upbuilding of a country and the other in its destruction. Slow money on the upbuilding, fast money at the crack-up. Remember my words. Perhaps they may be of use to you some day."
Rhett Butler
"Gone With The Wind"
----
Yesterday in the Washington Times I saw an advertisement from a jewelry/precious metals buyer. He was asking people to bring in their unwanted: sterling silver, platinum, antiques, jewelry, diamonds, and other precious stones. No mention of gold! This is sad, you guys!
Canuck Gold (10/31/2000; 7:15:13MT - usagold.com msg#: 40308)
Request for clarification from Trail Guide/FOA
Hello Canuck Gold,
I think your handle is new here, so welcome. I can't keep track of everyone anymore, nor answer all posts.
In a very humorous way I must say: ---- It took me a while to scrape the thoughts surrounding your question off the floor. You see, we pounded that subject into mush on several occasions. (smile)
OK, your words:
-----1. The first paragraph above appears to assume *********** their prices do not appear to need much encouragement to rise. -----------
CG, It's my understanding that most every miner the world over uses various official and semi private financial institutions for ongoing business. They use regular banks, bullion banks, investment banks and government banks to sell and finance their gold trade on both sides of the transactions.
In many cases, their freedom to sidestep their gold sale contracts are severely limited. In fact, I bet just about every form of loan contract against them, whether in currency, gold or equity based, has covenants and restrictions that tie all the mines assets up in any form of financial dislocation.
Now, a dislocation can occur on the banks side as well as the mines side. If some of these BBs or other financial players get into trouble and must call their loans / financing arrangements for renegotiation, it can back-play into all the other tie-ins on a mines books. Most everyone thinks that in an emergency, with physical gold soaring, the mines will just be able to snatch their gold up and peddle it into whatever market they choose. Don't count on it. In a crisis, the banks will snatch the gold and they will peddle it into whatever direction they choose. And more importantly, they may force the gold to cover derivatives at what will be officially sanctioned settlement prices. Paper
prices that is. Because in the fine print, most coventants express what market is the right one to identify an accepted price! We shall see if my thinking is right?
You see, in addition to that thought, we also fully well expect that initially a locked paper gold price will be touted as the real price for bullion, while the free physical traded price will be labeled as having "premium robbery". In other words, paper may show $300 in a very limited (locked and controlled workout) trading enviornment while physical will be reported to be selling at $300 plus a
$2,000 premium.
Are you with me? Not a good situation for any form of paper gold substitutes, mines included. Will this happen, exactly? Good odds, my friend. We shall see.
---2. Windfall taxes have not been introduced following the recent jump in oil prices. Why do you assume that governments will impose grand fathered windfall taxes on gold profits? --------
CG, go back and read all the stuff about the Texas Railroad Commission. OPEC was modeled after them. The recent runup in oil was nothing compared to the huge rise that happened in the 70s. (price adjusted). Besides, let oil gun past $60 or $70 and see what happens. It ain't over yet.
Further, the value jump in gold we discuss is off your radar screen, I'm sure. The amount of rise will be huge and certainly drive a lock down on traditional mine to market sales. Yes, the free market in existence then will trade. But it will trade mostly existing gold and trade it because international competitive trade settlements will require gold to act as a non officially decreed currency. The US
will be forced to open gold for this purpose. But it says nothing about gaining the windfall of newly produces gold as a taxable asset. Sure, such a tax would mean nothing now, at today's prices. But then with gold in the many, many thousands, rigidly controlled mine production the world over will produce some mighty fine taxes. And don't say they (officials) can't do it. Oil production and price was very well controlled in US for a long time. It can be done with any asset that's ground based and fixed.
-------3. After suffering years of depressed gold prices, do you think that shareholders will stand idly by while governments confiscate their investments? -------
CG,,,,,,,No, I expect them to stand idly by while governments "tax" their investments! Hey, they do it all the time, what's new about it now?
---------Most of these people have suffered enormous losses and would rightly expect to be rewarded for their years of patience and loyalty to, and support of, the mining companies.----
CG, while I am sorry for their loss, this story has played out in countless industries from the beginning. My only comment is that had management promoted their product (gold) as something to hold in a 9:1 ratio above mine stock investment, the gold world may not have been able to arrive
at this moment. The paper gold game may not have ever got off the ground!
-----4. I just cannot foresee Michael Kosares continuing to trade gold in a quickly falling market because he would go out of business. ---------
Clearly, you underestimate the political will of having a physical market to survive. Truly, MK would do more business under these conditions. (Just my thoughts Michael, I do not pretend to speak for CPM)
-----The end game of your scenario would surely occur within a very short time frame and at some point, all gold dealers would suspend business until the dust settled with the expectation of enormous windfall profits to come. ------
Short time frame? Could be yes, or no! All gold dealers stopping trade? Some yes. Enormous windfall profits to come? Most private citizens are not in the business of mining a product. Owning gold is not a business venture so taxes are not an issue here. They are holding private property that
is no longer official money. Therefore, there is no incentive for the US to again treat gold as money again, like it once did. Private asset, yes! Money no! Perhaps the Legal Tender Eagle could be a problem, but it's not a big deal.
-------However, if a windfall tax was imposed on mining companies, how could a government politically avoid imposing a similar tax on gold dealers and individuals?-------See above!
ALL: One of the big roadblocks in the minds of Western investor is in the perception of gold as an asset in and of itself. They have seen it remain in a political value pocket for so long that they can only view the trading of gold as a means to an end.
Hi Leigh,
His customers aren't buying gold, so he's not in the market for it right now. He may have his personal gold savings already in place....but there's very little small dealer or general public interest in it right now. It's gotta turn a profit faster before he'll be interested in buying. He's not interested in stock that has to sit on the shelf for weeks or months.
Silver always sells to the general public (coins, jewelry, tea services, etc.) especially when he can buy cheap and turn it fast, like now. Old, rare coins are beginning to make a come back after two years of public fascination with the State Quarters. He's probably hoping to buy a collection at or under silver spot, pull out some overlooked primo items (that's the profit) and turn the rest fast to cover costs.
As for the platinum, the dealer is probably hoping to pick up some really cheap metal from folks who aren't informed on the recent price hikes. He can turn a platinum deal over quickly for some good profit.
I'm not plugged in to gems trading...but there's a pretty wide variety and cheap prices available at the flea markets. Usually offered as a secondary item at the coin dealer's booth or alongside the finished jewelry. They're not moving very well right now either...but better than gold.
Best time to buy gold for savings...when no one else wants it!
I think a light bulb went on for me today, and I'd like to run this past you for correction and comments:
I've always wondered how hyperinflation could seriously get started in the USA. The basic idea I always had was that if prices for things like food, cars, clothes that people buy all the time went up too high too fast, people would just cut back, thereby lowering demand, which SHOULD lower the upward price pressure.
But, if things like HR4541 allow the forcing of paper gold settlements in dollars, wouldn't this dramatically force down, immediately, the worth of dollars? This bill isn't limited to gold trading? Any derivative or other forced dollar settlement mess could trigger it?
In other words, the interference in the free market could force a major gap in dollar value, since everything else's specified value in dollars is then suspect?
Is this what could cause a rush for the exits, only too late?
SA threatens consequences for US backing of Israel
I heard ONE mention of this news on CNBC yesterday, then nothing...not on newswires, nothing, nada.
Paraphrased, the news item was: Saudi Arabia threatens unspecified consequences for the U.S. backing of Israel.
Could this be a reminder to the Clinton Administration and other US powers that the Saudi's would just love an excuse to switch to Euro's right NOW and push the dollar off a cliff? A little nudge to remind Clinton of the talk he had with Prince Abdullah at the U.N.?
Thankyou for your response. I've been kicking around here for over a year now, but don't post very often. I try to keep up with all the discussions but I guess I must have missed some.
Your scenario appears to imply that the financial institutions will effectively take over vulnerable gold mines but what about those that don't hedge and don't have any debts? Under such onereous conditions, why and how would any mining company continue to operate? With such a dislocation taking place, the price of physical would explode further. And if governments can get away with taxing the investors, what makes you think that they won't introduce onerous capital gains taxes or other 'fees' on gold transactions? Could you please expand on your final paragraph to 'ALL'. How will it change?
The notion of gold trading as a wealth asset in and of itself is very appealing.
Does anyone know of historical relationships other than the suit of clothes one?
What say 160 acres of good land traded for in gold?
Maybe historical relationships aren't relevant - what with the liquidity storm a' brewin - but maybe they would be helpful to get a sense of the real power of gold unattached.
I am young in years so please correct my understanding if need be. My understanding is that the value or purchasing power of the dollar is dictated by the price of gold. The more gold you can buy, the stronger the dollar - less gold, weaker dollar. If this is the case, what happens to countries' currencies that are backed with a percetage of gold holdings if the dollar continues to strenghen and gold continues to fall. Does their currency fall as well? Considering they don't have any dollar reserves as a hedge (which is unlikely), but Iraq may be the first example. My second question is essentially the opposite of the first, since the dollar is the reserve currency what happens to other currencies that are backed by the dollar, with little or no holdings of gold, if the dollar should fall? Does their curency fall as well if they sit there and do nothing?
America Online has been known to gun owners for some time for their support of anti-gun organizations and policies. They've donated large sums of money to liberal, anti-gun Democrat organizations to support people like Dianne Feinstein, Hillary Clinton and Ted Kennedy.
More recently, they've canceled accounts for firearms related web sites on the grounds that such material is no different from "pornography". Never mind that guns are entirely legal items owned by tens of millions of Americans. Never mind that AOL doesn't seem to think that disgustingly offensive rock music is a problem.
Now, in another step towards the final elimination of gun owners from "civilized society", AOL has fired three exemplary workers for having firearms in their cars in order to go shooting at a range on their own time!
The three employees are Luke Hansen, Jason Melling and Paul Carlson. All three worked as "partner technical consultants" at AOL's Ogden, Utah facility, doing higher level technical support. The Ogden facility employs about 850 people, according to AOL's web site, and "handles a range of technical, billing, third-party and sales calls". According to Mr. Hansen, they had worked at AOL for two to four years, and all had good employee records and good reviews from their supervisors. Unfortunately (at least from AOL's point of view), the three young men also enjoy shooting.
On September 14, 2000, Luke, Jason and Paul met after work in the AOL parking lot to go shooting at the gun range near Eden, Utah. In order to carpool to the range, Jason and Paul transferred their firearms from their own cars to Luke's truck, a matter of carrying them a few yards. Jason transferred a .30-06 hunting rifle and a 9mm Smith & Wesson handgun. Both firearms were unloaded and in cases. Paul transferred a .45 long Colt "cowboy style" pistol and a 7.63 X .39 KBI. The Colt was in a holster, and both firearms were unloaded. The handguns had trigger locks in place. Luke's firearms were in his truck and he never touched Jason or Paul's firearms. At no time did they brandish or handle the firearms in a threatening or unsafe manner. Luke and Paul hold valid Utah concealed weapons permits, and Jason is in the process of obtaining one, so all three are familiar with safe handling and Utah laws.
Although all three of them worked during the subsequent three days, nothing about the firearms was mentioned. However, on Monday, Sept. 18, all three were fired for "violating AOL's employee policy" which states that firearms are forbidden on company property, including the parking lot. According to Luke, although no one complained, an overzealous security guard saw the firearms on a video surveillance tape and reported the alleged violations.
AOL does have its firearms policy posted inside the front and back doors of the building, stating that firearms are not permitted in the building or in the parking lot, and all three employees were aware of this policy. However, they were also aware that AOL's policy violates Utah state law. AOL states that it is a "secure facility", although under Utah law secure facilities can be designated only by the legislature, and include places such as courts, airports, mental health facilities, and prisons. By definition, a place open to the public cannot be a "secure facility", and AOL's parking lot is open to the public. (Actually, it's a group of marked stalls in a public parking lot.) In addition, a secure facility is required to provide locked safe storage for anyone lawfully carrying a firearm, and accept responsibility for stored firearms, something that AOL clearly was not equipped to do.
On a previous occasion about two months ago, the three men had also transferred firearms after work, and had been reported to management. At that time, Luke Hansen met with AOL's General Manager, Sarah McElwee. At that time, he explained to Ms. McElwee that while AOL might be able to restrict firearms in the building, it could not restrict firearms in a public parking lot, and that AOL did not meet the criteria for a "secure facility". Mr. Hansen says he thought the matter was resolved at the time, although no written changes were made to AOL's policy. Ironically, Ms. McElwee's husband is known for the very fine firearms he makes!
As a result of the firing, Paul is still looking for work. Jason, who has a wife and just bought a new home, has found a new job. So has Luke, who is expecting his first child in February.
I'm so encouraged by what you said about gold trading as a private asset and not as money (of course, you've said this before, but the way you phrased it today made it sink in). If, let's say, I wanted to pay a plumber or school tuition or some other bill, could I offer gold and it be readily accepted? And would there likely be no tax on the transaction?
"To save the village, we must destroy it." How the NWO thinks -- and then screws things up @ALL
http://www.arbld.unimelb.edu.au/envjust/papers/allpapers/brikell/home.htm In researching some WTO (World Trade Organization) successor and operational arm to GATT (General Agreement on Tariffs and Trade) and particularly NTRs (Non-tariff Trade Restrictions,) I ran across the article who's link is in the header to this message.
It spells out, in uncommon clairity, the philosophy of the Basel Accords, explaining how the WTO folks intend to carry out their mandate ~"to make trade easier". It's quite interesting and telling as to the thinking that went into the Accords.
Particularly interesting is the idea of institutionalizing the "norm," in the interest of being able to enforce bans on NTRs! In other words, to put an end to restrictions on free trade, including those sneaky little NTRs, the WTO will try to force what's "normal" down everyone's throat, thereby ultimately making trade much less free! "To save the village, we must destroy it." Quite typical of governments and bureaucracies, I must say.
The answer, of course, is as (largely) in the uS, just don't allow governments to interfere with trade in any way what-so-ever. The interstate commerce clause of the U.S. Constitution largely prevents this here -- and this legitimate aspect of the commerce clause causes few problems. (Any bad products will be much more efficiently taken care of by law suits and consumers, especially if consumers realize they must indeed be responsible for their own buying decisions rather than counting on government "watch dogs" who are as likely to let dangerous items [thalidomide, AZT, etc.] stay on the market because of bribes, etc.)
Those of you who've been following my "Free Trade" series -- both of you -- probably know why this kind of thing is nearly inevitable, once governments/bureaucracies are given a foot in the door to "improve" free markets.
Anyway, some of yu'all might find it an interesting read.
http://www2.marketwatch.com/newscenter/default.asp?doctype=rt§ion=MWNews4:41 pm ET API POSTS 749,000-BARREL FALL IN LAST WEEK'S CRUDE STOCKS - BRIDGE NEWS
4:41 pm ET API POSTS 1.728 MILLION-BARREL RISE IN LAST WEEK'S DISTILLATE STOCKS - BRIDGE
4:41 pm ET API POSTS 4.935 MILLION-BARREL FALL IN LAST WEEK'S GASOLINE STOCKS - BRIDGE
The Euro - an artificial currency? akin Esperanto a global language ...
failed, though the almighty US$ has not .. failed - YET and as some feel the euro is the only alternate to the US $ as the "ultimate" reserve currency of the (im) -perfect world, while gold has been rejected by any fiat - not only because, as the spinmeisters claim, the "valuation" of (barter counterfeit?) or currency now solely should be determined by market forces, which again are determined by (relative?) performance of GDP (-relative to what? If I may ask!), or is it productivity, again gains in productivity are great, though as Adam Hamilton has asked - relative to what? - Welll, relative to the only ever global accepted measure of real value - gold!
The Fed's chief spinmeister feels productivity gains in the US have by far outstripped the (still) obscene (to avoid exhuberant) valuations of the virtual financial markets of the US (the now by far largest export industry of the US) and he may be right - since the rest of the world is catching up in trying to match this kind of productivity - in "exporting" production to LDC's in favor of financial productivity - or better new economy virtual and financial engineering. A real virtue as long as you don't run out of willing "LDC;s" to produce real goods for virtual paper.
... So, may I ask, aware of FOA's arguments, the euro, a currency inflated before floated, or to put it more pointedly a future currency at the mercy of European politics, which seemingly hasn't really changed since the days of the Weimar Republic.
... Or else - Is the euro the final, spinal and only glue to
an economical, political and lastly (self-dependent)defense union forged by politcal pressures of its antidotes?
"What happens to countries' currencies that are backed with a percentage of gold holdings, if the dollar continues to strengthen and gold continues to fall? Does their currency fall as well?"
Rockgrabber, there are probably as many answers to these questions, as there are people to give an opinion. I'll give you my opinion, to which I finally arrived largely on the basis of thinking for myself and not on the basis of what others were saying, typically in the popular press and T.V.
"What happens?" ---Nobody has a clue! Anything can happen!
The problem with modern currencies is that they have no quality, they are simply numbers (quantity) devoid of quality. (I am here harking back to classical philosophy) What are they worth relatively to each other - in "purchasing power"? They are worth whatever the speculators think they are worth at the moment. The speculating community is watching itself (watching each speculator) to see what each is doing. These speculators know absolutely nothing about the currencies: there is nothing to know about them, since they have no quality. All the speculators have to go on, is what the others are doing. And they all, each and every one, are trying, 24 hrs. a day, to outwit the others by running to where they think the others will sooner or later run (that may be in 5 minutes time, or in 5 weeks time).
So this is a casino, or an insane asylum, take your choice of epithet. There is no rationality to it. It is sheer madness. (It would be interesting to know what percentage of currency traders are on coke during working hours and after.)
The gold reserves serve no useful function, unless they are going to be used to redeem paper money at a certain rate.
Relative values of currencies are all subjective; some have "prestige", a good image; others don't. Generally a fallen currency is like a fallen woman: reputations cannot be mended. We are told the "productivity" of a nation determines the strength of a currency. This is total rot!
The only way productivity affects the value of a currency, is because THE SPECULATORS THINK SO. And they all watch each other.
In currency valuations, there is nothing tangible to go on, only on correctly answering the question: what are the other speculators going to do, and when? And doing it first.
I don't think any school will tell you this, and very few individuals. The idea of "reserves" seduces people into thinking that with "backing", the currency is more trustworthy. This is nonsense, because the reserves are only decorative unless used to REDEEM paper at an absolutely fixed and permanent rate. In that case, reserves are certainly useful and highly important: they show the public how much gold there is, to redeem paper in circulation. Too much paper (too little reserves) engenders gold flight as people begin to worry, correctly so, that the gold will not suffice to redeem paper, in a crisis. This redemption is not done any more (last vestige was abandoned on August 15 1971) and so as I say, gold reserves without redemption are simply decorative and may add an aura of solidity but nothing truly objective.
Your other question:
2. "Since the dollar is the reserve currency, what happens to other currencies that are backed by the dollar, with little or no holdings of gold, if the dollar should fall? Does their currency fall as well if they sit there and do nothing?"
Again, anything can happen. It all depends on politics, for one, and on many other factors such as structure of internal and external debt. There are no inevitable consequences: it all depends on what governments and/or speculators want or feel or fear. There is no objective standard against which to measure. (All this means lots of stupid articles in stupid publications by stupid "economists", for stupid readers.) A stupid situation.
Indeed, part of the problem of the dollar, is: How do you devalue it? There has to be an agreement among the significant parties. The U.S. cannot devalue on its own, because to do so, requires a third, superior medium, recognized by all, against which to devalue. That used to be gold. Devaluation was done by reducing the content of the gold in the dollar, pound, franc, mark, etc as stipulated in the definitions of each of these currencies.
Since all currencies, in early 20th Century, were simply quantities of gold with different names, a devaluation was achieved simply by diminishing the quantity of gold required by the definition of the currency. But currencies are no longer quantities of gold with different names. How then, to devalue? In the case of the dollar, only by agreement and manipulation! "Up" and "Down" in value, can mean something, only in relation to something relatively immobile. That something was gold, and all link between currecies and gold has been specifically forbidden - by the IMF!
Specifically, what does dollar devaluation mean for Mexico, for instance? Very little, immediately. Most people would not even take notice. The peso would continue to be worth so many dollars. Politically, what is important is that pesos be redeemable for a quantity of dollars which, everyone hopes, will not change much in the near future. If the dollar goes down, the peso goes down with it. No visible change directly perceptible.
And that will prove a problem in a downturn in the U.S. economy; aside from the problems such a downturn would cause in Mexico itself, I can see a surging protest in the U.S., against imports from Mexico, which "steal jobs" from U.S. workers. So since the dollar cannot be devalued against the peso, the answer will be, raise tariffs: Taxes on imports.
The whole situation is madness. To explain it is maddening.
Speculating (investing) or gambling @justamereBear, Goldhunter, Holtzman, ALL you gamblers
justamere, your post to Goldhunter last night inspired me!
If I haven't convinced all you "investors" out there that you're
all really gamblers yet, well, will you take it from the classic "The
Futures Game," written by two college profs?
SPECULATING OR GAMBLING? [this is the actual header from the
book]
There are many who regard "speculation" and "gambling" as
synonymous terms. One hears of "investing in securities" and
"gambling in futures." Even some relatively sophisticated
investors consider futures trading to be one step removed from a
Nevada casino. .... The terms "speculation" and "investment"
cannot really be differentiated clearly from one another but
rather represent the same activity, differing only in the degree
of possible variation from expected returns.
...
The motivation of many individual speculators could well be
identical with that of gamblers; [remember justamereBear's posts
on fourX traders -j] that is, they are willing to take relatively
large risks in return for the chance to gain large profits. In
addition, they may derive some pleasure from the activity of
trading, just as the gambler derives excitement from the game and
not just from the monetary result of gambling. The major
difference is that the activities of futures speculators are
essential to hedging, which, on balance, is apparently beneficial
to the social good. -Richard J. Teweles, Frank J. Jones, The
Futures Game, (New York: McGraw-Hill 1987) p. 4->6 [ISBN
0-07-063734-2]
Thank you, Trail Guide, as always, and
particularly for your comments in reply
to my posting the AP story about the
United Nations' approval of Iraq's euro
account for oil sales.
I concur in your observations and forwarded
them to GATA Chairman Bill Murphy and our
consultant, Reg Howe.
I also concur in your recommendation for
purchase of physical gold and, happy
happenstance, even as you were posting I
was ordering the few ounces I can afford
this month. But that is where my new
investment money will be going. I'm just
trying to figure out exactly how the
S.O.B.'s will try to expropriate me once
the price of gold breaks out of its
paper stranglehold!
Attn: dragonfly (10/31/2000; 10:02:35MT - usagold.com msg#: 40321)dragonfly:
You posted/asked:
[quote]
The notion of gold trading as a wealth asset in and of itself is very appealing.
Does anyone know of historical relationships other than the suit of clothes one?
What say 160 acres of good land traded for in gold?
Maybe historical relationships aren't relevant - what with the liquidity storm a' brewin - but maybe they would be helpful to get a sense of the real power of gold unattached.
[unquote]
A few years ago, when I purchased my ranch, I required the
Title Insurance Company to provide me with a copy of any/all
easements recorded against said parcel. They obliged, and
it was amusing to read some of them. Here's a paraphrase
of one such recorded easement. [names withheld]:
"I,[name] hereby grant to [name] an easement across corner
of parcel from a point [legal description blah-blah] for the
purpose of access to the [place-place] Wagon Road, for the
sum of Ten Dollars in Gold."
It was a handwritten pen/ink document, recorded in 1928 and
warmed my heart as I read it.
While this isn't exactly an example of what you asked, since
it included the "Dollar" word, it does indicate that Good Land
wasn't traded for anything less than a Gold standard, and not
that far back in time.
Sierra Madre (10/31/00; 16:06:24MT - usagold.com msg#: 40331)Sierra Madre:
I really enjoyed reading your post.
You put the status of "currencies" into perspective, in such
an eleoquent and straightforward way.
Everyone should read it. Thanks for posting it.!.
[snip-1]
"But it will trade mostly existing gold and trade it because
international competitive trade settlements will require gold
to act as a non officially decreed currency. The US will be
forced to open gold for this purpose."
[snip-2]
"They are holding private property that is no longer official
money. Therefore, there is no incentive for the US to again
treat gold as money again, like it once did. Private asset, yes!
Money no! Perhaps the Legal Tender Eagle could be a
problem, but it's not a big deal."
[snip-3]
"One of the big roadblocks in the minds of Western investor is
in the perception of gold as an asset in and of itself. They have
seen it remain in a political value pocket for so long that they
can only view the trading of gold as a means to an end."
If these weren't slip-snips, then I can only comment that
what you write sometimes flys in the face of ..er.. what you
write.
ThaiGold (10/31/00; 18:31:16MT - usagold.com msg#: 40338)
Sierra Madre Post: HOF Nomination: I'll Second It.
Attn: Cavan Man (10/31/00; 18:22:09MT - usagold.com msg#: 40336)
Cavan Man
Yes indeed.!. I'll Second the:
Sierra Madre (10/31/00; 16:06:24MT - usagold.com msg#: 40331)
Your quote "The major
difference is that the activities of futures speculators are
essential to hedging, which, on balance, is apparently beneficial
to the social good."
A speculator takes on the risk of the marketplace (price risk) to try to earn a profit...The commercial "offsets" his risk to the marketplace (hedge)for protection against adverse price movement.
The above is a decent representation of the two different types that may use futures.
Is speculating gambling? Is buying a futures contract or a Krugerrand today at 270 with the intent to sell it in the future at 300 gambling? Or is buying IBM stock today for a gain in the future any different? If you take on risk to try to earn a return, (the speculator), I would say we're taking a "gamble".
A note: If commercials were unable to offset or transfer price risk to speculators, the consumer might suffer spot shortages of goods or pay higher prices for the good.
I would agree with the statement in your post that hedging does offer a social good.
Real-life speculators & where those naked shorts come from @ALL
"Actually, hedgers operate in the futures markets primarily to
increase their profits and not just to reduce their risks. If
they believe that to hedge against their inventories or to make
forward sale commitments is the best course of action, they will
do so. If they believe [BUT remember Yogi Berra -j.]that a
partial hedge is adequate, they might well hedge only part of
their risk. In some cases, if they are quite certain that their
judgment of the future course of prices is correct, [BUT remember
Mises -j.] they might carry their entire risk unhedged. Such
selective hedging is far more common than is implied in many
standard texts, which indicate that all risks are hedged and that
most hedges work perfectly or nearly so. [Ask Long Term Capital
Management about that. -j.]
Furthermore, many firms are not above attempting to take
advantage of apparent opportunities in the futures markets by
taking positions parallel with their cash positions--which, of
course, amounts to speculations that increase risk rather than
hedges that reduce it. If such speculation is successful, it
works for the good of the company and its owners, and insofar as
the economy is benefited by the health of companies and their
owners, it is also benefited by the speculation. If speculation
of this kind proves unccessful, however, and the company, its
owners, and its customers are damaged, it is difficult to argue
that the speculators who took the other side of the trade and
made it possible benefited anybody." [Robert Citron & Orange Co.,
Nick Leeson & Barings, Summitomo -j.] -Richard J. Teweles, Frank
J. Jones, The Futures Game, (New York: McGraw-Hill 1987) p. 4->6
[ISBN 0-07-063734-2]
"The stock markets made an impressive rally today--ie "panic buying"
, but we are not convinced this equates to a "sustainable" rally
going forward. Our timing models have indicated a Panic Cycle
Week for both the DOW & the S&P for this week. Often a market
that shows "panic buying" in the first part of a "Panic Cycle Week"
will suddenly turn to "Panic Selling" by the end of the week.
Is the market discounting a Bush Victory too soon? Has the market
completely forgotten about tension in the MidEast? Will an imminent
US attack on Bin Laden (payback for the USS Cole) backfire by further
radicalizing the Arab World against the US???? By the way, what does
Bill Clinton have to lose by striking now against Bin Laden???. He
won't have to deal the the mess...he can leave that to his successor.
We still believe a move down to 2438 basis the Dec Nasdaq;
9063 basis the Dec DOW; & 1267 basis theDec S&P is quite likely
before this correction has run its course.
Next week, if not sooner, attention may revert to the MidEast. Why?--
Panic Cycle on both OIL and GOLD!!"
Leigh (10/31/00; 04:50:26MT - usagold.com msg#: 40299)
Quick (but dumb) Question
To Anyone: How will HR 4541 affect physical gold and silver owners? I understand that bullion banks get off the hook from having to pay back actual gold - that they get to settle in cash. Does that mean there will be no "mother of short squeezes" that will cause the price to soar? Is that the extent of the damage it does to us?
Thank you to whoever is kind enough to answer.
UNSNIP
Leigh, I re-read Trail Guide's 40301, (addressed to you presumably as an answer to your 40299, and for the life of me, I can't find a definitive answer to your question.
In case I am obtuse, can you please digest 40301, and tell me how it answers your question. I dare not expose myself as dumb, so I wont ask Trail guide. TIA, eguy
Perhaps Trail Guide is agreeing with what you infer, in that there will be no "mother of short squeezes", since the paper gold derivitives will not have to be settled in gold.
One must learn to read between the lines!
So where does that leave us now? What effect will paper settlement of gold contracts have on the dollar, physical gold, and derivitives?
Wish I had someone to help me with this!
Tell you what, you clue me in, and I'll install an elevator for you, K?
Too sleepy to review TG, but my impression was that he suggested the gold bulls would quit playing the COMEX game if they knew they couldn't get physical in settlement but only dollars at a trumped-up LBMA/COMEX fixed price per ounce when they finally won the big one. In other words, part of the bulls equation is that they'll get physical ;> and be able to benefit by it's major price run-up when it finally comes. If they're likely to only get dollars at some trumped-up (actually more likely trumped-down) price, the game is no longer interesting. It looks like that's what HR4541 may be setting everyone up for. And not just gold. In which case they take their chits and go elsewhere - - - which makes the COMEX/LBMA collapse that much sooner. Who's going to play with all those shorts?
This rigs all the derivatives games for the gamblers and against the gambler/hedgers, and if I understand it, it's inflationary --- where will the money for settlement come from? It'll likely have to be created in some fashion for bailouts, monetizing the loses.
Then again, I'm los'n it, so I could be way wrong.
Thank you for your explanation of House Resolution.
I had originally thought that HR was a UN resolution.
So I went looking for the UN resolution and ... found it. It follows.
Anyone volunteers to outline the relation of HR 4541 to this UN resolution? (Bah, I must have been a lawyer in a previous life.)
Regards,
The IVH
Monday October 30, 9:43 pm Eastern Time
Iraq Gets UN OK for Euro Account
By NICOLE WINFIELD
Associated Press Writer
UNITED NATIONS (AP) -- A United Nations committee gave Iraq the green light Monday to open a euro-denominated bank account to handle deposits from oil sales -- a victory in Baghdad's campaign to stop using the hated American currency.
The decision eased fears that Iraq would follow through on a threat to disrupt oil exports if its request to start collecting payment in the common European currency was denied.
The U.N.'s sanctions committee on Iraq, made up of the 15 Security Council members, agreed Monday it could not object to the request because it had no legal basis to block it. Nevertheless, the United Nations has warned that the switch could cost millions of dollars in lost interest and other revenue, diplomats and U.N. officials said.
The committee authorized its chairman, Dutch Ambassador Peter van Walsum, to draft a letter to the U.N. Secretariat giving it the go-ahead to create a euro-based account for Iraq, the officials and diplomats said.
An account could be created within a week.
Earlier in the day, Iraq informed the committee that it was extending its Nov. 1 deadline to create the euro account until Nov. 6.
The United Nations already has a dollar-based escrow account at the French bank BNP Paribas in New York to receive payment for oil exported by Iraq through the U.N. oil-for-food program.
The program allows Iraq, under sanctions for its 1990 invasion of Kuwait, to sell its oil provided the proceeds are used to buy humanitarian goods for its 22 million people.
Currently, Iraq exports about 2.3 million barrels a day.
Earlier this month, Iraq requested the United Nations create a euro-denominated account so it didn't have to receive payment for its oil in American dollars, which it considers the currency of an ``enemy state.''
On Friday, the U.N. Treasury Department said the change would be cumbersome and costly since oil is bought and sold internationally in dollars and recommended the proposal be studied further SINCE THE FINANCIAL IMPLICATIONS WERE SO GREAT. (capitalisation by The Invisible Hand).
The U.N. sanctions committee requested a report in three months on the implications of the change, including its costs and benefits.
French Ambassador Jean-David Levitte complained Monday that the Treasury report omitted any mention of potential gains of using the euro, which France and 10 other countries use. He noted that a significant portion of the humanitarian supplies Baghdad purchases through the oil-for-food program comes from countries that use the euro.
``Transactions in this currency would reduce costs for exporters which currently have to factor in variations in the euro-dollar exchange rate,'' he wrote Undersecretary General for Management Joseph Connor.
Levitte also complained that the Treasury report concluded it was up to the sanctions committee, which is deeply divided over Iraq, to approve the switch to the euro account. He said there was no reference in any U.N. resolution that requires the committee to be involved in such dealings.
The source of the miracle was believed by some to be
new technology. Others - curmudgeons, cranks, and
Austrian economists - found a more familiar cause - new
money. In the 13 years since Alan Greenspan has been Fed
chief, Richard Russell observed over the weekend, he has
increased the money supply by 3.25 Trillion dollars -
more than all the other Fed chiefs, since 1913, combined.
Please consider my
The Invisible Hand (10/31/00; 22:48:15MT - usagold.com msg#: 40348)
HR 4541
as inexistent, except in as far as I've been thanking Simply Me.
I've confused the UN resolution on Iraq with the US bill on derivatives.
Sorry.
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Big bank pact to boost gold misses mark
By Cheryl Strauss Einhorn
A year ago last week, 15 European Central Banks announced their intention to boost gold prices by limiting official sales. Today, however, gold is down 2% from the date of their announcement, to $277 an ounce. It continues to trade near its lowest level in 20 years.
Nor do the prospects for the yellow metal look much brighter between now and yearend. Jeff Christian, head of CPM, a precious-metals research firm, expects gold to remain lackluster, trading in a range between $270 and $290 an ounce. "There isn't much liquidity in the market," he says. "London bullion trading is down." Indeed, trading volume has correction early 30% in the past year, to 25 million ounces per day.
There are several reasons for gold's continued troubles. To begin with, the European banks' self-imposed five-year sales limit actually exceeds the group's previous level of sales. The banks set a 2,000-metric-ton limit, intending to dispose of their gold in annual 400-ton installments. That's well above the average annual 320-350 metric tons the banks had been selling until now.
Out in the open
Too, by formally announcing their yearly sales limit, the banks legitimized the practice of official gold sales -- something that traditionally has been kept secret, and frowned upon by the gold industry. The 15 banks involved in the pact hold about 45% of the world's gold.
The group's disclosure has introduced an unusual degree of transparency into the gold market, which, in part, is what the Europeans intended. But the revelation also has made it easier for non-signatory banks to gauge the market and sell from their own gold holdings. During the past 12 months central banks in Brazil, Canada, Chile, Jordan and Malaysia, among others, have been selling.
Last year, gold demand hit a record, largely because of Year 2000-related fears. Demand climbed 20% from 1998 levels, which had been depressed because of the Asian crisis. But demand this year has fallen. "The absence of Y2K gold investment has made the market very depressed," says George Milling Stanley, at the World Gold Council.
Until fairly recently, at least, gold prices have suffered because of the strength of the U.S. stock market. As global investors have migrated to U.S. assets, the dollar has rallied. And since gold, like most commodities, is traded in dollars, the greenback's muscle has kept a lid on the metal's price.
The buck tops here
The U.S. dollar recently has been trading near its all-time high against the South African rand and the Australian dollar, both currencies of key gold-producing nations. The dollar also has been hitting highs against the euro and the Indian rupee, currencies of major consuming regions. In fact, India is the world's largest buyer of gold.
Such local-currency weakness often encourages producers to sell their production forward to lock in attractive prices. Conversely, for consumers, the dollar's strength has made gold too expensive. The Australians reportedly have been selling more gold than their South African peers, because it is more politically acceptable Down Under. In South Africa, only Anglogold is hedging, while other producers are afraid to get caught on the wrong side of a price spike. That's what happened last year to Ashanti Gold, in Ghana, which wound up having to unwind its hedge at great cost.
The multi-pronged attack on gold from the international currency markets, coupled with an absence of investor demand, may keep a lid on prices for a while. It might even counteract seasonal factors, which usually make the fourth quarter a strong period for gold sales. So what did the central banks' year-ago pronouncement actually achieve? In hindsight, basically nothing.
Black Blade: The usual drivel. The WA news has been out for a year and this is the best that Cheryl can come up with? What is the problem with the CB's selling gold? Well, they just transfer it to one another. Now if they would just sell to the public so we could get our hands on it, then that would be another story all together. I like these bargain prices. I just slowly acquire more as time goes on.
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