USAGOLD Discussion - January 2001

All times are U.S. Mountain Time

ThaiGold
(01/01/2001; 00:03:09 MDT - Msg ID: 44802)
My New Millenium Predictions
aka: ThaiGold's 2001 WishListALL: Wishing everyone in the Forum, a Happy New Year.!.
==========================================
As we enter this New Millenium, 2001 holds alot of promise. Let's hope the
next 1000 years will be better than the last 1000 years. Afterall, it couldn't
be much worse, could it.?.

Predictions, accurate ones, are not my forte'. As most of you know. But at least
allow me to put forth my WishList. I cannot see into the future as far as most
of you can. So I'll limit the scope to only the next four years.

[Energy]
Top of my list. Everyone's list. Continued shortage of refinery capacities
and increased wastefull consumption will lead to extreme conservation measures
enacted (once again) by government. Remember the 55 MPH speed limit.?. It'll
be back. Remember Nukes.?. They're gunna be back in vogue. Remember Clean Air
Standards.?. Out. Like the lights of Kalifornia.

New energy sources will become economically feasible. Look for breakthroughs
in Solar grids. Look for Shale-to-Oil. Remember coal.?. Better look it up.
But transcending all of those, will be new (small) (in-home) Fuel Cells. Using
water as fuel. Yes, water. And Platinum. And Silver. It's so easy, to electrolyze
Hydrogen and Oxygen from water. Burn it to create heat; make steam; turn your
turbine; and use a tiny fraction of the electricity produced to feedback into
the electrolyzer. Even smaller Fuel Cells will be adapted to autos and trucks.

It's common sense, not perpetual motion. Trust me.

[Stock Markets]
After DOW and NASDAQ (et al) crash to 500 and 50 (respectively) several new rules
will be enacted to stabilize such markets. The biggest will be the banning of any
and all "short" sales. If you ain't got it, you cannot sell it. Nor manipulate it.

[Precious Metal Shares]
Gold/Silver/Platinum/Palladium producers (mines) will see their shares vastly
outperform any of the other stock market shares. (see below -- $USTSC & $USTGC).
Meaning, ones that currently have *real* production and facilities. And ones not
hamstrung with faulty hedging programs of the past.

[Other Paper Markets]
Hapless "investors" in the Futures Markets (Gold/Silver/Platinum/Palladium) having
seen all their Metal Delivery Contracts evaporate into UnDeliverable status, will
welcome the new rules to be enacted: No more "short" sales, except from bonafide
(mining companies) producers, and then, not for more than a proven-capability of
a single year's forward production. Sellers will require a government license. And
buyers too.!. (see below) Only bonafide producers and fabricators will be allowed
to participate in PM "Futures". These will even become somewhat pointless.

[Derivitives]
Commodity and Stock Options, Puts, Calls, Index Funds, and all forms of Derivitives
will be banned. As nothing more than proxies for gambling. Market Stability becomes
the paramount concern of the regulators. These have not and never will, contribute
to authentic market activity. You wanna gamble.?. Go to Vegas. Or your nearest
Native American Casino. Fun is where you find it. You won't find it in the Markets.

[US Dollar]
Defined as "Federal Reserve Notes" (FRNs). These will "decline" until they reach their
ultimate "strength": Equal to one of the new USTreasury-issued $USTSC or $USTGC forms.
(see below).

[Federal Reserve Bank(s)]
FRB Chairman Alan Greenspan will be seen as foot-dragging or powerless to control
a spiraling (downward) USA economic system. The New Administration will phase out
the FRB concept. And replace it with the Constitutionally mandated US Treasury as
the ultimate and absoloute source of (Congressionally Decreed) (NEW) USA currency.
(see below). The FRB and Branches will become "nationalized" and function as local
Branches of the US Treasury. No-more an automonous privately held unaccountable
nightmare of credit and manipulation. Greenspan is out. Secretary of Treasury is
the new Currency/Credit Czar. Accountable to the President. Congress. And the People.

[$USTSC & $USTGC]
USTreasury Silver Certificates and USTreasury Gold Certificates will be issued to
phase out FRNs. Issued directly by the US Treasury. Backed by the Full Faith and
Credit of the US Government. And backed by whatever Silver and Gold remains in
the US & FRB-NY vaults. Plus (mandated) ALL future Silver and Gold production that
comes from the (USA) mines. US Treasury is the (mandated) only buyer of it, with
few exceptions, by government permit, for industrial fabricators.

$USTSC circulates side by side with US Silver Eagles, at face value.
(1 $USTSC= 1oz Silver)

$USTGC circulates side by side with US Gold Eagles, at face value.
(1 $USTGC = 1oz Gold)

FRNs will decline in quantity to become interexchangeable, until withdrawn completely.
That means, they will become STRONGER in purchasing power, as it takes only 50 of
them to purchase a new $USTGC or 1oz Gold Eagle. Ditto in the case of $USTSC, the old
FRNs will become stronger, whereupon only one is required to purchase one $USTSC or
an oz of Silver. But initially, FRNs will remain as Legal Tender for purposes of
monetizing preexisting US Dollar-denominated Debt(s). Public and Private. During
that period, they remain a "weaker" fiat currency, needing 500 to purchase 1oz Gold
or 50 to purchase 1 oz Silver. It sounds confusing, but isn't. Trust me.

[EURO]
The European Common Union's EURO will be forced to undergo a similar transformation
to remain competive for world trade, and to have local credibility with populace.
It will emerge in forms similarly backed by Silver and Gold. A similar phase out
process will occur. EURO SC and EURO GC will become identical in valuation to the
$USTSC and $USTGC coin and currencies. All or any of those will be (eventually)
accepted at par, as Legal Tender, in the newly stabilized world trade environment
as well as newly invigorated local economies.

[Other Currencies]
Silver and Gold backed equivilent currencies will become a necessity for all other
nations. And well to their advantage to do so. Hey.!. You wanna "trade" with us.?.
Then get-real with your coins and currencies. Fiat is Finished.

[New Common Markets]
Latin America (South, Central, and Mexico) will form a Latin America Common Market.
Call it the LACM. Their Silver based common-valued coin and currencies will provide
the stability for growth and integrity required of them to become vibrant and strong.

Asian Countries will form similar Common Markets. And institutionalize similar
Silver and Gold backed international standard coins and currencies.

Mid-Eastern countries, OPEC etc, will be quick to join in favoring standardized
Silver and Gold based coin and currencies. They will accept nothing else for their
coveted oil. They will not want to be left behind or cheated with fiat any longer.

African countries will find it easy to transition to precious metal based coin
and currencies. Of the international standard. Afterall, they will be the major
providers of metals to many non-resource abundant countries. (Europe etc)

Russia and the old remnants of the USSR will not wish to remain outside the world
circle of PM based coin and currency. Rich in PM's, they need only institute rigid
safeguards to insure their mine production(s) actually reach their Government(s)
Treasuries, for the subsequent and required minting and currency backing. President
Putin of Russia, will be strong enough and savvy enough to ramrod this into being,
and get tough on the corruption that currenty saps that region's great PM wealth.

Canada, of course, being rich in Precious Metals, will welcome similar revisions
to their coin and currency. Once again they will become proud of their Maple Leaf
coins of Silver and Gold. And Loonies will no longer be looney.

Australia, also rich in PM's, will lead the way to a rebuilt "Common Union" with
Canada, and the United Kingdom. This will be very popular with their citizens,
and as an act of comradarie, assit England (UK) to become strong and prosperous
once again. A new "Empire", based upon Common Markets, and commonized PM money.

[POG / POS]
The "Price of Gold" or "Price of Silver" will become a thing of the past. Meaningless
terminology. The "price" of Gold, will be, simply, an ounce of Gold, or a standardized
Gold Certificate issued by any number of cooperating countries. And too, the "price"
of Silver is simply, one ounce of Silver, or 1/50th ounce of Gold. And yes, the
"price" of Gold will also be defined as simply fifty ounces of Silver. See how easy.!.

In terms of the old (to be phased out) FRNs (and even old EUROs) you will see a
transitionary period where these will be "deflated" to an equilibrium valuation.
Then withdrwan from circulation (see above). So, initially, during the transition
period, people may talk in terms of Gold is at $500/oz in FRNs, or Silver is $50/oz
in FRNs. Knowing this, you will, of course, not get caught holding FRNs for very
much longer. Will you.?.

[Real Estate]
Housing, and the Property(s) upon which it's built, as well as pristine undeveloped
property will, as always, retain it's intrinsic value. And continue to appreciate
as it inevitable becomes more scarce. Never underestimate the "value" of prime
real estate, as a preserver of wealth. Beware of speculation bubbles that have, in
the past, overvalued or inflated it unrealistically. Under the new coin and currency
standards, nothing changes any of that.

[Credit and Banking]
In previous eras, when money was linked solidly to precious metals, Banks were able
to thrive and modestly increase the money supply. Via sensible credit and lending
practices. Strictly controlled "reserve" requirements will be instituted by the
(US)(and other government's) Treasury(s). Gold and Silver Certificate Banking, to
include checking and savings accounts, will be as safe as FDIC-insured nowadays.

Credit, in those days was generally "secured" loans. We will see a return to that
concept, with little if any "unsecured" flippant credit. A vibrant economy does
not need alot of unsecured credit. It's dangerous and counter productive.

Growth in the Money Supply comes from two sources in the future:
(1) Mine Production and (2) Sensibly controlled Lending by Banks.

[Consumer Prices & Inflation]
These will stabilize within reasonable ranges, priced in the new coins/currencies.
There will be a transitionary period of helter-skelter "inflation" in terms of the
old (to be phased out) FRNs. But generally, nothing to be alarmed about. No hyper-
inflation, and no $30,000/oz Gold is on the horizon. It ain't gunna happen. The
government(s) will step in way before that could ever materialize. Using all
of the above to thwart such unthinkable chaos. Governments are dumb, but they are
not stupid. And, as always, they, and only they, determine what you call "money".

Just deal with it. Be prepared personally. And enjoy the New Millenium.!.

Cordially,

ThaiGold@OperaMail.Com
View Yesterday's Discussion.

Peter Asher
(01/01/2001; 00:09:08 MDT - Msg ID: 44803)
Days of Gold Gone By

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

Chorus
For gold Lang Syne my friends,
For Gold Lang Syne,
Come drink a toast to our good host
And days of Gold Lang Syne

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

Chorus
To Gold Lang Syne my friends,
To Gold Lang Syne,
We raise our silver goblets high
To days of Gold Lang Syne

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

Chorus
For Gold lang Syne my friends,
For Gold Lang Syne,
So hoist a toast to golden friends
And days of Gold Lang Syne

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

Chorus
To Gold Lang Syne my friends,
To Gold Lang Syne,
And now we toast, our Forum host
And days of Gold Lang Syne

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

Thanks to The Scot for searching out the original lyrics

Copyright Peter Asher 28 Dec.99
ThaiGold
(01/01/2001; 01:51:54 MDT - Msg ID: 44804)
Robin's Book Gift
Attn: Peter AsherHi Peter
Your post of yesterday (?) about the set of rare "The Story Of"
books, that Robin miraculously rounded up and gave to you
for Christmas, was quite moving.

But I think you overstated the helpfulness of the Internet.

Surely, a person with as big a heart as Robin, would have
obtained them for you, even without the Internet. It might
just have taken her a few days longer.

She deserves another, even bigger hug from you. Right now.!.

More priceless than Gold. Got you one.!.

Cordially,

ThaiGold
ski
(01/01/2001; 04:23:37 MDT - Msg ID: 44805)
Re-kindle of my post #44564 of 12-27 ... forced margin liquidations


When you re-kindle a smoldering fire, three things are required: stir up the hot coals already there, add some additional fuel and patiently wait for results. In that same spirit, I thought that it would be productive to re-kindle my post #44564 of 12-27.

In that post, I suggested that PM prices are not quite responding to the known supply and demand fundamentals as would be expected. I then suggested a possible conclusion that: A temporary situation may exist whereby STOCK MARKET MARGIN CALLS are having a negative and significant impact on PM prices.

From my list of 77 different twists that can significantly influence the SUPPLY & DEMAND EQUATION for an given investment area, I will bring two more into the discussion.

#67 MARKET PARTICIPANTS AT THE MARGIN (A Doug Casey thought) "The market price for real estate is not being established by the 98% of the participants that are merely holding but rather by the 2% of the people that are currently in the market doing the buying and selling." Thus, the price of real estate is actually being determined AT THE MARGINS and by only 2% of the participants. In essence, the supply and demand fundamentals of this minority are the ONLY force that are determining current market direction. To what extent is your investment area subject to this "at the margin" phenomena? What are the supply and demand fundamentals for this pivotal "at the margin" group?

I believe that the PM markets are likewise subject to this "at the margin" phenomena. Only the active participants on any given day, are actually having an influence on PM price. Individuals on the sidelines are in fact, having negligible influence on price. Granted, we buy and sell PM's more often than houses and therefore the percentages may be more like 10% to 90%. But nonetheless and by default, only members of the select 10% group are steering the market ... no matter what you think or believe should otherwise be happening. Therefore, a careful analysis of the make-up and supply and demand fundamentals for the 10% players, should result in a much better explanation of near term PM price action.

#35 NEED FOR A WORLD VIEW. Attractiveness with regard to local, national and worldwide supply and demand forces. Currently, no new nuclear electrical generation plants are being built in the US and none are planned. In the US, everyone knows that the industry is practically dead. Nonetheless, Korea and China are building nuc plants like gangbusters and the world demand for fresh uranium is in a solid uptrend. Without a world view, you would be completely off the mark in your analysis & you would have missed out on a golden investment opportunity. Is the investment a "buy", "sell" or "hold" with regard to local, national and international concerns? What are the "worldwide investors" doing with your commodity? What does the world think?

I mentioned in my previous post that stock markets were falling worldwide and that the NASDAQ was leading the charge. Doesn't it also follow that stock market margin calls may be taking place worldwide? If this is true, then a pool of forced sellers of PM's is much larger and of a different character than the typical NASDAQ participant. They may have some PM's to sell. This un-acknowledged group of margin forced sellers could be the pivotal responsible party for our present un-happy PM prices.

I would be the first to admit that almost none of this can be proven. But, by the same token, it is likewise diffiult to disprove as well. The logic is facinating don't you think? Was it worth re-kindling the fire?
Flatlander
(01/01/2001; 06:37:35 MDT - Msg ID: 44806)
Happy New Year
May the New Year bring you GOLDEN Health, Wealth, and Happiness!
WAC (Wide Awake Club)
(01/01/2001; 06:43:21 MDT - Msg ID: 44807)
@ThaiGold - PMs in Africa
"African countries will find it easy to transition to precious metal based coin and currencies. Of the international standard. Afterall, they will be the major
providers of metals to many non-resource abundant countries. (Europe etc)"

Can you please name just ONE african country that can say it as ownership of it's resources? Does Mali own it's gold? Does Ghana own it's gold.? Does .... For the answer to the question of ownership of african sources, please consult Goldman Sachs, Shell et al.

Perplexed
(01/01/2001; 07:36:11 MDT - Msg ID: 44808)
Ski on margins

Ski you offer an intersting idea and lay another possibility on the table. As you indicate, whether you are right or wrong is not provable at this time, however, I, and I think most of your other fellow members, like and appreciate your critical thinking.
In my opinion gold is languishing because few people in the USA have any interest in it. New housing starts, automobile sales, and anything which can be purchased on credit has been setting new records for the last 10 years. Our nation is being beseiged with such an enormous quantity of merchandise, very attractively priced, very professionally merchandised with deals you can't refuse, and, very simply, many of your fellow citizens don't even try. Some people would buy an ocean liner docked in Omaha, if they could get it on credit.
In a nut shell, wealth, like beauty, is in the eye of the beholder. A new red Harley offers far more sex appeal, sense of excitement, and thus a lot brighter shine than a pocket full of gold coins, and besides, all these attributes may be enjoyed so long as you don't forget send the payment each month.
When you add this possibility, to your possibility, and the many other possibilities offered on this forum, including government manipulation, the fact that gold is even at $275 seems almost a miracle. Thanks again for your contribution to the forum.
We may not get the problem solved, but at least for me, the challenge offers far more appeal than what is being merchandised as entertainment by any of the television networks.

Still Perplexed
Orville Goldenbacher
(01/01/2001; 09:12:20 MDT - Msg ID: 44809)
gold on credit
i have a friend who regularly purchases gold bullion on his credit cards, he calls it his "life insurance policy".
he says he pays $200 in cc payments for each $10,000 in gold he purchases. he claims the interest on his payments is 2.99% to 9.9% apr.

for example, he just purchased 10 liberty double eagles for $3325.00 ("premium quality BU, includes shipping).his payments are approx $70 per month for such a purchase.

i ask him if he ever worries about not being able to come up with the payments, he says gold bullion is all he puts on his cards and if he was ever hurting to make a payment, he'd just "sell a coin".
TheStranger
(01/01/2001; 09:33:37 MDT - Msg ID: 44810)
2001 Outlook
For what it's worth, this is a message I wrote to clients this morning. I only have a few clients, and I do not accept new ones.

Aftermath of the Technology Bubble
Corporate Debt at Dangerous Levels

With the bursting of the tech bubble on Wall Street, the speculative binge of the past couple of years has now ended. The year 2000 was the worst in history for technology stocks, with the NASDAQ recording nearly a 40% loss. But the speculation in stocks was not the only risk-taking that went wrong in the recent past. Far from it, in fact. Emboldened by an accommodative Fed and by talk of a "new era" of perpetual prosperity, American corporations have leveraged themselves to the hilt. Many may now find it difficult, in a slowing economy, to pay their debts and meet rising expenses. For months already, thousands of dot.com workers have been losing their jobs. But now lay-offs are spreading to such"old economy" companies as General Motors and Gillette, while names like Montgomery Ward and LTV are announcing they will shut their doors for good.
Consequently, as of their December meeting, the Fed has now given up even the pretense of fighting inflation. Despite the greatest cost-of-living increases Americans have seen in 10 years, the Fed has said they now view recession as a greater risk to the economy, and they have adjusted policy accordingly. Of course, as I have argued in the past, high levels of money growth have meant the Fed wasn't really fighting inflation anyway.
So, on top of everything else, are we now in a recession? Perhaps. Technically, a recession is when gross domestic product shrinks for two consecutive quarters. Alan Greenspan does not wish to be blamed if that happens in 2001. Consequently, in recent weeks, the Fed has accelerated the rate of money growth in the American banking system. During the first 3 weeks of December, the broadest traditional money measure, M-3, grew by $50 billion. If maintained, this rate of growth would constitute an annual increase of more than 12%, which may be just what the doctor ordered for an ailing economy. But, with official inflation already close to 4%, a monetary expansion on this scale virtually guarantees still more inflation is on the way.

In the 70s, this was Called "Stagflation"

And not since the 1970s have there been so many signs of stagflation. Last week, for example, Fed Ex announced a 4% rate increase for overnight package delivery. This comes atop another 4.9% increase which was announced earlier in the year, meaning that customers will now pay 9% more than they did just 12 months ago. The reason given by the company was that business is slowing now, forcing them to spread their costs over a smaller number of packages. In other words, if they can't make more money by growing the company, they will make it simply by charging more. With exploding costs for all forms of energy and for employee health care coverage, this mentality is almost certain to spread through much of corporate pricing in the months ahead.
Meanwhile, America's energy companies continue to shine in a largely bleak investment landscape. This is because oil, oil service and natural gas producers are presently enjoying their greatest period of profitability ever. Insufficient infrastructure investment in each of these areas has left them vulnerable to shortages in the period immediately ahead. This month, people all over America will open their heating bills and be shocked by what they see. Yet several OPEC members are already hinting that further production cuts are in store for their January meeting.
Whatever happens in the months ahead, the U.S. economy is clearly in for some tough sledding. The likelihood of a weakening dollar has seldom been greater, in my view. For this reason, I believe energy and precious metals stocks, such as the ones we own, will be productive investments in the year 2001.

goldenpeace
(01/01/2001; 09:43:28 MDT - Msg ID: 44811)
New Year Wishes...
Gold and Peace
You are all the best.
Bowing to you
Paul
Peter Asher
(01/01/2001; 11:23:29 MDT - Msg ID: 44812)
ThaiGold msg#: 44804)
Thank you for the sentiment.

However, I think you missed the point of what the Net facilitated. Most of these books were obtained from private individuals and only through the connectivity of WWW could this kind of contact been established. Absent this phenomena, which even then required many days worth of search, negotiate, arrange and recieve, it could not have occured at all.
Peter Asher
(01/01/2001; 11:55:12 MDT - Msg ID: 44813)
Since it's a quite day here,
Have a look at where the shepherds are leading the flock.

Street experts see better days in 2001

By Adam Shell, USA TODAY

NEW YORK � After the market's dismal performance this
year, you'd think Wall Street seers would have soured on
stocks. They haven't. Strategists from 10 of the top
brokerages expect battered stocks to bounce back and post
double-digit gains in 2001. On average, 10 investment pros
interviewed by USA TODAY think the Standard & Poor's
500 index will rise 18% by the end of next year.
Even considering Wall Street's propensity to be bullish, that
mindset might seem surprising considering how the market is
limping into 2001:

The S&P was down more than 9.2% for 2000 as of
Thursday's close, its worst year since a 9.7% loss in 1981.

Down 37.1%, the Nasdaq will post its worst year since
being created in 1971, barring a massive 11th-hour rally.

The Dow industrials are down 5.5%, the first annual loss
since 1990.

So what about 2001?

UBS Warburg strategist Edward Kerschner is the biggest
bull. He expects the S&P 500 to end next year at 1715, a
hefty 29% above Thursday's 1334 close.

Stocks should move higher, he says, because they've taken
such a beating that they're selling for less than they are worth.
"The glass isn't half full, it's empty," says Kerschner, noting
that the S&P's price-earnings ratio is almost 20% below
where he says it should be.

Douglas Cliggott of J.P. Morgan is the most bearish and is
preaching caution. "Be careful," he says. He expects a rough
start for stocks and a modest recovery in the third and fourth
quarters. His year-end S&P target: 1400, a 5% gain.

Cliggott expects flat profit growth for the S&P 500 in 2001.
That's a far cry from the 6% to 8% growth analysts expect.
"There's a lot more negative earnings news in the pipeline,"
Cliggott says.

Another negative: Investors burned by the Nasdaq's 49%
plunge from its high are likely to decrease their exposure to
stocks, he says.

But forecasting stock prices is an inexact science. Last year,
most strategists got it all wrong. Most predicted gains.

The weight of six interest rate increases, the bursting of the
tech-stock bubble, record high energy prices, a slowing
economy and election uncertainty took stocks down hard.

Year-end 2001 targets for the Dow range from 12,000, a 10%
gain from 10,869 Thursday, to 13,000, a 20% jump.

How will hard-hit tech stocks fare next year? Bulls such as
Christine Callies, strategist at Merrill Lynch who started the
year on a conservative note, expect techs to stage a recovery.

"The big driver of rising stock prices will be lower interest
rates," she says. Merrill expects the Federal Reserve to slash
short-term interest rates by at least 1 percentage point by
midyear. A slowdown in tech spending, she says, is already
factored into stock prices.

Less exuberant strategists like A.G. Edwards' Stuart Freeman
expect tech stocks to remain under pressure. "We've had a
significant shift in psychology," he says. "We won't have the
type of activity that will result in another frenzy."


auspec
(01/01/2001; 12:48:15 MDT - Msg ID: 44814)
Peter Asher/ All
Enjoyed your piece, Days of Gold Gone By! Thank you.

Couple of tidbits {Tedbits in this case}- The rumors of Ted Butler's literary demise were premature. He has a new article out & he is still on the frontlines of the silver war. That is more exciting to me than any of the football games {why is football no longer interesting?}!

A recent article by Edmond Bugos quoted George Seldes from 1942 to the effect that "public opinion is generally the most powerful force in America". I found this to be rather profound today, even though on its face it is quite simple. It does pertain to this Forum as this is a place where 'public' opinions are both expressed and formed. We are in a cultural war folks and we cannot shirk from that fact. I wrote a letter to my Congressman yesterday encouraging him to seriously look into the gold manipulation frauds and GATA claims. I'm quite sure he's not gonna peer too deeply under the IMF, Fed Reserve, or GS rocks as it is pretty hideous under them. On the other hand he does have some vested interests that align with our side. I am also aware that I have completely "come out of the closet" in this free market/cultural war over the last several years; they won't have to search too hard if they want to start rounding up the "dangerous elements".
Please allow me to ask a few {redundant} questions--
1- Do you want to live in a country where you are afraid to express your deepest concerns to your elected representatives?
2- Do you live in a country where you are afraid to express your deepest concerns to your elected representatives?
3- Are you afraid to express your deepest concerns to your elected rerresentatives?

Let's keep in mind that "public opinion is generally the most powerful force in America". What we post here and elsewhere, what we write to our officials, however we express ourselves matters a great deal. I will put out a satirical piece later this week that goes right up to the edge {and well past it} of maligning Sir Scumbag in terms that much of our culture can relate to, knowing full well that many others would like to see me donate some Georgia Mountain oysters for same. So be it, I refuse to hide from the cultural war we are in. No DENIAL here.

Thanks for the ear!
GO GATA, GOLD, & SILVER. Scumbags away..........

Hill Billy Mitchell
(01/01/2001; 13:06:54 MDT - Msg ID: 44815)
PARDON ME FOR LIVING
I would like to offer my sincere apology to Michael and all on this forum. I knew an old man, homeless I think. His name was Floyd. He was passing through Cape Girardeau, Mo. some 30 years ago. When I say passing through I mean passing through. He was walking. Winter was coming on and the old man was heading south.

My best friend saw him walking along the highway and took him home to give him a few good meals, a few good nights' sleep, and a warm shelter. A few days later he dropped Floyd off (Floyd's request) in the same spot where he picked him up. We never saw Floyd again.

While Floyd was at my friend's house my family, wife and daughters, had the occasion to visit and eat around the table with Floyd and whoever might find a seat. My friend almost never sat down to a meal at his own dining table without at least a few visitors. His was simply the most hospitable family ever to grace the city of Cape Girardeau. They had little in the way of material things. He was a carpenter by trade, self-employed and took mostly handyman jobs, which did not pay much but made for lots of different jobs and opportunities to meet lots and lots of people and invite them to his home for a visit. This family lived a very humble life. Their largest monthly expenditure was on food (they had six children) mostly because of all the guests which routinely showed up. They made it a point to always have enough food on hand to feed at least 20 or thirty people just in case a large number showed up. Suddenly it occurs to me that I should not be presenting this story in the past tense because nothing has changed with them for the last 30 years. If I were to drop in on them tomorrow I would be treated not only to a meal but would also probably be in the company of someone whom I had never met with the opportunity to make an instant new friend.

Now back to Floyd. He was a very large man and could consume huge amounts of food. He also had a problem with flatulence. We got use to his breaking wind often and loudly at the dining table. Each time he did this he would say, "PARDON ME FOR LIVING." Floyd was a very humble man and very gentle with the children. He was so wonderful in so many ways that no one took offence to his problem with flatulence. Many of us old friends still reminisce about Floyd. We have guessed that Floyd might have been an angel being entertained unawares.

Now to the point of this post. I know that the purpose of this forum is to discuss PM's, namely gold, and the economics and the financial market dynamics which affect the subject. That is why I lurk so much. It is of great interest to me and I have the opportunity to learn about these things more quickly here than any other place on earth. Besides the efficiency of learning, it is great fun to visit this forum and is an opportunity to get to know some real thinkers.

Now when Sir Holtzman posted his religious thoughts he stirred something inside me, something which has nothing to do with gold. It was my understanding that he e-mailed his offering to Michael and that Michael gave his tacit approval to the topic by posting it for him. I took that to mean that Michael would not be opposed to equal time. I may have taken more than my equal time.

When Floyd broke wind he did it to relieve pressure. He had no choice. He could not help himself. He was just unable to hold the gas in. The same thing happened to me when I read Sir Holtzman's post. I just broke some wind. I did it to relieve pressure. I had no choice. I could not help myself. I was just unable to hold back. I called it, "earnestly contending for the FAITH once delivered to the saints". When one reads Holtzman's post in its entirety one should have no difficulty seeing why one who believes what I believe could not simply remain silent.

I shall try to refrain from using too much band space on religious thoughts in the future. Michael, I can only think of one way to apologize in true sincerity. I can only say along with Floyd, "PARDON ME FOR LIVING." I cannot promise to never to let off gas again should the pressure build beyond my ability to hold it back. When doing so I will try to remember to reveal my subject in advance by placing in the subject area, - PARDON ME FOR LIVING.

Sir you have been the most congenial of hosts. You have put up with a lot on this forum. The wisdom of your tolerance is very clear. I will continue to do a bit of janitorial work. If you object I prefer to be warned rather than having my posting privileges removed.

The best to you and to all who lurk and post.

HBM

VR

HBM
Leigh
(01/01/2001; 13:30:31 MDT - Msg ID: 44816)
Hill Billy Mitchell
What a heartwarming post! I'm still laughing! You share the qualities of humility and gentleness with Floyd, and I'm glad you brought his story to the Table Round.

Whoops, my husband's calling - back to the kitchen we've been remodeling for the past few weeks. Cabinets are going in. Bye!
Golden Truth
(01/01/2001; 14:58:47 MDT - Msg ID: 44817)
To ThaiGold
Thats some fantasy you got in your head, Silver goes up ten fold and of course GOLD only doubles????

You must be sitting on alot of Silver that you can't sell at a profit and then buy Gold. So you'll try to get others to believe that Silver will go higher, so they sell their GOLD to buy more Silver or you just need a truckload of GOLD yourself.

It must really suck being short so much GOLD! Why don't you go post on a Silver forum if you think Silver is the place to be, your commentary is always misleading and today was no different. :-( P.S i'll see you when GOLD blows right through $2000/oz.

G.T
LeSin
(01/01/2001; 15:06:06 MDT - Msg ID: 44818)
SIR HBM @ Holtzman
Sir HBM
Thank you for your rebuttal and discourse. Whilst I respect Mr Holtzman's right to his own beleif, views and opinions and will protect his right to express them, I for one, Sir HBM much prefer your stance and convictions by Faith. Your perspective and Faith can only be founded and anchored to the Rock; and He and His Father in heaven provide Golden Wisdom. Thank you and a healthy properous New Year to All.
"S"
P/S: A man I once met, similar to Floyd, simply would say "Oh pardon me, a man gots to do what a man gots to do". "S"
Genoo
(01/01/2001; 15:07:08 MDT - Msg ID: 44819)
The Round Table
Topic: The Stranger msg#44810
Peter Asher msg#44813
Hill Billy Mitchell msg#44815
to name a few

For myself, today is a day of thanks.

The Stranger offers his eagle's eye view of the economy, with humility ie. 'for what it's worth'. Yet his is clearly a very informed view that reflects a lot of homework and a lot of thought...all of which is freely shared.

Peter Asher says 'have a look at where the shepherds are leading the flock'. In so doing, he instead places the focus on a single issue ie. the interaction, between on the one hand, the experts, who make sounds, who after all are mere mortals expressing their opinion [or are they], and on the other hand, those who listen, and either don't think for themselves or do think, depending on their makeup.

So, at what other place I wonder, does one find such an individual group of thinkers...and yet at the same time, a place where one can let it all hang out and it be ok ie. Hill Billy Mitchell. Search me.

Hey MK, I like your round table.
Cavan Man
(01/01/2001; 15:17:02 MDT - Msg ID: 44820)
"the Stranger"
Why, if I didn't know you better, I'd think you were a Utah BEAR. Not too many bears in Missouri; that's why I sometimes feel like an endangered species. :>)
Cavan Man
(01/01/2001; 15:17:55 MDT - Msg ID: 44821)
HBM
I'll buy you a hot chocoloate anytime good Sir Knight.
Cavan Man
(01/01/2001; 16:27:57 MDT - Msg ID: 44822)
Article at Bloomberg RE: OPEC
How can you believe anything written about the oil market? Why are prices dropping with strong demand, loss of refinery capacity, no enough tanker capacity, low inventories etc etc etc ad infinitum? Anyone want to take a stab at this one?
TheStranger
(01/01/2001; 16:51:29 MDT - Msg ID: 44823)
Awesome Money Supply Numbers
I just went digging and found last Thursday's money supply report. Seasonally adjusted M-3 rose $55 Billion in a single week. This brings the 4 week total to $105 billion, an annualized growth rate of about 18%, not the 12% I mentioned here earlier.

A quick glance at your dictionary will assure you that this is the very definition of inflation. You can forget all of this talk about the Fed being stingy with interest rates. The Fed is hitting U.S. banks where it counts. There is no other word for this kind of money growth but awesome.

Clearly recent employment numbers, along with the poor Christmas retail environment have spurred Greenspan into action. Whether he is too late to avoid a recession or not is still debatable, but he obviously has been buying treasurys and lots of 'em.

Why does this matter to a bunch of gold bugs? Because in the conflict which presently exists between supporting the dollar and saving the economy, these numbers indicate clearly that the decision has been made. DAMN THE DOLLAR. FULL SPEED AHEAD!
TheStranger
(01/01/2001; 16:59:47 MDT - Msg ID: 44824)
Cavan Man
This time of year, people who heat with oil have largely filled their tanks, yet we are months away from the summer driving season. Additionally, all of the world's energy resources have been operating close to capacity. This is why the respite in oil prices. However, this month OPEC will no doubt impose an export reduction of 500,000 or more barrels per day. Believe me, oil may touch below $25 from time to time, but that is all. I would expect prices to average at least in the high 20s as summer approaches.

Hope that helps.

Thanks to you and Genoo for your acknowledgements today.
SteveH
(01/01/2001; 17:39:36 MDT - Msg ID: 44825)
See the repost...
www.kitco.comrepost:

Date: Mon Jan 01 2001 18:19
Fubarite (GATA/ Howe make it to mainstream press in OZ) ID#19380:
-
Golden Chance Awaits Miners
By JamesDunn, 02 Jan 2001
I have just finished reading Peter L. Bernstein's The Power of Gold, sub-titled The History of an Obsession ( John Wiley & Sons, $39.90, hardback ) and it got me thinking about the gold market.

If, like me, you love a well-written economic history book, Bernstein's aptly titled ( and sub-titled ) book will make a perfect use for that book voucher you got for Christmas.

Bernstein's major theme is that the gold market has never been � and can never be � a simple commodity market, because of all of the emotional capital we humans have invested in the yellow metal. After the excesses of the pillage of the new world by the old, this reached its zenith in the days of the gold standard, when the world's currencies were simply names for certain defined weights in gold.

We have largely demonetised gold, in that it no longer backs our currencies. When the European Central Bank was formed to oversee the euro, only 15% of the reserves to back that currency were in the form of gold. Gold is still money, just not officially.

Looking around the gold market these days, you would have to say that it is still far from simple: it is just that the complications are new. The gold market is artificial. The physical market � the annual trade in gold mined � is utterly dwarfed by the market in derivatives, gold futures and options contracts.

US gold analyst Paul van Eeden calculates that about 260,000 tonnes of gold is turned over in total each year on the London Bullion Market � nearly twice the amount that has ever been mined. Only about 5000 tonnes of physical gold, says van Eeden, is traded each year. That is less than 2% of London turnover. The notorious central bank sales � which garner all the headlines about depressing the gold price � make up less than 0.12% of the gold market.

Miners and consumers of gold are bit players. The derivatives market controls the gold price. Gold is not a supply/demand-driven market, it is an exchange rate-driven market, because the price is determined by the value of the US dollar.

The US dollar has usurped from gold the role of asset of last resort. If the US dollar were to fall, the gold price as expressed in US dollars would improve.

That would suit the Australian miners, whose gold price � expressed in $A � is actually very healthy. At the currency's record low of 51.1 US cents in October, the $A gold price hit a record high $A526 an ounce, a rise of almost 40% in a year. It is now at about $A496 an ounce. If an Australian miner is not able to achieve excellent margins at these prices, it should not be in business.

The build-up in the gold derivatives market has created a huge overhang in the gold market. Nobody really knows how large it is, but two quixotic court cases aim to try.

The first suit is dynamite stuff. It is being brought by one Reg Howe on behalf of the Gold Anti-Trust Action Committee ( GATA ) , which has accused some of the financial world's most powerful individuals and organisations of masterminding a global conspiracy to keep down the price of gold. First defendant is Alan Greenspan, chairman of the Federal Reserve Board of the US. Joining Greenspan as defendants are soon-to-be-former US Secretary of the Treasury Lawrence Summers, William McDonough, President of the Federal Reserve Board of New York, and the firms of Chase Manhattan, JP Morgan, Deutsche Bank, Citibank and Goldman Sachs, among others.

The suit alleges that, because the highly geared mountain of gold derivatives is mainly a bet on the gold price falling, all of the named parties have colluded to keep it from rising, so as to protect the global financial system from the consequences of the unravelling of the derivatives positions.

The second is a class action filed in a US court by aggrieved shareholders of London-based Ashanti Goldfields, which almost fell into bankruptcy in 1999, when the value of its hedge book plummeted. It seemed that Ashanti had been too clever in trying to lock in forward prices for the gold it was mining in Ghana.

Now Ashanti shareholders are demanding unspecified damages for alleged "reckless financial speculation". The shareholders are alleging that when they thought they were shareholders in a gold mining company, Ashanti was actually gambling with exotic financial instruments, the success of which required the price of gold to fall indefinitely. Ashanti chief executive officer Sam Jonah and ex-chief financial officer Mark Keatley are also named personally as defendants.

Tilting at windmills? Maybe. Quite possibly, by the end of the cases, investors will know more about the real gold price, and the intricacies of hedging activity, than ever before. At least, the prospect of a decline in the US dollar � more real for investors � is in the offing for gold shares, which should make the Australian branch of the industry appear good value indeed on a global scale.

This article first appeared in the Weekend Australian of December 30-31
SteveH
(01/01/2001; 17:46:27 MDT - Msg ID: 44826)
Must read
http://www.gold-eagle.com/gold_digest_01/noland010201.htmlsnippet:

"The financial sector goes into "Crisis Management Reliquefication Mode (CMRM)."

"CMRM entails immediate and aggressive action, with the old stalwart Goldman Sachs leading the charge. The firm takes a major leveraged position in Fannie Mae Long-Term Debt Securities to the tune of $50 billion. Since these are top-rated securities, this transaction is easily consummated by Goldman borrowing $50 billion in the money market (from the Money Market Fund using Fannie Mae Securities as collateral � a "repurchase agreement"). These "funds" are used to purchase $50 billion of the Household Sector's Fannie Mae Long-Term Debt Securities, held on account at Goldman Sachs. The $50 billion of proceeds are instantly deposited (electronic journal entry!) into the Money Market Funds on behalf of the client, the (now much more "liquid") Household Sector. In this case, Goldman's balance sheet increases by $50 billion to $250 billion, with Holdings of Long-Term Fannie Mae Securities increasing $50 billion (to $250 billion) and Borrowings from Money Market Fund ("Repo") also increasing $50 billion (to $250 billion). Total Household Sector Assets remain the same at $1.1 trillion. While Holdings of Fannie Mae Long-Term Debt Securities were reduced by $50 billion (to $50 billion), Money Market Fund Deposits increased $50 billion (to $450 billion). Through this leveraged transaction (an increase in financial sector liabilities/an expansion of financial credit!), Money Market Fund assets (broad money supply!) actually increased by $50 billion to $450 billion, with $250 billion of Holdings of Goldman Sach's Commercial Paper ("Repo") and $200 billion of Fannie Mae Commercial Paper. Money Market Fund liabilities "Deposits Owed to Household Sector" increased by $50 billion to $450 billion. Hopefully, this illustrates how financial sector leveraging increases so-called "liquidity," or the money supply."
Mr Gresham
(01/01/2001; 17:48:18 MDT - Msg ID: 44827)
Vilnis & tz -- worth reading
http://www.bearforum.com/cgi-bin/bbs.pl?read=96317Vilnis: "My suggestion of what would work:
A 1000 to 1 exchange of old Federal Reserve notes for a new gold backed USA$ using the post revolutionary exchange of continentals for a new gold backed dollar as the model. That also was a 1000 to 1 exchange.
"What I did not make clear is that this necessarily implies a 99.9% reduction in all debt. My suggested solution is based on Austrian and not Monetarist economics. My suggested solution eliminates in one stroke the debt problem and provides a new credible currency with which to start the whole process over again.
"The people at the Fed are not dumb. They know there is a bubble. There are enough people at the Fed who understand that if the debt they created is not eliminated quickly it will be eliminated slowly, as in Japan: ten years and still counting. That would not do. The USA would lose its leadership role. That would put the USA system at risk: maybe civil war. Much better to get it all over with quickly and blame some one or some thing else for the pain: a war, short sellers, tax evaders, the drug cartel, libertarians etc. "
"Under the Austrian economics model a recession or depression ends when prices are readjusted to a level at which transactions can clear so that people start to trade/exchange again. The major impediment to getting to that is debt so the quicker debt is written off the
faster you can get to the point I would call party on. AG understands that.
"That is as close as I can come up with the perfect crime and biggest bust out in the history of mankind. Starting in 1982 when the USA financial system is under water because third world debt will never be repaid, the solution is make the USA the worlds foremost tax haven for foreign nationals not resident in the USA. Over the next 18 years go from the worlds largest creditor nation to the worlds largest debtor nation. Suck in trillions of DM, SF, GBP etc. ..."


Chris Powell
(01/01/2001; 18:06:45 MDT - Msg ID: 44828)
Reg Howe on the Bush administration's adventure with gold
http://www.egroups.com/message/gata/607An analysis of how the new administration
may react to the gold price-fixing lawsuit.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com
Chris Powell
(01/01/2001; 18:39:24 MDT - Msg ID: 44829)
A letter to mining companies urging support for GATA
http://www.egroups.com/message/gata/608If only gold shareholders would send
a few more of these....

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com
Chris Powell
(01/01/2001; 18:40:41 MDT - Msg ID: 44830)
Audio fund-raising promotion for GATA
http://www.egroups.com/message/gata/609Listen to it and ask webmasters to
post it at their own sites.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com
Chris Powell
(01/01/2001; 18:42:32 MDT - Msg ID: 44831)
GATA lawsuit publicized in The Australian
http://www.egroups.com/message/gata/610Investment column by James Dunn of
www.investorweb.com.au.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com
Trail Guide
(01/01/2001; 19:31:16 MDT - Msg ID: 44832)
U.S. and EU Economies May Be Moving in Separate Directions
http://www.iht.com/articles/5686.htmHello Everyone,

A while back I had to stop writing. Several important things have taken most of my time and continue to do so. I let MK know of the uncertain nature of my continuing these discussions at the same volume level as in the past. But, as time presents itself I will update as able. I hope to bring up to speed several past discussions that were left cut off.
To do this, I'll have to conserve what writing time available by posting on the Gold Trail "as able".

Here is a very good writer that has offered an excellent update of the Euro situation. Please enjoy his clarity. Link is above and a portion below.

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

U.S. and EU Economies May Be Moving in Separate Directions
William Pfaff International Herald Tribune
Friday, December 29, 2000

" " The explanation for this emergent autonomy of the European economy would appear to be the creation and coming of age of the common currency, the euro. Before monetary union, European exchange and interest-rate policies were largely dictated by the defense of relatively weak
currencies.

This usually meant maintaining national interest rates at levels that depressed overall European domestic activity and growth. The EU countries' economic policies were indirectly determined by reaction to U.S. policy on the dollar, formulated with reference to U.S., not European, conditions.

A pluralism of economic power has been on the way to restoration since the Europeans established their single market in 1992. Its achievement would mean that the world economy has two strong and autonomous supports, and that now seems nearer than ever before." "

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

Thanks Trail Guide

Trail Guide
(01/01/2001; 19:35:03 MDT - Msg ID: 44833)
One more thing
Happy 2001 to all!

The year of change.
Canuck
(01/01/2001; 19:38:49 MDT - Msg ID: 44834)
@ Cavan Man
I'll take a stab at your POO question.

The markets are discounting oil (in the future) due to anticipated economic slowdown. A couple of months ago refinery capacity was 'maxed out' at some 96%. A few weeks ago I noticed capacity was down to about 91.6%. OPEC has noticed and is REDUCING production. They were conned (forced?) into too many production increases last year (2000) and now have to quickly backpeddle or else oil will be in the low 20's.

Watch the refinery capacity, I think it is key to 'demand' for oil. If 91% of refineries supply the demand, excess oil is not required.
LeSin
(01/01/2001; 19:43:55 MDT - Msg ID: 44835)
Trail Guide/FOA - Kind Sir
TG/FOA,
Welcome home and we trust matters and events in your life settle to a managable calm and peace.
Thank you for your valued contribution and guidance.
Happy New Year, I wish and pray you health, wealth and wisdom. "S"

YES! YES! THIS IS THE START OF REMARKABLE IRREVERSABLE CHANGE!
Canuck
(01/01/2001; 19:52:50 MDT - Msg ID: 44836)
Happy New Year to all
Following up on Stranger's and FOA's note re:2001

From the Ottawa Citizen Sat. Dec. 20, 2000:

'2000 ends as a year most investors might like to forget'

"The world economy and financial markets are ending the year on a very different note than what was evident at the beginning of 2000", said Morgan Stanley Dean Witter's chief economist Stephan Roach.

"Boom-like expectations have faded, and the debate focusing increasingly on whether the world can avoid a classic bust," said Mr. Roach.

"One way or another, that debate will be resolved in 2001"

-End-

Canuck
(01/01/2001; 19:55:54 MDT - Msg ID: 44837)
Hard landing/Soft landing
That is to say,

The debate over hard landing or soft landing will be resolved in 2001.

Get a crash helmet and .......get gold.
LeSin
(01/01/2001; 20:25:36 MDT - Msg ID: 44838)
Cambior "Forward Selling" Problems @ "CAP IN HAND TO B/BANKERS
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3TTNTLGHC&live=true&useoverridetemplate=ZZZ3XDHE90C&tagid=ZZZJIU2RA0C

Cambior agrees deal with banks on restructuring
By Gillian O'Connor Mining Correspondent
Published: January 1 2001 20:08GMT | Last Updated: January 1 2001 23:03GMT

Cambior, the Canadian gold miner crippled by its hedge book problems in late 1999, has persuaded its bankers to extend the deadline for its financial restructuring to January 12. The previous deadline was late December 2000. The new US$65m credit facility should be in place by mid-month.

Cambior has also secured a $55m pre-paid forward sale of 234oz of gold.

The company, whose shares had tumbled from more than C$7 at the start of 1999 to a token 47 cents by the end of December 2000, was caught out by the sudden upwards spike in the bullion price after the "Washington Agreement" in late September 1999.

Under the agreement, European banks planned to limit sales and loans of gold.

Another company hit by the price rise was Ashanti of Ghana. Both organised their hedge books of derivatives on the assumption that the gold price would remain weak. It had been trading at less than $260 an ounce before the agreement, but rose to $317 soon after the announcement.

This left large notional losses on their hedge books, putting them under obligations to their bankers that they could not meet.

Cambior has since tried to secure temporary finance from its bankers and sell its base metal assets in order to continue to develop its gold prospects.

The proceeds of the sale of its zinc assets, the Bouchard-Hebert and Langlois mines in north-western Quebec, to Breakwater resources cut its debt by $45m. In December 1999 it owed more than $200m

But the sale of its La Granja copper prospect in Peru, one of the world's largest undeveloped copper deposits, ran into problems after the unexpected departure of country's president, Alberto Fujimori. A state auction in parallel with its own sale was postponed, but the sale to Billiton was eventually successful.

However, the combination of last minute legal problems and the Christmas holiday season combined to prevent it from meeting the late December bank deadline.

It is still hoping to sell two more copper assets - El Pachon in Argentina and Carlota in Arizona.


ThaiGold
(01/01/2001; 20:57:14 MDT - Msg ID: 44839)
African Mine "Ownerships"
Attn: WAC (Wide Awake Club) (01/01/01; 06:43:21MT - usagold.com msg#: 44807)Hello WAC:
You asked:
[quote]
Can you please name just ONE african country that can say it as ownership of it's resources? Does Mali own it's gold? Does Ghana own it's gold.? Does .... For the answer to the question of ownership of african sources, please consult Goldman Sachs, Shell et al.
[unquote]

Answer:
Of course, you are very correct, as things stand now. But I'd
foresee those African (and elsewhere) countries nationalizing
or "virtually confiscating" all their mine outputs, same as will
happen in all other countries, once Gold (and Silver) become
the international money standard. Even USA and Canada, etc.

The point is, PM's would become the new National Treasury
Resource of every country, rather than the "commodity" that
they currently are. The essay made clear that (with very few
exceptions) all mine outputs can *only* be sold to respective
Treasuries. For minting and backing, which is the primary item
which grows their money supply, credit, and national wealth.
What's leftover, is then marketable (as a govt export) to those
countries shy of such resources. Further enhancing the origin
country's GNP/GDP.

Foreign owned mines (same as domestically owned mines)
would still be free to operate at a profit, and perhaps even
retain ownership. Why not.?. It's just that they would be very
limited in to-whom they could sell their output product.

Cordially,
ThaiGold
SHIFTY
(01/01/2001; 21:29:52 MDT - Msg ID: 44840)
Periodic Ponzi Update
http://home.columbus.rr.com/rossl/gold.htmNasdaq 2,470.52 + Dow 10,786.85 = 13,257.37 divide by 2 = 6,628.68 Ponzi

Up 52.39 from last week.

Link by RossL

$hifty
Peter Asher
(01/01/2001; 21:39:54 MDT - Msg ID: 44841)
Interesting start to the New Year
Globex S&P off 18.50 Dow down 95.
ThaiGold
(01/01/2001; 21:42:13 MDT - Msg ID: 44842)
Silver Bias
Attn: Golden Truth (01/01/01; 14:58:47MT - usagold.com msg#: 44817)Hello Golden Truth:
Thanks for your comments. It looks like I "Made Your Day".

Throughout my essay, I tried to give Gold equal treatment
with Silver, in an unbiased way. Although, you are correct
that I tend to favor Silver nowadays. Because of fundamentals.

It's my understanding that this Forum's scope is wide enough
to include rational discussion of *all* precious metals, not
at the exclusion of silver, platinum, palladium, or rhodium. And
as well, anything affecting markets therin. Such as energy,
oil, natural gas, electricity, politics, and poetry.

Give us a break. We cannot all be GoldBugs 100%. Even we
enjoy here to read other's viewpoints regarding paper products,
such as Futures and Options. And often we even enjoy those
comments of others, inclined towards DOW and NASDAQ
issues. Dot.Coms whatever. Times change. And many come
here to lurk and learn from other's mistakes and preferences.

I will take this opportunity to encourage you to open your mind
and investigate silver's outlook. You may be overlooking one
of the best possible investments for the future.

And lastly, I am not talking my silver book, as you implied. My
portfolio is diversified amongst Gold; Platintum; Palladium;
and Silver, in proportion to those listed order. Silver is least,
but I have recently begun shifting more towards it.

You have every right to feel:
[quote]
your commentary is always misleading and today was no different.
[unquote]

And I have every right to post herein, that which I feel may be
of interest to someone, anyone, looking for varied viewpoints.
Afterall, isn't that why *all* of us visit here so frequently.?.

You are confusing my often-contrarian viewpoints as nefarious
attempts to "mislead" others. Were I inclined to do so, I'd find
much subtler prose to accomplish such deceit. Trust me.

Meanwhile, just be content knowing that my opinions which I
express in this Forum are meant to enliven discussion, and
expand the concepts and thinking of everyone here, to the
benefit of whomsover chooses to contemplate such diversity.

I look forward to your "GOLD blows right through $2000/oz".
And wish it as soon as possible for you. Please give us your
opinion of what silver will be priced at upon that same day.

Regards,
ThaiGold


gidsek
(01/01/2001; 22:23:24 MDT - Msg ID: 44843)
SteveH
""CMRM entails immediate and aggressive action, with the old stalwart Goldman Sachs leading the charge. The firm takes a major leveraged position in Fannie Mae Long-Term Debt Securities to the tune of $50 billion. Since these are top-rated securities, this transaction is easily consummated by Goldman borrowing $50 billion in the money market (from the Money Market Fund using Fannie Mae Securities as collateral � a "repurchase agreement"). These "funds" are used to purchase $50 billion of the Household Sector's Fannie Mae Long-Term Debt Securities, held on account at Goldman Sachs. The $50 billion of proceeds are instantly deposited (electronic journal entry!) into the Money Market Funds on behalf of the client, the (now much more "liquid") Household Sector. In this case, Goldman's balance sheet increases by $50 billion to $250 billion, with Holdings of Long-Term Fannie Mae Securities increasing $50 billion (to $250 billion) and Borrowings from Money Market Fund ("Repo") also increasing $50 billion (to $250 billion). Total Household Sector Assets remain the same at $1.1 trillion. While Holdings of Fannie Mae Long-Term Debt Securities were reduced by $50 billion (to $50 billion), Money Market Fund Deposits increased $50 billion (to $450 billion). Through this leveraged transaction (an increase in financial sector liabilities/an expansion of financial credit!), Money Market Fund assets (broad money supply!) actually increased by $50 billion to $450 billion, with $250 billion of Holdings of Goldman Sach's Commercial Paper ("Repo") and $200 billion of Fannie Mae Commercial Paper. Money Market Fund liabilities "Deposits Owed to Household Sector" increased by $50 billion to $450 billion. Hopefully, this illustrates how financial sector leveraging increases so-called "liquidity," or the money supply."
---------------------------------------------------------
Not a criticism of you Steve but it's my belief that those that write stuff like this hope that nobody actually attempts to plow through it and that readers simply accept it's conclusions. Anybody here on the USAG Forum, take a few minutes with this and explain it to me because it certainly does not make any sense,

money market vs Money Market Fund? whos fund? who is "the client". If there is a point to this article Mr. Noland does a great job of hiding it. "Hopefully this illustrates" my foot!!

gidsek
Lois
(01/01/2001; 22:40:40 MDT - Msg ID: 44844)
ITS ALMOST TAX TIME
http://www.mtco.com/~ether/taxes.htmlFILE YOR TAXES ONLINE, use the link for more info
SHIFTY
(01/02/2001; 00:10:54 MDT - Msg ID: 44845)
WORLD GOLD COUNCIL
http://www.norfolk-now.co.uk/Content/Business/htm/010101Gold.htmNew gold rush could be on the way


Part of the World Gold Council's advertising campaign featuring Darcey Bussell.

HARRY DAY
Eastern Daily Press
January 1, 2001

Millions of dollars are being ploughed into a worldwide campaign aimed at sparking a 21st century gold rush by persuading investors to bank on bullion.

The World Gold Council (WGC) is backing its campaign with "several million dollars" � double its previous outlay � in a bid to encourage both institutional and private investors in Europe and the Far East to include gold in their portfolios.

Institutions can invest in gold by buying coins or gold bars � standard 400 ounce "London good delivery" bars are just over �73,000 apiece � which are kept for them by a bullion bank such as HSBC.

But private investors are more likely to buy jewellery, gold coins � UK gold sovereigns, Australian Nuggets, South African Krugerrands, Austrian Philharmonics � or small gold bars.

Indeed gold coin sales in the euro area, encouraged by the removal of Vat on January 1, rose by 29pc � from 4.4 tonnes of gold to 5.7 tonnes � in the first nine months of 2000 compared with the same period last year And there seems to be something to suit every pocket.

One Blackpool-based dealer was last week offering Australian gold nuggets over the internet costing from �50 for a tenth of an ounce to �215 for an ounce. The same dealer was offering year 2000 gold sovereigns for �65 with discounts of 13pc for bulk orders of 500.

The market price of gold at the time these figures were quoted was �183 an ounce so there is clearly a mark-up on the coins suggesting bars might be a better prospect.

At market prices a gold bar weighing a kilo would set you back just under �6000 and a small gold bar, called a 10 tola can be had on the open market for approaching �700.

But gold investment is not that simple.

Prices are always quoted in US dollars and fluctuations in the dollar against other currencies could turn a rock solid investment into fools� gold.

For example, the third quarter of this year saw the gold price fall in US dollar terms, but actually increase by 16pc in sterling and by 23pc in euros, compared with the same period last year.

The reverse could apply.

Stockbroker Richard Larner at the Norwich office of Hill Osborne said gold investment did have some advantages over shares � no management fees and good to look at.

There were also limitations.

Mr Larner said: "In the past gold has only come to the fore when there's been high inflation and we don't have any signs of high inflation at the moment. It didn't really pick up in the 80s when interest rates went up but it was really successful in the 70s when we had high rates of inflation."

Jeremy Charles, gold dealer at HSBC, said the market had been relatively quiet during the year with prices remaining in the $262 to $290 an ounce range.


WORLD GOLD COUNCIL

end
----------------------------------------------------------

$hiftyView Yesterday's Discussion.

Mr Gresham
(01/02/2001; 00:38:09 MDT - Msg ID: 44846)
Trail Guide, & debt dissolve
Trail Guide -- absolutely, take only the time you have available. How can we all make the best use of it? You have been so generous in the past, so I have three suggestions:

(1) We all re-read the Trail (so much has happened to confirm, or raise questions) so we're all "on the same page", and

(2) Questions specifically to TrailGuide are posted in a specific place (new page?) for you to get them most easily, unless, of course, you're having someone search each day's posts or previous day's archives. Maybe that's OK for you already?

(3) Be willing to write: "I think I've covered that one before,... but here's a new twist on that..." and just give us the quick take. But now I'm recalling that your writing style is one where you get pretty deep into the flow of your thoughts and experiences when you post a Trail message, or answer a bunch of questions... Maybe that's what it takes for us to get your best stuff, so that just means doing it less frequently, unfortunately.

But even just popping in for a quick hello, and maybe a couple clues or hints or articles dropped can keep us moving. If this is an alteration of your project with ANOTHER, can you tell us? Or if solely your personal time limits, we'll understand. You can't do any better than your best, so don't hold back trying to perfect it...

DEBT

All the discussions about a collapse assume that AG will be trying for a soft landing, trying to unwind derivatives slowly and leaning against another LTCM collapse. But things have gone on so much further, one analysis must be coming through to his and GWB's desks that a fast, deep debt unwinding would avoid a Japan meltdown followed by 10 years of the "walking dead."

I would suppose that under this scenario that the big firms are jockeying for survivorship. Might all the losing positions be being offloaded onto such as the JPM/Chase (now completed) derivatives Goliath, or the offshore "funding corps" that aggregated credit card debts, etc.? Even Fannie Mae/Freddie Mac.

You notice how a spate of bad earnings reports lets all of them off the hook to let out bad news? Like writing off "nonrecurring losses" so they'll look better in future reports. What about if their was going to be a big one-time debt meltdown? Why would anyone MISS the opportunity to load up their designated debt donkey and send him on outa town carrying all the firm's liabilities?

All the "chosen ones" would be moving their net worths toward safe havens, ready to net out their remaining losses. Their solvency will allow them to keep their long-term debt in current payments, and to buy up the losers' assets at firesale prices.

What kinds of signals would we look for that an awareness of this impending crash is part of strategy at the top, and that, instead of "Y2K warrooms", they now have "Plunge Protection Warrooms"? Oro?

It might be something as arcane as knowing which Treasury security dealers are keeping their repos going with certain others, or closing them out. Areas so far from my/our experience...
Black Blade
(01/02/2001; 01:40:10 MDT - Msg ID: 44847)
Gold Miners That Go Belly-Up, Abby Jo, and a Couple of Oil Slicks
I have read about how many mining companies have slashed exploration budgets. Those are the mining companies that are running scared. Profitable miners have actually increased exploration budgets. Harmony Gold for example is pushing ahead with increased exploration. Meanwhile, other hedged miners are eating out of their hedge books and high-grading their ore deposits in a desperate attempt to either remain "profitable" or at least survive for some reason. They have slashed exploration budgets because they simply can't afford it. Check into the companies annual reports and see which companies have cut exploration and development budgets � those are the ones to bail out of. Check to see which are living off of their hedge books � sell those too. Check the bottom line and see which ones are not profitable � sell those too. That leaves only a handful of miners. When the price of gold rebounds � look out, most forward sold miners are toast � refer to Ashanti (ASL) and Cambior (CBJ). You see, without exploration and high-grading ore, there is no future for that company � they're toast! Forward sold miners rely on gold prices to decline � rather curious for a gold company � yes? When the POG eventually rises � those companies are toast! An interesting note on those companies that are eating out their hedges � those contracts are running out. They have helped to depress the POG. Now any forward contracts available are also at much lower prices. These ever declining lower priced forward contracts are converging with the lower physical price of gold. Those companies who rely on higher gold prices will have to go belly up when the current forward contracts are filled. There simply are no more higher priced forward contracts available. It's "catch-22" � "Damned if you do, and damned if you don't" Feel no pity for them, they sowed the seeds of their own destruction. No exploration for higher grade deposits that can be mined cheaply? Then die on the vine as it were. Pick gold shares very carefully and then only profitable unhedged miners that have plans for growth. Also, watch the lawsuit of Ashanti Shareholders against the companies officers � take note Barrick (ABX) and AngloGold (AU). Also, Cambior only got a temporary reprieve, as they now are shedding off assets faster than a stripper on speed!

Well we made it into 2001. I see that Abby Jo Cohen's predictions came up short. No S&P at 1450, and no DOW at 11500. I thought for sure they would trot out the old girl to talk up the market for a year end push.

An interesting table of petroleum stats came to my attention. I thought they were somewhat entertaining, as the US is becoming more dependent on petroleum � especially natural gas. From the Division of Professional Affairs Energy Statistics, AAPG:

Petroleum Demand 1999 World 74.8 Mbbl/day US 19.52 Mbbl/day

Total US Energy Consumption (EIA) 1998:

Petroleum 40.7% Natural Gas 24.1% Coal 23.3% Nuclear 7.9% Hydro 3.8% Other 0.2%

US Electric Supply (EIA) 1999:

Coal 50.6% Nuclear 19.6% Natural Gas 15% Hydro 8.3% Petroleum 3.8% Geothermal-Solar-Wind 2.4% Other Gas Fuels 0.3%

BTW, OPEC meets on January 17th, to cut oil production and exports. The size of the cuts could determine whether supply becomes a problem. However, it was never a problem with supply as much as a problem with refinery capacity. We are in a "Dead Zone" now. Present supplies are filling the gaps for current needs, but as the so-called "driving Season" gets under way and refinery capacity comes under renewed pressure � lookout. Remember last summers high gas prices and calls for government investigations by Grasshoppers everywhere? Look for a repeat!
Black Blade
(01/02/2001; 01:50:20 MDT - Msg ID: 44848)
Gold Stirring Tonight
Gold is up slightly +$1.70, and Silver up +$0.03. Hang Seng gets clipped for over 225 points in overnight action. NG is off -$0.67 at $9.10 Mbtu as the little snow flurry on the east coast passes. However, winter is far from over and it looks to be cold this year, all the while NG storage is drawn down to record low levels. We are really cutting this one close!
Black Blade
(01/02/2001; 02:38:01 MDT - Msg ID: 44849)
Market Crash Developing for New Year's Open?
http://www.mrci.com/qpnight.htmFutures look sharply lower tonight. The theory of the market in January is that "As goes January - so goes the year." This could be interesting if January craters. Could be a last chance to acquire gold and silver at bargain basement - fire sale prices. This could get rather fun. BTW, Gold up +$1.80, but still clawing back from getting ambushed last week.
Black Blade
(01/02/2001; 05:15:02 MDT - Msg ID: 44850)
"Strange Daze"
Gold back to coma status, but the Euro is much stronger - up 0.52 at 94.80, and USD index is lower -0.26 at 109.02. Futures are all lower except the NASDAQ futures. Looks like a confused market for the first trading day of 2001. Gold demand is looking better, as gold is politically correct again. It appears that gold clothing and bold gold jewelry to match is in fashion according to a recent WSJ article and the WGC. A shift in sentiment could signal a shift among investors as well. We shall have to wiat and see. Petroleum is higher, though NG is plummeting below $9.00 Mbtu, in spite of record low storage levels, lack of additional drill rigs, and political opposition to increased drilling. The Grasshoppers are looking to steal from the ants by using their political muscle. Should get entertaining as regional neighbors and NG producers continue to resist.
SteveH
(01/02/2001; 05:19:58 MDT - Msg ID: 44851)
Gidsek
It is complicated. The point of that paragraph is that credit is being created using Fannie Mae instead of the fed, increasing liquidity in the housing loan market, which raises real estate prices. Later in the same article he mentions buying Microsoft shares, which heretofore had gone up (until recently).

Bottomline. Interesting article with periods of great concentration required. Good graphs though. Other times it is clear as a bell. SO, best to plow through the whole thing as he tries to explain the question you asked.

Steve
SteveH
(01/02/2001; 05:24:57 MDT - Msg ID: 44852)
Trail Guide
This morning, CNBC did a piece about the emerging Europe and the place where the money is flowing now. Bond Debt was at 88Billion euros, up from last year where the said it was -44 billion in outflows (whatever that meant). 9% unemployment though.

Did you read the ORO piece re: the euro and Europe? Back a couple of days ago.
SteveH
(01/02/2001; 05:27:51 MDT - Msg ID: 44853)
Trail Guide
Also,

ON the Bloomberg ticker area where the notes of the day are posted, Soros was quoted as saying that the US is in for a hard landing.
JavaMan
(01/02/2001; 05:57:25 MDT - Msg ID: 44854)
Good Morning all...
http://news.bbc.co.uk/low/english/business/newsid_1096000/1096865.stmJust recently returned from visiting with family for the holidays. I see there is lots of reading to catch up on. Hope to participate later as time allows.


Steve H, I saw this article just before visiting the forum.

"George Soros, the currency speculator who earned the title of 'the man who broke the Bank of England', has warned that a new global financial crisis is inevitable."

Canuck
(01/02/2001; 06:18:34 MDT - Msg ID: 44855)
Excellent article/Upcoming storm
http://www.gold-eagle.com/editorials_01/puplava010201.htmlGood read.
Canuck
(01/02/2001; 06:20:52 MDT - Msg ID: 44856)
@ Black Blade
Good morning Sir,

Any news on refinery capacity lately and/or link to such.

TIA.
Black Blade
(01/02/2001; 06:39:45 MDT - Msg ID: 44857)
RE: Canuck
This afternoon we should know about refinery utilization rates as the API inventory numbers should come out today. These numbers are released on tuesday afternoons - sounds like an old Moody Blues song doesn't it? Anyway, with the long New Year's weekend, it could be delayed. We are approaching a slow-down period in oil, yet on the 17th of this month OPEC meets to slash output. The refinery capacity problem will likely rear it's ugly head again as we approach summer with increased demand for distillates such as gasoline and diesel.

- Black Blade
Black Blade
(01/02/2001; 06:41:49 MDT - Msg ID: 44858)
RE: Canuck
http://www.futuresource.com/free/cgi-bin/mpsn?ai=fwneThis link might prove useful for commodities as well as API data when released.

- Black Blade
Black Blade
(01/02/2001; 06:44:06 MDT - Msg ID: 44859)
Euro at five-month high as US worries hit dollar
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3HRX2IHHC&live=true&tagid=ZZZLLCHPD0C
By Adrienne Roberts in London
Published: January 2 2001 11:07GMT | Last Updated: January 2 2001 12:29GMT

Two years after its launch, the euro celebrated its birthday on a healthy note on Tuesday morning, reaching a five-month high against the dollar and a 10-month high against the yen. The gains were fuelled by continued worries about the US and Japanese economies. The rally came as Greece joined the euro-zone as its twelfth member. The euro reached a high of $94.76 against the dollar, Y108.75 against the yen and �0.6347 against the pound. By 1030 GMT, the euro was trading at $94.45 against the dollar, Y108.50 against the yen and �0.6335 against the pound. Euro-zone officials played a part in the positive sentiment, with Jean-Claude Trichet, governor of the Bank of Franc, saying in a radio interview that he expected euro-zone countries to reach economic growth of around three percent in 2001 without inflationary pressures. Hans-Juergen Koebnick, a Bundesbank council member, said that the euro was still undervalued that parity with the dollar was a realistic value.

The euro's strength flew in the face of unexpectedly weak December euro-zone Purchasing Managers' Index data. The index fell for the eighth successive month to its lowest since June 1999. "At 53.4, the index is consistent with roughly 2 per cent annualised industrial production growth, compared with the current 4 per cent rate," said Robert Prior at HSBC in London. "It is certainly possible that the euro-zone will see an industrial recession later this year as the world trade cycle continues to weaken and the recent sharp rise in the euro starts to bite."

Black Blade: The USD looks to continue weaker against the Euro. Bush appears to favor a weaker dollar - we shall see. Looks like Dim Wim can't even scuttle the Euro this time.
Belgian
(01/02/2001; 07:31:05 MDT - Msg ID: 44860)
Financial sense
http://www.financialsense.com/series2/tactics1.htmThere is NO possibility that Dollar + Debt, make any kind of soft landing. We don't need another, Plaza-plot to replay the 1985-1995 dollar-decline. The wealth-spiral + easy money + expectations, "metastase", has invaded the complete financial / economic, body.
You can't turn an oil-tanker at full speed. Day after day...I understand more and more...the "vital" and utmost importance of a declining POG ! Don't give POG a chance to develop any increasing price-trend. This event, would attract all financial bees to this honeypot.
A strong dollar has never be so important to the whole economic world. Everybody is benefitting from every side of that strong dollar. But, the stronger the dollar gets...the heavier the Debt-increase. Catch 22 !

Today, the Euro climbs against US$ + Yen. POG is masking again the signal. 273,50$ >>> 271,85
US$-index : 118,45 >>> 109 = minus 8% and POG goes down !?

I repeat my 2 cents suggestion. Hidden agenda of 1 US$ = 1 Euro = 100 Yen ?? Result : a possible stop of distorting currency-war and a pauze for the other currencies to find their balance against the giants. Conditio sine qua non is a stable POG with downwards bias. Shock-Prevention-Operation. ?
Slow decrease in Derivatives and gentle expiration of expiry dates.

They give it a try to prevent the Debt-Eplosion, by using "reason", rather than "emotion". Sorry, folks...but this never worked out as planned.

POO - Behaviour, for the last 2 years, must have been subjected to enormous derivative-forces too. The last 5 years were a Carnival-masquerade, where the paper derivative masks have been hiding the real face of any valuables and debts.

IMO, the financial Titanic is made out of pure paper. If there is no iceberg...the paper will weaken anyway...over time, and sink of course. The "crash" - word will only appear at the end, when the capitulation phase sets in.
That's how I keep on explaining POG's weakness and lacq of signal.

Thanks to Financial Sense for broadening the insights.
WAC (Wide Awake Club)
(01/02/2001; 07:55:52 MDT - Msg ID: 44861)
@TheStranger - Full Steam Ahead, Down with the $
http://uk.biz.yahoo.com/010102/80/aubg6.htmlEuro seen set for turbulent ascent to dlr parity
By Sabrina Ghani
LONDON, Jan 2 (Reuters) - The euro is poised to reclaim dollar parity this year, but the single currency is set for a bumpy ride because of currency option barriers along the way, options traders said on Tuesday.

The single currency entered the new year on a buoyant note after breaching an array of key chart barriers against the dollar last year on the back of growing optimism that euro zone growth would slow at a more gentle pace than the United States'. While chartists said there was little in the way of technically significant resistance levels that could turn the euro's fortunes, options traders say the euro bulls might be frustrated as defenders of currency barriers sell the euro each time it heads toward a round number.

"Knock-outs will slow down intraday and short-term spot movement and make the euro's rise a little tricky," said an options trader at a Japanese bank in London.

"But it will not change the whole longer term trend, unless real flows into the euro turn around."

Large barriers, or knock-out options, with strike prices ranging from $0.95 all the way to parity and above are in the market and would be rendered worthless once the strike price is hit, traders said.

But traders add that these barriers would only cause short-term hiccups in the euro's climb, as the long-term trend firmly favours the euro. In fact, they added that once these options barriers are taken out, the holders of these options become euro buyers, helping to accelerate the euro's ascent.

"Option barriers are like icebergs, they come and go," said a trader at a European bank.


NEXT STOP $0.97

The euro hit five-month highs around $0.9476 on Tuesday, some 5.5 percent short of parity.

Chartists said the next technical resistance comes in at around $0.97 and the worst that can happen when the euro reaches this level is that it trades sideways for a few days or stages a minor pullback before heading higher.

"A lot of work has been done already and the euro's trend is extremely impressive," said Brian Kiely, senior technical strategist at Royal Bank of Scotland (LSE: RBOS.L - news) Financial Markets.

"Our focus now is parity and $1.03, which we might even see in the next two months." Expectations that the euro will reach parity against the dollar have seen demand for euro call options, the right to buy euros, with a strike price of $1.00, particularly in maturities beyond three months, traders said.

Furthermore, investors are willing to pay a higher premium for euro calls over euro puts, the right to sell euros.

The premium, reflected in one-month risk reversals, hit its highest levels on Tuesday in more than a year, when the euro was trading above parity.

"Risk reversals have flipped all the way and even favour euro calls in one year, so we can say that the sentiment has turned well bid for the euro and people are more convinced that the euro is going higher than they were two months ago," said the Japanese bank trader
Parsifal
(01/02/2001; 08:30:08 MDT - Msg ID: 44862)
Wow
http://www.kitco.com/charts/livegold.html
Evidence of POG in a dirty street fight this morning at the link above. Looks like London was loosing control. New York, well, looks like the battle got mean. After wild gyrations overnight, POG dropped about $4 in a couple hours in New York.
Canuck
(01/02/2001; 08:55:04 MDT - Msg ID: 44863)
@ Black Blade
Yes sir, Hydro-Carbon man is in for more whacks. A little reprieve on the oil front (watching the NG scramble) until the spring when oil will be back front and centre.

Forty dollar oil predicted for the winter may just be delayed a few months.

Thanks for the link.

Canuck
Canuck
(01/02/2001; 08:59:39 MDT - Msg ID: 44864)
Gold Whacked
Stocks taking a little hit this am, so the big bad crooks take a whack at gold just so there is no 'other alternative'.

You goofs, press that spring down a little more and get your faces out of the way when is goes, it'll take your head right off.

Rock and roll time is near; can't wait for 4Q numbers in a couple weeks.
Pandagold
(01/02/2001; 09:13:24 MDT - Msg ID: 44865)
JavaMan your posted quote (Soros)

"George Soros, the currency speculator who earned the title of 'the man who broke the Bank of England', has warned that a new global financial crisis is inevitable."

Well, he should know, he's the guy who brings about the crisis' in everybody's backyard but his own. As they say -dogs do not sh*t on their own doorstep.
CoBra(too)
(01/02/2001; 09:43:14 MDT - Msg ID: 44866)
Happy 2001 to all and @Canuck
Gold whacked?- though most gold stocks are up substantially!
Must come as a shock to the PPT that this blatant suppression of POG doesn't translate to lower gold stocks, or else, do more investors leave the tanking SM's to take cover in PM stocks? ... the physical will follow suit, as it did in early 1993.
I do understand that some of our hero's like, mostly unhedged NEM and others are under severe cash restraints - they still are my favourites, due to their perseverance not to hedge, though I hear Ron Cambre is on his way out (a great loss for the co.), but as a shareholder (meaningful for me!) I still feel this miner is one of the best in NA and I would fight any attempt of takeover by the l(y-)ikes of predatory ABX's and their Mo-(u)nkey ilks.
So fight the good fight for free markets and go gold and GATA (to quote YGM)and don't let the derivative paper game stand in your way of acquiring reality, physical and some unencumbered miners. cb2



fox
(01/02/2001; 09:50:35 MDT - Msg ID: 44867)
comex gold
what i see now on kitco chartsis laughing at my face
is cynical and prevers
is showing "i am the stongest"
and I begin to believe that "they" are the strongest
Journeyman
(01/02/2001; 09:53:21 MDT - Msg ID: 44868)
Signs of the times: Indeed hydrocarbon man is in for problems @Black Blade, ALL

If we continue to have a cold winter, it's possible that in certain
areas of the country, we will have to shut everything down except
hospitals and residences. This is a very real possibility. ... In
no time in the the last 30 years has OPEC cut oil production when
prices were this high. It's troubling that it's being done by Saudi
Arabia, our friends -- but they're up against the declining production
of their "mature" oil fields, so it's understandable. -Jerry Castellini,
Chief Investment Officer CastleArk Mgmt. Pres., CNBC, Jan. 2, 2001, 11:32AM EST

Regards, j.

P.S. The market will adjust -- we'll use less -- and alternative sources WILL be developed. People will change and adapt. That's what free markets facilitate extremely well. And we'll do it quicker if the bumbling nincompoops (you know which ones I mean) keep their inept "fingers" and kleptomaniac tendancies completely OUT of the energy business. And I mean COMPLETELY.
Journeyman
(01/02/2001; 09:57:59 MDT - Msg ID: 44869)
Signs of the times: Institutions dumping US equities, especially financials, apparently @Trail Guide, ORO, ALL

3/4 of all trades in GE & EMC today have been block trades, over 10,000
shares, which is considered a sign of institutional activity. These trades
have been sells, indicating institutions are getting out of a stock. NYSE
trades like these have been increasing over the last few weeks, and today
they have hit EMC & GE. -Bob Pisani, CNBC, Jan. 01, 2001, 11:40AM EST

Regards, j.

Journeyman
(01/02/2001; 10:05:23 MDT - Msg ID: 44870)
You've got it wrong this time @Pandagold (1/2/2001; 9:13:24MT - usagold.com msg#: 44865)

Hi Panda!

I don't usually disagree with you -- but I do on the above post.

I'm not a Soros fan, but he doesn't cause the problems, he and his brethern just take advantage of untennable economic conditions caused by government-bankster paper/megabyte fiat money junkies who don't heed the lessons of monetary history.

To be a bit more clear: The government and banker screw-ups are the cretins that, as usual, cause the problems. Soros causes the problems exactly the way wet cobble-stones cause rain.

Regards,
Jourenyman
Knallgold
(01/02/2001; 10:59:20 MDT - Msg ID: 44871)
@Black Blade
Would be interested to hear your opinion on Harmonys recent claim to hedge (the properties they bought from Anglogold must be hedged for capital reasons it was said.Banks named in the deal were 2 SA's I think and,guess it, Chase!).It shocked me when I read that,don't have the link anymore unfortunately.It is not time to hedge,it is time to close them at this prices.

Did Swanepoel sell his soul to the cabal???
magnison
(01/02/2001; 11:00:36 MDT - Msg ID: 44872)
China dumping silver
Hi..I'm just wondering what everone's take is on the news of China selling more silver into the market this year. There was a news article about it on Kitco a few weeks back. Does anyone remember it? (Sorry I don't have a link)

Does anyone know if the analysts that have been writing commentaries about the short supply of silver have taken into account what the Chinese did in 2000 and what they are planning on doing in 2001? The article said something about only two silver mining companies had quotas to sell into the market for 2000 but in 2001 they were going to allow 8 more with a total of up to 40m ounces possibly coming into the market this year. This news along with Kodak already being hedged for 2001 seems to be really bad news for silver as a whole, unless of course something major happens that no one is considering at this point.

Sorry for being so vague here but I couldn't find the article again on Kitco.

Hope some of you can shed some light on this. Thanks..Magnison
SHIFTY
(01/02/2001; 12:05:55 MDT - Msg ID: 44873)
WOW
Gold in free fall at Kitco and mining shares up. GSR up 33.33%
Something is up!

$hifty
Journeyman
(01/02/2001; 12:52:35 MDT - Msg ID: 44874)
Bond market visits Las Vegas @ALL

After a particularly volatile report on U.S. Treasury bonds by bond reporter
Rick Santelli - - - Ted David: "It's like Las Vegas, isn't it Rick. Rick
Santelli: "Yes it is, Ted." -CNBC, Jan. 2, 2001, 2:44PM EST

Regards, j.
YGM
(01/02/2001; 13:52:10 MDT - Msg ID: 44875)
Vatican Adopts EURO as Official Vatican Currency......
Hopefully the Coinage will be AU & AG......THE Vatican and Italy yesterday signed a convention enabling the Holy See to adopt the euro as its official currency and to mint its own euro coins.
Diplomats said the agreement had been required in order to bring Vatican City - whose official currency is the lira - into line with Italy's commitment to adopt the euro on January 2, 2002.

Under yesterday's terms, the Vatican will license Italy's Treasury to mint euros on its behalf, just as Vatican lire are struck at present. Vatican coins are legal tender now both in Vatican City and Italy.

Similarly, Vatican euros will be able to circulate freely throughout the entire euro zone, the Foreign Ministry in Rome said. Vatican euros will resemble those of euro zone countries, with the Holy See able to choose its own form of "national" illustration on one side of its coins.

There was no official mention yesterday of what this might entail, but sources said the most likely choice was either the Keys of St Peter, or the head of Pope John Paul II.


17 December 2000: Police fire tear-gas as Haider meets Pope

Pandagold
(01/02/2001; 14:02:46 MDT - Msg ID: 44876)
You misread me Journeyman
Nope! Not wrong. You have been duped by his rhetoric he uses to 'explain' his currency attacks', and soothe his conscience for the misery he causes. You have also misread my posting.

All governments have a screwed up currency (some worse than others). But the biggest of all is the US. Soros hit the Asian currencies after they had been lured into playing follow my leader (the US.)

This pre-planned attack by Soros( the Cabal's elite panzer division) brought down the Asian economies when they were at the most vunerable. Result - the assault troops moved in snapping up property, prime businesses - in particular financial institutions at knocked down prices with US monopoly money.

Meanwhile the dollar gets away with murder as it goes on a rampage. Why doesn't Soros punish the 'financial junkies' here? (rhetorical question)

Get wise my dear friend. See the whole picture. Is there a relationship between the Falklands war, the Gulf war, The Balkan war? Lets go farther back - the French Revolution, the Russian revolution - any connection? Search it out. There is a fine thread which runs through all these (and more) incidents. But we have been brained-washed into seeeing them as unrelated. VERY LITTLE of major importance is unrelated, nor unplanned well in advance.

I must shut my big mouth before I say too much.



Randy (@ The Tower)
(01/02/2001; 14:39:40 MDT - Msg ID: 44877)
Euro sentiment on the rise --ALSO-- "And Then There Were Twelve"
http://www.eubusiness.com/cgi-bin/item.cgi?id=34870&d=101&h=240&f=56&dateformat=%25o%2520%25B%2520%25YHEADLINE: Euro being viewed more favourably

The oft' overlooked importance of 'grass roots'...

From the linked article: "The euro is making up some lost ground in public opinion according a survey released by Canal-Ipsos of France just before Christmas."
---
Additionally in euro news, the ESCB and its consolidated reserves were swollen futher over the holiday weekend as Greece officially joined the monetary union, setting aside the drachma as a legacy currency at the fixed rate of GDR340.750 per 1 euro. Euro notes and coins will replace the 12 national legacy currencies for use in circulation during the first few months of 2002.
Pandagold
(01/02/2001; 14:52:44 MDT - Msg ID: 44878)
End of cash

BEGINNING OF THE END FOR CASH
" It could prove to be the death knell of notes and coins.
Singapore is to phase in e-money and force all
businesses to accept it as legal tender by 2008.
Financial transactions will be made using money
Stored on computer chips.
Cash will be a thing of the past as money changes
hands electronically using digital pulses transferred
through mobile phones., hand held computers and even
watches.
A shopper will be able to point a mobile phone at an
item to register the price. The phone would check the
shopper's bank balance on the internet and deduct
the money from the account if it was told to buy the
item.
��������."The physical notes and coins
will be a thing of the past "says Lo Siang Kok
currency director at Singapore's Board of Commissioners
of Currency. "There's no point in fighting technology"

Complete article by Wendy Vuvoska (Metro)

YGM
(01/02/2001; 14:54:13 MDT - Msg ID: 44879)
Lots of EURO news links today......(scroll link)
http://www.americanfreedomnews.com/EUROPEAN SUPERSTATE


Sweden wants EU to �harmonize� tax laws throughout Europe
THE Tories are claiming to have more proof that Brussels is committed to a "superstate agenda". Francis Maude, shadow foreign secretary, said yesterday that plans to harmonize taxes were being actively promoted.

European leaders cheer Euro's newfound prosperity
European leaders celebrated the sudden revival of the single currency on the markets over the New Year, which raised the prospect of a successful switch to euro notes and coins next year.

Criminals counterfeiting euro currency
Criminals are planning to cash in on the launch of euro notes and coins, by flooding the Continent with fake currency, the head of an anti-fraud agency said last night.

Greece abandons national currency and surrenders to growing euro
Greece has become the twelfth country to join the European single currency, ditching its own currency, the drachma.

Euro is only EU success in 10 years says former German chancellor
Helmut Schmidt, the former German chancellor, yesterday attacked the European Union for having achieved nothing in the past 10 years except for the creation of the euro.

Sweden takes over presidency of European Union after �French fiasco�
Sweden has taken over the six-month presidency of the European Union, saying it plans to focus on three main issues - the EU's eastern expansion, new employment guidelines and environmental protection.

�French fiasco� comes to end as France turns EU presidency over to Sweden
France prepares to hand over management of the European Union to Sweden this week after a bungled turn in the rotating presidency that has dealt a heavy blow to French influence in Europe.

Libyan dictator says Great Britain is slowing down European superstate vision
Colonel Gaddafi will criticize Britain today for slowing the pace of European integration.
R Powell
(01/02/2001; 15:04:34 MDT - Msg ID: 44880)
How Bridgenews sees today decline

Everyone sees things a little differently. Take this for what it's worth- as educational or amusing. I offer it but no judgment of it.
Rich





[B] NY Precious Metals Review: Feb gold falls $3.6 on technicals
2-Jan-2001 20:58:48


By Darcy Keith, BridgeNews
New York--Jan. 2--COMEX Feb gold futures, defying the usual market guidance
of the euro and equities, tumbled Tuesday to their lowest level in a month as
weak longs dumped the metal on technical pressures and several rounds of sell
stops. Feb settled down $3.6 at $270.0 an ounce after hitting a low of $269.0
late in the session. Mar silver, pressured by gold's slide, settled down 4.0
cents at $4.595 after hitting a fresh contract low of $4.590.
* * *
Gold players were left scratching their heads on the first trading session
of the year, as the euro was stronger Tuesday and equities much weaker, market
movements that typically would spur higher gold prices.
While dealers and analysts appeared to have no obvious explanation for the
move, most linked it to much weaker-than-expected U.S. manufacturing data
released at 1000 ET, prior to much of the heavy selling.
The National Association of Purchasing Management said its index of
economic activity was at 43.7 in December from 47.7 in November, much lower
than 47.0 that economists had forecast. The December reading was the lowest
since April 1991.
This key barometer of the health of the U.S. manufacturing economy was down
for the fifth month in a row. Technically, the manufacturing sector would be in
a recession if this index remains below 50.0 for two quarters or six straight
months. ( Story .4792 )
This, according to some dealers, spurred talk of deflation on trading
desks, a scenario which would certainly not help gold, sometimes used as a
hedge against inflation.
"Gold is really a very good barometer of deflation, and everybody,
including Greenspan, looks at deflation," commented one dealer.
Of course, gold did not benefit much from signs of inflation during the
first three quarters of last year, so why players are so concerned about
deflation leaves some question mark surrounding that theory.
Leonard Kaplan, president of Prospector Asset Management in Chicago,
suggested that one rationale is that the NAPM figures clearly point to a
recession, and if one assumes precious metals are industrial in nature and
dependent on economic growth, it would make sense that demand will be
weakening.
But Kaplan admits this rationale doesn't totally explain gold's move, given
that precious metals are not entirely industrial in nature and inflation
worries did little to spur buying interest last year.
"It seems like the New Year has brought us nothing but highly confusing
markets," said Kaplan. "One would have thought that the currencies would be
dominating the action. Today is an extreme aberration."
A variety of sellers were seen Tuesday, including the funds and the trade,
with a large cluster of stops taken out at $270.30, said dealers.
One trader said Tuesday's action suggests that while gold has been
following movements in the currencies lately, the dollar may not be a long-term
determinant of gold prices. "On a long-term basis, it may be nothing to hold a
hat on," he said.
The trader added that technical selling was a key factor Tuesday, as
several support lines were taken out.
Kaplan noted that gold slipped through support in the Feb contract at
$271.2 "like a hot knife in butter," and pegged support at $269.2, just above
Tuesday's low of $269.0. Next support is found at $268 and $265, said Kaplan.
Silver saw trade selling interest Tuesday, as prices came under pressure
from gold's weight. Silver's low Tuesday was its lowest level in 13 months on
continuation charts.

SETTLEMENT PRICES

--Feb gold (GCG1) at $270.0, dn $3.6; RANGE: $269.0-275.0
--Mar silver (SIH1) at $4.595, dn 4.0c; RANGE: $4.590-4.650
--Jan platinum (PLF1) at $608.9, dn $0.8; RANGE: $604.5-611.0
--Mar palladium (PAH1) at $968.5, up $14.05; RANGE: $964.0-968.5

SPOT PRECIOUS METALS PRICES:
New York 1514 ET London 1130 GMT Tokyo 0600 GMT
Gold(KRCGL) 271.20-271.80 273.25-273.75 272.75-273.25
Silver(KRCSL) 4.57-4.59 4.60-4.62 4.59-4.61
Platinum(KRCPL) 608.00-614.00 602.00-612.00 605.00-615.00
Palladium(KRCPA) 963.00-983.00 940.00-960.00 940.00-960.00 End

[Begin BridgeLinks]
Darcy Keith, BridgeNews, Tel: 212-372-7377
Send comments to metals@bridge.com

Click below for charts: Gold:
Media://analytics/pages::/cmd=us@?krcgl[1350MOVB]/VP Silver:
Media://analytics/pages::/cmd=us@?krcsl[1350MOVB]/VP Platinum:
Media://analytics/pages::/cmd=us@?krcpl[1350MOVB]/VP Palladium:
Media://analytics/pages::/cmd=us@?krcpa[1350MOVB]/VP Dlr/yen:
Media://analytics/pages::/cmd=$usdjpy[1350MOVB]/VP Quotes:
Media://Analytics/pages::/cmd/pag/id=1069

For an intraday chart of active-contract gold, double-click:
Media://analytics/pages:active-gold-intraday:/cmd=us@gc.1[1099ID;3;2] For
an intraday chart of active-contract silver, double-click:
Media://analytics/pages:active-silver-intraday:/cmd=us@si.1[1099ID;3;2] For
an intraday chart of active-contract platinum, double-click:
Media://analytics/pages:active-platinum-intraday:/cmd=us@pl.1[1099ID;3;2]
For an intraday chart of active-contract palladium, double-click:
Media://analytics/pages:active-palladium-intraday:/cmd=us@pa.1[1099ID;3;2]

[End BridgeLinks]
Copyright 2000 Bridge Information Systems Inc. All rights reserved.



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

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Pandagold
(01/02/2001; 15:12:33 MDT - Msg ID: 44881)
A re-posting
I have posted this before, I know, but eventually it will sink in.

"Dollar,Euro,Gold - the Three Cabilleros
We are in a transition from the dollar to the Euro (at least for some time). This should be obvious already to the discerning, but if it isn't, it will be as the new year progresses.

This is not Europe fighting the US. It was planned many moons ago (all part of the agenda).

It should be remembered that it is a transition from the old well-tried, to the new boy on the block. During any transition the situation is tenuous and sensitive. Also, because of the whole manipulated financial structure, we have a severe aggravated situation, that, if things went wrong, would topple the whole pack of cards.

If, once the dollar weakens, money were to flow into gold instead of the Euro we would have a worst case scenario, and this is why TPTB will enure that it does not.

Once the Euro is up and running, and steady on its feet, then, and only then, will the tight reins on gold be relaxed.

This, of course, does not mean that gold could not move some, but it is so far down at the moment - $10 would seem like a major event and get everyone excited. It could even go to $300 without doing much damage. But, as stated, there will be no major move (if ever) UNTIL THE EURO IS WELL ESTABLISHED. No one would be happier than I if it did, but it is not in the agenda.
Randy (@ The Tower)
(01/02/2001; 15:21:46 MDT - Msg ID: 44882)
Pandagold (usagold.com msg#: 44878) . . . "End of cash"
Excellent article. I can think of very few real-world examples that so clearly demonstrate to thinking men that "wealth" and "currency" are NOT to be confused and equated, as they are so clearly not the same thing. One need only to imagine a lost confidence (as we have seen in the purchasing power of "dot.com stock" as a form of intermediate quasi-currency, or the failure of many third-word currencies) or a power outage to render a person's savings into nothing at all. In truth, as things currently stand there is not much separating paper from digital currency as proposed. Let us hope that most people with money to lose have not forgotten the timelessness and durability of hard assets to denominate/represent their accumulated worldly wealth.
YGM
(01/02/2001; 15:38:32 MDT - Msg ID: 44883)
Pandagold....
Possible News Stories for 2010..........??*US Gov't passes laws restricting Gold and Precious Metal ownership to E-Trade accounts.

*UN dictates all Member Nations to focus on control of Black Marketing in Cash and Gold/Silver for goods.

*BIS, World Bank, IMF, US Fed Reserve, Vatican,and many other intitutions support Electronic Money laws and want all Gold and Silver to be held in trust accounts by proper
authorities.

*Gun control laws thru late 90's and early 2000 seemingly having little to no effect on crime rates. Now only the
"Bad Guys" have guns.

*The Market Crash of 2001 seems to be taking years to rebound as it did back in 1929. (25 years for it then to return to full value)

*Prophets and Seers alike watching very closely as Mallachy's last predicted Pope takes over.

*Ex-President Clinton dying of Aids related complications in Jail. Hillary doesn't want to visit and prefers to stay in her solitary confinement cell. More treason/murder charges still pending against both Clintons.

*US Treasury Agents to-date have recovered over 1000 tonnes of Gold and Silver Bullion and Coinage buried by illegal hoarders....Agents claim the new "Hand Held Ground Penetrating Radar Metal Detectors" are thru widespread use locating backyard caches in 10% of property searches. Also finding large stores of weaponry and Ammo...Story developing

*Environmentalists now worry continuing energy crisis is turning World forests into wastelands as people continue to ignore laws restricting tree cutting on private property and public lands. Expecting near term restrictions on wood burning stoves thru out USA and Canada.

*Blah, Blah, Blah.....Story Developing!!!

***I'll leave the guesswork as to War, Plague and the rest of the scenario for 2010 to somebody else.....YGM.
canamami
(01/02/2001; 15:46:08 MDT - Msg ID: 44884)
An institutional investor which believes in gold (at least gold shares)
I am not espousing or promoting this bank/trust company, or the gold mining company, but merely illustrating that there are institutional investors which believe gold has a future. Here is the news release:

ARIZONA STAR RESOURCE CORP ("AZS-V;AZSRF-L") - Pan Atlantic Bank and Trust Limited Acquires Arizona Star Shares
Pan Atlantic Bank and Trust Limited, Attention: Mr. Anscele Payne, Managing Director, P.O.B. 982, Musson Building, 3rd Floor, Hincks Street, Bridgetown, Barbados, W.I., acquired through a privately negotiated transaction ownership and control over 3,000,000 common shares of Arizona Star Resource Corp. (the "Company"). Pan Atlantic Bank and Trust Limited, together with any person acting jointly or in concert, now has ownership, control or direction over an aggregate of 12,036,100 common shares (representing approximately 30.31% of the total outstanding common shares) of the Company. Included in these are 20,000 common shares of the Company owned by an employee benefit plan of an affiliate of Pan Atlantic Bank and Trust Limited.

Pan Atlantic Bank and Trust Limited has purchased the shares for investment, and it does not presently have any intention of making additional investments in or dispositions of securities of the Company in the future, but may do so, depending on price, availability and general market conditions. Pan Atlantic Bank and Trust Limited currently intends to remain a passive investor in the Company, and not to influence control or direction of management of the Company, although it may seek board representation. TEL: 1-246-436-9756/7/8

Anscele Payne, Managing Director FAX: 1-246-228-1156


Pan Atlantic Bank & Trust Limited E-Mail: pabt@caribsurf.com



YGM
(01/02/2001; 15:55:37 MDT - Msg ID: 44885)
Left Off the 2010 News List....
http://www.sightings.com/general6/cowup.htmPrions in Cattle and Food chain thru feeding animal protein to animals and fertilizing with human waste is a subject yet to become news for most....I don't even want to think of 2010 and BSE.....Aids will pale by comparison...IMHO
Like the Ad said..."You Can't Fool w/ Mother Nature"..YGM
Randy (@ The Tower)
(01/02/2001; 16:17:56 MDT - Msg ID: 44886)
Tower commentary on today's Bridge News "NY Precious Metals Review"
"New York--Jan. 2--COMEX Feb gold futures, defying the usual market guidance
of the euro and equities, tumbled Tuesday to their lowest level in a month as
weak longs dumped the metal on technical pressures and several rounds of sell
stops. Feb settled down $3.6 at $270.0 an ounce after hitting a low of $269.0
late in the session."

From my view here in The Tower, I would say that it was the dumping of February futures contracts that caused the pricing downdraft, NOT the dumping of metal as indicated in this report. There is a difference. As only fiduciary representations of wealth, such things as stocks, currency, or derivatives contracts may at times undergo a crisis of confidence, suffering sharp valuation declines.

COMEX gold futures contracts, we must remember, are not hard assets. Rather, they are a leveraged wager on the "sentiment direction" of these very same wagers, determined by the bettors' demand to enter or exit these wagers, NOT the demands on the metal itself. Such is the farce (or blessing if you are buying metal) of the current market method for price discovery for gold.

The article seemed at a loss to explain how an exit of paper gold positions might be quite natural as confidence wanes in paper assets in the wake of floundering stocks after a year of financial punishment in "non-tangible" assets. Again, a futures contract is not a tangible asset. It is not gold, it is just a highly structured gentleman's agreement with rules that are subject to change to favor the "house" as needed. The article said:
--------
"Gold players were left scratching their heads on the first trading session
of the year, as the euro was stronger Tuesday and equities much weaker, market
movements that typically would spur higher gold prices.
While dealers and analysts appeared to have no obvious explanation for the
move, most linked it to much weaker-than-expected U.S. manufacturing data....
""It seems like the New Year has brought us nothing but highly confusing
markets," said Kaplan. "One would have thought that the currencies would be
dominating the action. Today is an extreme aberration."
A variety of sellers were seen Tuesday, including the funds and the trade,
with a large cluster of stops taken out at $270.30, said dealers.
One trader said Tuesday's action suggests that while gold has been
following movements in the currencies lately, the dollar may not be a long-term
determinant of gold prices. "On a long-term basis, it may be nothing to hold a
hat on," he said."
---------

While the traders scratch their heads, here at USAGOLD we have for a long time offered a fresh perspective on the nature of these markets in helping to paint a picture of the road ahead. Today seems a good opportunity to repost this good articulation of thoughts that were offered here on a Friday evening my by good friend, MK. It was a fine encapsulation, and something you should consider passing along to your friends and family. Randy
*****
[BEGIN repost]
USAGOLD (12/15/2000; 9:05:45MT - usagold.com msg#: 43784)
A Note on the Nature of Gold Price Movements. . . .
Where does it say that gold has to react tit for tat to the crumbling dollar? Though gold is regarded as money; it is not used at the moment as currency. Whereas there is a direct relationship between the dollar and the euro in forex markets, there is no such arrangement between gold and the dollar. If gold should go up 1% would the the dollar go down 1%? Not likely, since such a thing has not happened except by pure accident since the switchover to pure fiat money in the early 1970s. Gold broke out in the 1970s when the cartel controlling its dollar price threw in the towel. Why did they throw in the towel? Because the cartel -- in those days known as the London Gold Pool (in which the United States and UK were the primary players) -- refused (or was unable) to supply gold to the DeGaulle led continental Europeans at $35.

Go back and look at the record of gold flows. You will see gold leaving the U.S. Treasury and winding up on the balance sheets of France, Holland, Germany, Italy, et al. Gold, by the way, that for most part remains on those balance sheets today despite the claims to the contrary by the financial press. The London Gold Pool finally gave up lest all the U.S. gold would have wound up in Europe. The cartel was broken. The U.S. then devalued the dollar first in 1971 -- under a Republican I might add -- and then again in 1973. Gold, set free from the Pool went to $200 by 1974, retreated under the strain of IMF and U.S. gold sales through 1976, then resumed its climb after that intervention failed as well (to hold the price between $100 and $150). The gold/dollar correction concluded in the late 1970s at prices quoted so many times I won't quote them again. Make no mistake about it though, the move in the 1970s was nothing more than a correction resulting from the pent up price pressures built up during the London Gold Pool days.

Sound familiar? Do these echoes of the past resonate now?
They should! Though the circumstances and instruments have changed, the effect has remained the same. Gold is being managed covertly now -- as circumstances allow. (Though this time around for a dual purpose, i.e. to protect the gold carry trade as well as the international reputation of the dollar.) In the 1960s gold was being managed overtly -- as circumstances allowed.

I continue to believe that buying gold at $270 today is the equivalent of buying it at $35 in the 1960s, because this cartel will be broken as well and it will be broken by relentless and constant physical demand. Should any in the international scheme of things break ranks -- the Gulf, Japan, Europe -- and begin to sell bonds for gold, that would hasten the push by physical and drive the cartel to the wall in short order. I doubt it will be made public should the move to gold occur; it will just be done.

All the comparisons we see between then and now, all the deja vu's (Energy problems. Worldwide currency turmoil. Money printing. Etc.) are not an accident, but the products of a repetition of the money mistakes of the past. As gold was the messenger needing to be controlled then for political reasons, so it is now (with a twist, i.e. the gold carry trade). The only question is when will the towel fly out of our opponents corner and into the middle of the ring. When it occurs, my belief is that the move will be explosive as it was in the last go around, and as you can see by my constant (and annoying) hinting, bear consequences alluded to here often by our friend, FOA.

What is astonishing to me in discussions with all sorts of people both in my public and private life, how many do not understand that economic cycles play out over a very long period of time. Equity market Bulls can last 10 to 15 years; so can equity market Bears. Gold market Bulls can last 10 to 15 years; so can gold market bears. In my view, the long term paper bull is now ending; the long term gold bull is now beginning.

Too often, we gold advocates labor for understanding using the analytical framework of our opponents. They tell us that this is reality. These are the relationships we should sanction as proofs, when in fact they have little to do with reality. For years, we had to endure the constant mantra from the financial press and the gold shorts that the central banks were on the verge of selling all their gold. It took us awhile to realize that it was the same institutions shorting gold that were telling these tales and they were doing it for a reason (e.g.,the preservation of their very expensive financial hides). That still goes on today.

In fact I caught another whiff of it this morning. Now we are being told that gold hasn't moved against the tanking dollar, therefore gold should be abandoned as a hedge against the potential for another major dollar devaluation. I say, "Absurd. Rubbish. Just what I would expect from a group so immersed in gold short positions that there may not be a way out."

Though there is no doubt that any devaluation in the dollar will affect the price of gold, there is nothing that says that that price movement would be in lock step. I see this morning that others are saying that the Bush administration will move to end the "strong dollar policy." If so, such a policy change will have enormous implications. It is tantamount to what we used to call devaluation.

My Christmas Message: Be patient. Keep an ear to the rail. Develop a philosophy and carry it with you through all your intellectual musings and wanderings. Rely on it much like an article of Faith. This will be your foundation and source of portfolio strength. Continue to acquire physical gold in an orderly fashion. It will be your saving grace.
[END of repost]
Boxman
(01/02/2001; 16:32:51 MDT - Msg ID: 44887)
Is this any way to start a millennium?
1) Stock market gets hammered -

http://aolsvc.news.aol.com/pf/businessnews/usmarket/a/USStockMarkets

2) National association of purchasing managers comes out with rotten numbers-See seventh paragraph -

<>

http://dailynews.yahoo.com/h/nm/20010102/bs/markets_stocks_dc_1140.html

3) Mideast sabre rattling - Barak to IDF: Prepare for war -

http://cgis.jpost.com/cgi-bin/LinkLog/linklog.cgi?link=www.jpost.com/Editions/2001/01/02/News/News.18684.html&title=Barak+to+IDF%3A+Prepare+for+war&source=frontpage

4)Gold price gets mugged at NY open (What's new?)- Darnest graph that I have seen in a while.

http://www.kitco.com/charts/livegold.html

5) Further drawdowns in natural gas inventories - I did find the first paragraph somewhat of an understatement.

http://qv3.com/policypete/policypete.htm

6) Manufacturing lowest in almost 10 years - The statement about the service sector (Boy, there's some high paying jobs) seems to be a blatant attempt to soft peddle this problem)

<<- U.S. manufacturing activity fell for the fifth straight month in December, reaching its lowest level in almost a decade, a new report by the National Association of Purchasing Management (NAPM) showed on Tuesday.>>

7)Oil prices surge into new year -

OPEC very likely to reduce production, and summer driving demand not far off -

http://news.bbc.co.uk/hi/english/business/newsid_1096000/1096916.stm

8) Bankruptcies abound. LTV just being the latest -

<said that it is considering filing voluntary Chapter 11 petitions tomorrow,
December 29, 2000 in federal court in Youngstown, Ohio. The decision whether
to file will be made by the LTV Board of Directors later today.>>

http://www.prnewswire.com/cgi-bin/liststory?516787^769

8)Refinery cuts back on production, due to high energy costs.-

Sorry, I couldn't find a link. It is on Downstreamers Forum.
http://pub38.ezboard.com/bdownstreamventures

This is not todays news, but I think we may see more and more of this in the months ahead.


<"We've cut back our runs at the refinery as a result of sky-high power bills," said a spokeswoman.

The company would not say how much it has limited its output at the refinery, which produces mostly for local usage. Industry sources said other refiners in Wyoming and Idaho were also cutting production due to high electricity costs, but company officials were not available for comment.>>

There are many things to occupy ones mind, (providing you lean to the doomer mentality, as I seem to be these days)
nuclear weapons in the Middle East, biological warnings from our government, corporate and personal debt. Oh well, I think this enough for one day.

Oh, did I mention that gold got raped at the NY open? Must have been because of all of the good news, globally.

PS: I slept better, and was more relaxed before Russia became a third world country, and the "Wall" came down.

PSS: I did hear some good news today, although it appears to be a rumor as of the moment, and that is that Saddam so Insane suffered a stroke. I hope that the part of his brain that stores the "launch those babies" order is fried.

Like someone here once said, Gold, get you some.

Mike



















escapethematrix
(01/02/2001; 16:41:45 MDT - Msg ID: 44888)
USA Today Blurb.........
Greetings and salutations to all posters and lurkers of the best Gold site on the entire Net........Many thanks to everybody for all the great posts, with a special thanks to FOA/Trailguide for sharing his monumental mental acumen with all of us.....Anyway, I nearly spewed out my coffee this morning as I read.......

GULF COUNTRIES TO CREATE COMMON CURRENCY

Leaders of six oil-rich states Sunday approved steps to issue a unified currency. The move is part of a plan by Saudi Arabia, Kuwait, Oman, Bahrain and the United Arab Emirates for a regional currency and a unified trade zone.
It is designed to help speed up free-trade talks with the regions biggest trading partner, the European Union. Currencies of all the countries, with the exception of Kuwait, are pegged to the U.S. Dollar.

As the old song goes...."Signs, signs, everywhere are signs"........I thought I had read somewhere that top EU officials were in the Mid-East over the weekend....2001 is off to a Golden start....
Hi-Hat
(01/02/2001; 16:50:26 MDT - Msg ID: 44889)
escapethematrix
Serious is, as Serious does.
Boxman
(01/02/2001; 16:57:33 MDT - Msg ID: 44890)
See #8 in my last post#44887
http://money.iwon.com/jsp/nw/nwdt_rt.jsp?section=news≠ws_id=reu-n02633493&feed=reu&date=20010102&cat=INDUSTRY That didn't take long. There are many energy sucking giants on this little planet, but by years end, me thinks that there will be less of them.

<>

Mike
Boxman
(01/02/2001; 17:08:50 MDT - Msg ID: 44891)
Funny Money - how do they pay their taxes?
http://www.foxnews.com/etcetera/101600/currency.smlGreat stuff.

<>

Gotta go, my beloved KY Wildcats are tipping it off against the Louisville Cardinals.

Mike
Pandagold
(01/02/2001; 17:16:27 MDT - Msg ID: 44892)
Good or Bad Omen?
Jon Kaplan (the cockeyed gold optimist of "Goldmining Outlook")has finally thrown in the towel and sold all his gold shares - so he declares today in his Kaplan Corner.

He was claiming we should buy all we can at these 'knock-down' prices only a few weeks ago.

I never thought I would see the day. He would NEVER accept that gold is being manipulated - we had many verbal 'fights' on the subject.
YGM
(01/02/2001; 17:16:55 MDT - Msg ID: 44893)
escapethematrix.......Here is the typical Islamic Attitude to Banks & Gold
ALL.....please read at least, second last paragraph.....SECOND SPEAKER

SIDI UMAR IBRAHIM VADILLO

We are going to start with some Qur'an (from the sura of al--Bakarah) about this matter of riba' (usury):


In the Name of Allah, The Merciful, The Conpasionate:

"Those who devour usury will not arise except as he arises whom Satan has confounded with his touch; this is because they say trade is only like usury. But Allah has permitted trade and forbidden usury.

Those who after receiving admonition from their Lord desist, shall be pardoned for the past; their case is for Allah (to judge). But those who repeat (the offence) are Companions of the Fire; they will abide therein.

Allah will deprive usury of all blessing, but will give increase for deeds of sadaqa: for He loves not creatures ungrateful and bad.

Those who believe and do deeds of goodness and establish prayer and pay the zakat will have their reward with their Lord:

there shall be no fear on them nor shall they sorrow.

O you who believe! Fear Allah and give up what remains of your demand for usury, if you are indeed believers.

If you do not, take notice of war from Allah and His Messenger:

But if you turn back you shall have your capital sums: deal not unjustly and you shall not be dealt with unjustly."

QURAN: 2, 275-279.

I would like to start with a definitive affirmation: only the sufi can break with usury. I say this because only the sufi truly understands that whatever stops him from reaching his Lord must be an illusion. Whatever stops me from getting rid of usury is a self-created illusion. The sufi does not waste time fighting with this illusion, like the economists do -including the so-called "islamic economists"-, he simply ignores it.

Kufr is a system that weakens people. The economical system is a disaster for the people, internally and externally. Our job is not to fight the economical system but to get out of it before its disaster falls on top of us. By getting out of it you are also actively helping in its collapse. In order to do this we have to look at things in a different way: think differently and behave differently. In this, the sufi is the opposite of the economic man. The economic man -the man who lives within the patterns given by the economical system- is trained to think as the absolute observer (subject) who looks out at the world (object). This is the foundation of traditional western philosophy in which modern sciences and economics are based. Within this basis, the economical man thinks that usury is an economical problem with some economical answers. He may question, how can I fight the problem of usury? In this way of questioning it is assumed that usury is something over there, while the person questioning is in plastic bubble isolated from it, but this is not how things are. The questioner is actively participating in usury, what he may consider a problem, and yet, he is part of the problem. He is the problem. Without this recognition you will be fighting your own illusion.

This recognition has an explanation in the knowledge of Ihsan by which we can understand that we are not the observers of the world, we are not the measurers of the world but we are being observed. Allah is observing us. He is the Measurer, not us. Only on this basis can we understand our responsibility, rather than escape from it. Only thus we can become masters of our condition, rather than slaves of our condition.

We understand that nothing stops us from getting rid of usurious practice except ourselves. Then the question "How to fight usury?" should be replaced by "How should we change our behaviour so that we do not need usury anymore?" If we think in this way we are in a better position to suggest proper answers. Nowadays our own behaviour demands the existence of the banks and their monetary system. Therefore if we get rid of the usurious banks but continue to behave in the same way, we will end up again creating a bank. Nothing will change if we call it an "islamic bank". We have to change our behaviour. To do that we have to think differently. And to think differently we have to deny that the main characteristic of man is an economic characteristic. We are not economic units.

We deny what Islam denies. We deny the usurious practices of the modern economy and we deny the way of thinking they call Economics. We deny the banking system and its system of paper-money. We deny the administrative nature of the state.

Paper-money was created by the banks and was first made legal currency only about 200 years ago. Paper-money is not money under Islamic Law. The first condition for any merchandise to be acepted as money is that it has to be commonly accepted. Imam Malik, peace be upon him, defined money in this way:

money is any merchandise commonly accepted as a medium of exchange. Money can be any merchandise as long as it is commonly accepted. When the people were free they (almost) always chose gold and silver. On the other hand the value of paper-money is based on its being imposed on its people by law. Thus you are forced to use dollars in the United States, pesetas in Spain, so-called 'dirhams' in Marocco, francs in France, etc. Many people have already shown that this system of money is a form of cheating.

The modern state is not a structure acceptable in Islam. Islam is based on government by the Law of Allah. The Law of Allah guarantees the right to private ownership of wealth. The state is based on taxation (of trade and wealth) and administration. Economics is the science of the administration of the state. On the other hand, there are no state-taxes in Islam for the free man. Therefore, there is no administration. There is no state. The role of Muslim government is not administration. The only tax in Islam is the zakat, which is collected and distributed in 24 hours among already determined categories of people. Zakat cannot be confused with the state-taxation. The modern state is based on the constitution of the French Revolution, which guarantees the power to impose paper-money (debt-money) and tax its people. Therefore there is no such a thing as 'Islamic state' there is only Islamic Government. It should not be forgotten that in Europe where the modern state was born, many europeans have died attempting to destroy this form of tyranny.

We declare the end of economics based in two affirmations:

commerce without usury, and government without state.

We want to finish with the economics-religion. We have been told that you cannot break this system. But I can tell you that to break this system is easy because is based on illusion. The difficulty is to remain any longer in this system. We have to look at things differently. Let us move out of the economic illusion and look at how things were understood before, within our Islamic tradition.

We go to the "Muwatta" of Imam Malik (the first formulation of Islamic Law) and we look up the book of economics (what some people call iqtisad) and we find that there is not such a thing. What we find is the book of commercial transaction and the book of qirad. This is in itself a discovery. In Islamic Law, justice is to be pursued in the transaction itself. This is ignored by economics that looks at the efficiency of trade as a whole. We say that Justice is the best guarantee of efficiency. We say: "Truth is our Protection". Hasbunallahu wa ni'mal wakil (Allah is enough for me and He is the best of guides). While the economists say: "If it functions efficiently, it is good". The book of qirad introduces us to a complete new landscape that will help us to reconstruct the basis of what became the most advanced and sophisticated formulation of trade throughout the world without usury.

The qirad contract was commonly used in the early times. In its Islamic formulation it transformed, and almost revolutionized trade not only in Muslim lands but also outside it. The formulation of qirad allowed the society to invest its resources, in the context of Equity, rather than being in the ignorance of usurious contracts. Qirad and partnership (they are the two basic formulations of business contract) made finance accesible to everybody without the necessity of an institution of finance (banks or similar). The qirad is not a type of banking practice as it is suggested by 'islamic banking'. Qirad and banking are fundamentally different to the extend that one replace each other. They cannot co-exist. Banking needs a particular usurious environment, namely the imposition of paper-money and kafir law to protect it against popular fury. Qirad needs free people who want justice. Banking, including 'islamic banking', is based on a lie: usury is only like trade. Qirad is based in the practice in the sunna of the Prophet, peace be upon him. Banking institutionalises investment through the bank. In qirad, investment is carried out organically -everybody with everybody- without any central institution. Now we will study the nature of the business contracts in Islamic Law so that we will be able to actively suggest ways of getting out of the banking trap.

Qirad and partnership are guaranteed protection for tall the parties in the contract and they cannot be transformed into banking. The banks hold the money like a monopoly (by means of the permanent devaluation of paper-money, created by them!) and then they distribute it, not to the best business but to the best collateral. It does not matter if your business project is a complete disaster; if you have collateral they will lend you their money. Qirad is completely different because only if you are honest and your business is good you will have investors, but the stipulation of any collateral is null in this kind of contract. With the banks their money is directed to the people who have enough level of wealth. With qirad, investment follows the natural tendency of the honesty and the good business of the community. Banking imposes, through its monopoly of paper-money, their own conditions of self-protection.

The qirad is a protection for agents as well as for investors. It is a protection for the agent because in a qirad contract the agent will share according to the results of the business. In the usurious contract the agent is tied to a fixed interest before he knows the results of the business. Thus the bank is not investing money but renting money, although money cannot be rented (like a house or a car). In qirad, if the business of the agent has difficulties the investors will want to help him rather than expropriate him as the banks do. The qirad also is a protection for the investor because he knows what he is investing in and it is guaranteed that the totality of the results of the business will be shared. In the usurious system the investor has two choices: either 'rents' his money at the fixed interest offered by the banks and other financial institutions or he has to 'invest' his money at a 'variable interest' offered by the corrupt system of shares (Stock Exchange). The shares guarantee that you cannot decide on 'your' business -unless you are a majority owner-, therefore you do not know what you are investing in, neither do you know who is effectively going to be running the business. Through this form of 'investment' the majority owners can reinvest your own profit without your consultation, in whatever way they like. What is left for you is called dividends, but this is really like interest. We should recall this to the criminals of the 'islamic bank'. The contract of partnership guarantees the ownership of all the co-owners rather than only those who hold the majority of the shares. 'Majority ownership' of the shares is irrelevant in the contract of partnership. All the investors are equally protected.

Banking can only happen where there is lack of trust. Qirad can only happen in a community where trust is exalted, because the contract of qirad itself calls for this trust. In effect the qirad gathers people while the banks divide people. By the progressive implementation of Islamic Law we gain the trust that we have lost, which is what we need to overcome the banking trap. Every time we behave within the sunna of the Prophet, peace be upon him, Allah makes it easier for us, in the inward and in the outward. Thus we realise that we are free in Allah. To implement qirad and partnership, it is in our hands by Allah. Whoever denies this or says that this is not possible, is worshipping other-than-Allah, he is trapped in his own illusion. He is a slave and he is paralysed for fear of his own illusion. This fear and submission to usurious behaviour go together.

We are calling for a free man who is free to behave within our Law. We will create a differently shaped society. The society where the qirad was normal was a different society without banks or necessity of banks. It was a society with agents, not banks but agents. The agents brought the people together, without themselves forming an institution. They brought this man with this other man to make a business. The agent is like the old woman in the village who says this young man can marry this young woman and so arranges marriages. Without her some marriages would never have happened. The agents are there in the middle of the society, forming an organic part of it, bringing people they know together and not necessarily for money. The wealth of the agent is his honesty and good reputation. He competes in honesty with the others. The best of them is the one who is more honest, therefore more people will trust him with their wealth. Then he does not need to go to the people but people come to him.

We want to produce agents and put them back in the society. Their very first political role is to bring trust again to the people in such a way that is made clear that we do not need the banks. How can we produce these agents? We have to educate them in the Law of Trade, which is very simple, although these people of 'islamic economics' want to make it complicated. We strongly denounce this thing called "islamic economics" as a form of confusing people, and we denounce their product the so-called "islamic bank" as an attempt to lure some Muslims into the banking system, while destroying their communities. The agent thus takes on a political role rather than an economical role. He does not regard himself as a business or economical unit, but rather like a doctor who is curing the sickness of a society. His job is not to make a business. His business is to give a remedy to the usurious sickness by using our halal forms of business and not their usurious forms. Living and thinking like an economical man is a sickness in itself, usury is its evident effect.

Knowledge of Allah is what prevents the agent from being a robot like the 'economic man'. This is a time where there are people, some of them Muslims, who regard themselves as being unemployed. 'Unemployment or employment' is economic conditioning. The Muslim does not regard himself within these categories. We are above that because we have knowledge. The sufis use this metaphor to explain knowledge; "Man is like an ant who is so close to the carpet that he cannot see the design. Knowlege is elevation from the carpet, and the carpet is dunya. The person who is 'unemployed/employed' is spiritually so close to the carpet that either he finds himself totally useless or in need of the salary in some business of the usurious system. All business today are usurious on their bases because they all are forced to deal with usurious paper-money, which is banking-money. He knows that the bank for instance is no good, but he thinks he has no better choice. He works for the state, although he knows the state is criminal. Even the businessman profiting within the usurious frame is a slave. All these people have failed to understand the nature of dunya and they are slaves of it. The way out lies in Islam. We need the most pure Islam.

The opposite of the slave-economic man is the man who, trusting Allah, has become free from his own illusion. By giving up dunya he has gained all of dunya. The sufi says: "If you run after dunya, dunya runs in front of you. But if you turn your face and run to Allah, dunya will run after you". This is the law of existence, but the laws of economics are not the laws of existence, they are only madness. If you understand this then you can understand your role within existence. Existence has no reality in itself, it is only a means for you to recognise Allah.

Then, how can you change your perspective? The sufi says:

by generosity and by breaking your habits (changing, travelling). The man who knows is not limited by what is his or what he knows. He embraces all property and all knowledge. If he wants to make a business, he asks the means from the people who has them, just as he takes the knowledge from the people who knows. They are waiting for him. And if he is of the best, the people will go to him. The Messenger of Allah, peace be upon him, said that if you really knew, you would be like the birds who go with their stomachs empty in the morning and come back with them full in the evening. This knowledge makes people free to get out and destroy the usurious system.

The agent who is servant to the community has all the community available to him. He can implement qirad and partnership while cleaning the market of usurious practice. He finds the means from the people who have it and knowledge from the people who know. These people are waiting to use what they have. The agent who wants to make a business relating to shoes, for instance, will naturally will find finance more likely from the people who can assess better if the effort and the investment is worthy or not. They may be able to suggest even better ways to go about it. Thus the people of the same profession get bound together spontaneously when there are no banks. This is how the original guilds come to existence. The spontaneous creation of guilds and other types of association is part of the new landscape of the market that does not need usury.

Abandoning usury is the command of Allah to the believers. And it is in our hands to abandon it progressively. First, we need to gather the community together. We can do that by educating agents who will in turn glue the community together by the means of generous social behaviour and increasing our personal relations within Islamic business contracts. This first stage towards the Islamic Market we call the Qirad Market. As soon as we, the community, have grown in loyalty and trust among each other and enough wealth is circulating among ourselves, then we can move to the second stage.

The second stage is what we call the White Market where people have decided to use a different medium of exchange-other than paper-money-. It is like a Black Market except with clean money. Probably we will mint and put in circulation gold and silver coins for the exchange. We sell the paper-money and buy gold and we put the gold in our market. It is in our hands to substitute more and more paper-money for gold and silver. We can use gold and silver or anything else. This flexibility will impede the kafir from manipulating our market by forcing the prices of gold or silver up and down, because we can change from one medium of exchange to any other according to our own convenience as long as we avoid paper-money. We can also stop paying any tax to the criminal state, because at that point with our mutual trust we can hide our transaction by the simply way of not reporting it to the state. The White Market is defined as the market where we are able to have our own money (real money) and where we can avoid state taxation.

Within this situation we can gain enough strength for our amir to declare and carry out the punishment according to the Islamic Law to the people who continue cheating, while before we can only exclude them from our market. At this point we can declare an Islamic Market where no form of usury will be allowed.

If we do not abandon all usurious practice, Allah has warned us of war from Him and His Messenger, peace be upon him. This reminds us of the second part of our job. We have to construct an Islamic Market and actively we have to destroy the usurious system. The usurious system has became a system of power-control ruled by the jews over the nation states. It is enormously complex but it is enormously fragile. It is sustained in the illusion of its power. The moment people realise that the monster is really nothing, it will be destroyed. Our job here is to break the idols: burn the paper-money or print it in enormous amounts, introduce computer virus in the banking nexus, sabotage their information records, boost the figures, erase the debts, etc. Money is today electronic impulses, what can be more fragile than that? These will inevitably become the practice of the future.

It is, by Allah, in the hands of the Muslims. The Jihad of our time is to abolish usury. This is what we, the Murabitun, are doing. This is the easy way and the path of success. Success belongs to Allah.

As-Salaam-Alaikum.



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

Trail Guide
(01/02/2001; 17:27:46 MDT - Msg ID: 44894)
one needed comment
escapethematrix (1/2/2001; 16:41:45MT - usagold.com msg#: 44888)

Hello escapethematrix, thank you and welcome.

I was just sent today's postings, saw your piece and am very happy you found this item. It's good that this is public now. It is my intent to engage the direction of your post along with using much of the groundwork laid by MK's and Randy's solid efforts. Truly, these men have seen through the fog for some long time. This year that fog should clear for all to see. If only I had more time and energy. But, it shall be done.

A trail walk is coming, oh yes, it's coming! (smile)

TrailGuide
YGM
(01/02/2001; 17:28:21 MDT - Msg ID: 44895)
Link to my previous post.....
http://www.murabitun.org/documents/economics/beyond.htmlIf Islamic Nations recognize EURO over US dollar you can bet they expect much greater Physical Gold backing to be given to the EURO.....Gold/EUROs' for OIL? If their so called Jihad against Usury were to escalate full swing it would be just GOLD for OIL....IMHO....YGM
Randy (@ The Tower)
(01/02/2001; 17:39:02 MDT - Msg ID: 44896)
Happy New-Currency Year! Fed adds $10.5 billion to banking system
In two open market operations today, the Federal Reserve provided a temporary injection of over ten billion dollars to the nation's banking system.

Beginning with 27-day repurchase agreements, the Fed added an even three billion dollars, only to be followed shortly thereafter by a $7.505 billion addition via 3-day repos.

At the time, the fed funds market was fetching 6-11/16 percent, higher than the Fed's target by 3/16ths.
TheStranger
(01/02/2001; 17:42:27 MDT - Msg ID: 44897)
Inflation Update
I found the article below in the New York Times. How much longer do you think Americans will continue to believe this tripe about inflation not making a comeback?

January 2, 2001
What Keeps a Bottom Line Healthy? Weight Loss
By GREG WINTER



Perhaps shoppers did not notice as they scurried through supermarkets filling carts with potato chips and nachos for the holiday party, but their loads may have been a little lighter than in the past.

In an effort to offset rising production costs, Frito-Lay, the world's largest maker of salty snack foods, has begun putting fewer chips in bags of Fritos, Chee-tos and other well-known brands, while keeping the price the same.

A supermarket-size sack of Lay's potato chips has lost an ounce in the last month, or about 7.5 percent of its previous weight, but still costs $2.99. A 99-cent box of Cracker Jack has shed about 6.7 percent of its weight. And a $3.29 bag of Doritos has dropped almost 7 percent of its weight.

The packages themselves have also shrunk, ever so slightly, so they do not seem less full when customers grab them off the rack.

"It's a rip-off," said Jan Buttram, a playwright out shopping for a Christmas party at a Midtown Manhattan supermarket. "If I knew they were putting less in, I wouldn't buy it."

Industry insiders have a name for the practice: the weight-out. It is a subtle way of earning more from everyday products without scaring off price-conscious shoppers, and it is quite legal as long as the package accurately describes what is inside.

Makers of candy, coffee and tuna fish have all tried weight-outs, with varying success. But the practice had been relatively scarce since the mid-1990's, largely because the cost of raw materials was low enough that manufacturers could afford to forgo price increases and still preserve the bottom line.

Now, however, the cost of production is rising � expenses like energy, packaging, even ink. So weight-outs have slowly begun to resurface as a means of maintaining corporate profits without enraging customers, who are often none the wiser.

"We haven't encountered an environment like this in a long time," said Emanuel Goldman, a food and beverage analyst with ING Barings. "There's more resistance to raising prices than in the past, so you're going to get a lot more of these weight-outs."

For instance, while holding prices steady, the Perrier Group, a subsidiary of Nestl�, has just completed a switch to five gallons from six for home deliveries of Poland Spring bottled water, a swap it plans for water-cooler jugs of its Calistoga brand as well.

In September, Procter & Gamble scaled back the number of disposable diapers in its Luvs and Pampers packages by an average of 13 percent, while cutting prices only 7 percent. Company officials said the change, which, for example, comes out to eight fewer diapers in a jumbo pack that previously had 56, left parents with just enough diapers to get through the week, while providing Procter a price increase for each diaper sold.

Kimberly-Clark made a similar change to its Huggies diapers almost immediately after Procter & Gamble acted, prompting makers of many generic diapers to do the same.

"Everyone in the diaper industry is downsizing to the same count," said Tami Jones, a Procter spokeswoman.

With consumers increasingly resistant to paying more at the supermarket, conditioned by years of low inflation to expect stable prices on everyday items, some experts predict that other consumer product companies will soon follow suit.


Randy (@ The Tower)
(01/02/2001; 17:54:32 MDT - Msg ID: 44898)
For those who want to see the single Gulf currency news in print...
http://dailynews.yahoo.com/h/ap/20001230/wl/gulf_summit_1.htmlVist the URL given above

HEADLINE: Six Gulf Nations Hold Summit . . . Saturday, 30Dec00

MANAMA, Bahrain (AP) - Leaders of six Persian Gulf nations debated plans for a single currency Saturday during an annual summit that also was expected to focus on possible tariff and defense pacts.
+
The heads of the Gulf Cooperation Council states - Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates - are trying to unify their currencies by 2003, two years earlier than originally planned.
Sierra Madre
(01/02/2001; 18:08:12 MDT - Msg ID: 44899)
YGM....your post with gloomy outlook for 2010
All is not lost. Your outlook is based, it seems to me, on a prolongation of present trends. But those trends are going to change.

The best example of the future is Russia. The strictness of the USSR was followed by..corruption on a massive scale.

This is what awaits the world as a consequence of the debt orgy of the 90s.

The U.S. is a very highly controlled society (where the rulers want control) because the strong dollar permits the rulers to pay their enforcers.

That will come to an end when everyday inflation hits, with unemployment and the debt tsunami which will swamp the people. Everything from a parking ticket up will be "negotiable" with a "direct tax payment" to the enforcer. Especially if you have a gold or silver coin to offer.

That what you visualize is desired by the rulers, yes. But they will not be able to enforce such a dehumanization.

Corruption will be the oil that permits life to go on under dehumanizing legislation.
Randy (@ The Tower)
(01/02/2001; 18:15:27 MDT - Msg ID: 44900)
Good to see you, Trail Guide!
"...using much of the groundwork laid by MK's and Randy's solid efforts."

I echo your thoughts on the yeoman's work Michael has done on many fronts--largely unsung--on behalf of educating gold owners everywhere. And 'thank you' for the nod toward my own humble efforts at contribution toward fostering appropriate public gold and monetary awareness; but I assure you, compared to the foundation laid by the likes of you and ANOTHER, I am but a babe in the woods. Thank you again for the past efforts involved in sharing your unique insights and wisdom, and for selecting USAGOLD as your "media outlet".

Randy
Pandagold
(01/02/2001; 18:27:57 MDT - Msg ID: 44901)
YGM - The Message

Just before Christmas I posted an item which, for the sharp eyed, would have given them the strongest clue as to where the world's real problems lie.

It was a young Jewish man (so no anti-semitism here, anti-Zionism, perhaps) who was so incensed at the way His Father's house was being used for usury and things allied, and where money was being worshipped instead of His Father, that he entered the temple and drove out those that would defile the holy place.

Before this, the establishment had been prepared to tolerate His preachings to the masses. But TWO WEEKS after the physical action of actually interfering with their
money worshiping, lending, and wheeling and dealing, He was put to death.

Did His death end it? Not a bit. It is still the basic cause
of the world's problems. If you don't see it - you have a severe eye problem. As He said, "there are none so blind as those with eyes yet cannot see".



YGM
(01/02/2001; 18:49:55 MDT - Msg ID: 44902)
Sierra & Panda...
Sierra, I also hope dearly for trends to change, but as Panda has reminded us...Little has changed since Christ the Man walked among us...The Money Mongers can change the Rules, the Country to exploit and the methods used but their "Greed" still reins supreme....The battle for truth and light will go on and on....And the Greed is like a Macabre Energizer Bunny with unlimited Fiat Air Power.....

Go Gold, Go GATA, Go Physical and bury it deep!....YGM
Cavan Man
(01/02/2001; 19:23:45 MDT - Msg ID: 44903)
"the Stranger"
Thanks for helping me see thru the oily fog yesterday.

I know of a prominent pet food manufacturer that made a transition from a $10 lb bag to 8# at the same price. Sounds like 20% to me. Also, went shopping for some winter coats for next season and something dawned on me; the prices we pay for many, many garments are relatively stable; marked up and marked down as the retail game goes round and round. However, especially in the realm of outerwear, materials employed at these price points are marginal IMHO. The better made coats, hats, mittens etc are hard to find outside of a specialty shop where the prices are typically much higher.
Buena Fe
(01/02/2001; 20:57:15 MDT - Msg ID: 44904)
escapethematrix (1/2/2001; 16:41:45MT - usagold.com msg#: 44888)
Welcome...........great handle!.........great find!
Thanks for sharing.
Black Blade
(01/02/2001; 22:54:24 MDT - Msg ID: 44905)
RE: Knallgold and Harmony


Harmony (HGMCY) inherited a hedge book when they purchased Randfontein. They have since unwound that position. The recent purchases from AngloGold (AU) look to have come off without a hitch. You are apparently referring to some speculation by a couple of minor gold enthusiasts named David McKay & Tim Wood who occasionally write articles about mining companies for the web site MiningWeb.com. They are frequently off the mark. Harmony's main selling point is that they are unhedged. If they were to change that philosophy, then they would lose the loyalty of virtually every one of their shareholders. The shareholders would rather they not purchase any additional properties if there were a requirement to hedge. Otherwise, why not purchase shares of the hedge-fund AngloGold with its low PE and nearly 9.3% dividend yield? Besides, they are doing quite well with good cash flow, excellent favorable rand-USD exchange rate, a pile of cash on hand, and low operating costs. If they were to hedge, then I and many others would drop the shares immediately.
Black Blade
(01/02/2001; 23:10:39 MDT - Msg ID: 44906)
RE: Journeyman and Castellini Interview

I saw that interview. He was quite right about most of that. Matt Simmons of Simmons & Company International has said much the same except that there is the possibility of many dying from the extreme temperatures. Right now, the only thing that can stop that scenario is warmer temperatures. Forecasts of warmer temperatures resulted in a drop of over a dollar on NG prices today. If we make OK this winter, then all I can say is that we dodged a bullet and are only delaying the inevitable. In the CNBC interview, Mr. Castellini said that increased drilling would occur now. OOPS! Sorry Charlie, but where are the NG producers going to get the necessary drilling rigs? Nabors Industries (NBR) is scavenging the junkyards for bits and pieces of old drill rigs so they can slap together something resembling a drill rig. The drill rig manufacturers went outta business years ago when the price of petroleum cratered. They went tits up. And how about experienced drill crews? They aren't many left. They moved on to more stable careers. The companies don't pay squat for drill crews. They have been reduced to recruiting crews from the ranks of recently released felons. If not this year, then for certain next year looks like quite an adventure. Another reason for the shortfall � the companies that require NG as a raw material can't stop production indefinitely. Also, what happens if summer heat has people firing up the AC? The power plants will be burning NG all summer long, and more NG power plants will be coming on line.

- Black Blade


Old Yeller
(01/02/2001; 23:25:08 MDT - Msg ID: 44907)
Bill HR4541
Good evening,all.

Tumultous day,quite a start to the new "trading"year.

I was quite interested/concerned about Bill HR4541,the commodity futures modernization act of 2000.It seems to have dropped off the radar screen of late.

If anyone is aware of any new developments,I would appreciate the update.

Mr Gresham
(01/02/2001; 23:32:30 MDT - Msg ID: 44908)
"The Day the NASDAQ Died"
http://www.itulip.com/NASDAQdied.htm"So bye-bye to my piece of the pie
I poured my paycheck into Datek
Now my cash account's dry

...
Did you buy stocks you never heard of?
Q COM at 150 or above?
'Cos your plumber told you so
Now do you believe in Home Depot?
Can Wal-Mart save your portfolio?
And can you teach me what's a P/E ratio? ..."

Good work, Sean Brady and Tom Kearney! Parody may not be the highest form of art, but my DNA molecules think copying is just a fine idea!

Black Blade
(01/02/2001; 23:33:05 MDT - Msg ID: 44909)
NG Prices Down on Weather Forecasts
By Gloria Gonzalez, BridgeNews

New York--Jan. 2--NYMEX Feb Henry Hub natural gas futures ended down $1.411, or 14.43%, at $8.364 per MMBtu amid forecasts for warmer weather in the Midwest beginning this week and continuing into the middle of January. Market observers attributed the weakness to warming forecasts from both the National Weather Service and private forecasters. "It's just strictly a weather play," said Salomon Smith Barney analyst Kyle Cooper. Temperatures will be cooler than usual in the southeastern states while a large part of the northern and central Plains and Midwest turns warmer than usual, according to the latest 6- to 10-day weather forecast period from the National Weather Service. Welcome relief to one of the coldest Decembers on record will come to the Midwest Jan. 9-15, according to the NWS 8- to 14-day outlook. Temperatures will be warmer than usual from Minnesota, far eastern South Dakota, extreme eastern Nebraska and far northeastern Kansas through Michigan, Indiana, Kentucky and northern Tennessee to New England, New York state, New Jersey, Delaware and the majority of Virginia. Cooler than usual temperatures will occur from west Texas, the Oklahoma Panhandle and extreme southern Colorado through Arizona and far southern Nevada to central and southern California. The remainder of the nation will experience near normal temperatures.

OUTLOOK:

Players will continue to monitor the weather reports for any change to the forecasts for moderating temperatures. "It's going to be very sensitive to the weather forecasts for the next week," one broker said. "With all the demand that we've lost, with any decrease in electric generation demand, you're going to have some gas looking for a home." Brokers indicated that the market should see a rebound from Tuesday's sharp sell-off, particularly with the overall fundamental outlook still supportive. "I can't believe this market's going to continue to move down," another broker said. "I see no fundamental shift in this market whatsoever." The broker added that he expected the market to consolidate in the $8 to $10 range, noting that despite a brief break above the $10 mark last week, it still represented strong resistance. Meanwhile, the American Gas Association is expected to report that U.S. natural gas storage levels decreased by about 185 to 205 billion cubic feet although estimates as low as 130 bcf and as high as 230 bcf have circulated in the market, according to a BridgeNews survey of brokers and analysts. The AGA report will be released after 1400 ET Wednesday. Market sources indicated a number toward the lower end of the range should be fairly neutral while a number in the 200s could support another strong rally. "I think the AGAs won't hurt, but I think the market will go up anyway," the broker said. "I don't think we need the report, but I think it will confirm what we already know."
Black Blade
(01/03/2001; 00:56:37 MDT - Msg ID: 44910)
US NG Map with NG Prices!
http://abcnews.go.com/sections/business/DailyNews/wnt010102_naturalgas.html
For NG prices, follow the link above. First read the NG story. Then click where it says in detail at the bottom of the page, a map of the US will pop up, then click on your state to find out how much more you're likely to spend on NG this winter. I think it's a bit low on the prices in some areas, but then hope springs eternal.
View Yesterday's Discussion.

Black Blade
(01/03/2001; 01:08:46 MDT - Msg ID: 44911)
USD Growing Weaker!
http://www.mrci.com/qpnight.htmEuro is climbing again � up +$0.15 at $95.33, and USD index down -0.16 at 108.48. Would be nice to see some follow through on gold, but we may have to wait until the current Potomac Gangsters vacate the White House. Also, if the bright lights are pointed in the direction of those cockroaches, maybe we will see what has happened behind the scenes as the new Gangsters crack open the ledgers. Gonna get fun after January 20th!
Mr Gresham
(01/03/2001; 01:10:01 MDT - Msg ID: 44912)
TBTF, and more
http://csf.colorado.edu/longwaves/2001/msg00000.htmlThis is a fine, well-written essay on some of the excesses and malformed developments in US financial structures now...
Black Blade
(01/03/2001; 01:12:43 MDT - Msg ID: 44913)
U.S. to Repay Millions to Exxon, Marathon
http://dailynews.yahoo.com/h/nm/20001229/bs/lawsuit_outerbanks_dc_1.html
NEW YORK (Reuters) - The U.S. government has been ordered to reimburse Exxon Mobil Corp. (NYSE:XOM) and Marathon Oil (NYSE:MRO) $78 million each for 19-year-old drilling rights they were denied because of an environmental protection law, lawyers said Friday. The U.S. Court of Appeals in Washington, D.C. on Thursday also ruled that the Department of Interior (DOI) is liable for interest payments, said Allan Ripp, attorney with Sidley and Austin who represented the companies. In 1981, Mobil Corp., and Marathon each paid the Department of Interior (DOI) $78.2 million for drilling rights off North Carolina's barrier islands, the Outer Banks. But in 1990, Congress passed the Outer Banks Protection Act which forbade drilling where the companies had paid for the rights. The DOI will pay Mobil which merged with Exxon in November 1999, and Marathon in January next year, Ripp said.

Black Blade: God forbid we become less dependent on foreign oil!

Black Blade
(01/03/2001; 01:15:42 MDT - Msg ID: 44914)
Spot Price NG
http://www.piwpubs.com/gasprice.shtmlMost areas of the US have much higher NG prices than the quoted NYMEX contract prices.
Mr Gresham
(01/03/2001; 01:17:29 MDT - Msg ID: 44915)
Mr Moto's Money Report
http://www.piraz.com/wmre.htm"All the money got nowhere to go..."

-----The Beatles


Black Blade
(01/03/2001; 01:25:25 MDT - Msg ID: 44916)
Gold shares climb as prices fall
http://www2.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&dist=yhoo&guid=%7B0A46818C%2DF0B8%2D4551%2DADE6%2D3D589FC64365%7D
By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 4:15 PM ET Jan 2, 2001

NEW YORK (CBS.MW) -- Shares of gold companies closed higher Tuesday, following three days of declines, lifted by a weakness in the stock market. Over the last nine months, "the gold index has tended to do very well on severe down days on Nasdaq," said Chad Williams, an analyst at TD Securities, who's based in Toronto.
Fundamentally, investors are discounting a flow of funds out of the U.S., he said, which will eventually result in a lower U.S. dollar, implying a later rise in gold prices. "Investors are betting on higher gold prices in the next few months or so," he said. In the equities market, the CBOE Gold Index (GOX) rose by 2.1 percent to 30.66 and the Philadelphia Gold and Silver Index (XAU) climbed by 0.7 percent to 51.78. Individually, shares of Newmont Mining (NEM) added 88 cents to close at $17.94 and shares of Agnico-Eagle Mines (AEM) gained 38 cents to $6.38.

In other related news, Freeport McMoran Copper and Gold (FCX) said fourth-quarter operating results at its principal mining unit, PT Freeport Indonesia (PT-FT), will top previous estimates because of improved ore grades. Q4 output is expected to top 500 million pounds of copper and 875,000 ounces of gold. Shares of Freeport rose to an intraday high at $9, but closed at $8.31, down 25 cents. The company also announced that PT-FT resumed normal mining operations at its Grasberg pit mine. The unit had been operating at limited production over the last eight months as the government conducted a study related to environmental issues.

Gold futures prices fall

Gold futures prices fell, weighed down by weak demand for the precious metal over the holiday season. On the Commodities Exchange division of the New York Mercantile Exchange, February gold fell $3.60 to close at $270 an ounce after dropping to its lowest level in five weeks. March silver shed 4 cents to $4.595 an ounce. Physical demand and sales over the holiday season, especially out of India, were "relatively disappointing for precious metals prices," said Ross Norman, director at TheBullionDesk.com in London. Over on the supply end, Comex gold warehouse stocks were down 83,055 ounces to 1,701,224 ounces as of late Friday, and silver stocks rose 7,631 ounces to 93,983,167 ounces. Meanwhile, March palladium climbed $14.05 to $968.50 an ounce, while April platinum rose 80 cents to $608.90 an ounce. In other metals news, March copper slipped 3.15 cents to 81.15 an ounce. Tuesday morning's NAPM report revealed a slowdown in manufacturing, an indication that the need for copper in the industry may begin to fall Early Tuesday, London Metals Exchange warehouse stocks were flat at 357,225 metric tons.

Black Blade: Gold share movements tend to precede gold price movements. The apparent price manipulation gains steam as the physical price should have moved much higher in tandem with a weaker US Dollar and significantly higher demand. Meanwhile, Palladium continues to climb higher as it becomes ever more evident that the metal simply will not materialize out of Russia this year.

Black Blade
(01/03/2001; 01:34:06 MDT - Msg ID: 44917)
DJ Asia Precious Metals: Spot Gold Regains Some Losses
And a bit of "Monkey Business" in the gold market.
SINGAPORE (Dow Jones)--Spot gold edged a little higher Wednesday in Asia from its late New York level Tuesday, but it failed to recapture overnight losses. The metal saw heavy selling from funds Tuesday in New York, causing the metal to break technical support levels at $272.00 a troy ounce and $270.00/oz, a trader in Singapore said. Asian dealings were thin Wednesday in the absence of Japanese participants. Light short covering was believed to have lent support to the metal Wednesday in Asia. At 0643 GMT, spot gold was trading around $269.75 a troy ounce, up from its late New York level Tuesday of $268.90/oz. It remains, however, down 1.3% from its late Asian level Tuesday at $273.20/oz.

"Funds were big sellers last night," a trader with a European bank in Singapore said of the market late in New York. Market sentiment was cautiously bullish Tuesday in Asia with some participants expecting gold to benefit from a stronger euro and the Australian dollar. However, sentiment turned bearish following the sell-off in gold by fund managers. "Fund selling will continue," he added. "Price movement in the first three months of the year is usually indicative of price direction" of gold, the trader added. "With selling coming quite forcefully like yesterday...it will continue. The general trend (in gold) is weakish," he said. Spot gold, he said, could slide further to $265/oz later Wednesday. Dealings in the rest of the precious metals was negligible Wednesday.

-By Hamisah Samad, Dow Jones Newswires; 65-421-4834; hamisah.samad@dowjones.com

Black Blade: It's always the same old story � some unnamed trader/analysts says that some unnamed "fund" is selling. Then they continue to talk down gold, yet the fundamentals are somewhat Bullish for gold. Very curious indeed.

Pandagold
(01/03/2001; 02:11:26 MDT - Msg ID: 44918)
Our time WILL come - Bank on it!

Your faith, and patience, WILL be rewarded if, from now, you quietly add some GOOD QUALITY gold mining shares to your portfolio ON THEIR DIPS (and there WILL be MANY of those).

Ignore the negatives that will be put out ((and there WILL be MANY of those) - that's all part of the game.

Have a GREAT year!

Incidentally:- The GOOD QUALITY stocks are not hard to find - they have flashing neon signs all around them.
Black Blade
(01/03/2001; 03:35:29 MDT - Msg ID: 44919)
PGMs still look hot!
Palladium is up another $7.00 after being up $17.00 yesterday. Currently the metal is at $970.00/oz and counld easily surpass $1000.00/oz. from here. The Russians are out of metal. It's going to be fun if anyone at any of the exchanges try to collect some physical metal. This could be a good preview of the gold market once the metal is "allowed" to float free of manipulators hands.
Trurl
(01/03/2001; 03:56:37 MDT - Msg ID: 44920)
Debt is not fungible
http://quote.yahoo.com/q?s=^DJI&d=myI would like to present some ideas for discussion. This started for me with the realization that maybe a good case could be made that literal hyper inflation has been on the scene for some years. I am not an economist, nor do I play one on TV; thus I'm ready to be corrected and instructed.

Consider this case for hyper inflation:

Look at a linear graph of the DOW30 over time:
Goto http://quote.yahoo.com/q?s=^DJI&d=my and download the spreadsheet version. Note that the chart displayed is a log scale, and the line seems without understanding this to be a somewhat straight line. BUT-- Import the numbers into a spreadsheet and graph the data in a linear scale.

If you didn't know what you were looking at, you could swear it was a graph of the value of the old German mark during the Weimar Republic.

This got me thinking�

MK and CPM have had various contests to name a previously overlooked factor which, to put it mildly, may cause future problems.

There is no contest now, but here would be my entry: Debt is not fungible. "Everyone" treats it like it is.

The US dollar is currently a unit of debt. I do not yet have a graph to display, but I will make the assertion that if you make a graph of the sum of personal, corporate, and governmental debt over time, you would end up with an exponential growth chart far worse than even the DOW30 chart.

In this respect, it is unclear as to what the M1, M2, and M3 money supply numbers represent. If the dollar == debt, they are an expression of some liquid debt available for immediate use. Debt that is parked in traditional fiat "stores of value", such as money market accounts, bank deposits, etc. So. They say nothing of the magnitude of outstanding debt. They say nothing of the actual positions of the market players. They are only a strange sort of net sum of debt interpreted according to an earlier age when the dollar was not debt.

In measuring outstanding debt, I believe you need to be consistent. To measure the absolute value of outstanding debt, you need to add the value of all debt. Not add the sum of debt owned and subtract ( double negative? ) the debt owed. To do that would only be meaningful for individual participants, and only then if debt were fungible.

I have only discussed traditional debt denominated directly in dollars. Until recently, many tech companies liked to boast how their stock was a great currency for buying other companies. This is literally true. Or was true. Here is another source of "money" that isn't detected by traditional government measures, yet was being used as money. Perhaps stock isn't debt, and yet:

It has been observed that junk bonds bridge the gap between traditional stocks and bonds. Often they trade at a discount that reflects the current perceived prospects of how likely the company will be able to service the bond. That is, their market value varies based on the company's performance, just like a stock.

I'm not going to develop this thought further but I believe a good case could be made that with the fact that most stocks no longer pay dividends, but rather retain earnings, and with employee stock options and other derivatives, stock is more a debt ( future promises ) based store of value than is often acknowledged.

The bottom line in an individual example is this: Suppose I have a second mortgage from Bill for $10000, and Jill has a note from me, also for $10000. My net position is zero. Yet it is clear that I can't depend on Bill ALWAYS sending me the money when I need it to pay Jill. In normal, polite times, yes. As long as rates of change for various factors aren't too great, as long as Bill has a job, as long as the macro picture doesn't bump up against some limit.

In the bigger picture, each market participant may have a manageable position of debt owned vs. owed. Yet each market participant can at the same time have large debt positions which he is assuming are offset.
So picture this huge interconnected matrix of debt. Yet with all the types of debt issued by different players, with all the varying liquidity, with all the variation in likelyhood of actual payoff factors, in no way can debt be considered fungible. Thus each debt should be subject to continual revaluation.

Except things wouldn't work that way. That is why banks don't recognise losses, or mark their assets to market value. They must pretend debt is fungible in order to keep the game going.

Because "money" is officially measured as only some debt parked in certain accounts, and because people look at the net sum of debt owned less debt owed; and not the absolute value of debt outstanding, the magnitude of debt has been growing without causing alarm. Remember, the dollar is a unit of debt, thus indeed a good case can be made that the dollar has been in hyperinflation for some time.

The picture as presented here is very similar to the physical vs. paper gold controversy. During normal polite times, they may certainly appear similar. The net sum of paper shorts and longs may be a reasonable, manageable number. But the general assertion at this site it to not count on this remaining true during the times you really, really want the attributes of gold.

Comments?



auspec
(01/03/2001; 04:59:25 MDT - Msg ID: 44921)
Clinton Lovers: Read No FurtherA Multi-Cultural Farewell Salute To
A Multi-Cultural Farewell Salute To
The Child King

Dear Bill,
Thank you William Jefferson Clinton for a most entertaining eight years of Presidential Capers. The 22nd amendment to the Constitution, our country's current favorite, is still in effect and so you must now vacate what we used to call the White House. It will need to be properly cleaned and whitewashed for your predecessor's progeny's prestigious and pristine possession. There is little doubt that you have left your mark (stain) (scent) on this esteemed estate and you will, unfortunately, not soon be forgotten. The State of the UNIONS has never been so public or sleazy. We have been contacted by multiple international citizens that eagerly join us in this celebration of the termination of your tenure. The Nations ARE United and we extend to you these heartfelt and earnest, global messages:

French - Finalment il est parti! On en est enfin de`barasse`s!
Portuguese- Ainda bem one vais embora!
Thailand - Kob - Kun!
Philippine - Sa lamat umalis na!
Romanian - Bine ca au plecat!
Italian - Finalmente se ne va!
German - Gehe zum teufel!
Polish - Dziekuje oni poszli!
Spanish - AM__!
Ebonics - Get to steppin!
Dutch - Ga naar de vaantjes!
English - Good����.��Mr. President. Good Grief!
Goodbye! Good Riddance!


There has been much speculation as to what you will do, at such a young age, to wile away the hours/days while you patiently await a post-Presidency Noble Piece (spelled right) Prize, of which your subtle lobbying efforts are sure to pay off. Could we offer a few second career suggestions for your consideration? You do have vast talents, contacts, and experiences upon which to draw, and it would be nice if they finally could be tapped
Suggestions:

1. The Robert Rubin School of Arkansas Economics needs a Dean of
Student AFFAIRS. Experience required, yours should suffice. You could in fact, be a bit over qualified, but RR can fix most anything.

2. How about starring in a komic strip called Klintoon? Actually a
Kontinuation of the last 8 years' debacle. Reruns only will be required,
PLEASE.

3. You might consider becoming a fundraiser for the American Conservation
Union. You and your Boss (Ms.) are the best thing that ever happened to
them. How is that little matter of their audit progressing?

4. Please spend some time apologizing to your not-ready-for-prime-time
apprentice, Algor, for blowing his chances to also become "One of our
greatest Presidents". You screwed up the quid pro quo. That was some
real teamwork boys, the folks back home in Arkansas And Tennessee are
real proud of you two. DelusionAl just needs a few more cycles of The
Lanny Davis School of Endless Repetitive Spin and maybe he won't give
up so easy next time. Did he sleep through too many of his Saturday Night
Live assignments? Poor Al had to pretend he hardly knew you, Bill, after
all your selfless years of service.

5. Lobbyist for the New World Order - unless that is getting a bit stale and
tiresome. You and Pinocchio have more in common than just the nose
complications. Those strings seem like they could be a bit annoying?

6. Selling franchises of the Ken Starr Emission Inspection Stations. Cost-Up
to $55 Million per inspection. You cannot run a VRWC {Vast Right Wing
Conspiracy} on a shoestring budget.

7. You could do tobacco ads on TV and expound on the benefits of not
inhaling or taking personal responsibility for your actions.

8. How about pooling your resources with O.J. to jointly get to the bottom of
Nicole and Vince Foster's untimely deaths?


9. You could just totally retire as the Founding Father of Illegitimate
Presidencies and Children. Put out to pasture so to speak (You must stop
drooling, Sire).

10. There has to be a immense demand for Hair Salons on airport runways
called- I'm Stylin' You're Waitin'! Number 42, you are clearly a pioneer
as well as an entrepreneur. The free markets await your participation and
vision.

11. Your plans for a friendly (chummy actually) takeover of Tyson Chicken
should fully succeed. You will be able to sort out all the right wings and
personally handle EVERY breast, leg, and thigh.

12. Clinton Crisis Counseling Clinic for abused women - mostly just ice
patrol!

13. Challenge Charlton Heston for NRA Presidency based on your starring
role in "The Ten Commanding Scandals". We have almost forgotten
who your Best Supporting Actress was.


14. You could mediate some more serious global problems like you did in
the Middle East recently with such great success. Move over Jimmy!
Next time if you will quit giggling every time you say the name Yassar
you might have more success.

15. Hollywood is much too obvious to even mention. Barbara Streisand is no
Marilyn Monroe, but on the other hand, she's no Monica or HRC either.
You could do a remake of "Trading Places" starring both you and
Hillary. Stand-ins could be used for the love scene, no problem there.
How about a series called "I BEG YOUR PARDON" which would
showcase { the hopefully coming} Bush Presidential etiquette?

16. Kofi is Kalling. Go feel his pain and take Ted Turner with you!

17. The PGA tour might accept you, but I doubt they will be willing to let
you keep your own score. You have assuredly hit on more ladies in the
gallery than even Gerald Ford did.



18. Much time can be spent simply waiting for the coming official
Republican apology for YOUR IMPEACHMENT. Check your e-mail
regularly. What were those guys thinking with this "rule of law"
nonsense?

19. Every Law School Library needs a Lexicon for multiple
meanings/interpretations/applications for two letter English words.

20. Your own weekly television show on FOX (in the chick house) TV,
government reforms oriented. Geraldo can lend a helping hand.

21. You will have time to write an autobiography. I should not
require much work and we can actually save you a lot of trouble
as one rather large word will suffice:
Coverupsubpoenabimbosnortscamliesmenacigarbluedressraisetaxesfbi-
Indulgentcheatdnaderivativesroselawfirms&lsaxpaulasexbentapistray-
wagdogembarrassdonnaeconomystupidiceovalmanagersjuanitashilloral-
danlassiterfilegatecopresidencyisdeceitbribestarrasprinfactorylucianne-
#^*!&%healthcaregrabjimguybubbletrialmcdougalsimpeachedlegacy-
spinpuppetdesksusanhoovernosedepositionragincajundenialwebster-
naftatrippstallnoshameparsebuddyteflonpredatorchinagateforcetroopers-
septumhousesenateoathespyronbrownmonicahedonicsgoldbuster-
internlipsmovingdraftsociopathsomaliadollyfelonyperjurerenemies-
rogerdodgerhush$stonewallsecretservicecocaineaddictivepersonality-
glibpollslincolnbedroomdysfunctionalOhellUgettheidea!
Please let me know if you need any more help on this project.

22. Find a new country in which to practice law. Sri Lanka comes to mind.
Alan Derschowitz could also stand an extended sabbatical. Why can't his
Doctors get his medication right? Is he the best you can do?

23. You will have beaucoup opportunities to try out your precious Executive
Orders in your various trailer park soirees. Hoping you do not experience
any more FEMA failures.

24. You could spend the rest of your life paying back favors for Lady Reno
TSE {Trouble Shooter Extraordinaire}. Will she remain on the payroll
indefinitely?


25. Ever thought of starting a Dream Team of X-Presidents? Andrew
Johnson, RMN, and WJC, not necessarily in that order. Looks like a
clear LEGACY from this angle, but you are welcome to write your own
history books and who could stop you anyway?

26. Permanent Dependent Counsel for your estranged wife, Scandal - in �
Waiting, Senatorium Hillary Rodham? Is she prolific or what? You
could play the scorned man next go- around, it worked so well for her.
Any truth to the rumor that Hill-Rod makes more than A-Rod ]
{unofficially of course}?

Global citizens are nervously holding their breath in anticipation of your next adventure; we will soon get to quit holding our nose. The world is beckoning you now, Mr. X-President; some call you Slick Willie, some Comeback Kid (Puleeeze NO), some Boy President, some Bubba, I now call you GONE! We're happy for you, Bill, but mostly we're happy for us. Sounds like the fat lady (with the beret) is vibrating her vocal chords. And no, Sir, you do not get to take the ESF {Exchange Stabilization Fund} with you!

A final word - Get some help somewhere.

Respectfully,

Auspec (FOB) (Farewell Old Boy) - Hope we haven't hurt your ego too much - - - Better get some ice on that.


Permission is hereby extended to copy, fold, bend, staple, mutilate, or forward this article. No additions please-I do NOT want to run the risk of offending our political leaders!










Black Blade
(01/03/2001; 05:10:17 MDT - Msg ID: 44922)
The Grasshoppers Learn About Procrastination and the Costs of NIMBY
Gas suppliers refusing sales, PG&E unit says

The cash and credit squeeze created by the electricity crisis in California has prompted 15-20 natural gas suppliers to decline to sell gas to the company beyond current commitments, said Pacific Gas & Electric Co., a unit of PG&E Corp. The California utility also said it could have kept gas prices down if the California Public Utilities Commission (PUC) had permitted the company to build more in-state storage and lock in capacity rights on various pipelines that deliver gas to California. The company said Friday it had purchased enough gas for its customers' projected use in January, as long as temperatures do not drop, increasing demand above forecast levels. The utility delivers natural gas to 3.8 million customers, including residential consumers. January gas bills will be 60% higher than December, the company reported. Market prices in January are expected to reach record levels, following dramatic increases in November and December due to cold weather and record demand by natural gas-fueled power plants. The average residential bill will rise to $125 in January, compared with a December average of $77. In January 2000, before prices began to spike, the average residential bill was $50.

Gordon R. Smith, CEO of the utility, said it will not be able to finance the high cost of natural gas spreading it out over several months because of the company's present financial position, resulting from the "outrageous" wholesale electric prices the company is paying on behalf of its customers. "What should be noted is that many of the companies who have declined to sell us natural gas are the same companies who own power plants in California and are currently charging as much as 30 times what it costs them to generate the power," Smith said in a prepared statement.

If Pacific Gas & Electric Co. had not taken mitigating measures such as storing gas in the summer, average January residential bills could have been as high as $162, the company said. In the past, the PUC discouraged investment in gas pipeline assets. If the utility had been able to take other mitigating steps, customers' bills would have required a small surcharge, but compared to today's astronomical market prices, the surcharge would have seemed minuscule, it said. Pacific Gas and Electric also reported it has asked the Federal Energy Regulatory Commission (FERC) to impose price caps on gas delivered to the California border and points within the state. And the company has requested FERC to suspend contracts between El Paso Natural Gas Co. and its wholly owned affiliate that Pacific Gas & Electric Co. alleges have allowed those companies to manipulate prices in the California gas market.

Moody's Investors Service weighed in on the controversy surrounding the creditworthiness of PG&E Corp. and Edison International. These utility holding companies accumulated more than $8 billion in debt from unrecovered purchased power expenses in California. The investor-owned utility holding companies were also under a threat last week that Standard & Poor's would downgrade their ratings to "junk" bond status pending action by the California Public Utility Commission.

Black Blade: "And the Grasshoppers danced, sang, and played all summer�" These leeches just don't help themselves at all. They knew this day would come, yet they procrastinated and figured on stealing from others. Let em� freeze in the dark! Sounds cruel? How else will they ever learn?

The US Department of Justice filed suit against Duke Energy Corp. on behalf of the Environmental Protection Agency, charging that eight of the electric utility's power plants illegally released massive amounts of air pollution. The DOJ alleges that Duke Energy violated the Clean Air Act by making major modifications to all of its coal-fired power plants in the Carolinas without installing the equipment required to control smog, acid rain, and soot.

Black Blade: Yeah, shut down those big bad polluters! Besides, who needs all that electricity anyway?
SteveH
(01/03/2001; 05:54:43 MDT - Msg ID: 44923)
Inheriting the ESF, a hot potato
http://www.newaus.com.au/us174gold.htmlSo, who would want to inherit the ESF when it is now more widely known that said organization or fund (or whatever) is involved in the manipulation or alleged manipulation of commodities (to wit: gold, silver?) and possibly S&P futures?

If I were the incoming administration with a lawsuit hanging over my Treasury department, I would want to clean laundry quickly and put the blame squarely where it belongs.

I would think the job of gold afficiandos would be to keep the pressure on this particular suit and alleged dealings of the ESF. Only in that manner could one assure oneself that they had done everything that can be done, to set the gold market straight.

Tally ho Gata!
Journeyman
(01/03/2001; 05:58:36 MDT - Msg ID: 44924)
Deregulation???? @ALL

The media, including CNBC who SHOULD know better, continually explains the power debacle in California was the fault of "deregulation, and in fact the teaser from which I excerpted the clip below, repeated at least four times, included that PG&E was in trouble because of "deregulation:"

- In an interview with Ron Insanna, the Chairman of P G & E, the California
electric power utility that's under extreme pressure because of power
shortages, revealed the cause: ~"We have to pay $.40 per kilowatt-hour but
because of regulations, we can only charge $.05 for it when we sell it to our
customers." If the situation isn't remedied, P G & E will be bankrupt within
six weeks. -CNBC, Jan. 2, 2001, ~6:47PM EST

Does this sound like deregulation to you?

Regards, J.
Pandagold
(01/03/2001; 06:04:12 MDT - Msg ID: 44925)
He (they) who have the MOST gold, make the rules


The price of oil is dropping after the sudden surge upwards.

In spite of the recent bloodshed in the Middle East, and the apparent intransigence of Israel, they are still 'hopeful� of 'Creepy Clinton' pulling it (a so called peace deal)off.

Saddam has had a sudden 'heart attack'

Oh hum. Isolated incidents? Not on your Nellie.

Remember what I have always pushed home - He who has the (most) Gold makes the rules. Who has the most gold? The USA? think again, and again, and again.

Who do you think has been soaking up all this gold that has been dumped over the past decades? Don't be fooled by which country appears to be buying or selling. When you are international - every country is your home - but you owe allegiance to none.

The oil price was raised partly to put pressure on getting 'the best deal' they could at the table. The recent flair up of bloodshed in the M-East was likewise.

All parties know there is some settlement in the cards, but it is NOT Clinton who has been doing the talking. Only MONEY talks. If you believe otherwise - quit now, you've no chance in this dog eat dog world.

If any deal is done, you can bet your bottom dollar that a lot of financial assurance has been given, a few palms have been greased, a few Swiss bank accounts stocked up (we are not talking about the odd million or two). And, with whose money? - YOURS, and mine, and all the other poor wretches of this world. Money that could have built hospitals, educational establishments, better roads, and kept down crime, or raised the standards of those third world countries that have been bled to death. But the real price has yet to be paid by the common man - the bill is about to arrive.

If it isn't done, watch the price of oil move up again. Watch for a few other horrors as well, like a few leaders being toppled in the M-East.

The pressure is on now; something is about to snap. You can feel it at every turn. We have to thank, in no small way, those raggy a*sed stone throwing Palestinian 'Davids' who have, with little moral support - and none from the media, stood up to Goliath armed with technology and armour that could outclass by far, especially considering size - a land of six million people, and with no natural resources (not a drop of oil), any other power in the world.

So, if a deal IS done, give not one drop of credit to Clinton, though the media, for its own ends will push the world to believe that.


Black Blade
(01/03/2001; 06:20:18 MDT - Msg ID: 44926)
Everything Favors Higher Gold Prices, but....
http://www.mrci.com/qpnight.htmUS Dollar is crashing against most currencies, markets overnight flounder, futures are lower for all indices, and yet - PMs sink lower. Curious isn't it? Very difficult to believe that there is no "Malign Forces" holding down PMs.
Journeyman
(01/03/2001; 06:24:17 MDT - Msg ID: 44927)
Good thinking, excellent context @Trurl (1/3/2001; 3:56:37MT - usagold.com msg#: 44920)

Definitely a context worth developing and refining! Maybe you should become an economist -- or audition to play one on TV!

High regards,
Journeyman

Black Blade
(01/03/2001; 06:30:36 MDT - Msg ID: 44928)
Weak dollar, stocks seen lifting gold--but not yet

By Sara Marani

LONDON, Jan 3 (Reuters) - Falling U.S. equity markets and weakness in the U.S. dollar have so far failed to inject life into the gold market but analysts said on Wednesday that a positive knock-on effect could come soon. ``Gold's weakness has been a bit surprising -- we expected the upside to be capped but not the downside to be tested,'' said Merlin Marr-Johnson, analyst at HSBC. On Tuesday, the NASDAQ index saw losses of seven percent after manufacturing data reinforced fears of rapidly slowing growth in the United States and triggered a dollar sell-off. ``The dollar is weakening, the scope for an interest rate cut is here, and all this cannot be positive for the U.S. stock market,'' said Frederic Panizzutti at MKS Finance in Geneva. ``Investors will be repatriating flows and since most of the money invested in the U.S. is from Europe, it will come back to Europe and contribute to pushing the euro higher.'' The euro hit five-month highs against the dollar on Tuesday, rising as far as $0.9544, while the Australian dollar broke through the U.S.$0.56 level to set four-month highs. Once producer and consumer currencies strengthen, gold is more affordable for non-U.S. buyers and it is less attractive for producers to sell. ``The strong euro and Aussie have had a positive impact on physical demand, but the problem is that the physical buying interest was matched with non-physical selling which was not really currency related -- probably some long liquidation -- and that's why we didn't have the normal schoolbook reaction,'' explained Panizzutti.

RECOVERY DOWN THE ROAD

While traders and analysts agreed gold would never manage to recapture fully the safe haven status it once enjoyed, they expected to see some evidence of a flight to quality soon. ``While more liquidation and more downward pressure is possible short-term, we still have positive consumer confidence here (in Europe) so at some stage we expect this to have a positive impact on the gold price,'' said Panizzutti. The spot bullion price was expected to dip to around $260 a troy ounce before ticking back up towards $275-$280 at the end of the first quarter. ``We still have a positive year view and conditions for gold look better this year than last. Conceptually we're looking at about $280 for the quarter,'' said HSBC's Marr-Johnson. At 0940 GMT gold was quoted at $268.70/$269.20 a troy ounce, just up from Tuesday's New York close at $268.65/$269.15. Another factor which could contribute to an upturn after a possible price dip was Indian demand. India is the world's largest gold consumer and traders said many buyers were waiting for the price to fall to $265. ``Most of the Indians are looking to buy at $265 and once that happens things should pick up,'' said one trader. The 1999 agreement between 15 European central banks to limit gold sales and gold lending could also support the price, but only once demand shifts up a gear. ``The accord is a very positive step if we are in a demand market but we are still in a supply market and the tightening effect they (the banks) tried to create hasn't happened,'' said one analyst. ``If we move into the higher demand market, anticipated at the time of the accord, then the price will pick up.''

Black Blade: That does it! I'm going to go kill some Ducks! Later.
Journeyman
(01/03/2001; 07:58:08 MDT - Msg ID: 44929)
Free psychoanalysis @Black Blade, Journeyman, MANY

Hi Black Blade, Journeyman, MANY!

I've been meaning to write this for awhile, but I can procrastinate with the best.

There are many of us here who see "the system" as evil and secretly rooting for retribution, though we well know that we will likely be one of the vicitms of any retribution -- and many of our innocent countrymen & women, guilty of nothing more than a little facilitated (or possibly induced) ignorance and a bit of laziness.

And likely as not, those who SHOULD suffer retribution will escape largely unscathed. Saddam, while his people's children starved, almost certainly never missed a single banquet or meal.

But there's a deeper problem with hoping for justice and retribution where they are due, and that is, like other forms of revenge, it tends to cloud one's judgement. One tends to excerpt the bad things that are happening to the perceived miscreants and project them indefinitely into the future --- and to ignore little details --- like, for instance, most Iraqis hate Saddam even worse than some of us dislike Clinton.

If we're bett'n folks -- and as you may know, from my viewpoint we ALL are whether we know it or not -- this can skew our bets from cool, rational probabilistic prognostications toward betting against the SOBs.

While emotionally satisfying, it can easily lead to economic suicide.

I say this as much to remind myself as anyone.

Regards,
Journeyman
Pandagold
(01/03/2001; 08:10:47 MDT - Msg ID: 44930)
Face up to reality
My dear Sir Black Blade, and others, who keep filling your minds with this clap-trap put out by Reuters et al, and the two bit analysts that abound. Even if they new the truth, they would not tell you.

I know you mean well,I also know you don't really believe them, but so many of you are like drowning men ready to grasp at any straw, even though you know it won't support you.

Many of you know the reasons in your heart of hearts, just as I do, why gold is not moving, or going to move ( and we are not talking of a few dollars here and there). Yet you keep rehashing this bullsh*t which you don't believe. This is masochism pure and simple.

Face up to reality. When gold does make a move, it will appear to be for no apparent reason (though some will be suddenly found) - no crisis. It will be slow and gradual - and, in its small way, volatile. But then it will be good for trading.

Meanwhile, wait for those dips, study the quality gold mining stocks carefully, get to know them like the back of your hand, study their trading ranges. Buy on the severe dips and accumulate.

With the best mines (costs)trimmed to the bone and expanding, free from deadwood, gold won't have to move much to make them VERY profitable. Good mines also have a habit of taking care of their shareholders, so besides capital appreciation there will be good dividends.

So come on fellows - stop letting your enthusiasm, and excitement rise and fall with each little movement, or analysts forecast, or GATA statement. The people who are running the show, and controlling that psychological metal, and real money of the first and last resort are far more powerful than you could even begin to get your minds to imagine.

Ian Fleming was (probably on more than one occasion) asked if he didn't think he had made his stories of 007 and the secret services a little bit far fetched, and that people found them a bit hard to believe. His reply was that if he (ex-secret service) told everything that went on - the real truth, they would have been absolutely, unbelievable.

The same can be said about what, and who, is moving this world.
miner49er
(01/03/2001; 08:28:49 MDT - Msg ID: 44931)
Journeyman - #44929
Excellent, excellent... thank you for the little slap around the ears. Point well taken!

Best regards,
m49r
Orville Goldenbacher
(01/03/2001; 08:41:53 MDT - Msg ID: 44932)
Saddam is dead(?), long live Uday!!!
http://www1.sky.com/news/world/story7.htmcould it be????

Better get ya some more gold, the price is sure right!!!
Gold Trail Update
(01/03/2001; 08:50:38 MDT - Msg ID: 44933)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
Randy (@ The Tower)
(01/03/2001; 08:59:29 MDT - Msg ID: 44934)
Currency and trade
From yesterday's article on the summit of the Gulf Cooperation Council regarding the unification efforts for the currencies of the six states Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates, it was reported "The group has an $18 billion trade deficit with its largest trading partner, the European Union."

While recognizing that this group represents just a subset of the Petroleum Exporting Countries, it can be said that OPEC sells to the world but does a bulk of its own shopping in Europe. America is on pace for an annual trade deficit with OPEC reaching $48 billion, and America also does considerable shopping in the euro area, too, also running a trade deficit on pace for $48 billion for the current year.

It is not lost on officials of other countries that the U.S. has enjoyed the privilege of simply creating the international manna from the new issue of U.S. Treasuries while others must labor to earn these same currency units. With the U.S. running perennial trade deficits, on the whole it should seem apparent that the primary utility of our excess dollars shipped abroad is found in its use for reserves and for the international repayment obligations on past debts.

On point, when looking at current human productivity and the balance of modern trade rather than the debt-legacy of our fathers, the deck is stacked toward euro strength and dollar weakness as we move forward. If various nations such as those seen here are earning dollars but spending euros, you can see where a falling dollar exchange rate on the forex market might be ill-tolerated by those in a position to "name their price". In the end, it is goods and services rendered that pay for goods and services consumed. Meanwhile, the currency units are just digital blips that simply keep time to the music of commerce among the international orchestra, and can change suddenly "for" or "against" your position depending on external factors and on your own reliance upon these blips. Do not mistake these blips as equivalents to real wealth.

Gold is the single internationally-respected hard asset that moves freely in financial circles to provide a liquid reserve (savings) alternative -- protecting its holders from bad management of, or fading confidence in, their own local currency. Call Centennial to find out how easy it can be to...get real. Get gold.
Randy (@ The Tower)
(01/03/2001; 09:21:04 MDT - Msg ID: 44935)
Clarification to readers of my previous post
In the event that it seemed strange that I referred to U.S. trade deficits for both OPEC and euro-land that were "on pace" for annual shortfalls of $48 billion each for a year that is ALREADY over, please understand that trade figures have only been released thus far through the month of October.
-------
FOA...I enjoyed your latest contribution to the Gold Trail. Thank you again for all that you do, for the time and effort expended in selfless assistance to the greater understanding of your fellow man. Long health and happiness to you and all those near and dear.
Pandagold
(01/03/2001; 10:05:45 MDT - Msg ID: 44936)
Journeyman - Why pick on Saddam?
YOUR QUOTE:
"And likely as not, those who SHOULD suffer retribution will escape largely unscathed. Saddam, while his people's children starved, almost certainly never missed a single banquet or meal."


From where do you get your reasoning that Saddam does not care about his children, his people? That is the picture put out by our media, time and time again (US and British).

Yet people who have got close to him, and who have no ulterior motives or axe to grind, do not see him this way.

Why did he really invade Kuwait? Why did Galtieri (Argentina) invade the Falklands? Why do some of the other Arab Sheiks not like Saddam? Why are the people of Iraq prepared to suffer again and again this humiliation we meet out to them? Why are so many Palestinians prepared to die without direction from their government? Why do they love and respect Saddam? Find the real answers not the ones put out by media and �backed� historian writers.

Just because Britain, and some other countries sold their soul for some pieces of silver, there are others who are prepared to die to preserve their culture, and their heritage, and their beliefs. They do not want to be the 51st 52nd 53rd state of the US, official or unofficial, or any other international entity that operates via the US.

Did the US president, at the time, care about those poor wretches he sent into the hell-hole of Vietnam. Most of them were almost children and many from deprived areas. The man America made president skulked in Britain while they fought and died. Then he abused his office by screwing around with a young intern, beside all the other shenanigans
both he and his wife got up to.

Yet, just because the people behind the scenes printed money like there was no tomorrow (besides other financial manipulations) creating an artificial prosperity, he gets lauded as though he is a saint. Now he will be proclaimed the great peacemaker, no doubt.

From what little I know to make judgement, Saddam is no better, nor no worse than most, but from his feelings for his people - and the whole Arab people, he is probably better than many.

To make judgements on what the media tells us is probably the greatest disservice we can do yourselves. If you believe
the media is 'free', then what else can I say. Your mind is closed.

When our media tells us so and so is 'bad' - ask yourself one simple question, especially when they keep pressing the point - Why do they really want me to believe that?

Remember, at the close of world war 2, your most revered and decorated general - Patton, when he was able to get close to his enemy, and also 'see' who was really about to benefit from the war said " I think we fought the wrong people" Now here was a man who had given his all, and was closer to the truth than anyone. Oh! by the way, a few weeks later he was dead - from an 'accident� of all things - how surprising
Randy (@ The Tower)
(01/03/2001; 10:15:38 MDT - Msg ID: 44937)
Trurl (usagold.com msg#: 44920) -- Splendid!
"...the physical vs. paper gold controversy. During normal polite times, they may certainly appear similar. The net sum of paper shorts and longs may be a reasonable, manageable number. But the general assertion at this site it to not count on this remaining true during the times you really, really want the attributes of gold."

Yes, indeed! As I have tried to stress before, if a person is looking for a diversification or safe haven outside of their national currency, a position in paper gold (derivatives) amounts to little by way of accomplishing the objective as it is only a variation of the paper debt-based theme. Only physical gold is free from the risk of default or bad national monetary policy.

Get real. Get gold.
Knallgold
(01/03/2001; 10:54:59 MDT - Msg ID: 44938)
TrailGuide,BlackBlade
TrailGuide-maybe your magnificent teachings has finally allowed us to walk the golden trail for ourself,I mean there are now too many footsteps visible to miss the way,like in a catalytic chemical reaction:without the catalyst,no reaction at all.Adding the magic,often precious metals containing catalyst,the reaction kicks off easily,and in the end you'll rediscover the catalyst unchanged.

The only thing different with you is that you might have grown a few grey hairs extra because of us (smile)

BlackBlade-thanks!I hope you are right as I thought to read Swanepoel's own words of worry on "how to explain it to our investors".As if Chase warned him not to close the hedges.But you are right,there is no reason to own a hedged HGMCY,except the stolabars sales program.
TheStranger
(01/03/2001; 10:55:55 MDT - Msg ID: 44939)
Protect Your Savings
Gold is now within a few dollars of its 52-week low. Ten-year U.S. government bonds are within a few basis points of new 52-week highs. The Dow Jones Utilities Index was at a new all time high on Friday. Clearly, all of this is happening because the popular big money bet these days is as follows :

"There is no inflation danger, but, to be sure things stay that way, Greenspan has over-tightened credit and thrown the economy into a recessionary spell which, if anything, will mean slight deflation and lower interest rates in the months ahead."

If you believe this scenario, then you must not be a buyer of gold. Like the rest of the crowd, you have been dumping technology stocks and buying government bonds, utilities, etc. Like the rest of the crowd, your portfolio is perfectly up to date...perfectly up to date, that is, and headed for a fall.

Yes, there has been a lot of discounting on Main Street recently. And such things as Christmas mark-downs and fire-sale PC prices are bound to impact inflation indices for a while, at least.

But money has not been tight. Money has been loose, VERY loose. This is why, despite six Fed rate hikes and constant reassurances by the "experts" that inflation is not a problem, price indices last year recorded their biggest jump in a decade.

From Wall Street to Washington, almost no one will believe it. Take yesterday for example. When the National Association of Purchasing Manager's report of economic activity was released, it was accompanied by the biggest prices-paid component increase in five months. Yet the media uniformally dismissed the number as being immaterial; so great is the public's faith in Alan Greenspan and his delusive rate increases.

I have argued in these pages for the past two years that higher interest rates would not, could not, deter this economy from its rendezvous with inflation if money itself was allowed to grow out of sight. When I started, the U.S. dollar was experiencing a mild bout of deflation. At that time, no one in this room would agree that things were about to change. But, since then, quarter by quarter, inflation in America has climbed steadily back up to where it is today.

Now, even skeptics admit there is no quick fix in store for higher energy prices. For two years, they argued that energy didn't count like it used to. It simply wasn't as pervasive as before. Yet, now we are all being inundated with stories about companies cutting operations due to higher energy expense and products at the supermarket being downsized, again because of higher energy prices. The list will get bigger, believe me. Recent monetary data prove conclusively that this Fed does not have the courage to slam on the brakes.

Believe what you wish. But, if you are to protect your savings in the year ahead, you must understand this simple word of advice. Money is loose in America again. Inflation is on the rise, and it is destined to get a lot worse before it gets any better.

Thanks

miner49er
(01/03/2001; 11:19:44 MDT - Msg ID: 44940)
go look at the djia/naz/sp500 in the last few minutes
vertical ascent... i'm dizzy... who's up to mischief?
YGM
(01/03/2001; 11:23:34 MDT - Msg ID: 44941)
Greenspan & Fed
Just Provided the Lift Off For Large Sucker Rally...Half point rate cut....Whoopee paper lift off. Now the debt load can become even more "Irrational"....Fools rush in and
"wise money gets an escape route".......YGM.
Mr Gresham
(01/03/2001; 11:24:35 MDT - Msg ID: 44942)
Fed 50bp cut
http://www.bloomberg.com/welcome.htmlWell, aren't we having fun!

Alan does love to play with his toys.

Hmmmm, save the markets? Or save the dollar? Eeeny-meeny-miny-moe.

Now we'll see. Now we'll see... (how long it works)

(Not long, says FOA, not long.)
miner49er
(01/03/2001; 11:25:02 MDT - Msg ID: 44943)
never mind...
just got the rate cut newz...
Mr Gresham
(01/03/2001; 11:27:23 MDT - Msg ID: 44944)
Uh-uh-uhhhh
Somebody was in trouble. Somebody's Delta got outa whack, I'll bet.

OK, who threw that spitball? Was it you, GS? You, JPM? DeutschBank, get back in your seat!
YGM
(01/03/2001; 11:32:46 MDT - Msg ID: 44945)
Rate Cut of Fed.....
Kinda like a "BANANNA" Republic move....in Brazil to calm market jitters. Similarly lets some institutionals off the hook,"Temporarily"....Greenspans Airbus is flying on fumes.......YGM.
Knallgold
(01/03/2001; 11:37:52 MDT - Msg ID: 44946)
Paper decouples from physical-it is here!
-China opens new physical Gold market,next June(!) or so,this is now confirmed-Paper POG does not anticipate higher demand as it used to do (hey,there are only a billion humans!?)

-Stockmarket is in a serious bear market,no POG reaction exept down

-euro up,already close to parity,no POG reaction exept down

-and the most important thing,the Dollar has been hit hard lately and no POG reaction exept down

Investors,especially Goldbugs are totally clueless.If they would be used to FOA glasses,they could see it clear like Swiss rock crystals

We knew the Comex-POG didn't reflect real Gold demand for some time.But now,the Comex-POG has decoupled from the currency markets!!!It goes down with the Dollar!Comex paper Gold is not anymore an alternative to the $!The heat is on now on the physical market.The year of change...

YGM
(01/03/2001; 11:42:14 MDT - Msg ID: 44947)
A CONTEST!!!
Is what we need......"Name That Fund"...LTCM, Tiger, Princeton.....Which Fund will go next. It undoubtably will be BIG and WILL bring Wall St to it's knees.....This in my opinion is the greatest fear of the Fed. The dollar is still at great strength, but somewhere there's more than a few Derivatives Traders out there sitting on (or add the 'h') "Razor Blades"
There's many out there w/o Delta safety.......YGM.
miner49er
(01/03/2001; 12:01:06 MDT - Msg ID: 44948)
report from the ground...
used to be... certain times of the year you'd find the guys all standing around a radio in the break room, ears turned to the speaker, brows knitted, listening... listening to the intense moment of some championship game or match, for the next play, the next pitch...

right now, i've just finished observing several people (not just the guys anymore), all huddled around someone's computer, eagerly clicking 'reload' every few seconds to see how high we are now...

i have heard several audible 'hurrahs' and applause coming from several areas of the office floor. i actually observed two guys give each other high-fives.

sometimes i long for a more simple time when such behavior was reserved for a no-hitter, or a bases-clearing homerun in extra innings.

at least mr. blade can go 'kill some ducks.' i... i will just resort to going to get another cup of coffee...


YGM
(01/03/2001; 12:06:41 MDT - Msg ID: 44949)
Selling The Rally...
Is it the PPT?Maybe they are getting back on-side, but you can bet your boots alot of others will also sell into the rally....I'll be surprised if this Excuberence lasts 48 hrs....YGM.
YGM
(01/03/2001; 12:15:41 MDT - Msg ID: 44950)
Not the Dollar....
Oil Costs/Shortages (very possible) & Hedge Books...Two keys to rate cuts...IMHO...Buy Physical and soon, cause they're (Cartel & Fed) out of control now.....YGM
Journeyman
(01/03/2001; 12:36:03 MDT - Msg ID: 44951)
Only because he's a so-called "leader" @Pandagold (01/03/01; 10:05:45MT - usagold.com msg#: 44936)

Hi Panda!

Actually, there are two un-worthy reasons I "picked on" Saddam.

1. He's a so-called leader, nearly all of which these days don't pay their way. They don't risk their lives in defense of their group. Not even for their own dominating ruling oligarchy, let alone the taxpayers who's bones they pick. I could as easily have used Slobodan Milosevic or Bill Clinton -- or Tony Blair.

2. People tend to dislike Saddam because of said Brit-American propaganda -- and thus using Saddam tends to reinforce my point rather than detract from it.

AS I said, unworthy reasons, chosen to shortcut to a quick point.

Whoa, there Panda. I'm mostly on your side in this. You will not find me excusing modern "leaders" their sins, no matter who their victims are.

And I'm aware of the Rothschild scam after Waterloo. Etc. It's just that "they" don't have nearly that control or power anymore. Things are too complex. There are too many players now days and too many wild cards can bollix up their plans.

Further, it was "their" ancestors who, for relatively short-term gain threw not only us, but their progeny into the paper furnace we're burning in. They had no coherent long-term plans that have held-up very well that I can see.

Globalization, yes -- if done "right." But of course it isn't and won't be. Too many competing "mafias." Who won't give up power. Look how long it took to get the euro. And true "union" is still at least decades away.

Regards,
Journeyman
ORO
(01/03/2001; 12:42:17 MDT - Msg ID: 44952)
Fed begins supplementing Treasury and Fannie+Freddie

Obvious panic at Greenspan's map room.

Amazing instantaneous response to the instantaneous 7.5% drop in cost of short term Fed Funds. Response is an initial 11% on the Nasdaq, 16% on the Nasdaq 100. 3.5% jump in the Dow. Obviously we have a short squeeze not unlike the October 1998 mother of all short aqueezes.

Could it be that cost of funds to the bidders at the stock market is the Fed Funds? Meaning that bank trading desks are doing the buying?

Nasdaq 100 jumped vs. the five year note rate by 20%. The Nasdaq composite went up 15%, and the Dow is up 6% vs the note's interest rate. (The five year note is the first measure of returns alternate to stocks. Thus an investor putting funds into stocks is giving up the available return on a 5 year treasury - implying he foresees a rise in the stock greater than the interest paid by the treasury.)

To put things in perspective, the ND 100 has fallen 66% intraday relative to the 5 yr note yield from its high on the year in March. The SP 500 was down 39% by the same measure from its relative high at the same time. This provides a picture of the drop in investor expectations of future returns after the discounting rate is taken out of consideration.

Not to be outdone by the stock market, the bond market reacted with its own idea of happy times - higher rates.

I was just working out my estimates for projected bottoms in the Treasury papers. I had 5.37% for 30 yr, 4.86 for the 10 yr, 4.53 for the 5 yr with alternates 4.67 and 4.40. Since the Fed panicked, I can't be sure those rates would all be reached. The 30 year definitely did get there and then some, the tenner hit it on the dot as well, and the fiver hit 4.71, though not all the way to my favored 4.53% projected bottom value.

Looks like mortgage rates held back on continuing their trend. It may now be time to refinance if you have a high mortgage rate.



Paul
(01/03/2001; 12:42:26 MDT - Msg ID: 44953)
Alan Greenspan must be really scared
"WASHINGTON -- Faced with a cooling economy, the Federal Reserve unexpectedly cut interest rates Wednesday.
The central bank's move, slashing its key federal-funds target by one-half a percentage point, came four weeks before Fed policy makers were set to meet." - Wall Street Journal

Alan Greenspan must be really scared to go to this extreme. This is not an indication that Greenspan can engineer a soft landing, this is a glaring indication that the US economy is facing serious problems, most likely related to the debt explosion of the past ten years. If the economy slows down it is going to become increasingly more difficult to service outstanding debt.

Yesterday, the first trading day of 2001, both the Dow and NASDAQ declined ominously. Today's rally is one of the best examples of a sucker rally I've seen in years.

It appears as if 2001 is going to be a very interesting year, if nothing else. I hope we will all be able to prosper in spite of the financial turmoil that is likely to unfold.

Keep your eye on the gold price. A slowing US economy should lead to a declining dollar and that in turn should cause the gold price to rise.

Happy New Year,
Paul van Eeden
John Doe
(01/03/2001; 13:12:16 MDT - Msg ID: 44954)
If I had an interest lever, I'd lever it in the morning (or afternoon), I'd lever it in the evening, all over this land...
Ah, the free market...we had one once. I'm so glad AG sees "inflation contained", otherwise, there'd be real cause for concern. I guess AG means inflation is contained to only the Fed, the banks, the GSEs, and Wall Street pumping the money supply. A colander would qualify as a more convincing "container". The only thing worse than not having a central bank is having a central bank.
Peter Asher
(01/03/2001; 13:18:35 MDT - Msg ID: 44955)
It's not the principle,

it's the interest!

Put in simplistic terms, it is not the amount of unfungible (Good post, Turl) debt outstanding, but the monthly (Fungible?) cost of servicing it that controls the fate of the debt bubble.

Hopefully I'll have time tonight to post on why this will NOT be inflationary. Right no I'm out the door to manipulate some doug-fir and cedar.
Wild Hare
(01/03/2001; 13:20:07 MDT - Msg ID: 44956)
Health food GATA
http://www.deepblacklies.co.uk/main_page.htmI was thumbing through a magazine in a local health food store and was taken aback to see an article on Euro/Dollar/Gold/GATA. I didn't buy the magazine but did check out the website and was directed to the link posted above. I'm not sure if you can access the full article on-line or not. My apologies if this is old news.

The magazine was Nexus Magazine (nexusmagazine.com).
Randy (@ The Tower)
(01/03/2001; 13:32:16 MDT - Msg ID: 44957)
Press Release from the Federal Reserve on today's rate-cut decision
January 3, 2001

The Federal Open Market Committee decided today to lower its target for the federal funds rate by 50 basis points to 6 percent.

In a related action, the Board of Governors approved a 25-basis-point decrease in the discount rate to 5-3/4 percent, the level requested by seven Reserve Banks. The Board also indicated that it stands ready to approve a further reduction of 25 basis points in the discount rate to 5-1/2 percent on the requests of Federal Reserve Banks.

These actions were taken in light of further weakening of sales and production, and in the context of lower consumer confidence, tight conditions in some segments of financial markets, and high energy prices sapping household and business purchasing power. Moreover, inflation pressures remain contained. Nonetheless, to date there is little evidence to suggest that longer-term advances in technology and associated gains in productivity are abating.

The Committee continues to believe that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future.

In taking the discount rate action, the Federal Reserve Board approved requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, St. Louis, Kansas City, Dallas and San Francisco.
-------------------
Bottom-line: The banking system will at all costs be kept afloat in a sea of liquidity at the peril of bringing the demise of the "strong dollar". The material distinction between currency units that merely grease the wheels and the actual wheels themselves (real wealth) will become ever so much clearer for all to see and appreciate.

FOA,
today you posted on the Gold Trail at 10:50 Eastern Time "Michael and Randy, today is a very good day! A very good day, indeed! (smile)"
It nearly leads me to fancy that you saw in advance that this surprise rate cut was in the works. Any other rabbits up your sleeve?
Peter Asher
(01/03/2001; 13:32:38 MDT - Msg ID: 44958)
@Pandagold

I have not doubted you for a minute about the "Big Fix."

Today is a perfect example: Gold spends several days in a down-draft with all sorts of theorizing as to why.

Answer: The inside money knew the event was coming, simple as that.
Mr Gresham
(01/03/2001; 14:09:19 MDT - Msg ID: 44959)
Fed 50bp cut
http://csf.colorado.edu/longwaves/2001/msg00000.htmlHow prophetically timely...

"This explains why the record of Greenspan's recognition of market trends has been consistently six months late. Yet the Fed cannot afford to wait for market discipline to correct a credit crunch. And because of the recognition time lag, coupled with the diminished ability of the Fed to
affect market decisions, and the compressed chain reaction time of collapse, each subsequent intervention would need to be escalated or overshot to achieve comparable effect, which in turn increases moral hazard to fuel the next abuse. It is intervention inflation, similar to the narcotic syndrome of pushing towards the edge to reach new highs which always leads to fatal overdosing."
Beowulf
(01/03/2001; 14:14:12 MDT - Msg ID: 44960)
FED
I wonder if this rate cut by the FED was due to them seeing information that is about to come out later this week. It must be really bad news to pull this stunt without the talking heads on CNBC analyzing Greenspans suitcase and whether it looked big enough to offer a rate cut.
Randy (@ The Tower)
(01/03/2001; 14:35:03 MDT - Msg ID: 44961)
Stock markets...spending currency...on what???
Historically, commercial banks have turned to the Fed Funds market for needed currency, shunning the Fed's direct discount window as though it were a self-admission of trouble and weakness. And yet, from the Fed's action and statement, we see that the Fed "stands ready to approve a further reduction of 25 basis points in the discount rate to 5-1/2 percent on the requests of Federal Reserve Banks."

As we watch stocks climb today (much short covering?) and devine the future, we must ponder why a person with an account of ready, spendable currency would use it to buy stock. After all, stock ownership can be seen as a bet on the company and its management to enjoy future prosperity. Is such prosperity likely in an environment in which the Fed finds this sudden need to help liquidate the banking system?

It is such official tinkering ostensibly "for the common welfare" that kills a fiat currency faster than what would be its natural course toward the inevitable death. So as I sit here typing this with a gold sovereign lightly clenched between my teeth (for the proper effect for the historian photographer), it strikes me as fundamentally clear that the Fed's rate cut may make dollars easier to come by, but does nothing to loosen the Earth's grip (nor the grip of other gold owners) on its preciously rare gold. As such, gold remains the supreme reserve asset honored and respected the world over...past, present, future. Call Centennial to get some for yourself at a very appealing price; with dollars that are made easier to come by, it will not always be this way. Upon what is your wealth built? Get real. Get gold.
Journeyman
(01/03/2001; 14:46:54 MDT - Msg ID: 44962)
Define or be defined -Thomas Sazsz @Mr Gresham
http://csf.colorado.edu/longwaves/2001/msg00000.html
Mr Gresham (01/03/01; 14:09:19MT - usagold.com msg#: 44959)

Interesting link, Mr. G!!

The guy's got a lot correct, but over-all he's hopelessly confused because he confuses "free-markets" with fascism of the merchantilist sort.

And he seems to think that problems caused by collusion between businesses and governments can be corrected by, well, MORE collusion between businesses and governments.

Just goes to show you what havoc can be wrought by simple confusions of terms.

Regards,
Journeyman
Randy (@ The Tower)
(01/03/2001; 15:09:39 MDT - Msg ID: 44963)
If you follow some of the commentary at USAGOLD, you will recognize good corroborating evidence in this Brige report
[Bridge News] London--Jan. 3--COMEX Feb gold futures managed to trim some of their
losses, ending down only 70 cents at $269.30 per ounce after initially
extending Tuesday's fall and slipping to a one-month low of $267.60. Like
Tuesday's session, Wednesday's trading proved to be another puzzle, as
gold price moves appeared to defy the usual market logic.
.........As well as weakness in gold,
the Commodity Futures Trading Commission commitment of traders report
provides some clues on why the price is slipping lower, said David Meger,
metals analyst at Alaron Trading. He said that it shows small speculators
are heavily long and trading against commercials and funds, which are
short. "You tell me who you think's going to win that battle," he said.
--------------

If you are a hedge fund that has previously borrowed gold from a bullion bank in order to raise a source of low interest funds for investment purposes, please marvel how very easy it is to offer the short side of futures contracts as necessary to create the stagnation in this realm of price discovery as needed to buy the time (and metal!) to unwind the prior gold loans.

Simply put, some financial "chapters" are written for the benefit of the overall book. Use their weight and effect to your own advantage and buy gold for yourself at these bargain prices. This condition will not last forever...for reasons previously stated.
ORO
(01/03/2001; 15:44:13 MDT - Msg ID: 44964)
Nasdaq and futures. - dollar and Euro - competing with the EU
By my rough calculation, the nasdaq buying is lagely futures and index (QQQ) related which have come through with some 60% of the funds.

The intensity of the Fed decision (1/2 point instead of 1/4)may have to do with the coming January expiration of a couple of weeks hence. The nominal drop on the ND 100 (the hedge vehicle sold by the banks to institutional investors) was over 55% from the top, and the quarterly drop was 40%, and nearly 50% from the summer rally peak. The year over year loss came in at about 40% as well. The maximum tolerance for drops of this kind on Nasdaq is some 30% by my estimate, therefore a major drop such as we have seen is too great for the banking system to tolerate. Thus once futures purchases did not work anymore at the current interest rate. Despite broker's (not investor's) margin debt rising beyond the levels seen at the market peak, the Nasdaq continued to deteriorate rapidly. The pace of decline and its persistence in the face of major price support efforts meant that put option trades were conducted at a loss that threatened some or all of the bank's financial viability.

Because the trades were too heavy on losses, and levels had accumulated so very sharply so far, it became necessary to lower the cost of the futures and the arbitrage into them to overcome the historically high friction (difference between realized and expected prices in executing an arbitrage trade) and the absolute magnitude of losses.

The heavy block trade selling yesterday and on the last trading day last year could have something to do with the inability of the banks to sell puts at a price that instituitonals could pay given their expectations for possible investment gains going forward. Not being able to hedge, they started dumping stock in order to reduce exposure. The rate cut would allow a drop in the effective cost to the bankers of conducting price support operations by 7-8%, and lower the cost of hedging to institutions by a similar proportion. Any additional reduction in premiums as a result of reduced volatility expectations would assist in lowering the price of protective put options.

Related to this is the heavy selling of stock by insiders now that cashing out of vested stock by selling rather than through guaranteed payout contracts. A large volume of insider stock was hedged and borrowed against over the years by insiders using a variety of brokerage and bank services. Through this system, insiders could lock in their income from stock grants and options while avoiding capital gains taxes. The cost was reportedly about 15%, including interest expense, providing a savings of 30% relative to after tax gains. The put option's portion of the cost of the contract was around 5-6%. At current volatility levels and interest rates, a comparable cost for the same strategy would have been 25% or so, since premiums on puts had risen 3 fold in the tech (and other high growth stocks).

Financial corporations selling thes hedge and loan packages have met heavy strains as their hedge strategies were met with illiquid markets and price gaps on opening of trade that made the hedge strategy nearly impossible to implement profitably.

The "Dead Body" that the bond market is looking for to explain the rather sharp Fed action in their announcement of Dec. and the current surprise action was still missing from public view. Needless to say, there must have been one and the corpse must have given off quite a heavy stench at the Fed's undertaking facilities.

The dollar reaction is a resumption in capital flow into stocks. The Fed and the Bushes might be thinking of working towards a continued capital drain on Europe, something not consdered by the Clintonites who tended to cooperate, and at times lead EU (particularly French) attempts at capturing international income by taxation. The attempt has been made by the Clinton IRS to capture all the income information and sources for income generated in the US financial system. They, and his Justice department have been extremely aggressive in their pursuit of financial information. The Clintonites were cooperating with the OECD efforts (led by French and some German interest) out to prevent governments from competing internationally on tax rates, regulation, and government services, namely protection of property rights.

As detailed in a post of a week ago, there are alternative options available to the Bushes that the Clintonites, being the socialists that they are, could not follow because their interests were too heavily intertwined with the preservation of a large and expanding government power. It should be pointed out that Clinton stood slightly to the left of the middle of the Democratic delegation to Congress, thus putting him to the left of at least 75% of Representatives and Senators. I am sure that many Democrats in Congress were apalled at the extent and depth of the Clintonite power grab, and were even distressed at the arrogant disregard of them that Clinton displayed in his practice of substituting executive orders for legislation - much of which did not have support of a majority of his own party's congressional delegation.

I am ever so slightly hopeful that the Bushes take apart the Clintonite barrage of executive orders and move policy away from cooperation with the EU socialists to competition - which the EU would lose because of the rigid economic and power structures.


Even with an oil backed Euro - meaning that the EU can print up its oil supply just as the US had done since 1971 - getting oil at a cost to third party countries - the EU would still face the fact that tar sands are profitable at $30-35 on a large scale, and coal based liquid fuel breaks even below $45 (numbers are a bit old, but costs were rumored to be falling), fuel cells from nuclear energy sources are also profitable at about $100 oil, and most of the cost is infrastructure - thus once it is installed, running use is very low in cost. Remember Yamani's warning to the Saudis that the "stone age did not end for lack of stones".

Europe will only be able to garner a limited and temporary advantage from the arrangement with Arab OPEC. Considering structural limitations to European management talent reaching its optimum positions in corporations, it stands to reason that the advantage would be squandered.


Note that the debtor is always the one coming ahead in a default. The debtor suffers recession - the creditor undergos a depression as existing export facilities are converted to local use, and some of the historical investment is lost. In the debtor's economy, the housing and warehouses remain and are as useful as ever, investment remains intact, just that the economy shifts from moving around imports to producing replacements for them.

Journeyman
(01/03/2001; 15:44:31 MDT - Msg ID: 44965)
Where expanded credit (as from a FED easing) goes -- as if we didn't know! @ALL

The objective of credit expansion is to favor the
interests of some groups of the population at the expense of
others. This is, of course, the best that interventionism
can attain when it does not hurt the interests of all
groups. But while making the whole community poorer, it may
still enrich some strata. Which groups belong to the latter
class depends on the special data of each case.
+
The idea which generated what is called qualitative
credit control is to channel the additional credit in such a
way as to concentrate the alleged blessings of credit
expansion upon certain groups and to withhold them from
other groups. The credits should not go to the stock
exchange, it is argued, and should not make stock prices
soar. They should rather benefit the "legitimate productive
activity" of the processing industries, of mining, of
"legitimate commerce," and, first of all, of farming. Other
advocates of qualitative credit control want to prevent the
additional credits from being used for investment in fixed
capital and thus immobilized. They are to be used, instead,
for the production of liquid goods. According to these plans
the authorities give the banks concrete directions
concerning the types of loans they should grant or are
forbidden to grant.
+
However, all such schemes are vain. Discrimination in
lending is no substitute for checks placed on credit
expansion, the only means that could really prevent a rise
in stock exchange quotations and an expansion of investment
in fixed capital. The mode in which the additional amount of
credit finds its way into the loan market is only of
secondary importance. What matters is that there is an
inflow of newly created credit. If the banks grant more
credits to the farmers, the farmers are in a position to
repay loans received from other sources and to pay cash for
their purchases. If they grant more credits to business as
circulating capital, they free funds which were previously
tied up for this use. In any case they create an abundance
of disposable money for which its owners try to find the
most profitable investment. Very promptly these funds find
outlets in the stock exchange or in fixed investment. *The
notion that it is possible to pursue a credit expansion
without making stock prices rise and fixed investment expand
is absurd*.[6] -Ludwig von Mises, Human Action A Treatise on
Economics, Third Revised Edition (Chicago, Illinois:
Contemporary Books, Inc. 1966), pg. 795 & 796 [XXXI.
CURRENCY AND CREDIT MANIPULATION, 5. Credit Expansion
available also on-line from
http://www.mises.org/humanaction.asp]
+
[6] Cf. Machlup, The Stock Market, Credit and Capital
Formation, pp. 256-261

Regards,
Journeyman
Trail Guide
(01/03/2001; 15:54:16 MDT - Msg ID: 44966)
Comment
Randy (@ The Tower) 13:32:16MT - usagold.com msg#: 44957)
-- surprise rate cut was in the works. Any other rabbits up your sleeve?------

Hi Randy,
Your post made me comment!

Ha! Ha! Allan blinked first and a small few knew it! Picture him and the ECB standing head to head, not moving an inch. He moved and now the dollar is lost. With all the quick short covering on the stock and currency markets, "noone" noticed how much the long bond got smashed.

------ A 30-year bond fell a whopping 2 10/32 to 111 2/32 to yield 5.48 percent -----

Now our strong dollar support system is fracturing away. This year the dollar will lose it's reserve status to the Euro. Or at the very least share it. Nothing is going to fall again as a "Real" inflationary bias begins to build in our dollar world. Stocks, real estate and even basic economic activity will all feel the effects of a super dollar expansion. Done only to keep the dollar status somewhat in the game. Deflation will not be allowed. Nor will the gold derivatives markets be sustainable in dollar terms. Everyone in the world will be selling paper gold short in an effort to make some hay as it's structure crashes. It's called piling on!

This move by Allan is as important as the Washington Agreement because it marks the first time we are forced to action by a "competing" financial system. This game is well known to some and it's outcome is being positioned for. The Gulf producers, Europe and the BIS have been doing so for many years.

TrailGuide



tg
(01/03/2001; 15:56:53 MDT - Msg ID: 44967)
(No Subject)
How serious is the problem when "steady eddy" Greenspan, the man who has previously only changed rates by 25 point increments in the past, today decides to go a 50 point change.

Even during the LTCM debacle he made only 25 point changes,even if it was 3 of them in quick succession.

Is there something really serious about to happen
canamami
(01/03/2001; 16:16:06 MDT - Msg ID: 44968)
Oro - re post# 44964
Oro,

You gotta force yourself to write that book...just put it down on paper, a speed demon first draft. The revisions won't be as extensive as you fear. Many apologies in advance if I'm being presumptuous, but I'm only writing this because I admire your work. Heck, a collection of your USAGOLD posts would perhaps be publishable (sic).

A quick question, and I hope you haven't already answered it on a previous post I missed (I'm not here much, anymore). You accept FOA's scenario of Arab support for an EU/Euro gambit (which I suspect is true), but also the necessary caveat that Arab oil's backing of the Euro may not be enough to carry the day for the Euro in its efforts to supplant the dollar. Does your scenario guarantee a role for gold in the future, IYHO? Assuming both the dollar and the Euro survive as major international currencies, could this mean that instead of gold being the alternative to the dollar, the Euro will be the alternative? In other words, instead of restoring gold to its former role as the ultimate money, could the Arab-backed Euro supplant gold re gold's more recent role as the dollar alternative?
Pandagold
(01/03/2001; 16:24:45 MDT - Msg ID: 44969)
Journeyman: (#44951)
A quote from your posting, in reply to mine, reviewed

"And I'm aware of the Rothschild scam after Waterloo. Etc. It's just that "they" don't have nearly that control or power anymore. Things are too complex. There are too many players now days and too many wild cards can bollix up their plans.

Further, it was "their" ancestors who, for relatively short-term gain threw not only us, but their progeny into the paper furnace we're burning in. They had no coherent long-term plans that have held-up very well that I can see."

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

Quite the opposite my friend; quite the opposite. What we are 'in' today is exactly because their power is greater today. far greater, than ever it has been. It is a network built over centuries. If it were a physical disease, it would be akin to an advance stage of terminal cancer. The long-term plans have held up excellently. Complex the situation is - yes. This is why very few can understand. The complexity is, and has been, integral to its growth and survival.

I believe you have the ability to 'see'. Just sit quietly sometime, free from distraction. Unfetter your mind, and let it expand. You have no doubt seen enough so called 'Mafia' movies. Forget the wide brimmed dark hats, and cigars, or cigarettes dangling from the corner of the mouth and any of the other clich�s.

Think of the structure, then put in a little refinement and expand on it. Think network and globalisation but not just in a present day context. You need to encourage competition between your units - that makes for strength, just so long as there is unity when needed.

You need 'front men� who do not belong the 'inside'. For instance, when the 'Mafia - the Mob' wanted to take over places in Las Vegas, they used Mormon bankers as front men.

Because I have used the word 'Mafia', and referred to some of their doings, do not lock onto this and think my subject is Sicilian mobsters or a la Hollywood gangsters . That is NOT what I am on about. It is the basic principle of organisation I am concerned with here.

Whether in the final analysis, that is, when the agenda has reached its final stage of total world control via economics (and these people do believe they have been charged with this responsibility) it will be a good thing, or a bad thing, I don't know. Maybe it will be a positive. Maybe it will end wars for good. It will almost certainly bring in a form of communism by the back road.

Yes, I know, it all sounds so unbelievable. I can understand anyone not comprehending (or even wanting to). It is a bit like having cancer - do you really want to know, or would you prefer to live out what life you have left free from the knowledge?

The best way to use the knowledge is not to worry about it, or waste your time trying to change things. A greater man than you or I tried to two millenniums ago, and look where it got Him. Use it by 'seeing' where things are going
and recognise the power that is behind it, then use that power to carry you along. Go with the flow. Learn from King Canute and don't argue with the tide.

As I have said, if this is all above you, I understand. One day, I am sure you will.

( Hope this has not been too heavy, it's hardly a piece of
dust on the full story, if it could be told)
Cavan Man
(01/03/2001; 16:25:48 MDT - Msg ID: 44970)
ORO
IMHO, the "temporary advantage" for Euro zone is in fact a breakout strategy for ME OIL for precisely the reasons you propose. Alternative energy sources (needing infrastructure or not) are in fact waiting in the wings. A way will be found to power this world we live in. This new life gold is taking on will yield incredible leverage to ME gold holders and displace oil as the #1 natural resource. I do believe their endgame is to become a permanent and dominant fixture in global banking within the context of a new monetary regime. Those that have physical gold will participate and ride the coattails of FOA's giants. The Euro zone will never effectively compete economically (long term) with the USA--NEVER. A zebra cannot lose its' stripes. Pain ahead for the US but, we will emerge stronger and hopefully wiser than ever.
Cavan Man
(01/03/2001; 16:28:14 MDT - Msg ID: 44971)
Mr. Greenspan
is now playing their game in their house.
canamami
(01/03/2001; 16:34:11 MDT - Msg ID: 44972)
Trail Guide - Best Wishes
Trail Guide,

I hope you and your family are well, and that matters resolve in a positive and desired-for manner.

I am pleased to see your recent posts, and to learn your "take" on current developments. Your posts cause one to look at matters beyond the parameters of the current mainstream paradigm.

Re Greenspan blinking. Question whether Greenspan is the agent of Ayn Rand's final revenge against mixed-economy pseudo-socialism and the fiat money system. Perhaps he's the ultimate mole-cum-fifth-columnist, subverting the system from within? Perhaps the way to destroy the fiat money system is to inflate it into oblivion? Maybe he's fulfilling his dream and plan, instead of blinking. Just a paranoid thought, upon which to reflect.
Cavan Man
(01/03/2001; 16:37:03 MDT - Msg ID: 44973)
venerable Holtzman
"He is the One we should love. He made the world and He stays close to it. For when He made the world He did not go away and leave it. By Him it was created and in Him it exists. Wherever we taste the truth, God is there. He is in our very inmost hearts, but our hearts have strayed from Him. Think well on it unbelieving hearts, and cling to Him who made you. Stand with Him and you shall not fall; rest in Him and peace shall be yours. What snags and pitfalls lie before you? Where do your steps lead you? The good things which you love are all from God, but they are good and sweet only as long as they are used to do His will. They wiill rightly turn bitter if God is spurned and the things that come from Him are wrongly loved. Why do you still choose to travel by this hard and arduous path? There is no rest to be found where you seek it. In the land of death you try to find a happy life: it is not there. How can life be happy where there is no life at all?"

Augustine of Hippo
"Confessions"
Book IV:12
Cavan Man
(01/03/2001; 16:38:38 MDT - Msg ID: 44974)
canamami
Why, that is not a paranoid thought. That is the stuff of epic screenplays!
YGM
(01/03/2001; 16:43:55 MDT - Msg ID: 44975)
Pandagold....
If the story could be told....I'm interested in the whole story as always....By email or post links if you would.....Never to old or wise to learn!
Thanks....YGM
yukongold@yknet.yk.ca
auspec
(01/03/2001; 17:11:27 MDT - Msg ID: 44976)
Paul
Welcome Aboard!Glad to see your input today and look forward to frequent posts! These guys have been magicians for years as all their "desperate" moves have patched up and kept intact their dollar hegemony games. How long and how many patches ?
MarkeTalk
(01/03/2001; 17:24:44 MDT - Msg ID: 44977)
Hedge fund(s) debacle in the making?
Today's "surprise" rate cut by Alan the Greenie ("genie" to some people) makes me think back to 1998 when hedge fund, Long Term Capital Management, was upside down and threatened to take down the whole financial system. With declining stock prices over the last six months, I suspect that some big boys on Wall Street were breathing their last. Bush's meeting recently with Greenspan plus today's "economic summit" in Austin, Texas all add up to emergency action to head off disaster--at least for a while. Remember, in bear markets, you SELL THE RALLIES. And rally the stock markets did do. However, no one noticed that the bond market cratered--down about 2 full points. This is in line with cycle predictions for bonds courtesy of Eric Hadik of Insiide Track newsletter.

Final thought: While the U.S. Dollar did a knee-jerk rally, I suspect that European and Asian money managers are looking at Greenspan's move today as desperation to breathe life back into a moribund economy. Keep an eye on the course of the U.S. Dollar. And how does all of this relate to gold prices? As the Dollar drops, imported goods become more expensive, thus pushing up the CPI. All other Dollar denominated commodities become more expensive, thus pushing up the PPI. From a timing perspective, next week is a full moon/lunar eclipse on January 9th. For whatever reason, markets turn on such events about 82% of the time. My opinion is that gold's day in the sun is just around the corner.
R Powell
(01/03/2001; 17:42:46 MDT - Msg ID: 44978)
Re ORO's Nasdaq and Futures

If I'm interpreting properly, ORO suggested in #44964 that Put options were sold by banks to institutional investors (read mutual stock funds). The funds bought these for insurance (a hedge) to offset stock price loses in the event that prices fell. Failing stock prices reflected in the Nasdaq index number would greatly increase the put options' value, offseting stock loses.
Questions please,
Did the liability assumed by the banks from these sales place the banks in jeopardy?
Did the resulting rising price of purchasing these puts (hedge insurance) cause the mutual fund selling of stocks as holding them unhedged was too risky? If so, then are index number derivatives (options) a stabilizing, necessary (as insurance) element of the big money investors (funds)?
ORO's words "Any additional reduction in premiums as a result of reduced volatility expectations would assist in lowering the price of protective put options." Cheap insurance is more affordable than high premium insurance but after the ups and downs of the Nasdaq recently, I would quess both put and call premiums are now very costly. Even so, I have to admit that a well timed S+P or Nasdog put might be lots of fun if Friday's employment numbers are not favorable. Will we see more fund stock selling if index hedging remains too expensive in light of capital returns on stocks?? If so, it would seem the line of least resistence is down as soon as the rally falters.
Also, if A.G. did raise rates because there is a "dead body" about to be discovered (another LTCM?), how long can this kind of news be kept hidden? Faltering point?
One last question, if I may,
If the dollar's strength today was, as ORO suggested, the result of capital flow into stocks, then if stocks reverse lower and retract to just where they were before the rate change, then nothing is gained but the dollar has been weakened by the rate reduction (causing the smile on T.G.'s face). Will the dollar start back down again as soon as the market stops going up?
Any and all thoughts over any length of time welcome, especially from ORO. I hope I haven't misread or misrepresented your thoughts.
Thanks
Rich
turbohawg
(01/03/2001; 17:58:11 MDT - Msg ID: 44979)
But, Peter ...
... everyone *knows* rates cuts are always inflationary, don't they ???

Trurl: Good post. There's lots of holes in that (continued) hyperinflation argument aren't there. In an exchange with FOA awhile back, traveller detailed very comprehensively the ultimate ramifications of the problems you are zeroing in on. If you missed it, perhaps someone can direct you to where it can be found.
mhchuck
(01/03/2001; 19:49:07 MDT - Msg ID: 44980)
Trail Guide


Yourself and Another have always been consistent in your vision of the future. You have consistently maintained that the world will not go back to a gold standard. That particular part of your message has caused me much distress. I attribute many of the problems in the world today to the proliferation of fiat money. For instance, the tearing apart of the social fabric of the United States directly mirrors the proliferation of fiat. And it seems whenever greatness in the past was achieved by different cultures or countries, it was accompanied by "honest" money, and whenever a country declined precipitously in standards of value and the citizens became debauched, it was also the case that the currency was simultaneously being debauched. It seems to me then, that monetary policy greatly influences the attitudes and actions of citizens as well as the health of cultures. Fiat being associated with cultural decline, and "honest" money being associated with cultural ascension. "Golden Ages" occurred when the circulating medium of exchange was "as good as gold."


I know you speak from the perspective of what these "Giants" are supposedly doing and have provided the readers of this forum incredible insights. I am confounded because you speak of gold as wealth, but not as money. In the same way, I am confounded that Doug Noland, from Prudent Bear, who writes probably the most informative letter in the world about credit expansion, and how it will ultimately destroy the world economy, said in a recent offering, "I'm not here to advocate a gold standard." I sat there thinking, "Doug, then tell me, what else on earth can harness unbridled credit expansion?"

While I would rather stand in the Footsteps of Giants than not, I believe strongly that currencies must have backing or their values ultimately decline to zero. Isn't a system of "wealth" denominated in gold, but a commerce conducted by ever depreciating fiat akin to having your cake and eating it too? Are they not mutually exclusive? Isn't this the exact system in place today, except that gold is not recognized as a wealth asset? And if it were, would not EVERYONE want to measure his or her wealth in gold and abandon fiat to an extent? Is this not the reason why gold is "held down" in the first place? If such a system evolves, would not gold become the "true" barometer measuring fiat debasement, relentlessly increasing in value to reflect unrestrained paper money creation?


I have posted quotes in the past from Ayn Rand that accurately depicted the problem. The Austrian School of Economics has accurately described the problem. Representative Ron Paul of Texas, seems to have isolated the problem, as last year he introduced a bill in congress to abolish the Federal Reserve System (how he continues to be re-elected must rank as the eighth wonder of the world, and is a testament to the many friends of freedom he has made). I have posted many quotes by John Meynard Keynes, whose convoluted thinking is used as a blueprint for today's monetary system that benefits the few at the expense of the many. It seems Mr. Keynes, and many other Prize-winning economists have their brains up their sleeve�.. and up to this point, the Euro, as I see it, is the first currency said to exist without ever existing, for nobody has ever seen or touched a Euro. I am reticent, at this point, to think of the Europeans as the "good guys" in terms of reestablishing gold's value despite the following quote from Another.

ANOTHER: "The Dollar is today, strong in nature of a low gold price. Tomorrow, it will be the Euro that will find strength in a low gold price! Perhaps these dollar "gold loans" will be called in to become "Euro gold loans"? Gold priced in many thousands of USD's does not change this currency, it changes your perception of wealth."


Your contention that the "paper" gold market will fail, I think, is accepted by just about everyone, and rightly so, since yourself and Another, informed the world with great accuracy the mechanism that was being used to "corner" gold. I'm on shaky ground here, but I can't perceive what would cause the ultimate default? In other words, who is going to demand the gold and foil the master plan? That plan being discouraging gold use as a measure of wealth, and the obliteration of gold from having anything to do with currency in circulation.

I doubt any political or legal action can put an end to the greed that is concomitant with this Fiat system that reeks of injustice and corruption. I do find solace however, in the knowledge that it contains the seeds of it's own destruction, and that the misguided (just being kind) natures perpetrating it will eventually be found out. They can buy decades as Mr. Greenspan seems to think, but I have no incertitude in stating that one day the world will return to gold backed money. On that day, a new "Golden Age" will have begun.

Sincerely,

mhchuck
The Hoople
(01/03/2001; 19:50:01 MDT - Msg ID: 44981)
Tears of Joy (?)
Easy Al no doubt took his marching orders from his CB bosses. They saw non-performing loans,bad debt exposure,equity liabilities and God knows what else as a financial system on the brink- again. Excessive paper money creates cheap credit, which creates equity bubbles and manias for goods. It is essentially robbing forward production from the economy. We have built and financed millions and millions of homes,cars, and everything. Unless they can figure out a way to be destroyed (wars usually did the trick in the past) they will slow the economy for decades to come. Every rate cut and goosing of the money supply only adds to the hard time the economy must serve. It seems if you could only make one financial decision that would have to suffice a lifetime would you choose a paper asset or gold/silver? While this is preaching to a choir,few people understand they are making decisions that could affect their children and maybe grandchildren. As a side note I would not be surprised to see gold let off its chain and run wild for a while should GATA start hitting raw nerves in discovery. They might try to embarrass GATA by "proving" its free market. Trouble is, you can't put a genie back in a bottle.
Cavan Man
(01/03/2001; 20:07:44 MDT - Msg ID: 44982)
Rate Cut
Mr. Greennspan's January surprise coming as it did, should underscore the fact that the US economy is in the danger zone both now and in the forseeable future. Smart money knowing that any rate cut however gratuitious and generous will take time to adequately oil the wheels of commerce should take this opportunity to lighten up. I expect a down day tomorrow for that reason and, if that happens, a minor rout for the DOW index to ensue. (everybody's got one)..CM
mhchuck
(01/03/2001; 20:47:01 MDT - Msg ID: 44983)
Cave Man


Bravo! A perspicacious observation on your part.
mhchuck
(01/03/2001; 21:04:27 MDT - Msg ID: 44984)
Cavan Man


oops, sorry about that.
PH in LA
(01/03/2001; 22:03:25 MDT - Msg ID: 44985)
Inflation updates
http://www.fuckedcompany.com/
Easy Al pulled his head out of his *ss long enough today to ascertain that there is no inflation out there anywhere so he cut interest rates. Funny, I guess he missed that piece all over ABC news yesterday about downsizing the packaging contents without cutting the price. Must have missed both of the following items also. Just where has his head been, lately, anyway?

Pricing
Online bank WingspanBank.com, mailed a letter to current customers announcing a number of
"pricing improvements", including a higher balance requirement, higher service fees, new
charges for online bill payment, lower rebates, and longer hold times on deposits. Keep those
improvements coming!
When: 1/2/2001
Company: WingspanBank.com

Also:
http://www.larouchepub.com/ref_NF1443_weimar.html

Dec. 20, 2000 (EIRNS)--A group of Washington State-based industries, including Boeing, one of America's largest companies, last week petitioned the Washington Utilities Commission for emergency relief from high electricity prices. According to Melinda Davison, the group's attorney, one company in the group paid $60,000 for one day's worth of electric power on Dec. 11, 1999. For that same day this year, that company faces a cost of $6 million, an increase of 100 times, or 9,900%, in only a single year. Most of that increase came in the last two months.

Increases of 500%, or 5,000%--even above 10,000%--in electric and gas prices, are and have been occurring across the country during the last year. Since energy is the lifeblood for the economy, skyrocketing prices devastate industry and agriculture, infrastructure, and people... (more)
Randy (@ The Tower)
(01/03/2001; 22:19:49 MDT - Msg ID: 44986)
Loosely organized thoughts that might help you ponder this further, mhchuck
http://www.usagold.com/halldiscussion.htmlWhat you are currently driving at in your (usagold.com msg#: 44980) is an important topic, indeed. So important, in fact, that I instituted the link above (found within the Hall of Fame) as a permanent reference mark for many fine thoughts on several sides of this issue. I encourage you and all others to review this material as time allows, and bring forward your additional thoughts.

As FOA/Trail Guide has indicated his scant time available for posting at the current time, perhaps this link (which contains many of his thoughts on the matter) and my following words will satisfy some of your desire for a dialogue on this.

You said to FOA, "I am confounded because you speak of gold as wealth, but not as money."

In truth, I believe a more accurate appraisal of FOA's sentiment is that "gold", "wealth", and true "money" are akin. It is the term and function of "currency" that is specifically the odd man out. So to correct the sentiment you offer, it seems more proper to say that FOA speaks of gold as wealth and speaks of gold as money, but does not speak of gold as currency. Those are by-gone days for the foreseeable future....but who knows what lurks beyond what is foreseeable?

You ask, "Isn't a system of "wealth" denominated in gold, but a commerce conducted by ever depreciating fiat akin to having your cake and eating it too?"

Marvelous thought, is it not?

Further, you ask, "Isn't this the exact system in place today, except that gold is not recognized as a wealth asset? And if it were, would not EVERYONE want to measure his or her wealth in gold and abandon fiat to an extent?"

In official operations, it has been institutional support of U.S. Treasury securities as assets that has obscured the picture somewhat for what you describe being "the exact system that is in place today". And yet even under the current scenario, we do not see everyone want to measure their wealth in these U.S. bonds and subsequently "abandon fiat to an extent". Reserves (and wealth) serve a purpose that not always meet the objectives and functionality of currency. In practice, we do tend to use "the right tool for the right job"!

You ask, "Is this not the reason why gold is "held down" in the first place?"

While it may look as though gold has been in a 21-year grinding bear market when seen through the traditional "market eyes", (or else look conspired against by "powers greater than thou"), what has transpired over the past half of the century--and particularly the past three decades--can be more aptly be described as the "work out process" of this latest monetary phase of mankind's economic evolution. After the separation from use as currency, it was necessary for gold to be lost and forgotten for a time (and seemingly languish under a mantle of paper) in order to re-emerge in the role for which it is uniquely suited...that of an uncheatable wealth reserve asset.

Such are my thoughts, and to that end, I perceive the future for gold in this new modern usage to be brighter than it has been at any time seen by those who have tilled the fertile soil before us. Change IS good...else we would be yet doomed to the mundane doings of hunters/gatherers.
Zenidea
(01/03/2001; 22:23:10 MDT - Msg ID: 44987)
Old news ? Interesting read anyway :)
http://www.drfurfero.com/readings/crashof1929.html Still reading it, immm twice now.
Black Blade
(01/03/2001; 22:41:33 MDT - Msg ID: 44988)
It's a Jungle Out There!
While George Dubya was in Austin, TX entertaining a few of America's CEO's, Cheeta went ape**** and threw out a 50 basis pointed banana. That is his way of telling George Jr. who is in charge and not to get too big for his britches. However, there still remains the problem of a slowing economy, higher energy costs, declining retail sales, etc. In fact December's retail sales figures come out tomorrow, and this is one of Cheeta's favorite sets of data, so obviously he got a peek at the numbers and he was scared s***less. We are likely to see several more acts of desperation as more bananas are thrown. In other words more rate cuts are forthcoming. Of course there is the developing energy crisis that continues to eat into the pocket books of American consumers. The old chimp is going to be under a lot of pressure to head off stagflation. Consumer liquidity is almost nonexistent as most are simply tapped out. Tomorrow could be interesting. I suspect that Cheeta will soon be throwing whole bunches of bananas before long. I saw that the financial media did their part by trotting out analysts galore to shout loudly that now the bad news was out and everything is just peachy now. Sorry, but I figure if there is one cockroach, then there are likely to be many more! Besides, nothing has changed. The fundamentals still stink. The only question left is now that the FED has tossed out a banana, what will the monkeys at the ECB do now?
JMB
(01/03/2001; 23:37:29 MDT - Msg ID: 44989)
The Dope Addict

Your typical doper could care less about the cost of his junk. However, he is very concerned about the supply.

If our masters are going to keep the addicts pacified the upcoming credit and money growth should be astounding.

Detox is going to be a bitch!
YGM
(01/03/2001; 23:44:57 MDT - Msg ID: 44990)
Euro Tax Man Comin....
HOW MUCH GOLD WILL BE BOUGHT FIRST?>>>>>LOTS!!!Euro swap will trap French tax evaders

FROM CHARLES BREMNER IN PARIS

GOVERNMENTS across Europe are quietly preparing to trap money-launderers and tax evaders when a mountain of cash emerges for exchange into euros on the launch of the new currency next January.
France, which has a long tradition of cash-hoarding by bank-shy citizens and tax-averse tradesmen, is leading the way with plans to monitor the origin of big sums when people turn up with suitcases of francs in the six-month changeover period. As much as �15 billion, half of all notes in circulation, are believed to be stuffed under French mattresses, in drawers or in private safes, according to banks.

Financial institutions and the tax authorities are hoping to reap a windfall from the currency changeover. Tax authorities and banks in all 12 euro states are bracing for the emergence of billions of pounds in hidden cash when citizens are forced to convert notes before they become worthless. If handled right, the exercise will provide a windfall opportunity for banks to collar savings and divert them into investment and also for the taxman to nail "dirty" money.

However there are fears that the confusion of the mass changeover will be used by criminals to launder illicit cash holdings. The impact could be spectacular in Italy, where a fifth of the economy is officially estimated to run on cash, much of it beyond the reach of banks and the taxman. The country's antiquated banking system will make it hard for the authorities to keep tabs on people turning up with suitcases of lire, Italian officials say. In Germany, which has a smaller black economy and a tightly regulated banking system, officials still fear that criminals could use the confusion of the changeover to launder cash.

"It is going to be boom-time for drug dealers and criminals trying to shed their holdings," a Berlin official said. Belgium, which also operates heavily on cash, is taking steps to check the origin of big sums.

France, with its old tradition of cash-hoarding, is taking the toughest measures to monitor the expected flood of big-denomination franc notes, which cease to be legal tender on February 17 next year. Thrifty French countryfolk and cash-only tradesmen were told yesterday to expect attention from the taxman. Keeping a nest egg in a bas de laine, or woollen stocking, is still popular among older French, especially in rural areas. Up to 80 per cent of all Fr500 (�50) notes are said by the Banque de France to be out of circulation. With French taxes among the highest in Europe, a substantial share of the banknote mountain is assumed to be held by artisans and small businessmen who operate au noir � on the black � to stay free of the taxman and the VAT man.

The franc-euro exchange will be free, but the catch for illicit cash-holders is that all but relatively small sums must transit through an account, even if withdrawn immediately in euro notes. The ceiling on non-account conversions has not yet been fixed.

Consumer groups are fighting the rule on transit through accounts, saying it is unfair. The banks are chafing under sweeping laws that require them to notify authorities of all "suspicious" transactions.

The campaign to acquaint France with the future currency took off this week. Citizens are being advised to get used to buying a baguette for 61 cents rather than four francs.

Polls show the public and small businesses to be resisting the idea of scrapping the franc, but the Government is banking on the revival of the euro against the dollar to help to convince a reluctant country that the changeover will be worth the effort.


YGM
(01/03/2001; 23:49:24 MDT - Msg ID: 44991)
A subject not discussed....(unless I missed it)
Currency outflows from 11 nations about to exchange for new Fiat??How much cash is being socked away in Dow & Duck, Bonds etc and Gold before the six month exchange period ends? Interesting I think....YGM.
Black Blade
(01/04/2001; 00:14:38 MDT - Msg ID: 44992)
Saudis push for OPEC cut

By David Buchan and Ruth Sullivan in London
Published: January 2 2001 20:40GMT | Last Updated: January 2 2001 22:57GMT

Saudi Arabia, OPEC's leading producer, on Tuesday called for a big cut in the cartel's oil production this month, but the move produced only a brief rally in the oil price. The call for a cut of 1.5m barrels a day appeared to convince the oil markets that OPEC will reduce production quotas when it meets in Vienna on January 17, but that this would not necessarily halt a slide in the price from last October's peak of $35. After a weekend meeting of the Gulf Cooperation Council, which also includes OPEC members Kuwait, the United Arab Emirates and Qatar, a Saudi official told the Reuters news agency that GCC leaders had told their ministers "to do whatever is needed to achieve the targeted price of $25 for the OPEC basket". To achieve this, a cut of 1.5m barrels per day would be needed, the official said.

The size of the proposed cut took some traders by surprise. "It is a dramatic proposal, as we had been expecting calls for cuts of 1m barrels a day," said Peter Gignoux, a trader at Salomon Smith Barney. However, the Saudi call failed to shake market belief that world oil supplies are adequate or even excessive. Brent February futures on London's International Petroleum Exchange rose 98 cents to $24.90 in mid-afternoon trading before falling back to $24.46. On the New York Mercantile Exchange oil futures jumped 54 cents to $27.34 in morning trading before falling back to $26.87 at midday. Other members of the 11-nation OPEC cartel, including Iran, Venezuela and Libya, have already stressed the need for production cuts to pre-empt the seasonal decline in oil consumption next spring, making agreement on cuts this month highly likely. The US has increased pressure on Saudi Arabia to maintain oil output, but Washington's leverage will be weakened by the imminent change of administration. The Saudi official's reference to a target of $25 for the OPEC basket implies a higher price for the Brent benchmark crude. The OPEC basket, composed of the crude oils of the cartel's producers, traditionally sells at a quality discount to Brent. It traded all last week at under $22 per barrel. A cut of 1.5m barrels a day would reduce production for the 10 OPEC members with quotas by around 5 per cent to just over 25m barrels a day. Iraq is not covered by OPEC quotas, because it is restricted by United Nations sanctions.

Black Blade: Hydro-Carbon Man is about to find a bit of a supply problem now that OPEC is poised to take control of falling prices and slowing demand. Higher prices will have to be passed along in the current environment, but unlike the inflationary magic of the "disappearing ounces" of grocery items that were exposed in the media over the last couple of days, the petroleum and NG dealers can't get away with lighter gallons, liters, and cubic feet.


View Yesterday's Discussion.

Black Blade
(01/04/2001; 00:15:47 MDT - Msg ID: 44993)
Oil Demand Decreasing, and Inventories Rising! (at least until revised next week)


--NY Feb crude down 25c on unexpected stockpile increase
--API: US crude stocks up 64,000 barrels in latest week
--API: US distillate stocks up 3.517 mln barrels in latest week
--API: US gasoline stocks down 2.677 mln barrels in latest week
--API: US refineries operate at 93.0% in latest wk vs 93.4%
--APIs imply US distillate demand 3.73 mln bpd vs 4.35 mln
--APIs imply US gasoline demand 8.62 mln bpd vs 8.58 mln

By Peter Rosenthal and John Troland, BridgeNews

New York--Jan. 3--The American Petroleum Institute (API) reported Wednesday unexpected increases in crude oil and distillate inventories, sending crude and heating oil prices lower in electronic trading. Crude stocks increased 64,000 barrels per day and distillates supply grew 3.5 million barrels, despite cold weather in the Northeast, the biggest heating oil market. Gasoline inventories decreased 2.677 million barrels, while refinery operations were slightly lower at 93% of capacity, a 4-basis-point decrease from the prior week. At 1721 ET, NYMEX Feb WTI crude was down 18 cents at $27.82 a barrel. Feb heating oil was down 183 points at 84.15 cents a gallon and Feb gasoline dipped 20 points to 80.80 cents a gallon. The data, for the week ended Friday, were delayed 24 hours by the New Year's Day holiday. The U.S. Department of Energy will release its weekly inventory data on Thursday after 0900 ET. Crude inventories had been expected to decline by 2.7 million barrels, while stocks of distillate fuel, which include heating oil and gasoline, were seen declining as much as 2.5 million barrels, according to brokersand analysts estimates.

CRUDE: Up 64,000 barrels

The rise in crude stockpiles is attributed to a 417,000 barrels-per-day increase in imports and a slight 71,000-bpd dip in refinery runs. However, based on those figures, the data indicates that crude inventories should have risen more than 3.1 million barrels, a broker said. Imports rose to 9.184 million bpd, from 8.767 million bpd the previous week. The largest rise in crude inventories was on the Gulf Coast and is consistent with the increase in imports. Stockpiles rose by 2.2 million-barrels in the region. Crude stocks also rose by 121,000 barrels on the East Coast.

In the Midwest, which includes the NYMEX delivery point for light, sweet crude oil futures at Cushing, Okla., crude stocks fell 1.863 million barrels barrels, helping to widen the year-to-year deficit there to 5.1 million barrels, from 2.8 million barrels the prior week. The strong drop in stockpiles caused one broker to suggest that the Feb/Mar WTI spread could widen 20-30c per barrel from its present level of a 73c premium in favor of February. Crude stocks also fell 723,000 barrels on the generally unrepresentative West Coast region as refinery operations there increased
2.1 basis points. The overall rise in crude inventories caused the year-to-year deficit in total stocks to narrow to 4.1 million barrels last week, from 4.9 million barrels in the previous week.

GASOLINE: Down 2.677 million barrels

A decrease in East Coast stocks was complemented by another large draw at the Gulf Coast, the largest refining center. Production dipped but was offset by higher import levels. Domestic gasoline output fell to 7.82 million barrels per day from 8.0 million bpd a week earlier, while imports dropped increased to 420,000 bpd from 174,000 bpd. Demand was steady above 8.5 million bpd. The drawdown narrowed the surplus to year-ago inventory levels at 3.25 million barrels from 5.2 million a week ago. Reformulated gasoline inventories on the East Coast, the basis for the NYMEX futures contract, rose 78,000 barrels and but are now only 3.4 million barrels above year-ago levels, versus a 5.1-million-barrel premium the previous week.

DISTILLATES: Up 3.517 million barrels

Demand for distillate fuels saw a major drop of 620,000-bpd from the previous week's 4.35 million- bpd level. This coupled with a 287,000-bpd increase in imports, to 514,000-bpd is the major reason distillate fuel inventories rose, one trader said. The largest increase in distillate stockpiles, 1.925 million barrels, came on the East Coast, the largest user of heating oil. However, while total distillate fuels increased on the East Coast, high sulfur distillate, or heating oil, actually declined by 458,000 barrels. Increases of 799,000 barrels, 148,000 barrels and 762,000 barrels were also recorded in the Midwest, Rocky Mountains, and the West Coast, respectively. The East Coast build helped narrow the year-to-year deficit to 7.3 million barrels from the previous week's 11.0-million-barrel level. The only drop in distillate inventories was on the Gulf Coast, where they fell only 117,000-barrels. Overall distillate fuel inventories are now just 6.1 million barrels
below the previous year's level of 124,255 million-barrels.

REFINERIES: Down 0.4 basis points

Overall refinery rates dipped slightly, although all regions outside the West Coast saw a decrease. Midwest rates dipped 2.4-basis points as Farmland Industries shut several units at its Coffeyville, Kansas plant for unplanned work on Dec. 23. Valero shut 88,000 bpd of capacity at its Texas City plant, which may have depressed rates in that region.

Black Blade: As the previous post would indicate, it is no wonder that OPEC wishes to tighten production.

Black Blade
(01/04/2001; 00:16:50 MDT - Msg ID: 44994)
Natural Gas Lower Despite Record Low Storage

By Gloria Gonzalez, BridgeNews

New York--Jan. 3--NYMEX Feb Henry Hub natural gas futures ended down 14.4 cents at $8.220 per Mbtu amid forecasts for warmer weather in the key consuming regions. This is despite a larger-than-expected withdrawal in the latest American Gas Association storage report. The American Gas Association reported U.S. gas storage at 1,729 bcf for the week ended Dec. 29, down 209 from the previous week, and down 708 from the same period of 1999. Observers said the number was bullish because it was larger than both the 1999 draw of 133 bcf and the five-year average draw of 135 bcf, but that the data was overshadowed by forecasts predicting warmer temperatures in the key consuming regions. If these forecasts hold true, then the next few draws on storage are expected to be well below this week's withdrawal. "They've been screaming about supply, but the shortage is in the market," said Guy Gleichmann, senior trader at FSG International. "This number was significant, yet the weather is weak." The AGA data appears to have taken a back seat, at least temporarily, to the weather forecasts, which continue to predict warming temperatures in the Midwest and Northeast and a decline in industrial demand caused by high natural gas prices. Gleichmann added, however, that the natural gas shortage remains a serious problem with supplies about 29% below year-ago levels. "Fundamentally, the supply shortage is nothing to sneeze at," he said, adding, "1,729 is real critical because of what lies ahead."

Black Blade: NG Storage Levels are falling fast and winter is far from over. We might dodge a bullet, but then again who knows. There aren't any more spare drill rigs, not enough engineers and geologists and drill rig crews anyway, so an energy crisis is a foregone conclusion. If not this year � certainly next year. The NG producers, power plant operators, and politicians are all asleep at the wheel as we go barreling over the cliff.
Black Blade
(01/04/2001; 00:27:22 MDT - Msg ID: 44995)
Peoples Republik of Kalifornia on Verge of Power Collapse (The Trials and Tribulations of a Third World Socialist Republik)
--Calif. PUC order proposes 1c/kWh SoCal Edison, PG&E rate hike
--Calif. PUC proposed power charge to be based on usage
--Calif. PUC power rate hike seen as temporary measure
--Calif. PUC power rate hike in effect for next 90 days
--Calif. PUC draft order proposes 9% residential rate hike
--Calif. PUC order proposes 7% rate hike for small businesses
--Calif. PUC order proposes 12% rate hike for medium commercial users
--CPUC order proposes 15% rate hike for large commercial users
--CPUC order proposes 15% rate hike for industrial users
--CPUC rate order does not end PG&E, Edison rate freeze

By Christine Cordner, BridgeNews

San Francisco--Jan. 3--The California Public Utilities Commission released this afternoon a draft order that would allow Southern California Edison and Pacific Gas & Electric to raise electric rates for the next 90 days by 7% to 15%, less than the state's two biggest utilities had sought. The commission will vote on the order Thursday after hearing final arguments later today. The increases amount to a hike of 1 cent per kilowatt hour based on usage for retail customers. In a statement, the CPUC said the order would grant temporary increases pending a detailed investigation of utilities' finances and market conditions, a review which could result in customer refunds. The order would raise retail rates by about 9% for residential customers, 7% for small business customers, 12% for medium commercial users and 15% for both large commercial and industrial customers. The raises are far below the 26% and 30% rate increases sought by Pacific Gas and Electric and Southern California Edison, respectively. Shares of both utilities dropped sharply after the news. At 1454 ET, Edison International shares were down 1 5/8, or 10.83%, to 13 3/8. PG&E Corp. shares were down 1 7/16, or 7.35%, at 18 1/8.
The utilities said they will respond to the draft order at the hearing. The commission said it intends to continue its investigation and would limit the rate increase to 90 days, "pending further hearings." The CPUC said part of that investigation will be the utilities' audits. Pacific Gas and Electric and Edison claim to have incurred more than $8 billion in wholesale electricity costs above the income they receive from their customers. The commission said it has hired independent auditors "to verify the veracity of these and other claims related to the utilities' financial health" and is using the 90 days to "perform a comprehensive review," including the utilities, their holding companies and their affiliates.

Black Blade: Well the other shoe dropped as the Utes said that this is not good enough, and unless they get relief from government action, then they will begin power rationing and begin bankruptcy proceedings. Just imagine, Kalifornian housewives not having access to their soap operas, and hubbies with access to their porn-on-line. Horrors! They knew this day was coming, so have no pity for them. "And the Grasshoppers danced, sang, and played all summer�"

Black Blade
(01/04/2001; 00:37:41 MDT - Msg ID: 44996)
Snippits -
NY Precious Metals Review: Feb gold trims loss after 1-mo low London--Jan. 3--COMEX Feb gold futures managed to trim some of their losses, ending down only 70 cents at $269.30 per ounce after initially extending Tuesday's fall and slipping to a one-month low of $267.60. Like Tuesday's session, Wednesday's trading proved to be another puzzle, as gold price moves appeared to defy the usual market logic.

Black Blade: No Kidding!

Fed cuts interest rates 50 basis points in surprise move Washington--Jan. 3--In a surprise move Wednesday, the Federal Reserve cut interest rates by a dramatic 50 basis points amid mounting fears that the slowdown in the U.S. economy may turn into a recession.

Black Blade: Desperation! Hard landing is in the cards as desperate moves such as this are geared to suck the last few pennies out of investors� pockets as they throw themselves headlong into another "suckers rally." All that cash will go to "Money Heaven."

US DLA offered 2,709.338 oz palladium on Wednesday New York--Jan. 3--The U.S. Defense Logistics Agency offered a total of 2,709.338 troy ounces of palladium from its Web site Wednesday. No material was sold Tuesday.

Black Blade: A spit in the ocean.

Europe Precious Metals Review: Gold capped at $270, palladium up London--Jan. 3--Spot gold remained capped at U.S. $270 per ounce through the European morning's trade after Tuesday's losses, maintaining a sideways path between $268 and $269. Overnight it had reached a high of $269.80 on Australian dollar strength. Silver was weaker, reflecting gold's stance. Palladium was stronger as the market continues to wait for news on Russian deliveries, while platinum was flat.

Black Blade: No deliveries of Pd are coming out of Russia!

Black Blade
(01/04/2001; 00:48:39 MDT - Msg ID: 44997)
AngloGold's Godsell may have been kicked upstairs
http://m1.mny.co.za/MGCurve.nsf/Current/8525686A00324CF5422569B3005F5E9B?OpenDocument
A different spin on the appointment of Bobby Godsell as chairman of AngloGold is that he's being kicked upstairs. The official view, however, is that the move is a thumbs up for management's strategy and that current AngloGold chairman, Nicky Oppenheimer, has more onerous duties on the Anglo American board and, for course, as chairman of diamond giant, De Beers. But given AngloGold's poor operational performance of its South African mines this year, it could be argued that Godsell's intellect and strategic nous is best suited to the role of chairman. Other skills that recommend him to the new role is his ability to motivate those around him. The flip-side of this argument is that AngloGold also needs a bred-in-the-bone miner to get the mines straight. Godsell said recently that the company could well appoint an operating officer and one is tempted to think that AngloGold could seek to recruit former director and current Gold Fields MD Ian Cockerill. Cockerill was a kingpin behind AngloGold's impressive productivity improvements in the mid-1990s, and he has since done a sterling job at Gold Fields. Although Cockerill is not the only expert miner, it's difficult for South African miners to find candidates within South Africa. One rising star is Gordon Miller who, at a relatively youthful 36 years old, has an excellent reputation working through the ranks of Western Areas and now Placer Dome South Africa. But Placer Dome have snatched him away for good placing him in strategic development at Placer Dome's head office in Vancouver. It's hard work for South Africans to attract skills. Just ask Impala Platinum who are still on the lookout for a chief executive to replace Steve Kearney who resigned earlier this year. Then there's Harmony Gold's Bernard Swanepoel, but the last time I wrote about Swanepoel being wooed away, a colleague of mine ended up in hot water ... so I won't say anything.

By: Pitcher

Black Blade: It is true that mining companies are usually run by bean counters that don't have a clue about the mining business. It takes experienced miners to run mining companies. Unfortunately, shareholders do not understand this and they tend to demand CEO's with MBA's. That might work with some "ordinary" business, but not with an industry as unique as gold mining. That is a reason so many gold producers went tits up, and many more will also do so. As far as Bernie Swanepoel being wooed away from Harmony � I hope not. Though I am intrigued about what would happen to Anglos hedging policy if it were to happen.

Black Blade
(01/04/2001; 01:33:16 MDT - Msg ID: 44998)
Gold in coma, but currencies flog the US Dollar
http://www.mrci.com/qpnight.htmhttp://www.mrci.com/qpnight.htmThis is interesting, Euro is back up +1.51 at 94.70, and other currencies except the yen are higher against the USD. The USD index is down again at 108.90. Futures are down as well. However, gold is still comatose.
SHIFTY
(01/04/2001; 03:11:38 MDT - Msg ID: 44999)
Trail Guide/FOA
Trail Guide/FOA: I am a small placer miner and own physical gold ( in most all forms) and also un-hedged mining company shares in equal amounts. I have a problem understanding how Gold will have a tremendous value and that this will not also be the case with un-hedged mining companies that produce the very substance that you say will be so valuable.If we hold physical gold in a safe place to be pulled out for use when needed , what makes the gold I hold better than the gold that will be poured into a bar on the same day in the future? Will it not have equal value in whatever is being used as the medium of exchange . I can see where physical may out perform shares ,and I also can see where hedged mines can go bust , but I must be missing something here. Are you saying that mining will be outlawed in the future? Or will it be performed only by a world government of some sort and all the people that own the mines can kiss their wazoo? I hope when time permits that you can shed some light on this for me. I know your time is more presious than gold right now and I pray that things work out for you and your family.

$hifty
Black Blade
(01/04/2001; 03:17:15 MDT - Msg ID: 45000)
Cheer-up! Interesting Snippit from dailyreckoning.com
http://www.dailyreckoning.com/THE BARBARIC RELIC

"Your gold history lesson reminds me of what I consider to be one of the great open questions in economics," writes Porter Stansberry. "How does Nixon's action - removing the dollar from the gold standard - effect the fundamental monetary conditions you mention in your story?"
Porter's position, shared by many investors, is that gold has been stripped of its monetary role...and left to respond to market forces like any other commodity. Under normal conditions, like other commodities, time and technology should reduce the cost of acquiring gold, increase its abundance and lower its relative price. In times of deflation, the price of gold, along with copper and pampers, should fall sharply. In times of inflation, gold should rise in price.

In the 1930s, the only period of significant deflation since the establishment of the Federal Reserve System early in the century, the price of gold rose. Gold was still money then, according to Porter's view.

But in 1968, the `gold pool' was closed down. A person could no longer trade his paper dollars for gold on the London market. Then, 3 years later, Nixon `closed the gold window' at the Treasury - so foreign governments could no longer trade their dollar surpluses for gold either. Since these two actions, gold has not played an official monetary role.

But to Porter's assertion of fact, that `gold is no longer money' I reply, flippantly:

"Who says?"

To his anticipated response: "The most powerful government on the face of the Earth, the world's only remaining super- power and the custodian of the most successful monetary brand in history..." I retort:

"So what?"

For all his many talents and virtues, it is unlikely that Richard Milhouse Nixon could have achieved what no emperor, dictator, or elected official has been able to do since the beginning of time: eliminate gold as a monetary competitor. Many have tried. But gold, though malleable, is unyielding in its monetary rectitude. An ounce of gold is an ounce of gold. It is neither more nor less than it appears to be.
Paper money is a great aid to politicians. It makes it possible for them, said President Hoover, to confiscate "the savings of the people by manipulation of inflation and deflation."

"We have gold," he added, "because we cannot trust governments."

Have governments become more trustworthy since Herbert Hoover left office and Bill Clinton entered therein? I will leave that to you to decide, dear reader.

Paper currencies are, like so much else that issues from politics, subject to persuasion, ambiguity and financial gerrymandering. As a result, paper currencies are very useful for creating booms and bubbles - they can be readily multiplied and distributed.

"If your view of gold being a safe haven in times of deflation is correct," Porter continues, "then it would stand to reason that gold prices should fall during inflationary periods, right? That's how gold prices have always worked throughout history. See Davidson's work from the August 1997 issue of Strategic Investment. He traced 400 years of gold prices...up to 1970...and found conclusively that gold went up in purchasing power during deflation and down during inflation."

Agreeing that gold has acted as a hedge against deflation from the time of the Flood to the Nixon Administration, Porter brings us up to date: "But the facts since 1971 seem to indicate exactly the opposite. Gold went from $45 to $850 in the 1970s in the midst of an inflationary crisis."
"My view," says Porter, "is that Nixon's action, and the structure of the US economy - an economy based on credit, not gold - turn the historic relationships upside down. Essentially the monetary conditions that we used to call inflation are now deflation."

Let us stop here or we are doomed to wallow in confusion for the rest of this letter. The terms `inflation' or `deflation' refer to the rise and fall in the supply of money. The increase or decrease leads to an corresponding movement in the prices of goods and services. As the money supply inflates, prices rise. When the supply of money decreases, prices fall.

If the supply of gold is inflated - whether you call it money or not - it will have the same consequence...each ounce of gold will buy less of other things. This is what happened when, for example, Spanish explorers began colonizing the new world and sending ships back to Spain laden with gold.

Inflation lowers the value of whatever is inflated: whether it is paper currency or gold. Deflation, on the other hand, diminishes supply and increases value. But is it possible that a decrease in the supply of dollars could produce a counter effect - an increase in the supply of gold? When the supply of dollars declines - a deflation of the money supply - will gold act like money and rise against other goods and services? Or will it act like any other commodity...and fall?

Is gold still money, in other words? Or is it just another commodity? And to those questions, I reply, confidently: Yes. Gold is both.

More to come...
Bill Bonner

Hi-Hat
(01/04/2001; 03:30:42 MDT - Msg ID: 45001)
SHIFTY
I pray that if it is going to happen anyway, that the whole
craphouse burns up today, because the whole panorama from Greenspan to debt to fiat to paper gold to energy etc.,etc.
ad nauseam is getting real BORING.

The kind of World we live in is one in which every night
anyone who is alive goes to bed in a diverse menage, with a common theme of: OUR GANG WILL GET YOU.
Black Blade
(01/04/2001; 04:49:09 MDT - Msg ID: 45002)
It's time to rethink the rules: the consumer vs. the environmentalist
From Steven King's PetroDispatch
Consumers are about to get an unpleasant surprise in their mailboxes, a fat bill from their natural gas company. This winter, natural gas will cost homeowners who use it about 40% more than last year. In the Midwest, the average family will pay more than $800 this winter to heat the home. And almost everyone will be hit with bigger bills as higher prices for gas, which now supplies a quarter of the nation's energy, work through the economy. That's all thanks to a short-term supply problem. Extraordinarily low prices a few years ago discouraged drilling. That supply cutback is causing today's price spike, and only now is the industry ramping up production.

But an equal part of the problem has been the federal government, who needs to get its regulatory house in order. On the one hand, the government champions the use of natural gas as a cleaner alternative to coal and oil. On the other, it sharply restricts access to enormous supplies out of environmental concerns. If one side or the other doesn't give, consumers will find natural-gas prices on the permanent high side. Compared with other energy sources, natural gas is relatively benign to the environment. It produces half as much greenhouse gas as coal, for example, and almost a third less than oil for the same amount of energy. The result is that almost all new electrical generators are powered by natural gas, roughly 70% of new homes built are heated with it, and city buses and car fleets increasingly run on it.

But while demand for natural gas is expected to climb 45% during the next two decades, getting access to more gas is another story. Roughly 214 trillion cubic feet of gas -- a decade's worth at current consumption rates -- is off limits to drillers. A moratorium forbids drilling off both U.S. coasts. More than half of the identified natural-gas supply is blocked in the Gulf of Mexico. And overlapping regulations from several federal agencies on federal lands in the West make exploration for much of its gas impossible. But still the environmentalists don't seem to care. Carl Pope, executive director of the Sierra Club, believes that reducing consumption is the only answer. "Increasing supply doesn't require drilling our wilderness and destroying the irreplaceable. We can find quick relief by tapping into existing wells now sitting dormant. Many wells were capped when recovering the remaining gas became too expensive. Today's prices give gas companies an incentive to recover the rest."

He still clings to the false rhetoric: "Gas drilling brings problems attendant with oil drilling: fluids and drilling muds pollute the ocean and landscape, and sprawling on-land industrial production complexes destroy fragile wildlife habitats. In addition, natural-gas-drilling accidents threaten people and wipe out wildlife. Drilling for natural gas can release pockets of poisonous hydrogen sulfide, called ''sour gas.'' Across the USA, communities have suffered when sour gas clouds from local wells have leaked into town, burning residents' lungs. The leaks can be lethal to wildlife."
Instead, the public should listen to a recent Energy Department report that stated, "advances in drilling technology in recent years allow gas to be recovered with minimal environmental harm. Horizontal drilling technology, for instance, lets a well dug in one place reach gas supplies miles away. Better detection technology minimizes noise pollution. Rigs are smaller and less intrusive." That same report also urged the federal government to take a more flexible approach to bans and restrictions, and called for greater coordination among regulators.

That's what Canada is trying to do. Its natural resources department says the nation is trying to accommodate multiple uses of sensitive areas, including gas drilling, by getting interested parties together to work out agreeable terms. Already Canada has a natural-gas well just north of Maine, where drilling is strictly forbidden. Ironically, the well supplies gas to New England. So far, however, Canada's prudent approach hasn't caught on here. There has been little talk of opening the oceans to any gas drilling, and little awareness of how environmental rules conflict with the need to boost natural-gas supplies. That could change under a Bush administration. Last week President-elect Bush called boosting natural-gas production a top goal, and officials in his camp have said that means looking at areas currently off limits to drilling.

Black Blade: No Energy - No Economy. Learn to live like the Amish and then barter for trade. Costs for energy are rising and it's only beginning. PMs should be a part of ones investment portfolio because the energy costs will severely impact the economy and PMs will act as portfolio insurance when Cheeta's plans fall apart.

Black Blade
(01/04/2001; 05:01:11 MDT - Msg ID: 45003)
PGMs are hot this morning!
Palladium is up +$3.00 at $978.00/oz, and Platinum is up +$20.00 at $634.00/oz. Unfortunately gold and silver are still comatose. Currencies continue to gain against the USD. Market futures are all in negative territory. Could be a reversal of yesterday's fortunes.
SteveH
(01/04/2001; 05:06:20 MDT - Msg ID: 45004)
Bill Bonner
Interesting reparte'. Seems though, that several essential factors have been ommitted by both parties. I will list them:

-- Gold increases; population increases too;
-- Role of dollar as a reserve currency for world oil supply; Affect Euro will have on same;
-- Was gold demonitized or just taken off the radar screen? Fact is, it is treated as both a commodity and a currency. Don't look at their words, rather their actions;
-- The affect of the "gold-carry" trade and how it would affect the price of gold needs to be seriously considered.
-- The action of the Press anti-gold sentiment campaign orchestrated by bullion banks and others who wish to have one believe gold is demonitized: look at who is buying gold; not selling it;
-- The ESF's role and the Bank of England Gold Auction; and the Suisse gold sale on the price of gold. Also understanding the motivation for these sales. Again, who are the buyers.
-- High grading practices by current miners and its future implications on supply.
-- Lack of exploration currently underway.
-- Understanding paper gold and gold leasing practices and how those are engineered or devised.

Once your friend and you take up the above and incorporate that into your models, only then will we all get a more accurate picture of what is reall going on with gold as money; gold as commodity.

Keep up the discussion.
SteveH
(01/04/2001; 05:21:30 MDT - Msg ID: 45005)
stuff
You know, yesterday's Fed move was an incredible act. Let's talk:

Fed sees markets (Duck, Dow, S&P) working there way down. They see stats of all sorts, they have a December meeting and decide to leave rates unchanged. Going into the new year, they announce a fifty-basis point drop in short-term rates in the middle of the trading day, which causes the 7th record Dow rise in history with recrod high volume; the Duck has a record high gain of 14% and the highest volume day ever. Some stocks are up 25 plus %. Hmmm.

Today, the futures are all down.

What do you call the act of putting two electronic devices on the chest to restart the heart? Any takers?


Yet, the pundits on the CNBC and CNNs all talk about the DOW and Duck are going to be ahead for the year because their research shows that in the past when these methods were applied, the year ended higher. Everyone was happy, oh so happy.

Doesn't anyone on those shows live in Seattle, where it rains alot? Are they helpless to figure out that they are dealing with a never-before-seen situation that requires thinking way over the curve and not just ahead of it?

Don't you just feel like saying to them, "Come on now, don't you see what is going on? The dollar is in trouble; we have overspent our currency; we have competition now; we must act differently this time; things have changed; don't you get it?"

These pundits are using math and models from what worked before; the Fed is the answer. Well, I guess we are about to find that out. Can the Fed bail us out? They think so.

Frankly, this would appear to be an issue of credibility. AG was under a lot of pressure to lower rates. The press was lambasting him for not doing it in December. Yesterday he fired for maximum affect and the futures are still down this morning. Well, let's wait 30-days and try again and then again and again. Hey, what about the value of the dollar throughout all this? Shouldn't we be watching that too?

To much to think about so early.
SteveH
(01/04/2001; 05:36:17 MDT - Msg ID: 45006)
Mozel
www.kitco.comrepost:

Date: Thu Jan 04 2001 03:06
mozel (@Gold and Yer House Mortgage) ID#357270:
Copyright � 2000 mozel/Kitco Inc. All rights reserved
"Regardless of where they are deposited, London, Bahrain,
or Singapore, and regardless of who owns them, Americans or foreigners,
Eurodollars never leave the U.S. This can be illustrated with the following example.

Suppose AT&T draws a check for $5 million on its New York bank, Chase, and deposits it at a London Eurodollar bank. All that has happened is that the ownership of 5 million U.S. dollars has passed from the AT&T to the London bank in return for a Eurodollar time deposit. The balance sheet of the London bank shows a deposit at Chase balanced by a liability, the time deposit credited to AT&T. The balance sheet at Chase shows that it has traded a deposit liability of $5 million from AT&T to the London bank.

Since that money earns no interest at Chase, the London bank will not want to keep it on deposit there. Suppose it uses the funds to make a loan to duPont that banks at Morgan. Chase will show a decrease of $5 million on deposit at the Fed and a decrease in liability of that amount to the London bank. Morgan will gain that deposit at the Fed and an equal liability as a deposit for duPont. The London bank's balance sheet will show a loan of $5 million to duPont balanced by a time deposit owed to AT&T.
Note that throughout both transactions there was no change in banking system reserves at the Fed, and the $5 million remained on deposit at a U.S. bank. A somewhat more involved analysis would show this to be true even if the Eurodollars had been lent to a foreign corporation. Unlike domestic U.S. banks, Eurobanks cannot create credit money in U.S. dollars through the act of lending. Their lending only transfers ownership of deposits at U.S. banks.
For U.S. banks, another important distinction between their domestic and Euro operations is that no reserve requirements and no FDIC premiums are imposed against their Eurodollar deposits. Thus they can invest every Eurodeposit they receive. The Euromarket operates outside the control of any central bank.
Banks accepting Eurodollar deposits use the dollars to make two sorts of investments, loans and interbank placements.
All such placements, like other Eurodeposits, have fixed maturities and
bear interest. The rate at which banks in London offer Eurodollars
in the placement market is referred to as the London interbank offered
rate, LIBOR for short.
The general practice is to price loans at LIBOR plus a spread. On some term loans, the lending rate is fixed for the life of the loan. By far the more usual practice is to price loans on a rollover basis. This means that every three or six months, the loan is priced at the prevailing LIBOR for 3- or 6-month money plus the agreed-upon spread.
Source of Eurodollar Funds

The pool of funds that forms the basis for the Eurodollar market is provided by a wide range of depositors: large corporations ( domestic, foreign, multinational ) , central banks and other government bodies, supranational institutions such as the Bank for International Settlements, and wealthy individuals. Most of the funds come in the form of time deposits with fixed maturities.
The banks also receive a substantial amount of call money. A call account can be a same-day value account, a 2-day notice, or a 7-day notice account. The going rate for call money is pretty much tied to the overnight Euro rate, which in turn is tied by active arbitrage to the U.S. Fed funds rate. The main attraction of a call deposit is liquidity. Time deposits pay more, but a penalty is incurred if such a deposit is withdrawn before maturity. Call money is likely
to average about 10% of a bank's total deposits.

Lender of Last Resort

A question that troubles some in the Euromarket is: Who is to
act as the lender of last resort? This really involves two separate
questions: Who lends if the supply of Eurodollars dries up?
Who lends if the solvency of a major bank in the Euromarket is threatened?
Dollars can't disappear, but they can move from center to center.
It's possible, though very unlikely, that dollars in the Euromarket could
dry up because the holders decided to move their deposits from banks in
Eurocenters to banks in New York. Thus foreign banks could face a
liquidity crisis. To protect against any such risk, many have negotiated standby lines with U.S. banks.

Central banks have discussed at length the question of lender of last
resort to the Euromarket, and have concluded that each looks after its
own. Thus the Fed is the appropriate lender to a U.S. banker whether
its troubles arise from its New York or London operations. Other
central banks are expected to stand behind their own domestic banks both
at home and abroad."

Geez, Adjustable Rate Mortgages are now tied to Libor.

If there is a liquidity crunch in this eurodollar scene, an avalanche of paper gold will result
SteveH
(01/04/2001; 05:41:04 MDT - Msg ID: 45007)
TG and ORO
seem to have taken on a slightly different bent on this Euro thing. TG is still on track for a reserve currency shift in progress from Dollars to Euros. ORO seems to be saying that such a shift will be temporary because as oil is priced higher in dollars, the alternative energy sources will come on line eventually making the Middle East - Euro connection less important as they technologies take hold and it will not revert back to ME oil once that change takes place. This macro, future talk is good for trending long term but it sure doesn't help much in the day to day volatility of the market other than to know that the volatility is a result of the above unfolding. So when presented with the question, when will phyical gold rise, TG seems to be saying, once paper gold dies. Whe is that? This year it would seem as that is when he (or she) is predicting that the dollar will be equalled or overtaken by the Euro as the world's oil reserve currency. In progress... as they say.

ORO, do we have this right?
SteveH
(01/04/2001; 05:47:01 MDT - Msg ID: 45008)
mozel again
www.kitco.comrepost:

mozel (@Gold Miner Income = Derivatives Income + $ Exchange Price of Gold ) ID#153126:
Copyright � 2000 mozel/Kitco Inc. All rights reserved
"Euro dollars in meltup killing derivative mkts, there is no way you can unwind/delta hedge trillions of dlrs of exposure in a mkt moving 15 to 25 pts a day as Eurodollars have been the last few weeks." Homestk Kid

Where is the eurodollar rate for the forward price of gold posted ?

Behold: "In general, if the spot price is S, the forward price is F ( T ) for a time-horizon of T days ( up to a year ) , the eurodollar rate is r, and the gold lease rate is r*, we have the relation
F ( T ) = S [1 + r ( T/360 ) ] / [1 + r* ( T/360 ) ]."

If the eurodollar rate rises, more forward sales will pour from the miners and depress the $ exchange price of gold. If the eurodollar rate rises to 20%, there will be a flood of paper gold onto the "market".
Sancho
(01/04/2001; 06:22:44 MDT - Msg ID: 45009)
(No Subject)
ALL: If your outgo exceeds your income your upkeep will be your downfall.....
Black Blade
(01/04/2001; 06:41:40 MDT - Msg ID: 45010)
Wall St. hangover looms Sharp early drop in U.S. stocks indicated after Wednesday's Fed-inspired rally
http://cnnfn.cnn.com/2001/01/04/markets/stockswatch/
January 4, 2001: 8:06 a.m. ET

NEW YORK (CNNfn) - U.S. stocks are poised to beat a hasty retreat Thursday morning, as investors step back from record gains inspired by a surprise cut in interest rates by the Federal Reserve. While not an unusual reaction to a day of such sharp advances, the expected sell-off calls into question whether the market will eventually continue to rally or revert to its recent gloominess, which was powered by corporate result warnings in a slowing economy. While pleased with the rate cut, done to help save the economy from a profit-sapping slowdown, experts note that the move does not erase the facts that manufacturing has slowed, companies have reduced capital spending and consumers have reined in their buying plans.

The Nasdaq 100 futures fell 41.50 points to 2,488 in early trading. That put the futures 70.28 points below fair value, a benchmark set daily by traders based on future contracts and their underlying stocks, meaning traders expect a lower open for the Nasdaq market. S&P futures, the most widely watched futures contract, lost 2.20 points to 1,357 on the Globex trading system. That left futures 3.16 points below fair value, suggesting a lower open for the S&P 500 index. With each S&P futures point seen as equivalent to eight points of Dow Jones industrial average movement, the early loss indicated a 25-point drop for the blue chip measure. On Wednesday, U.S. stocks finished sharply higher after the surprise Federal Reserve interest rate cut.
Christopher
(01/04/2001; 07:06:12 MDT - Msg ID: 45011)
Grandalf the White
A most sincere thank-you, for the gift I recieved last week. I would be interested to learn more of your alchemy process.

Best wishes for a Golden Year

Christopher
SHIFTY
(01/04/2001; 09:15:31 MDT - Msg ID: 45012)
Test
Hellooooo.....
JMB
(01/04/2001; 09:18:08 MDT - Msg ID: 45013)
Freddy and Fanny

I like to keep an eye on FRE & FNM...Real Estate will bring this party to an end, IMO. I've never seen them act this way...each down 3-4 bucks on very large volume (it's all relative of course). Some systemic problem raising its ugly head? Any ideas?
Randy (@ The Tower)
(01/04/2001; 09:40:33 MDT - Msg ID: 45014)
Fed adds $2 billion to banking reserves via 28 day RP operation
Banks heave sigh of relief as the rate is a half-percent better than Tuesday's $10.505 billion repurchase agreements, also, the Fed funds market has eased off of the 6-11/16ths level to within 1/16th of the new 6% tarket rate.
The Hoople
(01/04/2001; 09:55:56 MDT - Msg ID: 45015)
JMB
Fanny and Freddy bear watching. So do REITs. The slowdown has to be increasing delinquency rates. I pay attention also to housing permits, NOT starts. The actuals, not seasonally adjusted. Since there is about a 90 day delay between loans issued and permits if Mar/April/May are down significantly we are heading for trouble. Home Depot drastically scaling back expansion and laying off 10% of workforce was little noticed yesterday. This was another unprecedented event similar to MSFT's earning warning. I get monthly housing starts and permits if anybody on this site would like to see them.
lamprey_65
(01/04/2001; 10:10:20 MDT - Msg ID: 45016)
JMB and The Hoople
You may be on to something regarding Freddy and Fanny. Trading action looks suspicious beginning on Tuesday and after nice spikes after the rate cut yesterday, they both continued to fall off to lower levels yesterday and today.

Both had run up quite a bit late last year, so that may be part of what's going on, but also remember the government backing issues from last year.

Keeping an eye on this one.
Randy (@ The Tower)
(01/04/2001; 10:13:08 MDT - Msg ID: 45017)
Assorted important points for your consideration culled from Bloomberg
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=AOlSovhZWRXVybyBTExcerpts from this article...
HEADLINE: Euro Surges vs Dollar, Yen; Euro-Zone Still Seen Outperforming

"...investors speculated European economic growth will outstrip the U.S. even after an interest-rate cut by the Federal Reserve."

"[In today's trade,] At one point it [the euro] staged its second- biggest intraday gain ever, surging 2.59 percent [against the dollar]."

With the yen currency sliding again, please appreciate the wider implications (regarding company decisions under a sliding dollar) found in this next excerpt...

"Traders also pointed to a report in the Nihon Keizai Shimbun, a Japanese business daily, that Toyota Motor Corp. will manage its overseas profits in local currencies, rather than in the yen. The company plans a 3 trillion yen ($26 billion) fund in dollars, euros, yen and other currencies, according to the report, which cited an anonymous Toyota official."

With an eye to the future (regarding rate-cuts and currency strength) as the Fed will save banking system at all costs...
"Interest-rate cuts typically hurt a currency as they reduce the returns on deposits, and the Fed may not be through. Some analysts expect central-bank policy-makers will cut rates again when they meet later this month, further narrowing the rate differential between the U.S. and euro zone."
+
"The fact it was 50 basis points and was before the payrolls number smacks of panic" to investors, said Steve Barrow, a currency strategist at Bear Stearns International in London. "It was a totally ridiculous reaction from the dollar yesterday and it's only right it's paying for it now."
Holtzman
(01/04/2001; 10:28:08 MDT - Msg ID: 45018)
Eternity
Holtzman here,

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Central banks ARE mines
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Something of an epiphany recently hit me and, as in most of these sorts of things, I found myself wondering why I hadn't thought of it in this way before.

Like Copernicus realising that the math became so much easier once he put the sun at the centre rather than the earth, it occurred to me that the workings of the gold market became substantially easier to comprehend once I started thinking of central banks as if they were nationalised gold mines.

The United States nationalised gold mine in Fort Knox, for example, has proven reserves of approximately 8000 tonnes, and the cost to mine these tonnes is NEGLIGIBLE. For political purposes, the United States chooses not to mine its nationalised gold. But of course it could do so at a moment's notice.

By contrast, the United Kingdom nationalised gold mine in the Bank of England did choose, again for political purposes, to begin mining its negligible-cost gold in earnest.

How can a 'first-time' gold mine such as Harmony possibly compete? It survives only while a sufficient number of central banks choose not to mine the cost-free gold out of their vaults.

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Perhaps gold is Not eternal?
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Someone recently suggested that perhaps Platinum and Palladium had taken the place of gold as the safe haven for big money in the modern world. That raises two very intriguing concepts: 1) perhaps gold is not eternal, and 2) perhaps platinum/palladium can be a safe haven. While I can envision a day where 1 becomes true, I do have some reservations about 2.

As to the first, we at this forum so often blithely AssUme that gold will forever remain the purest form of natural money, simply because it has always been so regarded. But as the mantra of the stock brokers warns, past performance is no guarantee of future performance. Carl Sagan chose gold as the source material for his recorded messages on space probes because of gold's reputation for remaining eternally in the form in which it was manufactured. However, Coca Cola is nowadays bottled in aluminium for precisely the same reason. The element gold does not have a monopoly on eternity anymore.

We have only to look at our most optimistic literature to see what may lie ahead. The fictional future of Star Trek has, on several occasions, portrayed characters who do not value gemstones or gold. Oh, they're pretty to look at, but with transporter technology they can be manufactured by the ton effectively cost-free. Gold in the Star Trek era has thus had its scarcity value stripped from it. Residents of United Earth, upon observing a London Good Delivery bar lying at the roadside, would pass it by as you would pass by a discarded concrete block. To those readers whom that notion disturbs, perhaps you haven't grasped what Gene Roddenberry was trying to tell you: someday, humans may yet build a society in which citizens are so well satisfied that they have no cause to fear one another... and so have no need to stockpile defences against such threats.

But of course, the world of to-day is far from that idealistic Star Trek future. The humans alive to-day are descendants of creatures who were sufficiently cunning and lucky enough to avoid being killed just long enough to bear children. As a result, we have within us three thousand million years' reinforcement of proven survival habits, one of which is hoarding.

Of course, that urge to hoard can sometimes produce unhelpful results. Obesity is the classic biological example of hoarding: citizens of the civilised world seldom if ever encounter starvation, yet our inherited bodies seem to go out of the way to stock up on lipids 'just in case' famine should ever return (in years past, this was viewed as mainly an American phenomenon, but in recent years the waistlines have begun to spread in other nations as well). Further examples of nonsense hoarding figure prominently in the tabloids: mostly variations along the lines of 'old man's house found to contain uncounted thousands of meticulously cleaned and categorised three-inch lengths of string'.

Sometimes, however, hoarding is beneficial. Travellers on the Null Arbour Plain can seldom be said to be carrying too much spare water and petrol. The Scots managed to rebuke English invasions through the centuries by stashing weaponry everywhere (speaking of which, I'm told the most popular movie in Chechnya these past few years has been Braveheart). And there are countless instances where refugees have negotiated their way past soldiers because they'd planned ahead and had in hand a sufficient stash of gold, silver, jewellery, or some other portable and anonymous form of wealth.

Historically, gold and silver have had top bragging rights as the materials to which the frightened masses would turn in times of trouble. In contrast, platinum and palladium (like aluminium) are comparatively recent arrivals on the stage of man's emotions.

It is true that a lot of big money players are involved in both platinum and palladium, but I should stop short of describing their activities as safe haven investing. In order for something to provide a safe haven, it must be something which is about to be wanted by the masses, but which has yet to soar in price. And palladium has problems with both of those issues.

Practically every adult alive today, whether he owns gold himself or not, realises that gold delivers significant value in a small package. In sharp contrast, however, we few here at this forum probably account for 20% of the adults alive today who 1) recognise the word 'palladium' at all, and 2) know that it has recently soared in price.

As a result, the emotions of the masses have no more hold upon palladium than upon tungsten. There is no practical way in which the masses can hoard palladium, nor I suspect would they care to do so if they could. It's not even a filament of their imaginations.

Look back at any chart of any precious metal's prices. You'll find lots of rolling valleys punctuated by the occasional Matterhorn: from an otherwise calm trading range, the line will abruptly rocket to the heavens, only to plummet back to the valley floor almost as quickly as it arose. If one gradually accumulates while the price is in the valley, he'll have acquired a very safe haven indeed. However, if one begins buying in the stratosphere, he's going to hate himself later. And worse, if he's left being the owner of something which no one wishes to purchase at any price, he finds himself in the same condition as the shareholder of a defunct dot com. Or the hoarder of fiat banknotes from a now-defunct government.

The present day spike in palladium came about due to an incredible lack of foresight among consumers of palladium, primarily the automobile industry. It speaks volumes on human naivete to realise that it was the Japanese especially who allowed themselves to believe that a material 70% supplied by Russia would always be accessible to them.

The present day spike in platinum is being caused by anticipation that automobile manufacturers will retool so as to use the predominantly South African supplied metal in place of palladium. The amusing aspect of this is that, by the time the retooling is complete, the odds are phenomenally good that the South African economy will have collapsed into anarchy.

In both instances, the arrival of a recession in the largest automobile consuming nation (the U.S.) will dramatically lessen the demand for both platinum and palladium. Indeed, the anticipation of same will hammer down their prices in a descent approximately as sheer as their earlier ascent. From now until then we may see their prices double or even triple, but they could just as easily halve this afternoon. I for one have no desire to play catch with a cannonball.

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Global Conspiracy and The New World Order
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I continue to be disturbed by the trend towards conspiracy theories at forums such as ours.

Let us for a moment consider the mother of all conspiracy theories: one world government. The mere mention of that phrase seems to send shivers up some people's backs, but honestly now why should it? I find the best way to appraise a situation is to look back into history for situations which at least somewhat resembled it, then examine what became of those situations.

For example, prior to 1066, England was composed primarily of six earldoms. Heredity did count in leadership positions, of course, but it was by no means guaranteed that the eldest son of the present king would be accepted as his successor. Merit and the respect of the nobles counted considerably, and it was perfectly possible that the six earls might decide to place one of their own number on the throne if they deemed he would be the better man for the job. Of course, the opinion of the commoners was unimportant.

If this sounds vaguely familiar right now, it is perhaps because you just witnessed much the same transfer of power in the United States, where the votes of the earldoms (states) and the nobles (election officials and judges) held sway rather than the votes of the commoners.

Do any of you care how the Secretary General of the United Nations is elected? We've had a President of Earth for nigh on half a century now and most Earthlings haven't even noticed. The high king of England seldom if ever came into a commoner's house, either to benefit him or to endanger him. How many Americans have had Bill Clinton personally invade their homes? For every televised home invasion by federal stormtroopers, there are tens of thousands of interventions by local constabularies.

But that's the key: almost all invading officials are local to the invaded. The bobby banging on your door sleeps not twenty miles from your house, so he'd best bear that in mind when dealing with you. As rare as a federal intervention is, realise how rare a planetary one is. Kosovo needed a planetary intervention. Florida only needed a federal one, and that happened only because the gridlock in that one state was hindering the needs of the other states. I daresay that if a similar fiasco were to occur in one state's governor's race, the federal level would feel no compulsion to intervene.

It is an unfortunate side-effect of human nature that many if not most people allow themselves to fall into overblown we-they mindsets, world views wherein dark forces are massing on the horizon, bent on doing harm specifically to us. The creeping terror which naturally results from such self-fulfilling world views is perhaps the prime motivator behind individual adults' acquisition of physical gold and silver (and individual children's acquisition of stuffed animals).

Being aware of that tendency among the masses, and steeling yourself to avoid falling into the same panic, is the key to knowing when to buy gold, when to hold gold, and when to sell gold.

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Getting ALL the gold
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There's a recurring theme among aficionados of conspiracy theories that 'They' are out to get all the gold away from 'Us' and, once 'They' have it all, 'We' will be at their mercy.

But think that scenario through for a moment. Let's say that NWO, Inc., somehow manages to buy, beg, borrow, or steal every ounce of aboveground gold in the world, down to the very last flake. Let us further say that NWO also takes control of (or at least has the power to destroy) every gold mine on the planet. I gather that's what's anticipated by the conspiracy fans.

In the aftermath of such a complete acquisition, I find myself asking the rather simple question, 'So what?'

Were someone to corner the world's supply of industrially crucial palladium, for example, then yes that would send distortions and convulsions through the world economy. The fact that such a cornering has occurred through post-Soviet ineptitude rather than through brilliant cunning is rather beside the point. The material in question has a very real value because it is a key component in core parts of the world economy... at least, until the major users of palladium have time to retool their systems to instead partake of an alternate material not quite so unreliably supplied. By the time the Russians have their act together, the world will have largely abandoned palladium as an industrial metal.

By contrast, if someone were to stand up to-day and announce, 'I've completely cornered the world's supply of francium and you lot can't have any', I truly doubt there'd be much outcry apart from the odd researcher.

Now let's try that with gold. 'Whilst you lot weren't paying any attention, we at NWO, Inc., have rounded up all the gold in the world and it's ours and you can't have any. Because it's ours.'

Okay, I'll grant there might be a general sense of 'wait a minute' from the world at large. And there would be the more immediately justifiable outcry from electronics makers who had only recently set to wondering why their supplies of electroplate were dwindling. There'd be an even greater outcry from all of the past purchasers of electronic equipment who, now they come to examine the sockets more closely, find that the NWO has successfully infiltrated their homes and offices and scraped all the highly conductive gold electroplate off every contact.

But again, apart from comparatively minor industrial inconveniences, 'So what?'

At this imagined and increasingly ridiculous stage, no-one would still be in possession of even a half sovereign or 5 gram wafer from Credit Suisse, so no-one except NWO, Inc., would have any further stake in any future price of gold. Indeed, by having completely removed the elemental substance from any active market, this nonsensical NWO, Inc., would have caused there to be no such thing as a price of gold, any more than there is a price of francium. Now I ask you: what possible benefit could there be for NWO, Inc., having found themselves the proud owners of a 60-foot cubed block of a substance which they themselves have just rendered valueless?

And that's the nub of it. If you're very very lucky, there may be as many as 4 atoms of francium within a kilometre of your present location, but your complete inability to lay hands upon them has hardly harmed you. Francium plays no biological part in your life, nor does it play any technological part, let alone any monetary part. Gold, come to think of it, plays no biological part in your life, and very little technological part. Nor, for billions of people, does gold play any monetary part.

Indeed, there's already been a far less effective NWO, Inc., rounding up gold for nearly a century now... the various central banks. A third of all the gold ever mined is cloistered in perhaps a dozen government vaults around the world. Additionally, perhaps another third of aboveground gold is cloistered in the vaults of petty governments and of wealthy individuals. And whilst all of that gold has been disappearing from pockets and arriving in vaults, the world economy has experienced the greatest explosion in living standards that humanity has ever experienced.

What makes gold valuable is not its elemental utility. A lump of gold is no more useful than is a still-valid slip of paper with a queen's or president's face on it. What makes gold valuable is that humans have historically regarded it as something other humans will accept in return for food, clothing, petrol, and other things directly necessary for life. What makes paper valuable is that a still-valid government imbues the paper with that same (legal tender) status. The big difference between paper and gold, of course, is that gold minted by a defunct government has the same value as gold minted by a still-extant government, whereas paper printed by a defunct government lost almost all of its value the moment said government fell.

But this notion that, by rounding up All the gold, some conspirators can gain power, is quite honestly wrong-footed. DeBeers, for example, would only be harming itself by attempting to round up all the diamonds not currently owned by them. DeBeers actively wishes for there to be many prominently visible diamonds in the world. The catch is that there should be just few enough of them that there shall always be persons who have no diamonds, and so who are willing to overpay to acquire them.

To maintain that dearth of accessible supply, DeBeers maintains vast holdings of diamonds, many years worth evidently. Just like a central bank's gold hoard. Now why should it be that this vast overhang should be ignored by the market pricing mechanism? Well, for one thing, because DeBeers is the only central bank for diamonds, and it's unlikely to do anything to cause prices to plunge. DeBeers manages the flow of diamonds in the same way that the Aswan Dam Authority manages the flow of the Nile.

By contrast, there are many central banks holding significant quantities of gold, some of whom wouldn't mind seeing a rise in POG, whilst others wouldn't mind seeing a fall in POG. Imagine competing dams, some of whom wouldn't mind seeing the lowlands become a desert, while others wouldn't mind seeing the lowlands become a lake. The result is that no single cabal exists which can control gold in the way in which DeBeers controls diamonds. Despite fears to the contrary, the price of gold is set in a far freer fashion than are many luxury goods.

More importantly, each of these competing central banks hold sufficient amounts of other wealth so that their gold component is, to the bankers themselves, not significantly large. That's why the Bank of England can sell its gold at a 20 year low and can afford to look stupid for having done so. It harms them no more than it harms you to occasionally pay Federal Express charges to post a letter. Is it foolish to pay �26 when it absolutely, positively has to get there overnight? Of course not. It's only foolish if you pay �26 for no good reason.

Likewise, the Bank of England is incurring only a very minor loss on its gold sales, yet is obviously doing so in pursuit of some greater gain elsewhere. There has been a concerted attempt since 1999 to stop sterling from tracking with the U.S. dollar, instead trying to steer it towards favourable alignment with the euro, primarily to stave off capital flight from the UK into Ireland and the rest of Euroland. As often happens with such interventions, the effect is only just now beginning to kick in, too late to retain several important manufacturers such as Sony. Hmmm, now there's a new catch phrase... 'Sony capitalism'.

(to be continued...)
Holtzman
(01/04/2001; 10:31:37 MDT - Msg ID: 45019)
Eternity (continued from previous)

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Well met, Sir HBM
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To Hill Billy Mitchell regarding (12/31/00; 13:49:07MT - usagold.com msg#: 44762 through 44771), I say EXCELLENT! You've taken me gloriously at my word when I suggested a month or so ago that we should all thoroughly challenge suppositions until their truth or falsehood was made plain. I was afraid for a time that no one was going to challenge my own suppositions, and I thank you for it.

I especially like your passage, '...to some, gold is physical. To some, gold is political. To some, gold is philosophical. To some, gold is safety. To some, gold is religious. To some, Gold is God. To most gold is a mixture of several of these.' Frankly, I think that statement would be an ideal motto at the entrance to this roundtable.

With barely two lines of text, you have wonderfully captured the point I was attempting to make in (12/01/00; 10:17:12MT - usagold.com msg#: 42604): if one would wish to know whether to buy, sell, or hold gold at any particular time, the first thing one should do is find out how his fellow market participants feel about gold at that time.

The second thing one should do, and by far the more difficult, is to then act contrary to the masses. When everyone wants to own something, that's the time to sell it to them. When everyone wants to sell something, that's the time to buy it from them. In order to successfully do this, however, one must realise that most market participants think like sheep, and one must consciously lift oneself out of the sheep mindset.

Please do accept that I mean no harm by describing my world view here. Quite the reverse: it is only by becoming aware of other people's world views that we improve our own chances of living happily to a ripe old age. As Peter Asher rightly pointed out in (12/31/00; 21:46:12MT - usagold.com msg#: 44797), 'the western bible viewpoint is a rather small percentage' of humanity. And for that matter, the mainly-U.S. fundamentalist viewpoint is an even smaller percentage of Christendom. As a result, although your own world view gives you a pretty clear idea of how U.S. fundamentalists currently regard gold, it will not help you to successfully anticipate how the other 95%+ of the gold market's participants will arrive at their buy/hold/sell decisions, simply because they are reading from different playbooks.

Note that I approach religious issues in the same way I approach political and investment ones: they are all things which, rather much by definition, cannot be perfectly known. That's why I see no incongruity in occasionally touching on religious issues at this gold-centric forum. It doesn't help us much to debate the precise number of angels which might or might not fit on the head of a pin, but every person who buys, holds, or sells gold does so for reasons which include his or her opinion as to whether angels exist in heaven or only on 20 franc coins. By observing how others around us arrive at the conclusions they draw, we can use those other conclusions to refine our own. This makes it more likely we'll survive and thrive as the world shifts and churns around us.

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How clean can I make that slate?
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You and I both genuinely attempt to start our contemplations with clean slates. But here we diverge: whilst you expect that you can perfectly clean your slate, I do not expect that either of us can ever completely clean either slate. No matter how hard we scrub, there will always be a few molecules of chalk clinging tenaciously to the surface. So, sitting here as I am with a slate which I feel I cannot perfectly clean, how can I have any hope of drawing reasonable conclusions?

Hope lies in realising that it's not necessary to achieve perfection. As most leaders of men will readily affirm, it's almost always unwise to try to acquire 100% information before making a decision. The final 5% will take longer to acquire than the first 95% did. But more often than not, being 95% certain of something is sufficient. Those who wait in hopes of 100% generally have their lunches eaten by their competitors.

For example, no president of a gold mining concern knows precisely how many ounces of gold are under his feet. But he does have a rough notion, and that's usually sufficient for him to keep things rolling. He simply doesn't care to know to the seventh significant digit how much might be down there. It's not only not possible to know, it isn't necessary to know.

Conversely, the recent political debacle in the U.S. state of Florida shows what goes wrong when people expect math to perfectly model an imperfect world. It is now literally impossible to accurately count every vote in that election, because voting forms and equipment which were sufficiently accurate to call a 60/40 election were simply not up to the task of calling a 50.0000001/49.9999999 election. Before nightfall on the day of the election, the system had already irrecoverably failed to capture the information it needed to ascertain the intention of every voter. Everything after that moment was tilting at windmills.

Nurses seldom take a patient's blood pressure more than once per visit for precisely the same reason: they could take it a hundred times and it would be different every single time. One might as well accept the first measure, because it is no less valid than would be a second or fifth or fiftieth 'recount'.

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Close enough for government work
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For me, there are no absolute truths. Not even in mathematics: two plus two sometimes rounds up to five for large values of two. But there are lots of 'close enough' truths, and most of the time they are quite sufficient. Religion provides perhaps the most contentious demonstration of this problem, particularly in regards to the notion of infallibility. When I describe myself as an apathist, what I'm trying to convey is that it does not disturb me to think that the particular edition of the Bible sitting on my bookshelf might be riddled with errors. Indeed, it reassures me.

While I'm quite confident that you, HBM, rarely if ever fall into this trap, I do observe that many people who believe without question every printed word in one book have a hard time questioning the printed word in other locations. Take the ubiquitous tabloid headlines declaring that the Bermuda Triangle is somehow supernatural. There it is in print, after all. And I'll admit to having had in my youth a deep hope that the myths of the Triangle might turn out to be true. But as an adult I learned an interesting thing: the run from Bermuda to the Bahamas is one of the most popular among amateur boaters... combine too much money, not enough common sense, and large amounts of alcohol, and it's suddenly not so very surprising that lots of boats disappear there. Nowadays I regard the Triangle as nature's way of weeding out rich idiots.

Each of us either fosters a habit of questioning everything we observe, or of accepting everything without question. And therein lies all the difference between people to whom history happens, and people who cause history to happen.

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Always demand a second opinion
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The point on which I'm sad to say I expect we shall never see eye to eye is that I do not regard any single text as a reliable document, religious or otherwise. The human authors of any text, and the innumerable human editors and translators who subsequently lay hands upon that text, each have their own world views and resulting temptations to omit and/or rephrase that which they do not like. I cannot in any way accept, for example, that the long-forgotten monk who translated the parable of the talents into Jacobean English was any more objective than is, say, the copy writer for the Gold Council.

When Dr. Greenspan speaks, is he saying what he honestly believes, or merely saying things which will cause the reactions he desires? And, as Black Blade points out almost daily, journalists who crank out economic reports are highly likely to either 1) have a personal bias even if a subconscious one or 2) lack expertise but face a deadline and so type what sounds good.

As a general rule, one rendition of a purportedly historical event should never be accepted as accurate until a second independently recorded report can corroborate it. And if the two reports disagree? Seek for a third. Even though the printer has carefully applied the letters HOLY BIBLE to the front cover in gold leaf, I still want to read an Egyptian account of Exodus before I'll be willing to accept that the story is historically factual. That the story is religiously inspirational I do not question, but that's an issue independent of determining what really happened.

So yes, whilst I would regard the original lightning-graven tablets of the Ten Commandments as infallible were they still available to-day, you are quite accurate when you suggest that I cannot regard any subsequent reprint as infallible. Not even the 'original Hebrew and Greek manuscripts', you might ask? Well, so far as I am aware, Joshua ben Joseph spoke Aramaic, so every one of the Greek phrased quotes ascribed to him was already at least once translated, and that left the door wide open for errors of interpretation. And if he had learned Greek in school? Well, recall that U.S. president Kennedy stood in downtown Berlin and sincerely attempted to show solidarity with the assembled crowd by declaring 'Ich bin EIN Berliner'. Unfortunately for him, this was received by the audience as 'I am a donut'.

HBM, I hesitate to 'directly' quote Machiavelli for precisely the same reason. I do not speak modern Italian, much less 1500s Italian. I have read three English translations of The Prince, and to my complete lack of surprise I find that the resulting English phrases used vary a great deal within the same passage. But I look for the general sense of it, rather than try to tease out precisely what Nicolo might, or might not, have been subtly trying to imply. Indeed, it is the man's lack of subtlety, his preference for candour, which recommends the work to me. But even so, when he makes casual reference to minor events instantly familiar to his own generation, the references are lost on a modern audience without translator intervention. And that presumes that the translator himself understood the reference, an often unwise presumption.

One of my favourite modern examples of translation problems was the catastrophic failure of an American refrigerator company to advertise in Thailand. They hired a local fellow to render their slogan, 'Out of sight, out of mind', into Siamese. Not grasping that this was an idiom, the chap took it literally. On about ten thousand billboards all over Thailand were displayed smart photographs of these attractive little refrigerators with the slogan 'Invisible things are insane' emblazoned over them. Whilst I daresay the translators of religious documents are more careful, by being human they simply cannot be perfectly careful. Thus, the results of their endeavours cannot be infallible.

Interesting thought: the U.S. is roughly comparable in size to Europe, but the majority of Americans know only one language. Where we over here have daily reminders of the fallibility of language translation, many of you live long lives without such reminders. That may go quite a ways in explaining why Biblical infallibility is mainly an American notion.

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Safety is where you find it
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Throughout time, there have been a minority of humans who were of a mind to 'step out of the box' and look back at the world from afar. You've met people of my mindset before, though most of us have had the sense not to admit it to you. I am much more candid at this forum than I am with those who know my real name, because honesty without anonymity often invites peril. Because we are willing to see the big picture, the vast majority of us are able to avoid the limelight and present the appearance of leading the most boring, uninteresting lives. Which explains why the Chinese consider it a curse to wish for someone to live in interesting times.

Most of us use our world view for survival, not self-aggrandisement. And if that world view can assist others in seeing an approaching fist, so much the better. It's by no means necessary that others abandon their own cherished world view: by simply becoming aware that your world view is not the only one, you dramatically improve your chances. But there are things to recommend our world view, obviously, else we wouldn't live long enough to talk about it.

We're the ones who shook our heads when we saw footage of people scrambling for the last helicopter to leave Saigon. We'd already long since left the place, just as Einstein had long since left Nazi Germany before the trap sprang shut on those less observant. The phrase 'How did they not see that coming?' is, sadly, a frequent visitor in our thoughts.

But not all of us are seekers of quiet. Many of the names you find in history books, for both good and ill, number among those who position ourselves outside looking in. There's a line from the movie, The Hunt for Red October, where the head of the U.S. Security Council says to the CIA researcher, 'I'm a politician, which means that while I'm kissing babies I'm trying to figure out how to steal their candy. But it also means I keep my options open.' A small few of us keep our options open with intentions of becoming infamous, but most of us do it with intentions of staying out of harm's way.

You, HBM, place great confidence in the faith in which you were raised, and you likewise place confidence in gold over other investments. By contrast, I have no such confidence in any one thing. As the last two decades have demonstrated, gold is not always a safe haven. However, with each grindingly lower year, gold becomes more and more a safe haven. But how much lower can it go? Quite a bit. Will it? There's no way to know.

I suppose that's the crux of it right there: I do not believe in eternal safe havens of any sort. Nothing is forever safe because everything is always in motion.

The devoted faith of English Catholics served them quite well right up until 1535 when Henry VIII decided he wanted a divorce. Within the year, many who continued to look to their religion for safety found instead that it had become their doom. Four hundred years later, hardworking and patriotic German citizens who worshipped in synagogues discovered to their horror that their faith had marked them for death. Heaven only knows how many prayers from concentration camp victims went unanswered. Just a couple of years ago, peaceful citizens of the former Yugoslavia were assaulted and driven from their homes because they were Muslim (well, more generally, because they were not Serbian).

Those of you who saw the movie Braveheart witnessed a great example of the divide between HBM's world view and my own. I daresay HBM finds a lot to admire in William Wallace's willingness to stand unflinching against the enemy. For myself, whilst I do greatly admire the man's courage, I cannot help but bow to the sense of Robert Bruce's decrepit yet wise father who knew when to get out of the way of the hammer. No, I didn't like it, any more than the young Robert Bruce liked it, and I would have tried to handle it in some other way had I been that decisionmaker, but the father's act did preserve the Bruce family and give it the chance to fight again another day.

To quote another Mel Gibson movie, Chicken Run, when Ginger says 'We'll either die free chickens, or die trying', recall that one of her fellow captives then wonders, 'Are there any other options?' Whilst I myself found Mac to be my closest kindred spirit in that movie, I couldn't argue with the ever-knitting chicken's sensibilities on that question. Actually, come to think on it, there was another line she said that was very much in keeping with my mindset: 'My life flashed in front of my eyes ... it was really boring.'

People who live long enough to pass in old age into the hands of their chosen maker are almost always those who knew not to raise their hands during a hijacking and ask for the kosher meal. Most such observant people had also secreted their savings in places untouched by time or by tyrants. Sometimes those safe places included gold. Sometimes not.

As it happens, I tend to think that the present day is a reasonably safe time to gradually acquire gold, regardless of one's personal motivations. We've been descending into the valley of POG for years now, so the odds of gold's present price being unsupportably high are quite a bit less than they were in years past. But because there's no way to know for certain, I own a little of many different things, and I really don't care which one if any suddenly leaps for heaven.


Yours,
I.V. Holtzman


PS: To USAGOLD regarding (12/31/00; 21:12:58MT - usagold.com msg#: 44796), I got a great laugh from your wife's interpretation that 'he was obviously a twelve year old child trying to stay out of trouble with his mother.'

PPS: To Pandagold, who wrote in (12/3/2000; 6:54:02MT - usagold.com msg#: 42780), 'It has now become a well known clich� in Britain that Hollywood gives the "baddies" British accents.'

Well, I suppose it's to be expected. For half a century 'til just recently, Hollywood's standard way of identifying baddies was to give them either German or Russian accents. But as American movie-goers began to have difficulty pointing out Germany and Russia on a world map, Hollywood realised it had to find other ways of putting a 'not one of us' label on the baddies. You can even see where the transition occurred: the lead baddie in Die Hard was a German terrorist, so naturally they cast London-born Alan Rickman (who couldn't utter a proper German R even if he leaned his head back).

Weird casting decisions do seem to be pretty equal-opportunity, however. Scottish actor Sean Connery was cast as a Lithuanian submarine captain. Mexican actor Ricardo Montalban was cast as Sikh warrior Khan Noonian Singh, whilst Yorkshire-born Ben Kingsley was cast as Ghandi. That they each managed to pull it off brilliantly is rather more a testament to their acting skills than to the casting skills of their employers. I'm just waiting for someone to cast Priyanka Chopra as Hillary Clinton. And don't even get me started about Robin Hood.

Sometimes, though, they get it right. One of my favourite movies is the 1981 film Arthur. Most people remember it simply as a comedy about a chap laughing whilst being drunk, but it's really a story of the depths to which loneliness can drive one. The casting of Dudley Moore as a New York financier's son was panned by several film critics who argued that the son's accent ought to have been like the father's. But watch that film again and ask yourself something. Decades before the events portrayed in the film, who do you think took the time to teach the child how to speak? Arthur's biological father? No, too busy at work. Who else would have cared enough but Hobson the butler (played by John Gielgud)? Those casting decisions were spot on.
JMB
(01/04/2001; 10:46:58 MDT - Msg ID: 45020)
The Hoopie & Lamprey 65
Hoopie, those monthly housing starts and permits along with your observations/opinions would be very informative, TIA. Delinquency rates are starting to rise. Can you immagine what would happen if unemployment shoots up? I have a feeling that many home owners would become tenants. The RE market is so levered up that a super crash is all but certain. When? If you know, don't keep it a secret.

Lamprey, "but also remember the government backing(sp?) issues from last year." Did you mean 'banking'? I need some help here...can you spare a brief refresher course? TIA
Peter Asher
(01/04/2001; 11:44:25 MDT - Msg ID: 45021)
Holtzmans Msg#45018-45019

Nominated to the Hall of fame!

Possibly the best post ever to appear here, this is IMO the most comprehensive covering of the two most prolific subjects on the Forum, Gold and Religion.

Newcomers to the Forum would be well served by being directed to this missive before engaging in discussion and debate.

Holtzman: One little detail. --- How about changing "German citizens who worshiped in synagogues discovered to their horror that their *faith* had marked them for death."--- to the actual reality that their *blood-line, no matter how diluted* had marked them for death.

Also. could you explain the German "doughnut" translation?

mhchuck
(01/04/2001; 11:50:30 MDT - Msg ID: 45022)
Randy (@The Tower)

Hi Randy,

I clicked on the link you provided, and as promised, I found both sides of the issue were well represented. It was easy for me to side with ORO on this issue. Thank you for addressing several of the questions I asked FOA.

I'm not averse to change, and yes, that "uncheatable" wealth reserve concept you mention would suit me fine.


Best Regards,

mhchuck
beesting
(01/04/2001; 12:01:25 MDT - Msg ID: 45023)
A Second to Peter Ashers Nomination for Holtzmans #45018 & # 45019 into USAGOLD HOF!
After reading these 2 posts my thoughts were stuck on the lyrics from a long forgotten popular song:
"Hands Across the Water, Hands Across the Sea!"
(I'm in the U.S.)

And my favorite line in the post:

<>

Great posts....beesting.
Old Yeller
(01/04/2001; 12:27:30 MDT - Msg ID: 45024)
Rate cuts, will they work?
Interesting thoughts from Mr.Moto at piraz.com.

"It all depends entirely upon whether the remainder of the investment world believes the US dollar is worth the artifically inflated valuations of the underlying assets;specifically share assets.Furthermore,in order to make them believers, the asset valuations must be driven higher in a fashion that is nothing short of spectacular and supported.Which means a continuance of US monetary expansion and therefore, another probable strike at the heart of gold.
YGM
(01/04/2001; 12:53:33 MDT - Msg ID: 45025)
Well I Got it Right for 'Once'...
Rally & 48 hrs.....Yesterday I said 48 hrs, hell it didn't last 24. Selling the Rally is still going on and after yesterdays gains are wiped out the selling will be given another name and new reasons by the (again) gloomy faced talking heads.......
Reality bites harder than a angry Rottwieller....YGM.
YGM
(01/04/2001; 12:58:02 MDT - Msg ID: 45026)
Will French or other Euro Participants be buying Gold???
With all the Hoarded Paper?..........Randy, any volume for CPM to Europe?Euro Tax Man Comin....
HOW MUCH GOLD WILL BE BOUGHT FIRST?>>>>>LOTS!!!
Euro swap will trap French tax evaders

FROM CHARLES BREMNER IN PARIS

GOVERNMENTS across Europe are quietly preparing to trap money-launderers and tax evaders when a mountain of cash emerges for exchange into euros on the launch of the new currency next January.
France, which has a long tradition of cash-hoarding by bank-shy citizens and tax-averse tradesmen, is leading the way with plans to monitor the origin of big sums when people turn up with suitcases of francs in the six-month changeover period. As much as �15 billion, half of all notes in circulation, are believed to be stuffed under French mattresses, in drawers or in private safes, according to banks.

Financial institutions and the tax authorities are hoping to reap a windfall from the currency changeover. Tax authorities and banks in all 12 euro states are bracing for the emergence of billions of pounds in hidden cash when citizens are forced to convert notes before they become worthless. If handled right, the exercise will provide a windfall opportunity for banks to collar savings and divert them into investment and also for the taxman to nail "dirty" money.

However there are fears that the confusion of the mass changeover will be used by criminals to launder illicit cash holdings. The impact could be spectacular in Italy, where a fifth of the economy is officially estimated to run on cash, much of it beyond the reach of banks and the taxman. The country's antiquated banking system will make it hard for the authorities to keep tabs on people turning up with suitcases of lire, Italian officials say. In Germany, which has a smaller black economy and a tightly regulated banking system, officials still fear that criminals could use the confusion of the changeover to launder cash.

"It is going to be boom-time for drug dealers and criminals trying to shed their holdings," a Berlin official said. Belgium, which also operates heavily on cash, is taking steps to check the origin of big sums.

France, with its old tradition of cash-hoarding, is taking the toughest measures to monitor the expected flood of big-denomination franc notes, which cease to be legal tender on February 17 next year. Thrifty French countryfolk and cash-only tradesmen were told yesterday to expect attention from the taxman. Keeping a nest egg in a bas de laine, or woollen stocking, is still popular among older French, especially in rural areas. Up to 80 per cent of all Fr500 (�50) notes are said by the Banque de France to be out of circulation. With French taxes among the highest in Europe, a substantial share of the banknote mountain is assumed to be held by artisans and small businessmen who operate au noir � on the black � to stay free of the taxman and the VAT man.

The franc-euro exchange will be free, but the catch for illicit cash-holders is that all but relatively small sums must transit through an account, even if withdrawn immediately in euro notes. The ceiling on non-account conversions has not yet been fixed.

Consumer groups are fighting the rule on transit through accounts, saying it is unfair. The banks are chafing under sweeping laws that require them to notify authorities of all "suspicious" transactions.

The campaign to acquaint France with the future currency took off this week. Citizens are being advised to get used to buying a baguette for 61 cents rather than four francs.

Polls show the public and small businesses to be resisting the idea of scrapping the franc, but the Government is banking on the revival of the euro against the dollar to help to convince a reluctant country that the changeover will be worth the effort.
The Hoople
(01/04/2001; 13:37:20 MDT - Msg ID: 45027)
JMB
Will pass housing numbers on, next release Jan 18 for December's starts/permits. That should be a pretty brutal one. Just to give a few more clues my friend who is president of a large regional midwest bank said they are tripling their bad debt reserve, adopting a repo on vehicle after 2nd late payment policy, and opening a "car lot" on the bank parking lot. He has 3 - 6 month old vehicles already repo'd or turned back in on lease. He had a $31,000 Yukon 4 months old that didn't bring the $21,000 minimum bid. As far as building materials go many are priced lower than in 1991 during Iraq war. OSB board has dropped 20% in 4 business days. Surprising to me is nothing went up today after Easy Al's juicing and in fact lumber futures approached limit down today, settling down $7.40 m/bf. One of the largest insul sheathing board manufacturers told me they would do anything to keep product flowing because their cash flow was acute to survival. Another barometer to watch is Home Depot stock. If it begins floundering it is practically the default setting for voting for this industry. I would view a break of $40 as ominous. Since it is a mutual fund darling an exodus would probably be cronies getting tipped off. Will post as can,but time often limited.
turkey hunter
(01/04/2001; 14:07:19 MDT - Msg ID: 45028)
Swiss Gold News
Swiss Natl Bank gold holdings fall
A corrected version follows:

(Adds details on gold, SNB 2000 earnings, background)

ZURICH, Jan 4 (Reuters) - The Swiss National Bank said on Thursday the total amount of gold held on its books as reserves by the end of 2000 fell by 2.276 billion Swiss francs ($1.42 billion) to 34.725 billion francs.

An SNB spokesman said the drop from December 20 to December 29 largely reflected a decline due to the SNB's regular quarterly assessment of the value of its gold.

The book value was revised down to 14,335 francs per kilo at the end of December from 15,245.65 francs at the end of September, the SNB said in a statement.

The SNB began gradually selling some of its gold holdings last May and ultimately plans to sell 1,300 tonnes, roughly half of a total 2,590 tonnes.

The SNB said at its year-end news conference in December that it had sold 160 tonnes of gold since it began the sales and plans to sell the same amount again through end-September 2001.

It is one of 15 European central banks which agreed in 1999 to sell a total of 2,000 tonnes of gold over a five year period, with annual sales not to top 400 tonnes.

In a separate statement on Thursday the SNB also said it had produced a surplus for 2000 of 28.1 billion francs.

Excluding gold, 2000 earnings totalled 2.7 billion francs of which 1.5 billion francs will go to the federal government and cantons as mandated by law.

The vast remainder resulted from a legal change effective May 1 which allowed the SNB to value its gold at market prices, well above the old book value of only 4,595.74 francs per kilo.

The revaluation led to an extraordinary book gain of 25.4 billion francs in 2000, a small portion of which will go into a special provision for market and liquidity risks, the SNB said.

The remainder, totalling 18.9 billion, will be set aside.

Switzerland has yet to decide how to use the windfall from revaluation of the gold. The Swiss government, in the wake of criticism of the country's role in World War Two, proposed placing the proceeds from sales of 500 tonnes of gold into a charitable Solidarity Foundation.

Swiss right-wing politician Christoph Blocher has opposed the plan, favouring instead using the gold proceeds to shore up the country's old age pension scheme.
Journeyman
(01/04/2001; 14:26:08 MDT - Msg ID: 45029)
Home Depot reported to be closing several stores @Hoople
"Another barometer to watch
is Home Depot stock. If it begins floundering it is practically the default setting for voting for this
industry. I would view a break of $40 as ominous. Since it is a mutual fund darling an exodus would
probably be cronies getting tipped off.
Reported on CNBC today." -Hoople

According to CNBC (didn't take specific note) Home Depot will be closing several of its stores this year.

Regards, j.
Journeyman
(01/04/2001; 14:29:07 MDT - Msg ID: 45030)
Home Depot reported to be closing several stores @Hoople

OOPS! THIS version is correct, the one directly below is misleading. Hoople wasn't reporting on any CNBC info as far as I know. SO completely disregard the other version of this message!!

"Another barometer to watch
is Home Depot stock. If it begins floundering it is practically the default setting for voting for this
industry. I would view a break of $40 as ominous. Since it is a mutual fund darling an exodus would
probably be cronies getting tipped off." -Hoople

According to CNBC (didn't take specific note) Home Depot will be closing several of its stores this year.

Regards, j.
Artie Farkle
(01/04/2001; 14:38:14 MDT - Msg ID: 45031)
Old Yeller post 45024
Hello all
I have been lurking for several months. This is my first post.
Old Yeller asked if there would be aonother strike at the heart of gold in connection with the Fed. rate cut.
Could it be that there was a massive (PREEMPTIVE) strike on gold two days before the cut.
Any thoughts from anyone on this.


Mr Gresham
(01/04/2001; 14:45:03 MDT - Msg ID: 45032)
Holtzman vs. Romanticism
Dagnabbit! Now I'm not gonna get any work done today with this writer's words a-simmerin' in my head. So I might as well get this out.

To start, IMO, any post that can hang its philosophical threadwork on "Chicken Run" (and the exegetic study of Mel Gibson's works) deserves the HOF Oscar.

This year, I've spent time in Europe (Italy), the US East Coast (where I used to live), and (where I live) the West Coast. I've noticed the differing bands of attitudes before, but, for brevity's sake, I'll say that this year I've discovered the label for it: Romantic Zones.

Bad label, I know. But it is the differing levels in romantic outlook on life which strike me as we move from west to east and back again.

(I am torn. To continue writing this today is a romantic outcropping of belief and enjoying the power of expression of words and shared joy of communication. To stop, and get my client calls and billing done is pragmatic, survival-oriented, and self-needs-centered. As usual, I'll try to slice it both ways.)

The frontier spirit was the myth that most captured the American imagination, and those who are able to speak it unabashedly and who appear to be living it (John Wayne, Ronald Reagan) become the unquestionable icons of American life. Occasionally, the frontier myth captures Europeans as well and they send us lots of money. Thank you. Merci. Grazie. Danke.

(Side thought from an ill-educated goy: Israel and Zionism seem to have a great frontier romantic component behind them, as well as their stake in pragmatic survival.)

Religion is at the furthest extreme of the romantic imagination and it commands a certain baseline respect within American life, no matter the actual practices of the adherents.

With regard to Christianity, I have known people to become believers in order to recover from alcoholism, to save troubled marriages, to recover from childhood abuse. Personal "salvation." (Note: This does not necessarily invalidate the religion itself, just makes the believer a less-relevant proselytizer to me.)

I have also known people whose beliefs originated more "rationally", from the Social Gospel of Jesus' teachings. "Wouldn't it be a better world if everybody..." (These don't proselytize at all.) Many attend churches primarily for the social companionship. Yet Dr. King and others have shown the prophetic, even mystic, potential of religion based on nonviolence and justice.

In my own romantic youth, I "stormed the gates of Heaven" out of some other metaphysical need, probably the desire to know what was real and if this world we see around us is all there is. The wish, at age 20, not to wander in a wilderness missing a fuller life I could have had by a little more curiosity.

I had (a few) experiences that told me that the foundation of the religious quest is probably real, that Jesus (and others) were most likely really there as the less-translated accounts say, but that the useful discovery of them must be made in each individual's life, and that that would take a lifetime of, yes, wandering in the wilderness. (A hard and incomprehensible "Answer" to receive at age 21.) But, like Holtzman, I'm not sure even of this, and none of it to the point I would impose on another. I can live with that, and do.

I found no group, book, or single philosophy that could give me the Easy Way Out. Only temporary oases or rest stops (some with very nice, clean bathrooms.)

Fundamentalism and evangelicism share that sense of romanticism (and have a very large market share). They don't present themselves to me very well as philosophies, even based on what we know of Jesus and his teachings. They are very much, as Holtzman points out, American phenomena.

Yet I can't dismiss them, because I know that INDIVIDUALS are having the learning experiences they seek and are capable of, and they WILL come to their own conclusions, as only they can. Yes, I want to know what inspires them. And if they only find shelter for awhile from chaotic times around them, I don't begrudge them that. I've been there, and the need still flares up once in awhile.

NWO and other conspiracy theories are a sort of anti-romantic romanticism. Study that Devil! They can be V-E-R-R-R-Y exciting! But then, so was National Socialism, as Leni Riefenstahl showed us. Sorry, that was clipping my topics together a little too closely. (I am somewhat interested in them, but wary.) Oy vey!

I guess the issue I have been pondering this year is "how to learn to somewhat distrust the things which excite me." Kind of like contradicting the human being's Prime Directive,eh? I guess I'll always be an "Excitable Boy"?

Holtzman writes about the pragmatic, survival-oriented diversification of viewpoints and experiences, relying none-too-heavily on any. I understand this. This is what happens to us in life anyway, after the excitement is over. I think of Yevtushenko's "let me be forever tossed between the City of Yes and the City of No." Hardly willingly.

(I will jump, of necessity now, to a possibly not very satisfying or well-established conclusion here.)

Jesus was nothing if not a Teacher. Wherever students gather, a good Teacher should be welcomed and recognized. His teaching words -- HOWEVER WE GOT THEM -- contain live nuggets of wisdom that penetrate our thick brains and with merit have lived for generations. Common people recognize common sense in them. Here I refer as an example to the "Pearl of Great Price" parable.

If your market research, life experience, and peering-round-the-markets'-corner wisdom tells you that gold is undervalued like no other asset. Then you get a credible guy like Trail Guide telling you that gold will "out-run everything on the planet so as to get to that inflation price starting gate!", you have a likely once in a lifetime "Pearl".

You are already diversified -- in your career, your life in these Dollar States of America, your house and family. Why not 100% pick for your liquid assets the investment that holds the best risk/reward ratio -- in YOUR judgment -- and thus will "outperform" any other? Or is this just my Romantic side looking for a good story to live in for awhile? Have I been "seduced" by the good company "watching together" at this Round Table?

And lest anyone confuse the level at which I just segue'd this post, I am mindful as we all should be that he taught: "for where a man's heart is, there will his treasure be also." I doubt that any of us will find, upon searching, that our hearts reside in gold. It is but a tool, and we come together to better learn how to use it, although that day may be off in the future.

There! Three hours well-spent. Yikes! Back to work!

P.S. Ben Kingsley, though Yorkshire-born, was born Krishna Bhanji, with his father an Indian doctor from Kenya. I remember hearing that by some coincidence his Indian family line goes back to the same village Gandhi was from, but I couldn't find any confirmation of that today even after some searching.
The Hoople
(01/04/2001; 15:13:29 MDT - Msg ID: 45033)
Journeyman
I know of no Home Depots' that are closing. Possibly someone could have confused Office Depots' annnouncement of 70 stores closing.
Cavan Man
(01/04/2001; 15:50:27 MDT - Msg ID: 45034)
Holtzman
almost belongs in a castle "hall" of his own.

I especially like the line about asking for a kosher meal during a hijacking. Good show!
Peter Asher
(01/04/2001; 15:57:23 MDT - Msg ID: 45035)
Artie Farkle msg#: 45031)

Re- "Could it be that there was a massive (PREEMPTIVE) strike on gold two days before the cut.
Any thoughts from anyone on this."

Peter Asher (01/03/01; 13:32:38MT - usagold.com msg#: 44958)
@Pandagold

I have not doubted you for a minute about the "Big Fix."

Today is a perfect example: Gold spends several days in a down-draft with all sorts of theorizing as to why.

Answer: The inside money knew the event was coming, simple as that.
Peter Asher
(01/04/2001; 15:58:44 MDT - Msg ID: 45036)
Mr G.
Was that the #2 second for Holtzmans post? If so, we need only one more to put Randy to work.
Peter Asher
(01/04/2001; 16:02:24 MDT - Msg ID: 45037)
Et Tu CavenMan
Was that a seconding of the nomination also.

Do we now have the three required via you, Mr.G and beesting?
Cavan Man
(01/04/2001; 16:10:41 MDT - Msg ID: 45038)
peterasher
Yes Peter; that is a second from me. His post was magnificent.
Mr Gresham
(01/04/2001; 16:10:44 MDT - Msg ID: 45039)
Superstition
http://www.bearforum.com/cgi-bin/bbs.pl?read=98101Supersitition

is a word you don't hear much anymore. Usually because "them's fightin' words." One man's faith is another man's supersitition.

We (the West) used it last on the Third World's "primitive" (that word went away, too) religions, then found they weren't so "dark" or that we had just better be more polite until we knew what we were talking about. Once conquered, I guess maybe it didn't matter what we called them.

I would venture that superstition exists today, in spite of the disappearance of the word from daily use. (And just like the fish, who has no word for "water", or any other words for that matter ;), perhaps it is because we are "swimming" in superstition, as humans have done from the beginning.)

Maybe it's because, once you have a people totally befuddled, you don't let a little light in by using the word "Superstition", lest you provoke some penetrating thought. You use good buzz words like "enlightened", "liberal", "free market", "conservative".

Perhaps superstition arises from a near approach to the truth, or, to paraphrase Holtzman and others: "close enough for clerical (as in clergy) work". You have encountered, by accident or pursuit, some truth but are momentarily blinded by it. How long that moment may be remains the question. To continue the diligent pursuit, or rest with the attained truth? (Risking your grip on the earthly flock you've gathered.)

Religious revivals have occurred not only as a reaction to the encroachments of science on everyday life, but secondarily out of a discovery of Western humanity's superstitious faith in science. That's right, science can become superstition, when its seekers rest on partial truths and ingrown biases. Spiritual seeking then re-asserts itself, as an integrator of science and faith (not-"knowing"), and sometimes through religion (as human groups; "religio": "binding together") as a fearful backlash.

I will say: I think there is at birth an "empty" part of the human brain that CRAVES to be filled up with religion (and similar belief) of some sort, in either/both a healthy way, and/or a manipulable way. In those distinctions is all the excitement we find in the topic.

I hear Stevie Wonder warming up: "When you believe in things that you don't understand, then you suffer. Supestition ain't the way."

Economics has paraded itself as science (better funding) through most of the 20th century and humans have been able to churn out much superstition from it. We write about and attempt to puncture those superstitions daily here.

Superstition is visible today in the stock markets: "Buy and Hold" and "stocks always come back (but to wait 25 years?), "stocks earn 9% long-term" (but won't during the remainder of YOUR lifetime).

Superstition is what we are accused of in seeking gold. In fact, if you probed the average American's thoughts, gold would be associated with some medieval time of leeching (I think of Steve Martin's Barber of York skit here), and witch-burning, rather than with the 20th century U.S. currency up through 1933, or 8000 tons still held by USG.

"Barbaric", quaint, comical, obsolete. (Until it's not.) Very unscientific and UN-HIP. Who can fight against that much bad PR and deprecating attitude? You can recall more examples of this yourself, I'll bet. When you realize you are in those crosshairs, summarized as "Nyahh, nyahh, superstitious!", you see how truly difficult it has been for us to offer up a different view of "truth", no matter how many facts in support.

Oh well, enough "coffee talk". (Honest, officer, it was just the coffee talking...) Link above not related, just a hoot...
R Powell
(01/04/2001; 16:12:19 MDT - Msg ID: 45040)
Sears closings

Haven't heard of any Home Depots closing but the evening news reported a number of Sears stores are being shut down with a large lose of jobs. I was half listening so I can't give accurate numbers but in Massachusetts where we live, many Sears stores are the big "anchor" stores of the malls they occupy.
This and other bad news may IMHO quickly overturn the Fed's rate cut "happy days are here again" move.
I remember when Warren Buffet accumulated 89 million ounces of silver during the summer and fall of 1997 before his broker was forced (by the filing of a lawsuit) to disclose that it was Buffet buying. Mr. Buffet then stated that he had 89 and intended to take final delivery of 129 million ounces, which he did. He shipped them to London and the suit was dropped. He said he was buying to "restore equilibrium in the silver market". If he could buy 89 million ounces (over many months) once, just 3 years ago, it would seem that very large accumulation is possible before any price reaction in silver at least. It would seem that if things get bad enough, safe haven in metals will be sought (even if only temporarily). We probably won't know it has happen until well after the fact.
The closing of a number of Sears stores will be looked at, in hindsight, as one of the warnings of something terribly wrong with the economy.
I make my living in the construction business. Oh well, nobody said it was supposed to be easy!
Rich
Mr Gresham
(01/04/2001; 16:12:26 MDT - Msg ID: 45041)
Peter
Yes, but Beesting #45023 was the 1st 2nd. ;)
John Doe
(01/04/2001; 16:41:56 MDT - Msg ID: 45042)
@Holtzman
WARNING - Trekkie talk, please skip if easily bored...

I hate to belabour the intricacies of the workings of highly theoretical technological devices, especially on a gold thread, but as a low-level Trekkie I will, as this has some (theoretical) bearing on the "future value" of "future gold".

Both the transporter and replicator supposedly work by disassembling and reassembling the molecular and/or atomic structure of a source object. Neither operates at the sub-atomic level. In other words, the transporter does not break an object into protons, neutrons, and electrons, apparently because of the tremendous amounts of energy that would be required and because it is not necessary to break an object down into the sub-atomic in order to transport it, if such a device were even possible.

Sister-technology replicators do not create objects out of thin air. For a replicator to actually "create" gold would require an immense inventory of protons, neutrons, and electrons, themselves not easily or cheaply collected and contained, and these would need to be assembled into the elemental molecular pattern of non-radioactive gold, requiring tremendous amounts of force in the process.

Instead, the replicator supposedly actually acts on a store of elemental materials, such as hydrogen, oxygen, nitrogen, carbon, etc., and uses these to replicate another object by referring to a pre-stored pattern, such as alcohol, and then produces a simulation of the real thing by mimicking its molecular structure using the stored elemental or molecular building blocks. Great for making "food", complex molecules comprised of simple common, elements, and lousy for making pure gold, a single, rare element.

The transporter cannot make gold, it can only transport existing gold. The replicator cannot create gold, it can only shape existing gold into other compounds or artifacts.

No level of technology can reverse or remove the laws of physics. Not in this dimension anyway. The people on Star Trek can't "make" gold any more easily than Alan Greenspan. Why do you think the Ferengi hoard gold-pressed lanthanum?

Now future mining technology is a whole other issue.

I now return this board to normal people... :o)
RossL
(01/04/2001; 16:49:58 MDT - Msg ID: 45043)
Fed cuts again
Two days in a row !!!!

NEW YORK (Reuters) -
On Thursday, after the close of regular trading, the Fed cut the discount rate again -- by another quarter percentage point -- to 5.5 percent.
RossL
(01/04/2001; 17:04:20 MDT - Msg ID: 45044)
John Doe - question on the trekkie stuff

The seawater of the Earth contains many thousand tons of gold. Wouldn't I just need to feed seawater into the inventory of a replicator to get 999.9 gold bars out of it?
RossL
(01/04/2001; 17:16:31 MDT - Msg ID: 45045)
Calif. Regulators OK Interim Electricity Rate Hikes

There is no mention of natural gas in the article referenced. Apparently these people cannot understand that when a state fixes prices, that market is not deregulated... that market is very highly regulated. Socialism lives on in California.

SAN FRANCISCO (Reuters) - California energy regulators, grappling with a financial crisis that threatens to bankrupt the state's two biggest public utilities within weeks, on Thursday approved temporary electricity rate increases of up to 15 percent and warned that the crisis was far from over.

-snip-

"EPITAPH" FOR DEREGULATION

Carl Wood, a CPUC commissioner, said the commission's action spelled an end to the state's chaotic deregulation effort. "What we are voting on today is the epitaph for deregulation in California ... deregulation is dead. It is time to put this behind us and clean up the mess it has left behind," Wood said during the discussion preceding the vote.

-snip-
John Doe
(01/04/2001; 17:24:51 MDT - Msg ID: 45046)
@RossL
I'm not sure, as the replicator apparently requires segregated elemental/molecular materials to build the target. Though seawater contains pure gold, seawater is not a component of "pure gold". However, pure gold and a hundred or so other elements could certainly be fed into a replicator to produce "pure seawater".

Simple filtration of seawater would be as effective in producing pure gold, even now. But will the free market price of the gold extracted cover the cost of power consumed in running the filtration process, the labor and capital costs, and the environmental costs? I guess if we could get the Federal Reserve or the Treasury to subsidize us...
Cavan Man
(01/04/2001; 17:26:13 MDT - Msg ID: 45047)
Holtzman
Would you comment on the Gold Trail series?
Peter Asher
(01/04/2001; 17:26:39 MDT - Msg ID: 45048)
RossL

That's a "Catch up" on the DISCOUNT rate which was only dropped a quarter point yesterday. It's the FED FUND rate that was dropped the half point yesterday.
Peter Asher
(01/04/2001; 17:44:43 MDT - Msg ID: 45049)
Where no Alchemist has gone before
@ RossL, John Doe:
It's that nutcase with the �Matter Transmuter" that could make unlimited Gold. Now that could really mess up the distant future's economy per Holtzman's post today.

Maybe we could make a good one hour episode script out of this. I think the going rate for those is 20-40K. {:-))
Randy (@ The Tower)
(01/04/2001; 18:10:59 MDT - Msg ID: 45050)
Transitional performances always appear crippled due to the suboptimal operating conditions for the ultimate design task
To wit, battleships getting a tug out of harbor...jet airliners being pushed around at the terminal...euro gold reserves under a dollar-based derivative scheme of pricing as the euro begins to rise (dollar begins to fall)...etc.

In the European Central Bank's final weekly financial statement for the year 2000, through the quarterly mark-to-market revaluation process we can see the two reserve systems at odds now that the euro has established a meaningful uptrend against the dollar. As the much-discussed price discovery mechanism leaves gold listless with respect to the dollar, the rising euro/dollar exchange rate translates into a shrinking level of reserve assets when denominated in euros.

As such, the total gold assets of the Eurosystem registered a numerical decline on the ECB consolidated books of 7.874 billion euros to 117.073 billion euros from the previous week. (If the extant gold pricing mecahnism does not allow for a separation from the dollar and its current structure under greatly weakening dollar, just imagine the potential for additional physical offtake that cannot be supported at the hands of rising foreign currencies). Buy gold now and bide your time.

In the paper arena, the ECB's consolidated foreign currency assets fell in level by 13.7 billion euros to 254.5 billion euros to mark the end of the quarter and the year.

On a somewhat related note, with Greece now on board as of the new year, adjustments will likely be seen to the consolidated ECB financial statement next week to reflect the additional gold reserves. It should also reflect the net adjustment to forex paper as any current ECB-held "foreign" Greek paper becomes domestic and as non-euro Greek-held forex paper bolsters the ECB's consolidated mix.

Fun stuff, this.
TheStranger
(01/04/2001; 18:11:23 MDT - Msg ID: 45051)
Holy Moley!
M-3 was up $35.5 billion this week! Holy Moley! What are we, mobilizing for war? I hope everyone in here is getting the significance of these weekly money supply numbers.
John Doe
(01/04/2001; 18:24:12 MDT - Msg ID: 45052)
@Peter Asher
You've touched upon the raging debate among futurist writers and their audiences. Science "fiction" is fiction more or less adhering to the limitations of known physics, or at most, hyper-advanced theoretical physics, whereas science "fantasy" does not adhere to these constraints. Switching dimensions is common way around this while still retaining some "plausibility". Some sci-fi fans go ballistic when the author willy-nilly switches between the two or blurs the line of separation.

For the Earth-bound, I would categorize molecular matter transmutation as science "fantasy", whereas the replicator is firmly science "fiction". The transporter is probably somewhere in between...depends on the design and operational parameters.

I don't believe future alchemists will have any better luck than the Medieval, unless you'd call massive explosions and radioactivity a success... :o)

PS. All gold comes from the cores of exploding stars!!
Peter Asher
(01/04/2001; 18:36:46 MDT - Msg ID: 45053)
Randy

We all know that markets move in anticipation of events and then often move against their effects when the events actually take place.

Several months ago, I suggested the decline of the euro was in part due to the fact that it was being discounted for the impending dilution of value as the smaller economies and the former iron curtain disasters were folded into the mix.

Now that is taking place and the currency is recovering. Not to say that is the �only' factor but as is always the case in a planetary economic system, one of a group of factors whose summation determines direction.

-------

Also, beesting, Mr Gresham and CavenMan have all seconded my nomination for Holtzman's masterpiece.
Peter Asher
(01/04/2001; 18:42:20 MDT - Msg ID: 45054)
John Doe

Are not the stars the crucible from which all the elements are smelted? If Gold and all the rest can be formed from the basic fusion furnace fed by hydrogen, then is not the formation of the elements a physical process whose secrets could be some day unraveled and manipulated?
John Doe
(01/04/2001; 18:57:06 MDT - Msg ID: 45055)
@Peter Asher
Your assertions are correct. Nearly all the elements are byproducts of a very natural process -- solar fusion followed by supernova explosion. Unfortunately, that process operates on a solar (! not planetary) scale (lots of matter), involving unbelievable amounts of energy, over eons of time, and the elemental end products are highly radioactive, requiring further eons of time to dissipate and stabilize.

The limitations in replicating such processes, in miniature, safely, economically, and in a controlled manner are likely beyond human ability (or need). It's much, much simpler to use the bankers' alchemy, the REAL alchemy. Want gold? Make up "money" out of thin air, convince (or force) people to accept that it has "value", and "buy" all the gold you could ever want. Need more gold than exists? Good luck.
Cavan Man
(01/04/2001; 19:00:08 MDT - Msg ID: 45056)
Randy
Now, Greeks I know something about but, I digress....

Could the following be correct:

1. FED targeting share market and by extension, US economy.
2. "Katy bar the door" with money supply growth.
3. Dollar is sacrificed in the process and falls against Euro and perhaps other world currencies.
5. Inflation gains.
4. US trade imbalance improves.
5. To stem the dollar's slide, gold is sold down the drain in paper market as the dollar is an alternative to gold.
6. Dollar continues to weaken.
7. POG dropping.
8. Physical demand accelerating.
9. At some point physical is exhausted vis a vis futures and new gold market begins.

BUT, what if Euros are "bought" instead of gold. Then, dollar drops, Euro rises and gold falls but, since gold is settled in USD, ECB books and their "mark to market" strategy make them look like heroes. Gold is held in check and European CBers continue their fiat game. Gold then is kept in the closet until Euro exhausted. What's going on here? Thanks....CM
Cavan Man
(01/04/2001; 19:02:00 MDT - Msg ID: 45057)
peter asher
Right analogy. Wrong crucible. :>)
silvercollector
(01/04/2001; 19:26:51 MDT - Msg ID: 45058)
@ Holtzman
From your post;

"As the last two decades have demonstrated, gold is not always a safe haven. However, with each grindingly lower year, gold becomes more and more a safe haven. But how much lower can it go? Quite a bit. Will it? There's no way to know"

...and...

"Hope lies in realising that it's not necessary to achieve perfection. As most leaders of men will readily affirm, it's almost always unwise to try to acquire 100% information before making a decision. The final 5% will take longer to acquire than the first 95% did. But more often than not, being 95% certain of something is sufficient."

So now that I am 95% certain that gold is undervalued is it unwise not to buy?

Peter Asher
(01/04/2001; 19:34:50 MDT - Msg ID: 45059)
Cavan Man msg#: 45057)

Re-"Right analogy. Wrong crucible. :>)"

I know, CM; I know. But that crucible is described in countless tongues and I don't want to open that up any more then we have here.
RAP
(01/04/2001; 19:43:19 MDT - Msg ID: 45060)
Sears closings
http://quote.bloomberg.com/fgcgi.cgi?s=AOlTqeRKyU2VhcnMg&T=marketsquote99_news.htHear is a link to the sears closings.
USAGOLD
(01/04/2001; 19:45:04 MDT - Msg ID: 45061)
Misc. . .
Stranger. . .Thank you for your astute updates on the inflationary situation. I too have marvelled at quality and content "deflation" as the government and Fed brag about "inflation" being under control. On M3, I wanted to throw out the conjecture that much of this out of the box growth has to do with "old money" coming out of the stock market and reincarnating in money markets. I was introduced to this concept a few years ago by Richard Maybury who ran some studies where he included the money invested in stocks as part of the money supply ( I believe he worked on that with our mutual mathematically inclined friend, John Carder) -- an interesting concept that inferred stocks as a form of "money" and drove home the point that though money was not available to push the prices of goods and services higher, it was available for such. The longer the Fed forestalls a liquidity searing crash, the greater the possibility that this money migrates to money market accounts, and in my estimation eventually to gold when investors realize that we are at a way station to massive inflation. As an interesting point of information that you would consider important, I am increasingly on the phone with financial advisors and money people looking to move their clients into gold. These people are astute and usually ahead of the thundering herd. I think it telling. My best to you and your family for the New Year.

Holtzman. . .I have to say that I thoroughly enjoyed your post today. I took some time at the end of the day and my staff , I think, may have thought me going daft as I chuckled out loud reading your entertaining and thoughtful post. You, sir, are not only astute, you have a marvelous way of presenting things. Thank you for posting here and I look forward to much more of the same.

Paul van Eeden: Welcome and thanks. We are privileged to have you pull a chair to this extraordinary table. Your Introduction to Gold which resides at our Gilded Opinion page is a masterpiece. There are so many levels to the rate cut -- so many points of discussion -- that I don't think we could possibly cover them all even here. But I welcome you to try. (smile)

All: Just as I thought we might have reached some sort of zenith, it gets even better. You have made this what it is -- so many quality posters and so profound that you pull up the page start scrolling and have difficulty choosing where to start. I would not even attempt to start naming names with respect to my appreciation. Just know that I appreciate what goes on here and couldn't be a prouder of our mutual achievement.

Randy: Thanks for everything but mostly for your spot-on daily comments. It was important today that the Asian central banks moved to lower their rates in response to the Fed while the ECB held fast. That which is hidden shall become known (and things are moving fast). Isn't it interesting how the needs of Europe have somehow coalesced with those of the U.S.? Perhaps that is what cycles are all about. Also, I think we better make sure that the Holtzman post(s) take their rightful place in the Hall.

FOA: Thanks for your timely return. I must say what I said to Randy in private: I usually do not realize how much I miss you until I read that first post upon your return. As I have said before that chair is always reserved for you, my friend, no matter what. And we also keep one near for our good friend, Another. Just in case. By the way, how did you know that AG was going to make his move? I could not think of a better scenario for gold than what has unfolded in the past 30 days. Yes? My best to Another.

To everyone: Respond if you wish, but I didn't post any of this to get a response.

MK
Cavan Man
(01/04/2001; 19:56:33 MDT - Msg ID: 45062)
Gold and the Euro
Whither a "store of value"Question for the forum:

If, following the Gold Trail one concludes that the USD is on its' last legs and that the Euro is the next "world reserve currency", then why not denominate your wealth in Euro and not gold? My small Euro investment is the only winner I have at this juncture. Is part of the answer that gold has no borders? My Euro's can only be spent without exchange in Europe but; 1. I can bring them home in exchange and 2. If we'll all be using Euro someday (I do NOT agree with that opinion) then, I won't need to make any exchange just be patient.

Something just dawned on me and I am probably wrong but...

1. Do European CBers have more confidence in gold than they do in their own currency? After all, a gold standard is not coming back right? True, France, Germany and Italy are large gold holders but, their monetary regimes are fiat. Fair weather friends are they yes?

2. Why wouldn't ME interests sell dollars for Euro and denominate a large part of their wealth in Euro? Regardless, they will still be buyers of gold in significant quantities. After all, the Euro is the next reserve currency. Everybody wants to own it right.

Not trying to be argumenative to the disadvantage of someone not here now, often but, these are my humble thoughts.

FOA has said that oil backs the Euro. I think the Euro is drafting behind oil. I think there is a strategy to put all that gold out to leverage; massive, paradigm shifting leverage.
TheStranger
(01/04/2001; 20:29:01 MDT - Msg ID: 45063)
Michael
There is no way I can think of to take one's money out of the market without getting someone else to put an identical amount in (Asher's Law). The effect on the money supply of all this selling, therefore, is net zero, unless you know something I don't.

Clearly, the Fed has been buying bonds. In 5 weeks, M-3 has grown by some $141 billion, an annualized growth rate which is north of 20%. This, and not the fed funds rate cut, is the real story of recent Fed activity. Greenspan is trying to avert a worsening recession scenario, and inflation is the weapon he has chosen.

Thank you for your gratitude. I greatly enjoy contributing to this marvelous forum you have created. It gives me something to do while I await the inevitable mother of all gold rallies.

Cheers!
Randy (@ The Tower)
(01/04/2001; 20:31:54 MDT - Msg ID: 45064)
PA; CM...my thoughts on the gold market ahead
Peter, thank you for keeping score and bringing the tally to my attention.

Cavan Man, I would be wary forming your conclusion (i.e., "Gold is held in check and European CBers continue their fiat game. Gold then is kept in the closet until Euro exhausted.") from the speculative flow of events you present in your msg#: 45056, particularly those of the paragraph following the numbered sequence.

If I may, let my share my thoughts on your item #5: "To stem the dollar's slide, gold is sold down the drain in paper market as the dollar is an alternative to gold."

While I do see the potential for selling of gold derivatives "down the drain", I do not see it being done to effectively stem the dollar's slide in any material way, nor could it. The forex rates and import prices would already tell the tale. The potential I see for continued selling of paper gold under a falling dollar was expressly described in my post yesterday as follows:

---(usagold.com msg#: 44963)---"If you are a hedge fund that has previously borrowed gold from a bullion bank in order to raise a source of low interest funds for investment purposes, please marvel how very easy it is to offer the short side of futures contracts as necessary to create the stagnation in this realm of price discovery as needed to buy the time (and metal!) to unwind the prior gold loans. Simply put, some financial "chapters" are written for the benefit of the overall book."

But then, as stated more recently, I would say again, "If the extant gold pricing mecahnism does not allow for a separation from the dollar and its current structure under greatly weakening dollar, just imagine the potential for additional physical offtake that cannot be supported at the hands of rising foreign currencies." The situation would not endure for any length of time, and eventually lead to an adjudicated work-out of the positions in the shattered gold derivatives market.

This is why I recommend and hold personally ONLY an advance position in physical gold metal. As for mines, I have little faith in management's ability to navigate the possible volatile pricing turmoil (Ashanti upside, bankruptcy downside), and less faith in government's resolve not to administer windfall profits taxes or otherwise orchestrate a gold-style Texas Railroad Commission.
TheStranger
(01/04/2001; 20:34:10 MDT - Msg ID: 45065)
Michael
I'll see if I can't figure out what role money market ballances have played in all of this and get back to you. thanks.
Bonedaddy
(01/04/2001; 20:37:51 MDT - Msg ID: 45066)
Cavan Man & Euros
Hello Cavan Man. Interesting thoughts you have to share on Euros. I am also considering holding a small portion of my meager wealth in Euros. A couple of years ago I contacted the Mark Twain Bank, near St.Louis. They were offering savings accounts denominated in foreign currencies. I didn't take any action at that time. Last week I attempted to contact the bank several times, but the phone number was not working. The feature I found most attractive about the accounts they advertised was the ease of convertibility. If I remember correctly, you could exchange your account dollars for yen, or other major currency with very little fuss. I believe the minimum account was $2,500. What a forward thinking bunch of folks! Does anyone happen to know of any bank that offers such a service for small account balances. ($10,000 or less) It isn't that I'm finished buying gold, far from it. But with all the hanky-panky that seems to be going on with the Wizard of Fed, I'd like to be able to diversify my "cash" holdings. Suggestions anyone?
Cavan Man
(01/04/2001; 20:57:46 MDT - Msg ID: 45067)
Randy
Most of the discussion here is speculative here is it not? I am a friend of gold and a customer of CPM but, if a thought seemingly reasonable strikes me and I need to bring in here for impaling I should do so as (hopefully) a service to all.

In Europe, for the most part, we're talking about government officials who are died in the wool socialists; much worse than here--much worse. We're talking about generations of people who have been socialized in a system that is the antithesis of the pure, US model. We are talking about people who are at once fundamentally the same as US and then again, radically different. We're talking about people who by and large are not big fans of the US.

I do not trust European governance.
Randy (@ The Tower)
(01/04/2001; 21:07:42 MDT - Msg ID: 45068)
Cavan Man
I assure you, my use of the phrase "speculative flow of events" in regard to your presentation was not intended as a snipe in any way. It was merely a manifestation of my affliction to be accurate where possible. I did not allow myself to simply refer to the "flow of events you present" because those are not yet actual events. I modified the phrase with "speculative", but I see now I should have saved us both agony had I chosen the term "hypothetical" as a modifier. It must be well past my time for sleeping.
|-)
TheStranger
(01/04/2001; 21:17:24 MDT - Msg ID: 45069)
Michael
Okay. I checked it out. The total increase in money market funds for the latest two weeks combined was $38.5 billion. To be sure, this is a good chunk of the $91 billion M-3 increase during the period . But the decline in the stock market for the corresponding two weeks (with three day offset to account for settlement) comes nowhere near to explaining such a whopping increase in money funds. The Nasdaq was only down by 160 points for the two weeks ending December 29, and the Dow Jones Industrials were actually UP 100 points.

Also, most of the gains were in institutional money market funds, which is right where one might expect the proceeds from large t-bond sales to wind up.

I don't think these data support your conjecture, Michael, but I am listening if you have any other thoughts.

PH in LA
(01/04/2001; 21:25:43 MDT - Msg ID: 45070)
Stranger: Where it's coming from
Greetings Stranger,

Over on the BearForum.com, they are talking a lot about mutual funds redemptions. Seems that billions are suddenly coming out of the mutuals and would be going into money markets and bank deposits. What do you think?
PH in LA
(01/04/2001; 21:30:29 MDT - Msg ID: 45071)
No. 1: Futures & Physicals No. 2: Greenspan's antics
"...physical gold is about to become the only portion of the gold sector that will perform,,,,, and perform as no other asset in history ever has!" FOA (01/03/01; 08:50:37MD - usagold.com msg#50)

Much as I have always been convinced by FOA and Another's vision, I am having fun trying to get my mind around this.

Apparently, the paper gold Comex futures market will have to be dismantled before there can be any separation between the paper and physical worlds. Around here, it is taken for granted that such a distinction already exists. However, last I heard, there still existed something called "delivery notice"; the day on which holders of contracts must declare their intention to stand for delivery. Because if an investor wants to, he can request delivery on his contracts.

Now, let us conjecture for a moment what that means. Let us just suppose that instead of buying 100 ounces of gold in the form of coins from MK, I decided to purchase a February contract on the futures market from my local futures broker. Instead of buying a large number of contracts with my available $27,000 cash, I adopt the unusual tactic of purchasing a single contract. On first notice day I declare my intention to accept delivery. At this juncture, (as the system is presently functioning) I would eventually receive my gold.

Now, for a physical market to open up separately as FOA forecasts, the paper-based futures market would have to vaporize instantly. Otherwise, anyone noticing that prices were higher on the physical market, would merely opt to stand for delivery and sell the delivered gold there. Far from causing the futures market to fall farther, it would merely explode higher as investors took delivery at Comex and sold it on the new Euro physical market.

Maybe this is where the forex rates become critical to the scenario. It looks like the Euro will have to first appreciate hugely against the dollar to prevent this option from being carried out by rank and file investors. It will probably mean that currency controls will have to be in effect also. What a different world they have in mind for us! And all this before 2001 is over?

Something else that keeps boiling to the surface of my mind: Greenspan's antics these past two days! At the last FOMC meeting, the board of governors decided that no rate change was necessary. Now, suddenly, a .5% cut is needed? One-half percent needed now that wasn't needed two weeks ago? Kind of hard to believe. I mean if a half percent is needed now, why wasn't at least a quarter point needed two weeks ago? Have things changed that much in two weeks?

Furthermore, are we to believe that yesterday's rate cuts were implemented for good and valid reasons that existed yesterday, and that today the situation had changed so that a different interbank rate is now called for today that wasn't called for yesterday?

This does indeed stretch the imagination. Or was it just that Greenspan forgot to cut the interbank rate by today's additional .25%? Was yesterday's rate cut a mistake that had to be corrected today?

Just what is going on here?

Why do I have the feeling that I'm missing something?
rc
(01/04/2001; 21:42:43 MDT - Msg ID: 45072)
@Pandagold - Your posts about the shadow government
While I agree with almost all you stated, I don't think that this can go on indefinitely. China, for one, won't go along. And don't count the Russians out yet.
Trade rivalry between the US and EU will soon boil over into economic warfare. In the long run expect them to be at each other throat. When and how this will happen ? Pretty hard to say. But we are certainly going to live in interesting times. (Chinese meaning)
TheStranger
(01/04/2001; 21:44:01 MDT - Msg ID: 45073)
PH and a Little Boyish Glee
PH - I hope my posts #45063 and especially #45065 take care of your question. I just went through all the numbers and I think I am getting this right, despite what uyou may be seeing elsewhere. Money simply can't just come out of the market, mutual funds or otherwise. Every share sold has to be bought by someone else.

Now, I hope the room will forgive me an unabashed expression of naivete and glee. I am convinced that EVERYTHING is now right for gold. I simply cannot imagine it ever being as cheap again in dollars as it was today. I am so convinced in fact, that I can hardly contain my excitement. My seatbelt is fastened for what I see coming in the next few weeks and months.

Let 'er Rip!
agbull
(01/04/2001; 22:01:12 MDT - Msg ID: 45074)
Main Stream Press- Financial Crisis
Most on this board are prepared for what is coming, the LA times today did not mix their words.

Effect of State's Energy Crisis on Economy May Have Worried
Fed

By JAMES FLANIGAN, Times Senior Economics Editor


The California energy debacle is rapidly growing into a financial crisis that could trigger bank failures, disrupt funds available
for lending to businesses and consumers and spark general chaos in global markets for corporate bonds, financial experts fear.

http://www.latimes.com/cgi-bin/print.cgi
Such fears may well have been a factor in prompting the Federal Reserve to dramatically lower interest rates Wednesday,
analysts suggested.
The energy crisis poses a spreading threat to the whole banking system, given that the crisis is occurring against a backdrop of
a sharply slowing economy and fears that more corporations may default on their debts, analysts said.
A lowering of interest rates doesn't solve the energy problem, but it would ease the plight of California's embattled utilities by
reducing their borrowing costs. That in turn would reduce pressure on banks and other participants in global markets that provide
credit to those utilities as well as other businesses.
Also, whether intentional or not, the Fed action in effect sends a signal to financial markets that the central bank will support
attempts by California's utilities and political leaders to work out a solution to the companies' credit problems, analysts said.
But though Fed action inspired a rise in the general stock market, initial action by the California Public Utilities Commission
had the opposite effect Wednesday on the state's major utilities, Southern California Edison and Pacific Gas & Electric. The PUC
staff issued an initial ruling giving the utilities a temporary 7% rate hike to alleviate their problem of uncollectable costs and rising
borrowings. Financial markets evidently saw that as too little, and investors send stocks of both companies into steep declines.
To be sure, the Fed's lowering of interest rates was prompted by many factors related to the slowing of the economy. But
several experts suggested that California's crisis was a factor, noting that Fed Chairman Alan Greenspan held a highly unusual
public meeting in Washington on Dec. 27 with Gov. Gray Davis to discuss the California energy situation. Davis also met with
President Clinton during the same trip.
Until recently, the plight of Edison and PG&E to finance purchases of electricity at higher prices than they could charge their
customers was thought of as an energy problem largely confined to California.
But as the utilities' borrowings from banks and in corporate money markets have mounted, to an estimated total of more than
$10 billion, the dangers of defaults, bankruptcies and withdrawals of credit have escalated.
As such, the California energy crisis draws parallels to the Russian currency crisis of 1998. Fears that a Russian financial
collapse could trigger a global financial crisis prompted the Fed to lower rates suddenly that year, just as it did Wednesday.
The problems of Edison and PG&E have multiplied as costs have risen for the electricity the utilities must purchase from
generating companies. The utilities cannot pass on such costs to consumers because of a rate freeze dating to California's
electricity deregulation in 1998.
The utilities' loans from banks and financial markets have grown to such an extent that credit-rating agencies such as Moody's
and Standard & Poor's are threatening to downgrade their credit ratings.
"It will be hard to refinance those loans," given the utilities' worsening credit situation, said Joan Payden, president of Payden
& Rygel, a Los Angeles investment firm. "If their debts are downgraded, we could have illiquidity in the markets."
The companies face the prospect of seeking protection from creditors under Chapter 11 of the Bankruptcy Code, which allows
firms to operate under court supervision while terms are worked out with creditors.
If the debts of Edison and PG&E were downgraded to a category of less than investment grade--equivalent to "junk"
bonds--the consequences for the financial system would be severe, as would the consequences of bankruptcy.
Many pension funds and other investing institutions could no longer hold the utilities' bonds if they were not investment grade.
The sums involved are enormous.
Like all utilities, Edison and PG&E must borrow heavily to purchase and maintain equipment for providing electricity. The total
of the two firms' long-term bonds is more than $20 billion, all held by pension funds and institutions worldwide. If such
institutions were forced to sell those bonds, the result would be major disruptions in financial markets.
If the utilities were forced into bankruptcy, the effect would be devastating on banks, including giants such as Bank of America
as well as smaller banks, and on the commercial paper markets, where companies borrow and lend to each other, said William
Gross, chief bond manager for Pacific Investment Management Co., a Newport Beach firm.
This could lead to some bank failures and other problems in the banking system, analysts said. At the very least, loans to small
businesses and mortgages for consumers would be reduced.
The specter of such trouble was a major factor leading the Fed to lower rates Wednesday, said economist William Rhodes of
Williams Capital, a New York-based investment bank.
Since the Fed's open market committee last met Dec. 19 and declined to lower interest rates, there have been several continuing
indicators of worsening trouble in the economy. Notably, consumer confidence was reported to be falling in the latest study from
the Conference Board on Friday, manufacturing slowed sharply, and the debt problems of California's utilities have mounted. The
Fed's action sends a powerful signal of support, but a lot still hinges on action by the state's PUC.
The PUC issues a final ruling today on the rise in electricity rates it will allow Edison and PG&E, so they may recover some of
their short-term under-collections on electricity purchases. Standard & Poor's and Moody's have said they are watching the PUC
decision closely to determine whether they will downgrade the utilities' debts.
But prospects are not hopeful. The PUC staff's initial ruling Wednesday was for a lower rate increase than financial markets
were looking for, said security analyst Brian Youngberg of Edward Jones & Co., a St. Louis-based brokerage firm.
Edison stock fell 18% and PG&E stock fell 13% after the PUC initial ruling was announced.
Copyright 2000 Los Angeles Times






USAGOLD
(01/04/2001; 22:32:23 MDT - Msg ID: 45075)
PH, Stranger. . . .
One thing I don't think we completely understand is the role of the specialist in all this.

In "Maestro" by Bob Woodward there's a passage about the 1987 Crash that I found fascinating. I refer to it only as a means to begin understanding the role of the Fed, the specialists and the brokerage firms play in "providing liquidity to the market." Greenspan had just come on board and the stock market goes in the tank. Corrigan from the New York Fed calls Greenspan and tells him "(Expletive)We don't need a scholarly, legalistic thing. We've just got to say in one sentence, we're going to put a lot of money into the market. Says Woodward, "In part we had a plumbing problem. Eveyone needed to be assured they could get money -- in other words liquidity or credit." Greenspan complied with the one sentence announcement: "The Federal Reserve consistent with its responsibilities as the nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system."

That was as much a statement of philosophy as it was of immediate purpose.

I would think that the situation now with mutual funds being flooded with redemptions, international selling, etc. that there is a possibility that the Fed is "providing liquidity" once again and that may be part of what the rate cut was all about.

I have no doubt that the Fed is buying Treasuries and sending hot money into the economy, Stranger, and that might be the lion's share of the surge in money supply as you indicated. It is my view that the specialist being fed through a credit line linked directly to the Fed might increase the money supply without a consequent reduction in the money supply from a buyer. At the very least the direct buyer to seller relationship you describe might be delayed. Otherwise why would Corrigan have made the call to Greenspan in the first place asking for Fed liquidity. Theoretically, a buyer would have been standing there money in hand waiting for the seller to show up stock certificate in hand. Since he wasn't what was the effect on the Money Supply?

All of this though is a technical discussion among market afficionados. In terms of the effect on the economy and all of us as individuals operating in it, the source of the money supply isn't as important as the fact that it is growing at an alarming rate -- as you indicated. Inflation is coming from every direction and the Maestro is orchestrating it.

I put this in the conjecture column because at this point we do not know if something similar to what happened in 1987 is happening now. We do know that stocks are being liquidated and we do know that mutual funds are reporting problems. We won't know, I'm afraid, for quite some time, how the Fed is reacting to these events behind the scenes.

Good to see you back, PH.

John Doe
(01/04/2001; 23:18:30 MDT - Msg ID: 45076)
@Bonedaddy
Check out internet bank, everbank.com. They offer something like 30 different foreign currencies, and foreign currency cds, all (theoretically) insured by the FDIC up to US$100K -- convenient, safe, and liquid. Or maybe look into the many mutual fund foreign bond funds for the shotgun approach.
justamereBear
(01/04/2001; 23:41:47 MDT - Msg ID: 45077)
Bonedaddy

Your solution may lie in bonds of various types, and there are all sorts of types out there, and usually you can buy in $5,000 tranches. As I recall, there is a Kingdom of Denmark gold backed bond, denominated in yen or some equally strange combination. If you want exposure to euros, there are bucket loads of them.

I do not own such vehicles, nor do I recommend them, because of my beliefs, which seem to be somewhat at varience with yours, and many attending this forum. If that will do the job you want to do, then go for it.

J'Bear

Black Blade
(01/05/2001; 00:43:32 MDT - Msg ID: 45078)
Hedging Scams and Other Nefarious Activities!
Hedging: Investment or Scam?

Recently some posters have inquired about gold mining stocks. I am not going to debate the stock vs. physical question here. What I do wish to examine is the reason for buying gold stocks, and why one is better than another. This of course would require that we look into the forward sales issue. This debate has raged here and on other gold forums. There is also the debate over marketing gold as a hard asset for currency reserves vs. jewelry, and the amount of funding by the gold industry for marketing purposes.

To Hedge or not to Hedge:

Hedging strategies such as forward sales were primarily used to fund acquisitions or to expand mining operations. Now that has moved beyond a survival strategy to a hedge fund strategy consistent with the so-called "gold carry trade." Occasionally these strategies go terribly wrong as evidenced by the near insolvency of Ashanti Gold (ASL) and Cambior (CBJ). When the Washington Agreement called for the restriction of gold leasing and forward sales by EU member banks in 1999, the price of gold rocketed higher. These two hedge fund gold miners found themselves kneeling before the boards of their overlord bankers with hat in hand begging for mercy. The question is whether forward sales are really even necessary. Some gold producers are true gold producers that have a stated policy of providing a leveraged exposure to the gold price, thereby benefiting from a rise in the price of gold. Other hedge fund gold miners prefer to be at the mercy of a rising gold price, thereby reflecting a no-confidence vote in the very product that they produce.

Gold prices have appear to have bottomed out. Now is not the time to hold heavily hedged positions. Many producers are eating out of their hedge books and are not replacing reserves in spite of an annual gold supply deficit of nearly 1400 tons. Many producers have been high-grading their reserves in order to survive the low gold prices. This situation can not continue much longer and several producers are going to start taking huge write-offs and begin closing mines in the very near future. Some producers have borrowed to the hilt in order to survive, and by doing so they have taken on untenable hedge positions. Many banks have demanded that producers hedge future production to reduce risk. Newmont Mining (NEM) at the behest of banker/broker Goldman Sachs was forced into hedge positions in order to maintain their bond rating. Unfortunately, days later the Washington Agreement was made public and Newmont suffered. As with most of these hedging strategies, it is the shareholder who has to forfeit future returns to pay the banks "low-risk" funding. Unfortunately, some corporate officers tend to use these strategies and no real benefit is realized by the shareholder. Take Barrick (ABX) as an example. The shareholders of Barrick get no return and a pitiful dividend of 1.2%. The only beneficiaries so far have been Barrick's corporate officers who enjoy fat bonuses. Alternatively Harmony is more generous with their dividends while proudly and publicly stating their "No-Hedging" policy in their most recent annual report.

So the question is whether hedging is really necessary or is it an obstacle to a rising gold price? Heavily hedged miner certainly do not want higher gold prices as evidenced by Ashanti Gold (ASL) and Cambior (CBJ). When Jay Taylor, CEO of Placer Dome Gold (PDG) declared that his company was reducing its hedged position, Barrick's management was very quick to declare that they were not. Not surprisingly, after the Placer Dome announcement, gold prices rose dramatically, however, when Barrick made their announcement, the price of gold cratered. Why was that? Why is Barrick afraid of a higher gold price? Simple answer, look at what happened to Ashanti Gold and Cambior when gold prices increased. Barrick also was quick to buy 10 million ounces worth of calls shortly after their announcement. Obviously, Barrick and other hedge fund miners simply cannot survive if the price of gold rises dramatically.

I have looked at the value of holding both hedged and unhedged gold mining shares. Of the 6 largest gold miners I have culled information from 2 unhedged gold producers - Harmony Mining (HGMCY), and Goldfields (GOLD), and 2 hedged gold producers � Barrick (ABX) and AngloGold (AU).

HGMCY: PE � 7.3, PEG � 0.243, and Growth Rate � 30%

GOLD: PE � 15.9, PEG � 1.06, and Growth Rate 15%

ABX: PE 20.2, PEG � 3.36, and Growth Rate 6%

AU: PE � 9.6, PEG � 1.14, and Growth Rate 8.4%

*PE � Price Earning ratio and PEG � Price Earnings/Growth ratio.

Obviously hedging gold production is not necessary nor does it appear to add value to the company. HGMCY is arguably the most profitable gold company. It is unhedged, pays a good dividend, and is growing dramatically. The major gold hedge fund producers in this example, do not provide much value if any to the shareholders. The question is why do some producers continue to hedge and depress the price of gold? It would appear that they are too deep into debt and in the clutches of their banker overlords. They appear to be trapped and that is the reason why every time the price of gold rises dramatically, they are there to talk down the price of gold and discourage any would be investors. Even so, some unhedged producers are light on their feet and can profit even as others denigrate their product.

Marketing Gold:

Most of us know that gold is undervalued and will rise in the future. Timing the market is a fool's game. Some miners even prefer to pay a dividend to their shareholders as a reward while awaiting the inevitable rise in the price of gold. Some miners even participate in the marketing of gold and some even have their own bullion and jewelry concerns.

The gold industry has done a miserable job as a marketer of its product. However, unlike other mining businesses, gold mining highly fragmented as there are over 300 gold mining companies providing gold on the world market. For example, the PGM industry has 4 companies that provide over 87% of the world's supply of platinum. The 13 largest gold producers provide a mere 39% of the world's supply of gold. Am I proposing a gold cartel as with oil or diamonds? Of course not. What I am saying that the marketing of the gold could be a concerted effort by the industry as a whole with at least a modest amount of support by the world's miners.

The World Gold Council has recently doubled their expenditures to promote gold. AngloGold (AU) has also combined with PAMP of Switzerland, and JP Morgan to provide various gold products and services. Harmony Gold (HGMCY) even sells its own branded gold to clients in India and Europe. Of course, Harmony is also the world's only producer that refines its own gold at the mine-site. However, the marketing campaigns are too few and fall short of similar campaigns in other industries. The diamond industry spends about 3% of its annual sales on marketing. The consumer industry spends about 4% of its annual sales on marketing its products. The gold industry spends a miserly 1% with the gold producers contributing about a 10% of that. Even De Beers, the diamond producer and marketer has the famous slogan � "A Diamond is Forever." What does gold have as a slogan? Sure, Harmony Gold has a marketing slogan � "Think Gold, Think Harmony Gold." But why are there no marketing slogans about gold as a product? What about marketing gold as a symbol of status and financial security? Unfortunately the gold industry has fallen short.

- Black Blade

Sources:

Harmony Mining annual report 2000

Placer Dome Gold annual report 1999

http://www.Quicken.com

http://www.gold.org

http://www.Zacks.com

Other: Various news reports, internet sources relating to gold, gold investments, and equities research.

View Yesterday's Discussion.

Black Blade
(01/05/2001; 00:49:20 MDT - Msg ID: 45079)
The non-relationship between the US dollar and gold
http://m1.mny.co.za/MGGold.nsf/Current/4225685F0043D1B2852569C9003F9C15?OpenDocumentInteresting. The recent decline of the POG in the face of a weakening USD makes one wonder if this is possible, or if the malign forces of price manipulation are at work. Never-the-less, an interesting read.
Peter Asher
(01/05/2001; 01:21:56 MDT - Msg ID: 45080)
Michael, Stranger

If the Fed is loaning money to the specialists, then right, that's new money supply. ALL of the money supply is created by being loaned into existence. But, it's not a gift, it must be returned with interest. When the specialists have squared their books, that money should be back in the hanger. Seems to be it would be like those overnight infusions.

Regarding that fellow who said the market is part of the money supply: He would be correct if he recognized it as a PERCEIVED money supply. In fact, as I said two years ago (The fifth currency post), stocks function much more as a currency then as a certificate of ownership because their share price is so far out on the limb of future anticipation.

I had gotten as far as writing "-Money spent on stocks is money supply that has changed hands, period!" But Stranger has already stated it perfectly in two posts this evening.
Mr Gresham
(01/05/2001; 02:08:45 MDT - Msg ID: 45081)
Oro: Catching up
Oro #44964: "The "Dead Body" ... was still missing from public view. Needless to say, there must have been one and the corpse must have given off quite a heavy stench at the Fed's undertaking facilities. " I love it when you let the gallows humor just roll off your keyboard. It's timed so well after the output of little-known facts and numeric surmisals you provide us. Thanks, again.

Tar sands, yes. I had a housemate in the early '80s, PhD in math I think, who had done a stint for the Trilats in Toronto researching and cataloging all the mineral resources in Canada. Wholly-owned subsidiary of USA in a pinch, eh? Just as the CFRs in the 30s strategized the Grand Areas roping off of the Pacific vs Japan that led to Pearl Harbor?

Oro, what institutions among the TBTF are likely to also be TBTR (Rescue) if too many TBTFs line up with hands outstretched? In other words, there must be a decision process going on now of prioritizing the rescues, so that stronger balance sheet financial firms (like the S&L crunch) buy up the weakers. Who do you think is on each side of the list?

Further thought, this really might be a test of the question of the unified financial "syndicate" theory, whether there is consensus on loading the debts onto a few poor beasts and delivering a bullet to their skulls, vs. any and all struggling tooth and nail to survive at the expense of one and all.

AG's priority is, as it was in 1987, to protect the system of payments clearing, so that insolvencies do not happen to institutions merely because of seize-ups in clearing payments due from other mostly-solvent counterparties. That is where the Fed interposes with liquidity.

Herstatt risk. That's like saying "BOO!" in the dark to a central banker.

Hmmm, I was going to put more in this post, but the winds outside have a high probability of blowing my power out, so I'll get out of here now. It's been quite a day.



Mr Gresham
(01/05/2001; 02:16:00 MDT - Msg ID: 45082)
Debt as Money: Break-a-Buck
We monetize our future labors ("I'll work to pay that back") by borrowing for current consumption. And if you lost your job for too long a time, well, you might have defaulted on your debt.

What has changed is the solidity of intention to do that paying back. I would say the psychology today is: "I'll pay that back if my stocks go up, as we all agree they must."

In a market crash, people will find it hard to service those debts, EVEN IF they keep their jobs. And many more of them will lose their jobs, to boot.

So the quality of the debt as debt money was compromised from the start. That is why it was offloaded to offshore funding corps, much of it, and slipped into money market funds, where one and all -- savers and debtors both -- might be fleeced of their cash balances.
Mr Gresham
(01/05/2001; 02:34:48 MDT - Msg ID: 45083)
So Clear is the Mises Outlook
http://www.mises.org/fullstory.asp?control=581&FS=TheIf it really is any more complex than this, somebody got a lot of 'splaining to do.
LeSin
(01/05/2001; 02:39:58 MDT - Msg ID: 45084)
Salomon Smith Barney - Recommends GOLD in 2001
http://www.minesite.com/brokers.htm
MAJOR BROKER RECOMMENDS GOLD AS AN INVESTMENT IN 2001

For the first time in a very long time a major broker, Salomon Smith Barney, is recommending gold as an investment. And it is not one of the subsidiary offices which is taking this stance, but the big boys in New York via the Global research department.

The message from New York is short and to the point. "Gold bulls....don't give up....you're time will come," so plead the precious metals team in their GYRUS Update 2000. "Long-suffering gold investors have all but given up. We think they shouldn't. The last 18 months have been unusual for the industry as gold has lagged rather than led the commodity price cycle.

The consensus bear case is well established and a record-high US dollar masks the trend. We believe gold has found a protracted bottom. Our longstanding bull thesis on gold is predicated on a massive deficit of 1,000 metric tonnes, or 24% of the market.

Amongst all of the doom and gloom that is battering the global equity markets, it appears that gold may again, (for the first time since '96), be rediscovering it's sparkle."

You cannot say fairer than that, and the share recommendations from SSB's Australian office are also interesting. Newcrest as its best absolute recommendation, Normandy for liquidity and Hill 50 in the mid caps. They go on to say that if the thesis is correct and gold is indeed coming off the bottom then almost all gold equity prices should improve dramatically.

In the US the top large cap gold producer is considered to be Newmont Mining.

5 January 2001
Black Blade
(01/05/2001; 03:03:41 MDT - Msg ID: 45085)
Natural Gas Crisis is Taking its Toll
America is about to get a wake-up call on Natural Gas. Sure, we have been hammered as the bills arrive in the mail box, but the Grasshoppers in California are about to get a real shock, as rolling blackouts become the norm. Moodys has relegated the bonds of California's utilities to "Junk" status. The Grasshoppers are getting very angry and blame the utes rather than their own stupid NIMBY attitude that put them there ion the first place. The misguided environmentalism is a big contributor to the problem. These problems are expanding eastward now, as Grasshoppers everywhere are about to feel the bite of old man winter. Matt Simmons of Simmons and Company International and industry researcher says to get ready for a decade long problem. The crisis is potentially worse than the 1973 and 1979 oil shocks. 53% of American homes are heated with NG, and NG currently generates 16% of the country's power. Government convinced many to use NG and yet did not provide incentives for producing adequate amounts. During the recent low oil prices, there was virtually no incentive to explore or produce NG or oil. The result is that there is not enough domestic NG to meet demand, and the shortfall is made up from Canadian resources. Adding to this problem is the majority of possible NG targets are on land owned by the US government. The US Forest Service and the Bureau of Land Management control most of the west's public lands. Over the last several years, these two agencies have sided with environmental groups that are opposed to drilling. Another problem is that coal and oil are considered "dirty" fuels, and power generating facilities that use "dirty" fuels have to use carbon credits provided under the EPA's Clean Air Act. That means that by year end, these facilities are closed down as their credits have been used. This ads more pressure to NG-fired power generating facilities. Over 90% of all new facilities under construction are NG-fired power plants. The economy is already in a severe downturn, yet soaring energy costs will only accelerate the market crash. The time is now for wealth preservation, and gold and silver are just the ticket. It will get a lot worse before it gets any better. The whole process of building power facilities and reviving the economy could take years.

- Black Blade
Bonedaddy
(01/05/2001; 03:08:37 MDT - Msg ID: 45086)
Thank You J-Bear and John Doe
This is exactly the kind of information I was seeking!

Black Blade
(01/05/2001; 03:15:27 MDT - Msg ID: 45087)
LA Times: Rate cut sparked by Calif energy crunch?
Far Ranging Ramifications Here!

Thursday, January 4, 2001 Effect of State's Energy Crisis on Economy May Have Worried Fed

By JAMES FLANIGAN, Times Senior Economics Editor


The California energy debacle is rapidly growing into a financial crisis that could trigger bank failures, disrupt funds available for lending to businesses and consumers and spark general chaos in global markets for corporate bonds, financial experts fear. Such fears may well have been a factor in prompting the Federal Reserve to dramatically lower interest rates Wednesday, analysts suggested. The energy crisis poses a spreading threat to the whole banking system, given that the crisis is occurring against a backdrop of a sharply slowing economy and fears that more corporations may default on their debts, analysts said. A lowering of interest rates doesn't solve the energy problem, but it would ease the plight of California's embattled utilities by reducing their borrowing costs. That in turn would reduce pressure on banks and other participants in global markets that provide credit to those utilities as well as other businesses.

Also, whether intentional or not, the Fed action in effect sends a signal to financial markets that the central bank will support attempts by California's utilities and political leaders to work out a solution to the companies' credit problems, analysts said. But though Fed action inspired a rise in the general stock market, initial action by the California Public Utilities Commission had the opposite effect Wednesday on the state's major utilities, Southern California Edison and Pacific Gas & Electric. The PUC staff issued an initial ruling giving the utilities a temporary 7% rate hike to alleviate their problem of uncollectable costs and rising borrowings. Financial markets evidently saw that as too little, and investors send stocks of both companies into steep declines. To be sure, the Fed's lowering of interest rates was prompted by many factors related to the slowing of the economy. But several experts suggested that California's crisis was a factor, noting that Fed Chairman Alan Greenspan held a highly unusual public meeting in Washington on Dec. 27 with Gov. Gray Davis to discuss the California energy situation. Davis also met with President Clinton during the same trip. Until recently, the plight of Edison and PG&E to finance purchases of electricity at higher prices than they could charge their customers was thought of as an energy problem largely confined to California. But as the utilities' borrowings from banks and in corporate money markets have mounted, to an estimated total of more than $10 billion, the dangers of defaults, bankruptcies and withdrawals of credit have escalated.

As such, the California energy crisis draws parallels to the Russian currency crisis of 1998. Fears that a Russian financial collapse could trigger a global financial crisis prompted the Fed to lower rates suddenly that year, just as it did Wednesday. The problems of Edison and PG&E have multiplied as costs have risen for the electricity the utilities must purchase from generating companies. The utilities cannot pass on such costs to consumers because of a rate freeze dating to California's electricity deregulation in 1998. The utilities' loans from banks and financial markets have grown to such an extent that credit-rating agencies such as Moody's and Standard & Poor's are threatening to downgrade their credit ratings. "It will be hard to refinance those loans," given the utilities' worsening credit situation, said Joan Payden, president of Payden & Rygel, a Los Angeles investment firm. "If their debts are downgraded, we could have illiquidity in the markets."

The companies face the prospect of seeking protection from creditors under Chapter 11 of the Bankruptcy Code, which allows firms to operate under court supervision while terms are worked out with creditors. If the debts of Edison and PG&E were downgraded to a category of less than investment grade--equivalent to "junk" bonds--the consequences for the financial system would be severe, as would the consequences of bankruptcy. Many pension funds and other investing institutions could no longer hold the utilities' bonds if they were not investment grade. The sums involved are enormous. Like all utilities, Edison and PG&E must borrow heavily to purchase and maintain equipment for providing electricity. The total of the two firms' long-term bonds is more than $20 billion, all held by pension funds and institutions worldwide. If such institutions were forced to sell those bonds, the result would be major disruptions in financial markets.

If the utilities were forced into bankruptcy, the effect would be devastating on banks, including giants such as Bank of America as well as smaller banks, and on the commercial paper markets, where companies borrow and lend to each other, said William Gross, chief bond manager for Pacific Investment Management Co., a Newport Beach firm. This could lead to some bank failures and other problems in the banking system, analysts said. At the very least, loans to small businesses and mortgages for consumers would be reduced. The specter of such trouble was a major factor leading the Fed to lower rates Wednesday, said economist William Rhodes of Williams Capital, a New York-based investment bank.

Since the Fed's open market committee last met Dec. 19 and declined to lower interest rates, there have been several continuing indicators of worsening trouble in the economy. Notably, consumer confidence was reported to be falling in the latest study from the Conference Board on Friday, manufacturing slowed sharply, and the debt problems of California's utilities have mounted. The Fed's action sends a powerful signal of support, but a lot still hinges on action by the state's PUC.

The PUC issues a final ruling today on the rise in electricity rates it will allow Edison and PG&E, so they may recover some of their short-term under-collections on electricity purchases. Standard & Poor's and Moody's have said they are watching the PUC decision closely to determine whether they will downgrade the utilities' debts.

But prospects are not hopeful. The PUC staff's initial ruling Wednesday was for a lower rate increase than financial markets were looking for, said security analyst Brian Youngberg of Edward Jones & Co., a St. Louis-based brokerage firm. Edison stock fell 18% and PG&E stock fell 13% after the PUC initial ruling was announced.

Bonedaddy
(01/05/2001; 03:33:12 MDT - Msg ID: 45088)
Hello again, Black Blade
I've been away for a while, but have managed to check in on occasion. It is good to see that your informative posts are still as timely as ever. Actually the high price of NG is the reason I have not had time to access the forum for several weeks. Activity is so furious out here in the Powder River Basin that many of the guys I know have visibly lost weight in the last several months. 14-18 hour work days are the norm. As I'm sure you are aware from your vantage point, we are also having an "old fashioned winter" too.
From my point of view, it is time for the producers to refuse further investment until government gives some assurance that we will not be molested any further by the enviros. For instance it takes six months to APPLY for an air quality permit from Wyoming DEQ. All the units are basically the same, each application is largely the same except for location and horsepower. The actual testing and application takes about five days. No reason to drag out the process. But it has to lay in some looter's in-basket until it turns the right shade of yellow so he\she can not miss a coffee break. Let the bastards freeze in the dark! I have to each and every day, just for the priveledge of keeping the left coast on the grid.
Mr Gresham
(01/05/2001; 03:40:52 MDT - Msg ID: 45089)
Mutual Fund Outflows -- Janus $12B
http://www.amgdata.com/scripts/runisa.dll?AMGWEB.1770228:PGBANNER:406045Don't you guys ever sleep?
Zenidea
(01/05/2001; 04:20:13 MDT - Msg ID: 45090)
,msg 45061
Indeed :)
LeSin
(01/05/2001; 04:44:25 MDT - Msg ID: 45091)
Rumour - "YEN To 140 = 1.00USD
from Kitco ForumDate: Fri Jan 05 2001 00:16
Cage Rattler (The Yen) ID#33155:
There are events going on behind the scenes that will cause the yen to significantly devalue with some explosive moves. Initially levels of 140 versus the dollar are being talked about. Be careful out there...
Black Blade
(01/05/2001; 04:51:48 MDT - Msg ID: 45092)
RE: Bonedaddy
Bonedaddy

I know where you're coming from. I have to deal with the BLM on occasion and the permits are always being reviewed. Meanwhile, I have guys who are out of work while some government leech (bureaucrat) is working on getting his ass the same shape as the seat of his chair. A couple of my friends in Sheridan and Buffalo not working right now, probably due to weather. They hope to get back to drilling soon. I would guess that when the situation turns critical and votes are at risk, then activity will pick up significantly. When voters are freezing in the dark, anything can be accomplished ;-) I was just thinking how those of us in the industry were able to predict these events long ago. Fortunately I have profited nicely from government inaction and consumer (Grasshopper) complacency. I hope to do as well or better with my PM holdings. Take care.

- Black Blade
silvercollector
(01/05/2001; 05:10:50 MDT - Msg ID: 45093)
Niagara Falls and Redemption of USD
PH in LA (#45071)

I visualize Mr. Greenspan has fallen over Niagara Falls in a barrel after blazing down the river for the past few weeks. After fearing the flight for a while, the actual event has caused him to panic. Take note that the fear of SM investors escalating upwards through brokers, bankers, etc. has now reached the top. When #1 is sh*tting his drawers it is confirmation that the jig is up.

It is not a co-incidence that this coincides with Mr. Strangers boyish glee. (#45073)


All,

Several posters has asked how to convert dollars to Euro and European currency. This line of posting has increased dramatically in the past few weeks. If this escalation (at the individual level) is a sign, imagine what is going through the minds of the big money.

Money ALWAYS flows to the vehicle yielding the highest ROI;
and as apparent over the past couple months or so it is not in US demoninated currency.

This also co-incides with Mr. Strangers inflation warnings,
imagine US banks stuffed full of greenbacks with more coming in. Dilution of a currency is inflationary.

SC

Topaz
(01/05/2001; 05:59:10 MDT - Msg ID: 45094)
Physical de-couple
All: Great postings of late.
It's occurred to me, given recent events, that the A/FOA position on Gold market meltdown and subsequent Phoenix like rise of physical, is all the more plausable when one considers the "big-picture".
Under a $US world reserve Fiat situation as exists, the ONE threat to upset the Applecart has been Gold - and as we are well aware, through countless disappointments, the mechanisms for "control" of the POG are well and truely in place.
Now, through bad luck/management this $US is under seige from OTHER directions - BUT! the Au control mechanisms (designed to discredit Au vis-a-vis $US) are still in place.
No matter what the Dollar does, POG will not rise against it until the Physical de-couples. IMHO
Black Blade
(01/05/2001; 06:12:29 MDT - Msg ID: 45095)
Russia to Default Again!
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3CPDASKHC&live=true&tagid=ZZZGXV4R00CAs Yogi Berra said - It's Deja Vu all over again. Now that the US markets are crashing, companies issue earnings warnings, and unemployment is climbling, etc. The last thing we need is to bail out the Russians again. Let the games begin!
Canuck
(01/05/2001; 06:16:14 MDT - Msg ID: 45096)
@ Stranger
Here's a good one for you, hope it starts your day on the right note.

Watching CNBC, Larry, Joe, David and the boys jabbering about inflation.

"There's no inflation..."

"Inflation is a threat..."

"There is no inflation...look at the numbers.."

"Why do you think there is no inflation Larry?"

Larry, " ..because the price of gold has not budged.."

LOL!!!!!!!! Is this a comedy show or what!!

Have a nice day.

Canuck.
Black Blade
(01/05/2001; 06:20:58 MDT - Msg ID: 45097)
Euro rises on dollar to highest since June
http://biz.yahoo.com/rf/010105/tau024081.html

0726 GMT -- Euro rose to 95.95 cents , fresh six-month high against dollar.-- U.S. operators aggressively bidding up euro against dollar, dealers said.-- Euro/yen quoted at 111.49/62 yen, off intraday high of 111.77 yen.-- Euro attracting demand as investors turn increasingly wary of outlook for both U.S. and Japanese economies.

Black Blade: Listen to the swoosh of cash flowing out of the US and back to Europe!
Black Blade
(01/05/2001; 06:35:39 MDT - Msg ID: 45098)
Palladium continues to hover at $1000/oz level
http://www.bday.co.za/bday/content/direct/1,3523,768109-6094-0,00.html
PALLADIUM hovered near the 1000/oz level yesterday for a second consecutive day, but failed to convincingly break through the barrier because of a paucity of buyers in the market. The higher metals prices meant good news for platinum shares and for diamond producer De Beers. The magical $1000/oz level has been regarded as an important barrier for some time, as Russian shipments of the platinum group metals have not been forthcoming. The metal was bid at levels above the 1000 mark, but analysts said this was more a testing of the waters rather than a serious offer. UBS Warburg said in its report on the precious metal market that "the PGM (platinum group metals) market remains becalmed with very little interest. Although there are few sellers around, few buyers appear willing to pay up for all but immediate requirements."

Platinum did not fare any worse, being dragged higher by the high palladium price. Platinum was fixed in London in the afternoon at $632/oz, compared with $638/oz in the morning, a 13-year high. Palladium's price was fixed at $991/oz, compared with $993/oz in the morning and 987/oz the previous afternoon. UBS Warburg said Russian shipments would continue to dominate price movements over the next few months. "If shipments do not resume within the next week or two, then the price could head much higher. Although both metals should remain firm through 2001, it is hard to see the current levels maintained (especially palladium) once this temporary delay in Russian shipments resumes." The higher prices had a knock-on effect on the platinum shares on the JSE Securities Exchange SA, which continued to outperform most of the market.

Anglo Platinum, the largest of the producers, managed to add R12,20 a share to end at R342 a share, while its smaller rival, Impala Platinum, was up R10 a share to R362 a share. Northam Platinum gained 85c to end the day at R14,80 a share.

Platinum's firmness was attributed also to the fact that the US, thanks to a cut in rates, would not show as severe a slowdown as expected initially. This meant that car sales -- platinum and palladium are used as car exhaust catalysts -- would slow down less than presumed, while jewellery sales (about 50% of platinum is used in jewellery) also would be affected less than initially thought. It was not only the platinum sector that was running ahead thanks to the higher prices. The resources index managed to gain 314 points or 5% to 6502, buoyed by the interest rate cuts in the US overnight and the climbing platinum index, which gained 910 points to end at 25472.

On the broader resources side, Anglo American's share price gained R31,60 to R443,60 and De Beers rose R13,80 to R210,40. This was despite figures from jewellery retailer Tiffany overnight showing flat retail numbers for the December holiday period, although comparable numbers were difficult to assess because of the millennium rush at the end of last year Tiffany said. Tiffany reported an overall increase of 2% for the period from November 1 to December 31, up from $474m to $482,5m. US retail sales fell 1%, with comparable store sales down 3%, following a 27% rise last year due to millennium madness.

Black Blade: Russian deliveries of Palladium were to begin the first week of January. Guess what?
RossL
(01/05/2001; 07:10:27 MDT - Msg ID: 45099)
Black Blade - msg#: 45078 - Hedging Scams

Black Blade said:
"The major gold hedge fund producers in this example, do not provide much value if any to the shareholders. The question is why do some producers continue to hedge and depress the price of gold? It would appear that they are too deep into debt and in the clutches of their banker overlords."

Hedging does provide cash flow, which may be essential to keep the mine open and the bills paid. Obviously, this cannot go on forever, selling anticipated production increasingly, on and on, out into the future.
Black Blade
(01/05/2001; 07:37:30 MDT - Msg ID: 45100)
Clinton unveiling historic forest rule
http://www.msnbc.com/msn/511867.asp
Roads, logging, oil drilling to be banned on 58.5 million acres. Clinton is still searching for a legacy, other than the legacy of leachery. A fight in Congress is ensured, and lawsuits are going to be inevitable.
R Powell
(01/05/2001; 07:41:36 MDT - Msg ID: 45101)
Morning thoughts

Mr. Canuck, I also saw Larry Kudlow explain on CNBC that there is no inflation and proof of this is that POG has not moved higher. At least he confirms that POG should move higher if there is inflation. My first thought was, like yours, to report this to the Stranger.

LeSin (45091), thanks for reporting Cage Rattler's thoughts on the Yen. I believe he used to post here and identified himself once as a currency trader. I've read other opinions that the Japanese currency may weaken.

A reporter on CNBC reported this morning that the Fed. does get the important numbers (like the unemployment number this morning) but only one day early. His sources, he said, were those who used to have access to the Fed. meetings. If this is still true, then the unemployment number was still unknown on Wed. when the Fed. lowered rates. Whether true or not, the employment number doesn't strike me as being noteworthy enough to cause Fed. concern. Is ORO's "Dead Body" (44964) yet to reveal itself??

Is the market euphoria over lower interest rates all spent now? Will the Dow, Duck and S+P find the line of least resistence is down. I shorted the S+P by buying a Put overnight on the globex thinking that something is still out there that caused enough fear to cause the rate lowering between meetings. I hope the stench from the "Dead Body" reveals itself soon. This is, of course, not investment advice. My investment decisions are however often humorous. Feel free to laugh.
Rich
Black Blade
(01/05/2001; 07:45:55 MDT - Msg ID: 45102)
RE: RossL
Unfortunately, forward sales only hurt the gold industry as a whole by flooding the market with gold, albeit leased physical gold (actually sold) and paper gold. This in effect drives the POG down as it is interpreted by the market as a huge supply of gold will soon appear in the market (the so-called "over-hang"). These forward sales and leasing programs have helped to bring the gold market to where it is today. Although I don't mind the bargain basement prices as I am accumulating both physical and shares of extremely profitable unhedged gold miners. But I call a spade a spade.
Canuck
(01/05/2001; 07:52:05 MDT - Msg ID: 45103)
Bank of America halted 09:45
Rumours of derivative/debt problems. News pending.

Can you say devirative meltdown!!
Canuck
(01/05/2001; 07:56:39 MDT - Msg ID: 45104)
Correction
Bank of America did not open. News pending. Derivative problems/debt rumours.

Dow beaten, down 200 pts., Nasdaq -3%
Canuck
(01/05/2001; 07:59:55 MDT - Msg ID: 45105)
CNBC freaking
"We don't know what's going on, DON'T PANIC"

"We don't want to be irresponsible, DON'T PANIC"

Dow down 220, NASDAQ melting near -4%.
Black Blade
(01/05/2001; 08:00:07 MDT - Msg ID: 45106)
Could be another fun day on Wall Street!
DOW �214 and DUCK �90! This is interesting. Givin it all back I see! So much for rate cuts, soft landings, and stimulating the market. Don't walk on the sidewalks as those brokers splatter when they hit pavement!
RossL
(01/05/2001; 08:04:17 MDT - Msg ID: 45107)
Black Blade

The use of hedging could be a beneficial tool if used in a prudent manner, just like a credit card for a consumer. Agreed, it has long since passed that stage and is now a recipe for disaster...
RossL
(01/05/2001; 08:04:53 MDT - Msg ID: 45108)
Mr Gresham - msg#: 45083 - So Clear is the Mises Outlook
http://www.mises.org/fullstory.asp?control=581&FS=The
Thanks for the link.

-snip-
"Prices are determined by real and monetary factors. Consequently it can occur that if the real factors are pulling things in an opposite direction to monetary factors, there may be no visible change in prices. While money growth is buoyant, prices may not increase. The crux therefore, is not rises in the CPI, or relative increases in money supply versus rises in goods, but the fact that money supply is rising. It is this increase in money that matters, for it is this increase that sets in motion an exchange of nothing for something."
-snip-

This is one of those situations. The money supply is rising, and the dollar price of gold is not. To take advantage of the situation, I will exchange some FRN nothings for some physical somethings!!!
Black Blade
(01/05/2001; 08:17:42 MDT - Msg ID: 45109)
RE: RossL - This can be fun! The gold world's version of "Survivor"
The problem of hedging over the last 4 to 5 years is that once the prices have been beaten down, there is little benefit to hedging. Eventually the spot price and futures prices converge to a point where there is no net benefit. Most hedged mining companies are working off hedged positions from years ago; however, any new hedges (forward sales) are not likely to yield much. With an explosive rise in the price of gold, many hedged miners will have the same unpleasant experiences as Ashanti Gold and Cambior. The next few months could get very interesting indeed. We will have to see who survives the shakeout. Cheers!
Black Blade
(01/05/2001; 08:22:08 MDT - Msg ID: 45110)
U.S. stocks weaken as warnings pour in
http://www.quicken.com/investments/cbswatch/market_snapshot/?column=P0DST
http://cbs.marketwatch.com/news/newsroom.htx?dist=intutextBy Julie Rannazzisi, CBS.MarketWatch.com
Updated: 9:50 AM ET January 5, 2001 Printer-friendly version

Excerpt:

NEW YORK (CBS.MW) - Stocks retreated across the board Friday as investors processed an employment report that revealed slowing job growth and pondered another slew of profit warnings. Weakness was widespread in the hardware, software, Internet, retail, financial, biotech and chemical sectors with only natural gas, gold, drug and oil service issues showing some signs of strength.


Black Blade: Looks like the "Working Groups on Financial Markets" aka PPT have stepped in as market indices are recovering. It doesn't take much now to rile the markets does it?
SHIFTY
(01/05/2001; 08:34:58 MDT - Msg ID: 45111)
Black Blade
PPTI was just going to say something about them being very active today.

$hifty
Black Blade
(01/05/2001; 08:54:03 MDT - Msg ID: 45112)
Bank Of America Dn 8% On Talk Of More Credit Problems
Updated: Friday, January 5, 2001 10:36 AM ET
By Tara Siegel
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Bank of America Corp. (BAC, news, msgs) said it has not experienced any significant losses in derivatives or other trading activities, putting the rumors that pervaded the market earlier to rest. "We know of no basis to support speculative rumors about our operations," said a Bank of America spokesman. "We are conducting business as usual." He also said the company remains comfortable with its guidance for credit quality in 2001 as provided to investors last month. Trading was halted on Bank of America's stock and has not yet resumed.







Black Blade
(01/05/2001; 09:13:28 MDT - Msg ID: 45113)
Stocks Slump, Led by Financials
http://biz.yahoo.com/rb/010105/bj.html
NEW YORK (Reuters) - Stocks fell in early morning trading on Friday, led by financial shares, as investors worried that the surprise interest-rate cuts by the U.S. Federal Reserve may signal distress in the banking system. Meanwhile, monthly jobs numbers that added to more signs of an economic slowdown before the opening, just two days after the Fed lowered key interest rates in a move that sparked an explosive rally in stocks. ``It's hard to make the case that an interest rate cut is to the solution to all problems, it should help consumer sentiment somewhat,'' said Bill Meehan, chief market analyst at Cantor Fitzgerald & Co. ``Right now the concerns are what kind of economy are we looking at, how long will it take for the Fed rate cuts to have an impact.

Black Blade: That's more than enough fun for me today, I see some ducks down by the creek. I gotta go Whack some Ducks! Only 2 more weeks left in the season.
ORO
(01/05/2001; 09:30:24 MDT - Msg ID: 45114)
Zombie - Dead body or walking corpse
I did a little calculation regarding the confluence of a couple of dead bodies recently departed, and the walking dead of the California energy markets and their creditors.

Cal governor Davis had met with Greenspan a day or two before the Fed's panic easing. Davis was probably told to raise rates or face responsibility for a credit market debacle as they file for bankruptcy just when Wards, LTV steel and Benderly (sp?) went belly up and Xerox is facing a cash crunch in recycling its debt and has exhausted its bank credit lines.

The Wards and LTV deaths are going to create a $3 billion (Ward's depends on how much they raise in their going out of business sale) hole in banking, but Xerox and the Cal utils are on the order of $8 billion EACH.

The two zombies needed to have their credit costs cut, and their bank creditors needed to lower their cost of funds. Furthermore, construction borrowing has fallen as short term construction loans have risen by 1/3 while labor costs continued upwards by 10% by my reckoning, thus eliminating the "Spec" construction, now 40% more expensive to hold. This factor and the new competition at the low end of the car market from Korean makers (lowering the dollar value of car sales and loans and shifting them away from US makers) has caused a drop in the overall volume of sales and loan originations for short term lending by banks. That meant that it was possible to have up to $20 billion in defaults coming due this quarter, with no prospect of short term money being created quickly enough to replace it.

At 5% capital adequacy, a $20 billion loss would require an additional $400 billion credit expansion to replace the lost capital, on top of that needed to cover losses of junk debt, which has put some leeraged LTCM style players in danger. This figure was way outside the realm of the possible at current rates, even with Treasury buybacks and Fed monetary injections at near record levels.

Davis must have cut a deal with Greenspan that would bring credit costs down, while Davis would act to increase the util's revenue.

That is the most probable panic cause, otherwise the rate would have been lowered following an ordinary meeting.

SHIFTY
(01/05/2001; 09:31:48 MDT - Msg ID: 45115)
Kitco chart
ZOOM ZOOM ZOOM
Mr Gresham
(01/05/2001; 11:08:50 MDT - Msg ID: 45116)
Just for fun
http://www.etrade.com/cgi-bin/gx.cgi/AppLogic+ResearchStock?prod=BAC:NYSE:EQ&cmenu=Chrt&etstyle=1dand future preparation, let's see what a trading halt in a stock looks like
SHIFTY
(01/05/2001; 11:23:54 MDT - Msg ID: 45117)
Mr Gresham
I just got back in the house. Did they stop Bank of America?

$hifty
SHIFTY
(01/05/2001; 11:26:46 MDT - Msg ID: 45118)
I forgot
Only GOLD is aloud to go down.

$hifty
Zenidea
(01/05/2001; 11:35:50 MDT - Msg ID: 45119)
jittery BOA
http://finance.yahoo.com/q?s=bac&d=ttext books flying in the office?
Artie Farkle
(01/05/2001; 12:56:02 MDT - Msg ID: 45120)
Salomon Smith Barney Recomends Gold in 2001
http://www.minesite.com/brokers.htmThey state that "almost all gold equity prices should improve dramaticly."
It is nice to hear words of encouragement but, what about all of those hedge books out there?
Randy (@ The Tower)
(01/05/2001; 13:00:22 MDT - Msg ID: 45121)
I suggested this Wednesday, now you can see it in media print
http://biz.yahoo.com/rf/010105/l0578108_2.htmlFrom Reuters with the HEADLINE: Europe welcomes Fed discount move, frets about banks

Excerpts:

"LONDON, Jan 5 (Reuters) - A second unexpected rate cut by the U.S. Federal Reserve in as many days was welcomed by European analysts and investors on Friday, but some cautioned the move could indicate distress in the banking system."

"...underscored growing concern about credit woes among major U.S. lenders.
``The discount rate is technical but it may suggest that there is some financial distress,'' said Bill O'Neill global strategist at HSBC Investment Bank in London.
``There has been talk that (the Fed) know of a particular bank in distress.''

``Banks don't often do it because they can borrow elsewhere more cheaply,'' said Paul Horne of Schroder Salomon Smith Barney in London.
``If they use it it is a signal to the Fed that banks are having difficulty and may be having trouble on the open market.''
``There has been concern because the Fed has acted so precipitously and indeed without precedent. It will get the market worried that there is some kind of specific problem out there that the market doesn't know about.''

"Most U.S. banks have had to set aside chests of money to protect against commercial loan defaults, analysts said."

``The Fed is the borrower of last resort and it could well be the case that they are trying to improve liquidity conditions for U.S. banks,'' said Matt Wickens, global economist at ABN Amro in London.
-------------
The Bank of America is said to have missed fourth-qauarter earnings projections due in part from $1.2 billion in bad loans.

Where do you run to protect your wealth (or should I say buying power) currently represented as currency when you know the Fed will do whatever liquidation (inflating) necessary to prevent a domino effect among a strapped banking system? You run to gold, of course. Call Centennial today and let them help you chart a safe course. Life may be hard without an "economics owners manual"; gold makes it just a bit easier.
Randy (@ The Tower)
(01/05/2001; 13:07:21 MDT - Msg ID: 45122)
The Fed adds $5.5 billion to banking reserves today
Using over-the-weekend repurchase agreements with the standard spectrum of collateral, the Fed has helped to temporarily boost banking system reserves by five and a half billion dollars.

Fed funds were trading at 5-7/8ths percent, which is below the target rate. Almost makes one wonder how many of the demand-side borrowers are opting for the Fed's direct discount window (and with it the better rate) instead...
beesting
(01/05/2001; 13:09:28 MDT - Msg ID: 45123)
Gold Mine Hedging!
Black Blade # 45078 Hedging Scams and RossL # 45099...Excellent Posts...

<>

I have thought long and hard about this for a long time now and this is what I come up with:

Everyone knows shareholders are the true owners of companies and management is supposed to do what the holder of the "MAJORITY" of shares vote to have done concerning company policy. Well I follow many of the Gold mining companies reports and releases and South African Gold mines used to release the top ten owners by shares of the mining company. The top 8 to 10 shareholders are always some type of bank or financial institution.(I've had trouble getting that information recently)
Now, I submit, controlling interest in "Hedged" Gold mines is made up of the same group that has controlling interest in the "Bullion Banks" that offer the miners cash or the equivalent for unmined Gold,hedges.(Future Gold Production)

Therefore the real "Majority" owners of the mines are and have been making much more profit dealing in the hedging business of Gold than the actual sale of the product produced.(GOLD) Management of these mines are told to hedge.
This seems to answer the question for me, "Why do some producers continue to hedge?"

On Ashanti...Thoughts Only...Some of the "Minority" shareholders have started a legal action against the company.I don't think any share holders want to stop current and future Gold production, however if current Gold production is stopped for a period of time the existing and future hedges may become almost worthless(Read go down in percieved value) as no Gold is being delivered at all or at the time specified,to be delivered. If that scenario ""Did"" happen in the not to distant future wouldn't holders of those hedging(paper contracts) try to sell(dump)them at any price and couldn't that action "Depress" the spot price of Gold irregardless of whats happening in the other financial markets?
Thanks for Reading...beesting.



auspec
(01/05/2001; 13:17:24 MDT - Msg ID: 45124)
Friday Again
The Boyz have survived another week of extremely short gold positions. Maybe they actually THRIVED this week by selling "fools gold" to some fool, knowing full well their shorts will be bailed later as per the "free money" theories taught at this establishment. Regardless, the vigil continues. Can they succeed in causing a panic low from here? We're certainly properly set up for it. MK, you probably should install a few more phone lines to handle all the orders that would come with $205 "fools gold" pricing. I am ready! Can I put in a pre-order in case the spike down is short lived, as it surely will be? Will you have enough to go around? Will a divergence of price between "fools gold" and physical crop up and spoil our insightful plans? Who can predict this dollar price of the divergence point accurately? Any guesses?
Waiting patiently. Got enough physical, got GATA???
justamereBear
(01/05/2001; 14:11:23 MDT - Msg ID: 45125)
All re 2 rate cuts in 2 days

This dead fish has officially become VERY VERY smelly to my nose. It became VERY smelly at the unseemly haste of the passage of the HR4541(?), the derivatives bill cooperated on by all political parties at a during the pre election fever, when no trick is on the opposition is to lowly to contemplate.

Hoo boy, anyone that does not read the writing on the wall, can't read. The BIG question is, will teflon Bill survive the next 16 days unscathed?

I think we should start a contest. Best one liners by the condemned facing the firing squad. A little Gallows humor. Winner to enter the CLEHOF. Any takers?

May God bless us all, each and every one.

j'Bear

Gold Trail Update
(01/05/2001; 14:20:41 MDT - Msg ID: 45126)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
Peter Asher
(01/05/2001; 15:27:01 MDT - Msg ID: 45127)
J-Bear
How'bout,
"If I had KNOWN she was a hemophiliac, I wouldn't have bit her on the lip."
Randy (@ The Tower)
(01/05/2001; 15:35:18 MDT - Msg ID: 45128)
Hall of Fame...good for weekend reading...now includes latest nomination of commmentary by Holtzman
http://www.usagold.com/halloffame.htmlThis special archive really does a fantastic service to encapsulate the intricacies of the gold market and philosophies behind personal gold ownership.

On another note...a plea to I.V. Holtzman: over the months I have derived considerable personal satisfaction reading your contributions. The exceptional even-handed treatment of your subject matter continues to strike me as nothing short of profound. Do you happen to have a list of your prior commentaries, and if so, would it be at all convenient for you provide it to me? I am otherwise daunted by the notion of prospecting the vast wealth of the archives to unearth your collective text. I should like to have an index of them, and perhaps make it similarly available for the benefit of new and future visitors.

In the early days you had e-mailed your commentaries to Michael to be posted on your behalf. Given his busy schedule and the e-mail traffic he receives, I can imagine that in his priority to attend to the business side of things it is possible that a commentary intended for the forum did not make it there. If so, and if you still have the text not rendered obsolete by the passage of time, I would be eager to receive it for proper inclusion in this index. Again, I request this only if it is quite convenient for you, sir.

And I thank you.
Cavan Man
(01/05/2001; 15:47:15 MDT - Msg ID: 45129)
USAGOLD #44982 1-3-01
Sorry, couldn't resist."I expect a down day tomorrow for that reason and, if that happens, a minor rout of the DOW Index to ensue..."

Cavan Man

Belgian
(01/05/2001; 16:17:37 MDT - Msg ID: 45130)
@ Beesting - Hedging :
20 yrs ago, when South Africa, dominated the gold-production...hedging wasn't even considered. They did not have the difficulty to impose discipline. The only pirate was Russia.
I thingk that hedging accelerated, when CB's, started the sell signal. Strong and Rich mines had their specific reasons to hedge and weak and poor mines, had other reasons.
Running a big mine-complex is not the same as running a candy-shop. You can't close a mine in full progress. Once you have taken the descission to develop the mine, you are at the mercy of POG. But things got out of hand. Who could or still can answer the question : for how long is POG going to remain weak ? Goldmines have relied to long on the advanced techniques to mine and extract gold from the different ores. In their panic of CB's gold selling, they took the hedging-silver-plate as an opportunity to survive or expand and fight for supremacy. You and I would have reacted the same way.

But, once you started taking the hedge - drug, it is very difficult to re-adjust. Especially for the weak and poor mines. As a shareholder, I would choose for a care and maintainance strategy. But, then you give the others the opportunity to profit on an increasing POG. So, a cartel formation seemed and still seems to be impossible. It is the same circus seen at OPEC for many years. How many shareholders have the courage to consider their mine as an inactive-underground-gold-holding ? They want dividends and growth. Employees can't be put aside with a fingerclip.
Management can't go, unpaid, on a long vacation, whilst POG is adjusting to offer/demand. and the gold-producers are still ignoring GATA, openly.

As I said before : big - strong - rich miners, never panicked or showed any signs of panic. They found different ways to survive and kept on mining. And they are not going to explain us, their reasons for the choosen strategies.
Post factum, we are experiencing the effects on POG. But in the future, the hedge-choice, will work for POG as a later catalyst. An increasing POG will have a negative effect on jewelry-consumption. The production will be in a simultane declining phase and offer/demand will balance positively.

A few years from now...hedging will be remembered as a bad dream. It also took quite a long time, before OPEC, was ably to discipline itself. Gold producers will have learned their lesson. At 270$, time, is Gold's best friend.
The longer it takes...the costlier the lesson.

After all...it is the wrong hedging choice that contributes to the opportunity of physical gold buyers to acquire the metal at rock-bottom prices. A once in a lifetime opportunity.

Sorry to repeat my wish of a POG collapse to under 200$.
Such an event, would be a true eye-opener. It would be the short-pain-trigger, to act upon the fact. Gold producers would go bancrupt and Goldsellers would decide to stop selling and massive gold accumulation would start immediately. Now, I have the impression we are sitting in between two chairs. Not high enough to live and not low enough to die. Cruel, isn't it ?

POG-pattern from 2/96 - 414$ decline is a five (5) Wave affair. Best to be seen on a P&F chart. We are still in the last Wave V (five) down. The 253$ low on 9/99 was the end of Wave III (down)and the WAG spike was Wave IV (up).
We can discard this scenario, when 350$ has been breached without any doubt. I hate to say it...but...as long as 350$ hasn't been broken...we are still down-trending. This is a very good reason to put all emotions on the shelf for the time being. This scenario does not exclude an unexpected and explosive turnaround. NIA !!!
Randy (@ The Tower)
(01/05/2001; 16:20:15 MDT - Msg ID: 45131)
HEADLINE: Daily forex trading shrinks by a quarter
http://straitstimes.asia1.com.sg/money/story/0,1870,15466,00.html?Globally, the volume is down a quarter, while in Asian trading centers specifically, the volume is down nearly two-thirds.

A good excerpt from the article:

"Lower currency flows can also be attributed to 'an unprecedented convergence of global interest rates' in the past five years, wrote Mr Leven. The narrowing differential on yields dampened demand for 'carry trades', where investors borrow money at a low interest rate and deposit it in countries with higher returns, he said.
+
Lehman expects trading volume to pick up again this year, as the bank forecasts the US dollar will decline against the euro and yen."
Christian
(01/05/2001; 16:46:58 MDT - Msg ID: 45132)
Money and Power

Mail message


��Money is accepted in exchange for
wealth until wealth expropriation
consumes most of production and the
public begins to starve. Easy credit
made possible by credit creation $3000+
gold along with the lower interest rates guarantee future correction. Money
creation is a check written without a
bank balance (deposit) or collateral.
What is stoping the central bank from
using the credit creation gold priced at $3000+ over and over. Much of the US
private sector debt is collateralised by equity and real estate holdings. Today
the main economic function of money is
expropriation of wealth. Asset
valuations can only be driven higher at
the expense of the real economy.
Inflation can not be controlled. We the
people have been fooled into believing
gold price is $270 when trade settlement trade gold goes for $526 and credit
creation gold goes for $3,000 and that
same gold is used over and over at least 10 times. I dare anyone on this forum
ask 1-At what price does credit creation gold change hands? 2-At what gold price
does the USA settle its trade deficit?
Retaining the god-given right to
distribute one's own wealth is the only
guarantee of freedom from tyranny and we do not even have the right to sell gold
at its true value. Money accepted as a
medium of echange subjects people to the influence of its creator. It is hard to
believe that the FED and the Bullion
Dealers have been and are trading with
wealth in under-ground free markets. Nobody has the guts to
ask the real questions and demand a real answere. I tried but found it dangerous
to my physical and financial health. I
am just a dumb farmer and I wish some of you smart people get answeres to 1+2
above. In our so called free markets
there are many losers and few winners.
The money that the many losers lost went to the few. It did't vanish; it changed
owners. Most of us on this earth are on
this earth to be financially wiped out
by the few and we just can't seem to get wiped out enough.
Randy (@ The Tower)
(01/05/2001; 16:55:46 MDT - Msg ID: 45133)
ECB board member Tommaso Padoa-Schioppa sees good year ahead for euro
http://biz.yahoo.com/rf/010105/l05252766.htmlIn an interview on Italian state television, P-S said telling in the wake of the U.S. rate cut, "Today in Europe there is a great European currency. Our moves are not towed along by U.S. moves but are based on European economic conditions."

In case you haven't noticed, many things are not as before. Act now to position yourself accordingly.
justamereBear
(01/05/2001; 16:57:57 MDT - Msg ID: 45134)
Peter Asher

UASG dated 01/05/10 11;59 MDT (message # 1059772)

I can't remember who said it, maybe Alan Greenspan, or more likely Bill Clinton, but one of the more famous quotes of the day was "I will return, reincarnated, to rescue the country from this mess caused by the Bush crowd. The good times will roll again".

Sorry Peter, not as good as yours.

j'Bear

beesting
(01/05/2001; 19:36:33 MDT - Msg ID: 45135)
Hi Sir Belgian # 45130
Thanks for the response, it brings up a lot of points for further discussion.
It's my opinion the jewelry business here in the U.S. is not affected very much by the spot POG simply because there is a huge mark up in jewelry anyway, most is 10,12,14 & 18 carat, according to my wife. That may be much different in India, Thailand,UAE, and other locations where jewelry is closer to 24 carat.

Lets look at POG @ 200 per ounce from a producers viewpoint.
If a producer of anything spends more to produce his/her finished product than they can sell or trade for it, how long will they continue to produce?
Answer...not very long!
There are a lot of factors slowly coming into play right now, one of them is; Euroland is valuing 15% of their digital currency(Gold) at market prices. It would not be in their best interests (they are trying keep a strong currency) if the POG went to $200 per ounce.

I look for the POG to be priced in Euro's and dollars very soon.
Currently POG in Euro's is around $280+ per ounce. Our old friend ANOTHER said long ago this($280) was a significant number for POG in U.S.dollars, it may also be in Euro's.($280 per ounce Gold = about $9.00 per gram or close to $9,000,000 per metric tonne,1000 kilograms)

One other misconception I think people may have is, if POG starts to climb buyers may disappear, I believe quite the contrary, buyers will slowly come out of the woodwork as the POG rises. That's what happened in the middle 1970's in jumps and hops till 1980's when the $850 spike happened. At $850 per ounce Gold some were BUYING!

Well enough said for now...We watch Together....beesting.
silvercollector
(01/05/2001; 20:07:44 MDT - Msg ID: 45136)
Christian
Have followed you very closely over at G-E.

You mentioned a few weeks ago that the heat was on, you had to leave.

Can you elaborate?
RossL
(01/05/2001; 20:11:48 MDT - Msg ID: 45137)
Chart of the crashing � and soaring �
http://home.columbus.rr.com/rossl/gold.htm
Drastic measures by the US fed do not even show up on this chart. I will be looking for derivatives to be making their mark soon.

Happy 2001 !
Canuck
(01/05/2001; 20:55:05 MDT - Msg ID: 45138)
CNBC
I watched CNBC for most of the day today (had the day off) and was both alarmed and in awe with the blatant and treacherous financial coverage it had to offer.

I began to watch at about 9:00 (eastern), just to get into the 'swing' before the markets opened. Larry Kudlow made the boneheaded spiel about inflation shortly after 9:00 (inflation is not rising because gold is not rising?), Maria did her 'on the floor' freak out show at 9:20 and then hell broke loose shortly after 9:30. Bank of America did not open and red alert warnings came out that there was rumours of 'derivative' problems. The CNBC desk was set afire with speculations and theories. For a full 20 minutes, until near 10:00 they were falling over each other with reasoning why the stock never opened. The PANIC was on the CNBC newsdesk. The anchor dude (sorry, I don't recall his name) made the statement, to the effect of, " the public deserves to know the possibilites, and one possibility is that the Bank of America may be in trouble, it may be derivative exposure that has gone bad on them."

The desk hushed and they stammered and stumped for several minutes until the BAC announcement. Then they cut back to the floor and Maria did her hyperbole freak show routine that BAC had made the announcement that everything was okay in 'derivative land', the stock was set to open any moment and it was going to open only a couple bucks down.

Sure enough, BAC opened soon after, an hour late I might add, the DOW briefly retraced and the 'pundits' gathered themselves and everything was okay in 'goldilocks' land.

HOWEVER, this is what I saw. For a couple fleeting minutes, maybe from 10:00 or so, there was horror at the desk. There was a genuine concern, a feeling that all hell was going to break out, a major sell-off. There was, for a minute or two a feeling of PANIC on the astute CNBC. It was there, crystal clear.

These clowns know what is going to happen. They are 'actors'
playing the bull game and now even the actors know the outcome. They know 'meltdown' is so very, very close. Mr. Greenspan's PANIC rate cut this week is being scutinized over and over this week and no one is able to justify his rash, abrupt decision other than he HAD to, he is on emergency damage control. The 'January effect' was clear and evident from Tuesday 9:30 until noon Wednesday, freefall was in the cards. He didn't want to prematurely cut rates but after a day and a half of mayhem he had no choice.

The house of cards (paper) is burning.
SHIFTY
(01/05/2001; 21:46:25 MDT - Msg ID: 45139)
Canuck
CNBCI was watching CNBC on and off today. You are correct about a look of panic.
I think I will pick up a tape for the VCR and tape CNBC this next week. It could be historic. Plus if gold decides to do a moon shot I want to have the Larry Kudlow reaction on tape.

$hifty
Christian
(01/05/2001; 22:06:02 MDT - Msg ID: 45140)
(No Subject)
To Silvercollector - -gold manipulation I found out from somebody that works at the Bank of England that credit creation gold price is $3000+ and from BIS that USA trade deficit settlement price is over $500. The low commodity gold price is being used to take gold out of circulation and then used for credit creation to feed the stock market and real estate boom. The boom and bust cycle is made possible by using gold for credit creation to create credit until everything is mortgaged to the hilt and then forclosed on. This has been going on ever since the discovery of paper money. I wrote to many elected officials and asked what 1- what price does credit creation gold change hands and 2- what price gold is the USA trade deficit settled at BIS? I must be on to something because my place was searched and my webtv unit disabled. Some of the elected officials are asking questions and getting different information. Many of these elected officials have heard of the ESF but have no idea what it does. Ever since I posted this on GE I have been unable to post again. You should see some of the response I get from the elected officials- they must be in on it for many of these officials like Hillary Clinton, Jon Corizone (SP) are making millions on this scam. I have mailed every month for the last 5 months to over 40 elected officials and some of them are seeing what I see. I got a letter today that said that "money is credit-imaginary demand-inflation-seigniorage. He stated that to get elected you have to be in on it in order to raise funds to run. Most elected officials make at least $50,000 per speech at the commodity exchange which are shown as profits made on betting on a lower gold price. I hope more people will ask the same two questions. Our future freedom is at stake. We the people are to blind to ask the obvious.. There is no transparancy to the gold market.
Mr Gresham
(01/05/2001; 23:10:18 MDT - Msg ID: 45141)
I Don't Think I've Ever Read it So Clearly Put Before
http://quote.bloomberg.com/fgcgi.cgi?T=special_news2.ht&s=AOlOyFRSOVS5TLiBFWashington, Jan. 3 (Bloomberg) -- Federal Reserve policy- makers cut the benchmark U.S. interest rate a half point to 6 percent in a surprise move aimed at preserving the record economic expansion.

``It's a loud and clear message that there's not going to be a recession,'' said Stephen Slifer, chief economist at Lehman Brothers in New York. ``The Fed stands ready to do whatever's necessary to make sure nothing bad happens."

And I thought that that's what sleeping with a nite light on was supposed to do. (I wonder if they have a brand with Alan G's face on them? Hey, isn't Mr. Rogers' job open now? Kids, wouldn't you like Mr. Greenspin's neighborhood on your TV?)
SHIFTY
(01/05/2001; 23:45:10 MDT - Msg ID: 45142)
Mr Gresham
Mr. Rogers' job Mr. Greenspin my have some competition for Mr.Rogers job . I heard last week there was talk of Billy Clinton getting a TV show.
Then again CNBC may have a large time slot opening up in the next few weeks! They can both have TV shows if they play their cards right!
LOL

$hifty
YGM
(01/06/2001; 00:23:27 MDT - Msg ID: 45143)
Christian......
Hello...Glad to see you've pulled up a chair at this table....
Marcia told some of our old GE crowd of your being harrassed
and I'm very glad to see you are not being intimidated or silenced....You've awoken more than a few thinkers w/ your posts and links over the last couple years....Looking forward to more of the same...YGMView Yesterday's Discussion.

SHIFTY
(01/06/2001; 00:23:39 MDT - Msg ID: 45144)
It never ends.....
http://dailynews.yahoo.com/h/nm/20010105/pl/congress_electoral_dc_2.htmlLike I said in the past : This whole thing reminds me of the movie Ground
Hog Day!
----------------------------------------------------------

Friday January 5 7:30 PM ET
Black Lawmakers to Challenge U.S. Electoral Vote

By Thomas Ferraro

WASHINGTON (Reuters) - The Congressional Black Caucus (news - web sites)
announced on Friday it will challenge final certification of Republican
George W. Bush (news - web sites) as the next president, but a spokesman
admitted they might well fail.

The challenge will made on Saturday during a joint session of Congress
chaired by Vice President Al Gore (news - web sites), who conceded defeat to
Bush last month in the contested Nov. 7 presidential election.

The rest of the story is at the link above.

$hifty



SHIFTY
(01/06/2001; 00:57:16 MDT - Msg ID: 45145)
TV Commercial
I saw a great TV commercial the other day on the Outdoor Channel . It was a spoof of the add where the two brothers are separated at birth and one is brought up reading fishing magazines and the other The Wall Street paper. Well in this version the outdoor channel was added in place of the fishing magazines. The end had a new twist too, the boy who watched the Outdoor Channel won millions of dollars in the Bass Master Classic. His brother lost it all when his new IPO went belly up. They show him sleeping on a park bench under his Wall Street paper.
Its a hoot.

Off to bed

Go GATA
Go Gold

$hifty
Mr Gresham
(01/06/2001; 01:00:31 MDT - Msg ID: 45146)
AG and Payments System: Squeeze is On
I guess I should put it up top: This is the way I see the FOA gold rocket-price scenario happening. Combination of Fed "printing", public "flocking" and "fleeing", and ECB "re-balancing" reserves. It's hard to see $30,000, no matter how much of the above occurs; hard to see that something else wouldn't siphon off those $ somewhere on the way to that, but none of us really NEED that number just now except as an attention-getter, right? Somewhere around $1000 or $2000 (very explainable) we'd be getting "the rest of the story" from FOA & ANOTHER, and making our judgments from there.


AG and Payments System: Squeeze is On

In the interviews with Greider and others for their books on the Fed, Greenspan and Volcker have emphasized that their concern has been with preventing a breakdown in the payments system between financial institutions (US & worldwide). They couldn't guarantee which way markets would go, but they wanted to be sure that the winners and losers could settle their deals quickly and finally in USD, and move on to more commerce.

The Fed acts to stand behind institutions with the required capital levels so that they are not driven over the brink by interruption of payments from less-solvent counterparties. In one instance during Volcker's reign, the breakdown ("Herstatt Risk" from an early-70s European crisis) was somewhat threatened by the different clearing times between US and European banks. I think one system had three-day, the other five-day clearance, and that difference would have left some banks gasping for liquidity for a fatal 48 hours. The Fed and other CBs had to tide over that difference during a cash flow crunch.

Many of AG's speeches have been about technical improvements in the payments system, so that a glitch seemingly far-removed from the basic business solvency of the transacting institutions (which are playing brinkmanship enough as it is) does not bring down the system. "Cascading cross-defaults" I think was his phrase.

We get a whiff of that anytime a major bank or other institution is threatened with capital insolvency. The memory of Continental Bank, which was cleaned out by foreign overnight wired withdrawals nearly 20 years ago, must still be in the minds of some today.

Picture the money supply as somewhat concentric rings of asset types, perhaps akin to Dante's rings of Hades?, or the electron rings of a highly agitated atomic particle. At the outermost levels are the "flakiest" of funny moneys, but they exist because people can play with them in certain ways they can't with the more stable moneys toward the center. (Can you Goldhearts guess what these might be?) The players are willing to accept higher risk to attain their ends of greed and excitement, though their risk/reward calculations have been actually been lousy if done at all and their information inputs inadequate.

They analyze their transactions on a two-dimensional map of risk/reward considering only market directions and maybe the psychology of counterplayers. They do not question the third dimension which, from an elevated perspective, says that the chessboard they are now winning upon can at any moment be swept clear by the hand of market breakdown and payments system collapse.

The US money supply today might be, for example, $7 trillion of all types (honest, I haven't looked this up, and don't care to research harder toward some useless specificity.) But this money supply represents debt of all types that people and institutions have committed themselves to work toward repaying, circumstances permitting. (Subject to many ways of discounting in future.) It represents paper currency that people commonly accept as money. And it represents real assets that can be used as money, or act as direct backing for a currency money.

Suppose that those categories boil down, in an economic "hard landing" scenario, to only $2 trillion of "hard" money. Money that really will be trusted in use, debt that will be worked down to sustain homes, businesses, and credit ratings. Right now, the public is looking toward the $7 trillion "mountain" of money that they've always known (and still remember from its smaller and less-flaky days). Right now, they believe that by working harder and smarter, a piece of that big mountain is to be theirs. A shift in psychology later, they turn around and see instead the smaller "hill" of $2 trillion. And, voila!, THAT becomes the real money supply, either very immediately, or eventually, after a longer and still-painful workout.

If that is what people believe is out there, then that is what they are willing to supply their labor and capital to work toward. That is THE Money Supply.

Alan Greenspan's problem with the Bubble is that its puncture immediately puts the smaller amount on peoples' credulity screen. All the funny money in various way-out orbits -- whether created by flicks of the fickle Fed fingers, or by a lifetime of self-denying savings -- flees toward the stable center when it is threatened, but like the crowded theatre on fire, the doorways are not wide enough. The available niches for more stable money in closer levels are fewer and cannot readily accommodate the flood of scared money. Much money, both borrowed and saved, departs for Money Heaven (where streets are paved with fiat.) Of course, back on Money Earth, prices rise for items representing the more stable money items.

In market Technical Analysis terminology, there is not much "Support" between $7 trillion and $2 trillion. Most "buyers" of money ("suppliers" of labor) will sit out the market slide as able, once their expectations shift, and they will thereby produce a bottoming out of the supply/demand equilibrium at a new low, but supportable, level. They will not bid their hard labors for the outer, flaky (mostly departed or soon to) moneys anymore but for the nearer to hand, harder, trusted moneys. Newly risk-averse, the cycle will funnel more of the remaining $2 trillion toward gold and assets near its central orbit of stability.

Of course, economic activity, statistically-measured, slows to a crawl as people re-jigger their ideas of what is worthwhile spending their now poorly-paid labor and dwindling cash upon. The Depression scenario, scary as it may be, may cause many people to repeat what was said in an earlier time: "We had everything in those days, except money." Learning about values never ceases; money is just the warm-up.

The payments system is the artery through which trillions of dollars flow daily or weekly, and upon the constriction of those vessels, the economic "lifeblood" flowing will reduce to the lowest practical and supportable amount. Institutions will simply not hang out their entire corporate capital on a transaction or two, when a new "Creditanstalt" or "Herstatt" has occurred and more are waiting to happen, unknown which ones among all their routine transactions. This is how the payments system dies, regardless of Fed and CB backing. Even the Lone Ranger can fit only six Silver Bullets in his pistol.

Greenspan simply does not want the statistical implosion of the money supply to happen on his watch. He does not consider it inevitable, and believes that the Art of Fed Chairmanship, aided by public psychology, has a spitting chance of turning it back, or landing it "softly". If he fails, his consolation prize would be history granting that he "did his best, in an impossible situation," quite a re-write in itself. (If the camera is focused only upon the post-Crash period, though, he may get away with it. Awww, let him.)

But, as he has pushed back each harbinger or lesser trigger of that implosion, he has aligned all of the disparate elements in a grand conjunction, a parting of the economic Red Sea (in which his own chariots must perish), and the almost meticulously calculated as-if-planned Perfect Storm that will fall upon the economy with full fury and spare no frivolous item of economic waste from dissolution.

SteveH
(01/06/2001; 01:28:25 MDT - Msg ID: 45147)
Mr. G.
I believe you give Mr. AG too much credibility. Your analogy of the atom or every increasing circles within circles is apropos in so far as the undulations of the volatility that are growing larger by the day, it seems, don't start to throw these outer-orbits out of orbit. And that is the risk here. How do you control an economy that you don't have control over? Hasn't he admitted that the money supply is now created outside of his area of responsibility? Fanny Mae, Freddy Mac, money market funds, etc?

We have a case of too many people controlling money or not controlling it, as the case actually would appear.

I can't help but think these wildly gyrating days of volatility aren't merely a nasty indicator that the system is vibrating out of control. My friend Roger is a PH.D. in vibrational mechanics. He says that vibration is the main enemy to anything mechanical. He says anything will eventually break if you shake it too hard. Well, Roger may have been prophetizing about money too. If we shake this economy too hard, she will break also. These wide swings of stock prices and dollar-euro exchange rates appear to be held in orbit only by keeping the price of gold and other commodities low. That there is such a concerted effort to do this with California natural gas, gold, silver and who knows what else tells me that the fear of inflation is so high that those who control or can control commodities justify commodity suppression to save the system from inflation.

In the meantime, we have all the volatility on the markets and forex that shows the system is starting to break up in flight because of the financial vibration. The gravity of your US dollar proton holding these financial electrons is only as strong as the commodities backing currency make it. Since the commodities appear to be kept from playing their stabilizing role of letting currency rise or fall to their proper value, we are waging this battle in the one commodity (oil and natural gas) and few markets stocks and bonds) that keeps this battle of inflation in check for now; but soon, this will change because of financial vibration breaking apart your monetary electrons, starting with those in outer orbits.

Sooner than later it seems now, gold, silver, natural gas, oil will all have to be allowed to rise in US dollar terms in order to keep the system in homeostasis. These vibrating forces of destruction will not get any better until a dampening effect is applied and that is the natural supply v demand of goods and money. As long as we have folks who can control the commodities downwards, inflation seems in check. It is now starting to get out of their control. Or so it seems.

YGM
(01/06/2001; 01:35:07 MDT - Msg ID: 45148)
Mr. Gresham...
The 'Squeeze'That was an EXCELLENT and easy to read/follow synopsis, and one I'm saving...Thank you.....YGM
SteveH
(01/06/2001; 01:46:52 MDT - Msg ID: 45149)
Interesting repost
www.kitco.comDate: Sat Jan 06 2001 00:49
Goldfish (A good one from GE .........) ID#433282:
Copyright � 2000 Goldfish/Kitco Inc. All rights reserved
( All ) International Economist urges Greenspan to let gold price rise for the wrong reasons!
( Deadeye ) Jan 05, 22:37

From National Review:
http://www.nationalreview.com/comment/
commentprint010401d.html

Rate cuts alone will not solve deflation problem. In fact, they may make it worse. Under its current operating procedures the Fed can only add enough dollar liquidity to hold its federal-funds rate target in place. But what if the banks expect the Fed to continue lowering rates? If they bid for fewer reserves on the expectation that the price of credit will continue to fall, it could force the Fed's open-market desk in New York to actually reduce the base money supply to keep the funds target from falling further.

This is precisely what occurred in Japan between 1990 and 1998. The Bank of Japan ( BoJ ) cut its interest-rate target in small steps from 9% down to zero, but the market was one step ahead of the Keynesian economists at the BoJ. When bidding activity stalled, the BoJ was forced to reduce the monetary base even as rates came down. The yen/gold price continued its downward march, pulling the rest of the price structure down with it. Errors in tax policy exacerbated the situation, which continues unabated to this day.

The best we can hope for in the current environment is that Greenspan shelves his Phillips Curves and hybrid Keynesianism and adds enough liquidity to get the price of gold - the commodity of the highest monetary order - up above $300/oz. If he could do that, financial markets would stage an extended relief rally, celebrating the end of Greenspan's deflationary squeeze on liquidity. Unfortunately, Greenspan seems to have forgotten about gold's ability to foreshadow price-level changes, which places the burden of relief on fiscal policy.
SteveH
(01/06/2001; 02:01:32 MDT - Msg ID: 45150)
Interesting repost
http://www.nationalreview.com/comment/commentprint010401d.htmlWe have economists who rely on a low price of gold to explain deflation v inflation. Is there any predictive value in basing one's prediction on the price of gold being low as the reason for current conditions and taking or making decisions of an economic nature that rely upon that premise as to gold being low? What if the premise for gold being low is the opposite of why one believes it to be low? Wouldn't that make any decisions based on it being low for one reason be completely wrong and lead to the opposite desired result?

If those in the know, know that gold is low because the ESF makes it so, yet others (see link above) believe it is low because they believe natural market forces make it so, wouldn't these differing parties make decisions completely different or cause them to offer advice that would be completely contradictory even though they were using the same fact or statitic?

I believe the answer is yes, it would make a big difference. That is why GATA is on to something, they just want a little bit of truth about gold told so that those who are at the helm of this big ship will make the right decisions about an economy in stress. If you have to make decisions the best ones, I would hope, would be made knowing the truth.

It seems that this truth-gap may be widening for Mr. AG, as we all believe he is in the know about this gold thing. But, the pundits on CNBC and CNN don't seem to understand gold nor why it is down and assume that gold is down because of natural supply and demand. They don't get that demand is so high for physical that all shackles are being broken down to free as much as possible without causing a rise in COMEX pricing.

In other words, if one is to use gold as a true monetary indicator, one must understand the difference between paper and physical gold and how they play off each other and understand that gold is the indicator they really want it to be, but others in the know, know this too and have taken measures to make sure that it gives the false signal. And there in lies the key with this whole mess. Disinformation extraordinaire!
SteveH
(01/06/2001; 02:11:39 MDT - Msg ID: 45151)
Must read
http://www.the-privateer.com/gold6.htmlFor snippet (all of it in fact) proceed to above link.
Mr Gresham
(01/06/2001; 02:51:59 MDT - Msg ID: 45152)
Steve H: Pay no attention to that fellow behind the curtain!
Thanks, YGM.

Steve -- I've gone way beyond my night's capacity, so I won't open a window and re-read our two pieces. I've got windows open with: Noland, 2 Flecks, Tarpley on the Great D, Bearforum up through 8pm and another through 3a.m., ContraryInvestor, Longwaves, Bonner, McCulley at Pimco, couple others. (Anyone who wishes to phone in at this point to scream "GET A LIFE!" can dial 1-900-EAT-****)

Been a busy, exciting day.

It seems we both were exploring and your mechanical vibration analogy carried thoughts pretty well. I'll re-read in the AM. (Hey, it IS the AM!)

My analogies were flying fast and thick as well, but I was trying to get at the old question of "what is money", and what will it be under crisis dynamics? Like electrons jumping orbits under different excitations, money will flow en masse between levels of risk based on mass judgments, which, in a major crisis, will preclude saving much of the money from passing through the needle's eye of salvation.

I don't remember praising AG so much, but maybe it could sound like it. He IS the central character of the Bubble mythology, rightly or wrongly, and you know he knows where the Goldbugs' lost hearts are buried. Anyway, his "invincibility" is a proxy for the market's bullish faith and he'll be tarred and feathered with the same idiotic lack of understanding of his limits.

I don't think about him much, but this week it's been hard not to. Oh yeah, and he cost me $20,000 in leap puts in '98. GRRRRR... (Nothing personal, right? ;)

Thanks many times for the posts you bring over from Kitco. You know we couldn't take the time to scan for the best ones and your skill at selection relieves me from the sense of missing something over there.
Pandagold
(01/06/2001; 04:07:35 MDT - Msg ID: 45153)
Steve (Must Read)
I read his comments every week. He makes a lot of sense, and is often right on the ball with predictions, and observaions. Definitely worth following.

Always remember, any of you readers, that these writers can't stick their neck out too far (they have family besides their own necks to consider) They know the 'elite' are ruthless in what they are about and in the preservtion their position.

So try to see not only what they are telling you, but also what they are trying to tell you. (Getting the message?)

If you doubt it - read (Mr) Christian his words are 'bountyful') and profound. (No, I am not sorry about the pun)
Black Blade
(01/06/2001; 04:21:39 MDT - Msg ID: 45154)
NG Going Higher and Banks Quiver as Loans and Derivatives are Scrutinized
By Gloria Gonzalez, BridgeNews

New York--Jan. 5--NYMEX Feb Henry Hub natural gas futures ended up 29.5 cents at $9.261 per MMBtu, extending Thursday's strong rally with support from forecasts predicting cooler temperatures toward the end of next week and expectations for a further expansion of the year-to-year storage deficit next week. The market had a technical reversal Thursday after a two-day sell-off left the market oversold. The rally was also partly a delayed reaction to the latest American Gas Association storage report. Observers said the 209-bcf draw featured in Wednesday's report was bullish because it was larger than both the 1999 draw of 133 bcf and the five-year average draw of 135 bcf.
"I thought it was a very impressive performance," said analyst Jim Ritterbusch of Ritterbusch Associates. "Just a couple of days ago we were teasing $8.000 and now we're at $9 and a quarter." Fundamentally, the weather picture, which had been overwhelming negative this week because of predictions for warmer temperatures, may have helped the market rally because of a chance for cool weather toward the end of the next 10-day period. Another shot of cool air will pass through the eastern United States this weekend and early next week, according to Bridge Global Weather Services. The impact of the cooler weather will be much smaller than the intense cold air masses that moved across the region in recent weeks. Temperatures will turn a little cooler, however, and some snow will precede the coldest air late in the weekend. Western portions of the country will see a change toward cooler weather late next week. Meanwhile, low storage levels continue to underpin the market with early indications that the next storage report will feature a withdrawal larger than the 1999 draw of 111 bcf during the comparable period. "Traders are looking ahead to next week's AGA," Ritterbusch said. "Even with the moderate temperatures, I think we'll draw more than 110, but that could be the last expansion of the deficit." Several market observers noted that after next week, it would take significant colder than normal temperatures to surpass upcoming withdrawals of 195, 242 and 213 bcf, which should lead to a narrowing of the year-to-year storage gap.

OUTLOOK

Although National Weather Service continues to predict warm temperatures in the Midwest and Northeast, several private forecasters are calling for more cold in the latter half of next week. The possibility of cold weather at the tail end of some forecasts is forcing people to rethink their positions. This should lead to more strength early next week as some players will be afraid to be short ahead of any more cold weather, sources said. In the absence of more forecasts for warm weather, the market may be "poised for a test of contract highs," Ritterbusch said

UPCOMING:

--Feb futures expire Jan. 29; Feb options expire Jan. 26.
--American Gas Association storage data are released at 1400 ET Wednesday.


Black Blade: Going into situation critical? It's going to be a close call. Yet the Grasshoppers continue to suck up energy at a record pace regardless of the price. They regard energy as a right. They complain when the prices rise. Why? Once it is extracted from the "core-rate" it isn't inflationary! Just ask the boys and girls at CNBC ;-) The events in the Peoples Republik of Kalifornia should be a warning to the rest of the country. The rumors that affected the Bank of America (BAC) show just how fragile things are now. Remember LTCM? That is a preview of things to come as huge debts and derivatives positions come under pressure and eventually begin to collapse as one domino (bank) takes out the next domino, etc. As power companies find that they are unable to service loans and go tits up, the rest of the investment community will take notice. The shock to BAC was just a preview that shows just how vulnerable and unstable these dominoes are.
Black Blade
(01/06/2001; 04:29:48 MDT - Msg ID: 45155)
Excellent Follow-Up Piece from Bridge News
New York--Jan. 5--The front lines of the fight to save California's two biggest utilities shifted to the government Friday as a court dashed hopes it would cap soaring electricity prices that have left Pacific Gas & Electricity and Southern California Edison near bankruptcy. As credit-rating agencies warned that the companies are less and less likely to repay their debts, a federal appeals court denied Edison's request to force the Federal Energy Regulatory Commission (FERC) to let power generators charge no more than the cost of production in the wholesale electricity market. If the Washington court had ruled in the utilities' favor, they would have escaped from a financial vise that has cost them more than $9 billion in the last few months. Until late this week, the rates the utilities are allowed to charge customers were frozen at 1996 levels even though cold weather and a shortage of generating capacity have boosted wholesale power prices as much as 60-fold from last year's levels. On Thursday afternoon, the California Public Utilities Commission voted 5-0 to let the utilities raise rates by an average of 10% for 90 days. The utilities said the decision gave them crucial breathing space, but it falls far short of the 26% to 30% rate increases they say they need. Now, the companies, financial markets and the ratings agencies are waiting for either the state or the federal government to act. The Clinton administration has invited California Gov. Gray Davis and leaders of the troubled utilities to a meeting at the White House next week. "We feel that this is a serious enough situation that every party has to be willing to compromise and go the extra mile to find a way out," a senior administration official told the Washington Post. "We believe every effort should be made to bring the parties together in search of at least a temporary solution." The California legislature is also working on ways to fix the situation -- a goal the ratings agencies say is essential. When Standard & Poor's cut its rating on both companies from A, a solid investment grade, to BBB-, a whisker above junk-bond status, the agency admitted more downgrades could follow quickly. "Yet, Standard & Poor's has concluded that while lower ratings may soon result, they are premature at this juncture because the California legislature is in special session and is endeavoring to craft a timely solution to the financial crisis of the state's utilities," the agency said. "It is precisely the dire consequences of inaction that leads Standard & Poor's to conclude that there is a reasonable chance that action is forthcoming." If Standard & Poor's and Moody's, its largest rival, cut the ratings to junk-bond levels, the utilities would move even closer to bankruptcy. The power companies have promised their creditors to maintain investment-grade ratings. Violating those agreements would mean the utilities had technically defaulted on their loans, opening the way for the creditors to claim their assets. Both Bank of America and J.P. Morgan Chase & Co. each have about $500 million in credit exposure to the utilities, according to people familiar with the situation. Fears that the banks could lose the money pushed their share prices sharply lower on Friday, even though analysts said any defaults wouldn't hurt earnings much. California's legislature wants to make sure the utilities stay solvent. Gray called the legislature into a special session to concentrate on the crisis on Wednesday. The state may issue bonds to give the utilities enough money to repay the billions of dollars they have borrowed to buy power on the wholesale market, according to the Los Angeles Times. The utilities--and their customers--would repay the money over time. As a longer-term solution, the state could take steps that would give it more control of power generation within its borders. On Friday morning, Philip Angelides, the state's treasurer, proposed setting up a financing authority that would issue $10 billion worth of bonds to buy the 75% of California's power transmission systems that is now in private hands. Some of the money would also pay for new, state-owned power plants. Construction on those plants could begin immediately, giving California an advantage over private power companies still waiting for state permission to build their own plants. Those private generators are some of the same companies that have profited as wholesale power prices hit unprecedented levels. Any deal faces formidable barriers. Steve Fetter, a former utilities commissioner now working as an analyst at the rating agency Fitch, said a bond-issuance scheme would require two-thirds votes in both houses of the California legislature. In addition, it would probably face court challenges from the state's powerful consumer advocacy groups, he said. "Something has to be done in the next three weeks," Lori Woodland, Fitch's California utilities analyst, said via a conference call on Friday. The agency cut its ratings on both utilities' debt to junk-bond status from investment grade on Thursday. She argued that FERC should impose an absolute cap on California's
wholesale power prices. The agency has limited prices to $150 per megawatt hour, but utilities can charge more if they can prove the rates are justified. Wholesale prices have reached more than $1,500 per megawatt hour, compared with less than $30 last spring. On Thursday, James J. Hoecker, FERC's chairman, said he could support a temporary price cap to create a "time out" during negotiations for a broad solution to the crisis. Hoecker is expected to attend the White House meeting next week. Meanwhile, both utilities' stock remained weak. Shares in PG & E Corp., Pacific Gas and Electric's parent company, were up 25 cents at $12.25 late Friday. The stock has plunged from a high of $31.81 in the last year. Stock in Edison International, the owner of Southern California Edison, fell 43 cents to $10.31--roughly one-third of its high over the last year.

Black Blade: What more can I add here. This says it all. Collapse is immenent!
Black Blade
(01/06/2001; 04:41:56 MDT - Msg ID: 45156)
Gold Bull becomes Gold Bear
http://www.goldminingoutlook.com/I see that SJ Kaplan has sold his stake in gold companies a couple of days ago and bought Dot.Coms and Techs. This ought to be interesting. I guess that the phrase about not trying to "catch a falling knife" has no meaning here. I remember when he said to short ebay and Amazon.com during the most irrational time of the exuberant market. One would have been whip-sawed badly of course. Now I await to see how this new strategy fares. I think I'll hold my PM position, my share of petroleum, utes, and other now minor positions, all interspersed with fishing and hunting breaks. Let the games begin!

- Black Blade
Usul
(01/06/2001; 06:04:33 MDT - Msg ID: 45157)
H. J. Davenport's Loan Fund Theory of Capital
http://web.nchulc.edu.tw/~gunning/pat/subjecti/workpape/loanfund.htmWhen gold money is replaced by "promises to pay", the system of exchange becomes dependent on confidence in those promises, and everything must be done to maintain that confidence.
Canuck
(01/06/2001; 06:05:51 MDT - Msg ID: 45158)
Nail in the coffin
Cold weather expected later in week-end and next week. A NG close $10+ would really be another 'nail in the coffin' for the CA util's.

Shifty

Good idea with the tape(s). L.K. and the puppets with horror on their faces as the POG crosses over $300 at a 60 degree angle. Hee hee!!
Usul
(01/06/2001; 06:08:33 MDT - Msg ID: 45159)
Central Banks, Gold, - and the Decline of the Dollar
http://www.libertyhaven.com/regulationandpropertyrights/bankingmoneyorfinance/goldstandard/centralbank.html"People accept money, even if it is not backed by a single grain of precious metal, because they know other people will accept it in exchange for goods and services.

But people accept the U.S. dollar today in exchange for much less than they used to. Since 1933, the U.S. dollar has lost 92 percent of its domestic purchasing power..."
Usul
(01/06/2001; 06:13:44 MDT - Msg ID: 45160)
Islamic Banking & Finance
http://users.bart.nl/~abdul/book4.html"Historically people have stored their wealth in gold and silver.

Banks, including the central banks and the IMF, too hold a major portion of their reserves in gold.

In fact, until recent times gold and silver coins were used as medium of exchange � that is, as money.

The British Pound and the US Dollar owe the prestige of their use as reserve currencies to their (now historical) guaranteed equivalence to a certain amount of gold, as much as to any other new cause.

Even today, when people's trust ebbed as to the ability of the banking system to return their deposits or as to that of the government to guarantee the value of the currency, people resorted to gold to hold their wealth in, if it was possible..."
Black Blade
(01/06/2001; 06:21:32 MDT - Msg ID: 45161)
Petroleum Will Continue to Hammer the Markets!
There is a growing consensus that OPEC will soon cut production 1- 2 million b/d. Indications that Kuwait's and Saudi Arabia's are in agreement make a production cut make it almost a foregone conclusion at the cartel's meeting later this month will be positive for oil prices. Also lower interest rates should support the slowing US economy and buoy demand for petroleum.

The American Gas Association reported Wednesday that 209 Bcf of gas was withdrawn from US storage last week, slightly more than analysts expected. US gas storage is 708 Bcf, a record low for this point in the heating season and 29% below the level of a year ago. Remember that natural gas is a continental commodity, not a worldwide commodity. For example, in London, the February natural gas contract gained 4� to the equivalent of $3.86/Mcf.
Black Blade
(01/06/2001; 06:45:12 MDT - Msg ID: 45162)
Analysts Misjudge The Market

Gretchen Morgenson, New York Times
Sunday, December 31, 2000
�2001 San Francisco Chronicle

Of all the rude awakenings that the bear market in stocks has brought to investors this year, perhaps the most jarring has been the realization of how wrong Wall Street research analysts have been on the stocks they follow. How can so many who are paid so much to scrutinize companies have blown it so spectacularly for their investor customers? The answer lies in a subtle but significant change in the way Wall Street analysts do their work and how they are rewarded for it. That shift, which has brought riches and stardom to many securities analysts, has cost investors billions of dollars in losses. The fact is, although brokerage firm stock gurus are still called analysts, their work involves more salesmanship than analysis.

"The competition for investing banking business is so keen that analysts' sell recommendations on stocks of banking clients or potential banking clients are very rare," said Arthur Levitt, chairman of the Securities and Exchange Commission. "Whether this is an actual or perceived conflict, . . . brokerage firm analysis has diminished credibility."

"What passes for research on Wall Street today is shocking," said Robert Olstein, a mutual fund manager with 32 years of experience analyzing companies' financial results. "Instead of providing investors with the kind of analysis that would have kept them from marching over the cliff, analysts prodded them forward by inventing new valuation criteria for stocks that had no basis in reality." Although no one can predict what stocks will do tomorrow, much less next year, Wall Street's analysts are supposed to help investors judge companies' shares. Investors look to analysts to advise them on whether to buy or sell a stock at its current price.

Until the mid-1990s, that is how most analysts approached their work. Today, there is virtually no such thing as a sell recommendation from Wall Street analysts. Of the 8,000 recommendations made by analysts covering the companies in the Standard & Poor's 500 index, only 29 now are sells, according to Zacks Investment Research in Chicago. That's less than 0.5 percent. On the other hand, "strong buy" recommendations number 214.

Analysts have long been known for unrelenting optimism about the companies they cover. But many investing veterans say the quality of research has sunk to new lows. That decline, they say, results from business shifts that have pushed many researchers to put their firms' relationships with the companies they follow ahead of investors. The commissions charged by Wall Street firms to their institutional and individual customers for trading stocks are one factor. These fees were much higher in the 1970s and 1980s, such as 10 cents per share on trades then versus 1 cent or less now. Because analysts' recommendations helped generate trades and commissions, research departments paid for themselves. More important, an analyst who uncovered a time bomb ticking away within a company's financial statements and who advised his customers to sell its shares made an important contribution to his firm in commissions those sales generated.

As commissions declined, Wall Street firms looked elsewhere for ways to cover research costs. Investment banking was an obvious choice. Analysts soon began going on sales calls for their firms, which were competing for stock underwritings, debt offerings and other investment banking deals. In this world, negative research reports carried a cost, not a benefit. The result is that the traditional role of analyst as adviser to investors has been compromised.

Black Blade: Most securities analysts are nothing more than charlatans and con men. Listening Abby Jo? I use them as contrary indicators along with simple fundamental analysis. The Mary Meeker's, Joe Battapaglia's and Abby Jo's of the investment world should be looked only as clowns who entertain and not for any serious consideration.
JavaMan
(01/06/2001; 07:59:35 MDT - Msg ID: 45163)
http://biz.yahoo.com/c/u.htmlMr. Gresham, in your msg#: 45146 you said:

"But, as he has pushed back each harbinger or lesser trigger of that implosion, he has aligned all of the disparate elements in a grand conjunction, a parting of the economic Red Sea (in which his own chariots must perish), and the almost meticulously calculated as-if-planned Perfect Storm that will fall upon the economy with full fury and spare no frivolous item of economic waste from dissolution."

Very colorful imagery. Either this business with the California Utilities and associated banks was just a bump in the road or it is only the beginning of more of the same to follow.

People seem divided over the competence of Alan Greenspan, some believe him to be all powerful while others perceive him to be a dolt. Japan should serve as a good object lesson that one can lower interest rates only so far. One thing seems for sure, if this is only the beginning of a "Herstatt" scenario, we will surely see what AG is made of.


Black Blade, re: your msg#: 45162: Gretchen Morgenson sounds just like Bill Fleckenstine who has lamented their game for quite some time now�he refers to them as "dead fish".

I don't know if it has been mentioned here before but the Yahoo link above shows what the analysts have had to say about a given stock over the last twelve months. Interestingly enough, there is hardly ever a recommendation to sell despite the markets� decline over the last ten months. I entered Priceline.com (pcln) whose stellar performance brought it from $100 in March down to $1 around the end of the year. Contrary to the analysts� recommendations, however, it is obvious the stockholders had a different opinion on the matter.
TheStranger
(01/06/2001; 08:51:24 MDT - Msg ID: 45164)
Marc Faber's View (from Barron's)
What is it the market knows, or thinks it knows, that the rather hoarse but still game cheerleading crew on the Street doesn't? The sage of Hong Kong (and anywhere else he happens to light), Marc Faber, in his latest Gloom, Boom & Doom Report, supplies the likely answer.

Marc stresses that there are two distinct types of booms: The first is consumption-powered, the other "an asset bubble or new-technology-driven capital-spending" kind -- which, you doubtless recognize, is the boom we all, until recently, so greatly enjoyed. A consumption boom typically ends because, well, consumers tire of consuming. In countering the recession that follows, Marc comments, tax cuts and rate cuts can be effective, once inventories are liquidated, in rekindling growth.

The asset bubble or new-technology boom, however, is a whole different animal, and so are the causes of its demise. The main culprit is a surfeit of capital investment that inevitably leads to oversupply and glut. Margins and profits suffer, returns to the folks spending all that dough fail to meet expectations and asset values crumble. "Even zero interest rates," Marc ventures, "may not help."

Compounding the woe is that an asset bubble or capital-spending boom is financed largely by long-term borrowings at fixed rates. During the bust, the interest costs on the long-term debt assumed to finance capital investment do not decline; indeed, in real terms, they become more onerous, the sorry stuff of rising defaults and bankruptcies.

Bubbles and investment manias, Marc says, always mark the terminal phase of a business expansion, although mistaken for its start. They are followed invariably by "deflationary busts, sharply declining equity prices, a weakening currency and a downward spiral in the economy."
Journeyman
(01/06/2001; 09:28:38 MDT - Msg ID: 45165)
Gold to the moon -- how it could happen @Mr Gresham msg#: 45146, ALL

"It's hard to see $30,000, no matter how much of the above occurs; hard to see that something else
wouldn't siphon off those $ somewhere on the way to that, but none of us really NEED that number
just now except as an attention-getter, right?" -Mr. Gresham

Hi Mr. G.!

Something that WOULD drive gold to the moon would be if a "new" and valuable use were suddenly discovered for which it has not previously been used. (By the way, this is straight from Mises.)

Suppose the U.S. dollar crashed and as a result, world-wide confidence in and support for fiat money crashed right along with it. Not an impossible scenario, yes?

What would people use to store their value in? Even us slow, de-facto ignore ant Americans?

By golly! A completely NEW use for gold!!

To the moon!

Regards,
Journeyman
Gold Trail Update
(01/06/2001; 09:49:52 MDT - Msg ID: 45166)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
auspec
(01/06/2001; 10:17:37 MDT - Msg ID: 45167)
justamere Bear
Hello Friend. Sorry to not have been able to participate in your worthy contest yesterday. We were celebrating my ingenue's 50th and what a celebration it was. After post #44921, aka 1001 Clinton insults, I am currently fresh out of "truths" to throw back at him. It is really a very empty feeling for now, but eagerly await the Queen's next move for more fodder. Is it 14 days left now? Let the bad times go! In the interest of fairness to all I suggest we extend the season for the following 14 days. A few rules are appropriate: 1- There will be no high blows allowed. 2- When you hear the bell---ignore it. 3- Anything goes.
Thanks to the silent members, who would never dream of publicly insulting their prez, for allowing us these liberties here. Thanks also to those that are in complete disagreement with this line of thought for indulging those few of us that are so inclined. If it is any consolation to you, I anticipate the same treatment of new guys if they start clowning it up.
Did anyone see the photo op with Bill, Hill, & Al together as Hill was being sworn in? All three had at least a pinkie on some little black book, a bible hopefully. Ms. Rodham had that delerious & goofy grin on, she really needs to work on that. I do not remember if the 3 Stooges had their other hands behind their backs or not. Betting that some fingers, toes, or legs were crossed during this swearing in. Some of that emptiness seems to be leaving now, things are looking up. 14 days really isn't that much time.
Do you think HRC will attempt a Senate takeover in her first year, or will she have learned from her health care fiasco and wait until the 2nd year? Every time in the past when The Queen Mother got snared in the wringer she was able to retreat back to her unelected civilian status and hide there. That will no longer be possible and frankly I don't think she has a chance of withstanding the scrutiny she will be under.
That goofy grin is gonna wear real thin. Let's watch these folks closely and celebrate our American heritage.
Got Gold, GATA, Gall??
beesting
(01/06/2001; 10:42:10 MDT - Msg ID: 45168)
FOA From The Gold Trail #52,,,,,All I can say is, WOW!!!
Sir,
In this part of your message:

<< The only paper owners that are not worried are the ones with an economic good that demands satisfaction, in gold if
needed. Oil! The rest of us must bolt towards the closest "par" conversion first. Real gold.>>

I take it to mean Producers of Oil will be paid in Gold or Euro's to keep the oil flowing.
Is this assumption correct?
And, if physical Gold supplies are at some point exhausted Central Bank Gold or Ft. Knox Gold will be used to pay for oil?

FOA, I would like to echo USAGOLD's strong welcome back and best wishes to you and ANOTHER and all your loved ones for the coming events and New Year 2001...beesting.
Mr Gresham
(01/06/2001; 10:42:45 MDT - Msg ID: 45169)
Journeyman: To the MOON!
Oh Golly, says Miss Molly. Yes, yes, I say yes.

That would do it, wouldn't it? Now why didn't I think of that? Been working in the salt mines too long, must be.
CoBra(too)
(01/06/2001; 10:55:27 MDT - Msg ID: 45170)
Re: Mark Faber (Barrons)
Hello Stranger,
according to MF/Barrons 2 types of booms - either
a. consumption powered - or
b. asset bubbles in new tech. - capital spending.

Seems to me this time both boom types relied on each other and who knows which occurred first to lead the other to either monetary oblivion or capital malinvestments at the grandest scale bust- ever experienced? ... and the winner of the double bubble IS... (not Chicklet's bubble gum-is it Bazooka?) - No there are only losers - maybe double credit bubble losers are still manageable by the Greenspun hype - the accentuated derivative BUBBLE`of a 100 trillion $ Delta hype of the "Nobly" priced Black/Sholes type won't ever be work, even in and in spite of counter party risk group{ie)s - an association of naked and short 3-letter word - well knowing thhe scam won't work - when the party is over and the counter{s) are bare ... BAC was a scare ... and we'll have more of the same - end of game?
I'll ask you - cb2


Mr Gresham
(01/06/2001; 10:58:17 MDT - Msg ID: 45171)
Wow!
I see Beesting's WOW over FOA's message and I'm almost afraid to click into it. Might be possessed to run out for one of those 125% mortgages to take more FRNs over to the local coin dealer...
Christian
(01/06/2001; 10:59:38 MDT - Msg ID: 45172)
The The power of $3000 credit creation gold price.
Most people lose money on Wall Street. For every loser there is a winner. The money that disapeared from your mutual fund and stock accounts did not vanish: it simply changed owners. Presently insiders are preparing another, even more massive sell-off for March, April and May. Many high tech excecutives and insiders will have a lot of shares that come out of lock up and will be dumping literally billions of dollars worth of their own companies stock. Most buy backs of company stocks is made possible by bank financing or ordinary investors brokerage accounts money to make possible the cashing in of insider stocks. Wall Street is a financial ponzi scheme made possible with credit creation gold at a price of $3000+. Gold money has been replaced by the "promise to pay". We have a controlled commodity gold price of $270 and a free underground credit creation gold market price of $3000+. This spring the markets will collapse like a house of cards it really is for it has become dependent on the "promises to pay" that are not payable because income cannot be dollarized excepy by becoming more debt. Many high flying wall street corporations have used their stock price as a means of buying income. As stock prices go so does the income. In our monetary system all money is debt money. There is no other source of money except to borrow it into existence. In this way income cannot be dollarized except by becoming more debt. The FED is using the credit creation $3,000 gold price to achieve parity in order to double the debt in our present context. It can easily reprice the credit creating gold price to $6,000 and double the debt of the $3,000 credit creating gold. The bottom line is that debt cannot be paid off with debt, and debt generates no aggregate income that is not offset by more debt. It takes production times price to generate aggregate income for an economy. Greenspan can not produce more electric power by increasing money supply with more and cheaper loans. Somebody actually has to built the real physical plants to do it. Greenspan can issue more greenbacks but he can not issue green beans. You actually have to grow them. Greenspan can not print electric power, print food or oil or a lot of other things we need. We in USA have two choices- 1 monetize the debt or 2 default. Russia is doing it right by defaulting. Default is a sure and prompt way to reduce debt where monetization reduces the value of the currency or your savings.--- Write your elected representative and ASK 1- What is the price that credit creation gold changes hands between central banks and 2- What is the price of gold USA settles its trade deficits with at BIS. It is sad that in a so called free country we the people are forced to gold at the controlled commodity price not the central banks credit creation price which is many times higher. I like GATA but I no longer agree to what they are doing. They already have the answere to 1+2 above and are doing nothing to make it public.
Cavan Man
(01/06/2001; 11:00:44 MDT - Msg ID: 45173)
Hello Trail Guide
I'd just like to ask, who does all this "planning" developing and implementing the "means" to achieve an "end" that is far off in the future. It would seem to require an impossible amount of coordination among individuals and nations with varied, conflicting objectives. Thanks..CM
Cavan Man
(01/06/2001; 11:02:55 MDT - Msg ID: 45174)
Interesting Anecdote
I have an acquaintance living in SLC, UT who reports his "customers" are having trouble paying their bills. One in particular, closely affiliated with the "new economy" is barely paying in 60 days and now is on a cash with order basis.
Mr Gresham
(01/06/2001; 11:20:13 MDT - Msg ID: 45175)
Trail Guide/FOA
I know a little girl that would be happy to take you on a bit of a walk from Paradise Lodge to a panoramic view of the trail. Anytime you're near, OK?

This sounds like the nub of it, the trigger: "It will be the inability to reconstruct the present volume of paper gold into a new reserve currency, the Euro, that breaks the gold pricing system."

In other words, two parties get to the point of finalizing a gold contract, and one of them says, "Now, ah, how much would you be willing to do that for, in Euros?"

And the other one says, "Mmmmm, well, ahhhhh, no can do, sorry. Now can we just sign this and get on our way?"

That one knows that the creators of dollars are very likely to bail him out in a force majeure situation, whereas the creators of Euros will not jeopardize their new currency's stability to do so. Playing in a different ballpark.

I'll keep reading for more, but might be interrupted (guests -- I'm such a BAD host!) so I'll hit "Submit" now.
lamprey_65
(01/06/2001; 12:27:27 MDT - Msg ID: 45176)
Gold - Paper Technicals
http://www.bookmarkusa.com/goldweekly.jpgThe breakout attempt at the end of December failed (was there ever any doubt?...a breakout at this time of year would have been very unusual, indeed).

Notice how the upper trendline is becoming more important as every week passes. Notice also how the breakout price falls every week...it now sits near $272. Every week increases the odds of the breakout - I expect it to occur by the end of March at the latest (my guess is sooner rather than later). With the dollar now falling and the equity markets not rejoicing over Uncle Al's interest rate cuts, anytime after the next BOE auction on January 23rd looks prime for gold to make its move. The 1993 breakout took place on March 30th.

BTW, the bottom trendline is drawn from the 1996 bear market and shows this pattern from October '99 for what it is - backing and filling.
Genoo
(01/06/2001; 12:47:03 MDT - Msg ID: 45177)
Monday Market
Any trumpeting of the entry of the HOWE/GATA case, as it enters the doorways of the lawcourts, I believe on Monday Jan 8,2001, could be drowned out by the sickening sound of a crashing market.

To my knowledge, not much has been written as yet about the prospects for 'the day after' one of the most extraordinary weeks in US market history. However, for anyone still long the NASDAQ, this could be a long weekend...perhaps long enough to penetrate the denial mechanism that has kept them long to date. Should the latter prove to be the case, there could be a rush to the exits as panic and capitulation trigger the final stage of ' the triple waterfall'. Hopefully, the process of realization will proceed in a more orderly fashion and continue its currently angled downward trough.

However, how ironic and perhaps sadly appropriate, if these two events were to coincide. ie. the presentation of evidence of corruptive practice in one area paired with the inevitable payoff of any action that seeks to
mask/deflect/deceive true market forces.
megatron
(01/06/2001; 15:08:24 MDT - Msg ID: 45178)
analogies
Even better than the proton/electron analogy is the 'supernova', the unbalance of gravity(mass) and energy eventually eating through/using up the different elemental layers until iron, and then swift collapse.
YGM
(01/06/2001; 15:20:31 MDT - Msg ID: 45179)
Gold, CBs' and Dollar.......
Central Banks, Gold, -
and the Decline of the Dollar
Robert Batemarco
This article is adapted from a presentation given before a Freeman Society gathering in suburban Philadelphia in May 1995.

Are inflation, currency depreciation, and business cycles inevitable facts of life? Are they part of the very laws of nature? Or do their origins stem from the actions of man? If so, are they discoverable by economic science? And, if economics can teach us their origins, can it also teach us how to avoid them?

The particular need which all money, even fiat money which we now use, serves is to facilitate exchange. People accept money, even if it is not backed by a single grain of precious metal, because they know other people will accept it in exchange for goods and services.

But people accept the U.S. dollar today in exchange for much less than they used to. Since 1933, the U.S. dollar has lost 92 percent of its domestic purchasing power.1 Even at its "moderate" 1994 inflation rate of 2.7 percent, the dollar will lose another half of its purchasing power by 2022. In international markets, the dollar has, since 1969, depreciated 65 percent against the Deutsche Mark, 74 percent against the Swiss franc, and 76 percent against the yen.2

Many economists claim that this is the price we pay for "full employment." If so, I'd like to ask who among you thinks we've gotten our money's worth. We've experienced 11 recessions 3 since the advent of inflation as the normal state of affairs in 1933, with the unemployment rate reaching 10.8 percent as recently as 1982. Clearly, the demise of the business cycle - a forecast made during every boom since the 1920s - is but a mirage.

Other things being equal, if the quantity of anything is increased, the value per unit in the eyes of its users will go down. The quantity of U.S. money has increased year in and year out every year since 1933. The narrow M1 measure of the quantity of U.S. money (basically currency in circulation and balances in checking accounts) stood at $19.9 billion in 1933. By 1940, it had doubled to $39.7 billion. It surpassed $100 billion in 1946, $200 billion in 1969 (and 1946-1969 was considered a non-inflationary period), $400 billion in 1980, $800 billion in 1990, and today it stands at almost $1.2 trillion. That is over 60 times what it was in 1933.

For all practical purposes, the quantity of money is determined by the Federal Reserve System, our central bank. Its increase should come as no surprise. The Federal Reserve was created to make the quantity of money "flexible." The theory was that the quantity of money should be able to go up and down with the "needs of business."

Under the Fed, "the demands of government funding and refunding ... unequivocally have set the pattern for American money management." 4 Right from the start, the Fed's supposed "independence" was compromised whenever the Treasury asserted its need for funds. In World War I, this was done indirectly as the Fed loaned reserves to banks at a lower discount rate to buy war bonds. In 1933, President Roosevelt ordered the Fed to buy up to $1 billion of Treasury bills and to maintain them in its portfolio in order to keep bond prices from falling. From 1936 to 1951, the Fed was required to maintain the yields on Treasury bills at 3/8 percent and bonds at 2.5 percent. Thereafter, the Fed was required to maintain "an orderly market" for Treasury issues.5 Today, the Federal Reserve System owns nearly 8 percent of all U.S. Treasury debt outstanding.6

The Fed granted access to unprecedented resources to the federal government by creating money to finance (i.e., to monetize) its debt. It also served as a cartellization device, making it unnecessary for banks to compete with each other by restricting their expansion of credit. Before the emergence of the Fed upon the scene, a bank which expanded credit more rapidly than other banks would soon find those other banks presenting their notes or deposits for redemption. It would have to redeem these liabilities from its reserves. To safeguard their reserve holdings was one of the foremost problems which occupied the mind of bankers. The Fed, by serving as the member banks' banker, a central source of reserves and lender of last resort, made this task much easier. When the Fed created new reserves, all banks could expand together.

And expand they did. Before the Fed opened its doors in November 1914, the average reserve requirement of banks was 21.1 percent.7 This meant that at a maximum, the private banking system could create $3.74 of new money through making loans for every $1 of gold reserves it held. Under the Fed, banks could count deposits with the Fed as reserves. The Fed, in turn, needed 35 percent gold backing against those deposits. This increased the available reserve base almost three-fold. In addition, the Fed reduced member bank reserve requirements to 11.6 percent in 1914 and to 9.8 percent in 1917.8 At that point, $1 in gold reserves had the potential of supporting an additional $28 of loans.

Note that at this juncture in time, gold still played a role in our monetary system. Gold coins circulated, albeit rarely, and banknotes (now almost all issued by the Federal Reserve) and deposits were redeemable in gold. Gold set a limit on the extent of credit expansion, and once that limit was reached, further expansion had to cease, at least in theory. But then limits were never what central banking was about. In practice, whenever gold threatened to limit credit expansion, the government changed the rules.

Cutting off the last vestige of gold convertibility in 1971 rendered the dollar a pure fiat currency. The fate of the new paper money was determined by the whim of the people running the Fed.

The average person looks to central banks to maintain full employment and the value of the dollar. The historical record makes clear that a sound dollar was never the Fed's intention. Nor has the goal of full employment done more than provide them with a plausible excuse to inflate the currency. The Fed has certainly not covered itself with glory in achieving either goal. Should this leave us in despair? Only if there is no alternative to central banking with fiat money and fractional reserves. History, however, does provide us with an alternative which has worked in the past and can work in the future. That alternative is gold.

There is nothing about money that makes it so unique that the market could not provide it just as it provides other goods. Historically, the market did provide money. An economy without money, a barter economy, is grossly inefficient because of the difficulty of finding a trading partner who will accept what you have and who also has exactly what you want. There must be what economists call a "double coincidence of wants." The difficulty of finding suitable partners led traders to seek out commodities for which they could trade which were more marketable in the sense that more people were willing to accept them. Clearly, perishable, bulky items of uneven quality would never do. Precious metals, however, combined durability, homogeneity, and high value in small quantity. These qualities led to wide acceptance. Once people became aware of the extreme marketability of the precious metals, they could take care of the rest without any government help. Gold and silver went from being highly marketable to being universally accepted in exchange, i.e., they became "money."

If we desire a money that will maintain its value, we must have a money that cannot be created at will. This is the real key to the suitability of gold as money. Since 1492 there has never been a year in which the growth of the world gold stock increased by more than 5 percent in a single year. In this century, the average has been about 2 percent.9 Thus with gold money, the kind of inflations that have plagued us in the twentieth century would not have occurred. Under the classic gold standard, even when only a fractional reserve was held by the banks, prices in the United States were as low in 1933 as they had been 100 years earlier. In Great Britain, which remained on the gold standard until the outbreak of World War I, prices in 1914 on the average were less than half of what they were a century earlier.10

Traditionally, the gold standard was not limited to one or two countries; it was an international system. With gold as money, one need not constantly be concerned with exchange rate fluctuations. Indeed, the very notion of an exchange rate is different under a gold standard than under a fiat money regime. Under flat money, exchange rates are prices of the different national currencies in terms of one another. Under a gold standard, exchange rates are not prices at all. They are more akin to conversion units, like 12 inches per foot, since under an international gold standard, every national currency unit would represent a specific weight of the same substance, i.e., gold. As such, their relationships would be immutable. This constancy of exchange rates eliminates exchange rate risk and the need to employ real resources to hedge such risk. Under such a system, trade between people in different countries should be no more difficult than trade among people of the several states of the United States today. It is no accident that the closest the world has come to the ideal of free international trade occurred during the heyday of the international gold standard.

It is common to speak of the "collapse" of the gold standard, with the implication that it did not work. In fact, governments abandoned the gold standard because it worked precisely as it was supposed to: it prevented governments and their central banks from surreptitiously diverting wealth from its rightful owners to themselves. The commitment to maintain gold convertibility restrains credit creation, which leads to gold outflows and threatens convertibility. If government were not able to resort to the issue of fiat money created by their central banks, they would not have had the means to embark on the welfare state, and it is possible that the citizens of the United States and Europe might have been spared the horrors of the first world war. If those same governments and central banks had stood by their promises to maintain convertibility of their currencies into gold, the catastrophic post -World War I inflations would not have ensued.

In recent years, some countries have suffered so much from central banks run amok, that they have decided to dispense with those legalized counterfeiters. Yet they have not returned to the gold standard. The expedient they are using is the currency board. Argentina, Estonia, and Lithuania have all recently instituted currency boards after suffering hyperinflations. A currency board issues notes and coins backed 100 percent by some foreign currency. The board guarantees full convertibility between its currency and the foreign currency it uses as its reserves. Unlike central banks, currency boards cannot act as lenders of last resort nor can they create inflation, although they can import the inflation of the currency they hold in reserve. Typically, this is well below the level of inflation which caused countries to resort to a currency board in the first place. In over 150 years of experience with currency boards in over 70 countries, not a single currency board has failed to maintain full convertibility.11

While currency boards may be a step in the right direction for countries in the throes of central-bank-induced monetary chaos, what keeps such countries from returning to gold? For one thing, they have been taught by at least two generations of economists that the gold standard is impractical. Let's examine three of the most common objections in turn:

1. Gold is too costly. Those who allude to the high cost of gold have in mind the resource costs of mining it. They are certainly correct in saying that more resources are expended to produce a dollar's worth of gold than to produce a fiat dollar. The cost of the former at the margin is very close to a dollar, while the cost of the latter is under a cent. The flaw in this argument is that the concept of cost they employ is too narrow. The correct concept economically speaking is that of opportunity cost, defined as the value of one's best sacrificed alternative. Viewed from this perspective, the cost of fiat money is actually much greater than that of gold. The cost of flat money is not merely the expense of printing new dollar bills. It also includes the cost of resources people use to protect themselves from the consequences of the inevitable inflation which fiat money makes possible, as well as the wasted capital entailed by the erroneous signals emitted under inflationary circumstances. The cost of digging gold out of the ground is minuscule by comparison.12

2. Gold supplies will not increase at the rate necessary to meet the needs of an expanding economy. With flexible prices and wages, any given amount of money is enough to accomplish money's task of facilitating exchange. Having the gold standard in place in the United States did not prevent industrial production from rising 534 percent from 1878 to 1913.13 Thus it is a mistake to think that an increase in the quantity of money must be increased to assure economic development. Moreover, an increase in the quantity of money is not tantamount to an increase in wealth. For instance, if new paper or fiat money is introduced into the economy, prices will be affected as the new money reaches individuals who use it to outbid others for the existing stocks of sport jackets, groceries, houses, computers, automobiles, or whatever. But the monetary increase itself does not bring more goods and services into existence.

3. A gold standard would be too deflationary to maintain full employment. As for the relationship of a gold standard to full employment, the partisans of gold have both theory and history on their side. The absolute "level" of prices does not drive production and employment decisions. Rather the differences between prices of specific inputs and outputs, better known as profit margins, are keys to these decisions. It is central bank creation of fiat money which alters these margins in ways that ultimately send workers to the unemployment line. Historically, the gradual price declines which characterized the nineteenth century made way for the biggest boom in job creation the world has ever seen.

The practical issues involved in actually returning to a gold standard are complex. But one of the most common objections, determining the proper valuation of gold, is fairly minor. After all, the market values gold every day. Any gold price other than that set by the market is by definition arbitrary. If we were to repeal legal tender laws, laws which today require the public to accept paper Federal Reserve Notes in payment of all debts, and permit banks to accept deposits denominated in ounces of gold, a parallel gold--based monetary system would soon arise and operate side-by-side with the Federal Reserve's fiat money.14

A more difficult problem than that would be how to get the gold the government seized in 1934 back into the hands of the public. But even that surely can't be more difficult than returning the businesses seized by the Communists in Eastern Europe to their rightful owners. If the Czech Republic can do that, we should be able to get government--held gold back into circulation.

In all likelihood, the biggest problem gold proponents face is that people simply aren't ready to go back to gold. Most people aren't aware of the extent of our monetary disarray and many of those who are don't understand its source. Two generations of Americans have known nothing but un-backed paper as money; few realize that there is an alternative. In contrast, when the United States restored gold convertibility in 1879 and when Britain did so in 1821 and 1926, gold money was still seen as the norm. That is no longer the case.

It might take a hyperinflationary disaster to shake people's faith in fiat money. Let's hope not. In addition to the horrendous costs of such a "learning experience," it's not even a sure thing that it would lead us back to gold. Recent hyperinflations in places as disparate as Russia and Bolivia have not done so.

The desire to get something for nothing dies hard. Governments use central banks with the unlimited power to issue fiat money as their way to get something for nothing. By "sharing" some of that loot with us, those governments have convinced us that we too are getting something for nothing. Until we either wise up to the fact that governments can't give us something for nothing or, better yet, when we realize the moral folly of taking government handouts when of-fered, we will continue to get money as base as our desires.



--------------------------------------------------------------------------------
At the time of the original publication, In addition to editing the book review section of The Freeman, Dr. Batemarco was a marketing research manager in New York City and taught economics at Marymount College in Tarrytown, New York.
--------------------------------------------------------------------------------


1. Arsen J. Darnay, editor, Economic Indicators Handbook (Detroit, London: Gale Research Inc., 1992), p. 232 and Survey of Current Business, vol. 75, February 1995, p. C-5 .

2. The Wall Street Journal, April 7, 1995, and The Economic Report of the President, 1995.

3. As measured by the National Bureau of Economic Research.

4. Robert J. Shapiro, "Polities and the Federal Reserve," The Public Interest, Winter 1982, p. 123.

5. Shapiro, pp. 126-127.

6. Federal Reserve Bulletin, February 1995, p. A30.

7. Murray N. Rothbard, "The Federal Reserve as a Cartellization Device: The Early Years, 1913-1930," in Barry N. Siegel, editor, Money in Crisis (Cambridge: Ballinger Publishing Company, 1984), p. 107.

8. Rothbard, pp. 105-106.

9. Richard M. Salsman, Gold and Liberty (Great Barrington, Mass.: American Institute for Economic Research, 1995), p. 26.

10. Michael David Bordo, "The Classical Gold Standard: Some Lessons for Today," Federal Reserve Bank of St. Louis Review, May 1981, pp. 8-9.

11. Steve H. Hanke, "Critics Err-Mexico Still Needs a Currency Board," The Wall Street Journal, February 22, 1995.

12. For a fuller treatment of this issue, see Roger Garrison, "The Cost of a Gold Standard," in Llewellyn H. Rockwell, Jr., editor, The Gold Standard: An Austrian Perspective (Lexington Books, 1985), pp. 61-79.

13. Alan Reynolds, "Gold and Economic Boom," in Sicgel, p. 256.

14. Hans Sennholz, Money and Freedom (Spring Mills, Pa.: Libertarian Press, 1985), pp. 81-83.

Reprinted with permission from The Freeman, a publication of the Foundation for Economic Education, Inc., November 1995, Vol. 45, No. 11.

Chris Powell
(01/06/2001; 15:28:58 MDT - Msg ID: 45180)
GATA lawsuit discussed on WABC-AM770 in New York
http://www.egroups.com/message/gata/611This genie is getting out of the bottle,
and there will be more big news later
tonight.
Chris Powell
(01/06/2001; 15:30:09 MDT - Msg ID: 45181)
Societe Generale follows GATA in suing BIS
http://www.egroups.com/message/gata/612They have a lot more money than we do,
but we got there first.
auspec
(01/06/2001; 15:40:26 MDT - Msg ID: 45182)
Mr. Gresham!
Post #45146 Squeeze Is On- HOF NominationThat was one fine post, my friend, and of tremendous help in INTERPRETING what you see and know for others to understand the complexities of the international payment system. Thank you! There are so many levels of knowledge among Forum posters and readers that multiple levels of INTERPRETATION are wonderful. I sometimes struggle to grasp what you are explaining, but grasp it I did, and that is exactly what is called for.
As far as SteveH's input in regards to giving Greenie "too much credibility" because he doesn't control all the Fannies, Freddies, Funnies, and other various Friends--- These entities are not directly under Fed's {AG's}responsibility, but the "strings" extend upward to the common masters for all the various F's {that speaks volumes, no?}. We are looking at the same creature here regardless how a blame game plays out. I am always truly appreciative of what SteveH posts because he is spot-on 99.9% of the time! Thank you SteveH.
You waxed eloquently in this post Mr. Gresham, and your analogy to molecular chemistry was splendid. Of course the streets of Money Heaven should have "streets paved with fiat". OUR MASTER must have sent that one your way! The CLHE-HoF guys have been inspired. More footprints to fall into and pull ourselves out of. I think AG will part the "Green Sea" that will turn Red after swallowing his chariots and his Fannie, but let us not quibble.
Well done and thus deserving of an official HoF nomination!
Cavan Man
(01/06/2001; 15:43:42 MDT - Msg ID: 45183)
auspec on "Gresham"
He sure can write can't he!
Chris Powell
(01/06/2001; 15:56:23 MDT - Msg ID: 45184)
German magazine Der Spiegel reports on GATA lawsuit
http://www.egroups.com/message/gata/613This genie is bursting out of the bottle
and there will be no putting him back in.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com
YGM
(01/06/2001; 16:53:54 MDT - Msg ID: 45185)
auspec..."Mr Gresham"
I'll second your nomination...Mr "G" deserves special recognition for his timely and down to earth understandable (many) offerings here...YGM
CoBra(too)
(01/06/2001; 17:31:50 MDT - Msg ID: 45186)
@ FOA - I'm just stumbling along ...
... Well, while I'm considering myself a simpleton and one having had a few Scotches too many tonight - returning from a nice dinner with friends - I have to confess I'm at a loss following some recent steps of FOA/TG's trail, as I may have ended up in the imprint of a footstep of a giant- too big for a midget.
... this new dollar drop to kick off the next gold bull market. It will, but Another dynamic will happen first.
... the inability to reconstruct the present volume of paper gold into a new reserve currency, the Euro ...?
... Well why would I need this detour in acquiring physical at rock bottom, except as euro zone gold buyer lately it's getting cheaper with the dollar depreciating, though why should anyone wait for physical gold markets in euro, while you can buy physical anyway - and even in still inflated dollars?
... Granted paper gold (or future contracts) are setting the perceived POG today and granted it will not hold up in reality if delivery of reality or better physical will be required by only a few of the outstanding contracts.
All of that and much more of what you, FOA say I can easily accept - as I may be able to accept gold trading sructures and contracts are perceived to shift to another reserve currency... and cannot be converted at par ... at happy with today's physical parity - I mean you can effectively buy gold now at perceived paper gold prices... and yes it is getting even cheaper in euros - so while the dolllar hyperinflates and the new euro only inflates I'll be happy to utilze this window of exchanging currencies sub-par for physical gold (and some unencumbered "locked in peanut" reserves in the ground).
As it seems, Sir FOA, I'm still an ant at the Krakatoa and not at the relative begnign slopes of Mt. Rainer, where potential eruptions might be welcome to supplement
dwindling power supplies of the peoples west coast Republics. Give me real fire wood and bullion gold anytime and I could do without the next digital fiat currency - reserve or not - True? cb2
Topaz
(01/06/2001; 17:45:00 MDT - Msg ID: 45187)
Usul (1/6/2001; 6:13:44MT - usagold.com msg#: 45160)
Hello Usul,
Your link to the Islamic banking article provided a synopsis of the 4 books by the Author.
In his 2nd (?) book he outlines a method of compensating for inflationary effects on invested capital under an Islamic (ie: NO interest) system of banking using only the POG as an inflation adjuster.
If perchance you have read his works, can you please elaborate on this method of inflation discovery?
Cavan Man
(01/06/2001; 18:03:43 MDT - Msg ID: 45188)
Cheers CB2
Have you a good remedy for the "brown bottle flu"?
TheStranger
(01/06/2001; 18:03:57 MDT - Msg ID: 45189)
A Passage Regarding Wage Inflation from Gene Epstein's Column in Today's Barron's
As great a contributing inflation factor as is energy, labor costs are far greater. They are, in fact, by far the largest cost component in any economy. For the past two years the disinflation crowd has cited rising labor productivity and sluggish wage gains as proof that U.S.inflation was under control. Now, as the economy and capital investment slow, we all know that systemic productivity gains will be darn near impossible to achieve. But what about wages? Are they set to accelerate or not? It was with great interest that I read the following comments on this subject in today's Barron's:

"So with the tightest labor market in more than 30 years, and with productivity soaring, wages and salaries are rising a lot faster than the rate of inflation. The December report showed that average hourly earnings for "nonsupervisory" workers (about four-fifths of the total), rose at an annualized rate of 5.3% in the fourth quarter, which matched the peak set in October '97. The Commerce Department has found that if supervisory workers are added, then you generally mark that figure up by about 1.5%-2%, which would bring hourly earnings growth for all workers to about 7%."
Cavan Man
(01/06/2001; 18:06:41 MDT - Msg ID: 45190)
Article at Bloomberg
is calling for a possible rally in growth stocks.

Mishugunnah (spelling)!!!!!!
Clint H
(01/06/2001; 18:19:33 MDT - Msg ID: 45191)
Black Blade msg#: 45087-45087)
Black Blade, my teacher in school said that in order give a good speech one must know ten times more about the subject than one actually delivers. I suspect that you read about ten times more articles than the quality posts that you pass on to us. I thank you so very much for your ongoing efforts.
Do you ever sleep?
I am taking the liberty of commenting on two of the articles that you posted. This is from a Joe Six Pack education but many years of hard knocks.

Black Blade msg#: 45087)
By JAMES FLANIGAN, Times Senior Economics Editor
<>

Clint H. One half of one percent on eight billion $ does not add any cash flow to the utilities that are furnishing the power. It just lowers expenses by less than one percent. Not any help that I can see.

<>

Clint H. Key words here are temporary, uncollectible and rising (costs) borrowings. I think they also said that they may have to refund the money later. Really gives one a warm fuzzy feeling.

<<"It will be hard to refinance those loans," given the utilities' worsening credit situation, said Joan Payden, president of Payden & Rygel, a Los Angeles investment firm. "If their debts are downgraded, we could have illiquidity in the markets." >>

Clint H. If the key words from above apply and costs are not going to be collected, more money into this pit would be foolish. However California is "entitled" to the rest of the nations resources. Duh.

<>

Clint H. Recover some of their undercollections, how very generous of the PUC.

Black Blade msg#: 45155)
<>

Clint H. Bonds must be repaid. Paying back eight billion $ on top of much higher monthly bills will make "their customers" squeal to high heaven. They will try to saddle the utilities and the investors for this bill. If you want the privilege of doing business in California you must do it at a loss.

<>

Clint H. The last sentence is the key. Sad.
Trurl
(01/06/2001; 18:39:31 MDT - Msg ID: 45192)
FOA/ gold confiscation
FOA, I like your latest 1/6/01 observation:

Truly, as peoples, we can know nothing if perception cannot separate "real" from "illusion".

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

In that spirit, I offer this suggestion for those worried about possible gold confiscation.

The Plan:

So the big, dumb storm troopers are pounding on your door, demanding your gold. You open the door and the squad leader demands, "we know you have gold, give it to us now!" Slowly, with great reluctance, you lead them to your kitchen sink. From under it you take out your old sock, clinking with coins.

They grab it and rip it open. Sure enough, the golden hue grabs all their attention. Your hoard of carefully saved Sacagawea �golden dollars�. All gone. Stolen by a government sworn to protect you. Sigh. Well, things could be worse�

Not investment advice.
CoBra(too)
(01/06/2001; 18:44:11 MDT - Msg ID: 45193)
Cheers CM - it's getting stranger with the day -
though try pink -as in gin or Put'in's highly recommended potato destillate, called "Vodka" (whot can you put in without puttin' Putin in?)- No PGE's for sale- njet - gold -you bet!
... and the tale of NEM, (only big player in Uzbekistan)
a producer of value
withstanding the stratagem
of the usurer.

For too long, say some
as Ron Cambre leaves
no open doors, come!
to the thiefs.

And they try to steal
all value from me
I just might appeal
to the SEC and the CFTC -

Let it be - Just let it be
cb2 or even 3


John Doe
(01/06/2001; 19:24:26 MDT - Msg ID: 45194)
California Scheming - Don't blame deregulation for the Golden State's electricity snafus
http://reason.com/ml/ml010401.html"...In 1996, Assemblyman Steve Peace, considered by some to be the Sen. Pat Moynihan of the California legislature, decided to get in front of this parade. He organized the relevant players �big industrial customers, utilities, environmental groups, and consumer groups�and the result was an electricity restructuring bill that passed the legislature unanimously. Whenever that happens, you can safely bet something screwy is going on.

Politicians claimed the plan would provide consumers with more choice and lower prices. Big business figured its purchasing power would allow it to secure lower prices, of the sort the feds deliver up in the Pacific Northwest with the heavily subsidized Bonneville Power Administration. Consumer and environmental groups got lots of restrictions on how the utilities could operate, including price controls, which, as Cuba shows, do a great job of protecting consumers from such things as consumer goods, including necessities such as food, clothing, and, well, electricity. They also got a guaranteed 10 percent rate cut right off the bat...."
CoBra(too)
(01/06/2001; 19:30:45 MDT - Msg ID: 45195)
@CM - Not being an expert ....
...meshugge ... crazy, depraved, raving mad in a fatalistic and typical sense of "Tante Jolesch (TM* Friedrich Torberg)", every Austrian's good old aunt stating among other great indictments, that "any improvement to your looks in comparison to an ape is a luxury"!
... A statement, I would gladly pass on to my broker - (a luxury I never could afford, anyway)- Can he be as cute as AG? ... may be the question? ... Oh, of course after reading Goethe's Faust, Gretchen, no Gretchen Morgenson's essay is out of the question - an essay answering the Quest of to be or not to be in the SM (aka: systmic meltdown)- Gretchen may answer with the bee in your bonnett.
Honett - say's old Austrian gent and went to the end
and overspent
a Sonnett, which meant the end of credit on rent...
and the tent
mortgaged at 125% (percent)...

As Mises, Hajek and co. won't even pretend
to give a cent
to AG's Waterloo - I don't think sooo - tooo- cb2
Cavan Man
(01/06/2001; 20:09:41 MDT - Msg ID: 45196)
@CB2
Good Sir Knight: There are very many highly intelligent people who grace these hallowed halls. However, you Sir are much smarter than the average (Wall@Broad) bear (and witty2)

All the best.....CM
SHIFTY
(01/06/2001; 20:49:37 MDT - Msg ID: 45197)
A $hifty translation of German magazine
German magazine Der Spiegel reports on GATA lawsuit


6 January 2001 Konspiration in the gentleman club? Against US central bank head Greenspan runs a complaint because of manipulation of the gold price. Also the German bank should be complicated into the zwielichtigen business. What US central bank head do Alan Greenspan, the bank for international clearing payment (BIZ) have, prominent global cash houses like German bank and J. P. Morgan as well as the separating US Minister of Finance Larry of buzzer together? " these gentlemen and these banks are responsible for one of the grossten scandals of restaurant history " - at least the US lawyer and Goldanalyst the Reginald Howe maintain. The advisor of the gold anti-anti-Trust Action Committee (Gata), an organization, which used up itself the fight against the alleged gold market manipulation, submitted therefore in December complaint with the United States District Court/District OF Massachusetts in Boston. Howe appoints itself to the Sherman act of the USA. The law forbids ausdrucklich the " Fixing " from prices in the grenzuberschreitenden trade. " in betrugerischer way the trust pressed the price for the precious metal over years on an artificially low level ", maintains the plaintiff. The Okay for the machinations came from the white house. As instrument of the " Konspiration " Howe constitutes the BIZ in Basel. There the bosses of the most important issuing banks maintain close gang in styles of a gentleman club. Howe is one of the few free shareholders of the BIZ - which hold predominant majority the central banks - and as troublemakers already well-known. Officially the Basler institute - just like the German bank - refuses each substanziellen comment, the US issuing bank left an inquiry unanswered to the complaint. Reproach are happig: " mine companies, their workers and owners are driven by the low gold price into the ruin ", say Howe. " in the developing countries the weak ones on the distance remain. " And, so paradoxically it first sounds: The barrier Street banks will spreader by the allegedly manipulated price billions. Actually the precious metal lost much of its gloss. Up to the First World War the currencies of the most powerful states were bound the international monetary system to the gold, after the Second World War to start of the seventies were based on the key currency US Dollar, which was convertable in gold. Still the myth of the glitzernden metal and likewise much emotion prevail in the trade. After its high-altitude flight end of the seventies however is sagged the price. For months the course sticks ounce in the range between 260 and 300 dollar for each. That meets above all producers such as South Africa. For the first time in their history the cape republic exported palladium than gold in the passed year more platinum and. Before 20 years the resplendent material still stated unquestioned the export list. At that time the dealers obtained dollar per ounce from time to time over 800. Today, then the Gata chairman Bill Murphy counts, would have to be situated the gold price with free market " over 600 dollar per ounce ". Would have. Because the financial elite trusts Howe according to plaintiff and the Gata of a simple equation: Only a deep gold price is a good gold price. An attractive course is considered generally as last warning of a monetary depreciation in the USA and a high-altitude flight signals a schwaechelnden US Dollar at the international financial markets. Both is a horror vision for Greenspan.
If the course pushes too much upward, then the critics maintain, gold in New York and London, the most important commercial centres, on the market are thrown. " the central banks are ready to lend gold in large quantities if the price rises ", acknowledged Greenspan in July 1998 before the bank committee of the US house of representatives. For Howe a clear case: " the statement equals the assertion that the gold price is controlled. "
With the check-out counter of gold the grosen cash houses made shining gains. However the German bank proved at the end of of 1999 business with an estimated equivalent of 5000 tons of gold - 1500 tons more than the official reserves of Germany. Morgan, Chase and the Citibank announced at the end of June to 2000 numbers, which would correspond to a gold mountain of 8461 tons. The business follows a simple pattern: Institutes borrow gold from the central banks to one aeuerst to low interest. The advantage for the national places: From the to a large extent useless gold mountains at least a small gain is drawn.
The banks sell the borrowed ingots. With proceeds they acquire securities, whose net yields exceed the leihzins far. Just as lucrative as risky business - and everything on pump. If the price breaks out too much upward, would have to bleed German bank, Goldman, Chase and CO: Then the leihzins would shoot also up. And, more badly still, the buy-back at the market would be almost unbezahlbar. Because the central banks require sometime the gold borrowed from them again. The " gold carry trade " ran already now from the rudder. Experts estimate that the business banks the central banks up to 7000 tons owe. ", to be over ever re-imbursed ", the experts of Salomon Smith Barney, a bank of the Citigroup warn too much. Therefore, Howe concludes, " Goldman, Chase and the German bank in the passed two years regelmaeig each appearing Goldrallye at the New Yorker produce exchange Comex by mass sales strangled ". But Howes theory is disputed. " also some my customers believe in a Konspiration ", say Analyst Martin Murenbeeld, publisher " gold monitor new type character ". " after me the available data I am however not convinced of the theory. " Gold Fields mineral services, a Londoner consulting firm, accuses statistical misinterpretations to Howe. The conspiracy theory is wrong. The experts analyse the sagged gold price rather as consequence of the strong dollar and low inflation rates. Besides many central banks used each still so small improvement in prices, in order to loose-will the dead capital. Approximately 33,000 tons gold nevertheless store in the safe deposits of the national institutes and international organizations. When it comes to the hostile exchange, the responsible judge in Boston must decide now. Howe hopes to uncover then " the machinations of the gold trust before public ". Greenspan and the representatives of the high finance would have then under oath
JANUARY DIRK HERBERMANN

- END
Chris Powell
(01/06/2001; 21:33:06 MDT - Msg ID: 45198)
English translation of Der Spiegel article on GATA lawsuit
http://www.egroups.com/message/gata/614Plus an editorial comment or two.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com




dragonfly
(01/06/2001; 21:45:10 MDT - Msg ID: 45199)
Great Analogy
Randy (@The Tower) msg #: 45050
Greetings Sir Randy!!

Your pedagogical prowress is unsurpassed. Thank you for presenting us with another gem of inspired insight. It surely helps convey a great deal of information to others whose vision is clouded.

You wrote >>> "Transitional performances always appear crippled due to the suboptimal operating conditions for the ultimate design task. To wit, battleships getting a tug out of harbor...jet airliners being pushed around at the terminal...euro gold reserves under a dollar-based derivitive scheme of pricing as the euro begins to rise (dollar begins to fall)...etc." <<<

Regards,
dragonfly

lamprey_65
(01/06/2001; 22:08:35 MDT - Msg ID: 45200)
The Gold Elbbub
http://www.the-privateer.com/gold6.htmlWell, you'll have to read this week's Privateer to get the meaning ;-)
YGM
(01/06/2001; 22:43:59 MDT - Msg ID: 45201)
"Der Spiegel" Commentary
Sent to the Cafe......Commentary on the Der Spiegel story from a German
Cafe member:

Bill:

Congratulations! "Der Spiegel" ("The Mirror") has
the highest reputation in Germany as the most
important news magazine and has uncovered many skandals
in the past. The publication has never been afraid
to uncover and publicize findings after their own
fact-checking. This is really a big deal. I assume
that after this publication the story will be picked
up by other news media in Germany as well. Also,
"Der Spiegel" has a TV program and it may be a good
idea for you to proactively contact them for an
interview.

Regards,
KR


Also from KR:

Subject: GATA Lawsuit also in "Netzeitung.de" the
largest German internet based daily newspaper.

http://www.netzeitung.de/servlets/page?section=5⁢em=125655

on the frontpage:


****I'm imagining 1 million magazine readers and 8 million
Internet readers of "Der Spiegel" all gaining new interest in Gold.... Now where could 'ALL' this publicity lead..LOL
and seeing the tide of sentiment turning very soon......YGM
Black Blade
(01/07/2001; 00:38:33 MDT - Msg ID: 45202)
Earnings Warnings, Debt Default, and High Energy Costs Force Rate Cut!
Things don't look so good in the investment world these days. The Utes in the Peoples Republik of Kalifornia have put the screws to Bill Richardson and have won official orders that the power producers in the western states provide "cheap" power to Kalifornia to the detriment of their own customers. So far, compliance has been sketchy as most of these providers fear that they won't be paid. The threat of bankruptcy is very real. If anyone here owns shares in the Kalifornia Utes, I offer my condolences as you have my sympathy. The high cost of energy is a real drag on the economy and several companies are expected to release earning warnings over the next few days. That is the reason for the "surprise" rate cut that Cheeta and the other creatures at the zoo gave out. A rate cut between FOMC meetings is not a very common event. This has only happened a couple of times in recent history. One time this happened just as the LTCM debacle had threatened to bring the Bull Market to a screeching halt. The higher costs of energy have always preceded every recession in the post-war economy. Many economic researchers say that we have entered into a recession and many more say that recession is inevitable now. The high cost of energy � this time natural gas and electricity � are the real culprits. Say a prayer over the corpse of the "Bull" and break out the BBQ sauce. The market is in a tailspin and the bone crushing crash is imminent. One could expect that technology, retail, and financial issues will post lower earnings or even losses over the next few days all while the so-called analysts call for anyone with a dollar left to his or her name to "buy the dips." Only no one is left in the hall, and the voices of the analysts� echo will a hollow ring. So hang on to your hats and get ready for a wild roller coaster ride, as Cheeta monkeys will the controls.

That's not all folks - now Russia has defaulted on bonds, again. OOPS! I mean - restructured their bonds again. These are the German bonds. It doesn't matter, as after 60 days it becomes a technical default and they will default. They have over $48 billion worth of bonds coming due and they just "restructured" a $5 million payment. Looks like it's time for the IMF to come to "help out" the poor Russians.

To hear the Wall Street pundits on the weekend financial shows, everything is just "peachy." I'm tightening my grasp on my PMs!

- Black Blade
View Yesterday's Discussion.

Mr Gresham
(01/07/2001; 00:42:19 MDT - Msg ID: 45203)
I was gonna shut up for tonight, but I couldn't resist this
http://www.contraryinvestor.com/mo.htm"Perhaps it was the NAPM (National Association of Purchasing Managers Index) that pushed the Fed into action. After all, there's nothing like the smell of NAPM in the morning."

These guys are brilliant and they deserve our subscription money when they go "pay-your-way" next week.
Black Blade
(01/07/2001; 01:05:46 MDT - Msg ID: 45204)
Key Bush Adviser: Economy in Trouble
Key Bush Adviser: Economy in Trouble

WASHINGTON (Reuters) - President-elect George W. Bush's chief economic adviser Lawrence Lindsey said on Saturday the U.S. economy ``is having some trouble,'' and that recent negative economic data underscored the need for Bush's proposed $1.3 trillion tax cut. ``The data we've had this week should erase any doubts in anyone's mind that the economy is having some trouble, that it needs some help,'' Lindsey told the CNN show ``Evans, Novak, Hunt & Shields'' in a taped interview. ``And whatever we can work out to give it the maximum help is what we're for.'' In recent days, Lindsey has hinted that the incoming Bush administration could move up the timing of the proposed tax cut to give the economy a quicker boost. Bush's tax plan calls for the $1.3 trillion in across-the-board cuts to be phased in beginning in 2002. Asked whether the incoming administration wanted to front-load the benefits of a tax cut by reducing the amount of taxes withheld from workers' paychecks beginning in late spring or early summer, Lindsey said, ``We're considering lots of things.'' But one priority should be to reduce the top tax rate paid by the unincorporated business sector, which includes many small businesses, Lindsey said. ``They are being soaked at the highest rate they ever have been. And they have suffered the last eight years as a result,'' he said. White House officials have bristled at suggestions that the economy is headed for a serious slump. But the Federal Reserve Board signaled this week that it was taking seriously concerns about the economy, unexpectedly slashing key interest rates by half a percentage point. Lindsey, a former Fed governor, refused to say whether more interest rate cuts were needed to keep the U.S. economy from stalling. But he expressed confidence in the ability of the Fed to steer the economy. ``Alan Greenspan and his colleagues will do the right thing for America. I'm convinced of that,'' he said, referring to the Fed chairman.

On another economic issue, Lindsey dashed speculation that the Bush administration would not put as much importance on a strong U.S. dollar as has the Clinton administration. ``We believe in a strong dollar,'' Lindsey said, adding that the Clinton administration had made ``a terrible mistake'' by talking down the currency when it first came to office. ``They undermined economies of Southeast Asia as a result. And I think we've all learned a lesson,'' he said.

Black Blade: That last part about a strong dollar and continuing with the status quo does not sound encouraging. Won't make much difference though as it is really out of their hands now. As Larry Lindsey says: the U.S. economy ``is having some trouble.'' Hmmm�
Black Blade
(01/07/2001; 01:10:03 MDT - Msg ID: 45205)
Iran Reportedly Sees OPEC Output Cut

TEHRAN (Reuters) - Iran has said the OPEC oil producers' cartel would decide to cut production by 1.5 million barrels a day (bpd) at its next meeting in Vienna this month, the Aftab-e Yazd newspaper said on Saturday. ``OPEC is determined to cut production,'' it quoted Iran's OPEC governor Hossein Kazempour as saying. ``OPEC...will decrease production at least by 1.5 million barrels a day.'' OPEC will have a full ministerial meeting on January 17 in Vienna to review market conditions and decide production policy. Saudi Arabia, the world's biggest oil producer, said consensus was emerging around a 1.5 million bpd output cut. Kazempour predicted OPEC would slash production by a maximum of two million bpd. Iran is the world's third largest oil producer. He said that if the cartel cut production by 1.5 million bpd at the Vienna meeting, a further cut of 1.5 million bpd might come in the spring, but that if output was reduced by two million bpd at the meeting, a cut of one million bpd would be expected next spring. OPEC, mindful of a price slump two years ago that sent oil plummeting below $10 a barrel, wants to keep prices in a $22 to $28 a barrel band, a level deemed suitable to producers and consumers alike. The fact that oil prices have now bounced back to within the price band would not affect the proposed output cut, Kazempour said.
``OPEC members will not have any doubts about cutting production despite oil prices returning to above $22,'' he said. ''This decision does not contradict with the mechanism approved by OPEC to stabilize oil prices between $22 and $28.''

Black Blade: Today a Saudi official said that it would be more likely that a 2 million/bbl would be agreed upon.

Black Blade
(01/07/2001; 01:14:34 MDT - Msg ID: 45206)
Reliant halts natural gas sales to Calif.'s PG&E, SCE
Others to Follow Suit as Well!
By Spencer Swartz

SAN FRANCISCO, Jan 5 (Reuters) - Houston-based Reliant Energy (NYSE:REI) confirmed on Friday it is no longer selling natural gas to California's financially imperiled utilities Pacific Gas & Electric (PG&E) and Edison International. ``We decided in the last two weeks to stop selling natural gas to PG&E and Edison because of their credit-worthiness. We did this purely from a standpoint to protect our shareholders,'' a Reliant spokesman told Reuters. He would not say exactly when the decision was taken nor how much gas the company usually sells to both utilities, which have spent close to $12 billion for buying power but have not been able to recover those costs due to a price cap imposed as part of California's 1996 deregulation legislation. PG&E, a unit of PG&E Corp. (NYSE:PCG), has said 15 to 20 gas suppliers, about one-third of market participants, have so far declined to sell to the utility unless payment is made up front. PG&E, which provides gas to nearly 3.8 million customers in northern and central California, has said it has enough natural gas to supply its customers for January but is uncertain whether it will secure sufficient supplies for February. PG&E's gas needs for February are around one billion cubic feet a day (bcfd), but the company has secured only ``small amounts'' of gas for next month, according to a PG&E spokeswoman, who would not specify how much had already been procured. If the company is unable to secure all of its needs it would likely then be forced to cut some amount of gas service to non-core customers, like industrial users, she said. The needs of core customers, like residential and small business customers, will be met and would only be reduced if service to all non-core customers had been cut and all the gas in the utility's three storage facilities was exhausted, an unlikely event at this time. El Paso Natural Gas (EPNG), a unit of El Paso Energy (NYSE:EPG), and Transwestern Pipeline (TW), a unit of Enron Corp. (NYSE:ENE), both said Friday they have no plans at this time to cut gas deliveries to PG&E but would continue monitoring the utility's financial health, spokeswomen at the companies said. EPNG and TW both supply substantial amounts of gas to PG&E through interstate pipelines in southern California. Southern California Edison (SCE), part of Edison International (NYSE:EIX ), does not not have a gas distribution business, but purchases natural gas to fuel its electric generation plants. SCE could not be reached for comment. Due to exorbitant power costs, PG&E and SCE have said they may not have enough cash to continue operations. And as a result, both have seen their credit standings slashed in the last two days by major ratings agencies.

Black Blade: The beginning of the end?

Black Blade
(01/07/2001; 01:21:18 MDT - Msg ID: 45207)
New York and New Jersey Have Highest Natural Gas Prices Nationwide, According to Platts

NEW YORK--(BUSINESS WIRE)--January 5, 2001--
What: The average price of natural gas in the New York and New Jersey market hit a record of $19.33/MMBtu for January 2001, higher than Southern California, which priced at $16.39, according to data published by Platts, the energy market information division of The McGraw-Hill Companies (NYSE: MHP).

Black Blade: Looks like East Coast Grasshoppers are going to pay up as well! I have info that many east coast nukes are being fired up again to make up for the short-fall. The peoples Republik of Kalifornia shut some nukes a few years ago such as Rancho Seco. They aren't likely to come back on line though. "And the Grasshoppers danced, sang, and played all summer�"
Black Blade
(01/07/2001; 03:40:07 MDT - Msg ID: 45208)
Natural Gas Prices
http://www.piwpubs.com/gasprice.shtmlNG prices for the week ending January 5th, still high.
Usul
(01/07/2001; 06:01:10 MDT - Msg ID: 45209)
Topaz: Islamic Banking and Confidence
http://www.federalreserve.gov/boarddocs/testimony/19981001.htmThe link I posted was intended to illustrate, by way of Islamic Banking's use of gold, how the value of fiat money is dependent on confidence. If you look around, you will find many diverse sources that cite this factor.

Considering that the price of gold in dollars indicates the level of inflation of dollars, is a viewpoint that does not take into account the alleged manipulation of the price of gold by short sellers, producer hedging, central bank sales, negative press, bull-market enthusiasm for non-material assets, and the influence of futures markets and derivatives. Some may consider that an over-simplification.

In addition to confidence in the sustained value of paper, another related confidence factor is the one described by Alan Greenspan in comments on the LTCM affair:

"Financial markets operate efficiently only when participants can commit to transactions with reasonable confidence that the risk of nonpayment can be rationally judged and compensated for. Effective and seasoned markets pass this test almost all of the time. On rare occasions, they do not. Fear, whether irrational or otherwise, grips participants and they unthinkingly disengage from risky assets in favor of those providing safety and liquidity. The subtle distinctions that investors make, so critical to the effective operation of financial markets, are abandoned. Assets, good and bad, are dumped indiscriminately in circumstances of high uncertainty and fear that are not conducive to planning and investment. Such circumstances, were they generalized and persistent, would be wholly inconsistent with the functioning of sophisticated economies supported by long-term capital investment"
Black Blade
(01/07/2001; 06:54:06 MDT - Msg ID: 45210)
Weak gold price is killing off prospecting
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT39MNPQOHC&live=true&tagid=IXL99I3TICC⊂heading=basic%20industries
By Gillian O'Connor, Mining Correspondent
Published: January 7 2001 12:44GMT | Last Updated: January 7 2001 13:11GMT

The continued slump in the bullion price is killing off gold prospecting. Last year mining companies spent only $1.1bn exploring for gold, roughly a third as much as in 1997. And for the first time on record gold accounted for less than 50 per cent of their global exploration budgets. New figures from Canadian research firm Metals Economic Group (MEG) show that in 2000 expenditure on gold exploration was just 47 per cent of the total of $2.3bn, whereas in 1997 it was 65 per cent of the much larger total of $4.6bn.* The gold price, which touched $850 an ounce in January 1980, has deteriorated steadily since February 1996 - the last month in which it averaged over $400 an ounce - and it finished last week at $268.

The soggy metal price, plus the Bre-X scandal that rocked the industry in 1997, has made it difficult for small exploration companies to raise money, and hammered share prices. The total market value of junior gold companies fell by 73 per cent to just below $10bn between December 1996 and June 2000. In the last few years many former gold exploration companies have changed their names and switched into businesses, such as dotcom-related activities, where raising money was easier.

Larger gold mining companies were able to buy control of promising prospects found by junior companies relatively cheaply, and so cut their own exploration budgets. In 1999, for example, Barrick Gold, the largest North American gold miner, bought Sutton Resources to get hold of its Bulyanhulu prospect in Tanzania. The falling gold price both reduced the likelihood of finding new prospects which would be worth developing, and scotched some existing developments. Both Barrick and Placer Dome, the second largest North American gold miner, have put once promising and important projects on hold. In mid-1999 Placer mothballed its $575m Las Cristinas mine in Venezuela, and in early December 2000 Barrick decided to delay full-scale construction at the $950m Pascua Lama project on the Chile-Argentine border.

Even some existing gold mines are now barely profitable. In Africa, AngloGold, the largest gold miner, recently sold two high cost mines, Elandsrand and Deelkraal, for $130m to smaller rival Harmony, which specialises in squeezing profits out of marginal mines. As gold's popularity has waned, platinum group metals have become a new magnet for exploration companies. Prices of both platinum and palladium have soared recently.

At over $600 an ounce, platinum is now worth more than twice as much as gold, and sister metal palladium, selling for less than $200 until 1997, was last week flirting with $1,000. Gold Fields, South Africa's second largest gold miner, last year announced a platinum prospect in Finland. And MEG statistics show that the number of companies searching for platinum soared to 64 in 2000, compared with just 38 in 1999. * The strategic report from Metals Economic Group, PO Box 2206, Halifax, Nova Scotia, Canada B3J 3C4.

Black Blade: It's a safe bet that when the POG rises and investment demand increases, there won't be much increase in production from new sources. The lag time from discovery to mine is a minimum of 3 to 5 years. Soon only the best and most nimble miners will be exploring. Another downside is that when the POG rebounds, there won't be many experienced drillers and geologists around as has happened in the petroleum industry. The big fat lazy producers will eat out of their hedge books, and the nimble focused miners will be the discoverers of the new mines of the future.
RossL
(01/07/2001; 07:10:15 MDT - Msg ID: 45211)
Cavan Man - remedy for the "Brown Bottle Flu"
http://www.lifelinefoods.com/
The best remedy for the "Brown Bottle Flu" is a good night's sleep, a good breakfast, two aspirin, a multivitamin, and a shot of colloidal minerals in a glass of orange or grapefruit juice.

The minerals help with that hangover feeling that all of your bodily fluids have been depleted of their vital life-giving properties. See the link above for the "Buried Treasure" brand that I buy at the local health food store.
justamereBear
(01/07/2001; 07:17:34 MDT - Msg ID: 45212)
Auspec 45167 Mr Gresham 45146
HoF Second
Auspec
Hi there, also my friend!
I'll forgive you your inattention to celebrate your ingenue's anniversery, if you will forgive me mine with my ingenue's return after an overlong absence. (smarmy grin)

That reply to me was great, but like mine was not a one liner. Still we need more. Everything accepted. Famous one liners of the condemned man facing the firing squad. Preferably apropos the very smelly situation in the market manipulations going on, lo this very week. Best formal one liner to date- Peter Asher- "if I had KNOWN she was a hemophiliac, I wouldn't have bit her on the lip"

Oh yeah, she would make a real good manager. We in Canada had a similiar stint with one of these managers. Her watch lasted days.
What part of the queen mother did you say got snared in the wringer?

I am also happy to go along with the thinking in your 45182, but for slightly different reasons, although I find difficulty in articulating them as well as you did.I second the nomination.

Mr Gresham.

That was a fine roadmap, plainly said.
"that is the money supply" indeed.

A small varience or perhaps a going on record.
My own recent numbers/estimates of the "purchasing power" have run to a fairly significant percentage of the $30,000 mentioned. However it is my forecast that somewhere just north of $800.00 (depending on the exact circumstances) the first step in the attempted save the treasury/confiscation/control, will take place under the facade of the foreign exchange regulations/act. A small wager perhaps? What are my odds for such action, say under $1,000? Could be somewhat less if the action is violent enough.

Best regards
j'Bear

Canuck
(01/07/2001; 07:22:58 MDT - Msg ID: 45213)
B.B.
Wicked articles dude.

Now some of the NG producers can't sell to the CA utes, WOW!

Two million bbl. cut by OPEC, WOW! Watch the 'unleaded' futures as we roll towards spring, gasoline might be a barnburner this summer.

Thanks for your brilliant and timely posts.
Canuck
(01/07/2001; 07:30:32 MDT - Msg ID: 45214)
Death of a Bull
1) Decelerating growth.

2) Decelerating profitability.

3) Accelerating debt load.

4) Cascading 'cross-defaults'

5) Death of a bull.

Large cap Techies are already way past #1, mixed in between
#2 and #3. Dot.coms are in the #3 to #4 range. Once more companies pass #2 and enter #3, #4 becomes inevitable and #5 is simply a function of #4.

Hey you, step AWAY from the PAPER!!!!!

Black Blade
(01/07/2001; 07:38:23 MDT - Msg ID: 45215)
Gold Fever Lifts Stocks of Korean Companies
http://www.iht.com/articles/6489.htmlA lot of commotion over a barbarous relic ;-) An entertaining article anyway.
Black Blade
(01/07/2001; 07:51:08 MDT - Msg ID: 45216)
A New Twist on Aesop's Fable "Ant and the Grasshopper"
I just heard the results from a poll taken among Kalifornian ants and Grasshoppers. 54% believe that the energy crisis is faked in order to increase electric rates (grasshoppers), 36% believe that their is a serious energy crisis (ants), and 10% not sure (ostriches).

Yeah, electricity comes from the socket in the wall (it's magic ya know), and hamburger comes from McDonald's and not cattle. Fruit and veggies come from safeway and Krogers - not farms, etc. I'm sure that there are other falacies that are taught in the public schools - maybe others here at the forum know a few. A rude awakening is about to occur!

- Black Blade

SteveH
(01/07/2001; 08:01:26 MDT - Msg ID: 45217)
The anti-gold article syndrome
Black Blade,

Here is the first-page text of your link:

SEOUL South Korean stock investors are taking a shine to gold - or at least to companies that claim to have found it. First there was Dong-Ah Construction Industrial Co., whose shares surged by their daily limit for 17 days in December after reports that the company had stumbled upon evidence of a sunken Russian warship laden with gold.
.
Now comes another lucky prospector, Hyundai Corp. Its shares surged by their 15 percent limit for the second day in a row Friday after the company claimed it had struck gold in Mali.
.
Just how much of the precious metal there is, is open to question. The Yonhap news agency reported speculation of a deposit as large as 300,000 tons in the West African country. That would be more than twice all the gold ever dug out of the Earth.
.
"No way there is a deposit as big as that," said Joachim Berlenbach, an analyst at ING Barings in Johannesburg. "Mali has been quite well explored, and a big deposit would have been long found."
.
Even Hyundai said it could not confirm the amount. "We have yet to finish our preliminary studies," said Lee Hong Jae, a company spokesman.
.
Such vague talk failed to cool enthusiasm for the trading arm of Hyundai Group, a once-powerful conglomerate that is now scrambling to sell assets to bail out its ailing construction unit.
.
Hyundai Corp. rose 195 won Friday to finish at 1,525 won ($1.21).
.
Gyrating stocks are not rare in South Korea, where the benchmark index is among the most volatile in the world. The KOSPI index has a 90-day annualized volatility of 47.5 percent. That suggests that if movements follow the same pattern as they have in the past three months, the index could be 47.5 percent higher (or lower) in the months to come.
.
And for the past month, it has been gold that helped some nervy investors forget that the KOSPI lost half its value in the past year.
.
Dong-Ah, a bankrupt contractor, finally fell Friday, tumbling 15 percent. Its first decline since Nov. 30 still leaves the shares up about 10 fold since reports surfaced that the company had found the wreck of the Dmitri Donskoi, a frigate scuttled in 1905 in the Sea of Japan.
.
"Investors, especially those who tend to invest in stocks like Dong Ah, tend to ride the wave of popular themes," said Yoo Young Kuk, a strategist at Hanyang Securities Co. "They're sensitive to what's in and what's out." Hyundai is definitely in, for now, even though gold is trading around $269 an ounce, a 28-year-low after adjusting for inflation. The company said Thursday that it had struck gold in the Malian town of Barani.
.
Though Mali is a plausible site for a gold discovery - gold accounts for a tenth of the gross domestic product - miners have not had an easy time there.
.
Randgold Resources Ltd., a group that does mining exploration in sub-Saharan Africa, said in November that its Syama mine in Mali may be forced to close soon if the company is unable to invest as much as $40 million to extend the mine's life to 2006.
.
The company, controlled by South Africa's Randgold Exploration Ltd., has asked the Malian government to waive taxes and royalties.
For Related Topics See:
Business

< < Back to Start of Article SEOUL South Korean stock investors are taking a shine to gold - or at least to companies that claim to have found it. First there was Dong-Ah Construction Industrial Co., whose shares surged by their daily limit for 17 days in December after reports that the company had stumbled upon evidence of a sunken Russian warship laden with gold.
.
Now comes another lucky prospector, Hyundai Corp. Its shares surged by their 15 percent limit for the second day in a row Friday after the company claimed it had struck gold in Mali.
.
Just how much of the precious metal there is, is open to question. The Yonhap news agency reported speculation of a deposit as large as 300,000 tons in the West African country. That would be more than twice all the gold ever dug out of the Earth.
.
"No way there is a deposit as big as that," said Joachim Berlenbach, an analyst at ING Barings in Johannesburg. "Mali has been quite well explored, and a big deposit would have been long found."
.
Even Hyundai said it could not confirm the amount. "We have yet to finish our preliminary studies," said Lee Hong Jae, a company spokesman.
.
Such vague talk failed to cool enthusiasm for the trading arm of Hyundai Group, a once-powerful conglomerate that is now scrambling to sell assets to bail out its ailing construction unit.
.
Hyundai Corp. rose 195 won Friday to finish at 1,525 won ($1.21).
.
Gyrating stocks are not rare in South Korea, where the benchmark index is among the most volatile in the world. The KOSPI index has a 90-day annualized volatility of 47.5 percent. That suggests that if movements follow the same pattern as they have in the past three months, the index could be 47.5 percent higher (or lower) in the months to come.
.
And for the past month, it has been gold that helped some nervy investors forget that the KOSPI lost half its value in the past year.
.
Dong-Ah, a bankrupt contractor, finally fell Friday, tumbling 15 percent. Its first decline since Nov. 30 still leaves the shares up about 10 fold since reports surfaced that the company had found the wreck of the Dmitri Donskoi, a frigate scuttled in 1905 in the Sea of Japan.
.
"Investors, especially those who tend to invest in stocks like Dong Ah, tend to ride the wave of popular themes," said Yoo Young Kuk, a strategist at Hanyang Securities Co. "They're sensitive to what's in and what's out." Hyundai is definitely in, for now, even though gold is trading around $269 an ounce, a 28-year-low after adjusting for inflation. The company said Thursday that it had struck gold in the Malian town of Barani.
.
Though Mali is a plausible site for a gold discovery - gold accounts for a tenth of the gross domestic product - miners have not had an easy time there.
.
Randgold Resources Ltd., a group that does mining exploration in sub-Saharan Africa, said in November that its Syama mine in Mali may be forced to close soon if the company is unable to invest as much as $40 million to extend the mine's life to 2006.
.
The company, controlled by South Africa's Randgold Exploration Ltd., has asked the Malian government to waive taxes and royalties. SEOUL South Korean stock investors are taking a shine to gold - or at least to companies that claim to have found it. First there was Dong-Ah Construction Industrial Co., whose shares surged by their daily limit for 17 days in December after reports that the company had stumbled upon evidence of a sunken Russian warship laden with gold.
.
Now comes another lucky prospector, Hyundai Corp. Its shares surged by their 15 percent limit for the second day in a row Friday after the company claimed it had struck gold in Mali.
.
Just how much of the precious metal there is, is open to question. The Yonhap news agency reported speculation of a deposit as large as 300,000 tons in the West African country. That would be more than twice all the gold ever dug out of the Earth.
.
"No way there is a deposit as big as that," said Joachim Berlenbach, an analyst at ING Barings in Johannesburg. "Mali has been quite well explored, and a big deposit would have been long found."
.
Even Hyundai said it could not confirm the amount. "We have yet to finish our preliminary studies," said Lee Hong Jae, a company spokesman.
.
Such vague talk failed to cool enthusiasm for the trading arm of Hyundai Group, a once-powerful conglomerate that is now scrambling to sell assets to bail out its ailing construction unit.
.
Hyundai Corp. rose 195 won Friday to finish at 1,525 won ($1.21).
.
Gyrating stocks are not rare in South Korea, where the benchmark index is among the most volatile in the world. The KOSPI index has a 90-day annualized volatility of 47.5 percent. That suggests that if movements follow the same pattern as they have in the past three months, the index could be 47.5 percent higher (or lower) in the months to come.
.
And for the past month, it has been gold that helped some nervy investors forget that the KOSPI lost half its value in the past year.
.
Dong-Ah, a bankrupt contractor, finally fell Friday, tumbling 15 percent. Its first decline since Nov. 30 still leaves the shares up about 10 fold since reports surfaced that the company had found the wreck of the Dmitri Donskoi, a frigate scuttled in 1905 in the Sea of Japan.
.
"Investors, especially those who tend to invest in stocks like Dong Ah, tend to ride the wave of popular themes," said Yoo Young Kuk, a strategist at Hanyang Securities Co. "They're sensitive to what's in and what's out." Hyundai is definitely in, for now, even though gold is trading around $269 an ounce, a 28-year-low after adjusting for inflation. The company said Thursday that it had struck gold in the Malian town of Barani.
.
Though Mali is a plausible site for a gold discovery - gold accounts for a tenth of the gross domestic product - miners have not had an easy time there.
.
Randgold Resources Ltd., a group that does mining exploration in sub-Saharan Africa, said in November that its Syama mine in Mali may be forced to close soon if the company is unable to invest as much as $40 million to extend the mine's life to 2006.
.
The company, controlled by South Africa's Randgold Exploration Ltd., has asked the Malian government to waive taxes and royalties. SEOUL South Korean stock investors are taking a shine to gold - or at least to companies that claim to have found it. First there was Dong-Ah Construction Industrial Co., whose shares surged by their daily limit for 17 days in December after reports that the company had stumbled upon evidence of a sunken Russian warship laden with gold.
.
Now comes another lucky prospector, Hyundai Corp. Its shares surged by their 15 percent limit for the second day in a row Friday after the company claimed it had struck gold in Mali.
.
Just how much of the precious metal there is, is open to question. The Yonhap news agency reported speculation of a deposit as large as 300,000 tons in the West African country. That would be more than twice all the gold ever dug out of the Earth.
.
"No way there is a deposit as big as that," said Joachim Berlenbach, an analyst at ING Barings in Johannesburg. "Mali has been quite well explored, and a big deposit would have been long found."


Note: Just another attempt to relegate gold to be as common as household salt in order to contain its price.

How many of you think Bre-X was a planned coup against the gold industry? Raise your hands. (...it worked didn't it?)

ps. Pass the salt please.
Boxman
(01/07/2001; 08:03:57 MDT - Msg ID: 45218)
California scrambles for answers
http://www.usatoday.com/news/ndssat01.htmFair use for educational/research purposes only

Calif. scrambles for answers to power crisis Mark J. Terrill, AP

SACRAMENTO, Calif. (AP) � Faced with a deepening electricity crisis, state officials are weighing some drastic proposals, ranging from a public takeover of the entire network to a crash construction program for new power plants. The state's two largest utilities are already $9 billion in debt and are losing an estimated $40 million each day because of wholesale price spikes. Both have said they'll face bankruptcy in a matter of weeks if nothing is done.

(Crash construction program! I guess in LaLa land, all they have to do is wiggle their noses, and poof, an environmentally perfect power generating plant springs up)

''At its core, you're looking at a catastrophic power shortage. That means you either ration by high prices or you ration by rolling blackouts. There is no third choice,'' said Republican state Sen. Tom McClintock.

(I didn't realize that any republicans were allowed to hold office in LaLa land. Brave soul, speaking common sense.)

Others disagree that a power shortage is the root problem, some blame the state's recent power deregulation and high wholesale costs, but most concur that time is running out for the utilities to remain solvent.

(Deregulation, my butt)

The Public Utilities Commission on Thursday approved rate increases of 7 to 15% for Pacific Gas and Electric Co. and Southern California Edison Co. But the utilities, which serve 25 million people, said the increases weren't enough. Wall Street agreed, and the major credit rating agencies sharply downgraded both utilities.

The focus on solutions has turned to Gov. Gray Davis and the Legislature.

(Better get yours nose wiggling Gray, or you're going to be a one term wonder)

The governor is ''considering all the options,'' said Davis spokesman Steve Maviglio. Davis is expected to discuss his proposals in his State of the State speech Monday, but administration officials say he will likely focus on conservation and financial incentives for power plant builders rather than price controls, re-regulation or public ownership of the grid.

(Somehow, I think "all the options" won't include common sense options. I sense the heavy hand of government.

The more dramatic proposals are coming from the Legislature.

McClintock favors spending $5 billion of the state's surplus on rebates to consumers, but that proposal has drawn little support.

(Can't be giving those tax dollars back, no way)

Democratic Assemblyman Fred Keeley has suggested spending $3 billion to buy hydroelectric power plants, then operate them under contract with the utilities. It would let the utilities get cheap power and avoid high wholesale prices on the open market, he said.

(I thought that there was a drought situation, that in part, has led to this overall problem. And just how many hydro plants are up for sale anyway?)

State Treasurer Phil Angelides has proposed a $10 billion plan to create a state agency to build and run power plants, own the distribution lines and use the power of eminent domain to seize plants in an emergency. However Republicans view Angelides with suspicion and Democrats don't have the necessary two-thirds majority to approve money for such proposals.

(Seize plants? Who in their right mind would want to build in the future, knowing this was hanging over their heads?)

Since late spring, PG&E and SoCal Edison have lost more than $9 billion because of soaring prices for wholesale electricity and a state-imposed rate freeze that prevents them from passing the costs on to customers. That, in turn, affects their ability to borrow money to buy power to avert blackouts.

(As I stated above, deregulation, my butt)

Wholesale prices have risen because of increased demand during the hot summer and cool winter and, some state officials say, because of profiteering on the part of wholesalers.

(No mention as to the stupidity of the politicians, or the power of the environmental wackos)

At the same time, the state's electricity reserves are stressed. A large number of power plants are down for maintenance, and imports are tight because nearby states are competing for power.

Nine new major power plants are licensed in California, but the first two won't go into operation for another year

(At least they won't freeze to death, blessed with temperate climate)

http://www.usatoday.com/news/ndssat01.htm

Mike


Christian
(01/07/2001; 08:07:37 MDT - Msg ID: 45219)
LBMA
1.4 billion ounces of gold is presently held by the CB's. 130 million ounces changes hands daily on the LBMA. It takes 11 working days for the total world gold to clear the amount of gold equivalent to all Central Banks holdings on the LBMA. These huge volumes on the LBMA are not from hoarders. These are the merchants of credit creation using gold as a currency for credit creation. What these credit merchants are saying is that gold is money and paper is not. They are saying that paper money is debt.. and debt is paper money. It is the LBMA that values credit creation gold at $3,000 and commodity gold at $270. BIS does not even do .01% of the business LBMA does. However LBMA uses BIS to do some of its business and store some of it's gold. GATA is going after the wrong people. It is LBMA who wants to buy the private share holders out at BIS. LBMA keeps the price for commodity gold as low as possible in order to profit from the difference between commodity gold and credit creation gold. BIS is the Central Banks bank when it comes to settle trade deficits among nations. For the year 2000 USA trade deficit was settled at BIS in gold at a price of $526. Greenspan is NOT a member of the LBMA. That $526 gold price is not determined by BIS but is determined by LBMA. In a sense England still controls USA + Canada. Clinton is an Oxford educated and his oath of office is the British Crown not the United States of America. So is former Treasury Secretary Rubin. For the record the Bush Family Trust is in England under the laws of the British monarchy. Our gold money is replaced by promises to pay. Our system of exchange is dependent on those promises which are created by the credit creation merchants of the LBMA. -- ASK your elected representatives two questions- 1 What price does credit creation gold change hands? + 2 What price is the USA trade deficit settled at BIS? You should ask a 3'd question= Why is commodity gold priced different from credit creation gold?
SteveH
(01/07/2001; 08:09:41 MDT - Msg ID: 45220)
Europe seems to be leading the GATA charge
www.kitco.comDate: Sun Jan 07 2001 09:25
G.SANDRO (forevergold) (Here's the text about the law suit that has been posted to many European newspapers and press ) ID#397149:
Copyright � 2000 G.SANDRO (forevergold)/Kitco Inc. All rights reserved
agencies.
You also have to know that the world famous"Der Spiegel" is speaking about it and that AFP ( the most famous french pess-agency has already send a communiqu� about it ) . We are some french Goldbugs who wanted to contribute ( with our small means ) to this histoical fight...
GO Reginald, GO GATA, GO Silver, Go GOLD...!!!

Madame, monsieur;

Vous assumez la noble, mais d�licate, t�che consistant � INFORMER vos lecteurs.

Un �v�nement majeur s'est produit le 07/12/2000...d�j� un mois...
Or,pour l'heure, personne de ce c�t�-ci de l'Atlantique n'en a encore fait �tat...

Ce mail va �tre envoy� simultan�ment � vos principaux confr�res//concurrents...
La presse Anglo-Saxonne est d�j� inform�e et ne devrait pas tarder � s'emparer de l'affaire. L'AFP vient de s'en saisir.

Une initiative in�dite vient d'�tre entreprise par Mr Reginald HOWE. Relayant la d�marche du GATA ( Gold Anti Trust Action ) qui avait remis, voici quelques mois, un volumineux rapport aux parlementaires am�ricains pour d�noncer les manoeuvres plus ou moins licites qui ont ( auraient ) �t� op�r�es par de prestigieuses institutions financi�res dans le but de faire baisser artificiellement le prix de l'OR.

Cette initiative avait fait"les choux gras"
de vos homologues dans de nombreux pays, mais le silence la concernant avait �t� assourdissant dans notre douce France.

Mr Reginald Howe a saisi la justice Am�ricaine pour les m�mes motifs. Il avance un nombre impressionnant de preuves de la "conspiration" en cours depuis cinq ans.
Cette plainte n'est pas port�e contre X; elle vise rien moins que le Chairman de la FED :Mr Alan GREENSPAN Himself...

Au nombre des mis en cause, on d�nombre aussi le secr�taire au Tr�sor: Mr Larry Summers, La BRI ( Banque des r�glements internationaux ) qui n'est autre que la Banque Centrale des Banques Centrales...
Mais aussi, et entre autres St�s; JP MORGAN, GOLMAN SACHS, DEUTSCHE BANK...etc...

Comme vous le voyez,tant le caract�re in�dit de ce que de nombreux observateurs n'h�sitent pas � qualifier de "l'un des plus gros scandales financiers du si�cle" que l'importance des personnalit�s et des institutions mises en cause justifient amplement que vous enqu�tiez pour en rendre compte � vos lecteurs...Il en va de votre cr�dibilt�.

Quel sera le premier journal francophone � en faire �tat? Si ce n'est le votre, ce sera celui d'en face.

Vous trouverez toutes les informations et confirmations sur les sites web dont la liste suit:
WWW. Golden-sextant.com
WWW. Gata.org
WWW. Gold-Eagle.com
WWW.contrary-investor.com

Vous trouverez ,ci-dessus, de nombreux liens vers des articles qui devraient titiller votre curiosit� professionnelle et votre d�ontologie....


Black Blade
(01/07/2001; 08:19:20 MDT - Msg ID: 45221)
RE: Boxman
Good article. Amazing that Gray Davis was being touted as a possible Democratic candidate for president in 2004. How the fortunes of politics change. This energy crisis is likely to blow up very soon and the markets will continue the long see-saw slide into oblivion as investors lose it all. The question now is can George Dubya hand off this hot potato to Bubba before he skips town, or will he be stuck with the "Herbert Hoover Legacy?" It should be quite entertaining as the politicos do their damnedest to grow a skin of teflon.
Boxman
(01/07/2001; 10:12:18 MDT - Msg ID: 45222)
Most Californians Think Electricity Crunch Is Artificial
http://www.latimes.com/business/reports/power/lat_power010107.htmSnippet:The energy crunch is still abstract to many, who have yet to receive higher monthly electricity bills. Even so, it has had a sharply negative effect on public attitudes,

These people (grasshoppers, as BlackBlade labels them) have far to many fluffball things to occupy their time. "Abstract", how fitting.

I guess that when those blackouts hit, reality may set in. (and note, I used the word "may")

Gray's approval numbers look like they are already getting hammered.

Black Blade: I thought that I would help you out a little, as from the times of your posts, you might need a little nap. Thanks for the yeomans job you have been doing, it is greatly appreciated.

Mike
Canuck
(01/07/2001; 10:34:42 MDT - Msg ID: 45223)
Debt
http://www.publicdebt.treas.gov/opd/opdpenny.htmThe Public Debt To the Penny
Current
01/04/2001 $5,719,452,925,490.54


CURRENT
MONTH AMOUNT

01/03/2001 $5,723,237,439,563.59
01/02/2001 $5,728,739,508,558.96


PRIOR
MONTHS

12/29/2000 $5,662,216,013,697.37
11/30/2000 $5,709,699,281,427.00
10/31/2000 $5,657,327,531,667.14


PRIOR FISCAL
YEARS

09/29/2000 $5,674,178,209,886.86
09/30/1999 $5,656,270,901,615.43
09/30/1998 $5,526,193,008,897.62
09/30/1997 $5,413,146,011,397.34
09/30/1996 $5,224,810,939,135.73
09/29/1995 $4,973,982,900,709.39
09/30/1994 $4,692,749,910,013.32
09/30/1993 $4,411,488,883,139.38
09/30/1992 $4,064,620,655,521.66
09/30/1991 $3,665,303,351,697.03
09/28/1990 $3,233,313,451,777.25
09/29/1989 $2,857,430,960,187.32
09/30/1988 $2,602,337,712,041.16
09/30/1987 $2,350,276,890,953.00

silvercollector
(01/07/2001; 10:37:27 MDT - Msg ID: 45224)
Mr. Christian
Do you mind if I email some of your postings to my media friends?

SC
auspec
(01/07/2001; 11:14:28 MDT - Msg ID: 45225)
Repost Mr Gresham "Squeeze Is On" #45146
Any More Seconds For HOF??
I have taken the liberty of reposting Mr.Gresham's "Squeeze Is On" from yesterday as it is an exceptional piece. Looking for at least one more second for HOF consideration, with supporting rational preferred. This post is an excellent example of using interesting analogies to get a point across. It fits somewhere between the "Big Boy" HOF and the CLHE-HoF, and my guess is that Mr. G may eventually end up with articles in both esteemed sites. That is, if he hasn't used up all his "silver bullets"! END/THANKS Auspec
Mr Gresham (1/6/2001; 1:00:31MT - usagold.com msg#: 45146)
AG and Payments System: Squeeze is On
I guess I should put it up top: This is the way I see the FOA gold rocket-price scenario happening. Combination of Fed "printing", public "flocking" and "fleeing", and ECB "re-balancing" reserves. It's hard to see $30,000, no matter how much of the above occurs; hard to see that something else wouldn't siphon off those $ somewhere on the way to that, but none of us really NEED that number just now except as an attention-getter, right? Somewhere around $1000 or $2000 (very explainable) we'd be getting "the rest of the story" from FOA & ANOTHER, and making our judgments from there.


AG and Payments System: Squeeze is On

In the interviews with Greider and others for their books on the Fed, Greenspan and Volcker have emphasized that their concern has been with preventing a breakdown in the payments system between financial institutions (US & worldwide). They couldn't guarantee which way markets would go, but they wanted to be sure that the winners and losers could settle their deals quickly and finally in USD, and move on to more commerce.

The Fed acts to stand behind institutions with the required capital levels so that they are not driven over the brink by interruption of payments from less-solvent counterparties. In one instance during Volcker's reign, the breakdown ("Herstatt Risk" from an early-70s European crisis) was somewhat threatened by the different clearing times between US and European banks. I think one system had three-day, the other five-day clearance, and that difference would have left some banks gasping for liquidity for a fatal 48 hours. The Fed and other CBs had to tide over that difference during a cash flow crunch.

Many of AG's speeches have been about technical improvements in the payments system, so that a glitch seemingly far-removed from the basic business solvency of the transacting institutions (which are playing brinkmanship enough as it is) does not bring down the system. "Cascading cross-defaults" I think was his phrase.

We get a whiff of that anytime a major bank or other institution is threatened with capital insolvency. The memory of Continental Bank, which was cleaned out by foreign overnight wired withdrawals nearly 20 years ago, must still be in the minds of some today.

Picture the money supply as somewhat concentric rings of asset types, perhaps akin to Dante's rings of Hades?, or the electron rings of a highly agitated atomic particle. At the outermost levels are the "flakiest" of funny moneys, but they exist because people can play with them in certain ways they can't with the more stable moneys toward the center. (Can you Goldhearts guess what these might be?) The players are willing to accept higher risk to attain their ends of greed and excitement, though their risk/reward calculations have been actually been lousy if done at all and their information inputs inadequate.

They analyze their transactions on a two-dimensional map of risk/reward considering only market directions and maybe the psychology of counterplayers. They do not question the third dimension which, from an elevated perspective, says that the chessboard they are now winning upon can at any moment be swept clear by the hand of market breakdown and payments system collapse.

The US money supply today might be, for example, $7 trillion of all types (honest, I haven't looked this up, and don't care to research harder toward some useless specificity.) But this money supply represents debt of all types that people and institutions have committed themselves to work toward repaying, circumstances permitting. (Subject to many ways of discounting in future.) It represents paper currency that people commonly accept as money. And it represents real assets that can be used as money, or act as direct backing for a currency money.

Suppose that those categories boil down, in an economic "hard landing" scenario, to only $2 trillion of "hard" money. Money that really will be trusted in use, debt that will be worked down to sustain homes, businesses, and credit ratings. Right now, the public is looking toward the $7 trillion "mountain" of money that they've always known (and still remember from its smaller and less-flaky days). Right now, they believe that by working harder and smarter, a piece of that big mountain is to be theirs. A shift in psychology later, they turn around and see instead the smaller "hill" of $2 trillion. And, voila!, THAT becomes the real money supply, either very immediately, or eventually, after a longer and still-painful workout.

If that is what people believe is out there, then that is what they are willing to supply their labor and capital to work toward. That is THE Money Supply.

Alan Greenspan's problem with the Bubble is that its puncture immediately puts the smaller amount on peoples' credulity screen. All the funny money in various way-out orbits -- whether created by flicks of the fickle Fed fingers, or by a lifetime of self-denying savings -- flees toward the stable center when it is threatened, but like the crowded theatre on fire, the doorways are not wide enough. The available niches for more stable money in closer levels are fewer and cannot readily accommodate the flood of scared money. Much money, both borrowed and saved, departs for Money Heaven (where streets are paved with fiat.) Of course, back on Money Earth, prices rise for items representing the more stable money items.

In market Technical Analysis terminology, there is not much "Support" between $7 trillion and $2 trillion. Most "buyers" of money ("suppliers" of labor) will sit out the market slide as able, once their expectations shift, and they will thereby produce a bottoming out of the supply/demand equilibrium at a new low, but supportable, level. They will not bid their hard labors for the outer, flaky (mostly departed or soon to) moneys anymore but for the nearer to hand, harder, trusted moneys. Newly risk-averse, the cycle will funnel more of the remaining $2 trillion toward gold and assets near its central orbit of stability.

Of course, economic activity, statistically-measured, slows to a crawl as people re-jigger their ideas of what is worthwhile spending their now poorly-paid labor and dwindling cash upon. The Depression scenario, scary as it may be, may cause many people to repeat what was said in an earlier time: "We had everything in those days, except money." Learning about values never ceases; money is just the warm-up.

The payments system is the artery through which trillions of dollars flow daily or weekly, and upon the constriction of those vessels, the economic "lifeblood" flowing will reduce to the lowest practical and supportable amount. Institutions will simply not hang out their entire corporate capital on a transaction or two, when a new "Creditanstalt" or "Herstatt" has occurred and more are waiting to happen, unknown which ones among all their routine transactions. This is how the payments system dies, regardless of Fed and CB backing. Even the Lone Ranger can fit only six Silver Bullets in his pistol.

Greenspan simply does not want the statistical implosion of the money supply to happen on his watch. He does not consider it inevitable, and believes that the Art of Fed Chairmanship, aided by public psychology, has a spitting chance of turning it back, or landing it "softly". If he fails, his consolation prize would be history granting that he "did his best, in an impossible situation," quite a re-write in itself. (If the camera is focused only upon the post-Crash period, though, he may get away with it. Awww, let him.)

But, as he has pushed back each harbinger or lesser trigger of that implosion, he has aligned all of the disparate elements in a grand conjunction, a parting of the economic Red Sea (in which his own chariots must perish), and the almost meticulously calculated as-if-planned Perfect Storm that will fall upon the economy with full fury and spare no frivolous item of economic waste from dissolution.




SHIFTY
(01/07/2001; 11:50:00 MDT - Msg ID: 45226)
More Seconds For Mr Gresham "Squeeze Is OnHOF
I will second Mr, Gresham's Squeeze is on !!!

$hifty
Peter Asher
(01/07/2001; 12:05:39 MDT - Msg ID: 45227)
Auspec, J-Bear

Robin (Who has a pass code here) Just now said "Clinton will go down in history as the man who re-invented the Presidency" she then had him saying the following one-liner --"Presidency? Presidency? I thought you knew; I wanted to be King!"
auspec
(01/07/2001; 12:23:34 MDT - Msg ID: 45228)
@ Peter Asher
You are "piling on" now! The contest continues!
auspec
(01/07/2001; 12:35:12 MDT - Msg ID: 45229)
j'Bear/Peter Asher
What age is it {emotionally/maturity} that most kids quit biting?
Regarding the Queen Mommy- I understand her next mammogram will entail a 50% fee reduction!
auspec
(01/07/2001; 12:58:06 MDT - Msg ID: 45230)
Noble Pacifier Prize
You know a simple pacifier could have saved the country a lot of trouble............lying, biting, lips moving, cigars, inhaling {not}.
Christian
(01/07/2001; 12:59:54 MDT - Msg ID: 45231)
To silvercollector
You have my permission to use the posts and show them to the media friends. Especially my last one. It has been my experience that the Wall Street Journal, Investor's Business Daily and others do not want their subscribers know the truth. Matter of fact of all the information I send them- they may very well be the ones that turned me in. These papers are Wall Street owned and it is in their interest to keep this ponzi scheme going for as long as possible. This ponzi equity market can only work as long as more money flows into this con game. I can proof with documented information from the Bank of England that the credit creating gold sells for at least $3,000+ and not more then $34,000 per oz. Presently the gold price would have to increase to $34,000 to back the dollar currency with gold. That the gold used for trade deficit settlement is above $500 I got from BIS.---- Canuck on your post on public debt-'Does the Bureau of Public Debt include the cost of future Social Security obligations Clinton already used to reduce debt? Does it include the cost of Treasury Debt Clinton purchased with gold the ESF does not have. This gold short position will have to be covered by ordinary people's gold at the commodity price not LBMA's credit creation price. Round 2 of gold confiscation is around the corner. Today any one that is invested in today's stock market, especially gold stocks and dot.com stock you are the victim of the biggest ponzi scheme ever orchestrated in the history of mankind. Durin the crash of 29 there was plenty of land to start over. During the next crash land avaiability goes to those who can pay for it.
SHIFTY
(01/07/2001; 13:05:36 MDT - Msg ID: 45232)
THE DAY AFTER CHRISTMAS
THE DAY AFTER CHRISTMAS

Twas the day after Christmas and all through the house,
every creature was hurting, even the mouse.
The toys were all broken, there batteries dead;
Santa passed, with some ice on his head.
Wrapping and ribbons just covered the floor,
while upstairs the family continued to snore.
And I in my T-shirt , new Reeboks and jeans,
Went into the kitchen and started to clean.
When out on the lawn there arose such a clatter,
I sprang from the sink to see what was the matter.
Away to the window I flew like a flash,
Tore open the curtains and threw up the sash.
When what to my wondering eyes should appear,
But a little white truck with an oversized mirror.
The driver was smiling, so lively and grand;
The patch on his jacket said U.S. POSTMAN
With a handful of bills, he grinned like a fox,
Then quickly he stuffed them in our mailbox.
Bill after bill , they still came.
Whistling and shouting he classed them by name;
Now Dillard, now Broadway, now Penny's and K-Mart,
Here's Robinsons, Levi's, and Targets and Wal-Mart.
To the tip of your limit, every store every mall,
Now chargeaway- chargeaway -chargeaway all!
He whooped and he whistled as he finished his work.
He filled up the box, and then turned with a jerk.
He sprang to his truck and he drove down the road,
Driving much faster with just half a load.
Then I heard him exclaim with great holiday cheer,
ENJOY WHAT YOU GOT
YOU'LL BE PAYING ALL YEAR!!

YGM
(01/07/2001; 13:13:26 MDT - Msg ID: 45233)
New PM site.....
http://www.silver-investor.com/Main focus on Silver....The more the merrier!
Go Gold, Go GATA, Go Reg, and "Go Physical".......YGM.
Peter Asher
(01/07/2001; 13:14:06 MDT - Msg ID: 45234)
Mr Gresham msg#: 45146)

Mr G. I'm having a bit of trouble following just what exactly you are saying as to the (Fiat) money that makes up the supply. You seem to be referring as the "outermost rings" as being derivatives and other speculative instruments that are contracts rather then money. Please correct me if I am mis-interpreting. Some labeling and quantification would help.

My perception of The total Money Supply is that of cash, demand deposits and any other instrument that is redeemable at some point for the amount of cash that was put into it. Anything that has to sold into a fluctuating market should be seen as a contract, acknowledging money parted with, that must be bartered back into cash in a Bid/Asked, trading marketplace.

Money may ENTER the system via securities as in T-bonds but once loose in the land it circulates from hand to hand until paid back to into the books of the Fed. The money goes from the Fed to the Government allocators and then into the hands of the makers of U-235 bomb casings, Ritalin for grade-schoolers , and some petty cash to fill potholes on the Interstates. From there, the renderors of those endeavors use the buying power to make their claims on goods and services and so the Totality keeps changing hands while along the way someone may retire some debt while simultaneously others are acquire more.

When you say:--- "flakiest" of funny moneys, but they exist because people can play with them in
certain ways they can't with the more stable moneys toward the center. The players are willing to accept higher risk to attain their ends of greed and excitement," ---(Derivatives?) you are describing the most nebulous of assets, having only real value at any particular moment in time that they entitle their holder to a price on the profit side of the strike.

This vision of contracts as money is a constantly re-occurring theme on the Forum that keeps popping up like a Hydra heads. Stranger took a couple of good sword-swipes in---

TheStranger (01/04/01; 20:29:01MT - usagold.com msg#: 45063)
There is no way I can think of to take one's money out of the market without getting someone else to put an identical amount in (Asher's Law). The effect on the money supply of all this selling, therefore, is net zero, unless you know something I don't.

TheStranger (01/04/01; 21:44:01MT - usagold.com msg#: 45073)
I hope my posts #45063 and especially #45065 take care of your question. I just went
through all the numbers and I think I am getting this right, despite what you may be seeing
elsewhere. Money simply can't just come out of the market, mutual funds or otherwise. Every
share sold has to be bought by someone else.

Fiat money is precisely: A record of entitlement to goods or services within the economic system wherein it is legal tender! Behind the occluding curtain of monetary theology, these rights are specifically obtained by delivering goods or labor, by making a commitment to do same at a future date, by being appropriated by government from one who has them and given to another (Welfare) by being won from another (Market trading) or just plain stolen outright.

Within the system of any nations money supply, the "value" of money is always a function of supply and demand. (Between competing nations supply/demand is co-mingled with currency trading fluctuations., but that's a digression for another post.) When a provider of natural gas gets more money for his MBTU he has acquired a larger share of buying power and the consumer who transferred it to him has less. Walmart will lose some sales and perhaps Cadillac will gain one. Any given amount of money supply is always in someone's hands as a purchasing right. What it will obtain at any given moment is the subject of the "Great �Flation Debate."

What I wanted to do here was draw attention to the difference between paper contacts that can be traded for (Fiat) money and specific money itself.






Peter Asher
(01/07/2001; 13:18:07 MDT - Msg ID: 45235)
SHIFTY (01/07/01; 13:05:36MT - usagold.com msg#: 45232)
Well done!Nominated to CLEHOF
YGM
(01/07/2001; 13:26:02 MDT - Msg ID: 45236)
Christian...
If time permits?Would you revisit a post you made long ago as to how JP Morgan (I believe)used David Walsh and Bre-X to it's own ends....I personaly believe this was the beginning of the 'War on Gold' to further the "Sting"......Thanks...YGM.
SHIFTY
(01/07/2001; 13:29:24 MDT - Msg ID: 45237)
THE DAY AFTER CHRISTMAS
I can not take credit for " The day after Christmas"
I do not know who the author is.
I read it in a newsletter from a Georgia Prospecting club I belong to.
There is no authors name on it. I thought all here would enjoy it as I did.

$hifty
Belgian
(01/07/2001; 13:31:12 MDT - Msg ID: 45238)
Social Democracy
Has Europ reached its limits of wealth-creation, through social welfare ? What are the limits of deficit spending?
Is good + bad credit in balance with tangible assets ?
These stupid questions date from the time when we tried to live with the Gold Standard. Today, Europ is living on a broad, super-high, standard of living. Consumption-slavery, still going strong. Increased acceptance of refugees of all sorts. A fundamental confidence in this deficit machinery, is creating a totally complacent society. A consensus-economy-model is backing the welfare state. And it works.
Is this the right environment for accumulating Gold? For the vast majority...the answer is : NO
They don't even consider it. I have the strong impression that the European situation is quite different from the US.
Europeans have substantial savings. National debts, stopped increasing at previous speeds. There are no sounds of any alarmbells in neither 12 member states. We are happy with the US$ and POO as it is today. Stockmarket valuations never reached mania levels and no schocking, distorting bancruptcies.

I don't know if one can conclude that Europ is a safe haven.
We don't have any www. bearsites to open the eyes. The Euro/POO blip, hasn't disturbed the consumption-force. (so far). Europ as Midway between US and Japan. Is Europ and the Euro, the balance-pivot between the 2 other super powers ?
If so, what will be the consequences for the capital flows in case of a US/Japan debacle ?
I have no idea, how much dollar exposure we have in Europ.
At what point shall Europ (and Japan), repatriate its dollars from the US ? Is a possible dollar-debacle, avoidable through inter-government agreements. The US keeps on preventing a Gold-flight and keeps its borders open for trade on condition of a stable dollar. Geopolitics in confrontation with the debt-spiral.

Will Europ's stability (?) be at the US/Japan's convenience?
And what will Europ get in exchange for that stability factor ? How much dollar-decline + debt is Europ and Japan, ready to swallow, before they stop being convenient ?
POO > 40$ ? Dow break under 10.000 dam ? US$-index plunging under 105/100 ? Panic fifth wave down in stockmarket ?
US$-interest rate (up)swing ?

I am searching for the ultimate gold-rush event. A macro-economic shock that burns the complete paper-gold-mountain away for the return to physical gold. The japan debacle never resulted in a goldrush. Europ, never had a fundamental reason to hide in gold for the long run. So we are left with the US Debt monster. And it is the US who manages to avoid a goldrush.

What is US-Funds holding from investing in gold ? A profit opportunity in an increasing Euro ? A profit in Bonds with declining interest rates ? Or is Everybody shorting Everything ? Where are the Trillions, saved from stockmarket decrease, flowing too ? Out from Nasdaq to Dow-growers ? Euro-earners ?
General Electric has given a clear down signal...a precursor for the Dow's fate ? At what point does a interest rate hike has to come to save the weakening dollar ? Why don't, the goldfunds, start to yell for goldaccumulation ? Don't they see the shadow of the panic-wave in equities, bonds and currency ? Yep, it must be Denial !
RossL
(01/07/2001; 13:57:19 MDT - Msg ID: 45239)
Christian...
If time permits?
Could you please take the time to completely explain what you mean by the term "credit creation gold" ?

I may have missed something, but I do not fully understand your use of this term.

Thanks
Leigh
(01/07/2001; 14:37:16 MDT - Msg ID: 45240)
Christian
Early last year you wrote that the Russians would be revaluing gold early in 2001 to either $2,000 or $3,000 (I forget which one you said). Would you mind "revisiting" this item and telling us whether it will indeed happen this year?

Thank you, and welcome to our site.
Christian
(01/07/2001; 15:22:53 MDT - Msg ID: 45241)
Difference between commodity, trade settlement and credit creation gold.
Commodity gold price = the controlled price of gold traded for every day people. LBMA who may very well be in control of Goldman Sachs and others like Chase etc because of their gold short position use them to regulate or control the commodity price of gold in order to control the flow of gold to individuals. By keeping the price of gold low the demand for gold to individuals keeps hitting new lows. Most every day people consider gold junk. If the price moved to lets say $800 more money would move into gold and gold would not be looked upon as junk. Present Commodity price is in the $270 area. -- Trade deficit settlement gold is gold the USA uses to make good its trade deficits. Here the USA buys commodity gold for $270 and trades (barter) that gold for $526 to reduce trade deficit account. $526 is the average price for the year 2000 gold price used to reduce trade deficit account. It's not fixed- and I have no idea why at that price. Ask Greenspan, he is the one to explain it so everyone can understand not. -- Credit creation gold is gold central banks use to create credit. 1 oz., of gold worth $270 in commodity form is worth $3000+ as backing for writting credit instrument. Most of Greenspan's cronies are the very people in charge of the biggest Hedge Funds. Most of the 12 Central Banks that make up the FED are Hedge Funds themselves. According to the Bank of England the underground free market price for gold moving from England to America or back is at the credit creation gold price of $3000+. By limiting or regulating (controlling) the commodity price less new gold comes from the ground to compete with the credit creation gold. If commodity gold was $1000 everyone would be digging for gold including the Russians. The powers to be have the above ground gold in their hands and they want the power to create credit to come from their own hands. The FED is owned by the Rockefeller Foundation, Euro is owned by another group (foundation) and the Bank of England is owned by another group who want the right to create credit. It is a rich family thing. If poor me did it I would be counterfeiting. Credit creation is usury which is a factor which makes a contract illegal because the interest due on that loan (credit instrument) is never created. When you make out a loan the bank does not give you the money needed to pay interest. You or someone else has to borrow that money into existence. There is no other source of money except to borrow it into existance. However the illegal contracts need a court decision to rule it illegal. Financial slavery is still legall. Hillary, Jon Corizone (SP) and many other have been able to buy their election by using commodity gold and turn it into credit creation gold worth far more then commodity gold. There is no physical difference between commodity gold or credit creation gold. IT IS WHAT YOU DO WITH IT. You have three choices. Sell it as a commodity, use it as trade settlement, or create credit with it by leasing (sell) to yourself the same gold over and over again to create credit. -- There is a part here I can not explain without getting killed so i will leave it out.
HOOSIER GOLDBUG
(01/07/2001; 15:44:03 MDT - Msg ID: 45242)
CONFISCATION!
Christian:
What are your thoughts/scenario on the second confiscation of, I quess, commodity gold!
Thanks in advance!
Christian
(01/07/2001; 16:02:20 MDT - Msg ID: 45243)
Gold moving to the EAST- Russia is buying commodity gold
Russia is defaulting on its IMF debt and forcing IMF to loan them more money to default on. It has exchanged part ownership for Euro debt (mostly German debt). The idea of part ownership is to get help both in operation and financial to run its industry from Europeans. The oligarchs all have accounts at Goldman Sachs and Putin wants most of these oligarchs dead. Oligarchs are the ones who made possible the movement of Russian gold to the west that Bank of England is Auctioning off. Putin is using the IMF money to buy gold. When the time is right he will revalue it and back the ruble with gold. He wants to control what once was known as the USSR. His plan is to drive the gold backed ruble drive the Oligarchs bad $'s out. Right now I feel 2001 is to early, however the ruble is gaining strenth and some of the Oligarchs are dead and whatever they owned or controlled is now back in Putin's control. Putin is making a lot of progress and will use all loan money gained from the IMF to buy gold. From here on out the IMF will have to loan Russia money in order to get paid for the previous loan with some money more money to buy gold. Russia has a balanced buget by defaulting on the IMF loans. Putin is using the gold for credit creation to drive out the $'s. Putin has an advandage over the oligarchs by using the armed service or the tax man to take them on one by one. There is a few going down every month but if he can drive the dollar out with gold backed rubles the oligarchs lose their source of power. Gore with his Hammermill (SP) connection really goofed. Even Soros is helping Putin.
Christian
(01/07/2001; 16:16:12 MDT - Msg ID: 45244)
Confiscation
Gold confiscation will happen when the price moved up and the control of the commodity price is lost and the ESF has to make good its gold short position. When? Sooner or later unless we are all dead.
Orville Goldenbacher
(01/07/2001; 16:22:05 MDT - Msg ID: 45245)
THE MONEY MYTH EXPLODED
http://www.prolognet.qc.ca/clyde/money.htmworth a look. interesting site.


Hipplebeck
(01/07/2001; 16:39:45 MDT - Msg ID: 45246)
Christian
I'm afraid I am going to have to disagree with you about this credit creation gold etc. If it were true, we would not be able to buy gold at the current commodity price. We all know that we can.
Sierra Madre
(01/07/2001; 16:41:43 MDT - Msg ID: 45247)
Christian: Soviet gold...
Does anyone remember that in 1988, '89 or '90 - anyway, just before the collapse of the Soviet Union - the Soviet Union was said to have reserves of 2,200 tons of gold?

I remember the amount clearly.

Then, in the disorder when the USSR was collapsing, first the head of Treasury in charge of gold and then the second in command, who knew where the reserves were and the amounts, WERE THROWN OUT OF TENTH STORY WINDOWS!

Since then, it began to be said - mentioned in the press - that "Russia has no gold". Strange disappearance!

Not a word since about those 2,200 tons.

Sierra
SHIFTY
(01/07/2001; 16:48:36 MDT - Msg ID: 45248)
Periodic Ponzi Update
http://home.columbus.rr.com/rossl/gold.htmNasdaq 2,407.65 + Dow 10,662.01= 13,069.66 divide by 2 = 6534.83 Ponzi

Down 93.850 from last week

We are just 25.415 points above the all time Ponzi low. It should get interesting this week.

Thank you RossL for the link .

I hope everyone has their gold and silver !

If not, I am sure our host can still help you with your precious metals needs.

$hifty
auspec
(01/07/2001; 17:28:44 MDT - Msg ID: 45249)
Randy {@ The Tower}
HOF Nomination Mr Gresham--Squeeze is On #45146Sir Randy-- We have three seconds to my nomination of Mr Gresham's post #45146 to the HOF. YGM, justamereBear, and $hifty have all agreed to the clarity and worthyness of this piece with their seconds. Thank you!

Mr Gresham-- The challenge is now to write a CLHE-HoF entry. I think you're just the guy to do it. Well done, Sir!
silvercollector
(01/07/2001; 18:00:37 MDT - Msg ID: 45250)
Mr. Hipplebeck
I am definitely in agreement with Christian. There are multiple prices for gold.

a) commodity price (ie spot) at 270; the gold you and I buy, derived from the suspicious paper markets.

b) trade sttlement price ($526??) which is the real (inflated) commodity price ie: the true POG not paper deflated. Note that documents accessible to this site mark $600 as the 'fair market value' for physical today.

c) the 'credit creation' POG is the fractionalization(sp?)
of $300 gold by a factor of 10, exactly what we see with fiat. Recall the discussions that banks require reserves of 10%. Please also note the coincidence with credit creating countries to gold backed reserves ie:US, UK, Europe. Note that non-gold backed fiat cannot create fiat credit ie:Russia.

Note I am the silvercollector and not the 'goldcollector'.

SC.
beesting
(01/07/2001; 18:06:10 MDT - Msg ID: 45251)
Belated Welcome to Mr. Paul Van Eeden to the USAGOLD Forum.
http://www.usagold.com/gildedopinion/vanEedenGold.htmlMr. Van Eeden,
I read all 9 chapters of your essay on, "Understanding Gold" located in,"The USAGOLD Gilded Opinion", at the top of the page.
A Big Thank you Sir, for your Excellent Perspective!

Unfortunately for me I'm a slow reader and even slower thinker, therefore it took all these weeks to respond and discuss a few of the points you raised.

I believe the main point you wanted to share was; Gold valued in many other currencies worldwide has remained fairly stable, and only lost value in U.S. dollars as the U.S. dollar gained in strength in relation to most other currencies.GOOD POINT, SIR!

Since first traveling overseas in the late 1950's I have been stymied on completely understanding the process by which currencies are valued in relation to each other.

I have posted this before and I will post it now again but it still comes up short on a "Complete" understanding, for me:

From my Broker:
FLOATING EXCHANGE RATE:
<>

Now, this explanation covered about 80% for me but there was still 20% mighty unclear. Today I did some more thinking on it and came up with 2 more plausible reasons for currency flucuations I had not thought about before.

Why has the U.S. dollar and the Yen lost value so fast in the last few weeks,"in relation to all other currencies???"
Reason # 1.:
""THREAT ONLY"" OF DEFAULT or OVER EXTENTION of CREDIT!
Many banks in Japan(from Bloomberg) are close to default, therefore credit ratings have been lowered, LOWERING the percieved value of the Yen! Same thing in the U.S. 'some banks in the U.S. may default on loans due to the energy problem in California, and the U.S. dollar is tanking, against all the currencies, that I've been following!

O.K. that seems to partially answer why the Yen and U.S. dollar are losing value currently. But it still doesn't answer the unknown 20% that's not mentioned in my brokers definition.

Today I did the year end statements for members of an investment fund I belong to, distributions(yearly income) are distributed by what percentage of the total amount a member owns....Then it dawned on me.... Could the "Worlds" total amount of "Money" be valued in a similar manner?? Please note this week,when the markets open, that the currencies seem to gain and lose value on a percentage basis in relation to each other. Ask yourself this, if the world is not on a Gold standard(Stable Base to Set a Standard Value) who or what computer could ever calculate every transaction in every country instantanously to give a fair value to currency? IMHO only using percentages of the whole amount could give a fairly close value to paper money on an international level.

Reason # 2, a "Percentage of the whole amount!"

It Makes a Lot of Sense to me!

Lets do 2 hypothetical scenarios:
example 1. A small country maintains a good balance of trade,a good supply of Foreign currency and Gold,the banks don't over extend themselves,and inflation is low and yet as we've seen, the past few years anyway, the local currency loses value in relation to the U.S. dollar.
WHY?
Because the U.S.dollar is simply "Gaining Strength" at a faster pace than the above small country!

example 2. Another small country imports very little and exports very little, very little internal borrowing or lending takes place,currency reserves and Gold stay the same, international debt is payed on time, and yet the currency is slowly being devalued over a period of time.(I've watched this happen!)
WHY???
Well, I submit, if that small countries amount of wealth(represented by currency)doesn't expand at the same "rate of expansion" as the rest of the country's currencies worldwide, it will lose value in relation!

As we at the forum have observed; the whole worlds unstable financial system is expanded by issuing more and more debt!!! If a country doesn't play this debt game their paper money's value is slowly eroded!!

One more point to Mr. Van Eeden:(Sorry for the long post.)
Mr. Van Eeden said in his essay:
<< U.S. based Gold mining companies will get the full benifit of an increase in the price of Gold, because Gold is priced in U.S. dollars.>>

I'm sorry Mr. Van Eeden, but I have to partially disagree on this one, here is why:
If the U.S. dollar continues to gain in strength in relation to other currencies to infinity, YES, U.S. based Gold mining companies will benifit as Gold rises in dollar price.

However,as you Sir, pointed out in your essay as other currencies gain in value and the U.S. dollar loses value(Which seems to be happening right now) wouldn't the value of the other currencies gain in value at a higher rate, therefore making holders of securities(ADR's & ADS's)more valuable than U.S. dollar denominated securities? A good current example are the South African Gold mining companies trading in the U.S. in "ADR & ADS" form. The U.S. dollar price of these stocks has, over the last few years, "Dropped" in price despite the relatively stable price of Gold in Rand in South Africa.
Why?
Because, the price of these stocks is adjusted each and every trading day by the Bank of New York's foriegn exchange currency desk, so prices in Rand's correspond to prices in U.S. dollars, otherwise some smart trader would buy in one location and sell in another to gain a profit from currency flucuations.By the way Sir,that may be changing right now, the South African Gold stocks seemed to gain or stay the same this week in U.S. dollars as the U.S. Gold stocks lost dollar value. Don't you think this could be because of the U.S. dollar losing value this week in relation to the Rand?

We Watch Together...Thanks for Reading....beesting.
Christian
(01/07/2001; 18:06:22 MDT - Msg ID: 45252)
To Hipplebeck------ Bre-x and J.P.Morgan
For many years I thought the same thing. I keep asking why are we mortals allowed to buy ever cheaper commodity gold when credit creation gold is worth so much more. It is because we are not allowed to sell it as credit creation gold. We have a controlled above ground commodity gold price that will only last as long as only a few buy gold and some of those few will sell it back as commodity gold. If and when the commodity gold price moves up sharply there will be a bank holiday and gold confiscation. If people can figure out how to create their own credit with gold there will be a bank holiday and gold confiscation. People are so stupit that they believe our $'s are money. Our $'s are debts, promises to pay or an means of exchange of promises to pay. Each and every one of us is dependent on those promises to pay. Every paycheck is a promise to pay. Gold stands on its own, has no need for the promise to pay.------------ Bre-x- J.P.Morgan was Bre-x's banker AND advisor indirectly with the control of Bresea (SP) Resources Bre-x's parent company. This was a time when J.P.Morgan was building a short gold position to finance and invest in dot.com companies. J.P.Morgan set up this ponzi scheme so it could ride up the share price of Bre-X from its 30 cents a share financing to $280.00+ and then shorted it down to 10 cents when they cashed in. Bre-x and the dot.com companies have a lot in common. 1= credit creating gold financed the run up on stocks and the profits from that run up made possibe the huge profits made shorting it. In this way common peoples so called investments in shares is used as a means of transferring money from one pocket to another. I am no longer at liberty to say what J.P.Morgan did but i will say they had Felderhof in their back pocket. Also I can say this Bre-x had the one of the highest highs and lowest lows of any gold stocks. The Bre-X sell off collapsed other gold company share prices and even more money went from the many ordinary people to the few super rich. All I can say is that Bre-x like many dot.com companies are a set up. How do you convince ordinary conservative people to risk their life savings in risky investments like Bre-X or the Internet? One way is to drive stock prices so high, no one can stand to miss out on profits. After watching friends and neighbors rack up unheard of gains we all want a little for ourselves. Buy high and sell low and then wonder what went wrong. The same process is at work in reverse with the commodity gold price. Some day if most of us are still alive on this planet and gold is $10,000+ we got to buy for we can not afford to miss on those unheard of profits. It will tank right after that. Life is a crap shoot unless you know how to create your own credit. Make those pricipal and the interest payments to yourself. Even Buffet has figured it out and is now buying control of major corporations by buying discounted junk bonds at a steep discount with credit created silver. Most people have a credit card, some have a dozen or more, where do you think that money comes from. That money is created the moment you use that card to pay your purchase with. Why don't you create your own card or is that counterfeiting????? Why are we mortals not allowed to creat our own credit? Why are we not allowed to sell gold in the free underground credit creation market?
beesting
(01/07/2001; 18:07:23 MDT - Msg ID: 45253)
Belated Welcome to Mr. Paul Van Eeden to the USAGOLD Forum.
http://www.usagold.com/gildedopinion/vanEedenGold.htmlMr. Van Eeden,
I read all 9 chapters of your essay on, "Understanding Gold" located in,"The USAGOLD Gilded Opinion", at the top of the page.
A Big Thank you Sir, for your Excellent Perspective!

Unfortunately for me I'm a slow reader and even slower thinker, therefore it took all these weeks to respond and discuss a few of the points you raised.

I believe the main point you wanted to share was; Gold valued in many other currencies worldwide has remained fairly stable, and only lost value in U.S. dollars as the U.S. dollar gained in strength in relation to most other currencies.GOOD POINT, SIR!

Since first traveling overseas in the late 1950's I have been stymied on completely understanding the process by which currencies are valued in relation to each other.

I have posted this before and I will post it now again but it still comes up short on a "Complete" understanding, for me:

From my Broker:
FLOATING EXCHANGE RATE:
<>

Now, this explanation covered about 80% for me but there was still 20% mighty unclear. Today I did some more thinking on it and came up with 2 more plausible reasons for currency flucuations I had not thought about before.

Why has the U.S. dollar and the Yen lost value so fast in the last few weeks,"in relation to all other currencies???"
Reason # 1.:
""THREAT ONLY"" OF DEFAULT or OVER EXTENTION of CREDIT!
Many banks in Japan(from Bloomberg) are close to default, therefore credit ratings have been lowered, LOWERING the percieved value of the Yen! Same thing in the U.S. 'some banks in the U.S. may default on loans due to the energy problem in California, and the U.S. dollar is tanking, against all the currencies, that I've been following!

O.K. that seems to partially answer why the Yen and U.S. dollar are losing value currently. But it still doesn't answer the unknown 20% that's not mentioned in my brokers definition.

Today I did the year end statements for members of an investment fund I belong to, distributions(yearly income) are distributed by what percentage of the total amount a member owns....Then it dawned on me.... Could the "Worlds" total amount of "Money" be valued in a similar manner?? Please note this week,when the markets open, that the currencies seem to gain and lose value on a percentage basis in relation to each other. Ask yourself this, if the world is not on a Gold standard(Stable Base to Set a Standard Value) who or what computer could ever calculate every transaction in every country instantanously to give a fair value to currency? IMHO only using percentages of the whole amount could give a fairly close value to paper money on an international level.

Reason # 2, a "Percentage of the whole amount!"

It Makes a Lot of Sense to me!

Lets do 2 hypothetical scenarios:
example 1. A small country maintains a good balance of trade,a good supply of Foreign currency and Gold,the banks don't over extend themselves,and inflation is low and yet as we've seen, the past few years anyway, the local currency loses value in relation to the U.S. dollar.
WHY?
Because the U.S.dollar is simply "Gaining Strength" at a faster pace than the above small country!

example 2. Another small country imports very little and exports very little, very little internal borrowing or lending takes place,currency reserves and Gold stay the same, international debt is payed on time, and yet the currency is slowly being devalued over a period of time.(I've watched this happen!)
WHY???
Well, I submit, if that small countries amount of wealth(represented by currency)doesn't expand at the same "rate of expansion" as the rest of the country's currencies worldwide, it will lose value in relation!

As we at the forum have observed; the whole worlds unstable financial system is expanded by issuing more and more debt!!! If a country doesn't play this debt game their paper money's value is slowly eroded!!

One more point to Mr. Van Eeden:(Sorry for the long post.)
Mr. Van Eeden said in his essay:
<< U.S. based Gold mining companies will get the full benifit of an increase in the price of Gold, because Gold is priced in U.S. dollars.>>

I'm sorry Mr. Van Eeden, but I have to partially disagree on this one, here is why:
If the U.S. dollar continues to gain in strength in relation to other currencies to infinity, YES, U.S. based Gold mining companies will benifit as Gold rises in dollar price.

However,as you Sir, pointed out in your essay as other currencies gain in value and the U.S. dollar loses value(Which seems to be happening right now) wouldn't the value of the other currencies gain in value at a higher rate, therefore making holders of securities(ADR's & ADS's)more valuable than U.S. dollar denominated securities? A good current example are the South African Gold mining companies trading in the U.S. in "ADR & ADS" form. The U.S. dollar price of these stocks has, over the last few years, "Dropped" in price despite the relatively stable price of Gold in Rand in South Africa.
Why?
Because, the price of these stocks is adjusted each and every trading day by the Bank of New York's foriegn exchange currency desk, so prices in Rand's correspond to prices in U.S. dollars, otherwise some smart trader would buy in one location and sell in another to gain a profit from currency flucuations.By the way Sir,that may be changing right now, the South African Gold stocks seemed to gain or stay the same this week in U.S. dollars as the U.S. Gold stocks lost dollar value. Don't you think this could be because of the U.S. dollar losing value this week in relation to the Rand?

We Watch Together...Thanks for Reading....beesting.
beesting
(01/07/2001; 18:14:09 MDT - Msg ID: 45254)
Sorry About the Double Post.
Must be my mouse jumped when I touched it...beesting.
silvercollector
(01/07/2001; 18:15:45 MDT - Msg ID: 45255)
..and...
Be careful what you wish for.

A tenfold rise in gold will result from the decimation of paper.

Are you even ready to begin to imagine the carnage involved?

Yes there may be troopers and bombs in your neighbourhood.

Have you left a paper trail Sir? Who knows that you have physical on your person, the decimated fiat monsters?

If $526 is the price that governments write off obligations, it is self admission that $270 paper has been 'managed' yes?
Pandagold
(01/07/2001; 18:19:18 MDT - Msg ID: 45256)
The price of a gold price rise- are we prepared to pay it?
Watch for an increase in anti-China rhetoric over the next two years. It will start fairly soon, in subtle ways. So called 'dissident' claims will be published via the media, and claimed to be authentic by so called authoritive 'China watchers'.

Remember the first rule of propaganda - the bigger the lie the more easily it gets believed.

There will be civil unrest in China backed by you-know- whom. They have to get public opinion hyped up to 'we must liberate the Chinese from their evil government' emotions.

These anti-China sentiments will grow as we move into 2002, and the economic downturn starts to bite.

The US government ( the official one and the unofficial one) will need an enemy, and a focus away from domestic problems). Bush will also need good grounds for pushing through his 'missile defence' scheme. (well. it's not 'his' really but he will be the stooge mouthpiece).

There will also be a need to shift world attention from Israel's growing Middle East problems. (and they sure are growing)

Sorry to spread this doom and gloom picture, but you can see it coming, right now, if you have 20/20 'vision', and you will, in good time, see it coming even if you're blind.

The only thing I can't see now is where it will end - and maybe that is a good thing. I like to sleep nights. I have the feeling, though, that gold will be the least of our worries.

POG should be well into a steady positive move upwards by 2002, but what price will we have to pay for this to happen?
This is what we should concern ourselves with. And are we prepared to pay that price?
Journeyman
(01/07/2001; 18:26:05 MDT - Msg ID: 45257)
Fine cuts at the hydra! @Peter Asher (01/07/01; 13:14:06MT - usagold.com msg#: 45234)

Hi Sir Peter!

I fear folks just don't get it. BUT, yours was a concise, clear, decapitation.

However, with megabyte, a doubling of supply is only ever a heart-beat (key-stroke) away.

High regards,
Journeyman
silvercollector
(01/07/2001; 18:31:08 MDT - Msg ID: 45258)
Mr. Christian
You seem to be very close to the fire, please be careful.

In the last couple hours you have mentioned the $526 figure and of your knowledge of Morgan.

silvercollector@hotmail.com

Peter Asher
(01/07/2001; 18:48:59 MDT - Msg ID: 45259)
Journeyman
Thanks for the acknowledgement

Remember the story told to fledgling Brokers about the guy who corners the market on a small-cap, 10Xing it and then when he tells his broker to sell, the response is "To whom?"

Same thing now for loaning new money into existence, To whom?

I'm actually afraid of the answer to that question.

Peter Asher
(01/07/2001; 19:31:04 MDT - Msg ID: 45260)
Our boy Bill just keeps making friends and influencing folks
January 5, 2001 11:18 am EST

ROME (Reuters) - Pope John Paul was quoted as saying the only world leader he was never really able to have a proper conversation with was outgoing President Clinton.
In a wide-ranging interview published in Italian weekly magazine Oggi, the surgeon who operated on the Pope in 1994 said the 80-year-old Pontiff had revealed details of some of his encounters during relaxed conversations.

Quoting what the Pope said to him, Fineschi said:

"The only leader I did not manage to have a proper conversation with was Clinton. I was speaking and he was looking at one of the walls, admiring the frescos and the paintings.

"He was not listening to me," Fineschi quoted the Pope as saying.


auspec
(01/07/2001; 19:43:41 MDT - Msg ID: 45261)
Frescos and Paintings
Some of those "Old World" frescos and paintings could be quite distracting to Bubba!
auspec
(01/07/2001; 19:58:57 MDT - Msg ID: 45262)
Gentlemen
Suggestion If I might?If there were HOF entries that others gushed over, but I considered to be total blather, I would allow {have allowed} the Forum process to function as set up and not go about disparaging the post, out of respect for fellow members. MK and friends are to be the final judges--If it's good enough for them..................
The issue of definition of money supply does not alter this article and the consequences on the payment system by a breakdown of "riskier" forms of money, however defined. All body parts are fully intact IMHO.
Best to all.
megatron
(01/07/2001; 21:27:31 MDT - Msg ID: 45263)
frescoe's
At the risk of defending Klinton, have you ever listened to the Pope talk? I'm not sure of the time frame that he was subjected to, but there is no way I could listen to the man for more than 15-20 minutes tops. Besides, he was busy gleaning useful political data, like observing how to pull off fingernails or burn opponents alive and get away with it.
Perplexed
(01/07/2001; 21:51:13 MDT - Msg ID: 45264)
Be Careful

Panda unfortunately I must agree entirely with your last post.

Perplexed
Sierra Madre
(01/07/2001; 22:06:47 MDT - Msg ID: 45265)
Sir Pandagold...I appreciate your perspective on World Affairs.

With regard to Israel:

I never hear anyone mention (anywhere!) that Israel is in very deep trouble; that in fact, their back is up against the wall.

Prior to the Balfour Declaration in 1919, there were grave doubts in the minds of the leaders of Jewry, as to whether it was a wise idea to seek a "homeland in the Middle East", as the Balfour Declaration put it.

I seem to remember that it was the French Rothschild who questioned whether the establishment of such a homeland, would then give rise to the idea, around the world, of depriving Jews of their various "nationalities" in the countries where they lived - a logical enough conjecture, as those various countries might argue that Jews, having their own homeland, should be limited to that nationality, and not allowed another.

However, the Zionists won out, and the Israel project went forward.

Why do I say that Israel has its back to the wall?

It seems to me that their situation is similar to say, the hypothetical case of a cult which might declare that the Second Coming would without a doubt occur on such and such a date (and in fact, the Seventh Day Adventists started from such a proposition)

Once a material fact is declared to be a question of dogma, then there is no going back. The prophetic dogma becomes essential to the survival of the cult.

Now, the re-establishment of Israel is to today's Jews, very much a matter of dogma. It is the recovery of the promised land, as promised by Jehovah. "This is it", for the Jews. Some say that what holds modern Judaism together today, is the Israel project.

So, what this means is that for Judaism, there cannot be a failure of Israel as a country. It cannot be allowed, for it would set back Judaism say, 1,000 years.

Somewhere I read that a leading Jew stated that if Israel's existence is threatened, "We will go crazy!" Can you imagine a Tony Blair, a Chirac, a Clinton or Bush, a Putin saying that "We will go crazy!"??

Israel is extremely powerful, no question. But Israel is in very deep trouble. Surrounded by hundreds of millions of enemies, with whom no terms can be acceptable. This is a formula for disaster - and what will happen to the rest of us, when Israel "goes crazy"? Might they not nuke London, Paris and Moscow, and blame it on the Arabs?

Israel was better off when the Promised Land was remembered simply by the ritual saying, "Next year, in Jerusalem."
The Zionists got the Jews into a great deal of trouble, indeed.



























rc
(01/07/2001; 22:21:49 MDT - Msg ID: 45266)
Are we prepared to pay that price?
@PandagoldAnswer : No. So what! We cannot do anything to change such occurrences. One thing : if it ever happens and we get through alive, then we will have some scores to settle.

Have a good night!
YGM
(01/07/2001; 22:41:00 MDT - Msg ID: 45267)
Mother Shiptons' Prophecies......
http://www.nexusmagazine.com//Shipton.htmlNo comment, but interesting if transcribed correctly?
Had not heard of this seer before....YGM
lamprey_65
(01/07/2001; 22:48:10 MDT - Msg ID: 45268)
Public Forums
http://www.cross-currents.net/charts.htmSometimes I just shake my head in dismay...other times I'm amazed at the depth of knowledge and (gold) nuggets I find.

Unfortunately, today I spent much time shaking my head, so thought I'd share a nugget (link above).

elevator guy
(01/07/2001; 23:13:02 MDT - Msg ID: 45269)
@Christian
Your handle, chosen purposefully, I assume?

Thanks for the insights. As the picture becomes clearer, I get the feeling that I need to run away in stark terror at the powers that be, like looking at a huge moon that hovers inches from the earth.

But the Islamic nations should be a balance of power to the British banksters, no?
Peter Asher
(01/07/2001; 23:29:03 MDT - Msg ID: 45270)
Auspec
Unfortunately, your nomination and seconds appeared while I was working on my response, but that is not the point.

First, I will take issue with your use of the word disparage. I do not see how the fact of nomination and seconds makes a point of debate �Disparaging'.

Secondly, my view is that a post appearing in the Hall Of Fame should be the most subject to accuracy in content because if it is not, the image of the Hall is itself disparaged. The agreement of four out of half a hundred debaters does not, by that vote, create a truth. I for one am dedicated to getting to the source definition of all phenomena delved into here.

I thought that truth was a basic purpose here. Now obviously there is much said that is opinion but some things are empirical. When readers are directed to the Hall Of Fame, they will, I would think, accept as fact that which is stated as such. Derivatives, Stock Certificates and other paper assets are NOT money, they must be SOLD for money to become legal tender that someone offering goods and services is obligated to accept.

I have not been alone in trying to get this FACT understood but have been working on this since way back, even before FOA's "Betting over the back fence post."

This blindness as to seeing derivatives as money seems to be ingrained out there in the bigger world of economic opining and it is my contention that much confusion and misconstruing derives some this false vision. If one can not discern what IS (Fiat) money from what instruments are not, than how can any extrapolations based on money supply and its flows come to any valid conclusion?

I strongly believe that The Hall of Fame should be the most subject to critique of any posts. I did NOT suggest this post be denied, there is merit in it; but I had hoped to stimulate some clarification and accuracy.

This problem has surfaced once before and the poster graciously did some rewriting which was to the benefit of all.

I can understand your concern as the nominator an perhaps as such you could address some of what I said here and earlier.

Yours for Truth, regardless of the consequences. Peter A.

Black Blade
(01/08/2001; 00:25:59 MDT - Msg ID: 45271)
PMs are Rising, Petroleum Rising, Euro Looking Stronger, and Equities Looking Grim
PM markets are getting a bit frisky tonight. The question is can they continue to rise and hold through the usual NY bashing? Gold is up +$1.05, Silver up a penny, Platinum is continuing to rise +$1.00, and Palladium is up $7.00. This could reflect the weakening US Dollar, a result of a number of recent events including the 75 basis point slashing of the overnight FED rate. The Euro stands at 95.93 and looks to blast through 96 and beyond. US Dollar index could fall below 108 today (maybe?). Petroleum is rising across the board with very good gains in NG at $9.75 Mbtu and could fly over $10.00 Mbtu very easily from here � especially with the weakened USD. Maybe this week the market in commodities and currencies will get very lively, and the equities markets will continuing the downward slide into oblivion. However, the index futures are slightly positive while overseas markets are generally negative.

- Black Blade
View Yesterday's Discussion.

Black Blade
(01/08/2001; 00:44:36 MDT - Msg ID: 45272)
Gas crisis just a rough transition; long-term outlook much clearer

12/18/2000
Editor's Note: Cambridge Energy Research Associates (CERA), based in Cambridge, MA, provides the following critique of skyrocketing natural gas prices. As this issue continues to unfold, Power Online hopes to bring, if not play-by-play coverage, this type of in-depth analysis designed to foster a deeper understanding of the headlines. ACM

The storm arrives

Colder-than-normal weather through November and for the first half of December throughout the Midwest and Northeast has driven gas prices well into record territory. The January Henry Hub price traded at a peak near US$9.50 per MMBtu Dec. 11. If December storage withdrawals are as high as CERA now expects, the gas market should start the new year with inventory levels at a record low level 1,850 Tcf�more than 650 Bcf lower than at the beginning of this year. This deficit will reverberate throughout the gas market next year and probably beyond.

Indeed, the enormous increase in storage injections needed next summer would keep the pressure on gas markets throughout 2001, although prices will fall off of the extreme winter peaks. For this reason, it is CERA's view that the gas market will remain on a high trajectory�with average annual Henry Hub prices expected to be between US$5.50 and US$6.50 per MMBtu for 2001�a record high.

So long as weather remains cold (or even normal) this winter, a new market dynamic comes into play in which gas prices interact more with distillate fuel oil prices rather than with those of residual fuel oil.

Also, gas is likely to have an increasingly direct influence on electric power prices in the growing number of regions in which gas-fired generation is now on the margin for much of the year. This winter, the gas market is likely to rediscover for the first time in decades which consumers value natural gas most highly, and which ultimately do not.

The gas market is also rediscovering the value of firm pipeline capacity, particularly into market areas. Both the West Coast and the Northeast have experienced even more extreme price spikes. Daily prices in New York have peaked near US$20 per MMBtu. In California, the shortage of gas is so acute that prices above US$50 per MMBtu have been reported. If sustained, these price levels will induce a political reaction expected to shake the industry.

Storage update�sustained record lows

The U.S. gas market remains highly seasonal, with gas withdrawn from storage accounting for just below 20% of winter supply. U.S. storage inventories started this heating season at a record low level, and the early cold has not allowed for any recovery.

Inventories as of the beginning of December, at an estimated 2,466 Bcf, were 525 Bcf below the year-earlier level, and this deficit is likely to increase substantially during December. Given cold temperatures so far in December, CERA estimates that storage withdrawals for the month will average about 20.0 Bcf per day.

This rate compares with less than 17.0 Bcf of withdrawal last December and only 14.0 Bcf per day in December 1998. This level of withdrawals would leave only 1,846 Bcf in storage Jan. 1, an inventory 663 Bcf below the year-earlier level, and a record end-of-year low.

Assuming normal weather, such an inventory would place storage on track to reach a March minimum of just under 500 Bcf, well below the 1996 record low. At a U.S. inventory level this low, many storage operators would be dipping into base gas�gas which normally remains in place to support storage reservoir pressure�to ensure that service even to firm gas customers continues.

Beyond this winter, the drive to replace depleted storage inventories will keep the pressure on the market throughout 2001 and probably into 2002. During the past two summers, high prices have been required to discourage demand and allow overall U.S. storage injections to reach barely 1.6 trillion cubic feet (Tcf).

This year, the injection requirement will be even greater. If normal weather holds for the remainder of this winter, 2.2 Tcf of injections�which would be nearly impossible to achieve�would be required during 2001 if inventories are to recover even to the record low level reached this year�2.7 Tcf at peak.

Reaching even the 2,400 Bcf level, according to CERA estimates, would prove challenging. Much of this will hinge on the extent of production growth in the U.S. and Canada over the next year.

While a boom in drilling activity has reversed the decline in production, at this point we appear headed for only a 1.2�1.5 Bcf per day increase in production during 2001. While this will help knock down the price spikes of this winter, all of this would have to be diverted to storage to bridge the inventory gap.

Yet we know that some will be needed to serve higher space heating load next year, as well as the growth in power generation demand for gas. As a result, only a portion can be used for storage injections�and a new record low in inventories entering next winter appears highly likely.

Demand�the difficult next round of switching With gas prices hitting new record highs, CERA expects some additional demand to be priced out of the market. Because gas has priced above residual fuel oil for most weeks since May, however, the easiest fuel switching in the power generation and industrial sectors has already occurred.

This represents about 1.0 Bcf per day of lost gas demand relative to this time last year. Even though gas prices are currently above the level of distillate, significant switching from gas to distillate requires changes in long-standing consumer habit and/or capital investments. This type of switching will occur only over time, and it is likely to be limited in volume. Also, significant switching to distillate would quickly raise the price of distillate itself.

As the market pressure continues, there are four major sources of additional demand response in industrial markets:

Additional switching to resid in industrial boilers�CERA estimates that the industrial boiler market has already started to lose small additional amounts of gas demand (less than 0.5 Bcf per day) through switching to resid, given the consistency of gas price premiums greater than US$0.50 per MMBtu. Investment in restoring switching capability�As premiums move far beyond this level, industrial end users can be expected to take a closer look at reinvigorating their switching capability beyond their initial short-term levels. However, such a change would require investment by industrial end users and the availability of resid fuel oil delivered to their site. CERA estimates that with focused investment over the course of a number of months to perhaps a year, switching to resid could eventually reach as high as 1.3 Bcf per day.

Switching to distillate�U.S. Department of Energy (DOE) data suggest that industrial end users have a theoretical capability of switching nearly 1.3 Bcf per day to distillate in the short term. This switch would represent additional distillate demand of over 200,000 barrels per day in a U.S. market of 3.8 million barrels. Some of it has, no doubt, already occurred. Shutting down industrial plants�Also offering some flexibility is the shutdown of manufacturing plants that use gas as a feedstock. Given the tight margins available, the major feedstock consumers (manufacturers of ammonia and of methanol), continue to show suppressed gas demand. CERA estimates additional losses of at least 200 million cubic feet (MMcf) per day of potential demand in addition to the facilities that have already closed. Extraordinarily high gas prices will also hasten the shuttering of North American methanol capacity, putting at risk another 100 to 200 MMcf per day of gas demand for that sector.

Conclusions

Although this cycle of high natural gas prices is likely to be extended through next year and beyond, investments are already underway that will bring longer-term supply sources to bear in the U.S. market.

Extreme pricing now is the result of demand pressure hitting just as supply has reached a multi-year low in the U.S. The new sources of supply will require both investment and time, but this period represents a difficult transition in the U.S. gas market, rather than an indication of any long-term shortage of natural gas.

The era in which U.S. lower-48 gas supplies could respond quickly and in large volume may be ending, while replacement supplies are still on the horizon beyond 2001.

Nevertheless, these supplies�from Canada, the deep water, the arctic, and LNG�are on their way. These will allow natural gas to fulfill its potential as a moderately priced, vital contributor to meeting the nation's growing energy needs.

CERA provides independent analysis and insight into the energy future by focusing on energy markets, geopolitics, industry trends and strategy. CERA's expertise covers major energy sectors�oil, refined products, natural gas, and electric power�on a regional and global basis. CERA, based in Cambridge, MA, also maintains offices in Bangkok, Beijing, Buenos Aires, Calgary, Houston, Mexico City, Moscow, Oakland, Oslo, Paris, Seoul and Washington, D.C.

For more information, visit www.cera.com.

Edited by April C. Murelio, Managing Editor, Power Online


Black Blade: Excellent thesis on the Natural Gas energy crisis. The Grasshoppers should take note. Hydro-Carbon Man's addiction to petroleum is about to be tested. Prices must rise. Then again, don't worry Grasshopper, it isn't calculated in the "Core-Rates" of inflation so everything is just Peachy! "And the Grasshoppers danced, played, and sang all summer�"
Topaz
(01/08/2001; 00:50:38 MDT - Msg ID: 45273)
Usul
Agreed on all points re: POG as an inflation barometer. One point I'd like to make though is that all (?) "Islamic Countries" are trading Fiat Currencies at present and there seems to be no end to that.
......more's the pity :-(
Perhaps the Author will oblige and forward "the plan".
Black Blade
(01/08/2001; 01:02:31 MDT - Msg ID: 45274)
Stocks May Fall Despite Fed Cuts
http://biz.yahoo.com/rb/010107/j.htmlBy Elizabeth Lazarowitz

NEW YORK (Reuters) - The Federal Reserve briefly ignited the stock market with interest rate cuts last week, but concerns the United States still may face a harsh economic winter will send a chill through Wall Street in days ahead. Stocks are likely to fall on worries the central bank already may be too late to keep dwindling growth from crunching corporate profits. Traders are wringing their hands as they await this year's first major earnings reports, and will scrutinize economic data for signs of the economic slowdown. To make matters worse, a financial scare is rippling through Wall Street. Investors fear big U.S. banks could face losses on financings to near-bankrupt California utilities.

``The big problem right now is that, while the Fed is in an easing mode and has demonstrated its willingness to reduce rates, the fundamental story remains pessimistic,'' said Paul Cherney, market analyst at S&P Marketscope. In a surprise move that caught many traders mid-lunch last Wednesday, the Fed cut interest rates by a half percentage point, bringing its key fed funds overnight bank lending rate to 6.0 percent. The ease came four weeks before the Fed's regularly scheduled policy-setting meeting at month's end. Wednesday's Fed action sparked a wild buying spree in U.S. stocks that helped the Nasdaq Composite Index (.IXIC) rack up the biggest one-day gain ever in its 30-year history -- up more than 14 percent. By Thursday, however, the rally had fizzled as concerns grew that the Fed may have acted too late to avert a deep slowdown at least for the first half of the year. The Nasdaq ended a shortened week down 2.5 percent, while the Dow Jones industrial average (.DJI) finished off 1.2 percent. ``It's really hard to turn the economy on one Fed rate cut,'' Peter Gottlieb, portfolio manager at First Albany Asset Management, said. ``It takes some time before the rate cuts take effect, and so I'm not sure that in the near-term you're going to see enough of an impact on the economy to really make a difference.'' On Friday, new U.S. jobs data showing the economy continues to slow dragged the stock market lower, while financial shares were crushed by rumors -- later denied by the company -- that Bank of America (NYSE: BAC) was facing significant losses from its involvement with California utilities.

Stocks of banks and brokerages are normally viewed as the best performers in an environment of easier monetary policy as the lower cost of credit encourages borrowing. ``If they seem to falter, I think the implication is that there may be some trouble ahead for the rest of the market,'' Gottlieb said.

EARNINGS SEASON TAKES OFF

The earnings picture, however, will be foremost on Wall Street investors' minds as fourth-quarter earnings start to trickle in and Wall Street listens to what companies see for the quarters to come. Alcoa Inc. (NYSE: AA), aluminum giant and Dow 30 stalwart, kicks off the week on Monday with its quarterly earnings statement. On Wednesday, after the close of trading, Motorola Inc. (NYSE: MOT) reports its fourth-quarter earnings. In December, the world's No. 2 mobile phone maker sent a chill through the high-tech industry when it announced its quarterly profits would fall some 40 percent below earlier estimates. Internet media giant Yahoo! Corp. (Nasdaq: YHOO), part of a sector plagued in recent months by worries that the evaporation of the dot-com boom will mean dwindling advertising revenues, also reports its fourth-quarter earnings on Wednesday. After Thursday's close, software company Ariba Inc. (Nasdaq: ARBA ) will issue its quarterly earnings report. Its shares came under siege last week amid fears about its exposure to flailing Internet firms.

KEY DATA FOR SIGNS OF SLOWDOWN

Traders will be watching out for key U.S. retail sales and inflation data, both due on Friday, for more signs that the economy is becoming ever more sluggish. Retail sales -- a gauge of the consumer spending that has helped power the longest U.S. economic expansion ever -- are expected to have fallen 0.4 percent in December following a similar drop in November, according to U.S. economists in a Reuters survey. They predicted slackening in sales of automobiles would account for a significant chunk of the drop, however, which means retail sales excluding cars and trucks gained 0.1 percent versus the prior month's 0.2 percent gain. In a separate report, the U.S. government will release data on producer-level inflation. Economists on average saw the Producer Price Index (PPI) ticking up 0.1 percent in December both overall and excluding volatile food and energy prices. In November, PPI rose 0.1 percent and was flat minus food and energy. Those results and the degree of economic sluggishness they show could impact the Fed's decision on interest rates when it next meets on Jan. 30-31, analysts said. The central bank is widely expected to lower rates again by a quarter percentage point at the meeting. ``The economy really is a lot weaker than people thought,'' Guy Truicko, portfolio manager at Union Management, said. ``The Fed's going to have to ease to get this thing rolling, and the market's telling us it's still behind the curve.'' But the Fed's rapid shift to a much easier monetary policy means that, although stocks may be headed for a rough patch as the economy slows to a more moderate pace, there is light at the end of the tunnel for Wall Street, analysts said. ``The market is going to start discounting better times ahead,'' Truicko said. ``The Fed's not going to let this economy die.''

Black Blade: The picture doesn't look so rosy does it? The equities markets should continue to get hammered as earnings warnings will be coming out all week long. Profit margins are getting squeezed, and the higher cost � much associated with higher energy must be passed on to the consumer. With a tanking stock market and falling US Dollar, there aren't too many alternatives left. The Europeans will call home their cash and go into Euros and Gold.

Black Blade
(01/08/2001; 01:07:56 MDT - Msg ID: 45275)
Rig Counts Edge up Higher
http://biz.yahoo.com/bw/010108/tx_baker_h.htmlMore rigs are drilling than ever for NG and oil, but it's a case of too little - too late. Energy Crisis = Recession = Market Crash = Rush to Safe Havens (such as gold).

- Black Blade
Black Blade
(01/08/2001; 01:13:36 MDT - Msg ID: 45276)
Skyrocketing gas bills prompt protest
http://dailynews.yahoo.com/h/cdh/20010107/lo/skyrocketing_gas_bills_prompt_protest_1.htmlThe Grasshoppers are beginning to freeze! Matt Simmons of Simmons and Company International had predicted that there could be many deaths due to the energy crisis. Will the Grasshoppers dodge the bullet? Steal from the Ants? NG levels are at record low levels, and will be drawn down over the summer as increased demand for power continues.

- Black Blade
SHIFTY
(01/08/2001; 01:49:17 MDT - Msg ID: 45277)
Lots of red ink tonight
http://finance.yahoo.com/m2?uOr is it morning.

Good night

$hifty
SHIFTY
(01/08/2001; 01:55:16 MDT - Msg ID: 45278)
Federal Reserve
http://www.frbchi.org/contents/contents.html#Bank Condition and Income DatabaseThis link should work.

Lots of info.

Good night again

$hifty
Black Blade
(01/08/2001; 03:31:18 MDT - Msg ID: 45279)
Dow Jones - London AM Palladium Fixing $1010.00 Mon Vs $977.00 Fri PM


The Russians haven't delivered palladium and are not likely to deliver any meaningful quantity. Platinum supplies also look a bit tight as well. Could be an interesting day for PGMs. Meanwhile the Euro is pulling back, as are most currencies. Petroleum prices are getting stronger. Stock index Futures are moving higher. Gold and silver are looking comatose right now.
Pandagold
(01/08/2001; 04:04:13 MDT - Msg ID: 45280)
Gold, politics and religion
Because, I believe, that gold is a 'political' metal, primarily because it is the only 'real' money that has stood the test of time, it is understandable that postings in this forum often appear to stray into other sensitive and controversial areas.

This, if we are not careful can lead to misjudgements and into discourse that could take us way off track.

I am sure we all have profound thoughts in these 'no go' areas, that if we were together, and not 'on the air� we could (and would love to) expound. We would also love to know how many others share the same thoughts, and 'are we right in our thinking?'

However, we must be ever mindful that the opportunity to post here is a privilege that is provided for a specific purpose, however much we are tempted to stray.

In consequence, I wish to state, I do not wish to be misunderstood in that I have any particular political, or religious stance, ever, in my postings. That is far from the case. As far as I have read, most of the major religions carry much the same message.

Even politics, today, only appear to have slightly varied approaches to arriving at the same thing - the control of the masses by the few.

As one of the masses, I hope I speak for most of my fellow sufferers when I say that I don't mind being 'governed' by the few, or even a single entity, if he/she, or they, administer, to all, with a reasonable degree of fairness and transparency.

I have travelled, and lived in many parts of the world among diverse cultures, religions, and political persuasions. What I have found is that all people have at their heart the same basic desires. We have all far more in common than we have differences.


There are, of course, elements within a particular society whose motives and actions of self-interest bring discredit on others with whom they are associated by ethnicity, religion, and politics or, in some cases, all of these.


We should be careful, therefore, never to condemn, or appear to condemn, the whole batch for one or two bad loaves. Nor should we allow ourselves to be influenced, either by government, media (especially government and media), or individuals, that any particular nation or leader (or whatever), is bad. That is, not without having presented, fairly, both sides of the argument. In other words, give the other guy 'his day in court' before we are urged to take up arms - literally or otherwise.




Black Blade
(01/08/2001; 06:41:22 MDT - Msg ID: 45281)
DJ Palladium Finally Breaks Through $1,000/Oz; Seen Higher


LONDON (Dow Jones)--With traders still plagued by fears over when Russia will release supplies to the market, palladium finally succumbed to the inevitable Monday, and broke through the $1,000 a troy ounce barrier. Monday morning, palladium fixed at $1,010/oz, and traded spot at this level minutes later, although the extremely thin volumes are contributing to large price swings and market nervousness, dealers said. "The buying's very, very small...but there are no sellers out there," the senior dealer at a bank in London said. The whole thing's crazy." This time last year, palladium was trading at $440/oz, but steady demand from the auto industry and erratic supply from Russia, the world's largest producer and exporter, has lifted the price to record highs. Meanwhile, gold was garnering support from the steady performance of sterling and the euro against the dollar, and the potential for further dollar weakness following the cut in U.S. interest rates last week, dealers said. While market participants had been expecting palladium to break $1,000/oz for some time now, the timing of when material might start flowing out of Russia is more of a conundrum. Dealers say they noticed platinum coming out of Russia last week - which capped that metal's rise to a 13-year high - but there is no evidence of any palladium being sold. With the price in uncharted waters, nobody can afford to take short positions in case the price goes even higher. Further moves higher are therefore likely, with $1,030 and $1,050 the next targets, according to a second London-based dealer. Gold is also looking good, with strong buying on the lows of $267.50/oz suggesting the range of $268-$272/oz will hold firm this week, dealers said. Sterling is holding above $1.50, while the euro is managing - only just - to hold above $0.95, which is giving encouragement to gold bulls. A weaker dollar encourages consumer buying, while at the same time helping to cap producer selling. The more bullish participants said that in the longer term, gold could benefit from the deteriorating global economic picture, which the surprise cut in U.S. interest rates would appear to confirm. In times of economic uncertainty, gold is traditionally seen as a store of value and a hedge against inflation.

-By Jamie McGeever, Dow Jones Newswires; 44 207 842 9248; jamie.mcgeever@dowjones.com
WAC (Wide Awake Club)
(01/08/2001; 08:51:53 MDT - Msg ID: 45282)
@Christian - J.P.Morgan/Chase
A merger of 2 entities the size of JPM and Chase will normally take at least a year to conclude, maybe more. There would normally be a leak when the negotiating is initiated. However, I was astounded at the speed at which the merger occured. Can we attribute this to some fiscal indigestion at JPM?

Yes, do be very careful. Judging from your handle, you already possess some form of protection.
Orville Goldenbacher
(01/08/2001; 09:03:00 MDT - Msg ID: 45283)
History repeats itself, over and over.......
http://moneyfacts.freeyellow.com/page3.htmlYes, please do be careful.....
Christian
(01/08/2001; 09:41:57 MDT - Msg ID: 45284)
I wish to create my own credit in a legal way
Our present monetary system of a privately owned FED writting checks on an account with nothing in it and charging interet on that so called money that is not brought into circulation is a contract to commit tort and is illegal and unconstitutional. The interest (usury) is a factor which makes this contract illegal. If the central banks have the right to buy commodity gold like we all do then we should have the right to create $3000 worth of credit with it just like they do. -- I know how central banks do it but I do not have the right to do it which to me is a bunch of BS. People like Buffet know how to do it and I wish some of you who have a better mind then I do would help me. ---- I am sick of "playing the market" for I find it not effective way to raise my living standard. I am a farmer by trade and the froth in the financial and real estate markets has come at the expense of our natural resource recovery industries (mining and farming) who are now forced into a state of welfare support. There is now to many stupid people that have a great deal of stupid money (blind capital) craving to make the next killing in the financial markets. Presently the real economy in foreign exchange transactions is down to 2% and the other 98% is now financial currency speculation. It now takes $3.00 worth of credit creation for every $1.00 worth of GNP of which .98 is uneeded BS GNP and only .02 is real GNP. I am a firm believer of the small self sufficient farmer (natural resource recovery industry) making a profit, not the banker, regulator and tax men making a profit on the natural resource recovery industry (farmer). It is the ever bigger profits of the banker who force the natural resource recovery industry to forward sell at the lowest possible price to collateralize (monetize) operational expenses to bring the crop to market to exist on a state of welfare support. There is a need to get around the banker and self finance. Make the principal and interest payments to one's own account instead of enriching the already super rich. A few years ago when Greenspan was in Germany he used the words Kreieren Undergang (creative destruction) was the central banks goal by suppressing the real economy. Seems to me he is achieving that. Everybody is playing the market for a quick kill. Gold market is a natural resource recovery industry getting killed. Here gold companies have their own credit creation commodity but sell it as a commodity for the lowest possible price in order to get fiat financing to continue their money losing operation. How can people be so stupid selling real money (gold) for fiat? There has to be a way out of this stupidity.
Journeyman
(01/08/2001; 09:53:30 MDT - Msg ID: 45285)
Confidence @Usul, ALL

Thanks for all the "confidence" links. You've put your mouse right on IT.

"Confidence" (or lack of it) is what separates the men from the boys -- and eventually, fiat from it's value.

Funny how that's never a problem with gold.

Regards & thanks,
Journeyman
VanRip
(01/08/2001; 10:21:40 MDT - Msg ID: 45286)
Home Depot Overbuilt?
Home Depot has been building their huge stores here in Palm Beach County, Florida, like there's no tomorrow. There are at least ten of these huge stores in the county, several built within the past 2 or 3 years. Three of them have been built within the past year and a half within a twenty minute drive from West Palm Beach, adding to the one already northwest of the city.

I have been in several of them, especially a new one that's located about a mile from downtown West Palm Beach that opened just before Chrstmas. Great to shop there at any time because there's hardly anyone ever there. Kind of scary in a funny sort of way to see so few cars in the huge parking lot. Two to three years ago the Home Depot stores already here were sometimes very crowded and it was difficult to find a parking space. I don't see that now even on weekends.

Recently, Home Depot took out large ads in the local paper offering a 10% discount on purchases. I'm told this is the first time they have done this, at least here in this supposedly booming market. And to make matters worse, competitor Lowes recently opened an even bigger store literally across the highway from from one of the new Home Depots.

Even if the housing and construction boom were to continue in the county indefinitely, it is hard for me to imagine the company making huge profits. Not hard to imagine though what could happen to them if (when) the real estate market or the economy tanks.
Wild Hare
(01/08/2001; 11:07:19 MDT - Msg ID: 45287)
Emptying the mattresses
I was talking to a Spanish ex-pat last night and he remarked that real estate prices there were escalating as people and other entities were busy converting their "dirty" cash prior to e-day. Seems like there would be increased demand on PMs as well. Any corroboration from our European bureau?
Artie Farkle
(01/08/2001; 13:54:40 MDT - Msg ID: 45288)
Panda Gold #45280
Hello Panda,
Although I don't agree with every view you have, I feel it is important to suport your last post.

There are many great minds here in this forum. I enjoy getting so many views. Here's mine.

I feel it's wrong to use derogatory remarks to refer to people from one region or another. It shows a great deal of disrespect for the vast majority that get up every day, raise kids, fix cars, paint houses, hall produce.......

If one chooses to bash an individual, go for it: We all love to rip Mr. Greenspan. One might even take issue with an organization: NAACP, ACLU, FBI, CIA, Girl Scouts.....
Randy (@ The Tower)
(01/08/2001; 14:21:31 MDT - Msg ID: 45289)
Out with the temporary, Fed adds permanent reserves to nation's banking system today
The Fed opted today for an outright purchase of Treasury coupons (dated August 2004 to August 2007) for Tuesday delivery totalling $0.71 billion.

I guarantee you this: you will not see them fabricating new gold reserves in such a manner...they cannot print gold, you know. At the nearest you would get gold on credit...distinctly NOT suitable because the unique purpose for gold is serve as a the primary financial asset which is utterly free from risk of credit default.

Bottom line: You either have gold the METAL, or else you only have a variation on a dollar-based paper theme that diminish in recognized value before your wondering but helpless eyes. The fate of the dollar is no longer in the Fed's (nor the U.S. Govt's) hands.
Paul
(01/08/2001; 15:37:47 MDT - Msg ID: 45290)
Reply to Beesting
Dear Beesting,

I do not assume to have all the answers but I will try to answer your question as best as I can. You are right that your broker's answer is incomplete. You have to add market participants� perception of value. It is changes in perception that drives markets in the short term and cause variations between price and value. Of course, it is important to distinguish between price and value, since the two are definitely not the same.

The recent changes that we have seen in currency exchange rates have a lot to do with changing perceptions. The market tends to be forward looking and attempts to discount future events in current prices.

Currencies present a unique problem for the market though. In general an item's price will fluctuate above and below its value over the course of time due to changes in perception. In the case of today's fiat currencies, they have no value since they are created out of thin air and the so-called reserves are a negligible amount relative to the issued currencies. This is further complicated by the cross holding of currencies in foreign reserves and the pervasiveness of the US dollar in the foreign reserves of the world.

A currency's price is therefore determined solely by the confidence that people have in the currency. The things your broker mentioned, such as foreign reserves, balance of payments, GDP, inflation, interest rates, etc, influence this confidence and if this confidence is shattered, the powers that be will try everything possible to restore confidence in their currency and prevent it from devaluing to nothing. Our history is rife with examples of currencies going to zero.

It is important to remember that price is not the same as value but that price ultimately converges with value over time. Even though it could take a very long time for that convergence to occur.

As in any market, currency exchange rates are determined by supply and demand. It isn't necessary for there to be a standard against which all currencies have to be measure in order to calculate exchange rates. It is the relative demand of one currency versus another that sets the price. In fact, the dollar's current value has a lot to do with foreign investors buying US stocks and bonds, which has very little to do with any "fundamental value" of the dollar.

Your idea about currencies being valued as a percentage of the total currency market has one flaw that can be seen if you take the idea a step further. Assume that America issues dollars at an incredible rate, faster than anyone else on a percentage basis. According to you, the dollar's value will then increase relative to other currencies because the amount of dollars in the world will increase in relation to other currencies. But price is a function of supply and demand and the supply of dollars in this example will increase substantially, thus lowering its price. Recall that inflation was traditionally defined as an increase in money supply and has the effect of decreasing the value (I should really say price) of the currency being inflated. It is only recently that economists started defining inflation as an increase in prices of goods relative to currencies, but the result is still a devaluation of the currency. The more currency you issue, the less it becomes worth.

If you want to look at the world's currencies as a pool and think about any one currency in relation to the rest in the pool, I can suggest a model that won't necessarily work 100%, but it might make some sense. Start by adding together the GDP for all the countries in the world and then compare any one county's percentage GDP to its percentage of currency relative to all the currencies outstanding. If a country's percentage of GDP is less than its percentage of worldwide currencies, its currency should be overpriced and vice versa. Then if a country increases its currency in relation to other currencies faster than what its GDP increases in relation to other country's GDP, its currency will devalue and you get the inverse relationship between supply and price, which is what one would expect. Of course this model has many flaws, the most glaring of which is an adjustment for balance of payments.

With regard to the countries that you have mentioned, I cannot comment because I don't know which ones you are talking about, and even if I did I most likely would still not know why their currencies have done poorly in relation to other currencies as you mentioned. But markets are not efficient, and many aberrations between price and value exist, and can persist for extended periods of time. So there is no quick and easy answer to any of these questions. That is what makes speculation on the markets so much fun.

Your last point about North American versus other gold stocks also deserves comment. The reason that I suggested North American gold mining companies should outperform their peers is that you have to look at the currency in which production costs are paid versus revenue generated. In the case of South Africa as an example, the mining companies have survived because their costs are denominated in rands, which has fallen against the dollar as the gold price has declined. None of this is coincidental, it is all part of the same phenomenon. But the declining rand has resulted in an increase in the rand denominated gold price and thus maintained the operating margins of the South African gold mining companies as the dollar denominated gold price has fallen.

If the dollar declines I would expect the dollar gold price to increase and for North American gold mining companies that should be a windfall since their costs are in dollars and their revenue is gold, which is gaining against the dollar and hence increasing their margins. It is the leverage that gold producers have to changes in the gold price that make all of this work, i.e. the difference between revenue and production cost.

Again looking at South African gold stocks, if the rand appreciates against the dollar, the rand gold price may or may not fall depending on the relative changes in the dollar denominated gold price versus the rand-dollar exchange rate. But the South African gold mining companies will continue to have inflation of their production costs in relation to South African inflation rates and hence it is uncertain how the story will unfold for them. Remember that in the 1970's when the South African gold stocks did so well in relation to other gold mining stocks, the rand was fixed against the dollar, which it isn't now. That was a whole different ball game.

I too apologize for this lengthy reply. I wish I could be more concise, then I would probably be more active in these groups. As it is these responses take far too long and so I have to restrain my posting activities.

Paul van Eeden
Sancho
(01/08/2001; 16:43:58 MDT - Msg ID: 45291)
Pandagold
A good post at 45280. I think it was Aristotle (the old one)that said in order to find the truth you must hear all sides in their most persuasive form.
auspec
(01/08/2001; 17:34:50 MDT - Msg ID: 45292)
Christian / GATA/ Vatican/Misc
Am enjoying your posts very much as you obviously have knowledge that is far from common. I will make a brief point about GATA and their reasons for taking on the BIS vs the LBMA. It is purely incidental to the fact that the BIS allowed the opening with their shareholder freeze-out and Reg Howe happened to be a shareholder. I am not privy to all of the lawsuit strategies, as almost no one isfor obvious reasons. Shooting from my hip though, I would surmise they would love access to each tentacle of the creature. A successful discovery gives a transparent gold market. Where can they be contained? That is the huge question.BIS, LBMA, FED, ESF, Ft. Knox{?}, multiple esteemed banking establishments, International Puppeteers Association? I do not remember GATA even mentioning Ft Knox. This will all make WJC look like he really did supply all the facts as soon as possible!
Are you completely certain that GATA has full knowledge of your various prices for gold trading/settlement? I'm not sure they do. Sometimes I think their tiger is much bigger than the initial tail told! It may be much bigger still than what they would ever dream. I can tell you this-- they're not letting go!
While we're at it, let me throw a couple of center field questions your way. We are a captive and appreciative audience!
1- Can you shed a little light on Vatican gold, and current uses?
2- Can you delve into the "Black Gold" issues more? Or is this thoroughly covered in your discussed trade settlement categories? Frankly, is the above ground gold supply a multiple of what we think it is? Have you read "The Secret Gold Treaty"?
3- Ft. Knox gold issues?
If you need to answer "I cannot go there", will perfectly understand.
4- When trade settlement gold changes hands, what is the US origin of this gold? Treasury {FK}, ESF?
They say "when the pupil is ready the teacher will appear". We're ready, hoping the teacher has appeared. By the way, you are not the only poster to talk of "parallel" markets on this Forum, so you are in excellent company IMHO.
Best to you Brother,
auspec
Hill Billy Mitchell
(01/08/2001; 18:29:13 MDT - Msg ID: 45293)
Sir Paul @ # 45290
Sir Paul

That was one fine concise unveiling before our eyes.

Question? If you have time.

I am convinced that the current recession that we have entered has been orchestrated by the yield inversion which has been methodically implemented by Greenspan and Co.

I believe that a recession officially defined as two quarters of negative growth has started. The only remaining piece of the puzzle is the transpiration of the facts. We never are in a recession until the government admits that we are in one after the fact.

Could you please comment upon this inverted curve and whether you think it is a dependale indicator of what is happening to us right now. I have operated for the last 3 or 4 months under the assumption that we will be in recession for much of 2001.

Very respectfully,



HBM
SHIFTY
(01/08/2001; 18:46:33 MDT - Msg ID: 45294)
Mr . Greenspan
AnyoneHow long has he(Greenspan) been Fed Chairman?
Yellow Jacket
(01/08/2001; 19:20:01 MDT - Msg ID: 45295)
Greenspan
Greenspan became fed chairman in 1987.Shortly after that we had the october crash.At the end of the year,gold touched $500 for the last time.
silvercollector
(01/08/2001; 20:19:36 MDT - Msg ID: 45296)
Mr. Christian
Are you being censored over at G-E tonight (18:03)?

I thought you were barred there; not barred but censored?

Bizarre.

SC
auspec
(01/08/2001; 20:22:25 MDT - Msg ID: 45297)
Mr Gresham & HOF Post Nomination # 45146
Would you be kind enough to provide clarification as to what you consider the "money supply" to be as per your "AG and Payments System: Squeeze is On"? While I, personally, do not see a rigid definition of the money supply as being a central issue to the possible breakdown in the payment system {the same risk exists no matter how one wants to categorize}, there are concerns expressed that this definition is important when considering HOF entry. I can read your entire post without derivatives coming to the forefront, but again "money supply" is not my forte {will let you know if I find my forte}.
Please refer to Peter Asher's post #45234 for specifics if you will. You may alter, delete, clarify, or stand pat as far as I know. Technicalities are the business of the Forum, not this bloke. I enjoy your post each time I read it, in spite of the fact that Chemistry {minor} was also not my forte.
My apologies to the gentlemen of this Forum for seeing a disparagement "ghost". A finger was poked into an issue a bit hotter than realized. These shall both heal/cool!
Goodnight to all--hope I didn't run Christian off with that can of worms list of questions asked of him.
GATA ROCKS!! {The precious kind}
beesting
(01/08/2001; 20:46:10 MDT - Msg ID: 45298)
Mr. van Eeden a sincere thank you for your insight & time # 45290
Thanks for pointing out the "flaw" in my post on currency's, your world GDP model does seem to offer a better perspective. As far as speculation "can be fun" it can also be agonizing, ask any long term Goldheart that visits these pages.

Many here cannot understand why the masses are not investing a portion of their investments in Gold right now, historically the safest long term storage of wealth available to all and in limited supply.Most must not realise that Gold coins have a chance to appreciate in value 2 ways, as collectors items and as the "Spot" price of Gold appreciates. By the way I have some recently minted Gold coins I bought in 1996 when "Spot" was around $380 that according to my coin book are still valued approximately at what I paid for them.

Thanks again for your post sir....beesting.



gidsek
(01/08/2001; 21:52:24 MDT - Msg ID: 45299)
SHIFTY re Greenspan
took office in 1987 prior to the crash in the fall of that year.

gidsek
ORO
(01/08/2001; 22:06:53 MDT - Msg ID: 45300)
Beesting, Van Eeden - currency exchange rates
Van Eeden's explanation of the possible relationship of currency expansion relative to GDP etc. is quite off the mark. I tried analyzing the currency exchange rates using this point of view, but found little rhyme and no reason as to the moves. Though intuitively very attractive, the idea simply does not wash the moment the fact of trade flows being much smaller than GDP is considered.

The international markets move enormous amounts of currency daily as they move from one institution or financial instrument to another, seeking returns one iota greater than where they were just a few minutes before, and responding to programmed diversification criteria spit out by the computer in response to business contracts being signed or one investment rising to disproportion while another falls. These volumes have risen in response to the fall of transaction costs.

The bulk of these flows have little to do with supply and demand for currency, they merely respond to what has happened. The main response of the actual exchange rates is to the amounts entering and exiting the international trading arena. There are sources for supply, and sources for demand. Demand is for debt repayment and for "cash" balances and their equivalents for the purpose of either buying internationally traded commodities, or in order to "sanitize" local debt creation with reserves. Supply is net from trade surplusses and deficits and from income flows, but most predominantly as a result of debt creation.

The BIS observed that debt creation will tend to occur in the currency that has appreciated most, has been strongest, over the immediate past (months to a year or so). This flows from the lender's preference to be paid in the strongest currency. The only exception being the 1999-2000 Euro debt expansion.

For a long while, I thought the capital flows would drive exchange rates, and they do, but not directly as one might expect. As the Asian crisis evolved, one could observe that Asian currencies broke down with minor outflows of capital. The main difference between the "before" "during" and "after" were the strong inflows before simply stopping - not reversing. The main culprit in reserves falling prior to a currency debacle is seldom a capital flight, but a trade related problem of trade imbalance depleting reserves.

The main point to consider here is that only the dollar and now the Euro have a substantial debt demand base globally, the Yen Sterling and Swiss Franc having smaller ones. This means that the local currency has no external demand of its own. Thus its sale on the international markets results in immediate depreciation as there is no "natural" bid.

The net capital flows are significant in that they replace local savings that are instead spent on goods and services as the capital goes to work by being spent on labor. Labor income is increased due to capital investment and demand for products grows, which is met, in turn, with imports. Imports decrease reserves if the currency is "defended". If not, local prices rise to accomodate the added income from foreign capital being invested. Because the price flexibility of products is extremely non-linear, the new demand from increased capital flow pressures prices upwards, causing imports to flow in (as local prices rise above international prices). This analysis does not work in the US or in substantial creditor nations such as Hong Kong, Japan, China, Taiwan, Germany (and thereby the EU), etc..

One of the so called mysteries of internaitonal trade and financial statistics is that total imports are forever greater than total exports no matter how many adjustments are applied to the numbers. They just plain don't balance - mainly because of debt outstanding sucking the trade balances in the form of interest payments.

Bottom line, capital flows are not important as drivers, they are important as results that do affect the main drivers circularly, in a virtuous (or vicious) circle.

For the US and presumably for the EU in the future (which is not going to be the great player as reserve currency issuer until its ex EU trade levels double) reserve currency status and debt outstanding drives trade which then drives prices in the various markets, and then drives the capital markets to fill in missing supply.

The debtors who have obliged themselves to supply so many reserve currency units over a set period of time under pain of bankruptcy and reposession, are the highest bidders for the reserve currency. Their need to keep their mortgaged property brings the value of the one additional currency unit needed to make the coming payment on time (or at all) is the value of the physical, organizational and intellectual capital accumulated in the corporation - all that would be lost if debt payments are not met. What these debtors have on offer will be used to purchase the dollars. Be it bannanas, Hyundai Elantras or anything else, it all bids to buy that marginal dollar that will complete the debt payment.

The main result of this is that the items are dumped on the international market during crisis, so that prices are driven downwards. This makes imported inputs into the reserve issuer's (RI) markets fall in price, while increasing the import purchasing power of the local population, who then proceed to borrow or dis-save in order to buy these bargains - in short, the exporter exports because his local market is priced out, and the RI's people and corporations just borrow the currency into existence and pay for the products, they are priced into the market by the import price drop. Local businesses at the RI are built to import the cheap products and package, promote or assemble them into the convenient form or format for the RI consumer.

The credit expansion that forms as both consumers and business borrow currency in order to import the cheap goods makes profits soar and brings in capital from abroad. The profits, being the difference between local (inflated) price and local processing costs plus (deflated) import costs, drive investment in import processing, distribution, and marketing/retailing. The profit opportunities make for the investment inflows. As clear evidence of this, it should be noted that savings are high where local purchasing power is taxed by government or existing indebtedness and either government or foreigners compete with the locals for their production. Locals are priced out of the markets, and save the income they could not spend at what they thought to be reasonable prices.

The importers, to date that means the US, the only RI of significance, are priced out of the capital markets due to foreign competition for returns against their savings, and are priced in on the internationally traded goods markets. Their savings fall in accordance to the total competition they face for the imports and products/services in general by their government. Current data show Americans are finding little competition for imports from their government (whos expenditures are falling or stable as a share of national income), substantial but not bad competition for local items (hence service price rises), and heavy competition from foreign investors that have so priced them out of the markets, that dividends on the SP 500 are 1.3%, and the corporations found it appropriate to pay out only 26% of their free cash flow instead of 45% in prior periods. Obviously someone outbid Americans for investment returns, since they were selling $500 billion of these investments (actually only $250 billion including mutual funds, but back to the same number if direct investment is put back in the accounts), and foreigners, insurers, and government pensions bought them.

In short, since equity source income from capital gains are not part of the reported US incomes, the actual US savings rate is actually overstated.

Hope this muddied things up enough.

ORO
SHIFTY
(01/08/2001; 22:19:47 MDT - Msg ID: 45301)
gidsek
I was thinking he had been there for quite some time.I was just not sure how long.
Thank you.
Peter Asher
(01/08/2001; 23:07:56 MDT - Msg ID: 45302)
ORO msg#: 45300)
There seems to be a common denominator here in Currency and Stocks.People buy or sell them because of what they think other people are buying and selling rather than for what productivity or earnings are backing either.

This all has become trading on the perception of someone's perception of someone else's perception of the present and future state of the actual nuts and bolts.

The playing field of floating currencies simply functions on "Build it and they will come." A Field of traders dreams, and productive people's endless nightmares!
ORO
(01/08/2001; 23:22:49 MDT - Msg ID: 45303)
Chicken and egg, an addendum
For many economists, the matter of the current accounts and capital accounts is one of balance "by definition". The part that does not respond to the definition is swept under a separate account called "discrepancy" - i.e. the difference between theory and practice. This comes to about 10% of exports.

The information in the accounts data sheds no light on which causes which; trade deficits causing capital imports or capital imports causing trade deficits. A chicken and egg kind of situation.

As I should have made slightly clearer in the previous posting, the chicken of one country lays the other's eggs. The chicken being the reserve currency issuing country, laying little anti-eggs wherever one borrows it, and laying decrepid eggs in the creditor's central nests that hatch into scrawny chicks. The eggs borrowed into debtor's end up hatching into little inverted anti-chickens consuming the local chickens and the henhouse.

The capital surplus of a debtor or breakeven nation causes its trade deficit. The trade deficit of the reserve issuer will bring forth capital flows.
The negative income flows of the debtor nation drives its trade surplus and distorts its pricing.
The capital flows follow in accordance with the profit opportunities for internal and exporting/importing operations.

SHIFTY
(01/08/2001; 23:30:17 MDT - Msg ID: 45304)
A Workbook on Bank Reserves and Deposit Expansion
http://203.79.82.35/nzbanking/mmm2.htmlBesides showing how they turn a $10,000. deposit into $100,000. on the books , they mention ESF, gold. Lots of charts and graphs. About 39 pages long.
Here is a snip.
----------------------------------------------------------


MODERN MONEY MECHANICS
A Workbook on Bank Reserves and Deposit Expansion
Federal Reserve Bank of Chicago


Foreign-Related Transactions for the Treasury

U.S. intervention in foreign exchange markets by the Federal Reserve usually is divided between its own account and the Treasury's Exchange Stabilization Fund (ESF) account. The impact on U.S. bank reserves from the intervention transaction is the same for both - sales of dollars add to reserves while purchases of dollars drain reserves. See illustration 35. Depending upon how the Treasury pays for, or finances, its part of the intervention, however, the Federal Reserve may not need to conduct offsetting open market operations.

The Treasury typically keeps only minimal balances in the ESF's account at the Federal Reserve. Therefore, the Treasury generally has to convert some ESF assets into dollar or foreign currency deposits in order to pay for its part of an intervention transaction. Likewise, the dollar or foreign currency deposits acquired by the ESF in the intervention typically are drawn down when the ESF invests the proceeds in earning assets.

For example, to finance an intervention sale of dollars (such as that shown in illustration 35), the Treasury might redeem some of the U.S. government securities issued to the ESF, resulting in a transfer of funds from the Treasury's (general account) balances at the Federal Reserve to the ESF's account at the Fed. (On the Federal Reserve's balance sheet, the ESF's account is included in the liability category "other deposits.") The Treasury, however, would need to replenish its Fed balances to desired levels, perhaps by increasing the size of TT&L calls - a transaction that drains U.S. bank reserves. The intervention and financing transactions essentially occur simultaneously. As a result, U.S. bank reserves added in the intervention sale of dollars are offset by the drain in U.S. bank reserves from the TT&L call. See illustrations 35 and 36. Thus, no Federal Reserve offsetting actions would be needed if the Treasury financed the intervention sale of dollars through a TT&L call on banks.

Offsetting actions by the Federal Reserve would be needed, however, if the Treasury restored deposits affected by foreign-related transactions through a number of transactions involving the Federal Reserve. These include the Treasury's issuance of SDR or gold certificates to the Federal Reserve and the "warehousing" of foreign currencies by the Federal Reserve.

SDR certificates. Occasionally the Treasury acquires dollar deposits for the ESF's account by issuing certificates to the Federal Reserve against allocations of Special Drawing Rights (SDRs) received from the International Monetary Fund.(21) For example, $3.5 billion of SDR certificates were issued in 1989, and another $1.5 billion in 1990. This "monetization" of SDRs is reflected on the Federal Reserve's balance sheet as an increase in its asset "SDR certificate account" and an increase in its liability "other deposits (ESF account)."

If the ESF uses these dollar deposits directly in an intervention sale of dollars, then the intervention-induced increase in U.S. bank reserves is not altered. See illustrations 35 and 37. If not needed immediately for an intervention transaction, the ESF might use the dollar deposits from issuance of SDR certificates to buy securities from the Treasury, resulting in a transfer of funds from the ESF's account at the Federal Reserve to the Treasury's account at the Fed. U.S. bank reserves would then increase as the Treasury spent the funds or transferred them to banks through a direct investment to TT&L note accounts.


Gold stock and gold certificates. Changes in the U.S. monetary gold stock used to be an important factor affecting bank reserves. However, the gold stock and gold certificates issued to the Federal Reserve in "monetizing" gold, have not changed significantly since the early 1970s. (See chart.)

Prior to August 1971, the Treasury bought and sold gold for a fixed price in terms of U.S. dollars, mainly at the initiative of foreign central banks and governments. Gold purchases by the Treasury were added to the U.S. monetary gold stock, and paid for from its account at the Federal Reserve. As the sellers deposited the Treasury's checks in banks, reserves increased. To replenish its balance at the Fed, the Treasury issued gold certificates to the Federal Reserve and received a credit to its deposit balance.

Treasury sales of gold have the opposite effect. Buyers' checks are credited to the Treasury's account and reserves decline. Because the official U.S. gold stock is now fully "monetized," the Treasury currently has to use its deposits to retire gold certificates issued to the Federal Reserve whenever gold is sold. However, the value of gold certificates retired, as well as the net contraction in bank reserves, is based on the official gold price. Proceeds from a gold sale at the market price to meet demands of domestic buyers likely would be greater. The difference represents the Treasury's profit, which, when spent, restores deposits and bank reserves by a like amount.

While the Treasury no longer purchases gold and sales of gold have been limited, increases in the official price of gold have added to the value of the gold stock. (The official gold price was last raised from $38.00 to $42.22 per troy ounce, in 1973.)

Warehousing. The Treasury sometimes acquires dollar deposits at the Federal Reserve by "warehousing" foreign currencies with the Fed. (For example, $7 billion of foreign currencies were warehoused in 1989.) The Treasury or ESF acquires foreign currency assets as a result of transactions such as intervention sales of dollars or sales of U.S government securities denominated in foreign currencies. When the Federal Reserve warehouses foreign currencies for the Treasury,(22) "Federal Reserve Banks assets denominated in foreign currencies" increase as do Treasury deposits at the Fed. As these deposits are spent, reserves of U.S. banks rise. In contrast, the Treasury likely will have to increase the size of TT&L calls - a transaction that drains reserves - when it repurchases warehoused foreign currencies from the Federal Reserve. (In 1991, $2.5 billion of warehoused foreign currencies were repurchased.) The repurchase transaction is reflected on the Fed's balance sheet as declines in both Treasury deposits at the Federal Reserve and Federal Reserve Bank assets denominated in foreign currencies.



ORO
(01/08/2001; 23:32:46 MDT - Msg ID: 45305)
Peter Asher - all trade is like that
You prepare for production of a product in the future by researching the target market, designing it to fit the needs in features quality and price, planning the production process and ordering the equipment, etc.. You then produce product, send it to market, promote it, and try to get the price you planned on.

Everything here is one person "guessing" the proclivities of another and supplying the other with what one hopes is the desired product and hoping the other will pay the expected price, or perhaps more.

Because of this perpetual guessing, we learn to value differences, and learn to cooperate. We trade for mutual benefit but without knowing at any one time what the value of our efforts would be for our partners in trade. They don't know what their purchasing power will bring in the future either. How many of Block's bagels will the Dunkin Doughnut baker be able to get for his dozen?

justamereBear
(01/08/2001; 23:48:52 MDT - Msg ID: 45306)
Oro 45303

That is some chicken house and flock you've got there. (grin)
justamereBear
(01/09/2001; 00:14:10 MDT - Msg ID: 45307)
Foriegn Exchange Volumes

Any one have any theories as to why FX volume is off by a quarter recently?

Given that the majority of the volume is speculation by banks, I can only come up with 2. The very knowledgable interbank traders, with their fingers always on the pulse of the market, can either be long, short or flat. They are flat when they have no opinion, or don't understand what the H is going on, so anything could happen.

Either there are a lot of positions being sweated currently, (which would reduce turnover, and implies interbank trader concensus which would be difficult, and most unusual) OR there is a lot of interbank traders who are flat.

The other major currency flows are from investments, (in which case everybody is holding their breath) and trade. I don't see enough change in trade flows to suggest a significant change in FX flows. To the contrary, if one considers one of the biggies, hydrocarbons, I would think there is a case for increased action.

Comments anyone?
j'Bear

View Yesterday's Discussion.

SteveH
(01/09/2001; 00:17:34 MDT - Msg ID: 45308)
repost
www.gold-eagle.comrepost:

Looking for the Truth.....Central Bank Gold......and GATA
(uponroof) Jan 08, 23:46

Your looking to unlock a riddle that you must first define. The riddle has as many false paths as it does true ones. The true paths surely include quite a few twists and turns designed out of greed, for our head spinning benefit.

The crime here is about fixing the price of a supposedly 'free trade' commodity. It has nothing to do with capitalism, but everything to do with our laws. IMHO we are past the legal letter in principal, but perhaps not so in court.

The moral hazzard compromise that stretches back to the 1930's, involves a piss poor ESF policy that has now bastardized the world economy through double standard commodity trading/selling for dollar strength, gold.

If anyone really wants some frontline opinions on what is happening to gold, and how the Central Banks play the game, dig into the GATA site first. It will give you an overview of who's doing what. Suggest you use the search engine to your advantage and key the word 'lease' for starters. Lots of other good words to search like 'selling gold', '1%' or 'payback'.

http://www.egroups.com/messages/gata/

After that, read the headline stories and commentaries at The Golden Sextant.

http://www.goldensextant.com/

These sites were started by different fellows who had the same goal and were equally skilled at interpreting the screwing they (we) were getting with their (our) pants on.

When your fighting people who have influence gained through all the money in the world, and can then change the laws when the money isn't enough, it's a tough fight....

But one that can certainly be won.

All the pieces are starting to drop into place.
The failing market.
The coming recession.
The change in Administration.
The ever increasing energy crisis.
The unrest in key areas of the world.

Public opinion is in each of these, and unbeknownst to them now, turning pro gold.

As if gold is being prepared for greatness, despite and in contrast to the manipulations of those who would hide the truth from the world.

GATA....(the same courageous men who run these sites)
is about to be "at the right place, at the right time".


ALL:
If you haven't had a chance to support this cause don't delay. A correct understanding of what's going on in the end will be a hollow victory if the reservation to help monetarily now, out of a lack of complete understanding, becomes a regret later.

Don't wait until you figure it all out. Support GATA NOW!

&& end of repost
ORO
(01/09/2001; 00:26:25 MDT - Msg ID: 45309)
Justamerebear - FX trades falling in volume
The main reason is the drop in the number of trading partners of size.

Mergers and acquisitions have reduced the number of counterparties over the past couple of years. European banks have purchased many brokers and dealers, from Banker's Trust to Republic, Donaldson Lufkin and Jeanrette, and many more. In the US, bankers have merged as Chase bought Hambrecht and Quist, and then merged with Morgan, and so on.

The effect is that the interbank markets are falling in size relative to the bank's outstanding positions. This will soon pose a problem of "trade with whom".

Many houses are finding themselves in a squeeze on profits as newcomers eat their lunch from the bottom, and where size matters, someone had just merged into an even larger bank, fired 1/4 of the people and closed 1/4 of the offices, and now can offer more services at a slightly lower price, which drives you to get the same savings.

Black Blade
(01/09/2001; 01:45:35 MDT - Msg ID: 45310)
2 Arctic gas lines said needed to meet U.S. demand
http://biz.yahoo.com/rf/010108/n08289073.html
By Dann Rogers

CALGARY, Jan 8 (Reuters) - The growing natural gas crisis in North America will result in two new pipelines being built to connect Arctic reserves to existing lines in northern Alberta instead of just one, analysts said on Monday. Gas shortages, which have led to record home heating bills and power outages, have refocused industry efforts to tap into known reserves on Alaska's North Slope and the Mackenzie Delta in Canada's Northwest Territories. U.S. benchmark gas prices rose 45 cents on Monday to $9.73 per million British thermal units, almost quadruple year-earlier levels. Two groups of companies, one in Canada and one in the United States, are studying the feasibility of transporting gas to the lower 48 states and are expected to announce their decisions later this year. Previously, industry observers had suggested only one pipeline would be built. But analysts now say a pre-Christmas announcement by BP Amoco (quote from Yahoo! UK & Ireland: BP.L) that it will explore for gas in Canada's Mackenzie Delta means two new Arctic lines are in the works. BP Amoco, like Exxon Mobil Corp. (NYSE:XOM), is now a major leaseholder on Alaska's North Slope and the Mackenzie Delta. ``With that announcement, BP is playing both sides of the border, so they obviously believe there will be two pipelines,'' said Tom Ebbern, analyst with Newcrest Capital Corp. ``We see the Alaska Highway line being fast-tracked - even though it is more expensive - because there will be a huge cry for energy security in the U.S. and gas is the only thing the Americans have to play.'' Currently, some 8 billion cubic feet a day of gas is being re-injected into Alaskan North Slope oil wells because there is no pipeline traversing Canada's far north to connect with existing systems in Alberta and British Columbia. Ebbern estimated the Alaska line could be onstream by 2005, while a line to the Mackenzie Delta could be commissioned two to five years after that. Tim Holt, president of BP Amoco's Canadian arm, agrees. He said gas producers should work toward formulating a development plan for the entire region in the face of forecasts showing gas demand could outstrip supplies from traditional sources by as much as 4 billion cubic feet a day within a decade. Another proposal that would see an undersea pipeline connecting Alaskan reserves to the Mackenzie Delta and then heading south through Canada won't proceed because of the political implications, said another analyst. ``The politics are already in play here and there are going to be two pipelines because of the politics,'' said John Mawdsley of FirstEnergy Capital Corp. ``Exxon and BP know it's not the most economic way to go, but they have to please Alaska, its natives, the U.S. federal government, Canada and the natives in the Northwest Territories.'' A spokesman for Canada's Imperial Oil Ltd. (Toronto:IMO.TO), which is 70- percent-owned by Exxon Mobil, said his company has launched a study to evaluate the feasibility of developing onshore Mackenzie Valley natural gas only. ``Can the North American market take two Arctic pipelines?'' said Hart Searle. ``We're trying to figure that out, but we don't know at this point.''

Black Blade: Meanwhile, natural gas supplies continue to run out and the Grasshoppers are screaming for relief. The current energy crisis is having a real drag on the economy and is showing up as a factor in many earnings warnings. You can't create "paper natural gas" to solve this problem. When the fires go out at the power plants, try to create energy with "paper natural gas." This current economic recession is about to take a severe turn for the worse. Also heard a portion of Gov. Gray Davis blasting the "profiteering" energy companies for the energy crisis in the Peoples Republik of Kalifornia, and that they will not take it anymore. I say good! They should just turn off the switch from other states and let Gray put that in his pipe and smoke it. These quasi-communists like Gray are at the very least entertaining to watch as they twist in the wind.

Black Blade
(01/09/2001; 01:53:17 MDT - Msg ID: 45311)
U.S. Sees Natgas Heating Bills Up 70 Percent
http://dailynews.yahoo.com/h/nm/20010108/pl/energy_natgas_dc_1.htmlBy Patrick Connole

WASHINGTON (Reuters) - The U.S. government warned Monday there is no end in sight for expensive natural gas prices this winter, predicting consumers will face a 70 percent hike in heating bills from last year. While California's dire power crisis has received the most attention, the rest of the nation is also facing tight supply, strong demand, and a return to bone-chilling winter temperatures after several years of mild weather. Those factors have escalated prices for natural gas, a fuel used by consumers and by power plants to make electricity, the Energy Information Administration said. The EIA, the statistical unit of the U.S. Energy Department, issued a gloomy outlook for Americans dependent on natural gas to heat their homes and businesses. Consumers will see their heating expenses for natural gas rise 70 percent for the winter season of October through March, compared to last year, the EIA said. Previously, the agency had expected winter heating costs would soar 50 to 55 percent for natural gas. Colder temperatures that have blanketed much of the nation in recent weeks mean many Americans will have to buy more fuel -- at higher prices -- to heat their homes this winter. Midwestern states depend mostly on natural gas for heating, and consumers there will pay an average $927 to heat their homes with natural gas this winter. That compares to about $540 last winter, the EIA said. ``About 55 percent of the total U.S. heating market uses natural gas,'' said Dave Costello, an analyst with the EIA. Households in Northeastern states use more fuel oil. They will see fuel oil heating bills about 40 percent higher this winter, at an average $1,061, despite a slight decline in per-gallon prices in recent weeks. The slightly lower prices are being offset by colder weather that requires more fuel, the EIA said.

California Worse Off

California has been hit even harder. Wholesale natural gas prices in the nation's most populous state are roughly double that of the rest of the country due to the state's dire problem in filling demand for gas-fired power plants, and inability to import fresh supplies, the EIA said. The higher gas prices in California translate into skyrocketing electricity costs. ``The critical power situation in California highlights the inter-related tightness in both electricity and gas markets,'' EIA said. ``As environmental regulations on coal and oil fired generation units have become more strict over the last few years, gas fired generators began to take on more of the baseload burden. And as power generation demand has increased, demand for gas has increased with it,'' said EIA. The EIA said it saw no immediate end to the problems in California, noting the nation's most populous state lacks pipeline capacity while it has low hydroelectricity and nuclear power available and ever-increasing demand for power. ``Also the region is short on the electricity generating capacity and transmission wires to deliver enough power into a market that is growing at 4 percent annually,'' EIA said. California Gov. Gray Davis was expected to unveil a plan late Monday evening to tackle the state's precarious power situation and help two major utilities avoid bankruptcy.

Dwindling Stocks Of Natgas

Nationwide, the EIA called the jump in U.S. natural gas prices ``unheard of,'' and blamed it on fears that stocks or storage levels of the increasingly popular fuel were too low. ``For much of the summer, low levels of underground storage raised concerns about the availability of winter supplies. Now that the winter has really started, the most severe assumptions about low storage levels have come true,'' the EIA said. These low levels of storage have hit wholesale natural gas markets hard, with spot prices at the wellhead breaching a record $10.00 per thousand cubic feet on four separate days in December. Government analysts forecasted prices for natural gas at the production wellhead would average about $6.23 per thousand cubic feet for the entire winter. That would be more than two-and-a-half times the price of last winter. ``Never have spot gas prices at the wellhead been this high for such a sustained period of time,'' EIA said. Prices were expected to retreat from their winter highs this spring and summer, but wellhead prices were likely to remain about $4.00 per thousand cubic feet in 2001.

Black Blade: A little over optimistic IMO. Get a lot of blankets and start chopping wood. Get gold and silver as hard asset portfolio insurance as the equities markets continue to tank. Shades of 1929 are around the corner.

justamereBear
(01/09/2001; 02:07:51 MDT - Msg ID: 45312)
Oro 45309

Ultimately there is a "trading with whom" but for the interbank FX transactions, there is always the CB's and other biggies around the world. What is more I have seen traders within the same desk taking opposite sides of the same trade, and individual traders both long and short for different reasons at the same time.

My experience with FX interbank trading desks says that it is a profit center unto itself, and the field is very capital oriented, the more capital you can command the more you are, or should be IN. As long as a trader is profitable (at X percent of utilized capital) he has no fear of losing his job. I have seen some physical restraints on that, ie the trading room during a merger wouldn't hold all the people, and the weaker had to go. But by and large, they don't like to let profitable people go. Besides, if that were the case, the remaining few could simply add a zero, and the volumes would probably even grow. Moreover, looking at the numbers, the timing does not make sense.

But Voila, this train of thought has brought up another idea. A trader also ceases trading when he is ordered to do so, most commonly when the capital of the bank is encumbered. Given the panic passage of HR4541 and the sudden rate cutS, along with the attendant speculation that there is trouble in bankland, and we have another possibility. This one is even more frightening than the previous.

God bless us all, each and every one
j'Bear

ORO
(01/09/2001; 02:45:38 MDT - Msg ID: 45313)
Black Blade, - is the heating oil and gasoline shortages
`Is the heating oil shortage being replaced with a gasoline shortage?

Futures are showing gasoline recovering and surpassing its normal premium to heating oil (HO).

From the normal 5% premium of unleaded over HO, it fell to a 15% discount, and has just now gone over the normal range to indicate a premium over 5%.

By the way, the originary interest contribution of the energy sector is enormous this year - particularly this winter. Originary interest being the discount of future goods to current goods (an arbitrageable condition - putting the lie to Black Scholes).

The crude oil part came to 35% at the peak at Nov. Fell to 11%, and has now gone back towards 20%. HO gives similar numbers. Nat Gas, is phenomenal at 80%, up from 12 to 20% prior to the Nov - Dec price spike. Considering that expenditure on NG and oil are 7-8% of the economy (GDP base), that is a contribution of 1.9% to interest rates at the peak oil price, and now at high NG prices we have a 2.1% contribution, 2.7% including crude - and this should be manifest in the spread between non government and government paper

Black Blade
(01/09/2001; 03:37:15 MDT - Msg ID: 45314)
RE: ORO - NG and HO

Just this last week I had some data on the heating oil supplies. Unfortunately I cannot find it now. The heating oil supplies have been pumped up a bit with some refined oil out of Europe. Of course, natural gas is used by five times as many homes for heating than those using heating oil. Most of the heating oil use is concentrated in the northeast US. Natural gas is not imported as easily except by pipeline from Canada. One should note that NG prices in Europe are much lower as a result. The problem for the US is that many have equated oil with natural gas, and that worked well when the US had cogeneration power plants that could use both. However, EPA regulations with regard to carbon credits (AKA pollution credits) limited the use of so-called "dirty fuels" such as oil and coal in favor of NG. Therefore, virtually all new power plants are NG-fired. Unfortunately, the "great" minds of Wall Street and the Government never thought of the pressure that would come to bear on the NG supplies. To compound the problem, when petroleum prices cratered, the industry mothballed and scrapped drill rigs as many drill manufacturers and drillers went tits up. Drill rig day rate are increasing almost daily as no adequate drill rigs are available. Some companies such as Nabors Industries (NBR) are scavenging junkyards in order to piece together drill rigs. Add to that problem the fact that experienced drill rig crews are not to be found. Many left the industry for more stable employment when petroleum prices last cratered. Most will never return. In fact, many companies are hiring recently paroled felons to train as drill rig workers. Also, several petroleum geologists and other professionals also left the industry. Some friends in the oil patch tell me of Russian and eastern European Geologists who are working in the Gulf as mudloggers and petroleum geologists. The universities in the US simply don't produce that many geologists anymore. Another major problem is that most likely targets for NG are off-limits. The ANWR (Alaska National Wildlife Refuge) is one such major target. Also, Bubba just signed a new executive order that nationalized 58.5 million acres that cannot be explored unless George Dubya rescinds that (he has 60 days to do so). So it would seem that NG prices will not recover for several years. We will just have to get used to the idea of high energy prices from here on out.

- Black Blade
Black Blade
(01/09/2001; 05:26:09 MDT - Msg ID: 45315)
Gold Could Get Hammered Today
Gold is down -$0.90. The US Dollar is pounding the hell out of the world's currencies this morning. Did Dim Wim give another interview? And market futures are down slightly. Could be interesting today. Meanwhile, NG is down, and oil is slightly higher.
Black Blade
(01/09/2001; 05:45:37 MDT - Msg ID: 45316)
Asia Precious Metals Review: Currency-related Selling Caps Gold
Source: Bridge News
By Mari Iwata and Polly Yam, BridgeNews

Hong Kong--Jan. 9--Spot gold was capped by currency-related selling in Asia Tuesday despite scattered physical buying, dealers said. Spot palladium prices continued to rise in Asia in line with the limit-up of Tokyo Commodity Exchange palladium futures, dealers said, while spot palladium prices are expected to rise to U.S. $1,200 per ounce soon as fears of unstable Russian exports remain. Physical demand supported gold prices above $268 per ounce in the morning but the selling emerged at about $268.50-269.00, dealers said. The firmness of U.S. dollar against the Australian dollar triggered selling of dollar-denominated spot gold by Australian sources, they said. Spot gold is expected to move in the range of $267.50-271.50 in the near term, a dealer in Australia said. Japanese buying pushed up spot platinum to near $640 in the afternoon in Asia from near $630 early in the morning, dealers said, while the activity by players in other Asian countries on the metal remained thin. Although trading of spot palladium remained thin during Asia trading, it continued to rise on the lack of selling offers, dealers said. The price volatility in the past few days has led many dealers to widen the spread for their bids and offers to $50 from $30 last week, they said. As Russia's exports of palladium remain unstable, players have continued to squeeze the physical market, keeping the price on the upside trend, dealers said. "Many are talking about $1,200 now, it will come soon," a dealer said. He said the price would rise even if Japanese buyers suspend their buying in the near term. Japan is one of the world's major buyers for palladium, while Russia is the world's largest palladium exporter. Japanese buyers of PGM (platinum group metals) expect the first delivery for 2001 Russian palladium shipment under long-term contract to arrive in Japan on time in late January, BridgeNews reported Tuesday. Meanwhile, they don't expect spot palladium prices to remain above U.S. $1,000 per ounce for long, as the price is being supported by panic over unstable Russian exports in thin trading. In previous years, Japanese palladium end-users sold palladium in small lots in the spot market to cap the price, PGM buyer sources said. But, the end-users have stopped the selling after their repeated failures to push down prices, they said. TOCOM palladium rose in thin trade, hitting their limit-ups. TOCOM platinum futures rose on aggressive fresh buying and short-covering despite persistent profit-taking and fresh selling, TOCOM dealers said. The TOCOM April platinum contract and the most active TOCOM December platinum contract hit their limit-ups, they added. Many TOCOM dealers expect TOCOM platinum futures to see a correction in the near term, as spot prices may fall from the current high levels. "If I were a TOCOM speculator, I wouldn't open fresh longs on PGM. They look too crazy for me, but PGM have moved against our expectations," a Japanese dealer at one major Japanese brokerage said.

Black Blade: $1200 oz. Palladium? Hmmm� Quite possible as the Russians don't have any left. Their stockpiles are depleted. Gold prices look to be under pressure as the US Dollar is beating the crap out of the world's currencies over the last couple of days.
Black Blade
(01/09/2001; 06:10:29 MDT - Msg ID: 45317)
Palladium scales heights beyond $1,000/oz in Europe


LONDON, Jan 9 (Reuters) - Palladium scaled fresh peaks beyond $1,000 on Tuesday and spurred platinum towards a 13-year high as Russian supplies remained absent from the market, traders said. Palladium hit $1,037 an ounce at the London morning fix, up $7 from a previous high set on Monday, while platinum reached $632, just below last week's 13-year high of $638. ``It's basically the same scenario as we've seen over the past month -- buyers and absolutely no sellers,'' one Europe-based trader said. ``And it's not going to come down from here until we start seeing some Russian selling in the market,'' he added. While key supplier Russia delivers platinum regularly to the market, its palladium deliveries are more erratic, and traders said worries that the metal would fail to appear this month as promised were responsible for the price spike. Japanese dealers said on Tuesday U.S. buyers were the main palladium purchasers at present since Japan signed long-term contracts with Russia in December and had no reason to buy at current high prices. The metal, used mainly in autocatalysts to clean noxious engine exhaust emissions, was trading at around $100 four years ago and has more than doubled in value since last year. Dealers said this might have encouraged consmuers to buy platinum as a subsitute. However, they noted thin volumes were currently exaggerating price moves. ``Volatility remains the order of the day for the palladium market, with very thin conditions giving rise to wide price swings,'' Canaccord Capital analyst Rhona O'Connell said in a report. The market's erratic behaviour meant highs and lows were difficult to estimate, she added. ``While the market's mood has a toppy feel to it, there is just too much uncertainty to call a turn. There is no doubt that prices will come off, and potentially sharply, when Russian metal appears,'' O'Connell said. ``The longer term prognosis for demand remains a cause for concern, but the degree to which Russian supplies are fashioned to meet demand levels will be the key.'' Spot platinum was quoted at 1115 GMT at $630.00/$640.00, compared with Monday's New York close of $629.50/$635.50. Palladium was at $1,030.00/$1,040.00, from $999.00/$1,019.00.

GOLD, SILVER HEMMED IN RANGE

Gold and silver failed to mount similar rallies, and were pinned in the middle of their current ranges, traders said. ``Gold has made a slight recovery from $267.50 this morning but it's going to hold around here for the moment,'' one trader said. Support for gold was seen at $267, with resistance at $270. ``If it stays around here ($268) for the next few days we should see it break resistance,'' the trader said. Spot gold was last indicated at $267.90/$268.30 from a close of $268.30/$268.80, while silver was down one cent at $4.55/$4.57.
Black Blade
(01/09/2001; 06:26:28 MDT - Msg ID: 45318)
Morgan Stanley sees recession
http://cbs.marketwatch.com/news/current/roach.htx?source=htx/http2_mw
By Emily Church, CBS.MarketWatch.com
Last Update: 10:56 AM ET Jan 8, 2001

NEW YORK (CBS.MW) -- Morgan Stanley Dean Witter's top economist on Monday told clients to brace for a recession in the United States and the possibility of a "full-blown global recession." "We are shifting to an outright recession scenario in the United States, and, in response, we are slashing our forecast of the global economy for 2001," Chief Economist Stephen Roach said. "The risks remain very much on the downside, and I would now attach a 45 percent probability to a full-blown global recession," Roach wrote in a note in clients. He cut his expectation for 2001 growth in the global gross domestic product by 17 percent to 2.9 percent, with the assumption of a U.S. recession accounting for about half of the downward revision. The firm's economists now see the U.S. economy contracting by around 1.25 percent annualized in the first half of the year. Morgan Stanley is more bearish than many on Wall Street, with most economists still expecting growth, however small, in the first half of the year. The firm has ratcheted down its global growth estimate by a steep 1.3 percentage points in three months. "This paints a picture of a $32 trillion global economy that has essentially turned on a dime," he said.

More downside potential

As relatively bearish as the call is, Roach said in an interview that there's a risk of further slowing. "There are lots of risks to the downside. Recessions tend to take on a life of their own," he said. The research has forecast "the mildest of all possible recessions. The risk is that this goes further and longer than we think." Some of the larger worries for Roach are the "unwinding" of anything to do with technology -- that is, from spending on information technology to the tumble in tech stock prices. The rise in energy prices in the United States are also likely to hurt the U.S. economy as consumers face higher usage prices. Other worries listed in his report include: a California shock from the dot.com and utilities woes and a "seizing up of the credit intermediation process reflecting mounting concerns with credit quality."

Europe a haven

Europe emerges as something of a haven in Roach's scenario, thanks largely to the recovering euro, which has appreciated sharply against the dollar recently. He pared estimates for European growth for 2001 by 0.3 percentage points to 2.2 percent; "that would leave Europe growing at double the pace of the U.S." Europe should also benefit as direct exposure to the U.S. is limited, with exports to the U.S. account for 2 percent of GDP for the region and because fiscal stimulus "is set to kick in this spring," he said.

Black Blade: Looks like the US Dollar is being boosted the last couple of days. Probably an attempt to head off capital flight to Europe. Meanwhile, mutual fund redemptions are accelerating. Looks to get much-much worse.
Black Blade
(01/09/2001; 06:51:11 MDT - Msg ID: 45319)
Some Markets Just Don't Get a Break!
http://quote.yahoo.com/m2?uFinland's market has crashed! Down 9.63%! This could get interesting in the US markets, especially in the telecoms as Finnish telephone manufacturer Nokia is a very large institutional holding. Nokia is getting ripped a new one in overseas trading. Janus Funds has inordinately large positions and could suffer a meltdown today. Keep your eyes open!
Belgian
(01/09/2001; 07:00:56 MDT - Msg ID: 45320)
Perceptions - Value - Price
For gold-addicts, the perception of POG, being low, suffices to buy physical. Gold-movers, don't make a physical move on gold, as long as they are not convinced it is a rightout steal. Goldmovers are not fooled by a vaque perception. POG's behaviour, since the dollar-turn, is giving evidence of the above. Paper-gold is guiding its profit-missils to the setted price-targets.
267$ / ounce must be perceptive cheap to a broad but unbuying, majority. They know that 267$ and below is affecting, goldproduction, now. The more that hedging at these pricelevels is unrewarding and becoming very dangerous.

Value-players, must still be sticking on their dollar. They must be confident that the 105/100 US$-index will hold.
The don't bother the dollar being a paperbag, filled with huge piles of debt. This paperbag is still dry and will get wet under 105/100. With the Dow, breaking under 10.000, being the wettening rain.

PriceOG, isn't volatile enough to seduce enough would-be players to organise some swinging. No aspirine for the pain-proces.

It is a great pity that no form of goldproducer/miner is taking part on the discussions at this or other gold-forums.
Today's rumor of De Beers, having an affair with LVMH is or should be inspiring for goldminers. I don't understand their attitude and in particular to this forum, who consist in majority of clients-goldbuyers. Is it a kind of arrogance ?

WGC, says, it will work on the gold-selling nations, outside the 15 WAG participants. WGC will provide these countries with sound argumentation to stop selling and give evidence as to why, accumulate gold. But they are only a one man + one horse workforce. Again, some disturbing contradiction added to the already mountain of inconsistancy.

2/3 th (or 100.000 tons) of above gold is investment-gold.
The holders of this gold must be re-motivated and re-educated, about the true meaning of holding it. Fifty years ago, De Beers, was marketing, diamonts, with the "For Ever" slogan. 100.000 ton holders are still waiting for that vital support, from the gold-diggers-sellers. Car producers (etc..) are also forced to produce, automobiles in function of evolutive buyers. Is the creation of a World Gold Bank, such a stupid idea ? Why can't this be realised to give an example to the selling CB's ? A Gold Bank that invites world-traders, to avoid the disadvantages of currency-wars.
Shareholders of this Gold Worldbank, that want to put their reserves in a gold-accumulater that is giving an example to UK / SUISSE and others. Give your mined gold and underground reserves : Added Value !! Dampen the speculative aspect of gold and create TRUST !
The aboveground gold is supposed to be as much as the presumed underground-reserves. Isn't it time to reconsider the future of that second half part of gold to be mined ?
OPEC is facing the same problem. Banlancing on future reserves - POO and energy-alternatives. When goldproducers are running out of profitable underground gold...what are they going to do ? I would prefer to have a gold-bank, nextdoor.
Black Blade
(01/09/2001; 07:28:57 MDT - Msg ID: 45321)
Gold Seen Hitting 23-Year Low Of $210/Oz - Mitsui

LONDON ( Dow Jones ) --Pressured by thinning trade and the prospect of a rise in producer hedging and official sector sales, the price of gold will fall sharply this year, said a report by trade house Mitsui ( MITSY ) . In his precious metals forecast for this year, analyst Andy Smith said the outlook for gold is bleak, with a low of $210 a troy ounce possible. Even a weakening dollar and the threat of a looming global economic slowdown won't be enough to prevent gold from dropping below the 20-year lows of around $252/oz plumbed in 1999.

Gold last traded as low as $210/oz at the end of 1978.

In a gloomy outline of the market's prospects this year, Smith said mining companies and central banks - the
largest holders of underground and aboveground gold reserves, respectively - will be tempted to start selling
ahead of further weakness. For miners, this means selling production forward, a likely consequence of industry consolidation as hedging reduces the overall costs of acquisition, Smith said. For the official sector, it will mean selling gold, then investing the receipts in more attractive financial assets. With the proliferation of asset classes in recent years, gold is losing its allure. Even traditional gold buyers such as Indian consumers will start looking to invest elsewhere, such as bank deposits, Smith said. Demand looks weak, and gold is unlikely to be seen as a store of value in a global economic slowdown, he said. Gold is currently trading at $268/oz, and last traded above $290/oz, Smith's most bullish forecast, at the end of June 2000.

Black Blade: Hmmmm....


Hill Billy Mitchell
(01/09/2001; 08:26:35 MDT - Msg ID: 45322)
1989 vs 2000 (inverted yield comparison)
One of my most frustrating experiences for several years is that I always have to wait until it is all over before I find out what happened, ie Greider's, "Secrets of the Temple" and Woodward's "Maestro". The hard facts presented in those books and the inside thinking involved we great reading for historical purposes but they are no guide to the future, without timely information. Common folk like me do not generally have access to the pertinent facts/information, on a timely basis. For that reason I began to track interest rates for myself in order to have timely information.

On this forum several have expressed an interest in more than just seeing an occasional chart depicting the yield curve. We need information that is timely. I have 40 clients, all that I can handle, whom I cautioned about 3 months ago to prepare for recession in 2001. My caution has been based upon the only indicator (for the common folk) that has shown itself to be dependable. If I am right and my clients follow my advice they will be ahead of the curve and suffer less for it. If I am wrong none will be hurt. Why? The simple advice which I have given in order to prepare for recession is good advice in any economic environment, just especially more so in bad times. In bad times this pre-emptive planning may make the difference in survival for the very small businesses which pay me for my service.

This is not a solicitation. I do not want even one more client. I have all I can handle and hope to go into semi-retirement soon.

The following information is as timely as I can get it:

During the last 6 months of the year 2000 the interest rate spread for the 10 yr note vs the 3 month T-Bill was inverted by an average of 46 basis points while this spread for the entire year was only plus 3 basis points on average for the entire year.

During the last 6 months of the year 1989 the interest rate spread for the 10 yr note vs the 3 month T-Bill was inverted by an average of only 3 basis points while the spread for the entire year was plus 10 basis points.

"A prudent forseeth the evil, and hideth himself: but the simple pass on and are punished." (Prov. 22:3)

Respectfully submitted

HBM
Paul
(01/09/2001; 08:49:21 MDT - Msg ID: 45323)
(No Subject)
Thank you for your comments on the currency flows Oro. The GDP model was an off-the-cuff idea as I was writing and I was curios if anyone had looked at that. So your quick response is much appreciated.

In response to Beesting's comment that gold speculation can be agonizing, I have been actively speculating in gold related investmenst for the past five years and thus I have a first hand familiarity with the agony you are referring to. In order to maintain my sanity, I try to retain a sense of humor whenever the market humiliates me and reminds me that my own hubris is my worst enemy.
SHIFTY
(01/09/2001; 09:10:50 MDT - Msg ID: 45324)
Black Blade
Do you have a link to the story :Gold Seen Hitting 23-Year Low Of $210/Oz - Mitsui

I cant find it. I would love to tell analyst Andy Smith what I think of his precious metals forecast .

$hifty
Belgian
(01/09/2001; 09:43:01 MDT - Msg ID: 45325)
Mitsui
A. Smith / S. Saville / Prechter...etc : as long as there is no sound evidence of physical gold buying...POG, will slide towards the minus 200$, attraction target. Ridiculous or not. Price manipulation or not. It was possible to sell Dot.Bombs at mania prices to the masses of individuals and supposed sophisticated investment funds. The opposite is possibly happening with gold. The stockmarket had to reach an almost vertical hyperbole to induce some dizziness.
A justified perception of a low POG is most probable not enough to induce physical buying. Market and psychology of the masses (Gustave le Bon).
Gold needs a shock-effect. We must reach the point of no alternative. Gold-movers must be pushed into physical gold,
through lacq of any alternative. That is the damaging result of a 20 yrs slide. We must have the courage to face this ugly reality. It does not imply that we are wrong doing in accumulating gold, further in time.

US-government Bonds and the dollar are the only investment alternative left ! The dollar must crash (below 100-index)
to give gold a chance. We know the reasons why it should crash. We also are prepared to give this crash plenty of time.
Journeyman
(01/09/2001; 09:49:05 MDT - Msg ID: 45326)
Prognostication, please! @ORO, TG, justamereBear, Hill Billy Mitchell, Stranger, Randy, Peter Asher, auspec (& anyone else bold enough)

Hi ORO, TG, justamereBear, Hill Billy Mitchell, Stranger, Randy, Sir Peter, auspec!

There's an awful lot of expertise here, and it just struck me this morning, we're under-utilized ;>

How about a few consensus-type questions to get an idea where "the room" thinks the dollar is going, how long it will take to get there, and how long it'll stay?

Who knows, something like this could become a regular feature?? And a compilation might attract more lurkers. Heck, we could become as popular as the "Shadow Fed" or even Alan Greenspan's "brief-case indicator!" Then everyone will be exposed to gold, free-market banking instituted which will lead to a defacto new gold standard - - - - and we'll all live happily ever after!!!!

What can I say. I just woke up.

Anyway, here are four questions to attempt a jump-start in that direction.

1. What are the odds of a dollar melt-down of more than, say, 25%?

2. What's your best guess as to the most likely final equilibrium dollar index (or percentage drop)?

3. What is your best guess as to time frame to the bottom? How long do you think it will take?

4. What is your best guess as to the duration of the economic effects? Will it be like Japan's ten years -- or more like 1987?

I realize such predictions are, ah, Yogi, but your feel for the situation, coming from such unique perspectives, might be akin but superior to the Fed's prognostications. Based on a hard-money perspective, you-all might beat the Fed's 60% accuracy rate!

Hope you don't take offense at being mentioned in the same sentence as "Fed."

Regards,
Journeyman

P.S. Edison International and PG&E bonds were down-graded to B- (junk bond status) by Fitch Global. -Steve Fetter, Fitch Global, CNBC, Jan. 9, 2001 ~11:31AM
Cavan Man
(01/09/2001; 10:30:38 MDT - Msg ID: 45327)
Belgian, RE: POG @200
Granted, there's a fundamental problem with the transparency of the gold market. However, forgetting the "gold as money" rationales, gold "the commodity" is in supply deficit. Holtzman is quite right placing CB's in the category of "mines" BUT, with the WA, supply from these above ground "mines" is in check is it not? Therefore, with most mines unable to extract gold from the ground at a cash cost of 200, where is gold the "commodity" going to come from; where? You can't make it up on volume. Let's not forget the demand that might ensue with gold trading at those lows. Mr. Smith has been referred to by gold enthusiasts as a "highly paid shill" and I would agree. Mitsui is a Japanese firm. We know that Japan is loaded up on dollars and NOT a large holder of gold in their reserves.

What am I missing here? Anybody?
The Hoople
(01/09/2001; 10:42:24 MDT - Msg ID: 45328)
For what it's worth
I overheard several employees in my store in a heated discussion. When I listened in, they said they all just got their gas bills. One went from $130 to $320, another went from $210 to $780, and another said it cost her $1,700 to fill her 1,000 gal. propane tank. After hearing panic in their voices I can't imagine what's going on out there if millions of people are getting the heat bill, credit card bills from Christmas, and IRS tax forms all at once. When asked what they would do, they all said stop eating out, defer bills that aren't mandatory, and spread payments out over the whole year. Sounds like the hard landing to me.
Journeyman
(01/09/2001; 11:00:44 MDT - Msg ID: 45329)
Down 43% and counting @ALL

CNBC caller, obviously a little older guy, says, "My portfolio is down 43% year over year. What can I do to get it back up?"

Bill Griffith, the moderator, and his guest look at each other meaningly for a second, then give an answer that amounts to "Why ask us. We don't know."

Regards,
Journeyman
beesting
(01/09/2001; 11:48:27 MDT - Msg ID: 45330)
How to Voice Your Opinion Directly to Gold Mine Management!
http://biz.yahoo.com/prnews/010109/ca_homesta.htmlHomestake Mining Company to host a conference call Feb. 7 2001 8:00 AM (PST) 11:00 AM (EST).
Toll free in the U.S. and Canada 1-800-450-0785.
Outside the U.S. and Canada 612-322-0342.

Your chance to be heard....beesting.
Belgian
(01/09/2001; 11:51:13 MDT - Msg ID: 45331)
Cavan and Journey-gentlemen
Gold "the commodity" in supply deficit : we don't know how much gold-deficit there is or will be ! The figures 4.000 ton demand / 2.500 tons production and X tonnes scrap...are repeated ad nauseum, without solid evidence ! I do not take the WGC figures. WA = 15 countries. We have evidence of sales (leases) by other countries. Mine production at 200$ cash costs : as long as there are mines that can hedge...they will keep on hedging even at their own peril.
Demand at 200$ is jewelry-demand. But the jewelry-industry takes a profit of 300%. And at a certain level...price, doesn't matter that much anymore, for obtaining, a much desired golden chain. The jewelry industry is a master in playing POG into their sale strategies.
Investment gold does not care what the price-level is. Gold investors start buying gold when they run out of liquid alternatives. A minus 200$ price, acts only as a strong eye-opener. An overshooting always attracts opportunists, who might induce a visible upwards price-trend. The gold-movers want to have maximum insurance that their move is succesfull. They stay aside, when in doubt. See POG-behaviour.

Japanese, holding dollars are possibly, repatriating when a certain pain-level is reached and the dollar Titanic has hit the iceberg. If POG could signal such a possibility...anticipation, could manage to make an up- price-trend visible. Then I see a possibility that Japanese will give gold a chance, with a small portion of their dollarholdings.
The dollar-index "Big picture" is still in a rounding bottom pattern. This Big picture gives no indication of a future catastrophic crash. On the contrary ! A nasdaq retracement to 3.000 is even possible. The Dow hasn't broken its psychological support of 10.000. We have a tendency to sell the bear's skin before he has been shot. The devastating down-wave on the stockmarket hasn't yet materialised.

IMO, the US will not suffer a 10 yr Japan debacle. Because of the complete different culture. But what if the Nikkei hasn't yet seen its lows yet.(what I presume) And the japanese, don't withdraw a softening dollar ? It is impossible to guess anyones intentions. A run to their own Yen is not going to help them out of their deflation debacle.
We can only chart the movements and speculate on certain characteristic patterns, building up and on some vital breakpoints. (support-resistance)
For this reason, I was expecting and looking out eagerly for POG to show some anticipative signs. There aren't. The two failed breakouts, have done a lot of psychological damage.
That's the reason I must conclude that there are no gold-buyers out there at the moment. But with a dollar/stockmarket/intersest decline...the alternative choice becomes smaller. A strong rising Euro would cause a terrible economic slow down. Hyper-deflation also leads to moments of panic.
White Hills
(01/09/2001; 12:15:39 MDT - Msg ID: 45332)
Cavan Man 45327
If the POG were to go down to $200.00 per oz couldn't that be because the Paper Gold Pricing Mechanism is breaking down and burning, and wasn't that what Another, FOA, and others have predicted? White Hills
Beowulf
(01/09/2001; 12:44:34 MDT - Msg ID: 45333)
Black Blade what's your thoughts on this story?
http://dailynews.yahoo.com/h/nm/20010109/pl/utilities_california_dc.htmlTuesday January 9 12:01 AM ET

Utilities Hail California Plan; Consumers Wary

By Nigel Hunt

LOS ANGELES (Reuters) - California's embattled public utilities on Monday hailed Gov. Gray Davis' plan to end the state's electricity crisis and save them from bankruptcy but said action was needed within days or they could run out of money to buy power supplies.

Consumer groups had a mixed reaction to the plan,predicting that the public would wind up paying the bill.

``While the governor's statements are welcome, we are concerned that unless strong steps are taken over the next few days, the financial crisis ... will bring us to the point where we can no longer buy electricity and gas for our
customers,'' Pacific Gas and Electric warned in a statement.

Southern California Edison (news - web sites), the state's other major troubled power company, said it was ``pleased to hear the governor recognize again the importance of ... financial stability and (the) role utilities play in providing reliable and affordable power for the state of California.''

Southern California Edison, which has also warned that it has only weeks of cash remaining, added that ``urgent action is needed to allow us to continue (playing) this essential role.''

Bankruptcy Not An Option

Davis told the state legislature that California could not afford to let the utilities go bankrupt. ``I reject the irresponsible notion that we can afford to allow our major utilities to go bankrupt. Our fate is tied to their fate,'' he said in his annual State of the State speech.

Stock prices in the parent companies of the two utilities rose Monday in advance of the speech.

But it remains to be seen if Wall Street thinks that Davis has gone far enough. He provided few details about how Edison International unit SCE and Pacific Gas and Electric, a subsidiary of PG&E Corp., would be kept from failure. He made no mention of a utility-backed proposal to issue state bonds to pay off billions of dollars of unrecovered power costs.

That omission left consumer groups fearing that Davis' support might result in higher electricity bills for customers. ''He has not addressed who will pick up the tab for this debacle, and still all indications are that it will be the consumers,'' said Doug Heller of the Foundation for Taxpayer and Consumer Rights.

Opposition To State Bonds

Consumer groups are strongly opposed to issuing state bonds to pay off utility debts, saying that would force customers to pay higher rates for the next 10 years.

``He did not say anything about (the state bond proposal), which means it is either not on the table or perhaps, more likely, it will be the unspoken bailout,'' said Heller, whose group has urged Southern California Edison to divest overseas assets to raise cash.

The two utilities, which together serve more than 70 percent of California's 34 million residents, have run up a total of about $12 billion in costs buying power that they cannot pass on to consumers because of a legislated rate freeze.

Severin Borenstein of the University of California Energy Institute in Berkeley told KCBS radio that California had ``done the rest of the country a great favor'' because other states would ''approach deregulation with a lot more care than California.''

Bill Called ``Dangerous Failure''

Davis branded California's trailblazing power deregulation legislation, which was passed in 1996 and enacted in 1998, ``a colossal and dangerous failure.'' Twenty-three states already have passed some legislation deregulating their power markets.

Heller, of the Foundation for Taxpayer and Consumer Rights, welcomed Davis' strong attacks on power producers, which included this passage:

``Never again can we allow out-of-state profiteers to hold Californians hostage. Never again will we allow out-of-state generators to threaten to turn off our lights with the flip of a switch.''

``(Davis) sounded like he was ready to stand up to profiteering generators,'' Heller said.

A chronic power shortage triggered the state's power crisis, driving wholesale prices to unprecedented levels and resulting in many supply emergencies. Grid managers frequently came within a whisker of ordering statewide rolling blackouts last year.

The state's power shortage stems from surging demand, linked to a buoyant economy. And there have been no major power plants built during the last decade because of uncertainty linked to deregulation legislation.


Beowulf - Do you think the Grasshoppers are planning on confiscating the ant property in order to serve their own needs?
Peter Asher
(01/09/2001; 12:59:10 MDT - Msg ID: 45334)
Journeyman msg#: 45326)

Step #1: Follow the money!

As you and I well know, before you can follow it you must be able to identify it. So, let's start with the changing hands aspect of (Fiat) money. At every instant this legal tender totality is in the hands of some one who has just delivered, promised, won, benefitted or stolen to get it. They now are poised to demand goods and services with it, turn it over to others to do so, or surrender it to authorities or the more recognized criminals.

Internally, we are entering a sudden surprising shift in who posseses the current "Product demand notes" as they shift percentages from home heaters to NG providers. Quantifying that change and predicting the spending intentions of the holders of the new windfall would be a logical first step as this is the current "grenade" that has been thrown into the room.

After that, we should attempt to see in our crystal ball, what is changing in international dollar flows as the Stock Market has ceased to provide the gargantuan function of turning investors funds into consumer spending money.

I personally see a fall in the dollar as a good thing! When foreign money gives American consumers purchasing rights in exchange for a stock certificate there is greater demand for goods and services but less incentive for the local folks to pick up the tools of production and create them. If the dollar reverses enough to make a difference then the "free lunch" from overseas is replaced by a foreign market willing to pay our guys for some PRODUCT instead of gambling chips.

The massive money supply now in existence is still in somebody's hands poised to be spent on whatever appeals to the holders. Who holds what? What will they do with it? How will that effect foreign trade in goods and currency? Those are the questions: Yes?

I look at it from the nuts and bolts viewpoint. Of your list just now, we have ORO on the monetary desk, possibly the most sane and astute analyst on the planet for this. We have you for free trade, HBM charting the waters, Stranger on the Markets, TG, Randy and auspec on the Gold angle and J-Bear as a free agent.

Like the childhood skit of all the guys with different twisted mouths, getting together to blow out the candle., maybe we can figure it out.
Cavan Man
(01/09/2001; 13:17:13 MDT - Msg ID: 45335)
White Hills
Well, yes; that is one possible explanation/scenario. There is the FOA/Another reason to buy gold and then there are all the other reasons. I do believe as the US fundamentals deteriorate, gold will be sold by large players because a rise in POG is to their detriment. POG is still the dollar's bogeyman and will be. Gold stocks should lead because POG is problematic. Gold stocks should respond due to inflation. Otherwise, physical is best bet. Absolutely anything could happen (at any moment). Where for art thou safety? Sorry for the rambling got to go...CM
barnacle bill
(01/09/2001; 13:57:47 MDT - Msg ID: 45336)
Reason Not to Own Gold
On the Motley Fool website, someone must have posted a list of 12 reasons to own gold. One of their readers posted a reason not to.

One reason not to: society will not pay you to run scared and put your capital into yellow metal...
put your capital in things that advance mankind, and get approprite returns...
R Powell
(01/09/2001; 14:04:27 MDT - Msg ID: 45337)
Journeyman's dollar consensus
http://www.thespiritof76.com/bigfloat.html
I think most are familar with the theory of "Big-Float: The American Damocles" but for those who aren't, I've included the link.
In keeping with this theory and the notion that Greenie and the Feds can not support BOTH the falling markets with lower interest rates and the weakening dollar with higher rates, then it would seem the dollar's fate rests in the hands of the powers that be as to which will be supported.
If rates are lowered to attain a "soft" landing, then the dollar weakens and perhaps we see the return of Big-float.
If rates are raised to support the dollar, then the soft landing turns into a skydive with no parachute. It's quite a choice with IMHO both roads leading to recession unless the two can somehow be balanced. Perhaps the policy makers have a solution I haven't heard of? I have no doubt that they are immensely smarter than I but as Journeyman has stated, perhaps not smarter than the efforts of this combined forum! Were their inside information available, I for one, wouldn't bet against the brainpower here.
This is not intended to give anyone a swelled head but is offered as a compliment to any and all so puff out your chest and strut around if the mood strikes you!
Rich
Peter Asher
(01/09/2001; 14:16:20 MDT - Msg ID: 45338)
Barnacle Bill

Which society would that be? Maybe the one we wish for but certainly not the one we have. If it comes down to some serious "Running scared" this society will pay through the nose trying to catch up to those of us who are outrunning the Bear faster then they are!
Sierra Madre
(01/09/2001; 15:00:57 MDT - Msg ID: 45339)
Reason not to own gold is a very good one!
Says the reason, "society will not pay you to put your capital into gold, so put your capital into things that advance mankind, not into yellow metal".

That's just what I'm doing, I'm letting those more intelligent than I am, advance the welfare of mankind; let those more intelligent hand over their gold to me, they can have my "capital" and I wish them lotsa luck with it, advancing the welfare of mankind.

Sierra
Cris
(01/09/2001; 15:23:05 MDT - Msg ID: 45340)
TRAIL GUIDE? WHO IS A GOOD RELIABLE SOURCE FOR EURO DOLLAR ACCOUNTS?
Hello TrailGuide and all Knights&Ladies,
I have been following this wonderful group for the past year+.....
Your here is quite remarkable with his ability to leed one down the 'Golden Path'.
I have noticed many discussions of the Euro(dollar bonds/accounts).
Would you please be kind enough to recommend or point me/us in the right direction of how and where to get started :+)..smile....
I also want to say thank you for all the numerous postings and hours you must of spent with this GoldForum.
I applaud you!!!
thank you in advance for your kind consideration in helping me to obtain more information for a Euro Account.

yours truly,
Cris
Sierra Madre
(01/09/2001; 15:36:50 MDT - Msg ID: 45341)
Belgian...your posts, including 45320 earlier
You are talking sense, indeed. The large investors are waiting for the sign, to invest. But, shrewd as they are, when the sign comes, it will be too late - in my opinion.

As for why gold is not being talked up by the producers, and why there is no World Gold Bank (certainly we wish there was one!) well, first of all, it must be domiciled somewhere. And, there is no place anywhere on earth willing to take on the U.S. (and Britain?) and permit the establishment of such an entity.

Not even Saddam has the guts to call the U.S.'s bluff. Nor does Iran, or anyone else, Japan included.

They know that to take actions that break, or intend to break the control of the price of gold, means a DIRECT ATTACK ON THE USA! It means a war to destroy the U.S. empire based on the Dollar. It would amount to "casus belli" a reason for all-out shooting war.

There's Soros - he's shrewd, but not insane. It's one thing to make billions, another to declare war on the U.S.!

The WCG knows this. It explains their lack of action.

Those of us who believe in gold as the ultimate victor, can only bide our time, and wait for the fundamental irrationality of the paper economy of the world, to run its full course. May be a long time, I'm afraid. But it might not. No one knows.

For the time being, there is not a human being or organization on this planet, willing to "Bell the U.S. cat".

Sierra
Pandagold
(01/09/2001; 16:05:44 MDT - Msg ID: 45342)
Get wise
I hope with this little illustration, I can get you guys to see what is happening, and will continue to happen regarding dollar, gold and Euro. I will throw in a few other tidbits on the way.

A 'soft landing' means that they clean you out, little by little, over period of time instead of a couple of days.
Simple isn't it.

You shoot one Palestinian kid stone thrower
a day, that is 365 at the end of a year, but no public outcry, as one a day is hardly news. But, shoot 365 in one day and you have a serious problem. IT GETS NOTICED.

A good bartender (or is it a bad one?} could get away with stealing a $1 a day from his employer. But go a whole year playing honest Jim, then take $365 and he's out on his ear.

I hope I have made my point.

This 'soft landing' bit does not upset the end result. It just means they get to keep their skin.

Will they get to keep their skin - you bet!

You guys have absolutely no idea who is running this so. Do you think they are quaking in their boots at GATA, or any other voices that may be raised? Do they mind you knowing, or guessing gold is being manipulated? Not a bit. In fact they kind of want you to know. PROVING IT IS A DIFFERENT MATTER.

When TPTB got the American public to swallow the verdict that Oswald killed Kennedy in the light of all the evidence.
Then, a short time later 'a lone gunman' eliminated the other member of the duo who were going to get to grips with what they saw as America's biggest problem, manipulating the gold price (which they have done for years anyway) was no problem. Manipulating the gold price does not necessarily always mean holding it down. Letting it go up, when the timing is right and in their favour, is manipulation.

How do you make something go up? By creating the set of circumstances that will bring this about. How do you divert a river; how do you reduce the flow of a huge river to a trickle? The Chinese have just dammed the mighty Yangtze - a much more difficult feat than manipulating gold, which 'they' control most of anyway.

They got the message through to the sort of people who have the kind of money that could be dangerous. Because, if they can keep them away from gold, they won't excite us chickens who are weak individually, but could be a little problem collectively.

The name of the game is to bring the dollar down GRADUALLY (no sudden shocks). The river of money has to be diverted into the Euro GRADUALLY. There must be no sudden shocks to the system.

There must also be no other diversions, like GOLD.

I e-mailed Jon Kaplan (Goldminingoutlook) some time ago about what was happening. He wouldn't accept that gold was being manipulated. He even advised buying gold shares until just before Christmas. Then he stopped updating. When he resumed after Christmas it was to tell us he had sold all his mining shares.

Below are sections of just two of my e-mails in which I was
telling him that palladium and platinum had taken the place of gold and silver as a 'safe haven' for the 'big boys', the ones you would need to kick-start any goldrush.

Now, I ask you, why on earth are these two metals shooting for the stars and leaving gold and silver dead in the water,
and sinking below the gunwales? Please don't tell me it is because they are used in automobile exhausts, and the like.

Car manufacturers are cutting back all over the world. (See my snippet, that is just one of the many).

How many of you took the trouble to read a posting by



GM SLASHES OUTPUT AGAIN

The world's largest automaker said it expects to produce 1.2 million vehicles in the first quarter, down 21 percent from the year-ago period. On Dec. 7, it projected first-quarter North American plant output of 1.301 million cars and light trucks.

Parts of my e-mails to 'Goldminingoutlook'. of some weeks ago

"............ It should be sinking in now that all this is resulting from a well planned and orchestrated attempt to smash any potential threat to that over-bloated piece of paper they call the US dollar.

The only people capable of smashing the dollar, gold, or any other currency, have a vested interest in not only keeping the dollar afloat, but 'king of the road'.. The more it bucks the trend of the economic fundamentals which point to its potential decline (which is daily), the more it illustrates the power of those who are behind its facade of strength.

I can understand many not seeing this organised deception ( I hate to use the word conspiracy, as the word has become a Hollywood clich�), because they are unable to comprehend the inestimable power of those who are behind it, and their ultimate objective.

Most people see what has (and still is) happening around the world as isolated incidents. People scratch their heads when trying to understand the often confused reasoning behind their individual causes. All kinds of explanations are thrown up, all of them way off beam. Only when you take everything as a whole and see how it fits in to the agenda (the real 'new paradigm') does it make sense.

Their is no antagonism towards gold itself - only what it stands for. On normal economic 'fundamentals' there is no reason why palladium, and platinum should be going so strong one way, while gold and silver go the other.

Platinum, and palladium do not have the psychological image for the common man, as does gold. Few people know how to invest in them, or what mining companies produce them, and, strangely enough (not really), there is little education from the media.

However, the 'elite' who may in the past have invested in gold have been using these other two metals as their 'hedge'. They have been quietly preserving, and improving their wealth, while those who thought they were being prudent and all foreseeing clung to their belief in gold.

"....... Maybe you should change your website to "platinumining outlook.com" Doesn't quite have the same ring, but at least you won't suffer the screaming ad-dabs whenever you have to think of what encouraging words and advice you can offer your subscribers. And you won't lose them money...."


"..........Just after sending you my e-mail 'Is the message coming through' I saw this. Robinson is a geologist and authority on South African Mining. The article is from Today's Financial Times,

"If you look at the history of South Africa," says Mr Robinson, "the 19th century was the century of diamonds, the 20th the century of gold. It appears the 21st will be the century of platinum......."
Copyright � The Financial Times Limited

Even Asia is swinging to Platinum, and both China and India are importing large quantities

How many of you took the trouble to read the posting #45283 by Goldenbacher, if you had you would realise just a little of what you are up against. It discloses hardly the tip of the iceberg.

In 'their' defence I have to say that they (or at least some of them) believe they have been ordained by God to bring unity, and peace, to the world. They believe that when the agenda is complete they will have brought heaven to earth and that we will all enjoy the fruits of their master plan. The end will jusify the means. Maybe they are right. I hope to God they are because there is no way to stop it.
KC
(01/09/2001; 16:08:20 MDT - Msg ID: 45343)
When England went back to the gold standard?
When Churchill was executer of the exchange, I think in the 30's he took England back to the gold standard. As I understand it, it was a miserable failure and caused havoc in the economy. What really happened and why did it fail? I thought perhaps some brighter minds out there might be able to help me out with this question.
Orville Goldenbacher
(01/09/2001; 16:16:56 MDT - Msg ID: 45344)
soros
Sierra,
I'm afraid Soros is one of "them". He has close ties with the Rothschild's, he's really not much more than a wealthy puppet. just type into a search engine, "soros, rothschild, illuminati" and see what you come up with. We all need to open our eyes and see the big picture, it is almost unbelievable.
Sorry if i offend any body, but all views must be looked into before we can see the "real" truth.
Randy (@ The Tower)
(01/09/2001; 16:19:40 MDT - Msg ID: 45345)
From the new year's first installment of the Week in Gold, commentary by WGC
http://www.usagold.com/wgc.htmlNotable:

"The Istanbul Gold Exchange has reported that Turkey's gold imports jumped by 91% during 2000 to 205.3 tonnes;
Taiwan's Finance Ministry, meanwhile, reported that Taiwan's imports of gold bars and coins during 2000 were 17% up at 99.6 tonnes."

"Based on the PM London gold fix, the average price of gold during 2000 was $279.10, barely changed from the $278.57 average in 1999. The year's highest PM fix was $312.70, seen on February 4; the lowest PM fix was $263.80 on October 27."
---
My note: How many people are there across the land wishing their stock assets held up so well as gold over the past year? And now, as domestic prices certainly seem set to rise at increasing rates as energy costs escalate and the Fed endeavors to liquify the banking system, which asset do you believe is best positioned to perform well into the future? Turkey is your good example that failing currency within a nation can result in brisk gold business. Can you envision the physical strains under a scenario in which the deep pockets of the U.S. citizenry move for gold, too?
auspec
(01/09/2001; 16:32:02 MDT - Msg ID: 45346)
Move Over David Copperfield
Post # 45292Is it my imagination that by simply asking pointed questions, to those who quite likely know the answers, I can make people simply disappear? I'm going to now test this theory once more.............
These questions are for Christian, our Esteemed Leader, pandagold{?}, belgian{?}, and anyone else that is in posession of "uncommon knowledge" in regards to the following topics:
Black Gold issues
Vatican Gold issues
Ft. Knox Gold issues
ESF & Friends, BIS, LBMA & Friends

My post # 45292 asked more complete questions in these regards. Maybe we can set up a "anonymous" posting method so these key questions can be answered-- Deep Throat? I have no doubt that there are folks among us that can explain much of what is REALLY going on. There is much murkiness among us for good reason, but dammit the pupil is ready for the answers- where is that teacher?
Best to all!
Randy (@ The Tower)
(01/09/2001; 16:58:49 MDT - Msg ID: 45347)
ECB weekly financial statement reflects that assets have swollen with the addition of Greece as a member nation
As reported here last Thursday regardsing the European Central Bank's final weekly financial statement for the year 2000, the gold assets of the Eurosystem totalled 117.073 billion euros following the quarterly mark-to-market revaluation process. In this first consolidated statement with the inclusion of new member, Greece, the total Eurosystem gold assets for this first week of the new year (week ending January 5th) are now 118.615 billion euros as reported through Bridge News.

In similar fashion in the paper arena, the ECB's consolidated foreign currency assets swelled from 254.5 billion euros to 261.4 billion euros.

Offering a brief recap of thoughts offered last week .... we can see the two reserve models at odds now that the euro has established a meaningful uptrend against the dollar. As the much-discussed price discovery mechanism leaves gold listless with respect to the dollar, the strengthening euro exchange rate translates into a shrinking level of reserve assets when quoted in euros.

As such, if the extant gold pricing mecahnism does not allow for a separation from derivative structure ties with the dollar under future weakening of the dollar, just imagine the potential for additional physical demand at the hands of rising foreign currencies that cannot be supported. Continue to buy gold now and bide your time.
Mr Gresham
(01/09/2001; 16:58:57 MDT - Msg ID: 45348)
Randy, auspec & others
Yikes! HOF? Surely you jest (thank you, I'm trying to say ;). Just back from the road, with the IRS/& client on the other phone line, so of course I check in here first opportunity when things get boring. Do I get rewrite rights? Things are much clearer on later readings. It would be better if I can get what I was trying to say on that first try out better if it's gonna stick around for awhile. Will be back later this evening.
Cavan Man
(01/09/2001; 17:02:23 MDT - Msg ID: 45349)
Sierra Madre and owning AU
Yesterday eve, I was at Las Vegas airport talking with a very intelligent gentleman about investing. This chap had "taken his lumps", sold off his losses, and held onto some equities he, "knew would come back". He was aware of the period roughly 1972-81. I suggested his investment horizon might extend 10 years or more. He said fifteen would work.

My investment in PM is likewise "medium to longterm". The foundations are quaking. Control is slowly being lost to natural, immutable laws. Time is on my side.
Cavan Man
(01/09/2001; 17:05:05 MDT - Msg ID: 45350)
Randy (tower)
Are your stats on gold buying by Turkish official sector? Seems to me that country has been buying a lot of gold!
slingshot
(01/09/2001; 17:06:05 MDT - Msg ID: 45351)
recession/depression
Happy New Year,

I am not a financial advisor nor investor. I am a survivalist. When the rumors of Y2K first surfaced,I started to acquire some precious metals to diversify my portfolio,
as you all say. The past year or so I have been following
a few sites with forums concerning Gold and Silver. The commentary has been from most informative to comical. Thanks
you for many hours of pleasant reading. Now, Gentlemen, some
postings have me concerned about recession/ depression or is it soft/ hard landing. My greatest source of information about "The Crash of 1929" and "The Great Depression", were my grandparents. One thing that was mentioned most was never trust the banks! I have read the Howe lawsuit and I find it very well presented and in my opinion highly credible. It is
nice to buy gold/silver at bargain prices. Still one has to contemplate the cascading effects should the price of gold
reach very high levels. Will the days of The Great Depression be revisited? If the goverment goes to a gold standard, will they confiscate the very gold we are buying
now for the protection of our familys and loved ones?
Have noticed my bullion dealer has been doing some very good business. How do I know? I count the moving types of
coins in his display and see what the change is the next time I visit him. Just an observation. This is my first time posting and my advise for the simple investor as to buying gold is simular to gambling. If you can not afford to lose
the money you should not be gambling in the first place.
In closing, may this year be profitable for all of us without too much disruption in ourlives. But having my cake and eating it too would be nice.
All comments Appreciated GO GOLD GATA F.O.A.

NOT TO BE USED FOR ANY INVESTMENTS
Trail Guide
(01/09/2001; 17:25:47 MDT - Msg ID: 45352)
Comment
Hello ALL!

I hope to post again tomorrow. Will then comment on several posts given over the last few days.

USAGOLD (Michael) (or Randy),,,,, I could give some names of banks that offer Euros? But I think CPM could/should advise most any client as they do gold business in Europe.

For Americans that are non-residents (or simply don't have a place there)of the Euroland Zone or England, an Offshore savings account in Jersey (Channel Islands)or Isle Of Man would do fine, I think? But there is far more to cover with this than I would ever get into in public. Again, CPM is the place to ask these questions and seek direction.

TrailGuide
R Powell
(01/09/2001; 17:40:26 MDT - Msg ID: 45353)
Chris Re Euro Account

I don't know about transfering into Euros in a bank but can tell you the exchange rate can be "played" with the use of futures and/or options. This is among the riskiest of ventures even for the most experienced and skillful of traders. It's almost an insiders only game. Depending upon where you live, you may find no one who will even welcome your business after you mention commodity trading.
So, educate yourself and then trade "on your own handle" if you want. It's extremely risky and, I believe, the greatest game in the world. Start with "How the Futures Markets Work" for basic info. It's by Jake Bernstein (who now recommends gold as a long term investment). Also, "Winner Take All" by Gallacher. Both are available in paperback. An account can be opened through any of the brokers who advertise on the commodities pages of the Wall St. Journal or Investors Daily but please don't jump in without studying first. It's estimated that approx. 90% of those who open accounts go broke in about a year's time. This is one reason why physical gold in hand is advocated, but learn and then proceed as you see fit.

Don't put your hope in ungodly men, or

Be a slave to what somebody else believe.

If you need somebody you can trust,

Trust yourself.
--Bob Dylan--

Good luck
Rich
Randy (@ The Tower)
(01/09/2001; 17:40:45 MDT - Msg ID: 45354)
Cavan Man ... Gold flow through Turkey
Which sector? Istanbul represents buying of metal by "regular folks" as "regular" as folks get on this diverse spherical garden found amid the twinkling stars and blackness of space.

On the other currency item raised by Cris, if I were of a mind to open a euro account, I would likely do so with similar criteria under which I select a bank for my other accounts....too big or too smart to fail. But then, physical gold is where I personally "bank" much of my accumulated productivity...too real to fail.
Bonedaddy
(01/09/2001; 18:02:13 MDT - Msg ID: 45355)
Barnicle Bill (the sailor?)
Interesting thought.....I should invest to advance mankind. Hmmm, I Wonder what Ayn Rand would have replied to that idea?
Consider this point of view if you will. People speak of "putting your money into something". When one buys a stock, bond, mutual fund, ect. one is "putting one's money" INTO DEBT. When one buys GOLD one is putting money into MONEY. Bottom line, gold is the money you get to keep. Money placed into debt instruments is at the mercy of the debtor. Just how good are some of the 28 year old prodigies managing this debt? Are their intentions to grow the business and benefit mankind, (incedentally mankind is mostly broke), or make profits for the share holder? What happens in a debt collapse? Does mankind benefit from a bunch of reprobate CEOs and fund managers lying on the beach chugging rum?
The Englishman Samuel Johnson once said "Patriotism is the last refuge of a scoundrel". I once believed that was true. But perhaps in the post modern "global community" patriotism is the next to the last refuge. The last one may well be the "good of mankind".
I'm not totally opposed to debt instruments as investments, they have a purpose. But so does a home appliance. In todays debt ridden economy I fear that many debt instruments are about as wise as "investing" in a new toaster oven.

Regards, Bd
auspec
(01/09/2001; 18:02:32 MDT - Msg ID: 45356)
Journeyman/ Prognostications
1c 1cThank you Friend, but this is about what my opinion of the dollar/economy is worth.......two cents, factored by the amount of fannie money created since that expression was.
Anyway, I am willing to ramble a bit. I started shorting "the market" somewhere near 1994 and was determined to continue {intermittently} until successful, yet giving up on that sucker's game at the start of 2001. Too many variables outside of normal market control, an irresponsible FED, PPT, and general political "games". OBVIOUS! This rather large balloon isn't going to deflate quietly, that is not history's lesson. The economical and social excesses will have to be wrung out together and it will take quite some time IMO. The rubber band is stretched so tight that a dollar drop of >25% has a slightly better than 50% chance of occuring, let's call a 33% drop to reach bottom.
As far as duration-- I think we will enter into what's called a severe and extended recession, but it will last no more than 3 years.
You know Jman, some of your best ideas come to you when you "just wake up"-----more CLHE stuff. I will get out of bed in the night to write down an idea or two and the next thing I know a couple of pages of deep thought has appeared.
I am generally an upbeat and optimistic soul, this is nothing but "realism" in my thinking as far as the dollar/economy. I tend to be early on a lot of big picture happenings so have had to learn to use more staying power. We all likely see something in current news that we have known and acted on for 10 years or so, just par for the course in this upside down/ backwards world. Our USA "bottom" as far as culturally/ socially is nowhere in sight, unfortunately. Hang on to your hat and your soul! Thanks for asking.
auspecfully yours
CoBra(too)
(01/09/2001; 18:04:55 MDT - Msg ID: 45357)
It's not the Economy - it's the System, Stupid!
The financial markets, is it equity, credit or in particular derivative markets seem to have reached a terminable state of dislocation. Greenspan's papering over process of (dis-)stress does not have the desired effects any longer and while ever fewer believe the FED actions are intended to ensure a soft landing for the economy, as documented in sharply lower consumption - it's not the lower $ only!-, a feeling of un-easiness or queasiness is
creeping into new era goldilocks.
Household names as Ma Belle reduces dividends along with the stockprice to a fraction, Xerox, the synonym for copy is on the brink of bankruptcy, and even major utilities - almost as safe as T-bonds are tanking. Not to mention the
new economy, where most believers would probably wish they'd never heard the term.
It seems that Greenspan hit the panic button on something much more severe than LTCM et al combined. The BAC story may be the first clue to systemic risk, where the derivative club and their percieved hedges against, lastly themselves -see counter party risk management group - turns against their creators and AG as their defender (as in - casino capitalism is a great regulator of "paper" prices, therefor no inflation).
As we all don't really accept -yet, auspec- who played whatever roles in this game, we may be convinced that certain players you've mentioned, couldn't resist to play along, may have overplayed their hand by now. Though I still feel its typically the reaction of the greedy banksters, who can't miss a game, particularily if it used to be their game before the likes of GE started to invade their turf and quite successfully - to the end I'm kind a tempted to say.
So anyway, the last indication I've needed were Mssrs. Andy Smith and Ted Arnold, the infamous destroyers of goldbug vermin, in order to keep up the orderly retreat of the POG - and prolong the (in-)sanity of the system. A system now reduced to throwing mothballs by faded skeletons or better repetitive automatons towards a new aurea prima?
Let's watch the unfolding events send these ghosts of the past back to their destination of mothballed closets.
Times are indeed a'turnin'! cb2


justamereBear
(01/09/2001; 18:29:10 MDT - Msg ID: 45358)
Jouneyman 45326 Peter Asher 45334

Journeyman
Hi there my friend, I am indeed honored that you have me in this august listing. Or is it as you said at the end, or "anyone else BOLD enough"? Or is this a polite way of saying I spout off at any opportunity? Any way, thanks. Count me in for the first round at least, business is looking a bit frantic, so I do not know how much long term time I can commit. It sounds like fun, and maybe beneficial to all concerned. You never learn so much, quite as quickly, as when you are "teaching" ie up in front of an, at least, somewhat knowledgable crowd.

I want to say that your questions are good, but like most of this type of question a bit narrow. Take your perfect storm; it is a confluence of several events, not just one. In this case I think all roads lead to Rome, but there are many roads. The US dollar index is the SUM of the forces acting on it.

Anyway I intend to get a bit of shuteye before tackling this. To little sleep to think at the level your questions demand.

Peter Asher
Of course I was scolling down and read yours before Jouneymans. I was absolutely delighted, and laughed out loud at your description of me as a "free agent". I think you too, are a diplomat par excellance. Other people might have used a 4 letter word before the word "disturber". Many thanks.

Later
j'bear


Cavan Man
(01/09/2001; 18:35:46 MDT - Msg ID: 45359)
Euro Account
Bank of Ireland
Lr Baggot Street Branch
Dublin 2

http://www.boinet.ie
HOOSIER GOLDBUG
(01/09/2001; 18:43:50 MDT - Msg ID: 45360)
LAW!!!!!!!!!!!!
What is LAW?
Sitting in my freshman business law class on the first day of school, the professor began the class by trying to uncover the definition of LAW. Some classmates said was a set of rules to abide by. Wrong, exclaimed the professor.Some classmates said it was principles of honor based on behaviour since the beginning of time incorporated in social justice that all men aspire to and demand from their fellow man. Wrong, exclaimed the professor! After no further responses from the audience could be solicited, the professor exclaimed: LAW IS THE ABILITY TO PREDICT WHAT A JUDGE OR JURY WILL DECIDE! WRONG OR RIGHT, JUST OR UNJUST, TRUTH OR LIE, BAD OR GOOD, DO NOT EVEN ENTER INTO THE PICTURE!
GATA and Reg Howe are barking up the wrong tree! There is no way they can or will win! Their efforts, time-energy-money should be used in taking the physical off the table, or as Christian says, learning to play the gold-credit creation game. THE JUDGE/JURY WILL SIDE WITH THE POWER/CABAL/NEW WORLD ORDER/SORROS/ROTHCHILD/ROCKEFELLERS/GREEENSPAN/IMF/ESF/BIS/
DEUTCHE BANK/CITIBANK/J.P.MORGAN/CHASE. Please to not turn me in to the ATTORNEY GENERAL of the STATE OF INDIANA for PRACTICING LAW!!!!!!!!!!!!!!!!!!!!
P.S.: Can the sheeple be stupid to have a negative savings rate and buying, buying, buying, when the fiat is soon to be worthless??????????
Sancho
(01/09/2001; 19:07:45 MDT - Msg ID: 45361)
(No Subject)
Journeyman, re your post 45326, I am an "anybody else bold enough" I'll bite. Everybody has opinions. On l-4,odds of an undefined meltdown, run 75% with a time frame from here of a continually sagging dollar against most currencies (those using USD backing get to sag together) with the results of a recession/depression (whether your job or someone else's) lasting for four or five years. And affecting much of the world. Yes. On the reasons for this self induced debacle, (A) The U.S. is rapidly losing an industrial base to more beneficial circumstances overseas with which to even compete internationally; most of the key producers being foeign owned anyway resulting in questionable autonomy (B) The balance of payments deficits does not re-set to zero each January l, it is cumulative and is an ungodly amount of money. Other creditors may not suffer wastrels with as much enthusiasm as does the U.S. Don't count on a helping hand...from whence? (C)Just as optimism can be somewhat catching in a business environment and otherwise, pessimism is also, only much much faster. (D) Almost nobody saves and everything except a pair of shoes (from China by the way) is financed. Maybe I live in the wrong place. People I run into don't even need a 60% increase in energy costs as Black Blade points out; they already are running sufficiently negative that someone is not going to get paid today and tomorrow and any downturn will vastly speed that up. (E) Twas a pleasure. Hope someone (for your own sake) agrees. I still do not have any workable answers.
Peter Asher
(01/09/2001; 20:00:39 MDT - Msg ID: 45362)
Anyone hear about this before?
http://www.inside.com/jcs/Story?article_id=20218&pod_id=8
HOME > BOOKS > NEWS

What Is 'IT'? Book Proposal
Heightens Intrigue About Secret
Invention Touted as Bigger Than
the Internet or PC
Steve Jobs quoted on accomplished scientist's new
device: 'If enough people see the machine you won't
have to convince them to architect cities around it.
It'll just happen.' A venerable press pays $250,000
for a book on project cloaked in unprecedented
secrecy. EXCLUSIVE
Got a clue? Post your guess as to what IT is.
by PJ Mark

Tuesday , January 09, 2001 01:43 p.m.

Harvard Business School Press executive editor Hollis
Heimbouch has just paid $250,000 for a book about IT
-- but neither the editor nor the agent, Dan Kois of The
Sagalyn Literary Agency, knows what IT is.

All they do know: IT, also code-named Ginger, is an
invention developed by 49-year-old scientist Dean
Kamen, and the subject of a planned book by journalist
Steve Kemper. According to Kemper's proposal, IT will
change the world, and is so extraordinary that it has
drawn the attention of technology visionaries Jeff
Bezos and Steve Jobs and the investment dollars of
pre-eminent Silicon Valley venture capitalist John
Doerr, among others.

Kemper -- who has been published in Smithsonian,
National Geographic and Outside among others -- has
had exclusive access to Kamen and the engineers at his
New Hampshire-based research and development
company, DEKA, for the past year and a half. He tags
the proposed book as Soul of the New Machine meets
The New New Thing and won over his agent and
publisher with e-mails describing the project in carefully
couched language. He also included an amusing
narrative of a meeting between Bezos, Jobs, Doerr and
Kamen.


In the proposal, Doerr calls Kamen --
who was just awarded the National
Medal of Technology, the country's
highest such award -- a combination
of Henry Ford and Thomas Edison.
Doerr also says, a touch ominously,
that he had been sure that he
wouldn't see the development of
anything in his lifetime as important
as the World Wide Web -- until he
saw IT. According to the proposal,
another investor, Credit Suisse First
Boston, expects Kamen's invention
to make more money in its first year
than any start-up in history,
predicting Kamen will be worth more
in five years than Bill Gates. Jobs
told Kamen the invention would be
as significant as the PC, the proposal
says.

And though there are no specifics in the proposal as to
what the invention is, there are some tantalizing clues.
Is IT an energy source? Some sort of environmentally
friendly personal transport device? One editor who saw
the proposal went as far as to speculate -- jokingly
(perhaps) -- that IT was a type of personal hovering
craft.

Consider the following items, culled from the proposal:

IT is not a medical invention.

In a private meeting with Bezos, Jobs and Doerr,
Kamen assembled two Gingers -- or ITs -- in 10
minutes, using a screwdriver and hex wrenches from
components that fit into a couple of large duffel bags
and some cardboard boxes.

The invention has a fun element to it, because once a
Ginger was turned on, Bezos started laughing his ''loud,
honking laugh.''

There are possibly two Ginger models, named Metro
and Pro -- and the Metro may possibly cost less than
$2,000.

Bezos is quoted as saying that IT ''is a product so
revolutionary, you'll have no problem selling it. The
question is, are people going to be allowed to use it?''

Jobs is quoted as saying: ''If enough people see the
machine you won't have to convince them to architect
cities around it. It'll just happen.''

Kemper says the invention will ''sweep over the world
and change lives, cities, and ways of thinking.''

The ''core technology and its implementations'' will,
according to Kamen, ''have a big, broad impact not only
on social institutions but some billion-dollar old-line
companies.'' And the invention will ''profoundly affect
our environment and the way people live worldwide. It
will be an alternative to products that are dirty,
expensive, sometimes dangerous and often frustrating,
especially for people in the cities.''

IT will be a mass-market consumer product ''likely to
run afoul of existing regulations and or inspire new
ones,'' according to Kemper. The invention will also
likely require ''meeting with city planners, regulators,
legislators, large commercial companies and university
presidents about how cities, companies and campuses
can be retro-fitted for Ginger.''

The invention itself is as interesting as the inventor.
Kamen -- ''a true eccentric, cantankerous and
opinionated, a great character,'' according to the
proposal -- dropped out of college in his 20s, then
invented the first drug infusion pump; he later created
the first portable insulin pump and dialysis machine.

Boxman
(01/09/2001; 20:16:06 MDT - Msg ID: 45363)
Black Blade post #45332
http://www.newsmax.com/archives/articles/2001/1/9/84247.shtmlBlack Blade asked Beowulf the following question.


Beowulf - Do you think the Grasshoppers are planning on confiscating the ant property in order to serve their own needs?

Black Blade, looks like this answers your question.

Article:

Gov. Gray Davis wants California government to confiscate generating plants and build new ones - virtual socialism for the electricity-starved state's privately owned power industry.
According to a report by the Associated Press:

In his annual State of the State address Monday to the California General Assembly, the Democratic governor of America's most-populous state made the sweeping proposal to "prevent generators from driving consumers into the dark and utilities into bankruptcy."

Davis called for creation of a new state agency, a public-power authority authorized to:

� Use the power of eminent domain to seize power plants now generating electricity in California and

� To buy and build new state-owned power plants to generate additional electricity.

"Make no mistake," the governor told legislators. "We will regain control over the power that's generated in California and commit it to the public good."

He denounced California's venture into a gradually deregulated electricity market as a "colossal and dangerous failure," leaving consumers with the prospect of huge rate increases and two giant investor-owned utilities on the brink of bankruptcy.

"It has not lowered consumer prices and it has not increased supply," Davis said. "In fact, it has resulted in skyrocketing prices, price-gouging and an unreliable supply of electricity - in short, an energy nightmare.

"The time has come to take control of our own energy destiny."

Davis also asked lawmakers to:

� Force California utilities to hold on to their remaining generating plants and to sell their power in California instead of out of state.

� Order those power plants now down for unscheduled maintenance to go back on line.

� Allot the state attorney general $4 million to investigate whether power suppliers manipulated prices.

� Set aside $1 billion of taxpayer funds to help stabilize electricity prices and generate additional energy.

� Restructure the boards that manage the state's power grid.

� Make it a criminal act to withhold deliberately power from the state grid if it threatens public health or safety.

� Overhaul a "crazy bidding process for electricity."

� Stabilize prices by making it easier for utilities to buy electricity through long-term contracts.

� Provide low-interest financing to build more power plants designed to be used during periods of high demand.

� "Re-power" existing plants to make them cleaner and more efficient.

� Make available state-owned land as sites for more generating facilities.

Davis' threat of eminent domain and a public power authority brought praise from Doug Heller, a consumer advocate, formerly a severe critic of the governor on energy issues.

Heller he said the governor also should have called for an excess-profits tax on power generators to repay consumers for rate hikes.

Duke Energy, one of the major power wholesalers in California, said that seizing plants and creating a state power authority would "do nothing to produce power."

Vowing that Duke would fight any attempt to confiscate its power plants, a company spokesman, Tom Williams, said:

"California needs to increase supply and as rapidly as possible. We're willing to develop any kind of solutions to increase supply and anything that can be done to reduce demand."

Related article. Sorry, no link.

New York--Jan. 9--The Clinton Administration is attempting to keep California's two biggest utilities from going bankrupt, due to concern that the companies will be unable to continue buying power and could plunge the state into blackouts, an Administration source told BridgeNews. However, the administration wants the issue ultimately settled by the states.
Story Developing............


If California is the trend setter for the rest of the country, as has long been stated, then watch out for a socialist takeover of a state government near you.

Mike



















beesting
(01/09/2001; 20:36:02 MDT - Msg ID: 45364)
Mr. Hoosier Goldbug # 45360.
Please ask your law professor to look up these famous words and see who wrote them:
"When in the Course of human Events, it becomes NECESSARY for one......"
A hint, it is 224 1/2 years old....Thank you....beesting.
Chris Powell
(01/09/2001; 22:31:21 MDT - Msg ID: 45365)
GATA causes stir in Germany, hires press agent in South Africa
http://www.egroups.com/message/gata/617A statement by GATA Chairman Bill Murphy.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com
Chris Powell
(01/09/2001; 22:32:26 MDT - Msg ID: 45366)
BIS votes to dispossess private shareholders despite lawsuits
http://www.egroups.com/message/gata/618The Bank for International Settlements votes
to disposses its private shareholders despite
pending legal action:

http://www.egroups.com/message/gata/618


To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com


elevator guy
(01/09/2001; 23:00:41 MDT - Msg ID: 45367)
@Hoosier Goldbug
Very interesting last post. I agree with the premise, if it could be re-stated this way-

"What does it mean to practice Law"

Law, in and of itself, is not a guess at an outcome of a trial. Although the guess may be calculated and scientific, and highly accurate, and this no doubt is an art practiced by lawyers. No argument from me here...

If you look at the roots of Law in Western societies, they are based either closely, or loosely, on the Ten Commandments. And the Ten Commandments are the Word of God.
(BTW, they are not the Ten Suggestions) So in my opinion, which I will state no matter which Phd (Piled Higher and Deeper) will scoff, no matter the titter of disbelief that will wave over the room, I will state that Law is the Word of God.

Without a unified Law, each would be a law unto himself, each turned to his own way, doing what is right in his own eyes. This is moral relativism, which is not incompatable with a secular system of laws of man, where the common good is provided for, which on the surface seems to be the essence of Law, to provide a stable social environment for the good of all, with small concessions of personnel freedom, in exchange for an orderly process of living together. But Law is more than that, it goes deeper, to matters of the heart, fairness in love relationships, victimless crime, where no one seems to get hurt, like cheating on taxes. Law goes to the heart of man, and requires that he do what is right and honest. So Law is not just a collection of popular dos and donts assembled by mortals, but it is a divine sword, that discerns the thoughts and intents of the heart. If Law were only the creation of man, it would stop at the external things, and once the external things were made clean, the soul could rot in a cesspool of decay, for man is only concerned with the external. But Law goes inside, and proves the debasement of all mortals, so as to expose the need for forgiveness. See, thats the thing, none of us measure up, and we all need to be forgiven. Thats what the whole body of the Law of Moses is about, to show perfection as an smooth, vertical wall, covered in teflon, and if you are honest with yourself inwardly, you have to admit that you dont measure up to absolute perfection, and the Law convicts us of this all the time. Unless one has been sucessful in beating down ones conscience with a mallet, until it no longer bothers you. The only problem comes when the self righteous claim to be following the Law, with their external practices. They preach a religion of phonyness. And if you are honest inwardly, this type of religion should make you feel sick inside, for it is of man.

The apostle Paul said, the Law is a schoolmaster, to bring us to Christ.
Cris
(01/09/2001; 23:01:05 MDT - Msg ID: 45368)
RE:What is 'IT'(P.A.) and thank you for the info :+)
Hello P.A.
I heard about this IT project a couple years back..
actually it is called ..a one person solarpower and fuel cell vehicle. IT, comes in 2 models; either solo or for 2 person.
It will fly effortlessly using an onboard computer to do most all the navigation.
From what I heard, it will cost under $2,500 and will be a turning point in the future of our 21st Century.
The inventor of IT or Solo Trek also patented a Wheelchair that can climb up and down stairs!!
so I guess for about Ten Gold Eagles we can all be flying to the Moon if Gold doesnt get their first..
smile..
cris
gidsek
(01/09/2001; 23:38:12 MDT - Msg ID: 45369)
Justamerebear FX volume
I don't know if you got an answer to your question about FX volume. In case not, I think I or someone posted here about two days ago an article that explained this in terms of converging interest rate worldwide.

gidsek
ORO
(01/09/2001; 23:42:51 MDT - Msg ID: 45370)
Law - not ten commandments
The law of the West is a development of the Roman law and could easily be recognized by any practitioner without any reference to the ten commandments or god, not singular not plural.

European history shows two parallel systems of law, a common law loosely based on Roman law, and a religious law. The religious law being practiced by church or rabbinate, the common law practiced by the people for their own good using judges of repute and juries chosen by lot from among the people at hand. A minor law of military tribunal was developed seperately. All systems required the the parties to agree to being subject to court jurisdiction explicitly or implicitly.

As late as the end of the 18th century, the common law courts in many areas were still independent of government (then constituted of a few large kingdoms and many small principalities loosely associated to one king or another. At times, the court would even move across borders of various sovereignties in its traditional circuit.

Law was accepted by people much the same way as currency was accepted by the commercial market. The court and its law were accepted by a long process of trial and error to accomodate the practices of the people, particularly in commercial law, and to compromise with the claims of ecclesiastic courts and the sovereign's statutory law administered by tribunal.

The Judeo-Christian biblical law did not enter into things because most people could not read or write, and copies of the bible were only available to the church. The common law courts deferred to the religious courts on all matters of religion, and therefore did not incorporate religion into law directly. The separation held because the church wanted it so, in order to maintain its monopoly on the soul and its judgment.

Black Blade
(01/10/2001; 00:08:47 MDT - Msg ID: 45371)
RE: Beowulf, Boxman, barnacle bill (nice diddy BTW), and Chris Powell
Beowulf #45333 and Boxman 45363:

It was inevitable. That is why I refer to them as Grasshoppers (per Aesop's fable) because they have no concept of personal responsibility. Of course they will confiscate the Ants property. They have done so in the past. I recall several years ago when the state confiscated property in order to build highways. They did not provide reasonable compensation either. With the Peoples Socialist Republik of Kalifornia's stellar record, I would suspect that they would even screw up a confiscation plan. They certainly couldn't run the power plants because government simply does not work, and they can't cross-state lines to confiscate out of state power plants and natural gas producers. Since these Grasshoppers are not producers, they will have a difficult time if NG producers refuse to sell (read give) them NG. I would think that NG producers would service their local clients ahead of the Kalifornia Grasshopper at weaker prices. Gray Davis, nice communist that he is, is only trying to remain viable as a possible presidential candidate for 2004.

Barnacle bill #45336:

Why not have both? Some people feel that investing in the newest hottest mania or in hard assets is an all or nothing proposition. I have done well with good diversification. Gold is simply a diversifier that adds a measure of insurance to my portfolio. I have made out on dot.coms and bailed out with some gains, even though I knew that it was a speculative mania, but I also held other stocks as well as PMs. If things get as rough as I expect, I think many here will be glad they had PMs in their portfolios. History is on our side. Also, you might ask these people why do they think that Warren Buffett, Bill Gates, Paul and George Soros hold large investments in PMs.

Chris Powell #45366:

>>>>BASEL, Switzerland, Jan. 8 (Reuters) -- Central bank shareholders of the Bank for International ettlements voted unanimously on Monday to buy back all shares from private shareholders, ignoring threats of a legal challenge.

The BIS, an international institution that serves as a bank to central banks, stuck by a plan to pay 6,000 Swiss francs per share for the 72,648 shares, or 13.73 percent, of its total capital its member central banks do not yet own, despite objections from some private shareholders.

However, some private investors are not satisfied.

SocGen First Eagle Fund has filed a complaint in Manhattan.

BIS General Manager Andrew Crockett said BIS records showed the SocGen has 5,000 shares outstanding, but the company said it had 9,000 altogether.

Separately, in the United States, gold analyst Reginald Howe has also filed a suit against the BIS alleging
that it colluded with other central banks to depress the gold price. Howe also claims that the BIS is offering private shareholders less than fair value.

Crockett said there were two further complaints in the pipeline. One of these comes from the French firm
Deminor.

Deminor has threatened a dozen top central bankers with legal action if they approve the buyback, saying they think the offer is 53 percent lower than the BIS's net asset value.

Deminor's Fabrice Remon told Reuters, "This is an outlaw operation. There were no checks and controls. The central bankers have set the rules of the game to suit themselves. We're going to take this to the courts." He said Deminor would probably make its move as soon as next week. <<<<

Black Blade: As it is said � "He who has the gold makes the rules" (the Golden Rule).

View Yesterday's Discussion.

Mr Gresham
(01/10/2001; 00:18:26 MDT - Msg ID: 45372)
Gold Trail, Speculation
http://www.bearforum.com/cgi-bin/bbs.pl?read=99113I've been on the road a couple days, with a printout of the Gold Trail for passenger-seat and bedtime reading. Wow, wow, and wow. It gets clearer each reading (last was 4-5 months ago) how clear a teacher FOA is. Read it again, soon.

Here is a BearForum description of useful hedging and speculation, vs speculation on momentum under a credit excess system (entire following by Koala Bear):

"I would say that there is stabilising and destabilising speculation.

Stabilising speculation is a form of time arbitrage. It means that you find short-term pricing anomalies and you supply or withdraw liquidity from them so as to push the price back towards the mean.

In exchange for absorbing some of the risk of the market,
the speculator earns a profit. The rest of the market benefits from a lower risk (volatility) profile. Pure hedge funds are supposed to look for arbitrage opportunities while controlling their risk through the use of hedging. At their best they help to make the pricing mechanism faster and more responsive. They help to maintain the law of one price. They supply liquidity to otherwise thinly traded and mispriced asset markets. They are undoubtedly value adding.
And they are part of the reason why capitalism is so efficient.

The problem though, is that in a system that is as distorted as ours, where credit is created at a whim by a vast state-organised cartel (i.e. the whole Central Bank system), the nature of the game changes. The optimum strategy alters from stabilising to destabilising.

In destabilising speculation the game becomes to predict what "they" are going to do next. To catch the fastest moving target and hop on for the ride. This is momentum trading and it creates the volatile, bubbly market we are now observing. Destabilising speculation tends to push the system further and further away from equilibrium and rational pricing. The ultimate conclusion is massive malinvestment, culminating in violent crashes. "

ORO
(01/10/2001; 00:48:20 MDT - Msg ID: 45373)
Black Blade, viable to whom?
Obviously Davis is trying to run for president of the Democrats by using the classic Democrat ploy of creating disaster, then blaming the private market "savior" for it and confiscating the solution. It may wash with some of the old Cal grasshoppers, but Cal has a big non-grasshopper population that may dump him if he is not convincing. How many is he going to alienate by the time he takes hold of the power plants and finds that (1) no one is willing to build any power supplies in Cal, or sell to them. (2) That State construction costs and time tables would be slower and more costly by 30-50% (on both numbers) and (3) the Grasshoppers will end up paying more for electricity than anyone on the West coast. He will have about the same chance Gore had of winning his home state.
Black Blade
(01/10/2001; 00:53:08 MDT - Msg ID: 45374)
API Inventory Data

--NY Feb crude up 5c amid surprising yet small API stock drop
--NY Feb heating oil up 58 points as API stock gain small
--NY Feb gasoline down 54 points as API stock gain beats views
--API: US crude stocks down 589,000 barrels in latest week
--API: US distillate stocks up 33,000 barrels in latest week
--API: US gasoline stocks up 4.606 mln barrels in latest week
--API: US refineries operate at 91.6% in latest wk vs 93.0%
--APIs imply US gasoline demand 7.42 mln bpd vs. 8.62 mln
--APIs imply US distillate demand 4.27 mln bpd vs. 3.73 mln

By Karyn Peterson, Peter Rosenthal and John Troland, BridgeNews New York--Jan. 9--NYMEX crude and heating oil futures rose in overnight Access trade as American Petroleum Institute data showed crude stocks last week surprisingly fell 589,000 barrels, while distillate stocks rose by a marginal 33,000 barrels. NYMEX gasoline values dipped, as API data showed inventories gained a whopping 4.606 million barrels, far beyond the expected rise. API also reported that U.S. refinery utilization last week slipped by 1.4 basis points of capacity, exceeding expectations for a drop of 0.9-1.3 points.

At 1638 ET, NYMEX Feb WTI crude was up 13 cents at $27.77 a barrel, while Feb heating oil was up 38 points at 81.00c a gallon. Feb gasoline was down 54 points at 82.40c a gallon. The data, for the week ended Friday, Jan. 5. The U.S. Department of Energy will release its weekly inventory data on Thursday after 0900 ET. Crude inventories were expected to have risen 0.4 to 0.8 million barrels due to lower crude runs. But while crude runs did decline, the drop in imports was also significant, helping to erode total stockpiles.
Meanwhile, many brokers and analysts expected stocks of distillates, which include both heating oil and diesel fuel, to have fallen by 0.5 to 0.9 million barrels due to anticipated revisions to the previous week's data. But others predicted slightly higher stocks, which proved true. Total stocks rose as slightly higher demand--as implied by the data--and a dip in import levels were overshadowed by higher domestic output levels. Gasoline stocks were expected to rise 1.0 to 1.4 million barrels due to an anticipated drop in demand that would overshadow any rise in output. However, although output actually dipped, demand--as implied by the data--fell by more than anticipated and resulted in a build at least four times expectations.

CRUDE: Down 589,000 barrels

The small drop in crude an be mostly attributed to lower runs, which fell by 234,000 barrels per day to 15.169 million bpd, from the previous week's 15.403 million bpd, against the expectations of some market sources. "What surprised me a little bit was the run decrease," one broker noted. The drop in runs, however, was nearly offset by a 200,000-bpd decline in crude oil imports to 8.984 million bpd, from 9.184 million bpd the previous week, which met a number of analysts' predictions that imports would fall slightly below the 9.0-million-bpd level. The only drop in crude oil inventories, 2.9 million barrels, was on the Gulf Coast, as BP Amoco shut a 230,000-bpd crude unit Jan. 2 for maintenance. This overall drop in inventories caused the year-to-year deficit in total crude stocks to widen to 5.3 million barrels last week, from 4.1 million barrels in the previous week. In the Midwest, which includes the NYMEX delivery point for light, sweet crude oil futures at Cushing, Okla., crude stocks rose 407,000 barrels, which helped to narrow the year-to-year deficit there to 3.2 million barrels, from 5.1 million barrels the prior week. The largest build in crude stockpiles, 1.4 million barrels, was on the East Coast. Crude inventories also rose 163,000 barrels in the Rocky Mountain region and by 371,000 barrels on the West Coast.

GASOLINE: Up 4.6 million barrels

Stocks rose across the U.S., led by more-than 1.4 million-barrel increases in the Midwest and East Coast as a drop in demand offset lower output and import levels. Domestic gasoline output fell again to 7.76 million barrels per day
from 7.82 million bpd a week earlier and imports decreased to 312,000 bpd from 420,000 bpd. However, demand, as implied by the data, fell to 7.4 million bpd from 8.62 million a week earlier, possibly due to snowy conditions keeping motorists off the roads in the eastern third of the
U.S. "I still thought you'd see a decent draw the way people were buying it the last few days," a broker said. Despite the increase, the surplus to year-ago inventory levels actually decreased to 2.76 million barrels from 3.25 million a week ago. Reformulated gasoline inventories on the East Coast, the basis for the NYMEX futures contract declined 566,000 barrels and are now only 1.4 million barrels above year-ago levels.

DISTILLATES: Up 33,000 barrels

Overall distillate inventories increased as 1.9-million-barrel decline on the East Coast was offset by Midwest and West Coast builds. However, heating oil inventories declined on the East Coast, the biggest market, by 280$000 barrels and are now nearly 8.0 million barrels below year-ago levels. Demand for distillates rose to 4.27 million bpd from 3.73 million as industrial users with ability to switch fuels did so to escape rising natural gas costs. Distillate imports dipped to 422,000 bpd from 514,000 bpd, while output increased to 3.85 million bpd from 3.72 million. The overall supply deficit to year-ago levels also widened to 8.45 million barrels from 7.3 million a week earlier.

REFINERIES: Down 1.4 basis points

The drop in overall refinery rates can be attributed to lower runs in both the Midwest and U.S. Gulf regions, which overshadowed gains elsewhere. Runs fell the most, a sharp 3.9 points, in the U.S. Gulf, in line with the BP Amoco crude unit outage as well as downtime on several units at both Marathon Ashland Petroleum's 230,000-bpd Garyville, La., refinery and at Motiva's facility in Port Arthur. Midwest runs were down 1.2 points. East Coast runs rose 1.8 points, while runs in the Rocky Mountain region, an area that contains far fewer refineries that key industry centers such as Texas, rose 4.7 points. West Coast runs rose 1.6 points as Ultramar Diamond Shamrock continued to maximize rates on its crude unit in Avon, Calif., newly purchased from.

Black Blade: modestly bullish, yet OPEC meets on January 17th and has already declared that there will be a production cut of upwards to 2 million bbl/day. The real story as always is that of NG. The costs of energy will be the downfall of the economy. Every postwar recession was preceded by an increase in energy costs (energy crisis). We have an energy crisis now. Hard Landing? Definitely! But more like a crash. TPTB can't seem to contain this crisis. Even the Peoples Socialist Republik of Kalifornia Gov. Gray Davis sees his political future slipping away. Couldn't happen to a nicer guy.

Jackson
(01/10/2001; 01:02:39 MDT - Msg ID: 45375)
Seekers of Gold
Hello,

I was wondering if all of you out there who are interested in gold.Would come on by my website and read about my quest to find the precious metal here in BC. I would love to hear what you all think.

Hope to hear from you soon
Daryl Friesen
Spindle Explorations
http://www.bc-alter.net/dfriesen
Black Blade
(01/10/2001; 01:19:00 MDT - Msg ID: 45376)
RE: ORO

I agree. He is scrambling to position himself in order to pass blame onto others. The unfortunate thing about all of this is that this situation was brewing for decades and no one would take the "Bull by the Horns" so to speak. Now these Grasshoppers are trying to use threats and intimidation and will eventually steal from others. It won't work of course. They have closed down several power plants, and they don't have the means to operate them efficiently. They have oil and gas reserves, but those reserves are either off-limits or the environmental regulations and potential liabilities are too severe. It should be somewhat entertaining. I hold investments in some Utes, however, none are in Kalifornia, and they are also happen to be NG producers. Unfortunately, most of these Grasshoppers are lost on the concept of personal responsibility. That attitude is showing up now as they blame others for their misfortune. A good life lesson.

Life Lesson:

I don't know why I bring this up other than to show the comical feel-good liberal elitists (Grasshoppers)at their best: