http://www.federalreserve.gov/BoardDocs/Speeches/2000/Sir Tree - You and I could be on the same wavelength (scary thought, eh?) as I've always found the lyrics you posted (#49154) to be a perfect psychotropic analysis of what the worlds power structure is derived from and for. Almost posted it myself a couple times - thanks for allowing me to protect my innocence, ha ha!

Regarding what the FedHeads have to say, and any late night insomniacs in need of a sure fire sleeping pill; the above site gives the text of what each of the Fed Res. Board members have given in any public speeches.

Beats having to listen to what the talking "Heads" profer as interprative dribble.

View Yesterday's Discussion.

You make reference to 1929 and the Fed's ability to lower interest rates, citing the lack of hyperinflation then as an anecdotal "proof" that our fate shall be the same. Well, my friend, please consider two items. Back then the Federal Reserve was still pedalling with training wheels on, and more significantly, the currency was not of fiat as it is today but was in a degree limited by its gold convertibility on the fixed gold standard of that day. Times do change, my friend, and the context for possibilities changes with them.

You also make mention of a liquidity-swallowing black hole of debt and derivatives, and mention "corporate overproduction" of goods with nowhere to go. I "see" your "black hole and production" and I "raise" you one overseas U.S. bond.....rumour has it that there might be "one or two" out there. Perhaps the international CBs hold "half of one", but I don't fret over that as they may very well choose to eat the loss with a stiff upper lip. Why? Because it is the good manners that might be expected by those attending tea parties with Fed Chairman Greenspan. More problematic is the "bond or two" held by speculative hedge funds that know ways and means of "hot money". You have there the recipe for plunging prices (which translates to soaring interest rates (=yield)) on the outlying Treasury notes in defiance of the Fed's low overnight target rate.

Factor in the "truth" that the Political Will with fiat currency is to avoid deflation at all costs (the battle cry is that the banking sector must be and will be saved even if the currency value is sacrificed to do it!), and you see the Fed stepping in to print currency as needed to serve as the buyer of last resort. (Other buyeres would drain precious reserves from the banking system....the very thing the Fed is fighting to prevent!) And as these bond-buying dollars are then presented to the forex desk for conversion to foreign currency to be brought homeward to foreign hands, we see a plunging external exchange value (causing import prices to soar) in addition to the failing bond market. The rest of the equation solves itself, along witht the implications on the fragile, overextended paper gold market. "We shall have the hyperinflation."

I say again (and not for the last time), if you haven't got metal, you haven't got a clue.

got gold?

One is made to understand that 70% of all physical $s are physically outside of the US. What would happen if these $s experienced great difficulties in returning to the US, who would have the hyperinflation? It would be fairly simple to discourage these $s from returning home, no?

Topaz (02/28/01; 04:51:39MT - usagold.com msg#: 49112)Hi Boys,
Thanks G for the input, however the specifics of Lease rate, LIBOR and GOFO and how they relate to each other (what moves what) is still confusing.
Randy, can you take a crack at it? ...or perhaps Rhody can be persuaded to post a "for Dummies" explanation? TIA.

http://www.usagold.com/GoldTrail/archives/ANOTHER1.htmlDear reader,
In case you have yet to discover this new set of pages, this comprehensive archive of ALL of ANOTHER's (and FOA's) internet postings prior to the establishment of the USAGOLD forum archives (where you will find them post-September 22, 1998) was assembled as a fitting tribute by those "few of us" here in The Tower to this exceptional figure who single-handedly did more to revolutionize modern perception and understanding of the gold market than all others coming before or attempting to claim credit in his wake.

In reviewing again the comprehensive content of these postings, I can personally say in hindsight that there is no output during the years of commentary I have directed from The Tower, including these modern events, that was not already to be found in a germ of Thought shared long ago by ANOTHER. It might be said that there is nothing new under the Sun. I must contend, at the very least, that while that may be true of all things under the Sun, it is only ANOTHER that manages to shine as brightly.

In no way should you believe me on this. Have another look and judge for yourself.

I believe I only serve to clutter your time and this space when it is this link you should be reading instead. And as if on cue, I see with good timing that my cup of tea is now empty, so it is time to rest with thoughts of gold...a natural form of savings that shall immutably endure the longest, darkest and stormiest of nights to await my awakening to a new dawn. For what more could one ask of his silent wealth? Get you some.

Time will tell.

I have no pretentions that my thoughts on deflation are correct. They are my views and i air them here because i am not ultimately sure. I f i was certain of the truth, there would be no need for me to discuss it.
I am sure you air your thoughts here because you too are not absolutely certain.

Please consider
1) if it was only a matter of dropping interest rates and pumping liquidity, then Japan would have long been out of its deflationary depression.(also note that Japan had a high savings rate and still does)
2)Ultimately do you think it is the will of the Fed to make the US Dollar as valuable as the Mexican Peso.
3) if consumer confidence slips (not to mention the confidence of corporate America) who will do the spending and who will do the borrowing

Sir WAC,
just idle thinking on my part, but if capital controls conspired to leave dollars stranded where they were not wanted, think what that would probably do to the external exchange rate versus the other currencies that were wanted as the forex markets tally the score for all to see. In effect, we did that in 1971 when we said that foreign held dollars could not be returned to their home in The States to claim the gold that was their due. The dollar did suffer untoward inflation, but not as bad as might have been because there was no where else to go....the jilted parties had to "suck it up and play ball" lest all of world commerce collapse with no system of settlement. That is no longer a strong fear with the euro now firmly grounded on an independent foundation.

Sir Topaz,
I have in the past been in and out of the financing arena, but now mostly out for long enough that I must turn a page or two before attempting an anwser worthy of your time. (Right now I am not immediately aware of the location of one of my prior post addressing the relatively simple math.) As my tea was particularly weak, I am fading fast and must rest ahead of at least two projects that await in the morning. I am certain Sirs Rhody, ORO, or a number of other generous souls would be happy to explain how the gold forward rate is an adjustment to the borrowing costs (interest rate) of the paper funds by means of subtracting the borrowing costs (gold lease rate) for the metal funds over that period of time. Taking LIBOR as our cost of currency over time, then the equation would be:

GOFO = LIBOR - GoldLease

That looks right to me at the moment, but who am I? There are sheep jumping fences as a distraction to my concentration. Just buy the metal, my friend, and leave this financing nonsense to the bullion banking boys. Their days are numbered, but mine stretch on to infinity. (got gold?)

Zzzzzz.....

As my mum was fond of saying,...."L'il man, you've had a busy day"!
Golden dreams good Sir.

http://www.quotewatch.com/charts/futures/NYCE/DXY0-intraday.htmlEuropeans bailing out? (rather than bailing US out)

Sir,

You were correct when you said that perhaps it is a minor point.

Or should I say it this way:

You were correct when you said, "Perhaps it is a minor point."

It depends on what the word 'that' or the omission of the word 'that' means.

After following your suggestion and re-examining your post (# 49077) and replaying the tape, I conclude that, the words that I said you said he said, were not your words, but rather were the words of Mr. Angel. By paraphrasing another's words do not make them your words. In your post # 49168 as you repeat what you say he said, you have changed what you said he said by inserting the word 'that' after "Again, he said" and before the word, the.

In my opinion the including or omitting the word 'that' and using such comments in parenthesis as (his emphasis) are at the very least as important as using quotation marks to clarify whether or not one is quoting another's words or offering ones own words.

What did I misconstrue about your message other than the fact that the words you posted were your own and not attributed to Mr. Angel.

I understood that the whole point of your post was that the price of gold would be an obvious beneficiary of inflating our monetary unit. If that was the point you were making, I quite agree. If not we do have a, "failure to communicate.".

I truly did mean my post # 49157 to be complimentary of your post # 49077. Obviously since the result of my post offended you, I have failed to communicate.

Let me put it this way and you can quote me on this! When TheStranger posts, I listen and your post stands on its own.

Very respectfully,


HBM

I wasn't offended. I just don't want to mislead anybody.

Meanwhile, thanks for the compliment. Your sentiments are mutual.

Gold lease rates are subsiding fast, but a slight
backwardation still exists. This all thanks apparently
to the BIS stepping in an providing the extra liquidity
that the BOE no longer has. I wonder if the BOE will
cancel its next auction?
Meanwhile silver has gone into backwardation out to 6 months
with a furth spike in one month rates.
All this tightness in lease markets has had the predictable
impact on spot prices: no change to declining (snicker)

LEASE RATE = LIBOR - LENDING RATE

The bullion bank gets the lease rate (the bank's profit
margin) while the central bank source of the gold gets
the lending rate, which is far more than the lease rate,
say 4% metal interest. Anyone who thinks a CB is stupid
enough to lend out gold at fractions of a percent is
truly ignorant. This gold market lives on ignorance.

http://www.usagold.com/gildedopinion/bigfloat.html
Anchor TED DAVID: What did Allan Greenspan not say? SEIDMAN: He can create a self-fulfilling prophecy if he says something a little too negative. I think he's more worried than he let on. .... SEIDMAN: I think the FED is behind the curve. They need to lower interest rates more agressively. If the market drops further, we might find the dollar is in trouble. TED DAVID: Repatriation? SEIDMAN: Yes, repatriation. -CNBC Chief Commentator Bill Seidman, CNBC, March 1, 2001, ~11:28AM EST

Regards, j

P.S. If you haven't seen it yet, see article in link for explanation of "repatriation."

Well, with so many rivets popping out of the ol' US Titanic's hull, are we getting close to testing FOA's thesis:

Some market somewhere, some players must be hurting: NAZ, Nikkei, USD/Euro. Spreads, carry trades. Because the cost of doing so has been low and easy to do in totally unbacked paper markets, they're holding the POG down/level, until they can't anymore. Keep bailing till the dam breaks.

I think we're closer now to seeing if one of those implosions tests the brittleness of the POG containment structure...

http://biz.yahoo.com/iw/010228/0202023969.htmlINTERNET WIRE -- Some of the nation's most affluent investors were encouraged today to consider including gold bullion in their portfolios as signs of increasing instability in the world's financial markets become more apparent. "The need to diversify portfolios confronts every prudent investor," said Richard Scott-Ram, Chief Economist of the World Gold Council, addressing a meeting of executives and individuals controlling the financial affairs of some of America's wealthiest families in Palm Springs today.
Mr. Scott-Ram said that there were growing signs of market instability at home and abroad and that many portfolio managers around the world were wrestling with the effects of stock market uncertainity. He said that the Japanese stock market had fallen to levels approaching the 1998 low and Japanese officials had expressed concern that the economy was moving back again into a recession. Meanwhile, in the U.S. consumer confidence had dropped sharply again in January in line with faultering stock markets.

"It seems that every advertisement produced by U.S. financial institutions today is urging investors to go for diversification. I concur and would only add that investors should strive for even greater diversification through the in conclusion of gold bullion." Gold, he said, is an excellent insurance asset - particularly at today's relatively low cost. It was, he said, competitive with traditional diversifiers such as put options and inflation-linked bonds (TIPS), Treasury bills and market - neutral strategies.

"Traditional diversifiers often don't work when you need them most - during market stress. In fact, gold brings several benefits to an institutional portfolio at times of market stress due to its negative collaboration with equity markets."

He reminded the audience that according to many analysts, the U.S. financial markets were entering a stress period. "It is at moments like this that gold shines as the preeminent portfolio diversifier - a defensive asset that tends to perform well when other asset classes do not," he said.

Mr. Scott-Ram said that the WGC intends to redouble its efforts to promote gold as an investment and as a portfolio diversifier. Over the past 3 years, the Council has been working in conjunction with some of the leading bullion banks and dealers to promote gold to U.S. institutional investors.

"During that time we know of 30 separate institutions that have between them purchased some 200 tonnes of gold. This represents an investment of some $2 billion, which may not sound like a great deal in the overall context of the U.S. market. Nevertheless, if the practice of allocating a small percentage of a portfolio into gold became more prevalent, it would represent a huge increase in demand for gold," said Mr. Scott-Ram.

"We are redoubling our efforts to demonstrate - using the most reliable and painstaking research we can find - that gold is an effective tool for controlling risk and protecting portfolios from major stock market declines," Mr. Scott-Ram said.

The World Gold Council is an international organization formed and funded by leading gold mining companies from around the world to monitor and analyze developments in the gold market and to encourage demand for gold

How hyper-inflation - - - quick and dirty. @Perplexed,
deflationists, ALL & Mr. Gresham

According to the standard Austrian (and monetarist) view, a
GENERAL price inflation (or for that matter, price deflation) is
strictly a monetary phenomenon. That is, these GENERAL increases
or decreases in prices don't happen unless the supply of money
(plus money substitutes) increases (inflation) or decreases
(deflation) in excess to the available supply of goods and
services.

There is an "inventory glut," implying an excess of "stuff" and
thus falling prices - - - in those industries with the glut only.
These price decreases COULD be a symptom of monetary deflation,
but even the doctored stats from the Bureau of Labor Statistics
doesn't show this, and in fact, show MONETARY inflation, that is,
rising prices OVERALL.

BUT when businesses shrink and produce less "stuff" during a
recession, then, clearly, there is less "stuff."

At the same time, we have the FED monetizing every piece of
"paper" they can get their paws on - - - except maybe the Daily
News (and you might even want to lock-up your back issues.)
Remember, they don't print but 8% of it anymore - - - they use
computers. And foreigners returning "big float."

Now you've got "more money chasing fewer "stuff." The question is
then, how much inflation?

And since you have a contracting economy at the same time you
have a ballooning money+money_substitute supply, how much
_stagflation_?

Regards,
Journeyman

P.S. Perplexed asked awhile ago:

"As stated in my post, there is or can be plenty of 'money'
available, it is just in the wrong place. I can understand the
banking process resulting in price increases of merchandise.
+
"What I can't understand is just how the newly created currency,
whether in paper or electronic form, manages to get into either
my bank account or billfold.
+
"Perhaps you, or other members of the forum can explain it to me,
During the deflation of the 30s, the government attempted to
re-inflate the economy with government make work programs, such
as the Public Works Administration, and Works Progress
Administration, both fell woefully short." -Perplexed (02/14/01;
23:35:10MT - usagold.com msg#: 48270

Anyone want to answer this one? Mr Gresham? I beleive you were
on-the-track a day or two ago (that late-nite post)?

March silver stoppers now number 8075. That's more than 40 million oz for delivery by end of March. GCMS, a poster at GE, is saying that some of the registered warehouse stock in silver at COMEX is actually silver that was supposed to be delivered months ago and he is saying that now, COMEX warehouses will be empty by the end of March. I will check this out further and report back whatever I find. In the mean time, keep some Ag handy.

IronHead: The BOE auctions are positively psychedelic! The funny thing is that Reg Howe has failed to name COMEX and the BOE as defendants in his suit when both parties are so obviously knee deep in this manipulation. Also strange: last BOE auction is on March 14, GATA gets a decision on March 15. Coincidence? Hmmmm. And then maybe Ag runs at the end of March, Au at end of April? Hey the world is full of coincidences right? ;)

What I was going after was getting a bird's eye view above the I/D either/or debate, and trying to set up the two stages that happen.

Let's call Inflating Money, and Inflating Prices, distinct things, correlated yes, but separate stages.

The overall level, which may be deflating from money destruction, weighed against by the Fed liquefying their chosen debt instruments du jour. And the Mises view of the newly created fiat going into chosen parties' accounts (the public is SO far from seeing this, it won't be written in textbooks for decades) to cover their retreat from equities and various hedge positions. Those coupon passes, etc.

Then, there is what the individual sees on the ground level, inflationwise. Categories can diverge widely. Wasn't the farm economy in depression all through the '20s? While the Fed was inflating money, all headed for Wall Street. What's the saying: Money supply seeks inflation.

It has both to do with pricing power of sellers, and investor/buyer choices.

Money creation is the necessary but not sufficient condition for some price increases. Especially when times look tough, people will narrow down their choices to put their now more precious dollars into, but they will still tend to flock in same direction.

Gold gets a boost by its reputation for stability over paper choices, and then, once the momentum (RSI) is in its favor, it will attract a greater share of the new money being created (or fleeing) to rescue other sectors. The "We shall have hyperinflation" choice means that money holders in danger of having their money destroyed (defaulted) will fling it at gold in their "Hail Mary" effort to stay solvent. They'll sell the debt instruments while Fed is still buying, and take those electronic balances over to GS for a bullion purchase at $1000 (today only!) while they may.

These competing organizations MUST be mapping out their survival scenarios relative to their competitors now, hoping to rule market share later by being the least impaired on D-Day and worthy of Fed liquidity bailout.

Those who get enough gold and its kin will avoid the downslide; the rest will default and destroy the asset of their creditors, creating more "poster child" stories driving money toward real assets.

One effort I grapple with is to see the interrelation of business (corporations) and individuals, in normal times and hard times. People have to eat, corporations don't; so there is a perpetual advantage there. But in hard times, people "starve" many of the corporations, who have gone too far out on a product limb, because most of their product is fluff.

Corporations that provide the necessities and hard stuff have pricing power, ESPECIALLY after a tech/consumer/service boom where most of the economy has become fluff. Employees of fluffmakers will have to scramble for survival basics, and fast.

Curves of expectation will go hyperbolic, in either direction. Money supply pumping will push on a string, and flee into safe assets, waiting for a bottom. Gold will compete with T-bills, and new deficit fears will tilt even that one our way.

Their wages will price-deflate; their purchases price-inflate. A consumer good's price will comprise a lower wage factor and a higher raw materials and energy factor. I tried to find those historic GDP component percentages, but Fed's site didn't have, nor St.Louis Fed. But I imagine it might be something like wages dropping from, say, 67% of a "boom" economy to 55% of a slump economy, and the 15% unemployed really hurting.

All the factors that have worked against us, and worn us down in disappointment, are likely to reverse together, and accelerate once started. There is not much in the way of usual economic balancing force that is left to challenge gold at that point.

The competing paper investments will be showing their impairments to a greater degree than ever expected, and those with the money to spend, who would supposedly be inhibited by news of "deflation" to purchase Treasuries over gold, will be spurred on by even greater news of defaults all around (and interest rate spiral upward -- which will send them to short maturities -- which will spiral deficit -- which will threaten the Treasury "guarantee". Vicious circles galore as fiat's chickens come home from all directions.)

oops gotta run, sorry couldn't edit

EuroWhy is the Euro headed up?Could it be the U.S. bankers think if you must abandon the Dollar its better to swap over to another sister currency .Its better for both currencys not to have gold as an alternative.Its sort of like a 2 party political system ,what does it matter who wins the election its all the same club members. It appears the Euro will be the place to be until the hedge funds short positions get unwound.I think the Euro may go to a premium while U.S. stock market sorts itself out.Remember ..when bankers are jumping out of windows consider following them,there must be money to be made down there!

http://www.rich.frb.org/eon/topic3/messages/43.html
I would like to slightly spin Sir Holtzman's posts as summarized by:

"currency is for spending; gold is for saving." -donnemuir (02/28/01; 19:44:48MT - usagold.com msg#: 49163)

But what do you do with "currency" in the time interval between when you receive it and when you spend it?

Wouldn't it be more efficient to have one product able to serve both functions --- then you wouldn't have to attempt such contortions as described below (from link above.):

"Essentially, since reserves do not pay interest and reserve
requirements are at approximately 10%, that's a significant
amount of a bank's liabilities that contribute nothing to the
bottom line. To avoid this position, many financial institutions
have taken to totalling deposits at the end of the day,
"sweeping" a portion of that amount into overnight money markets
where they generate a return and "sweeping" the funds back into
deposit accounts in the morning. The temporary absence of the
swept funds, reduces the financial institutions deposit stance
and, by extenstion, the required reserve to back them when
reporting to the Fed. This in turn understates or "depresses" M1." -http://www.rich.frb.org/eon/topic3/messages/43.html

And of course, larger businesses, rather than keep their liquid funds over-night, emulate the financial institutions. They MUST do this just to stay even because as everyone knows, fiat (not "paper" - - only ~8% is paper anymore) inexorably depreciates EVERY year (and thus every minute) by the rate of "inflation."

Is it practical for individual citizens and small businesses to do such things to protect their buying power?

Why, then, do we have this needless dichotomy between something to "spend" versus something to "save?"

Yes, of course you can protect yourself somewhat - - - buy here @USAGOLD and look into E-GOLD.COM. But most folks have been conned into keeping their buying power in the same fiat that businesses sweep into accounts for the best interest rates - - - AND with the amounts these conned folks keep in banks, they pay taxes on any "interest" despite they've been robbed of a considerable portion of interest AND principle by that inflation. In short, fiat is a scheme to rob the unwary.

Holtzman makes the arguments that macro-manipulators make. Unfortunately, we as individuals ARE stuck with the effects of these manipulations, for the time being at least.

But we, of all groups, need to keep things in perspective: We have fiat because the banker-government axis profits at our expense from it's use.

The answer is, of course, free market money which won't come from any government or central bank, but already has it's nose in the tent thru the internet in the form of E-GOLD. It's convertible - - - and you can keep independent track of how much is stored; grams issued equals grams stored (if you believe the independent auditor program.)

It's this sort of thing, multiplied by a large number of independent E-GOLD type "banks," that will allow circulation of gold as money relatively free of the threat of dilution scams such as the original Federal Reserve scam - - - and the current paper-gold soon-to-be debacle.

Regards,
Journeyman

Or was it lightening?

Need a surefire uptick to cover a short position?

First lightening, then thunder!!!

Look out below!

HBM

Or was it lightening?

Need a surefire uptick to cover a short position?

First lightening, then thunder!!!

Look out below!

HBM

http://www.usagold.com/HallDiscussion.htmlYou said,
---------I would like to slightly spin Sir Holtzman's posts as summarized by:

"currency is for spending; gold is for saving." -donnemuir (02/28/01; 19:44:48MT - usagold.com msg#: 49163)

Wouldn't it be more efficient to have one product able to serve both functions.....Why, then, do we have this needless dichotomy between something to "spend" versus something to "save?"-----------

Before poor donnemuir or Holtzman get pinned with this sentiment which might not necessarily best reflect the "nutshell" of Sir Holtzman's views, let me put the "blame" where it belongs--with me, as my earlier comments may have overly influenced donnemuir's interpretation of Holtzman either rightly or wrongly.

In my early post to Holtzman, I said:
"Simply put, Currency is for borrowing and spending as needs require; and Gold is for saving." -Randy (@ The Tower) (02/28/01; 15:07:31MT - usagold.com msg#: 49149)

And to keep this short because I have another project in the works, in that same post I provided something that I believe bears your consideration as a possible answer to your question posed above about, in your words, --"this needless dichotomy between something to 'spend' versus something to 'save'."

I suggested this about the necessary dichotomy, "Given the nature of contracts, to attempt a mixture of these two [bullion assets and currency] within the structures of banking is to witness oil and vinegar. The separation is always inevitable...unless great agitation is to be endured from time to time."

A fuller elaboration on this "unholy" admixture can be found at the link above in the Aristotle posts beginning with (2/7/2000; 7:15:24MDT - Msg ID:24589) *Executive Summary--an Outline of Observations*. You will also find there your significant part in the discussion that followed, along with that of ORO, Trail Guide, and many others.

http://biz.yahoo.com/apf/010301/europe_euro_switch.htmlHEADLINE: European Central Bank Unveils Unambiguous Euro Slogan

FRANKFURT, Germany (AP) -- ...The simple slogan is part of a 80 million-euro ($73 million) publicity blitz targeting a population of which three-quarters as recently as November didn't even know euro cash would begin circulating New Year's Day 2002.
+
...There will be seven new bills and eight new coins. And with the bill denominations ranging from 5 euros to 500 euros, they will be a new experience for people in some countries such as Italy, where everyday transactions are counted out in thousands.
+
...The national central banks that comprise the European Central Bank will also be running their own publicity campaigns as E-Day approaches, sometimes coming up with more innovative slogans -- such as ``Real value shows itself'' in Germany or Ireland's ``The change is in your pocket.''
------

ECB president Duisenberg expressed, "The campaign does not try to sell the euro. The explicit aim is to familiarize the public at large."

While only circulating in electronic form or as fixed ratios of the legacy national currencies, the day the euro becomes more "real" as a "physical" item is just around the corner...10 months away. Is the dollar starting to feel the pressure?

I have asked the question before and no one has replied:



IN AN ECONOMY BASED AND DEDICATED TO THE CONCENTRATION OF
"WEALTH" THROUGH THE FAVORING OF "PROFESSIONALS " ala.. CURRENCY AND LAW MANIPULATORS:

HOW DO "THEY" GET THE MONEY INTO THE HANDS OF THE GREAT UNWASHED? (about ninty percent of the population)

While hiding inflation in plain sight in the form of national debt, our "experts on the economy" peddled the "no inflation" line. Ahhh, something for nothing, the three magic words always in vogue.

Even in good times, nation wide, garage and yard sales occur by the millions. These sales occur because a very large percentage of the American people own so many possessions, that many of them, (purchased on impulse in time of plenty) and although still in great condition and useful, are sold at "junk" prices when money is no longer so plentiful.

Much of this "junk" was purchased on credit at 18 to 22 percent interest, and was purchased because the price, shorn of inflation, screamed "bargain." Much of this "stuff" is yet to be paid for.

Because of governmental manipulation of inflation information, those of us actively involved in the production of goods and services have not demanded that OUR wages consistantly reflect the true cost of infltation.

We are thus staring Leviathan squarely in the eye with no means of feeding him, and no hope of controlling him.

So while there is plenty of currency or credits in existance, just as in the 30's it is in the wrong hands.

It is very unlikely that the current inflation of the money supply will translate as added income in direct proportion, or within the time frame necessary to keep pace with the escalating cost of living, let alone the debt service.

Unless a means is devised to get the purchasing power out of cyber space and off spread sheets, and into the hands of the working class people immediately, pandemonium will reign supreme.

Trickle down economics was a disaster in the 1920s and 30s and should have been seen for what it was, a recipe for more of the same.

The idea that if you over fill the hog trough and allow the chickens to consume that which the hogs manage to spill, works only when the hogs are few in number, very sloppy eaters, and the chicken population remains static. When the hogs get greedy and efficient, the hungry chickens first quit laying, and then peacefully die.
Not so with people. While they will quit working, the only peace to be enjoyed will be that eventually enjoyed by the survivors.

Taking Peter Ashers rocket example one step further, when sufficient pressure may be released and directed, the engine completes the job for which it was created, if however the vent is insufficient to release the mounting pressure, it is transformed from a rocket to a bomb, releasing uncontrolled energy in every direction.

>PETER ASHER "FEEDING LEVIATHAN"<

>A nation of tapped out debtors, asset rich and stressed to service debt would all benefit from Hyperinflation. However, Asher's third law of Ecodynamics states "Any activity that creates gain without production can empirically only benefit a minority.," Therefore in this current endemic situation, the ratio of buying power to available goods, necessary to inflate, cannot exist.

If the food-chain necessary to sustain this behemoth falters, then -- Contracted buying power, lot's of debt, no sales, need to raise cash, nation wide garage sale; =Deflation!

Waiter: "...and for you, sir?"

Uncle Sam: "We shall have the hyperinflation."

Waiter: "Sorry sir, we're out of the ingredients to make it."

Peter Asher<

Government make work programs The WPA, PWA, CCC camps in the 1930's was unable stimulate economic growth. It took WAGES spurred by a world war to kill the depression.

What do we do now, Just open the bank doors and turn on a giant fan or maybe drop trillions of dollars from a fleet of 747's?

STILL PERPLEXED

... As FOA/TG rightly states gold mines are only paper, though I'm personally kind'a happy that I've invested in some of the paper, which I again can turn into physical gold ... and still buying the same amount or more of paper back.

Next to some juniors, where I may have a vested interest, I've bought NEM (14), HM (4.6) and DROOY (5/8)in Nov 00 . Sold NEM at 17 (could have done better, though I feel with a billion $ debt this ex-favorite is at risk). Sold 10K Drooy at 1.31 and bought back at 1,- today and bought some more HM and new PAAS at 3 1/8.

As there's still some $-confetti profit left I'd probably like to re-invest in AU and AG - physically - can you help me - with a bag of ag quarters nominally - just for fun- done?

Hoping for more time to cash in paper and the mines for reality - regards cb2

http://www.economist.com/world/asia/displayStory.cfm?Story_ID=519143The Economist Headline: India's Breaktrough Budget? -- The lip-service so long paid to economic reform by India's government now starts to sound more genuine

That article is for your background reading if you so desire. Here is the golden meat and bones of it from Bridge News:

INDIA BUDGET: Bullion trade sees gold imports rising on duty cut
Mumbai--Feb. 28--Gold imports are seen rising after India cut import duty on the yellow metal to 250 rupees per 10 grams from 400 rupees per 10 grams.
The duty reduction was announced on Wednesday by Finance Minister Yashwant Sinha in the federal budget for fiscal year 2001-02.

[Randy's note: You should appreciate that one of the euro member requirements is that there be no restriction to gold trade. We also see at this time China moving to liberalize its gold markets. And while I am not in any way hinting that China or India is headed toward the currency union, I do want you to appreciate that while India has lowered these restriction on open gold trade, they have NOT similarly lowered the import duty on silver -- which remains 500 rupees per kilogram.]

We move one step closer to the new performance standard for gold as a highly valued reserve asset.

got gold?

http://biz.yahoo.com/st/010301/22558.htmlThe article asks, "So did anyone actually see this coming?"

While it may be news to the rest of the world's investors, it is no news to us here at the Forum.

This is how the article begins:

-----When the stock market seems particularly subjective and psychology-driven, it's nice to have a few number-based definitions on hand. For instance, a "bear market" is commonly described as a 20 percent stock drop. Guess what? Not only has the Nasdaq dropped much more than that, but some calculate that the S&P 500 hit the 20 percent mark Wednesday. This did not go unnoticed amid news of the Nasdaq's new 26-month low and the latest round of Greenspan-bashing.
+
CNN's Moneyline News Hour show summed up the increased panic. "The Nasdaq has been in a bear market for months," said CNN correspondent Fred Katayama. "But a bear market in the S&P would affect far more people than just day-traders and high rollers." It's not just dot-commers' retirement accounts losing money - was it ever? - so maybe we'll soon see a merciful end to the smug tone that has been accompanying bad economic news.


I particularly liked this sentiment:
"Go bottom-fishing, or stay out of the water entirely? Do what you want, since you'll find some pundit to back your decision either way - and an equal number to sneer if you get it wrong."

Ha Ha! No matter what you've done, you've gone and done it! Be sure it is a decision you can live with.

Gold. Get you some.

Yo Journeyman, regarding: > According to the standard Austrian (and monetarist) view, a GENERAL price inflation (or for that matter, price deflation) is strictly a monetary phenomenon. That is, these GENERAL increases or decreases in prices don't happen unless the supply of money
(plus money substitutes) increases (inflation) or decreases (deflation) in excess to the available supply of goods and services. <

The strict Austrian definition defines inflation as an increase in the money supply and deflation as a decrease in the money supply � and that's it. Yes, price activity is partly a function of the money supply but it's unpredictable how it will manifest itself in various sectors.

One guesses that future non-Austrian economic historians are going to look back at this time in history and be forced to align their definitions with Austrian definitions in order to explain what is being missed by so many right now. It seems that there is a predominating mindset that the experience of the �70s defines inflation and the experience of the �30s defines deflation. I would argue that that mindset is backwards. Deflation defined the �30s and inflation defined the �70s ... the �30s did not define deflation and the �70s did not define inflation. Because this deflation cycle is playing out a little differently than the �30s most people are failing to recognize it. It'll likely be much more clear in hindsight.

Randy ol� chap , you might be surprised to know that this person, as a deflationist, agrees with you that bonds are gonna get killed and interest rates are gonna skyrocket, notwithstanding any short term flight to bonds due to stock market woes. They're gonna get killed because of deflation, for 2 reasons. One, there's a lot of�em out there. When the run to liquidity hits critical mass, there will be a forced liquidation of bonds along with all other assets and rates will be driven up as a consequence. Second, the US is not in nearly as sound of a financial condition as it was in the �30s or Japan was in the �90s. In short, this time the US is a poor credit risk; who's going to want to hold Treasuries ? The destruction of the bond market means the destruction of a vast amount of wealth, which will only intensify a deflationary spiral.

The inflation/deflation debate has been widespread across the net, having really started right here on the USAGOLD Forum if I'm not mistaken. I certainly never saw anything more than isolated discussion of it until after we started chewing ratherly intensely on it probably 3 years ago. The one point that seems to always be missing from the debate is why it's so important to get it right. It's my belief that if gold investors, while preparing for more inflation, get blindsided by a severe liquidity crisis that is characteristic of a deflation then they might well see their gold eventually blast off to astronomical prices � but in someone else's hands.

Betting that this Fed will successfully inflate its way through this deflation cycle is betting that this Fed is in the midst of proving itself to be an historical exception. Maybe that'll prove to be true. If so, all gold investors will be partying. If not, then we can expect to have to survive a monetary vacuum before any subsequent inflation/hyperinflation takes place. A market devaluation of the dollar during such a monetary vacuum, similar to what has happened to the currencies of countries hit by the Asian Contagion, may or may not prove to be the salvation of gold owners unprepared for a liquidity crisis.

Worst case is that there will first be sudden widespread destruction of wealth and savings which fuels a vicious liquidity crisis and results in a large scale liquidation of assets, including gold, followed closely behind by the devaluation of the dollar, thereby rendering whatever dollars that are left worth much less. This scenario would surely do the most damage to the most people. Given what's been happening in other countries the last few years, it doesn't seem to me that this possibility is too far out. Personally, my guess is that dollars will continue to be precious *domestically* , and that's because our monetary system is based on credit, and when credit caves in on itself, the money supply will be reduced to the cash supply, and there isn't much cash in existence, nor can there be in a short timeframe. (And I suggest that this is by design in order to ensure that Americans always value the dollar.) Therefore, in my opinion, a more important question than �got gold ?� is ...

got liquidity ?

You got it Perplexed.

:)

http://biz.yahoo.com/rf/010301/n01394864.htmlReuters HEADLINE: COMEX gold, silver meander lower...

NEW YORK, March 1 (Reuters) - New York COMEX gold opened slightly lower on Thursday on follow through selling from Wednesday, but COMEX floor brokers said the action in the futures pit was extremely light.
"There's really nothing to say, because there is nothing going on. One large fund came in offering some paper to take it down, but besides that the ring is really not doing anything," said one broker.
-------------
Did you catch that?! Again, "One large fund came in offering some paper to take it down..."

Call Centennial tomorrow to lock in your order while the oversupplied market for these paper substitutes remains to serve as the price-setting mechanism for the metal which is in fundamental undersupply. The gap is filled by leased gold which appears to satisfy two or more pockets at the same time. Are you prepared for a gold "bank run"? Thus, beware the self-serving bearish comments of the media's oft' quoted analysts who are themselves largely hip deep in the gold leasing business.

Know you know.

NOW you know.

The Wall Street Journal is raising its newstand price by 33 percent from 75� to $1.00.

Does this charge reflect an improved product, or the subject line of this post?

Perhaps people should have been hoarding old WSJ's under their mattresses for a windfall gain of 33% on every one! Or not. I don't recollect the Washington Agreement laying the subtle groundwork for the important future role of WSJ's in global monetary reserves.

http://www.dailyreckoning.com/ Capacity Utilization" - a stodgy term economists use to indicate how efficiently factories and businesses are using their equipment - has dropped below 80%. "That's historically a sign of deflation," says The Fleet Street Letter's Lynn Carpenter. "The last time we saw this number was in 1991. The Fed cut its benchmark rate from 6% to under 4% over the next year, and still utilization fell... for another three years. Then it rose slowly. It didn't climb back above 80 until 1995."

I picture gold's profit scenario as a "U"-shaped chart, with hyperinflation on one end, deflationary default on the opposite, and stable paper assets in the middle. These are also three probabilities on a spectrum of outcomes.

The system is telling us: Don't worry, the middle will hold. But I (we) believe the probability of that is getting squeezed smaller and smaller. So the extremes become more likely, depend on Fed and gov action, and really kinda sorta melt together as Tweedle-dum, Tweedle-dee choices. (Maybe a circular loop, where the extremes meet -- they certainly have similar effect on people, and on gold's purchasing power.)

Another way to think of monetary inflation in a default risk environment would be as something of a ratio, of money supply to paper debt stability. IOW, if the market trusts (and is able to fund) the paper, then you have the stable middle between hyperinflation and deflationary default (either of which benefit AU), so gold stays quiet.

So if the Fed is liquefying, by buying out everyone's paper debt holdings, the next question would be: Where are those new dollar holders going with their bucks? More paper? -- or solid physical assets, waiting out the firestorm?

That answer will show whether we are having the hyperinflationary meltdown of asset values vs. the stable middle holding more firmly.

A key confusion when people go back and forth on this is the difference between the Fed's EFFORT, and the OUTCOME. Whether or not they succeed in actually increasing the money supply by weighing in against deflation, they will have deteriorated the quality of the underlying assets corresponding to it, and the market will not bet its own money on this forever.

The Fed may issue funny money to turn back monetary deflation, and it may create a muddle in the middle of M3 stats. The figure may look stable. (But picture the ratio mentioned above: M3/debtquality.) The key is the QUALITY of components in the Ms, which the market is judging to be impaired, and the Fed is betting somebody's "full faith and credit" that overall credit quality can make a comeback in time.

If the Fed did not make the inflationary effort, the money destruction would produce the deflationary default of bad debt scenario, in a parabolic curve cascading downward, one default triggering another. The Fed is attempting to stabilize that curve upward, help it find a bottom, (choose survivors) and then recover, before too many big structural components are taken out (and shot). That is the Fed's job, their founding mission, and they will gamble one big roll o' the dice on it.

Don't fade the Fed, except when it's trying to stop the unstoppable tide.

Sir Randy please do not weep for "poor" donnemuir. I view most issues in a very clear and simple light...how you spend the currency determines how much gold you can save. I see many references to "profiting from gold"; my view is "gold is the profit" (real gold). The rest of it is a game that you must learn to play... and it is always someone else's game; they make the rules, change the rules and break the rules consistently (not constantly). Currency is the game piece. A token, no real value, but necessary to the game and it must be kept moving (that's why it's called currency). The object of the game is to make the right moves with it and accumulate a surplus. You score when the surplus is invested in real wealth....GOLD. The secret to winning this game is never commit to much of the currency to either the game or the gold at any one time.

donnemuir

.....and never sell the gold just to get back in the game.

http://groups.yahoo.com/group/gata/message/689A feeble attempt by the World Gold Council to
promote gold, overlooking all the big issues
of the contemporary gold market.


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@yahoogroups.com

http://groups.yahoo.com/group/gata/message/690GATA wants to know what the WGC really
knows about the manipulation of the gold
price.

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@yahoogroups.com

HYPERINFLATE THIS!
@ Perplexed, Turbohawg & tg

"Getting the money into the hands of the great unwashed," requires lots of water (liquidity) and soap (low interest). Our recent foray into the "Carwash" that I referred to last month, pencils out as follows:

Two vehicles, one domestic, one foreign; were traded in for new ones. Both were similar to the old ones in price range and type (more bells and whistles) but still averaging only about 5% more for a median 4 year period. The loans had an average of a year to go to payoff with a balance due of $10,000, and the trade-in values, after negotiating and figuring in overheating- testing positive for hydro-carbons in the engine for one and multiple job-site dings on the other, totaled $17,000. After paying off the current loans that left us with a net credit of $7000. By signing some papers, no money out of pocket, we drove away with $52,000 MSRP, purchased for $46,000. Therefore after deducting the $7,000 of credit we were issued new loans totaling $39,000.

Now, the $10,000 dollars that was "destroyed" had been yielding its investors an average of 10.4% but the new $39,000 that was "Printed" is only yielding it's suppliers %7.2. Furthermore, the old loans ran five years, and the new ones (Lease) run seven, the final four being at the lessors risk as we can walk away at lease end. Meanwhile, we have new upgraded vehicles, back on warranty with no threat of known and unknown multi thousand repair bills, new tires and two full tanks of gas. And along with all that savings of deferred maintenance and the comfort and luxury of the new vehicles, our net monthly payments are -----$60.00 LESS! The only �cost' is what will be due after the dates the old loans would have been paid off. At that point we will have the new debt, but also newer equity. So there you have a microcosm, The money supply went up $29,000 and the cost of servicing debt went down.--- It's the future commitment that went up!

This is how Leviathan gets fed morsel by morsel. The new, cheaper money created reimbursed Ford and Subaru for one unit produced. So far though, all this liquidity created has only resulted in giving the beast a good burp and he immediately asks for another helping.

The phenomena of msg#: 46783, 1/28/01,
>>> you see acres of manufactured homes, John Deeres, Caterpillers,--- Stuff! INVENTORY! Financed by debt and seeking consumers funds. We have a domestic and global PIPELINE filled with goods that can clamor for the dollars in the float. <<< was confirmed by last week's announcement that GM is shutting down 14 out of 26 production facilities til June or July because they "reached a crucial 100 day level of supply in the pipeline."(Perplexed: I was referring to NEW product, on its way to market)

The hard-core physical fact is that all that money washing around the inflationist's ankles is not enough quantity to pressure the demand side of the price equation. The great millennium tool-up is still holding up Leviathan's body weight and he is in need of more nutrients than he is receiving. These are not the ingredients for Hyperinflation Stew!

Possibly it is the high dollar that generates the import demand, driving foreign production to keep cranking out the stuff and sending it to us for the credits. Could it be that what is holding off the proclaimed "Run on the dollar" is that whatever state our economy is in, as regards it's ability to service it's fiat debt, we constantly stay more desirable then the Asians and Europeans and their travails.


We "Don't have to outrun the Bear", we just have to outrun all the others!

http://www.bearforum.com/cgi-bin/bbs.pl?read=117493"But, from where, you might ask, are the additional funds sourced. One is, as has been mentioned, from the multiplier effect of fractional bank lending. There is also, in effect, no longer a statutory reserve restriction. In recent years the Fed has been adding more than $40 billion dollars in permanent funds per annum to the system. The equivalent to not less than $400 billion in available loan asset growth. The action by banks, too, of sweeping funds from a reservable to non-reservable deposit category has freed more than $400 billion dollars from 1995 to 1999 for additional investment.

"I'll just end here, and say that such sizable amounts chasing share assets is entirely sufficient to advance the price of those assets to levels considered once as abnormal. Share asset prices forced higher by lending and investment conducted within a fairly narrow time period will quite naturally, also, either ignite or contribute largely to the maniacal investment sentiment of both public and private investors.
"

http://finance.yahoo.com/q?s=^N225&d=1dYikes!View Yesterday's Discussion.

http://www.atimes.com/editor/CB21Ba01.htmlWhich way will the tsunami go, and when will it hit?

"Even more worrying, the bad-loan situation of the financial system not only remains bad, but is getting worse as bankruptcies are expected to hit an all-time high this fiscal year ending March, with no relief in sight in fiscal 2001. Problem loans held by 136 Japanese banks at the end of September 2000 totaled 64 trillion yen (US$553 billion), 12 percent of all outstanding loans and 0.8 percent higher than in March 2000.

"And worse still, banks are less able to cope with bad loans now that stock prices have dropped back to the 13,000 level on the Nikkei index. The Bank of Japan (BOJ) estimates that the combined paper losses on shares held by 15 major Japanese banks will total 3.5 trillion yen at book closing in March, assuming a Nikkei average of 13,000. The figure would balloon to close to 5 trillion yen, if the index fell to 12,500. Under international accounting standards, all 15 major banks would then be in the red and show considerable depletion of capital by fiscal year end. "

Sir Tree - You've climbed to a "knot" of significance, which I feel GATA should be emphasizing and soliciting direct response from effected parties, which would bring the rotting wood to the compost heap. That "knot" being the Comex complicity in the gold manipulation, with the hoards of little sapplings that have been maligned by the false hope of a fair and equitable market.

Admittedly I too was at one time of the opinion that the paper markets were an equivalent representation of the material, which they purported to represent. This was before my BAT (Before *Anothers* Teachings) time, and his sidekick FOA's lessons. [If only I had the volumes in the library in the other room available a bit earlier!] As Harvey says, " what we earn and what we learn in life, is usually too late."

So, if GATA were to solicit those whom have played the Comex paper game and feel conspired against, could not this be another branch of the attack? Don't anti trust cases seek corroboration by affected plaintiffs?

I think Mr. Powell is in the other room, and perhaps we can get him to comment on this. Speaking of; he sends a really nice personal letter if you send him even a pittance for renumerative efforts in "the cause." Which reminds me, time for my monthly installment.

By the way, regarding your coincidence - my runes show 4-04 as being very significant, on many fronts. (But don't tell anyone, lest they think Harvey to be the fool he is)

Your bid on Sir Farfel's contest was great, even beat my nothing hands down.

Salutations
IronHead

History has shown that hyper-inflation brings down governments.France ,Germany etc.The U.S. opted for deflation in the 30's for that reason.We did not over throw the government. The depression was not an accident,it was intentional.They didn't want a Hitler or a Napolean to come to power here.A strong man,a fascist,a dictator.Inflation means wheel barrows full of money to buy a pair of shoes 'savings destroyed,elderly people destitute.Credit will be non-existant,nobody will lend money,not for mortgages,car loans ,nothing.The whole credit system will be destroyed.NO...I believe they will do as they did before,opt for deflation.I know I am in minority here,but logic tells me otherwise.Politicians will do what keeps them in power,and so will the Fed Reserve.Inflate yes until the last minute ,but when push comes to shove they will reverse course and collapse the inflation,possibly issue new currency,like a 1 for 10 reverse split and back it with about 15 % gold.We have the gold to do it.Thats our ace in the hole!Gold will still go up just as it did in the 30's. Credit can be restored in deflation and thats exactly what brought the end of the depression,not the war ,that was a side issue because of Germanys decision to choose inflation.Thats what brought Hitler to power.When push comes to shove it will be DEFLATION.

Mr Greenspan knows what should be done with the surplus,they used to call it "retire"the surplus.Just BURN it thats all,no Im not mad ,if you think about it, that will stop inflation .You won't have to buy back bonds and disrupt the credit system,you won't have to worry about buying private assets with public money .You won't have to worry about increasing the size of Government with government spending.You won't spend it creating future obligations for taxpayers .You won't have to worry about FAIRNESS ,you will be burning rich peoples taxes,the poor can't complain,they didn't pay it..The Dollars left in circulation will buy more,poor people will benefit from the increased purchasing power,inflation will be dead.Just BURN it Mr Bush.
Up in Smoke ,take a lesson from Cheech and Chong.Just Burn it.

http://www.publicdebt.treas.gov/opd/opdpenny.htmSir your ideas at first made sense to me. But then I realized we are not self sufficent. We have to trade with other nations for stuff like oil, and well just about everything. Even my cigatettes are made in Greece! Say we deflate. Just about everyone and everything in the US defaults, including the banks. I guess the Fed could buy the bad loans but then we are not talking about deflation anymore. So everyone is bankrupt. And other nations are still going to send us stuff? I know you said we would back the currency with %15 gold. And do a reverse split on the dollar. So that would make the POG what about 26.50? And other countries could trade their dollars for gold, maybe in a place like London? And .. And I bet the French would start trading lots of dollars for the gold... and Nixon, er ah.. wait...
We import more than we export, even if we do as you suggest, eventually we would run out of all that gold that is supposed to be there.
Also they can't inflate up till the last moment then pull all the dollars back. The Fed is pumping out dollars, they can stop at some point, but it still wouldn't be deflation. You can change the number of zeros on a $10 bill, but it dosn't change the amount of currency that has already been created. Well I guess it will be worth ten times what it is worth now, but what is that? Too much dollars have been created for just our country, enough have been created for the whole world to use as a reserve or more likely a media of trade settlement. If we restrict the number of dollars such that it no longer serves it's function pricing oil and other stuff for the rest of the world, then the world will use something else. It is as if deflating the dollar supply would be the very thing that is most likely to cause local price inflation in the remaining dollar area.
Of course I can't see how inflating the dollar supply is any better, but that is what the fed is doing, so they must think it's a better solution.
Sir, I do not know, but they are pumping money into the system at an alarming rate according to posters here, and while I have checked to see if the posters numbers are accurate, I am not smart enough to know for sure that the rate is indeed alarming.
In time, it will be clear what is happing now, but I don't know beyond what I can understand, which isn't much.
If it matters to you, they say gold does well in a deflation, in fact a poster elsewhere named Aurator, I think did some sort of study and found it does best in deflations.
Not that I truly understood it.

As for the surplus, I don't think there is a surplus. The link above seems to indicate we owe more now than we did before, by my accounting standards that would indicate that there isn't a surplus.

Also the poor are destroyed by deflation. The rich are harmed more by inflation. Deep down, I fear we will have neither. I fear our dollar will go the way of the Czar's rouble. But I'm a pessimist.

http://www.millenniumadventure.com/content/stories/pitiful.htmlgood read

http://www.usagold.com/gildedopinion/BakerSigns.htmlOne of our favorite Colorado School of Mines grads, Leanne M. Baker of SalomonSmithBarney, offers us our latest additional commentary for The Gilded Opinion. In her Industry Note published on Wednesday of this week, she sees 'Gold Showing Signs of Life', saying in her commentary, "recent developments in the lending market support our long-held contention that the equilibrium gold price is well above $300 per ounce. We continue to believe that the longer gold prices stay mired near 20-year lows, the more explosive the eventual upturn may be."

She also offers authentication of the cautionary letter sent by the World Gold Council that rightfully got much attention among gold market followers in recent days:

"...The fact that least rates continued to climb even as short positions are being reduced suggests that the supply of gold being lent to the market is, in fact, tightening.
Is there evidence that central banks are reducing the supply of gold available for lending in the market? The short answer is, yes. Excerpts from a letter that the World Gold Council sent last week to its producer members have been circulating on a number of Internet sites. We confirmed that the letter was written, and that the excerpts are quoted accurately. It appears that the Bank of England (an outright seller of gold through its semi-monthly gold auctions) has not been lending gold in recent days, a move that the WGC characterized as "unprecedented, as its short-term lending is considered a vital tool in the smooth running of the London market."
+
In the wake of the late-1999 unruly gold market, when both lease rates and gold prices spiked, some client central banks apparently injected necessary liquidity by lending gold for longer periods than normal -- a year or more, rather than three-month or six-month periods. As the gold loans have matured this year, in an environment of depressed gold prices and sub-1% lease rates, some of these central banks chose not to renew the loans, thus drying up liquidity."

Click the link to see her briefing, along with a nice chart of near-term historical supply and demand figures for the kingly metal.

http://www.pronetisp.net/~rbrownHow can you have a depression with fiat money? Here's one attempt at an answer. Quotes from the above link...

DEBT MONEY From Chapter 3:

But what about the money supply under the fractional reserve scenario? Consider: A man has $100 in his pocket. It is his to spend. As long as he spends it, and the person who receives it proceeds to re-spend it, et cetera, there is $100 in circulation. But if someone along the way deposits the money with a banker, and the banker keeps only 25% in reserve and loans the balance... Now we have a different situation.

The man who deposits the money with a banker still has $100 in liquid assets to spend as he wishes �- or so he believes �- be it in his pocket, hidden in his mattress, or in a bank account. But now, of the original $100 placed on deposit, the banker proceeds to loan $75 to a second man.
Now the second man has $75 in his pocket to spend as he chooses. And we have $175 in circulation �- the first man still has $100 to spend and the second man has $75 to spend.
If the second man �- living in this checkbook world -� deposits the $75 with his banker, and his banker loans 75% of it (just as the first banker did) we now have $100 + $75 + $56.25 in circulation �- $231.75 in total.

If this continues, we ultimately end up with $400 in circulation. The $400 results from a $100 primary deposit and a reserve being held in each bank of one-fourth or 25% of the money deposited. A lesser reserve of 20% in each bank would result in $500 circulating for each $100 primary deposit. A 10% reserve would convert the original $100 to $1000 of spendable money in circulation. Just like magic.

And when the money supply goes up, we already know what happens to prices. We call it inflation. Note that the government didn't have to print more currency. The money supply increased entirely by merit of fractional reserve banking.

Money is created when a bank makes a loan. Each bank, alone, lends just a fraction of the money depositors place with it for safekeeping. But a group of banks, passing the same money hand-over-hand through a chain of loans and checking account deposits, multiplies the money supply several times over.

It becomes a vast whirlpool of circular reasoning. The ultimate brake on this whirlpool is the reserve requirement imposed by the Federal Reserve System... It is the reserve requirement which specifies the fraction of bank deposits which may be loaned.

Through fractional reserve banking, the creation of money is pyramided by means of loans from the seed of a single bank deposit. The destruction of money �- a collapse of the money supply -� is reverse-pyramided from the withdrawal of a deposit or the default of a loan.

Although money is created when a bank makes a loan, it takes two parties to consummate that loan: the willingness of an individual to go in debt and the willingness of a banker to extend credit. The borrower must be credit worthy in the banker's eyes. Until the loan is actually made, the new "money" is only latent or potential. The linchpin of the money supply is thus the judgment of local, individual bankers on when and when not to extend credit.

When banks make loans, money is created. Then what is money? It is nothing more than the commitment of an individual to create future wealth (by building the house or growing the crop) sufficient to pay off current debt (plus interest, of course). Money is not a piece of paper or a lump of gold; it is someone's promise; it is as fleeting and intangible as "goodwill" in accounting.

In the earlier discussion, goldsmiths practiced the art of fractional reserve banking. But in that era, the reserves kept on hand to satisfy day-to-day needs were "hard" reserves � bullion, coin, and cash money. Today, the reserves kept on hand are themselves debts, not hard reserves.

[The textbook] Money and Banking puts it this way:

"Our stock of money is made up of debts. Government currency and coin, Federal Reserve notes, national bank notes, and checking deposits are all promises to pay on demand. Our monetary stock varies directly with the volume of outstanding debt. The largest part of our money supply is created by banks who issue their own promises to pay on demand in return for the promises to pay given the banks by governmental bodies, corporations, and individuals...

"The banker is really a dealer in debt and is a convenient intermediary through which citizens offset their claims and debts to others. The clearing of credits and debts against each other provides settlement of claims without the use of hand-to-hand money. Thus society is saved the cost of acquiring huge sums of standard money, the labor and cost of acquiring the metals, and the wear and tear incidental to their use...

"It is important to recognize that credit and debt are the same thing looked at from different points of view. If Jones lends Smith $1000, Jones has a $1000 credit due in say 6 months. At the same time Smith has a debt of $1000 due in 6 months. Since credit and debt are the same thing viewed by different persons, it is illogical to say debt is bad and credit is good..."

Some 150 years ago, Daniel Webster wrote: "Credit has done more -� a thousand times more -� to enrich nations than all the mines in the world. It has excited labor, stimulated manufactures, pushed commerce on every sea, and brought every nation, every kingdom, and every small tribe among the races of men to be known to all the rest."

Obviously, Mr. Webster thought highly of credit. But, to the banker and the accountant familiar with double entry bookkeeping, credit and debt are the same thing looked at from different points of view; your accounts payable is someone else's accounts receivable.

When a bank makes a loan, money is created. We call this "extending credit". Simultaneously, we are creating debt. The only backing for the money being created is the debt commitment of the individual taking out the loan.

DEPRESSION From Chapter 7:

Inflation is an increase in the money supply. It is characterized by higher prices. When the current money supply is diluted with new money, each dollar is worth less than formerly. When money is worth less, goods are worth more (in money terms) and prices go up.

Depression (or "deflation") is the opposite. When the money supply shrinks there are less dollars in circulation than formerly. Money is more scarce; more valuable. More valuable money means that prices go down. Depressions are characterized by lowered business activity, higher unemployment, and lower prices.

It would appear on the surface that with printing press money, not backed by gold or silver, deflation is all but impossible. The government can prevent that from happening by just revving up the presses. Right?

Wrong, because our money supply consists of more than just printed currency. Over 70% of our money supply is in the form of checking account balances. It is "debt-based" money, created when a bank makes a loan. The Fed can create an easy-money policy but it cannot force people to go in debt. Therein lies the rub. The Fed's power to increase the money supply is limited by the willingness of individuals to go in debt. As Paul Samuelson puts it in Economics, "This is summarized by the aphorism �the central bank can pull on a string (to curb booms), but it can't push on a string (to reverse deep slumps).�"

A depression, by definition, is a shrinkage or contraction of the money supply. But the roots of depression, ironically, are found in inflation. The sequence is this. First, the money supply is inflated. Then, when the inflation is recognized, investors demand higher interest rates to keep ahead of it.

The inflation rate, piled on top of the premium already being charged for other kinds of risk, raises interest rates to levels that guarantee loans will never be repaid. They cannot be repaid, due to the nature of compound interest [subject of a different chapter]. They will be defaulted. Inflation is the straw that breaks the camel's back...

...Ah, the magic of it all. The magic of compound interest. The magic of leverage. The magic of fractional reserve banking. "Neither a borrower nor a lender be," the proverb admonishes. Old fuddy-duddies. What do they know?

We hear on TV about the Fed raising interest rates in a pre-emptive strike to head off inflation. This is a half-truth at best, sung by a chorus of professionally coached basso legato voices, uttering with certitude whatever appears on the TelePrompTer. Tout au contraire. Higher rates do not cure inflation; they result from inflation.

After the money supply has been enlarged, the Fed raises interest rates to discourage borrowing and prevent further inflation. Because it is the Fed who first raises rates, it appears that the Fed controls rates. The Fed controls inflation, but it does not control interest rates thereafter.

When inflation occurs, investors demand higher rates to stay ahead of it. (Borrowers are willing to pay higher rates because they foresee that a loan can be repaid with cheaper, inflated dollars.)

As inflation heats up, each new interest rate level consists of (1) the ordinary incentive demanded by investors to part with their money for a time and put it at risk, plus (2) the inflation rate, plus (3) an extra couple of points tacked on by the Fed to discourage borrowing (and give the impression, real or feigned, that the Fed has entered an inflation-fighting mode).

Each time inflation increases, interest rates increase. Investors control that. Investors buy government bonds. They buy the bonds only at discounts steep enough to produce the rate of return they demand, inflation fears included. Or they don't buy. The Fed doesn't control that. The Fed controls only step #3 �- the last little bit tacked on for public relations purposes.

Inflation causes higher interest rates. Higher interest rates cause borrowers to default on their debts. Default causes the money supply to contract. A contraction in the money supply is called a depression. Inflation causes depression.

The inflation game goes on until somebody can't pay. Then the pyramided, interlocking structure of debt comes crashing down and the money supply collapses. Printing press money (fiat money) does not prevent depression; fractional reserve banking actually contributes to it.

Because the cycle takes longer than a generation to play out, the pattern tends to be forgotten. As a result, the depression at hand is always a fresh surprise and mystery to the generation experiencing it.

Once begun, a depression perpetuates itself. First, borrowers who are deemed good credit risks by the banks and who would be welcome to borrow money at any time are themselves not in the mood to take on new debt. For one thing, the future looks troubled. For another, the loan will have to be repaid in ever more valuable dollars. Result: loan application not made.

Second, the borrowers who get something less than red carpet treatment from banks, those who need to borrow money because of financial difficulties, are deemed poor credit risks by the banks. Result: loan application not approved.

Third, many banks fail in depressions. Those which remain are not much trusted by the few folks fortunate enough to have a little money... So deposits dry up. Without deposits there is no money to lend.

For all these reasons, lending stops. Without lending there is no expansion of the money supply. The depression -� the contracted money supply �- continues.

How does it end? In the case of the Great Depression of the 1930's it ended with World War II. We are given the impression that wartime deficit spending by the government somehow or other lifted the country by its bootstraps out of depression and into prosperity. It's unfortunate that it took a war to do so, but that's how it happened. Or so we are told.

Actually, the Great Depression did end with World War II, but it did not end due to deficit wartime spending any more than it ended with pre-war deficit spending. It ended due to the monumental influx of European money. Europeans sent money to this country for two reasons. One was to buy war material. The other was investment money seeking safe haven in the midst of war. By 1948 the U.S. government held 75% of all the gold in the free world. We did not lift ourselves out of depression. Rather, the Europeans sent us all their money.

If nature takes its course, a generation or two of inflation will lead to default and depression as described above. There are other, unique scenarios, however, which could leapfrog the natural course of events and throw us directly into depression.

How about this one. The Pacific rim is subject to earthquakes. Chile, California, Alaska, the Philippines, and Japan are all part of the Pacific rim.

Tokyo real estate is the world's most expensive. It is reported that a few blocks of downtown Tokyo have a higher dollar value than the state of California. One big earthquake could bankrupt all the major American insurance companies, obligating them to dump holdings �- stock, bonds, real estate �- at whatever price they can get. Golly, Mr. Perot, talk about a giant sucking sound...

AND WHAT CAN WE EXPECT NEXT? From Chapter 13:

If nature takes its course, it appears that the logical sequence we face is (1) increasing inflation, followed at some point by (2) wage and price controls, followed at some point by (3) deflationary depression. Of course, a major debt default (by a third world country unable to pay its bills, for example) could leapfrog the normal course of events and plunge us directly into depression. In fact, the next thing on the horizon could be inflation or depression or both �- and in either order. In simple fact, no-one knows what's coming next. No-one.

And if a war starts, all bets are off. War is as likely as any other scenario because it allows politicians to rally support in the face of failed policies, consolidate power, impose controls, and shift blame. War �- rallying �round the flag �- is a great blessing to a faltering leader...

I believe that a "prudent man" should structure his portfolio such that it is shielded in every way possible from potential calamities �- double digit inflation, war, 1930's-style depression, an incipient police state, wage and price controls, or foreign exchange controls. No? Look me in the eye and tell me that none of these things will happen (again) in my lifetime. Sorry, friend, but as the punch line of a dirty joke has it, "Be ye not a wee bit old to be believin� in leprechauns?"

I would like to discuss a private matter that I think might be of interest to you. If you are so inclined please e mail me at
currie@mqcinc.com

j'Bear

Japan, the second-largest-world-economy (!!) is at a 15 (fifteen) year LOW ! This fact is the purest evidence of the "rotting in the state of Denmark" . The total world-volume of paper currencies is not backed by total volume of products and services. This golden(sorry-paper) era, is specialised in the creation of hot air out of nothing. Wealth-Illusion, created with lesser and lesser working-effort. Speculative euphoria. Welfare at your service.

The inflation/deflation, discussion, has already 15 years of age. Economy is the result of mass-perception. Impossible to predict the final outcome. Panic and greed extremes are constantly engineered and contained. Patiently awaiting THE Fatal and Destructive shock-wave. I'm not claiming a Nobel price for this statement :-)

We don't choose for deflationnary Debt-Paper-Money-Destruction. Debt write-offs, Defaults, Stock Market crashes and bankrupcies, are the results of mass-perception-moves (changes), with their specific momentum-structure. Japan isn't able to engineer a positive outcome. The US-bastion, must (inevitably) follow, in the global march, for radical change. Credit-creation and resulting UNPRODUCTIVE (useless) Debt is cause (intrinsic) for the uncontrollable and growing systemic crisis. The social-political model of wealth-redistribution (welfare) is cancered. Statistics are of little help to provide the evidence. Serene observation of people's attitudes, says it all. Drastic, corrective, action,(fiscal-monetary) is already to late.
Unproductive debt MUST be destroyed, before healthy money can be used for a new period of "natural" growth. (linear growth versus exponential growth). If ALL want Everything NOW...growth is condemned (forced) to go exponential. This proces, developped during the last 30 years.

The flight to quality will be initiated when the poison, passes, the brain-barrier (denial >>> acceptance). A dollar-index, below the 100 level, is IMO, the pain-barrier. Continuation of the 1985 dollar-decline. Momentum build-up, below this 100-level, will decide if the masses will be guided to inflation or deflation. Interest rates - direction (up/down) will signal, wich way we will go. Cash and Gold will rule without any doubt! With or without Deflation or Inflation choice. Winter and summer season are the opposite extremes of spring and autum.
Each proces of growth, starts in spring. Early blossoms, freeze and will never produce any fruits. Winter is knocking at the front door, already. Call the japanese for confirmation.


With my poor spaghetti-english...just repeating what many others are trying to say with more, sophisticated-economic-language. It is the degree of conviction that is the most important for survival or protection. The masses are still, decisive in the denial status. They don't want to fly, to picture the ongoing "fundamental" detoriation.

WGC is receiving 2$/ounce from the profitable miners. A total of 57 million $, means that only 28 millions ounces of gold are mined at a profit, yearly. This is only 850 tons out of 2.400 tons of newly mined gold ? Significant ?

Before the markets turned down I was worried enough to change my IRAs and 401Ks from stocks to US treasuries and "secure" corporate and municipal bonds. Over this last year I have benefitted from this since the stock funds have had real trouble. There have been a few posts on the forum that have gotten me concerned about being in bonds now.

Could someone please explain in a very simplistic way, why there is a concern about these bonds? I have never cherry picked investments or insurance (with the exception of gold). That which is out of my control I have always stayed away from since I have a healthy respect for other peoples greed. Because of the tax laws I am in bonds now, and previously in stocks. Is there any other option that is out there? Unless I find an ideal retirement property at an ideal price, I fear a crash in real estate prices is inevitable. Any suggestions as to how to position oneself?

http://www.usagold.com/Order_Form.htmlMutual Funds Experience Record Exodus

3/1/01 www. usagold.com. . . . . Gold sold off sharply this morning on reports of heavy fund selling with some of the banks coat tailing the maneuver and others taking the opportunity to fill short positions. Things were nip and tuck in Asia until the price gave way in London and then at the New York open. Yesterday reports circulated that a single "fund" was responsible for driving gold lower. The paper selling, as has been the case in the past, is being met by physical buying around the world. In the face of rising inflation numbers, a worldwide energy crisis, an irresolute dollar and plummeting stocks, one wonders what might motivate this "fund" shorting the market. The DJIA was down over 100 at the open, and the euro up for the second straight day.

As gold retraced its recent gains late this week, reports circulated in the mainstream media about a mass exodus of the investing public from the stock market. . . . . . . . .

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

Registration required to access the full Commentary & Review. Please go to the link above.

http://groups.yahoo.com/group/gata/message/691President Mbeki's office calls, and
a leading black businessman signs on.

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@yahoogroups.com

Yes, an attack on the gold cabal by people who
have traded futures and options on the Comex
is very much in GATA's thoughts. Our current
lawsuit may be extended to become a class action
that would include Comex traders. The time is not
quite right, but maybe soon -- I hope.

Bonds have two kinds of risk. First there is credit risk. That is the risk that the bond issuer's ability to repay will diminish over time, perhaps to zero. This would reduce the value of the bond accordingly. Credit risk is not usually a factor when buying treasuries, but it is always a consideration when choosing municipals or corporates.

The other kind of risk facing bonds is interest rate risk. If you buy bonds at currently prevailing rates of return, and then the economy experiences a general rise in interest rates, your older, lower-yielding bonds will no longer be as attractive to new investors. You will have to mark them down in price to sell them.

Interest rates are always a function of prevailing inflation expectations. U.S. wholesale inflation for the past twelve months (Feb.1,2000 to Feb.1,2001) was 4.8%. Currently, investors in 30-tear treasuries are content with just a 5.35% rate of return. No doubt this is because they believe the current recession (if that is what we are in) will drive inflation, and thereby interest rates, down. But what if they are wrong? What if inflation rises from here? Soon, the rate of inflation would exceed the rate of return on their bonds, making their investment a poor one indeed. Under such a circumstance, the bonds would most assuredly decline in price.

As it stands now, the AFTER TAX, AFTER INFLATION return on 30-year treasuries is already negative for many investors (depends on tax bracket). So, there is no justification for buying them unless one believes inflation rates are about to decline. This raises doubts about the advisability of owning most other bonds as well, since most bonds are subject to the same valuation influences.

Bonds are poison when inflation rises. For this reason, they are often considered the investing antithesis of gold.

Franz Pick, a great advocate of gold money years ago, produced the following dictum:

"BONDS ARE CERTIFICATES OF GUARANTEED CONFISCATION"

Stuff for casino players, not serious investors.

Sierra

http://www.newaus.com.au/econ197colin.html
The world monetary system relies on the credibility of it's various players to function in a semi-orderly way.Where is the epicenter of said credibility?Why it rests with Mr. Greenspan,of course.

Perusing the latest comments from the Maestro,I was left wondering(as all of do,in befuddled amazement),just how this man manages to keep this image as an all-knowing steward,more or less without question since the 1987 market debacle.

We are all quite aware of his history of re-liquifying markets as problems occur,thereby rescuing all those "suffering"from poor investment decisions.Leaving aside the implications of such moves on future ramifications,he maintains his credibility as the Maestro,rescuing the monetary system from chaos and ruin.

So,how can the image of credibility be maintained now in light of his latest offerings.Firstly,he admonishes government to maintain fiscal responsibility.His actions with the credit bubble developed during his tenure stand out in stark contrast.Secondly,he is back to pondering that in the absense of policy changes,the government may have to acquire private assets as a result of the growing surplus,"in a few short years".This appears to be deception of the highest order,as the issue of financing the surplus has been laid bare here at the forum and elsewbere by so many.

As Randy so succinctly put it yesterday;Arrgh!Credibility;who's got it,got gold?

PS,the commentary is there,just scroll down the page to find it.Contains a positive mention of GATA,too.

http://www.timesofindia.com/today/01mbom5.htmBEWARE!!!
"You just could be the next victim of the tricksters waiting to fleece you. With their cheating modus operandi getting more innovative, a lot of people are falling prey."

Haven't read below yet to see what else posted, but I'll just get this in:

Mr Moto says:

"Japan was a net seller in December, with holdings falling $4.2 billion to $335.8 billion.

"That's the latest. Which would be very near to 25% of the public debt that's held by foreign and international investors, and about 6% of the whole. "

Is this why the talk about Treasury "buybacks" and future premiums on T-bonds? (I mean, as in, "Let's REALLY talk this one UP, gang") To keep Japan in the big dollar-asset holding pen? "Thanks for the yen, friend. Sorry about that $80 sushi roll..."

Just a reminder:
It's not too late to send out letters in support of GATA.

All one has to do is say "I vote and I support Gata."

If you send a letter to each of the following addresses, you will accomplish a few things. You will take up their valuable staff time opening counting and sorting mail.
You will also get their attention and let them know that we are paying attention to what they do. : )

Each letter is like an informal ballot so, cast your votes

Treasury Secretary Paul O'Neill
U.S. Treasury Department
1500 Pennsylvania Ave. NW
Washington, D.C. 20220

Charles A. James
Anti-Trust Division
U.S. Department of Justice
950 Pennsylvania Ave.
Washington, D.C. 20530

http://biz.yahoo.com/rf/010302/t122863_2.html"Nobuaki Kurisu, chief fund manager at Sumisei Global Investment Trust Management, also cited derivatives-related selling as a factor in the stock market's plunge, and added that such selling should keep market volatility high for the time being, making institutional investors hesitant to buy.

"Analysts said speculators have been selling Nikkei futures contracts in the past weeks, trying to nudge the Nikkei average to pre-determined levels that will in turn trigger hedge-related selling. Many of the trigger points were believed to be set at or below 12,600.

"THE RUSH TO HEDGE

"Equity linked derivative bonds, which usually mature in six months to one year, offer higher interest rates than ordinary bonds if the Nikkei stays above a pre-determined level.

"But once the Nikkei drops below that level, the return at the bond's maturity will be lower than the initial investment. This causes brokers to hedge by lightening existing long positions or selling in the market.

"``Arrangers of these products have to sell either Nikkei futures or a basket of Nikkei 225 component stocks to hedge, and there are more trigger points if the average dips to 12,000 and further to 11,500,'' said Hirokazu Kabeya, analyst at Daiwa Institute of Research.

"He said up to 100 billion yen ($852.2 million) worth of these bonds have been launched at each of three different pre-set Nikkei levels -- between 13,000 and 12,500, between 12,500 and 12,000 and between 12,000 and 11,500."

Mr G: We wouldn't have any of those around here now, would we?

"She's vibratin' too much, Captain. I dunna think I can hold her t'gither much longer..."

Yaaahhh! She caan't take anymore Captain!

A long time ago in a place not so far away...

PTB#1-"...Well and we've got this blasted debt that we decided to sell to the foreigners. We keep owing them more and more money every year. People are sending our dollars overseas and we have to pay them off to keep them from coming back. If we let the dollars back in we have inflation. If inflation takes hold everything will come to a grinding halt. What we need is a way to pay off the debt without causing domestic inflation."

PTB#2 "...OK lets try this. We get the banks to stop paying decent interest on insured savings. That will free up some money/liquidity to seek higher returns elsewhere. Our friends on wall street say that they think the time is ripe for a real market run-up. Lets say we let the market appear to be returning better than the banks used to then feed the frenzy with the printing press. All the new money will flow right into the bubble and not cause inflation in the traditional sense. Then when it gets really huge we tip off the wall street guys to present the case that the market looks a bit unstable. Then everyone will bail and rack up incredible tax revenues to be collected. With the surplus in revenue we can buy back our debt. End result, we fool the foreigners about our prosperity then prime the pump to get what looks like legitimate revenue. We buy back our debt with inflated dollars and the economy booms and NO inflation!"

PTB#1 "...Why that's brilliant! do you really think we can pull it off?"


Later...much later...

PTB#1A "...Yeah but didn't the idiots realize that once hooked on high returns and being told to hold for the long term, that the people would not sell until they were well in the red! There's no surplus in that!

PTB#2A "...And to make things worsre those same foreigners jumped into our bubble and drove it way higher than was ever intended. Now they are pulling out and causing volatility that is difficult to contain. All the while the domestic public is waiting for the rebound. To make that happen we are going to have to print 1000 X more money than we did to get this thing started. Then the public leveraged themselves to the hilt to get more speculative advantage. Now they are tapped out and in danger of not meeting their payments due."

PTB#1A "Cripes!"

http://www.usagold.com/onlinestore/special.htmlThe final grains of sand are running through the hourglass on this offer of Swiss 20 franc confederatios and Danish 10 and 20 kroner gold coins. Act now because, like time, this offer won't wait.

I'm off to ski ... the promised champagne powder slopes of the Austrian Alps ... and leave any and all unfinished business until the 'Ides of March'... when we'll have some clarity as to the cabalistic variety of gold derivativity - probably.
Best to all of you - cb2

A very strange thing to report. Advanced Micro, a company that
warned about lower profits right here on our air earlier today is
now up 11%. This is not a misprint. -Tom Costello, CNBC,
Thursday, March 01, 2001, 3:20PM EST.

CNBC Anchor: "It WAS a rather odd turn around wasn't it? And just
exactly at 2:30?" ~"Yes it was - - and it centered around
Advanced Micro Devices." -Liz McKay, Bear Stearns, CNBC, March 1,
2001, 4:18PM EST

Regards,
Journeyman

Many thanks for your kudos friend. Hope Farfel is still with us. Every internet board needs a good rascal! So...you've got runes! Wow. I'll have to get me some of those. When I get 'em, I'll check 'em and get back to you.

TheStranger (3/2/2001; 9:48:35MT - usagold.com msg#: 49230)

Sir,

You would be hard pressed to find anything better in the way of guidance on bond investment concerns than what TheStranger offered per his post # 49230. Since you mentioned that the assets in question were of the IRA�401K sort, one might at first think that TheStranger's point about AFTER TAX effects might not apply. The fact is that they do apply, as the postponement of tax via these deferred vehicles only exacerbate the problem. Almost everybody I know who finally got to the point of cashing out on these types of investments ended up paying more taxes at the point of liquidation than they would have paid had they paid the taxes as they went. An excellent statement appeared on this forum a few days ago by TownCrier @ # 49085 in which he says it best, "Generally, what is a "capital gains tax" but little other than a "currency devaluation tax" (�inflation� �tax�). This after tax, after inflation thing that TheStranger so aptly spelled out affects even the tax deferred assets which you are concerned with, and the longer the deferral the more pronounced the negative net draw-down in your investments.

If you were to roll these investments out of Treasuries where would you go at this point in time? With all the talk of the possibilities of things moving either direction (inflation or deflation) and even worse the possibility of stagflation, with the uncertainty of it all, it might be prudent to choose a haven where the assets would benefit no matter which direction the US dollar goes. (This works best at the moment because POG is at or near production costs and downside risk is negligible.) I know that Michael and Co. can handle an IRA roll-over into Gold should you choose to "cherry pick" on even these assets.

Of course you cannot avoid the capital gains tax caused by inflation but at least you do avoid the devaluation caused by the possibility of inflation, the very problem that is most dangerous with Treasuries and or any other types of bonds.

I know what Stranger said was short in content but it is the sort of item which I believe belongs in the HOF so that it can be easily and often reviewed by those who like to take the efficient route to truth and understanding. I hereby nominate Post # 49230 to the HOF. Any seconds?

Very respectfully,

HBM

An exceptional demonstration of discernment on your part in making this nomination for Sir Stranger's bond expo. As I do the work of "four men" here in The Tower, does my SECOND provide automatic qualification? Perhaps....

got power?

PS. To those seeking Farfel, I have it on highest authority that his ability to post remains as unfettered as yours or mine. Any absence is by choice or chance, but not by circumstance.

http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B285256A02006A52A1?OpenDocumentI read the article in Miningweb by Tim Woods (see link). I cant help but remember a
scene in the movie " It's a Wonderful Life " In the scene I am thinking of
Potter tries to hire ( buy ) George Bailey and offers him a cigar, a Big
salary and the nicest home in town and even trips abroad. George Bailey asks to
think about it and talk it over with the wife. Potter say's "Sure ! , Take
all the time you need my boy! " . And then George Bailey remembers who he is
dealing with. He lets Potter have it ! Im sure you know the scene I am
referring to. I find the similarity uncanny.

$hifty

$hifty

Though I post infrequently, I hope my second to Sir Stranger's inflation post will be counted.

For reasons I cannot explain, his posts on inflation (and especially this one) always remind me of some interesting times I had in New York City. I often ate with a friend at Katz's, a famous deli on Houston Street. My friend would always order the same sandwich and while it was being prepared would yell at the counterman "AND MAKE SURE WITH MEAT ITS LOADED." That's the way I see Stranger's posts - always lean, no fat, and with meat they're loaded.

Hey Stranger - let me also offer my kudos to the list. I have a question for you. Let's say we rule out stocks of any kind as an investment at this point. Also, let's rule out most bonds. Assuming the safest bond is issued by the entity that can essentially print money to cover, which debt instrument would you hold to the exclusion of others at this time and why?

The reason I ask, it seems to me the only way to place your funds today if you don't want all your money in physical gold would be high grade debt or cash. As a second question I would also like your opinion on the viability of money market funds in a liquidity squeeze. I noticed a couple of houses are moving cash into savings accounts out of money markets.

It appears all debt is coming under tremendous stress. In my industry receivables have jumped an additional 2-3 weeks. Businesses will have to borrow more at this point or face default. We're seeing credit lines being extended for what appears to be a case of "let's give this show another 90 days". I'd be safe in saying that cash flows are getting squeezed real hard.

Have you heard anything from old Cavan Man?

My dear FARFEL:
I bid my now defunct downline in the multi-marketing FAMILY OF EAGLES, which I had hoped to use not only for exchanging fiat for REAL money, but to educate the proletariet on the inherent risks in fiat money, the REAL role the Federal Reserve is playing in destroying lives, countries, sovereignty, etc. I began in earnest in 1996, at least that is the year I solicited most of the participants below me, back when REAL money was around the $350-$400 mark. But the my efforts quickly regressed, first slowly, then more rapidly as the price of gold went down. Try convincing people that it is inherently to their well being to pay $1980 for 2.7 ounces of 1/10 ounce gold American Gold Eagles, when the spot price of gold is declining. To further the process, I quaranteed that if they (Participants) were unconvinced of their need for possession of the REAL money, I would buy their $70.00@ Gold Eagles back within a year! Needless to say, the cabal kept shorting the paper, and forced me to come up with $40,000 to buy back the participants' gold. So now I am going to put up my DOWNLINE for the hopes of winning your auction!
Do I begin my acceptance speech this way????????????
It is with great honor, Mr FARFEL that I accept the winning trophy because I truly deserve it and ...............
Sincerely,
HOOSIER GOLDBUG
P.S. You could give me my due respect in grading my bid against the other participants of your auction. HOW DO I MEASURE UP??????
THANKS in advance, Mr. FARFEL.

I think it was Tice or Noland that warned of a coming disaster in the money market funds. His case was that these funds are largely involved in purchasing the securitized recievables from credit card debtors. The creditworthyness of such will be dubuois at best in a liquidity squeeze. If I am correct, the money markets also finance the leases on everything that moves, and much that doesn't. How well will the leases on all those SUVs be honored in the coming credit debacle?

Shermag

FARFEL AUCTON BID!!!!HOOSIER GOLDBUG
I think you missed Farfels Auction. Wednesday was the last day.

$hifty

http://www.savingsbonds.gov/com/comi1100.htmWell, the official financial advisor's answer for the safest Treasury would be either 90-day T-bills bought through Treasury Direct (your own account with them, not through a broker.) Now paying around 5%.

Or Savings Bonds -- I-bonds -- which are now at 6.49% (which is 3.4% plus the calculated interest rate of a recent six-month period.) Rate is re-adjusted every six months.

You are price-protected with both of these, as you will not lose market value in an interest rate rise, and your rates will in effect move up with the market for the Treasury Direct, and with inflation (yes, the CPI sham) for Savings Bonds.

Also SBs have option of deferred taxability on interest and altogether tax-free interest if used for certain educational expenses. (Read, read, read the fine print as to ownership, purchaser, etc etc.)

Yes, I feel the same as you about lending more money to the same pickpockets who herd us all toward April 15 each year, and then counting on the skills of the IRS in being YOUR debt-collector. But, hey, Savings Bonds are the gifts that other people give your kids, so you might as well be sure they're in the right vehicle.

ZZZZZZZZZZZZZZ-----
I occasionally have fun trying the mental exercise of figuring how to arbitrage the Savings Bond rate vs (shorting?) another Treasury security (5-year? 90-day?), but I'm usually asleep before I get very far. Beats counting sheep...

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

I sense a disturbance in The Force. Do you think Trail Guide has something for us tomorrow after this turbulent week?

Sorry, that's "3.4% plus the calculated INFLATION (not interest) rate." 3.4 is the interest, and stays fixed for the 30-year life of the bond, and they say they're adding on 3.04% for the inflation rate. 'Twill be interesting to see how high that goes, or doesn't.

http://216.46.231.211/credit.htmon Ron Paul

I am wondering how much the current stock market fall, particularly in the big techs, is driven by the need the beneficiaries of ESOPs to raise cash to cover a tax liability. As the deadline of April 15 looms near, these poor souls must be near the point of capitilation, no longer waiting for a rebound to deliver them from their woes. At some point, commencing several weeks ago I speculate, they decided to cut and run. This may also help to explain why Mr. Magoo's rate cut had only a momentary support for the market.

Shermag

My, Sir Hoosier,

You really came out of the closet with that one.

O'Steen reminds me of Clinton in the way he used religion to get gain. I have often wondered if any FOA casualties like myself were posting or lurking on this forum.

I have way over 100 now defunct tracking centers. Shucks, I cannot believe that there is another like me out there. My loss upon honoring my personal guarantees to others amounted to $26,880. My promise was to make sure that they had double the number of ounces they purchased if they did not double their money by January 1, 2000. I ended up buying 96 ounces @ $280 and forking it over to these people who trusted me. They still trust me. My wife thinks I am nuts but she still keeps her stash for the big one. Sometimes we laugh, sometimes we cry, but mostly "we stand and wait."(Milton)

Very respectfully,

HBM

Sir,

That was quite perceptive. You may be on to something there.

Respectfully,

HBM

Good Sir,

Are you still among the living.

HBM

Hey gents - thanks for the input. I've got this profit sharing plan that has rather dubious choices and I can't exit with the dough. Aside from various foreign and domestic stock schemes I have the choice of money market, "Bond Fund of America", and Franklin Real Estate Securities. Fortunately I'm not counting on this "money" but I'd like to maximize the return if such a thing is ultimately possible. Unfortunately, 90-day t-bills isn't a fund of choice.

I'm sure many readers here have a similar "plan" and would appreciate any input regarding ideas on how to get hurt the least regarding these funds. Is there any "value" in any of the above choices?

MY BAD!!!!

HBM, Randy, Van Rip and ET - You'd think by age 52 I could take compliments in stride. But, honest to goodness, I blushed when I read your praise. Thanks for making my day!

ET - If I had to buy bonds for my IRA right now, I would buy short term treasuries maturing in a year or less. Outside my IRA, I would probably buy a short term insured municipal bond (they are tax free). But I believe that inflation is on the rise, and I don't want to lock in the current low interest rates any longer than necessary.

If, on the other hand, I thought we were headed into a debt trap (ala Japan), I would put all of my IRA money into long-dated zero coupon treasuries. As interest rates cascaded to Japan-like lows, my bonds would ratchet higher in price.

Now, about money market funds: Just this week, one prominent fund family had to supliment their money market fund with their own corporate cash in order to keep it from breaking the sacred dollar per share price. I don't recall who it was, but it was a well known name. Someday, perhaps soon, some big money market fund finally WILL break below a dollar a share, and when it does, it will scare the heck out of everybody.

If you are concerned about the safety of your money fund, consider using one that only invests in government paper. Most fund families offer such an animal, and, though you will get a slightly lower yield, you may sleep a LITTLE better at night.

I do hear from Cavan Man fairly regularly. Thanks for asking. Like me, he may sometimes be simply trying to avoid overposting. Who knows? Perhaps he is lurking even as I write this.

Thanks again to everybody for the kind words.

Thanks for the nod.

If that notion has any merit, the effect will diminish into the deadline. Perhaps the time of a near term bottom?

Of course, the issue that I refer to would be only one of many varied influences on the market. Many cross currents are at play. From my simple perspective, I can only be confident of the long term trend toward parity with historic norms. All else to me remains a mystery, revealing itself one episode at a time.

Shermag

Hey Stranger - thanks for your thoughts. You'll certainly not be accused of over-posting.

Do you have any thoughts on European debt, primarily Swiss debt?

http://www.bigcharts.com/intchart/frames/frames.asp?symb=nasdaq&time=8&freq=1
I don't profess to be a technical analyst,most of the time a chart is a secondary consideration.That being said,I found this chart to be quite interesting.This month brings the anniversary of the nasty NASDAQ bear,hence the one year time frame.I chose Newmont because they are unhedged,familiar to most investors;gold oriented or not.

It is the interplay between the two that stands out,they track each other in an almost identical fashion at times,at other times in almost a perfect negative correlation.The present time looks most intriguing,it appears that if NASDAQ breaks through the very important support levels it now sits at,the speculative money flows look ready to jump into another arena.

Could it be Newmont or as a proxy,gold? View Yesterday's Discussion.

Whoops,posted link seems to have lost the NEM line.Just click on "compare to"and add NEM to symbol box.

I'm unpleasantly surprised that this above question, arises on this forum. Physical Gold-Accumulators, should know better. IM-strong-O, there is no place anymore for any kind of DEBT-PAPER ! If you desire interest rate income, stash your cash on an ordinarry account, immediately available.

After 20 years of POG descend and the present possibility of further accumulation of physical gold at decreasing prices...we have the bulk of arguments for future profit and wealth-protection. What will be the POG 5 or 10 years from now ? Still hanging around the 250$ or lower ? Nonsense !! Yearly Goldproduction will decline rapidly and the WA is our quasi guarantee that CBs will not unload the 32.000 tons. Reread the 12.000 tons underground gold, projections and the dominance of South Africa (50%) as a 100 year old gold-producer.

The incredibable Debt-Berg, can only survive and be rolled over, as long as some kind of growth is engineered. If growth stalls after the past MEGA_EXPANSION, we are left with only two choices : extreme deflation, or extreme inflation. Both are destructive and strongly polarising on interest rates and currency-balances. There is not such thing as a soft landing possible. The DEBT-TRAP is a French guillotine. Sooner or later, but most probably, within your 5 to 10 years of Bond lifetime. A POG of 600$ is not at all unrealistic, within this 5/10 yrs. This is a plus 100%.
With NO RISK at all. Give me one single argument why any Bond can compete with physical gold at an accumulated average of 300$ !!!! (realistic assesment)
POG at 260$ or below is not a pricezone where the classical and boring 5%-10% goldpart in portfolio-advise is applicable. We know better.

BTW, the same goes for silver : 4,5$ >>> 9$ Impossible ???

Accumulating debt is an extremely dangerous luxuary, you can afford to play for an extended period of time. That re-distribution and phantom welfare-time is running out, slowly but surely.

My conviction, may seem arrogant. Please do counter the basic argument. I'll remain all ear. And consider this as NIA at all !

The total amount of unproductive and mostly speculative paper money, wich keeps on surching, desparetely for return, is in absurd proportion to productive-money-volume, serving for growth in products and services. All debt is supported by illusionarry Government back-up.

Allocating your precious paper-surplusses in LT-Bonds is believing that we will surely be able to manage another transitionnal period of debt roll-over, without any shock.
Why isn't the second world-economy, Japan, not able to realise this transition after full 10 years ? What's wrong with the Japanese ? After full deflation (zero% interest rates), they will be forced to hire the Inflation-monster again. Sam, play it again !

We have no basis anymore to start a new expantionnal growth-phase. Debt and Speculation is NOT the right foundation to build on. Previous fantasy-wealth was already builded on too much air. Air = unproductive and speculative paper money. Europ is in no better shape than the US. Taxes and exhorbitant welfare are inflationary in itself. We don't talk about money-creation or expansion. We just live as Gods in France, milking the paper cow. The high degree of private savings is also in pure or derivative paper-form.
Just hanging here unproductively and projecting the amount of produced paper surplus against the volume of products and services, created and needed.

The next 5 to 10 years carry a high statistical relevance of explosive, brutal change. GOLD...the ultimate selfdefense. Accumulate as much as you can...NOW !

Belgian, although I respect your ideological purity regarding gold (it is my favorite investment vehicle, too), the fact is that over the last few years, in fact, over the last TWENTY years, one would've received a far better return on bonds than on gold bullion. Not all of us who post here are ideologues such as yourself, but some of us are more practical investors looking to diversify our portfolios who buy bullion as a hedge. Frankly, the return on gold is non-existant unless it appreciates in value, which has NOT been occurring over the last few years. Besides my sentiments regarding gold, the primary reason I purchase it is that, like many others here, I think it will fare well when international currencies undergo another realignment such as we saw in the 60' and 70's. In essence, gold is my insurance and little more. As for your request for one single argument why bonds can compete with bullion, the answer is simple: look at the track record.

Peace.

Consider this fictional scenario:

Feeling confident because of past poker successes with a table of locals, I decide to jump in with both feet. I take all of my savings of $100,000, and flush with cash and bravado, I seek someone to engage in a high stakes poker game. I eventually link up with someone who calls himself Journeyman, and we play until I am penniless. After paying the house a fee of $1000 for the fine hosting that enabled our little match, Journeyman goes home with a capital gain of $99,000, and I sulk my way home with a $100,000 capital loss.

Now, replace poker with a little give and take game of stock trading, and Journeyman's gain is now subject to capital gains tax. If we are in Canada, he would face a taxable income gain of 2/3 of his winnings. If he is at a marginal rate of 48% (this is not very unusual up here) he would face a tax liability of $31,680. What would I face taxwise? I would have a capital loss that I can carry forward to offset some future taxable capital gain. For the time being, I have no taxable income change. In effect, my $100,000 is split, $67,320 to Journeyman, $31680 to the gubmint, and $1000 to the house. We have produced nothing of added value in all of this activity.

In the large picture, the stock market as it is now played by the masses is largely a means of transferring ownership of money from one individual to another. We are just moving the jello from one plate to another. Somehow in the process the gubmint is allowed to siphon off a large portion of the stake.

Now consider that these governments are in a much larger tax receipts position because of this activity. This means that Joe Sixpack has less cash kicking around to spend. This, combined with the energy whammy, and the self imposed added debt burden might go a long way to explaining the slowing economy.

As a final point, I ask how any politician can view this tax receipt windfall as anything but transitory?

Shermag

Buying bonds denominated in a foreign currency is like buying any other bonds except that you are also making a bet on that currency. Nobody has a consistent record of successfully predicting currency fluctuations. The same can be said for moves in interest rates. Consequently, buying foreign bonds, except as a hedge, strikes me as sheer guesswork, not something I would want to try.

I hope that helps. Thanks for asking.

http://www.sharelynx.net/Charts/wwgp.gifThe above is a chart of gold production from the 1830's until 1998 or 1999. I'm not sure of the source of Sharefin's chart here, but it seems congruent with figures I've seen from WGC and others to the effect that as much as 40% of the world's above ground supply of gold has been mined since 1980. My question is this:

If this were a chart of the money supply of any given currency, what would you say as to the state of such a currency?

Tia.

Poker and Capital losses
Sorry to hear of your loses to Journeyman. You lost, partly because he noticed your right eyebrow raised slightly whenever you held good cards.
The IRS forms limit capital loses to $3000 for a married couple per year but as you mentioned, the loses can be carried forward by completing a "workshop" in the instruction booklet. This should be keep with your records for next year's return. Unfortunately, I just finished this lose procedure. Maybe next year I'll be able to subtract my carried over lose against gains. That would be nice.
Rich

There are two over-lapping and rarely heard reasons why CBs want to keep gold:

1. Reduce the available supply to discourage us from re-instituting a free-market money, which would almost certainly evolve to include gold as the central asset.

2. To hold their current ~32,000 tons as a potential "spoiler" implicitly threatening anyone who holds gold with a dilution of the supply. In other words as ORO suggested awhile back, they should hold gold to implicitly remind gold users ~"You've got to be a bit careful when you dance with someone-else's girl."

But compare that dilution potential with the dilution potential of fiat, which is now about 8% paper and 92% megabyte, and under the control of "Easy Al's" band of merry manipulators.

Regards,
Journeyman

With much respect for your opinion and wise sense for equilibrum...you and I are getting to the heart of the matter...the Gold matter. Once ('94), I was holder of a Triple AAA bond (Credit foncier de france 8 1/2%) with state-guarantee. The state of France, suddenly withdrawned it's backing ! Can you imagine, what happened. No, no, I am not a doom and gloomer. Just providing an argument.

Thanks to free speech at www, we have gathered an immense load of arguments and perspectives on the gold matter.
This, from as much as possible, different angles. It seems to be almost complete and just waiting for confirmation in the nearby future. And still, there seems to reign so much fear and incertainty about that tangible yellow store of value with a respectfull age of 5.000 years.

The past 21 years are totally irrelevant in the perspective of the building up of paper wealth. Stockmarket hyperboles...Debt explosion...global imbalances etc..
Important is today's paper valuation of Gold at 265$. This paper money price is crucial. Give this price of 265$ and perhaps (much) lower, a place in the center of your total knowledge about Gold. You don't have to take any (profitable) cathastrophy into consideration. Than, goldholders, are only left with one imponderabile : will the Central Banks unload (rightout sale) their full 32.000 tons of Gold !? My answer to this vital remaining question is of course : NO THEY WILL NOT !

Gold's biggest friend is "TIME". Don't accumulate gold with paper you need to provide you with the necesseties of live.
Gold is storage of wealth (surplusses) you are prepared to pass onto the next generation. History is infested with brutal paper accidents. The only accident that can happen with gold is theft.

This vieuw is probably unpleasant for gold-owners at 800+$.
25 years is per definition a generation...and, it will be their children who are going to see the revaluation of the costly accumulated gold-reserve. That's part of the "crucial" I mentionned. POG at a give-away of 265$.

There is no alternative for Gold at present. Time has come to face the excesses of the past 30 years. I am convinced, you know, what many on this forum are trying to communicate, without the urge to indoctrinate one way or the other. A paper-profit makes you feel good, but Gold gives you warm, tender and secure feeling. Especially if you were lucky to accumulate at such a low price and culminating period.

An insignificant minority of Gold advocates are spending efforts on gold-activism. Goldproducers are still neglecting
to promote their honest product with the same enthousiasm.
Ergo...they give us the strong perception, that they do not believe in their unique product. This is one out of several other facts that are confusing, people's attitude versus Gold (investment standpoint). Above and underground gold-providers (holders) are trapped into the ongoing paper fantasy. We will never run out of paper, but this generation will definitely run out of abunded gold. The mirror of 21 years price-evolution is good evidence. It takes a hell of a lot of courage to talk about Gold today, let alone of buying it. 120.000 tons at 600$/ounce = 2 trillion US$ against an unpayable debt of 7 trillion US$. A one-currency world is not for tomorrow. The Debt-Shock is growing fat and awaiting it's finale stroke.
Dear Sir, 714 : nothing personal,please. Just my humble opinion.

When are Gold-movers forced to act positively on the undervalued POG : shock-possibilities ?
- war with economic implications ?
- SUDDEN Acceptance of stockmarket and dollar overvaluation ? Resulting in Panic.
- Defaults and Bankruptcies, that aren't manageble anymore ?
- Economic protectionism and periodical deglobilisation ?
- Japanitis ? (remember bank-run '95 !)
- London Gold Pool-like event ?
- Hyperinflation choice wit POG and POO explosion ?
- Interest rate shock ? (remember '94 !)
etc...etc...

Personally, feeling very, very, uncomfortable with AAA Bonds
left in my pocket. The only reason why they are still there is that I am hungry 3 times a day and cold in winter.

Well, at first glance, it would appear as if that currency had been printed with reckless abandon, until it is worthless.

But you would also have to plot it against a chart showing an increase in population, which necessitates more currency for trade purposes.

And if there is a demand for more currency that follows the rise in population, then the chart would show an almost vertical line, 'cause thats the way population is going.

When I was a kid in the 60's, there were 3 billion on earth, (and a few in space), and now its about twice that.
If you plotted human population, it shows a curve that gets increasingly steep. I think its called a sinosidal curve.

So maybe there isn't too much money out there at all. By what standard does one determine this? Oro, if you respond, please include color pictures so I can follow along.

The "computer gang" was an '80s Vegas phenom. We bet college
basketball and college football based on the brilliant and
diligent computer work of a friend of mine - - BEFORE it was
cool. When we first went into operation, we had a 17% edge.
That is, for every $100 dollars we managed to get into action, we
got $117 back.

Alas, because of a careless Dr. "The computer gang" got busted by
a bumbling FBI who mistakenly thought they were busting an inter-
state bookie ring. Luckily, I had left the group about a year
earlier over, well, essentially a woman.

All the legal pundits in Vegas, once they heard the details,
suggested the case would be laughed out of court. Which it was
eventually. Agent Nobel (his real name), his future on the line
since the multi-state bust cost U.S. taxpayers a reported $1
million or so, kept agitating to have the case tried despite the
laughter.

In the interim, my computer wiz friend turned state's evidence
and joined the ranks of the tax-blackmailed. He set-up to go
back into business as a corporation, and contracted with some of
the old "gang" members to buy his information for about what his
share of the take would have been before.

But there was a rub: Anyone working with him now would be subject
to tax scrutiny. Dr. Careless looked into the proposition,
retained my services, but after the first week did some basic
math and discovered that he'd make more putting his investment in
a CD. The enterprise broke up because a mere 17% edge couldn't
turn a profit with the tax-man as silent partner. This is a very
clear example of "the power to tax" as "the power to destroy."

And how, as Sir Shermag suggests, taxation SEVERELY damps and
shrinks the private economy.

And as far as politicians more logically viewing the tax receipts
glut as transitory, Sir Shermag, you may be making the same
mistake I still do now and again. You may be assuming politicians
are likely to think and behave rationally.

Regards,
Journeyman

TheStranger: Excellent commentary on bonds. If any more seconds are needed for your HOF nomination on the referenced post, count this post as just that.

ET: Some time back, well over a year ago I think, ORO posted a short list of recommendations which seemed to go relatively unnoticed that any person preparing for a liquidity crisis would find most useful. Perhaps ORO or someone else can re-post it or identify where it's at.

hAug

http://www.millenniumadventure.com/content/stories/pitiful.html
Hi elevator dude!

"Japan's first great trouble is its severe demographic problem.
Its population is the second or third oldest in the world, and to
judge by its low birthrate, in a hundred years its 125-million
people will be reduced by half. Europe, which has a similar
problem, at least allows immigration, which Japan doesn't." -Ex
CNBC commentator and "Investment Biker" Jim Rogers (above link
originally provided by Mr Gresham yesterday)

Russia has similar population projections. The U.S. may be on
the verge of the same sort of problem, and Alan Greenspan and the
FED have been pimping congress for looser immigration policy (so
foreigners can move in and help pay the FED "our" bills.) In
fact, even in Africa, India and China, population growth is
leveling off or falling.

The notion that the population is still zooming up in a
sinusoidal curve has undergone a reversal nearly as quickly as
OMB & CBO projections of U.S. deficit became projections of a
surplus - - - only in the opposite direciton and with a lot more
veracity.

Modern birth control is a main reason.

The notion that the population explosion is alive and it's powder
is dry is largely because it's useful for those using the
environmental movement to manipulate public opinion for fun and
profit.

Regards,
Journeyman

"Not he who knows how to acquire
But to enjoy, is blest;
Nor does our happiness consist
In motion, but in rest.

"The gods pass man in bliss, because
They toil not for more height,
But can enjoy, and in their own
Eternal rest delight.

Then Princes, do not toil nor care:
Enjoy what you possess;
For whilst you do, you equalize
The gods in happiness."

The old traditional philosophy held that the highest activity of man was...contemplation. Strange sounding to our modern ears!

"We contemplate together, no?"

Sierra

Having made a "Trumanesque" remark about calling Another "out" so to speak, I've been reluctant to sully this venue again with similar emotion although I still mean what I said.

Where have I been? Why, I've been living in dualityville; watching the world go by in a maddening rush whilst holding onto my core convictions regarding gold at this critical juncture in global monetary history.

I had thought of entering a bid at Farfel's reverse auction and in fact, if I had done so, the bid would have been ZERO: nada , nothing, nil. Reason: I see no value in spending time to read the musings of anyone who cannot be trusted to make the right decision.

I stand in awe of many of the fine posts here and do not want to take up valuable space with my own musings.

Otherwise, I have been waiting on Trail Guide to explain the machinations of the BIS. Now, that is a campfire story I am willing to listen to.

Kind regards to all....CM

Why do CBs have 77,7% dollar-bonds and only +/- 15% Gold as reserve ? The US with his $ is only 50% of world's GNP.
In fact...why do CBs have to have reserves ? What is the value of your house meaning, with x-times more debt ?
States don't have to protect themselves against their own stupidity. They just expand their amount of money with a push of the index-finger. The state is not offering Medieval protection with the Lord's castle. The state always taxes himself out of each monetary trouble.
It is the individual who has to protect himself against voracious states. That's why CBs never announce a goldbuy.
That's why they announce GOLDSALES after 20 years of fantasy-protection. Bonds are nothing more than a risky and temporarely parking place for paper.

Do gold-haters realise the impact-extend of a possible CB goldbuy announcement ? Suffice it to urge the WGC to update the world, constantly, on any move, on the 32.000 tons of CB-gold ! The best marketing basis ever. If CBs really had the intention of selling all their gold...they would have arranged a much higher price-environment for their sales.
We are still in doubt if another London Gold Pool is behind the smoke screen. Can we possibly figure out how the dollar-reserves have been growing or not, for the last 30 years ?
If we compare their gold-value from 42$('71)>>>260$('01) and US$ Bonds+ interest rate accumulation over the past 30 years : what would be the result today in growth ?
We could make the same comparaison for ourselves with gold and real estate. Unfortunately, I don't have correct data to do this excersise.

In a true democracy, we would be able to ask these questions to our respective CBs. But CBs are politiciced and per definition unreliable. A good (?) example is the 700 billion yearly, interest rate obligation on the Belgian state debt. To put this figure into perspective, you must know that total yearly expenses on eduction is 80 billion. !!!! Official figures.!
What does talk about zero debt mean in this perspective !?
In the past economic euphoria, we were not able to repay any fraction of the past debt to give some relief on interest repayement. On the contrary...surpluses are used to redistribute again into this welfare state. Thanks !
This same story is true for Japan. State debt is 120% of GNP. There is a very remarquable blip in the state debt/GNP charts for the US/Belgium(possibly others) on the date of 1971 when gold broke free. Debt/GNP dived from 120% to under 30% !!?? Gold and debt, related ??
I have no clue on this. I'll have my weekend bubble bath.

Cavan Man: Otherwise, I have been waiting on Trail Guide to explain the machinations of the BIS. Now, that is a campfire story I am willing to listen to.

Yes, yes. Me too. Perhaps FOA can offer some information that would help resolve the apparent discrepancies between the description of the BIS's role in holding down the POG given by GATA and Reg Howe vs the description of the BIS's role in creating a new gold market given by Another.

Besides the fact that the POG is still slowly, steadily, painfully, dropping, this unresolved issue regarding the BIS is this forum's current elephant in the living room.

Parsifal

Excellent posts on bonds sir. I would like to know more about that 1971 blip. I bought a City of Chicago muni bond once. It was called (in part) days after delivery. Instant loss. Broker probably knew. So what does this mean? Don't trust the City of Chicago? Muni bonds? Governmant bonds? Brokers? All of the above? One thing I learned. Read all of the fine print before investing. That's the good thing about gold. Not much fine print!

Saw your intriguing invitation. Will respond as per included address in a day or two - - - as soon as my e-mail gets fixed.

Regards, j.

Sneaking a peek in between birthday parties -- looks like lots of juicy reading for later...

Whose essay (at GE?) suggested BIS had been cut loose by ECB's successful creation? Does BIS own/hold gold, or just handle dealings between the banks? Does BIS make its own policy (and with US taking its two seats since -- when? 1990? 95? Wasn't it Mr Fisher sent to work there on his first Fed assignment?)

Perhaps ECB assigns BIS the "dirty work" (good cop/bad cop) to keep its hands clean, while dollar was being propped up. This latest leasing spike a warning flare for "all swimmers to get out of the pool"?

If anyone would know which way things are likely to fall (dollar losing reserve status or not), it would be BIS. They'd want to be sure of being on the winning side at the end. Double agent? Improves bargaining power by appearing to occupy the middle. US thought Euro didn't have a chance at successful launch (FOA), so BIS would say "Of course not; we're with you." Until they're not.

Organizational survival imperative.

Now how's that for guesswork from someone who doesn't know Fact One about BIS?

Indeed! This paradox needs illumination from the campfire. However, perhaps the lack of comment is related to Howe lawsuit in some way??

Mr. Gresham: You have fine thoughts. (...back to painting)

Well, FOA referred a few days back to GATA aiming at BIS, I suppose, and when they duck, it might hit some of the real "bad guys." Probably no naming of names at this stage, since his advice is to just stand back and watch.

That's a central point of Reg Howe's
lawsuit: that the BIS undervalued its
gold holdings and thereby cheated its
private shareholders in buying them
out. I don't have the figures right
here, but my recollection is that the
BIS held several hundred tons of gold.

http://www.sharelynx.net/Charts/wwgp.gif
This chart is not comparable to a chart of the money supply of any given currency. It appears to be a chart that shows the gold mined in any given year, not a chart of a cumulative amount of mined metal. Nor does it display any relation to the above-ground stores of gold-money.

It is a useful graphic if anyone here needed proof that AU is certainly not a barbaric relic. If it were, why has so much of it been mined these last few decades???

Are the British putting thier gold out there on consignment and calling it a sale?.I once owned a companys stock that did that, the owners were put in jail for fraud.Calling something a sale and recording income as a sale that really is temporary lease income is a fraud.This kind of activity would weaken the pound and give a false impression while it helps British exports.That would be typically British ,trying to have thier cake and eat it too.Am I getting too cynical?

I have learned much from your research - thanks. Now I want to share with you an idea.

I bought 3 - $35.00 crude oil calls, one every 6 months beginning Dec., 01. Three of these (cost of $1900.00) should cover the next Middle East war (very soon a reality).

Thanks again for sharing your wisdom.

Thanx. Just finished the long one finger job of typing my expected response, and will fire it off as soon as I hear.
j'Bear

OK, it's a slow day at the gold forum... So somebody tell me... how is the acronym pronounced? Is it "gayta" or "gatta" ???

Does anyone know if Japan has had an episode with hyperinflation in the recent past, say the last 100 years? How about prior to that?

The reason I ask is that nations with a memory of the destruction of hyperinflation are less likely to retravel this route. This is why the bundesbank is the central bank with the best record of protecting its currency over the last 60 some years. If Japan has had similar experiences, that would favor a deflationary response to their current problems.

Thanks in advance.

Shermag

http://www.ex.ac.uk/~RDavies/arian/war.htmlYes, after the Franco-Prussian War in 1870-71, which finally united Germany, the Germans subsequently went on a strict gold standard, and other countries in Europe followed suit, abandoning bi-metalism under which silver was part of the monetary standard. At about the same time, large silver strikes in Nevada and Mexico combined with this abandonment of silver as money by many countries left other nations that continued to use a bi-metal standard, including Japan, with inflation. And though I find no documentation as of yet, Japan likely suffered inflation for a few years after WWII, not due to monetary policy but an outright shortage of goods.

Interestingly enough, the price of silver took a real hit in the latter part of the 1800's, partly from an increase in mining production, and partly from the abandonment of silver as a monetary standard. It was a hit from which it never really recovered. And it is not, in my opinion, dissimilar from what we see in the gold market in the last twenty years.

http://www.labyrinth.net.au/~gjackson/econ56b.html...apparently it was running about 25% during the oil shock of the 70's.

For the public, it's GAH-ta. For those
who contribute financially, they can
say it any way they want!

http://www.slonet.org/~ied/frthuz.html

http://www.usagold.comHow is the lease rate for Gold determined?

Anybody that can shed some light on this will be a light shedder.

Belgium is on the right track. Quotes from one Belgium's
latest posts:

"..why do CBs have to have reserves ?

States don't have to protect themselves against their own stupidity.
They just expand their amount of money with a push of the index-finger.

...That's why CBs never announce a goldbuy.
That's why they announce GOLDSALES...

Do gold-haters realise the impact-extend of a possible CB goldbuy
announcement ? Suffice it to urge the WGC to update the world,
constantly, on any move, on the 32.000 tons of CB-gold ! The best
marketing basis ever. If CBs really had the intention of selling all
their gold...they would have arranged a much higher price-environment
for their sales. " Quoted from Belgian Post


The price of gold is on the low side now - the best time to buy. For the U.S. Treasury to buy . With augmented gold reserves in the treasury the money supply could be expanded many more times than the percent gold reserve increase, with less of an impact on the value of the USD. Likewise, interest rates, tax cuts could all be accomodated and the dollar's value maintained or enhanced.

AX

Goldsell AuctionDid Goldsell make you an offer you cant refuse?

$hifty

Last night I posted the following:

HOOSIER GOLDBUG (3/2/2001; 20:44:10MT - usagold.com msg#: 49248)
FARFEL AUCTON BID!!!!
My dear FARFEL:
I bid my now defunct downline in the multi-marketing FAMILY OF EAGLES, which I had hoped to use not only for exchanging fiat for REAL money, but to educate the proletariet on the inherent risks in fiat money, the REAL role the Federal Reserve is playing in destroying lives, countries, sovereignty, etc. I began in earnest in 1996, at least that is the year I solicited most of the participants below me, back when REAL money was around the $350-$400 mark. But the my efforts quickly regressed, first slowly, then more rapidly as the price of gold went down. Try convincing people that it is inherently to their well being to pay $1980 for 2.7 ounces of 1/10 ounce gold American Gold Eagles, when the spot price of gold is declining. To further the process, I quaranteed that if they (Participants) were unconvinced of their need for possession of the REAL money, I would buy their $70.00@ Gold Eagles back within a year! Needless to say, the cabal kept shorting the paper, and forced me to come up with $40,000 to buy back the participants' gold. So now I am going to put up my DOWNLINE for the hopes of winning your auction!
Do I begin my acceptance speech this way????????????
It is with great honor, Mr FARFEL that I accept the winning trophy because I truly deserve it and ...............
Sincerely,
HOOSIER GOLDBUG
P.S. You could give me my due respect in grading my bid against the other participants of your auction. HOW DO I MEASURE UP??????
THANKS in advance, Mr. FARFEL.

If GATA/Reginald Howe wins their/his lawsuit, will I be able to recoup/recover any damages for my losses, mental anguish, phyiscal pain (wife beatings, etc.), spiritual doubts?
Any comments,Mr Powell, Mr. Hilly Billy Mitchell, anybody!

It has been said by "Another" that the oil producing states have corned the gold market. But it is said that the CB's control 80% of all the gold reserves. Does this mean that the CB's control 80% of the gold that the oil producing states don't have or I should say 80% of what is left to be gotten? I just want to make sure I understand. Thanks

Class ActionI read something about a possible class action lawsuit for COMEX traders someplace but I cant find it.

$hifty

1) Farfel posts that he has received E-mail content from Godsell and been threatened with dire consequences if he goes public with it.

2) Farfel states he is going public with it (And profanely disses them to boot)

3) Randy says Farfels code is alive and well!

4) No word from (The late??) Farfel!

Farfel, if you can read this, perhaps you would like to qoute Mark Twain!

The Farfel FileDo you think that FARFEL is swimming with the fishes?
Concrete Nikes?
Curtain Rods ?

$hifty

http://www.gold.org/Gra/Pr/Grpc/Survey.htm
In 1998 and 1999 the World Gold Council surveyed people
in five countries relative to their attitude on central
bank gold reserves. The study was published July 13, 1999.
Countries studied were the U.S./U.K./France/Italy & Germany.

One statement the WGC report made in summary was:

"People in all five of the countries we surveyed care deeply about the role of gold as a monetary asset. In all five countries, overwhelming majorities say that a strong currency is important to a healthy economy,
and their countries� gold reserves are important to the strength of
their currencies. Huge majorities want their governments either to
maintain or increase the level of gold in their countries� reserves. "


If the U.S. TREASURY were to INCREASE its GOLD RESERVES at this time when prices are relatively low, it would be in a
position to increase money supply and restore economic
growth at a much faster rate, and simultaneously drop
interest rates, tax rates WITHOUT weakening the U.S. Dollar.

http://www.usagold.com/onlinestore/special.html
They WILL go fast.

It looks like the service provider we contract with for providing our secure server for all encrypted online orders is temporarily down for servicing or whatnot. So if you try to access the order form and get an error message instead, just try again a little later, ok? You'll be glad you did!

http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Mining%20News&tp=ad_mine&T=au_storypage99.ht&s=AOp8g2hGWQ1NGQidz&ao=10096932Listen at link above
Running time 3:09.

Sydney, March 2, 2001 (Bloomberg) -- Kevin Crisp, a director for precious metals at Credit Suisse First Boston, talks with Bloomberg's Brendan Trembath about the recent decline in the gold price, the impact of European Central Bank gold sales on market volatility, supply issues and the long-term price outlook.

01:20 Gold price, market volatility, long-term trading outlook
01:49 Reasons for price fluctuations; ECB gold sales and supply


View Yesterday's Discussion.

Re Farfel
LOL Either that or Goldsell sent a hit man.
j'Bear

ING-Bank is looking at the evolution of state-debt/%GNP of the last 30 years. The conclusion is very simple and as expected. Most stockmarkets-highs, suggest that the economic expansion has been tremendous...but did not result in a decrease of state-debt, with the exceptions of Ireland and Denmark. A consensus of state-debt at 60% of GNP, seems to be the target. The US? made it but Japan/Italy/Belgium/Greece/ still above 100%. And this under such a long period of favarable conditions !

The study is projecting this debt evolution into a 10 to 50 years future. Ridiculous of course to suppose that the world economy will expand and grow at the same momentum of the past 30 years explosion. They want us to dream about zero debt ! And economic perpetum mobile ! They even are seriously worried about having to live without debt ! Broeeeehaha ! This is outright idiocy of course.


Blip-1971 : evolution of US state-debt/%GNP since 1790 :
The chart shows how this debt slowly rises to 25% in 1922 and starts getting momentum, with hyperbolic allures, and topping at above 100% in 1940 (start of WWII). Dramatic decline afterwards and reaching a low of 20% in 1971, where an instant (!) rise is bringing the debt over 50% and going higher.

States are looking for the optimum debt-growth versus GNP-growth. They are constantly wrong in their projections. Welfare, socialism, breath and games for all. Thanks !

Today, we have such a tremendous amount of private paper-money, invested in thousands (millions) of funds of all kinds that this is behaving as an avalanche builing.
These masses of paper must be contained (freezed) at any price and nothing may occur to make the fatal slide happen.
PPTs worldwide. The CONFIDENCE-SHOCK-WAVE is there to stay and growing. This and nothing else is the clue. Nothing is or can or has the will to change this evolution.

Each time, I bring the question of Debt and Debt-growth on the table...(any table of course)...the final answer is uniform : there is NO problem with debt, as long as we can avoid any shock. Never to be precicised as Confidence shock ! cfr, ridiculisation of POO as an economic given.

Time and time again, the debt question is causing a caustic silence and the next subject is hastely, started. Yes, I know ...nothing new ! But I keep on communicating and reminding this debt-cancer to anyone who wants to lend me his official ear. But my story is hopelessly D�-MO-D� (out of fashion)

Officials claim that they will eradicate DEBT with economic GROWTH !? But this GROWTH can only be materialised, with...YES !... MORE DEBT...MU_U_U_CH MORE De-e-e-e-btttttt !! Nice, very nice viscious circle. That's why GOLD is the ultimate chain breaker. This message must be fostered worldwide by all goldphiles. Use your WWW for homework ! And let's have a close look how Japan will get out of its 120% debt status ? Zero rates ?...Yen-Devaluation ?...Bankruptcies and write-offs ?...Delays on repayments on Bonds and interest rates ?...Artificial stockmarket support ad infinitum ? Faites vos jeux, messieurs.

A worldwide decline in Growth is "THE" sword of Damocles. Ask Greenie, why he is lowering his interest rates frantically. Ououuhhgff...you all know it, of course.
I am only putting GOLD into the right perspective at this very right moment...that's all.

http://www.gold.org/Gra/Gra1.htm#Gold reserve statisticsCentral banks currently hold approximately 25% of the world's above ground supply. Statistics on CB gold reserves is available at the above link. And the world's above ground supply of gold is generally estimated 120,000 tons, though some claim this estimate is low.

Personally, I wouldn't put much stock in what "Another" has to say. I've done a lot of background research on his postings at Kitco and there's little to verify some of his claims, particularly the so-called oil-for-gold trade. His heart's in the right place, but his head's not on straight.

http://www.trumanlibrary.org/oralhist/bernsten.htm...what exactly did happen to your Triple AAA bonds? Your comments on debt are right on. Economic growth has to continue or it's crunch time. As for your question why CBs hold so many US$'s, that is very complicated. Some of it is financing one's export market, which explains Japan's blind (and VERY important) support for the US$. But there's a bit of history in there too. From 1939 to 1941, the US took extraordinary measures to protect foreign assets held by allied countries and to keep them from falling into nazi hands. Much of this is documented by a lawyer named Bernard Bernstein who worked for US Treasury in the 30' and 40's. Very interesting. I first ran across this guy in researching gold-clause contracts and how those were handled under the US's Gold Reserve Act of 1934 here in the States. Actually there's quite a bit of history on gold, both in the US and Europe in the above document. It is for good, and long-standing, reasons the US is considered a "safe haven".

On a more personal note, what part of Europe are you in? I get the impression your reside in France, despite your handle. I was in France a couple of years ago and it was striking to me how much was named after Roosevelt, even a restaurant in Fontainebleu called the "FDR".

You're right; Farfel has gone missing! He still has access not only to USAGOLD but also to LeMetropoleCafe, which I imagine would be thrilled to publish his correspondence. Farfel, come forth! Let the world see these incriminating documents! Don't let anyone think you've been cowed by the threats of the evil forces!

First let me say thanks to those who offered a few kind words at my parting post. I will compromise with those who wished me to stay by confining my post to the odd weekend. Too busy making money ( though still small potatoes) during the week.

I had detected things were livening up so felt I needed to focus my energy in the area where money is generated. I hope you are all doing a little better, accepting that this is very early days.

I have been in, and considered, many kinds of businesses, in my life, but this one 'the Gold business', to me, is the most rewarding. It is one where I can truly put all my education and talents to work.

Why am I in the Gold business? Because they, 'TPTB' , are in the gold business - and have been for thousands of years. What's good enough for them, is good enough for me.

If you are Christian, though the little babe was Jewish - His first present - the FIRST Christmas present, was GOLD!. If it was good enough for Him......yes, you've got the message.

I contend that today, it has NEVER been easier for the common man to make money.

When I sit at my computer and see the wealth of information at my disposal, the ease at which I can flash an order - thousands of miles across the ocean, to buy or sell (Gold coins, or mining shares) and have it executed within seconds, bowls me over. You are 'in business' for the price of a good computer.

You can give yourself a university education without getting off your backside - diverse information, the thoughts of the wise, are literally at your finger tips.

As 'Satch' used to sing - "What a Wonderful World". My only fear is that when they have got us all hooked, they will start charging us for all this information. Meanwhile, I make hay while the sun shines.

When I started attending auctions many years ago, someone told me then - don't bid for something on which you are hoping to sell for a profit if you can't live with it (because you might have to, at least for a while). I have used this rule in anything I have been tempted to deal in. What is nicer to have to live with than a beautiful gold coin - and what is easier to sell if you have to.

I needed some quick cash a few years ago. I went to Binks in London with a few gold coins - American, and Canadian, plus a gold bracelet, I had bought (without VAT) in New York. I was handed a fistful of crisp pound notes in the length of time it took the dealer to take out his spy glass and give the items the once over, then count the money.

The price of gold fell just over a week later. That made me feel even better. The point is, it is so easy. Could you do that with your house or car? There is a Jeweller's near where I live. Even while gold has been dropping like a lead brick, he has had a board on the sidewalk which says on both sides - 'We buy Gold and Silver".

When we lose money in the market, if we are honest, it is because we got our timing wrong. It doesn't really matter where gold is going ( I know that sounds smug, and a little off beat) you can make money.

Gold has ALWAYS been manipulated, well, long enough to stand as always. Manipulation is not synonimus with 'down'. You can manipulate something up. When gold spiked at over $800 dollars in the early 1980's most of that was a giant short squeeze, especially right at the end.

One of the causes of falls zig-zagging down is that besides the bottom fishers, you have those elite professional shorts who squeeze the multitude of minnow shorts, because they are'clogging the drain' (stopping it going down), and stopping the big professional shorts from making money. Yes, there are shorts, and shorts - the big shorts eat the little shorts.

The same applies in reverse. I am making money now, but I am not getting excited because we are at a point where the tide (for gold) is very treacherous. The trend is still down but it is getting ready for the turn.

While I use a metaphor that is tied to nature, there is a big difference to that which it is being applied to. The real tide is pure nature, and regulated by God, and does not lend itself to manipulation by man.

The answer is to take small profits - be satisfied with small mercies until a definite trend shows itself, backed by a good tail wind.

It is only important to know it (gold) is manipulated by people, who descend form people who have been in the gold busines for centuries, and control most of it. In this way, you are not labouring under false illusions. To worry about who is doing it is a waste of time. and is fruitless.

I know many of you will be tempted to put up arguments here, and I can accept that because I know how difficult this business ( of who, and how , it is controlled) is to understand.

Someone once told me that the easiest way to go someplace is, find some guy who is going someplace, then grab his coat tails. So, I watch where these jokers are going, then hang on. They love a crisis, they create them. Why? because that is when the sheep panic.

Crisis means opportunity - usully opportunity to pick up things cheap. How often do we hear those adages of the big traders - 'Buy when no one else wants it, then sell when everyone does.' 'Buy when blood is running in the streets'.

Yes, we hear them, read them, say yes thats the way, then promptly forget it. Why? Because it takes guts to do it.

Every time gold moves down it goes into stronger hands. Most them are BIG players,
bullion isn't for the small timers, they did not amass their fortunes by being foolish.

No one can expect to buy right at the bottom, but there is 'insurance' you can take to cover most of any fall. And you don't have to be in the futures market.

You can make MORE in the gold market right now than you can get in any other form of normal investment. I believe Co-bra explained how he has made some. I too, in one week made more on my money ( not a lot) but more than I would have got in a year in any bank or time deposit or whatever. And, I had fun doing it.

The short term zigs and zags, or media rhetoric doesn't bother me. I KNOW where these jokers are going, and thats all that matters.

It's no use getting uptight about - London is doing this, and New York is doing that, or Switzerland is .......... Forget it. These people are INTERNATIONAL. To them, the world has always been a global village. They work as a team, and pass the ball to keep you guessing. They don't want you to see it as a team. Sometimes they throw in a bit of angry exchange rhetoric to make it look good.

They can collapse ANY currency at the drop of a hat. The dollar will be propped as long as it suits them. They know the dollar needs some rest and recuperation, so they are moving to establish the Euro. The Euro WILL take up the slack - trust me.

Gold WILL NOT make any serious move up until the Euro is steady on its feet no matter what GATA says or does - trust me. I have said this many times, and I will keep on saying it whether it bores you or not. I believe, sooner or later YOU WILL see it. The Euro will be where they want it before this year is out, and then the hold on gold will be relaxed (the word is 'relaxed', not released).

I am sorry if, to some of you, I sound a bit strong, but I don'e believe you can pussy-foot around with this stuff. Making money is serious business. And when you enter the financial markets, forget this crap about 'investing' you are at war, and there is an enemy out there who is out to kill you - and drink your blood.

The financial markets do NOT make money, they just shift it from one set of itchy fingers to another. Usually, it is from yours to theirs, if you're not VERY careful. Hence the fact that I do not flower my words, or smother them with pleasantries.

To sum up, I honestly believe that the time has never been better. Gold is here to stay. Goldsmiths go back into history, and will be around in the next millennium if the world dominated by humans survives. As I said earlier, I am sticking with GOLD because TPTB believe in gold, and have a huge investment in it. It is the source of their power. If they lost it they would be like Superman without cryptonite.

Have fun. Don't die without a smile on your face. People will be for ever wondering what you just found out.

http://www.gold-eagle.com/editorials_01/hickel030201.html SteveH argues that

1. by now gold has been sold short to an estimated 10,000 to 17,000 tons (no body knows for sure). This represents four to six years of production. In other words, physical gold is the Achilles Heel of the new economy.

2. we can all rest assured that it will be several years to a decade (maybe) to recover from the excesses in the paper markets since 1982 (and mostly since 1994).

And concludes that if the inevitable rise in gold can be put off, it will be, but it is becoming increasingly harder to curtail, and, thanks to the Internet, it is being done in broad daylight.

My apologies if this has been posted before.

Does it strike any of you as rather odd that Euro members such as France and Germany will maintain their own central banks and gold holdings in spite of their "monetary union"?

http://www.econ.yale.edu/~corsetti/euro/Euroit.htm

It helps me put the picture together.

Also, regarding your question on Germany and France keeping their CBs and gold, I suspect that it would not have been politically palatable with the voters, especially the Germans, to go more deeply into integration at this first step. I believe that deeper integration and dissolving of the seperate CBs is in the future of European monetary affairs.

From Ax (49298):

"Do gold-haters realise the impact-extend of a possible CB goldbuy announcement ? Suffice it to urge the WGC to update the world, constantly, on any move, on the 32.000 tons of CB-gold ! The best marketing basis ever. If CBs really had the intention of selling all their gold...they would have arranged a much higher price-environment for their sales. " Quoted from Belgian Post

Agreed. I have seen statistics on CB held ground over the years. I seem to recall approximately some 50%-60% of above ground gold was held post WWII. This amount has dwindled to some 25%-30%. Perhaps WGC (are they really acting in gold's best interests; does the term 'WORLD GOLD COUNCIL' imply that they want gold up or down, or are they neutral, or do they even care?) as well as:

a) updating movement of CB-held gold

b) update the world to total quantity of CB-held gold in terms of total quantity (ie: 32,000 tonnes) and percentage of above-ground stock. (ie:25%)

When the WGC has shown the world that CB dishoarding has ceased (ie leveled at 25%/32,000 tonnes) the gambit will be up.

Failure of this may lead one to believe that:

a) WGC is not interested or cares and consequently one would have to question their motives or,

b) WGC is unable to obtain the 'secretative' numbers from CB's and thus one must examine the role of CB holdings of gold as a reserve.

For example, the US apparently holds some 8,000+/- tonnes of gold in reserve. Surely the reserve aids in the role of maintaining the dollar. However, the tonnage has not been confirmed (as we are lead to believe) in 30-some years. This begs the question as to why the USG wants this 'secret'. What is the advantage to the US in having it's gold reserve non-audited?

Further to the above (and in comparision) does France/Germany/EU report gold holdings regularly? From Randy's posts it is clear that this occurs but are holdings audited unlike the US.

Thanks.

SC

From 714 (49311):

"Personally, I wouldn't put much stock in what "Another" has to say. I've done a lot of background research on his postings at Kitco and there's little to verify some of his claims, particularly the so-called oil-for-gold trade.


Mr. 714,

Please elaborate on your research.

I have been reading 'ANOTHER'S' postings and find them most interesting. The believability factor is a question. I spent alot of time researching oil pre/post Y2K. The EIA accredited the sharp rise in POO pre-Y2K to hoarding and stockpiling in fear of Y2K. However, as you know, oil has not fallen back post-Y2K and it begs the question of the sudden rise in POO. It can be debated that the rise is attributable to supply/demand shortfalls to a large degree but oil still remains high in a falling economic enviroment.
Speculation is that oil will never return to $20 or less and that high oil is here to stay.

My research also found that 'swing share' is shifting to the Middle East and secondly oil reserves are falling with a cresting of consumption exceeding discovery in the very near term (2005+/-). With the 'half-life' of oil approaching
and critical resources upon us in some 30-40 years, oil appears to be an extremely dangerous situation moving forward.

If this information is remotely accurate a relationship may exist between oil and gold. The question that I ask myself (probably too often) is what is to replace oil, as a reserve, in the eyes of the oil producers and in particular the Middle East. Do they want tractor-trailer loads of non-redeemable debt instruments? I must believe that something more tangible is wanted; gold seems an obvious answer. As economies falter and currencies loose value, driven by high oil and lost confidence what is to replace this?

We are aware that CB's are selling gold and the favorite question is who is buying. Above ground stocks remain the same, yes? Perhaps, oil producers will accept 'money' for oil for an indeterminate period of time but for how long. Perhaps FOA's statement regarding the 2 year old spike in oil is indicative of a re-evaluation of the USD. If the USD is for example overvalued by a factor of 2, then the POO at 30 reflects the real price of oil at $15 times 2? What do we look forward to, higher and higher oil because of increasingly overevaluation of the USD? Or perhaps the supplement of cheap oil and gold? (ie: $19 + XXX)

There is something Another knows that we don't, I personally look for hidden clues and I believe I have spotted a couple.

What's your take?

SC

WGCA very short comment about the WGC and related stuff:

Who subsidizes this group and its activities (therefore its position on gold prices.)? Answer: miners and fabricators.

What percentage of the above are interested in HIGHER gold prices?

Answer: unhedged miners.

Inescapable conclusion: the WGC is in the other camp my friend. This should be the end of the discussion. (smile)
It must be tough on Bill Murphy to work with this absurd situation. He has to promote miner shares, but would know (as do they) that his activities would be dangerous to them in the short term, while fundamentally many would agree with him. Don't you just love conflicts of interest?

Best case scenario for the paper miner market investor: liquidity crisis sparks a gold bull - big default, G.S (or somebody) makes a grab for physical on COMEX (whatever, some left field event). Miners soar initially. Margin call miner bankruptcies follow. Paper defaults on physical. Runs on bullion banks to take delivery for paper (gold certificates). Bullion bank defaults. COMEX defaults. TOCOM in gold. COMEX collapses.
Limbo period/depression/stagflation/financial crisis/collapsing USD.

New physical market in Europe (London?)Euro ascendency.

I may have left out something with the brevity. However, if you hold gold or silver miner stocks, one should try to dump them at the first spike in the miners fortunes before the margin call calamities hit the general awareness level of investors. There is a narrow window here and one should NOT be tempted to ride any paper bull in miners. Be prepared to take some loses in exchange for a margin of safety.

If plausable jump back into pms or some other asset in a worstening hyperinflationary environment.

Hibernation time.

Best regards,

G

The weekend for me is quality time, when I can share in the excellent ideas of people from around the world. You provide just that, splendid European flavor looking at a wide range of topics (all related to gold - honest money). In the relentless search for truth one should never put his/her own ego in front. That only serves to blind our vision. It is only human nature to share our own experiences with others and you do that very well, so I thank you for this.

Welcome Back Pandagold.
Slingshot.

Sir,

I have assumed from early on that the individual central banks within the European Union would be for show only. It appears to be patterned after the Federal Reserve System, 12 regional reserve banks. Contrary to what is perceived, there is only one central bank in the US where "absolute" power resides. The power is exercised by those who control the Central Bank in New York, which is the true seat of the power. Those who control the board of governors are without a doubt meeting behind closed doors and their directives only appear to be originating from Greenspan and the Board of Governors. Greenspan and the Board of Governors do their bidding.

I firmly believe that the evolving European Central Banking system is based upon the nearly perfect model in the US, which turns out to be a grand and successful experiment. The central banking system developing in Europe will not fail in its ultimate goal. It is based upon a proven method of taking over power by stealth.

When the Central Bank of the European Community is securely in place the Europeans, the common people, will not know that their individual, "national", CB's are only for show. It will appear that the individual CB's are part of the grand decision making entity, when they are only for display to the window shoppers.

If ever there were a stealth operation in the works it would be the European Union. Its purpose and its ultimate structure will not be revealed. The "Central Bank" of the European central banks will be the seat of world rule. There will be a "Greenspan and Co." up front, but the real ruling authority will be hidden from view for a time until there is no probability for any opposition.

It has only been just a very few years that the press and the politburo have been allowed to even refer to the Federal Reserve System as the Central Bank of the United States. From the very birth of the Federal Reserve it was vehemently asserted that the Federal Reserve System was not a Central Banking system. Now that there is no probability for any opposition and it is openly referred to as the Central Bank of the United States.

My thoughts only. No reason to give them serious consideration.

Very respectfully,

HBM

Sir

I plan to go to Denny's (I 270 and Rock Road) for a cup of coffee later on this evening. I will post the time when I can work it out with my wife. Should you have the time, just an hour or so for introductories (sp) I would be glad to buy you a cup.

Will post in a little while to give you a time and a way to recognize me when you arrive.

If this is not a convenient day we can work it out another day, as I am in the area for a day or two during the first week of each month.

Very respectfully,

HBM

http://www.freerepublic.com/forum/a3aa1e6e306c7.htmI ran into this researching this month's News & Views. This is a good story for a Sunday morning. Since it involves a gold dealer, I remain on subject. (smile)

P.S. My purpose here is not to go off into a discussion of faith. Just provide a link to those with an interest. Mr.Kudlow receives much criticism for his gold views here and elsewhere, and I have to say that sometimes I have problems with him even though he keeps gold in the public venue (if not always with an acceptable spin). I thought the interview might shed some light on a complicated, sometimes brilliant, always controversial opinion-maker.

http://home.att.net/~strat.gt/secret_historyI bought into the "Another" phenomenom when he was all the rage at Kitco back in '97 and '98. And yes, he's an intriguing guy. BUT! Last year, in a fit of disillusion with my gold investments, I returned to his old Kitco posts and began to research what he was saying so as to verify what might be happening in the gold market. And as a result, I found the above info on the oil-for-gold trade, as he called it, and uploaded it to a website. And the facts appear to be quite different than he was portraying. Gold was only used to pay oil royalties to the ruling Arab sheiks and NEVER was oil sold for gold on the open market. Sure, there's a minor link between oil and gold -- royalties! That's it. Gold has little else to do with oil. Let me ask you: If there was a link between the price of oil and the price of gold, why hasn't gold risen? I've posted the above link several times since last September and the typical response I get is that that's history, or could I write a summary. It seems goldbugs are as lazy as the rest of humanity and few seem to choose to do their homework on background issues, settling instead for a few paragraphs of platitudes. It may well be history, but more than that, it is relationship.

Don't get me wrong. I do think Another's heart was in the right place, but I don't think investors, as a general rule, are going to be attracted to investing in gold because of some fringe theories or manipulation mantras. Yes, I think gold's been manipulated (what isn't these days!), but that is a minor issue in the face of other issues affecting the industry. Particularly troubling is the fact over 80% of annual gold production goes into the jewelry industry, which is indicative of a disinterest on the part of the investing community. Throw in a huge jump in production in the last twenty years, along the trend towards demonitization, and you have a bear market.

Fwiw, my religion is based on knowledge, not faith. I have NO faith in gold. I only possess the knowledge, as Alan Greenspan so aptly put it two years ago, that gold remains the payment of last resort.

p.s.--And I probably differ from most posters here in that I think the WGC is doing a bang-up job. You ever been to there website and read through their docs?

http://europa.eu.int/euro/html/calendrier5.html?lang=5...I needed that perspective. I'll keep it in mind as the euro unfolds before us this next year. In fact, by this time next year, the euro will be circulating!

...one more thing real quick. I don't think the oil-producing states are just sitting on their debt instruments. They have used the proceeds to invest around the world. Two years ago, some friends were involved in negotiating a $50 million deal for a short-line railroad in Indiana. I asked where the money was coming from for the deal and was told it would be financed by insurance company money and Arab oil money. Fwiw.

p.s.--Any research on the ME oil business will turn up the fact Arabs, like the rest of us, will accept FRNs anytime if the price is right.

If you own a company that owes 12 billion dollars will a 1% interest rate cut help?
If you own a company that is making a profit will a cut add to the bottom line?

Who will it hurt? How about;
1. Grandmother when she renews her CD's.
2. Companies who invest their spare short term cash in the money markets. Some just overnight.
3. Insurance companies that depend on earning interest on premiums to make a profit. Why have many insurance companies in Japan gone under?
4. Your local bank that invests in the local economy. Also owned by local investors.

The list goes on.

Anyone care to list some major benefits?

SHIFTY (03/03/01; 21:23:05MT - usagold.com msg#: 49304)
It should read : Do you think that FARFEL is SLEEPING with the fishes?
not swimming with the fishes.

LOL, It was getting late.

$hifty

There is definitely a relationship between oil and gold, and I covered it at some length in a past post.

In it I stated that the Arabs sell oil for gold. Some of the readers, although if they had really read my posting properly, would have understood that I was not saying that they actually took physical gold at the time of sale, challenged my statement - one saying that they sold it for 'money'.

To the Arab oil producers - gold is the only 'real' money they trust. They have a simple yardstick - one ounce of gold equals about 20-25 barrels of oil.

If they think the dollar is overvalued (as it is at present) they raise their oil price in dollars - in other words they want more dollars so that they are getting what THEY feel an ounce of gold should be worth.

They accommdate their trading partners up to a point with their economic problems so may hold off for a while if asked, but eventually they get it back on track.

So to answer your question - that is why oil is going up BECAUSE GOLD ISN'T and the dollar is inflated.

This is a simple explanation, but nothing in the financial world is ever simple. It's enough for me to my sums on, and act upon.

I work it that they (OPEC) see gold at about $600 with the US dollar true value at this point of time. I don't think they are far out - in fact, I think they are spot on.

The MAJOR benefit from lower interest rates is that producers keep more of their earnings and the suppliers of passive capital receive less.

Probably 999.99% of the stock market is the reimbursement of previously invested direct capitalization. Modern society has evolved into holding a viewpoint of entitlement to getting wealthy via the labor of others by "Putting their money to work." While it is certainly ethical and desirable to make a profit on forgoing spending power earned, a free-market reduction of that profit is a net benefit to the society as a whole. If you really put your money IN the bank for safe keeping, maybe they would charge you for the service.

.All the much bemoaned credit excess of the Fiat money system are rooted in the quest for wealth transfer without production in kind.

As I said a year ago, much to FOA's delight; (And this also holds true to some extent for bonds and savings) "Those who buy stocks in the aftermarket, have abrogated their responsibility as investors, and they do so at their peril."

Regrets due to a dinner engagement but let us keep trying--perhaps early next month. Thanks....CM

...I don't know if I buy your theory or what evidence you have of it, but I've been unable to find any evidence whatsoever of an oil-for-gold trade outside of the royalties paid by oil companies to the sheiks. Interestingly enough, there was no currency issued in the Arabian oil countries until about the 1940's, and it was gold coins from various countries, particularly British sovereigns, that served that function. In fact, in the '40's the US minted silver riyals in a loan arrangement so the Saudis would have their own currency. You are probably correct that the Arabs don't trust any money as much as gold, but they obviously have accepted all kinds of paper money through the years, probably spending it as fast as it comes in on various tangible investments. Their ethic regarding money, and particularly interest, is far different than the West's. But I doubt there's enough gold in the world to carry the oil trade (that's been kicked around here too) and there were obvious problems during WWII, when the LBMA was shut down, in paying the royalties in gold. The House of Saud was more than happy to accept US$, at least for a time, until 1947, when the royalty payments were renegotiated. I would be grateful if you had any more background info to ad to this oil-for-gold trade. Do you know of any specific oil deals that were done for gold, other than these royalties? I tried to get FOA to address this issue, but he dismissively said there were many versions of the 1947 negotiations, then offered no details. None. Obviously, I think the background of these issues is very important in helping to make informed decisions.

Thanks. BBML.

Interest rate cuts, who does it hurt?

Sir,

Good question. I will offer another angle which in no way diminishes the need for answers to your question.

Your post prompts me to ask, what rate cuts?

When the Fed lowers the discount rate the member banks have the privilege of borrowing at the forbidden window at a lower cost. This sort of rate cut is rather insignificant in the general scheme unless a bank is in great immediate need for funds which it cannot obtain elsewhere, in which case the member bank will have its leash shortened considerably.

The talk of interest rate cuts by the Fed are not that at all. What they are talking about is fiat injections which will result in an increase in available cash for overnight lending which will thus result in lower Fed Funds rates.

The whole idea is increased liquidity, not reduced interest rates, which are only a result of increased fiat supply. What we hear all over is the great fanfare that rates need to go down. It sounds so good to the sheeple. While increased liquidity will in the short run, reduce interest rates (generally short-term interest rates only), this increased liquidity will, in the long run, increase interest rates because the bond buyers will need more return on their investments in order to cover the cost of the devaluation of the money which they have loaned out.


Who will benefit from increased liquidity?

Answer: Those to whom the short-term money flows, who lend it short.

Who will be harmed by the increased liquidity?

Answer: Those from whom the money flows, who lend it long.
Very respectfully,

HBM

PS: For whom is the bell tolling? It is tolling for all disproportionate fiat holders. Not only in the long-run are we all dead, but in the long-run we will all be broke, that is of course, if a disproportionate share of our assets are denominated in fiat.

Unfortunately, I have bad data on my POG charts, so no link.

Two weeks ago we had a breakdown below support -- this was reversed the following week as the price recovered within the wedge pattern. Last week we had a breakout above the wedge which did not confirm (failed breakout) by the end of the week. So, the torture continues.

I'm still looking for a confirmed breakout before April...gold shares are remaining strong with each fall in POG and lease rates remain on an uptrend (watch those lease rates). Also, Indian buying should start to kick in strongly by next month.

Sir,

Perhaps, next month. I will give you more advanced notice and some options of when. It would be nice to have our wives along, but necessary.

I look forward.

Very respectfully,

HBM

I'm showing breakout price has fallen to $265 while support is at $258.25 --- prices are approximations only.

Compression continues.

Meant to say, "Not necessary".

I am researching the phenomenon of the Gold Bugs, Buy or Sell position. Due to the limitations of financial backing, research has been of Spartan gathering capabilities for information.
Just a few points of interest. Again for a second time, some are selling Gold and others are buying. When spot of Gold was $267.00 A person sold six Gold Eagles to PM dealer and by the end of the day dealer had resold all the Eagles.
Did the man sell at what he thought was a good price, or just to pay bills? The other thing of interest is besides myself, there was someone else buying, A 2 to 1 or better ratio to buy. Also, this dealer sells at a lower price than the others and may account for him being short of 1 Oz Gold Eagles. Like my other post his display was mostly 1/4 and 1/10th in small quantities. The 1 oz seems to be the big mover. I just have to be positive about this. It seems that
2001 coins are in quanity and pre 2001 date are available only when they are sold to PM dealers.
A snap shot in the life of a Gold Bug.
Very Interesting!
Slingshot

Sir Panda,

Nice to see you back!

I would like to reinforce some of the points you made in your
post #49314.

Especailly neophytes here may get the idea that they can simply
enter the gold market, catch the trend and make money speculating
on gold. This idea is not much different from the day-trader
mentality, and I'm pretty sure we know a few and what ultimately
happened to most of them.

Many posters have gotten that day-trader mentality in various
forms, and just lately a few have alluded - - - no, in fact
spelled out - - - the very disappointing results. One poster
promised his Family Of Eagles down-line gold was going up in
short order. Because he was an honorable man - - - and had at
least one characteristic of a professional gambler, was somewhat
prepared to live with the actuality of what he only saw as a
possibility, that is, that he could lose. Several others have
posted similar stories here recently.

It's not that gold was a bad investment - - - especially if as
you suggest, you're prepared to keep it for awhile - - - it's the
timing, which is just as difficult with gold as it is with
stocks, etc. If your profit depends on accurate timing, then
unless you're a real pro, you're almost certainly playing with a
negative edge. And stats show even many pros don't do all that
well.

Let me present a simple story, an extension of one I posted
yesterday, to illustrate. This is "that insider's story" - -
like the one we'll probably never get on the gold game - -
because I _was_ an "insider" and I'm willing to talk about it.
While not on anywhere near the scale of the gold situation, this
story serves to demonstrate several principles which may be
useful to gold players.

When we were doing the "Computer Gang" - - - betting college
football and basketball (see yesterday's post #49274 for a more
detailed description) - - - many of us became individually known
as "wise-guys." Understdandably not only regulers waiting in
line with us to make a bet, but the big-time line-makers like Lem
Banker, etc. wanted to know what we were going to bet.

Sometimes a "little guy" in line would ask for a pick. If I was
sure he wasn't aware we were "wise-guys," sometimes I'd give him
a really good one. Usually anyone even a little bit "in the
know" got disinformation. They didn't do the work, why should
they profit? And more to the point, if they got one of our
picks, they'd immediately tell their friends and partners and the
line would move before we got down. That's just the way things
work in the big city.

Toward the end of my involvement with "The Gang," anytime we made
bets, observers from other groups put our line together and by
the time we got to the next Vegas book, there were other pros
already in line betting our numbers and by the time we got to the
bettng window, the line had changed. We became ringers.

At this point, we began to use our reputation to move the line
the way _we_ wanted it to go. We "ringers" would bet the "wrong"
side of the game for fairly large stakes and wait a few minutes
for the line to move (we could move the "Vegas Line" which in
turn moved the lines all over the country), and then the rest of
"The Gang" would "get down" with much more money at a much more
advantageous number on the "right" side of the game.

One real sleeper in all this is the situation the "little guy"
finds himself in. Is the pick I gave him any good? How much
should he bet on it? Let's say I make a mistake and unknown to
me, he's a pro. He still doesn't know how strongly that pick is
weighted and so what our PERCEIVED percent edge is. This makes
sizing his bets very iffy. And of course, there's no way he can
know whether I gave him disinformation.

But even if I gave him good "intel" and he makes the bet, he can
lose - - - because so can we! We don't really know what the
outcome of a particular game will be, even with the most advanced
CDC (Control Data Corp.) computers of the period working for us.
All even we have is just an "educated guess." He has only a
slightly better chance of winning with our single pick than if he
got a pick on the same game from Dumb or Dumber.

So "one bet only" no matter what the source of the information,
is mostly a gamble. It's the long-run that counts. You have to
bet over and over, keep your money in action and often,
particularly during the inevitable downward fluctuations, ask
youself if your PERCEIVED edge actually exists. Or if something
has changed it.

And this means also your over-all business equation must include
your costs of doing business. In sports betting one of our main
expenses was the cost of placing each bet. This was usually 10%
of the bet up-front, and is called "the vig." When you win, you
get your 10% back, when you lose, you lose the bet plus the 10%
vig, thus, if you're playing an even game overall (win half the
time, lose half), in the long run you lose 5% of your total
action to the bookie. To break even then, you have to have a 5%
edge - - - but who wants to just break even?

What's the cost of betting the stock markets? The gold markets?
That depends on all sorts of things. How much commission do you
pay your bookie, ah, that is, your broker? Do you cut a
government in on your win? (They aren't usually interested in
taking any part of your loss.) Are you beating "inflation" as
well? Etc. Given this business equation, what PERCIEVED edge
must you maintain over the long run to make playing the game
worth-while? Do you have records from which you can calculate
the edge you've been playing with up till now?

If you haven't made these calculations or even thought of them,
you're not behaving professionally, and if you play "long enough"
odds are you will lose. I'd bet on it.

I should say that the analogy between sports-betting with playing
gold and the stock-markets breaks down somewhat at the point of
settlement. The sports betting ticket is worth either twice the
bet (plus the vig - - which you get back on winning tickets) or
nothing. This is more akin to options and other derivatives
which have an expiration and are "in the money" or worthless at
that time. Even fiat "money" has that zero potential - - -
remember the Ecuadorian Sucre. Holding physical gold simply
doesn't have the zero-value downside, and usually, only a small
portion of the perceived downside of any other bet.

I would respectfully suggest that:

1. The "manipulators," just as "The Computer Gang," don't have
the iron control you seem to imply. Just as Greenspan, etc., they
must count on economic projections, which as we know
(particularly those of us who watched Greenspan's testimony to
the Senate Banking Committee) are skewed and are massively
subject to Yogi's Law and Mises Maxim, namely that the future's
hidden. Thus it seems to me that you may over-estimate the degree
to which TPTB can exert control. For example:

Secretary of the Treasury Lloyd Bentsen and Laura
D'Andrea Tyson of the Council of Economic Advisors both
refinanced their houses with VARIABLE rate mortgages
when FIXED rate mortages were at their lowest rate. If
they'd known what interest rates were going to do, they
could have saved themselves a lot of money by getting
fixed rate mortgages instead! "Does this make you feel
any better about sending your tax dollars to
Washington?" -David Brinkley's tag line, ABC This Week with
David Brinkley, 4 Dec 1994 ~11:59:00 AM EST

2. TPTB, to the extent they DO exert control, would indeed be, as
you suggest, long-time pros. They know folks want to grab their
coat-tails and they know how to use this to their advantage.

3. If you're playing particularly a game with a time limit
(options, etc.) and haven't kept track of your previous bets - -
- and haven't made a whole bunch of previous bets - - - and don't
have a numerical "perceived edge" calculated, you are most likely
fooling yourself about having a real edge.

4. Even if you have a real edge, if you haven't taken the "vig"
(commission you pay your broker), taxes, and inflation into
account, you may well be playing a losing game.

In short, recreational gambling is easy, professional gambling is
much harder. If you endulge in recreational gambling often, the
math says you will probably lose. Which kind of gambling are you
doing?

Finally, you can't escape gambling. A bank account is a gamble.
So is holding physical gold. The question is, what are the
PERCEIVED potential upside and downside? AND what is the melt-
down down-side potential of your particular bets?

Regards and good luck,
Journeyman

Excellent post and advice Sir Pandagold! I especially like the following: "It is only important to know it {gold} is manipulated by people, who descend from people who have been in the gold business for centuries, and control most of it". END
Would you be kind enough to e-mail me at rtmauspec@hotmail.com, as would like to ask a question unrelated to this forum? Thank you.
auspec

I'd just like to know what people's opinions are on timing.

On a scale of 1-10, what do you think about the PRESENT time to buy gold?

Is there enough turmoil in the world to make the present time a "10"?

Remember, to have good timing you must be a little early before the POG explodes and it is too late.

Not to pin anybody down, i'd just like to know what people think. I always think the present is at least a "9.5" so far, i've been a "little" early. I'm always ready to buy a little more au and those 20 Mark coins are looking pretty tempting at the moment.

Panda, good to see you back!

OG

Forgive me if I haven't grasped fully what you are saying, but I will answer what I believe it to be.

The value of gold is what they trust. Gold is the measure of value they get for their oil. Because the supply of gold is limited, and the amount above ground, and below, more or less, is known if only by estimate, it is the only thing which has some stability. Governments can't just print more of at their will.

So, when they are guaging what to ask for their oil, and it is currently priced in US dollars, they have to see that the number of dollars they get equates to what they estimate
to be the true value of gold ( ie, not what price Rothschilds care to put on it in London.

As I have said, these things are not so simple. The two sides have to work together - to a point. The Arabs will go along with holding their price to help overcome some temporary economic problem the west may have. But, eventually they ajust their price to 'make up their books'.

To summarise - the true price of gold is their measure, the yardstick. It does not mean they have to have the gold. (20-25 barrels = one ounce gold)

Hope this explains it without getting in too deep. I read this many years ago from one or two sources, and I have watched how this works ever since.

If they keep pumping more dollars into the economy and holding the POG down - up will go the price of oil - you can bank on it.

This is the problem when you try to juggle things without dishing up the right medicine - you create another problem elsewhere.

This is also why they have to get the Euro standing on its two feet, so they can let the dollar slide and the gold price rise - or face high oil prices.

Sorry, no time to edit hope its readable

Wow that's a long one (as the Duchesse said to the Bishop)
Give me time to digest it.(she probably said that too)

By the way, was it you that asked me for a reference to the Christmass Truce on the Western Front (1914) some weeks ago? I did get one but could not remember who asked me for one.

http://www.usagold.com/halloffame.html#anchor863944For many years now we all have been reading over and over again how Gold is obsolete as a form of money and how the Central Banks of the world really want to sell their 32,000 tonnes of Gold which would in turn depress the price of Gold to way below production costs.

Lets take a step back and think about this scenario on an international level, because I think it's a big bluff that only the gullible fall for.

First, we have the thoughts of Another/Trail Guide/FOA/Sir Aristotle(Part 5 at top of page) and a Mr. Jim Sinclair(Wall St dubbed him Mr.Gold, after 40 years as an insider in the Gold business, he had an article at the mining webb recently which I cannot retrieve right now.)
They ALL agree Oil interests play a major roll in POG!

Mr. Holtzman recently pointed out that the U.S. with 8140 + tonnes of Gold(***UP 10 TONNES SINCE LAST YEAR!) could totally depress the POG by dumping the Gold all at once on the market, he may be right, but has anyone ever thought about this?
The Saud family of Saudi Ariabia in a very short time could very easily "BUY" at current POG "spot"(using paper money) all the Central Bank Gold in the world if they so desired, if you don't believe me do the "$" math on their oil export revenue.

Now lets expose the IMF & Central Bank Bluff!

Ask your self this, how are the worlds Central Banks "CONTROLLING" the "VALUES" of the worlds paper currencies?
Answer:
By knowing the approximate amount of "Paper" money issued worldwide, and thereby taking the real supply and demand equation away from what's being used as a medium of exchange, from the users of the "money", the people.(And using a "paper" set of valuations to their own advantage.)
The manipulation of a Gold price can only be accomplished by the manipulation of "PAPER" Gold!

If the Central Bank Gold was sold to the public,,,,in 8 to 12 years or LESS(when the CB Gold was all sold) the smart ones would use Gold as a medium of exchange worldwide in commerce to totally circumvent the false paper money valuation system, for many many reasons, here is an excellent current example.

If your business had recently sold any product to someone in the country of Turkey, would you rather be paid,right now, in Turkish Lira or Gold? If you've been watching the current destruction of the value of the Lira I'm sure your answer would be Gold.

So, the bottom line is:
Current Central Banking worldwide as we know it, would collapse if the people of the world(especially the USA)would exersize their Constitutional rights and use Gold as a medium of exchange among themselves, the way the framers of the U.S. Constitution intended!
Some are already exploring this "NEW" Gold medium of exchange system thru the internet!!! If anyone wants me to elaborate, without using names, with USAGOLDS permission,I will. Thanks for Reading.....beesting.

A Mass-Correlation, Hyper-Volatility, Illiquidity Event is brewing

by Bob Bronson
02 March 2001 07:29 UTC

Seemingly unrelated capital market events are starting to escalate:

gold is moving up,
Turkish lira drops one-third,
hedge fund failure rumors building,
Japanese equity derivative problems surfacing,

Orville Goldenbacher "10" My reason being. I jumped in at $325.00 and I am going to run with it even if it drops. Forget about the world and all that statistical information. At $ 325.00 it was a good buy. Why don't others see it? Their up to their butts in debt. Live from payday to payday. Anyway, if you read this forum you learn plenty. Can't learn anything from a dummy. Gold is Cheap! May get Cheaper!
Steady as she goes, Mr. O.G.
Slingshot

P.S. Wait till Joe Sixpack wakes up. Just about the time the price of Gold starts moving upward at a good steady pace. OH! BOY!

The total value of gold above ground, give and take 50cents either way (joke), is approximately 1 trillion dollars at the current set POG.

Just $1 trillion. Yes its a lot of money but compared to paper money in the system, which is increasing daily - it is nothing.

Once again TOTAL VALUE OF ALL GOLD!

For your response to my post asking about bonds. I appreciate your making the effort. Time for me to consider which harbor to weather out the coming storm.

Its nice to see you today.

$hifty

Cardinals fans?

Total value of all goldTotal paper money in the system (?) divide by total above ground gold = ????? POG

Any thoughts ?

$hifty

Hi Panda,

Yea, it was a bit long. Did the Duchess mind?

Your memory is batting 1000. It was indeed I who asked for a reference on the 1914? truce where the soldiers of both sides celebrated together and as a result, were chastised by the "brass."

If you have that reference, I would appreciate it greatly.

Regards,
Journeyman

http://www.bis.org/index.htm@ 714 : Bond Credit Foncier de France 8,5% '94-'04 - Euro
As soon AS the French government announced its withdrawel of state guarantee, the bond dived from 108% to 85%. Panic sales because AAA, changed in A1 and fear of delaying the yearly interest rate (8,5% yield) and repayment of the Bond itself. France has it's share on scandalitis. The state always shows up to back-up with taxpayers money on every scandal. The most recent one is former President Mitterand's son involvement in oil and arms business in Africa. etc..etc...

The above BIS-url is a nice starter to communicate your personal concern, about gold-reserves to a lot of Central Banks.

From 1980 to 2001. I remember the 1980 period as was it yesterday.Skyrocketing interest rates (14%) and Gold-Flamboyance (850$). Both events against an ever declining stockmarket, where VALUE (shares) were up for sale at mania-low prices. This thrilling event was exactly the diametral opposite as what we are experiencing today !!!!!
An unbelievable 21 year expansion of production and services (DowNas) against all time low interest rates (3,5%)
and our beloved yellow, 21 year slide to the mania-low of 252$/ounce. In 1980, I wondered each day at what new low, I was going to be able to buy some Value-shares. Did it with shaking hands and sold them much to fast with easy profit.
Isn't this something very important to consider seriously and toroughly. In French : plus que ca change, plus que ca reste la meme chose (the more things change, the more they stay the same).

Gold lost progressively its place in almost all portfolios over this extended period of 21 years. And as in 1980, for shares, POG is knocking at a solid rock-zone bottom. A natural layer of rocks, where the drilling gets very difficult, altough not impossible. The 1980 share panic and fear, made us recalculate a 100 times again the rock-bottom value of the dramatic undervalued shares (P/E<6+div.>6%)
Today we are asking ourselves, who will be able to get gold out of mother earth at a lower price into the nearby future?

Isn't this a nice story to contemplate before bedtime ?

http://csf.colorado.edu/forums/longwaves/2001/gif00024.gif
Very interesting Kondratiev cycle chart from Bob Bronson of Bronson Capital Markets Research. Have a look at this.

Thanks Shifty, the sabbatical is nearly over.

Remember, this truce was unofficial

A truce took place in many areas of the Front from the Belgian front down
along the British Front Line. Lyn Macdonald deals with it her works _1914_
and _1915_ AJP Taylor deals with it in _The Illustrated History of World
War I_. I think Barbara Tuchman deals with it also in Guns of August. I
will check some other books I have at home and let you know.

Also check
/www.pbs.org/greatwar/episodes/stalemate.html#christmas

The Christmas Truce


Peter Simkins, Imperial War Museum
Germans would be heard singing "Still Nacht, Heilig Nacht." And the British would respond with a British Christmas carol. In some places food was lobbed over into the opposing trenches. I think on one or two instances, the Germans erected Christmas trees and there was a kind of mutual curiosity and certainly instances of soldiers applauding each other's singing. And in one or two places, on Christmas Day itself, the first curious, slightly headstrong people, perhaps, from both sides poked their heads above the trenches and being made aware that somebody on the other side wasn't going to shoot it off, then clambered cautiously out.

Paul Fussell, University of Pennsylvania
The Christmas Truce was the last twitch of the 19th Century. By that, I mean it was the last public moment in which it was assumed that people were nice. It's the last gesture that human beings are getting better the longer the human race goes on.

The last post (no pun intended) to Journeyman was in reference to a posting of some weeks ago. If my memory serves me right, the point being made was how we are used and manipulated by the media.

Up until the first world war there was no history of hate between Germany and England. We are both from the same stock, and if we were involved in any battles it was both on the same side.

Then suddenly, almost overnight we were taught to hate.

But, as that first Christmas of 1914 showed, even though war had been declared, the hate was not there in the common man.

Who will we be told to hate the next time?

It shows how media, and it was not as advanced then as today
is used to manipulate our thinking and our actions.

Control a people's thinking, and you control the people

Hi Pandagold. Welcome back. It appears to be your opinion that gold will not make a significant move up until next year. While I do not dismiss the possibility that they could hold things off that long (I was amazed that they held things off this long), this is becoming progressively harder. The recent gold move was due to a liquidity problem on the Comex. They are running out of metal. Of course the Comex could be bailed out just as LTCM was. However, based on FOA, the ECB is content to let the system collapse on its own. If that is their position, it means they are certainly not going to assist Comex though there is some rumor of BIS assistance and of course the BOE is also assisting. They stopped leasing gold long enough to goose up the price so Comex could cover.

Theoretically, the US could give its gold to Comex indefinitely. They could use their 8000 tons to hold this off for a very long time. But consider that holding together Comex is not all they must do. They must do all of the following:

1)Maintain US stock market indexes indefinitely
2)Hold GATA off indefinitely
3)Hold major fiat currencies up including the dollar and the yen
4)Hold off imminent hedge fund failures
5)Hold off Japanese equity derivative problems surfacing,
6)Hold up the price of silver (and they don't have silver reserves like they have gold. US silver is gone.)
7)Hold off Japanese bank failures which have been held off for more than a decade already and are promising to multiply rapidly if the Nikkei falls below 12,000 which it is in danger of doing now.
8)Hold off war

And this is just a partial list. Now, how much longer do you honestly believe they can hold this mess together?

Something you mentioned earlier hit close to home.... i.e. $325.00 buy in.

Although much of my current holdings were obtained in the $260-$280 range (thank God for cost averaging), just suppose.......

....We "unsophisticated Gold Bugs" buying AU at $325.00 may seem a laugh to some, but what of those running up the credit cards in a similar amount, paying them off at "minimum monthly payments" of some 20% or higer APR, and most likely not even remembering exactly WHAT it was they purchased in the first place ?

Think I'll take the $325.00 gold "loss"....... any day !

Sir,

Once spent my summers behind home plate. That was before Auggie died. Not the same anymore. I am a Mcguire fan and, I suppose a fair weather fan. That's about it. I am also a Louisville (Denny Crum)fan. Does that count.

Respectfully,

HBM

No I think we should see some movement before this year is out. But there should be a more significant move next year, and beyond.

One of the problems, and there are many at the moment, is if
the Middle East erupts. Another one is the 'dirty tricks brigade' causing trouble with China.

America will need something to deflect attention from home and pull the country together if (when) the recession deepens.

So I keep one eye cocked in that direction. Something is going to snap somehwere, but just where in the chain, I am not sure.

We are living in interesting times. I take it one day at a time. I am not a day trader as such, but will trade in the day if the situation calls for it, and I always keep enough cash in reserve to cover my ass (hopefully), or seize opportunities.

What I am looking for is a little volatility, even if it only treds water for a while. At least then we know its alive.

Like a good sailor from a seafaring nation I respect the sea and the elements.

Gandalf - lost your emaill address. Email me. Richard

Cost averaging.Yes, thats right! Cost averaging. One more addition to the equation. Never sell below your get in price to insure profit. Those who brought at $800.00 could do this with a sell price say at $550.00 to cut losses. My opinion of course. Funny, with me if gold goes up I win. If gold goes down, I win again. I think I have a good plan. I do some research. Read this forum. (Thanks you'all) Follow the plan.
I really feel like I'm on the ground floor of some special project.
Have Fun! Steady as she goes, aunuggets, Steady as she goes!
Slingshot

Did anybody hear anything about maybe FARFEL'S new bodyguard lighting up FARFEL'S wing of his house and not his wife's????

http://www.contraryinvestor.com/mo.htm
Wow,I've been checking daily for the next update from this site,excellent research and hard hitting bubble commentary.

Check out the thoughts on Japan and the implications for the rest of us at the end of the piece.Ole Greenie appears to have some serious flexing coming up.

Good tidings unto you Sir.

August Jr.There was a man's man. Agree totally with you. I remember when he fired Vern Rapp in the 70's; there was a press conference from the dugout live. Time has passed me by.
Call me a "throwback"....CM

Mr. 714,

Thanks for your message. In part,

"Gold was only used to pay oil royalties to the ruling Arab sheiks and NEVER was oil sold for gold on the open market."

So if we cut hairs on the definiton of 'royalities' can we imply that the oil was sold plus gold? Why were royalites paid in gold; why not USD or any other currency?


"Sure, there's a minor link between oil and gold -- royalties! That's it. Gold has little else to do with oil."

Again playing both sides of the fence, is it possible that Another's discussion of $19 + XXX is merely a number, not exactly that figure. The 'royality' may be a mere 1% or 2%, this cannot be minor given the huge sales in currency terms of oil to gold. The 'tiny' royality would add up to huge amounts of gold.


"Let me ask you: If there was a link between the price of oil and the price of gold, why hasn't gold risen?"

Oil and gold are not in their usual 20/1 ratio anymore, it does not exist. Another mentioned that.Because of the 'deal' Another suggests; keep gold low for us(them) to accumulate and free flowing oil will continue. Stop the gold flow and we (them) will price gold in terms of oil. The recent (nearly 2 years) rise in POO reflects the overvalued USD. To realize the same bang-for-the-buck oil is twice the price because the dollar is '2' times inflated.

"I've posted the above link ...."

The link didn't work.

Finally,

I am new to Another's thoughts. I have been completely stumped by the gold 'wars' and decided to look at it bottom-up for a change. We know that gold is being sold to keep it low (managed price). I think most, if not all of us, can agree to that. We are not completely sure how, when or where. We do not know who is buying. It may not be ultra-important to know HOW the 'sales' or WHEN they occur. It might not even matter WHO is buying. I think it is important to know WHY they are buying. We know or can assume to know WHY they are selling, WHY is WHO buying?

Another, IMHO, is completely correct on one major issue. WHEN the WHO stops selling the game is over. I think this issue is difficult to debate.

Thoughts?

SC

Mr. Galearis,

Your earlier post echos my thoughts, not closely, but exactly.

My holdings are near equally split between physical and shares. Yes, the shares will be the first to go. No greed factor here, catch a ride and bail out of all paper.

Yes, hibernation will be key, extremely low profile.

SC

Mr. Beesting,

"The Big Bluff" (49347)

Great post.

Easy money is not here yet. We will know when easy money is here. Easy money will be here when the Fed Funds rate exceeds the 30-year bond rate by at least 300 basis points. We are 300 basis points away from there.

All the talk of not knowing whether we are in recession or not is baloney.

We are in a down turn that is going to continue to turn down for a good long while.

I suggested that the tight money policy would finally put us into a recession. No amount of smoke and mirrors is going to change what we are in for.

I have been through three recessions. 1973-1974, 1978-1981, and 1991-1992. I use these dates because those were the time periods when I experienced the full effects of recession in the income-producing period of my life and I have a vivid memory of it. I was defenseless because I was up to my ears in debt.

This just happens to be the first one that will not hurt me. Why because I have no debt.

The interest rate spreads tell the story. Al has not been able to stem the tide because it is controlled by the moon, not the sun.

Some of you out there will remember that I told you that we were going to be in recession about this time. I also said that it would not be mild. I will say it again. It will not be mild and it will not be short-lived.

When money is pumped into the pipeline and it does not flow into consumption the money does not liven up the economy. Ask George H. Bush. He lost a presidential election because no one would borrow the re-liquification. I tell you we are in for it.

Hunker down. This is no time to get aggressive in business and it is no time to go further into debt, unless of course one plans to default anyway.

HBM

http://home.columbus.rr.com/rossl/gold.htmNasdaq 2,117.63 + Dow 10,466.31 = 12,583.94 divide by 2 = 6,291.97 Ponzi

Down 60.23 from last week.

ANOTHER ALL TIME PONZI LOW !!

Thank you Sir RossL for the link.

$hifty

HBM,

I'm a Big Mac fan also and listen to as many of the games as I can. If you were an umpire, whats with the strike zone these days? Can't they read the rule book?

Cavan Man,

Vern Rapp......do you think he'd get rid of McGwire if he refused to shave his beard? The game isn't the same with respect to the managers. Whitey throwing that punk Templeton into the dugout after flipping off the home crowd. Sadly, those days are long gone.

Oh, and in deference to the forum:

Rick Ankiel's control = the cabal's future control of POG

http://groups.yahoo.com/group/gata/message/692AngloGold warned formally against bid for
Gold Fields while the cabal is being exposed.


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@yahoogroups.com

http://groups.yahoo.com/group/gata/message/693Dispatch from 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,
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http://www.eia.doe.gov/oiaf/ieo96/oil.htmlSilvercollector, sorry that you're not able to link to the website I posted. I'm guessing your running AOL, or perhaps Compuserve, as some other friends on those ISP's have had trouble accessing my homepages (it might be the tilde in the URL). Looks like I might have to set the redirect service up again. Basically, the site consists of a webpage and a "pdf" file, the pdf file consisting of various memorandum from a US government archive regarding financial, and political, arrangements between Aramco and the House of Saud (Saudi king). Although it may be a bit dry for some, the memos are rather revealing of the arrangements at that time. This is what I know on the numbers, and contract arrangements in the 1940's: gold was going for about a $1.10 a barrel on the world oil market at that time (vs. the current $25-30 a barrel range). This oil was explored for and drilled in Saudi Arabia, and then brought to market, by an American conglomeration, Aramco (since nationalized by the Saudis). This was done under an agreement that Aramco would pay the royalty in gold sovereigns (see Mr. Kosares "Buy Gold" page) and the oil was Aramco's. The original royalty payment, negotiated in the 1930's, was 4 gold shillings a barrel, or about 22 cents a barrel. That works out to 153 barrels per ounce of gold, for royalties. This arrangement was renegotiated in 1947, under circumstances and terms too involved to go into much detail here, but it's safe to say royalties composed about 20% of the price of a barrel of oil. On top of that, during WWII, royalty payments were made in dollars, because Aramco could not obtain gold in London as that market was closed and, being an American company, they could not obtain gold bullion in the US due to the Gold Reserve Act, which severely limited the gold trade (Aramco even needed a waver from the US to buy it in London!). So from almost the beginning of the relationship between Aramco and the House of Saud, the King was willing to take US$ for royalty payments pegged to gold. Having said that, in fairness to FOA and Another who have asked us to think not like Westerners, it's easy to see the Arab point of view that they received gold for oil. But that's not the entire picture from the Western point of view, is it? Oil in the ground requires a bit of industry and a lot of work. And the oil markets were not in Arabia. They were in Western Europe, the US, and Japan, by and large. And there, oil has never sold for gold as far as I can tell. It was always US$, British pounds, or more recently in the case of Iran, yen. Now, having said all that, from the above link, we know that current oil consumption is about 70 million barrels a day. Let's see...the math...70 million times times $25 a barrel is $1.75 BILLION a day in oil. Or about $638 billion a year. Now, using the estimate of 120000 tons of above ground gold supply, and being a bit liberal with the figures ($300 an ounce), there's about $1.2 TRILLION in gold around the world. If gold was being used to pay for oil, it would be gone in TWO YEARS! If 20% of the price of oil was being used to pay for royalties in gold, the world's gold supply is gone, into oil coffers, in 10 years. And on top of these numbers, we know from the gold industry that 85% of gold production is going into jewelry. Considering gold production was maybe 3000 tons last year, times 15%, after jewelry, we've got 450 tons of gold left to pay for oil royalties, if we don't count industrial and other demand. By the way, the Saudis were not the only ME oil producer to have such an arrangement. Similar deals were cut in Kuwait, Iraq, and Iran for royalty payments in gold by British conglomerates. Honestly, it seems to me that the oil market long ago outgrew the availability of gold to pay for much of it at all. Perhaps FOA could enlighten us as to just where all this gold is coming from to pay for oil, and maybe shed some light on this rather oblique arrangement he contends is going on. (Wow, I was going to try to be brief.)

Belgian, thanks again putting up the numbers on bonds and gold. All the more reason, as you say, to buy gold.

Pandagold, see above.

Salaam (peace).

Just a few observations 714,
Up till '71, US$ was likened to Gold (fixed exchange rate) so the direct O/G purchase wouldn't have been an issue. His Majesty STILL insisted on sovereigns though.
A/FOA contended that only a SMALL portion of oil was traded for Gold post '71 (full blown Fiat Dollar) as a trial balloon, and have suggested the bulk of O/G trades are now done with O & G still in the ground.
The gist apparently is to keep the trade wheels "ON" and have something to show for it at the end of the day (Gold) as opposed to debt.
View Yesterday's Discussion.

Hi Journeyman,

Someday I will get around to finding and reading "Hierarchy in the Forest" as per your recommendation.
Thanks for the gambling viewpoint, it's so...clear.
You may find "The Selfish Gene" by Richard Dawkins interesting- there is much about altruism, game theory, evolution, etc. It's written in an easy style but still pretty dense, I've read maybe a third of it so far.

Excerpt:

Chapter 12, Nice Guys Finish First

"The mathematician's simple distinction between the one-off Prisoner's Dilemma game and the Iterated Prisoner's Dilemma game is too simple. Each player can be expected to behave as if he possessed a continuously updated estimate of how long the game is likely to go on. The longer his estimate, the more he will play according to the mathematician's expectations for the true iterated game: in other words, the nicer, more forgiving, less envious he will be. The shorter his estimate of the future of the game, the more he will be inclined to play according to the mathematician's expectations for the one-off game: the nastier, and less forgiving will he be.
Axelrod draws a moving illustration of the importance of the shadow of the future from a remarkable phenomenon that grew up during the First World War, the so-called live-and-let-live system. His source is the research of the historian and sociologist Tony Ashworth. It is quite well known that at Christmas British and German troops briefly fraternized and drank together in no-man's-land. Less well known, but in my opinion more interesting, is the fact that unofficial and unspoken nonaggression pacts, a 'live-and-let-live' system, flourished all up and down the front lines for at least two years starting in 1914....
"The theory of games and the Prisoner's Dilemma had not been invented in those days but, with hindsight, we can see pretty clearly what was going on, and Axelrod provides a fascinating analysis. In the entrenched warfare of those times, the shadow of the future for each platoon was long. That is to say, each dug-in group of British soldiers could expect to be facing the same dug-n group of Germans for many months...The shadow of the future was quite long enough, and indeterminate enough, to foster the development of a Tit for Tat type of cooperation."

References:
Axelrod, R., (1984) *The Evolution of Cooperation*, New York: Basic Books

Axelrod, R. and Hamilton, W. D., (1981) "The Evolution of Cooperation", *Science*, V211, pp1390-6

--The Selfish Gene", 1989 edition

Hope this is useful, have a nice, iterated game. :-)

Thanks, I enjoyed the Millenium Adventure in Japan link.

My own perception is that ANOTHER was describing events and potential eventualities of the modern decade or so, whereas your comments concentrate on the early and mid portions of the past century. As such, I don't believe your commentary does anything to discredit the "Thoughts" put forth by ANOTHER.

Further, if we examine your era focus, one is left wondering how it is that you can make such a comment as you have made in your recent post. You say, "oil has never sold for gold as far as I can tell".

Is your chapter closed against your study of the 1944 agreements of Bretton Woods, agreements which persisted in a form directly contrary to your above-stated knowledge for three decades? As the "bitter end" approached and sorely tested the originally-designed structure of the Agreements, did not the London Gold pool give adequate testimony to oil (or for that matter, anything and everything else which was also seen to be internationally priced in the convertible dollars of that era) selling for gold? As you will see, the dollar and bonds were effectively units of account in those days, representing gold as currency (money) and as gold loans.

I hope this helps somewhat in the event you choose to ponder these matters further.

You certainly pulled the trigger more quickly than I could on that fixed gold-dollar issue, and far more efficiently, too. It seems I continue to type two words were one would do. Now I must rest and gather my few wits for a big day of projects ahead.

Let yourself imagine you're the big Kahoona. (with the entire world trading your Fiat money)
You know full well the fatal flaw is - a continuing growth pattern HAS to be maintained for the system to function.
You realise growth these last 20 yrs have been directly linked to a reasonable and regular Oil supply and whatsmore, you know those suppliers want to retain wealth in the future in something that isn't hamstrung with other peoples "INPUT" ie: Gold.
What do YOU do?
FWIW, here's what I'd do:-
Well firstly I'd poopoo gold and run it's price into the trash-can (thus divesting all but the most resilient goldhearts of their bullion)
Then, out of no-where, one fine eve, I'd let the price explode to a point where only the ultra-rich could afford it.
My cohorts in the Central banks would then declare Au is "MONEY" and impose total control over all things Au.

Pretty well what A/FoA have predicted....Yup?

Just the kind of info I can really use.

Regards & Thanx,
Journeyman

Randy,
...evenin' Squire, I've found your link to Another's postings and spent a good part of the w-end reading.
What strikes me is the (predicted) tanking of the Markets in concert with a "ever so slightly" too high POO.
For my small mind - the writing's on the wall.
714,
Go back and read the content of Another's message, not from an Investment point of view, but from the position of someone "desperate" to retain profit's from trade NOW - well into the distant future.
The chips WILL fall into place.

Many thanks for the response. Many things to learn.........

http://english.peopledaily.com.cn/200103/05/eng20010305_64115.htmlJust when things here in The Tower were settling down, I received a knock on my door with word that a gentleman was here to see me about some bit of important news to pass along. With a wary glance toward the clock, I put aside my bit of evening reading and lifted myself from the large rocking chair in which it is my custom to sit beside the lighted hearth within this particular chamber. In turning into the hallway I saw that I was to be met halfway by this messenger, whom I immediately sized up as an old friend. I wondered aloud at the urgency of any message that would inspire him (at this hour, no less) to climb the many steps to see me rather than await my decent for a proper meeting in the more aptly furnished anteroom of The Tower.

In summary of the message I offer you this link to an article...
(Excerpts)
-----China plans to establish a National Gold Exchange (NGE) this year, another step towards reforming its gold trading market.

Today's China Daily reported that a nine-member panel has been formed in the central government to lead and plan details for the establishment of the exchange. A preparatory committee will be formed soon, it said.

Shanghai is the most likely location for the exchange, though the central People's Bank of China (PBOC) would not confirm this early last month.

For years, gold trading has been strictly controlled by the central government. PBOC monopolizes the purchase and allocation of gold. China's gold prices are separated from the international market and rarely fluctuate.

The upcoming NGE, which would mainly target gold producers and wholesalers, would introduced market prices to China's gold trade.

The central bank would gradually withdraw from its monopoly position.

A retail market for gold would then be established, the newspaper's source said.--------

Also according to the article, in a speech before congress the mayor of Shanghai ranked this move as a top priority in the current Five-Year Plan; meanwhile a manager for the World World Gold Council Shanghai Office said the establishment of the National Gold Exchange "will help Shanghai become established as an international financial center."

I yawned as politely as I could, and asked him for how long he had been afield and away from all contact with anyone here at The Tower or at the Forum Round Table. After reassuring him that this was in fact information of global importance, I further explained that as a topic, it was anything but news (leastwise "urgent") to us here in The Tower, having discussed it off and on for many months now. But I thanked him just the same for providing this additional clear "evidence" of China's impressive progress in support of our commentary.

After exchanging a few other items of information with a relaxing drink by the comfort of the fire, he was eager to be gone as suddenly as he arrived, fading into the night on the sound of galloping hooves. With him went a gold coin I provided for his trouble, knowing full well that this wealth would in time grow to fearsome proportions, though his pony would know it not by the unchanging weight.

So, based on your calculations, how many times do the ounces of gold in the 485 tons (13 plus million ounces?) go into the annual supply of oil in barrels and what is the significance of that number, which I calculate roughly at 1850 or so? And, how constant has that number been over time? And, what if anything does it signify? And, what could or should we expect as the supply of oil is depleted in 34 years by way of a graph? In other words, what would a chart look like, not showing a constant state of production of annual bbls of oil but the same amount of gold valued at the remaining qty. of oil, assuming total depletion in 34 years at current rates of consumption? I would think that it would be exponential such that the entire 485 tons of gold would eventually only buy the last remaining bbl of oil. Therefore, we should expect to see that more and more gold is being required to pay for less and less oil. Is this supported by the facts or even a trend seen in the current set of data that we have available today?

Actually, I am only really posting at weekends, but as I was checking on yesterdays late night posts that I may ned to reply to, I saw your post re the above. Well anything about China and gold alerts a mental sensor to me.

I believe what China is planning (and achieving) is going to have a dramatic effect in many ways. There are also 'outside' dangers from sources that deem this a threat to them, so must keep alert.

Opening the gold market was planned for last year, and should already be operating, but was delayed until this year. Shanghai, a city I love, and know well, it will certainly be.

It is VERY old news now.

Topaz, I fail to follow your logic as to why a fixed exchange rate would negate any point I made last night. There was a fixed exchange rate in place from the time of the original deal between Aramco and King Saud up until the 1970's, and since then, a floating US$. So what? You say His Majesty still insisted on gold sovereigns. But we know that from 1939 until after WWII, King Saud recieved NO sovereigns. He received no gold. He took US$, pegged to gold, for royalties, also pegged to gold. The record is clear on that. We also know, that upon renegotiating royalty payments in 1947, King Saud accepted, among other things, the construction of a railroad in payment of the royalties. Now, I will grant you that perhaps his successor, King Faisal, did indeed insist on a stricter gold arrangement, but what evidence do we have of that? Conjecture? Suggestion? You say, a small portion of oil was traded for gold, post '71. Where? And who consumated the deal? Was it before, or after, Aramco was nationalized in 1976? You know, Another was very good at making suggestions. Doesn't it strike you as odd that is all we seemed to get from him? He and FOA are certainly talented at stimulating goldbugs' imaginations.

Randy, thanks for your input, but how can we really separate what was going on in the 40's from what is occurring now? History is wonderful for shedding light on patterns of behavior and relationships. And history clearly shows that the House of Saud has been more than willing to accept alternatives to gold, though such royalties were still pegged to gold, as payment through the years. They even accepted a railroad! But again, and I will keep returning to this point because it is so important in this conversation, there is no history of gold being used in the oil markets of Europe, America and Asia to purchase oil from companies such as Aramco and Anglo-American. There is no evidence of it whatsoever, unless you accept suggestion as such. And how is it Bretton Woods affected any arrangements between Aramco and the House of Saud?

SteveH, those are very rough calculations. My point in making them is that the gold market in much, much thinner than the oil market, and as such, if gold were paying for oil, we would be seeing much more volatility and movement in the price of gold than in oil. In fact in reviewing those figures, I now have serious doubts that there is enough gold production to pay for Saudi oil royalties, if they were in fact still insisting on gold as payment. It would be very, very difficult, given the size of the gold market, to hide such huge gold transactions if it indeed were paying for oil on any kind of scale.

Perhaps I'm belaboring this critique of Another's oil-for-gold trade at this point, but let me say that gold is a wonderfully tangible investment. And we need many more who feel the same so investment demand for gold rebounds (it's awfully low). I do not think we are well served to hawk it like some kind of snake oil, making unsubstantiated claims and suggestions that it is a panacea for all that ails us.

Salaam.

Just quickly. I am not quite sure what I was supposed to see
in that post you asked me to note. I did observe that I believe the part referring to the four gold shillings and price of oil, the maths did not quite work out, for the 1930's, though I did it in my head (not the best of places)

Was your over all point agreeeing, more or less with what I had said, or diagreeing?

Remember what I stressed, there does NOT have to be enough gold to pay for oil. The price is what matters when converted to value.

Once they have got the value, they use their funds for building infrastructure and whatever rewarding financial instruments, or property purchases are in vogue at the time.

...where do you get this figure of an ounce of gold for 25-30 barrels of oil? And do you have any documentation? The figure of four shillings a barrel comes from Aramco memorandum and applies not to the price of oil, but rather the royalty paid by Aramco, per barrel of oil, to King Saud, for the right to drill, pump and export oil under the terms of their original agreement, dating to the 1930's. Do you have any documentation, or any other evidence, that oil ever sold for gold in the open markets? And perhaps more importantly, are you at all familiar with the details of the working arrangements, and relationships, between the various parties in the ME oil business?

Tia.

What concerns me is why you keep stressing this oil 'sold for gold'. I keep explaining that that is not what I am talking about. I keep saying that the POG= 20 to 25 barrels is only the yardstick for pricing their oil.

Where are we going wrong. Am I not making my point clear, I have tried several ways. Then someone says there would not be enough gold. But it does not depend on how much gold. The Arab Oil producers don't need the gold - they have plenty. But as the arrangements at the present are that oil will be priced in dollars, they want to be sure they get enough dollars to give them the VALUE.

Gold is their YARDSTICK. Before we go further - where am I going wrong in that you keep referring to selling oil for gold? Am I misunderstanding you, or you me. I am sure there is a simple solution

...but obviously we don't see eye-to-eye on this issue.

I am NOT saying oil sold for gold. I am contending just the opposite. OIL NEVER SOLD FOR GOLD! Capiche? There is no link between oil and gold outside of some dated royalty deal, and history clearly shows gold was not used to pay these royalties at times, as some here have indicated. If you've got some documentation, great, let's have it. What I am saying is that Another's & FOA's well-intended musings on the oil-for-gold trade (their term!) is FICTION. Yes, it is that simple.

Thanks again.

It seems as if the works of ANOTHER/FOA and Reginald HOWE complement each other. According to Howe, physical and paper short positions amounted to 10,000 tonnes and 6,000 tonnes respectively at the end of 1999 (http://www.goldensextant.com/commentary12.html#anchor341719). He based his study on published BIS data. The question is, "who holds all the (16,000 tonnes) of paper claims?"

Having walked through the Gold Trail, I can now speculate: Oil holds most of the paper gold claims.

Apparently, gold is cornered. Unbelievable!

The following is a quotation from ANOTHER.

BEGIN QUOTE

...
Understand that oil is still traded for a certain number of US$ but after the deal is done a certain amount of gold is also purchased with the future flow of oil as collateral"...

In the beginning the CBs didn't sell their own gold. They ( thru third party ) found someone else who had bullion. That "party" sold to a broker who sold forward for a mine or speculator or government). In the end the 3rd party had the backing from the broker that he
had backing from the CB to supply physical if needed to put out a fire. The CB held a very private note from the broker as insurance and was paid a small fee. This process mobilized free standing bullion outside the government stockpiles...

This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT IT'S MOVEMENT TO BE SEEN!...

Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the
real stuff...

Gold is cornered. Plain and simple. No complicated theories, no options problems. The commodity value of gold was forced so low in paper currency terms that all of the new mined gold, going out some 10 years is spoken for. Between the third world buying physical gold and the jewelry industry ( same people buying ) there is none left for the oil states!

END QUOTE

Gee714, we've just got to get this one straight, or I will go nuts.
I appreicaite you are not yourself saying that oil is sold for gold - or that you doubt it through lack of evidence.

I am NOT saying it either. I am just saying that they use the POG as a yardstick for pricing their gold. the POG as THEY see it, not Rothschild's London fix. As both commodities are priced in dollars, and gold is the 'real' money not paper dollars, the Arabs make sure they get their true value, whatever the market makers dictate. IE., inflated dollars, suppressed gold price = higher oil price.

If this doesn't work, then we'll call it day. It's just a misunderstanding I'm sure

www.financenews.com au (via 'fallstreet')
Brief gold rally wrong-foots investors



By ROBIN BROMBY
05mar01

AS a rally it was short-lived -- but just long enough to show gold's potential to catch some big players on the wrong foot.

Gold rose to $US268.25 last week, its highest level for seven weeks.

Those holding any of the many massive short positions would have been given a fright.

While the metal was back at $US262.85 by Friday night, the brief rally had shown the yawning gap between available physical gold and that sold forward by traders and speculators.

After all, these people know that short positions -- gold sold on paper in the belief that the physical gold can be bought at a cheaper price to fill the contract in the future -- amount to something between five and eight years' physical production.

Annual world gold production is about 2550 tonnes, but short positions total several times that, with some estimates as high as 17,000 tonnes.

The tight state of gold supply was thrown into relief last week when leasing rates soared as high as 4.75 per cent for one month, against a rate of less than 0.5 per cent for most of 2000.

Even as late as the end of January, the monthly gold lease rate was just 0.8 per cent. By last Friday, it was back down to 1.7 per cent.

The rally is being written off by some as just one large short position being covered.

But even if that were so, the price and leasing rate jumps do illustrate the potential for serious dislocation if there were to be a sustained rally.

Mercurial Hong Kong investor Marc Faber, known as Dr Doom, believes that 2001 could mark a decisive turn in the fate of gold.

"If a gold market rally took place -- for whatever reason -- massive short covering could drive the gold price far higher than anyone currently thinks possible," he wrote last week.

Faber's forecast is based on his belief that there is a good chance the US will find itself in an "unpleasant deflationary recession this year, in the course of which corporate profits will collapse and bankruptcies soar".

He is telling clients gold is the best hedge against the coming bear market, and advising positions in Newmont Mining, Placer Dome and AngloGold, among others.

Gold tends to be a refuge in times of crisis when faith in paper money is diminished. During the Great Depression, for example, the metal rose 69 per cent from $US20.67 to $US35 an ounce.

Even the more restrained analysts at Salomon Smith Barney were this week adding gold to their positive sector. Speculators piled into gold last week on rumours that some central banks were refusing to lease gold and that there would be a squeeze as buyers would need to pay more to buy the metal.

Australian Gold Council chief executive Greg Barns said part of the problem was that rumours were driving the market.

The market will be in a state of uncertainty until March 14, when Bank of England governor Eddie George will outline the bank's future gold sales policy.

Overall, Mr Barns said last week's shallow rally had lifted the barrier to $US270 an ounce. Should it break that barrier, gold could well rally as high as $US280.

The World Gold Council's George Milling-Stanley told The Australian the key factor last week was that the cost of borrowing short-term gold exceeded that for longer term transactions.

This demonstrated a shortage of gold liquidity.

"Some lending has entered the market over the past couple of days, probably to take advantage of the higher lease rates, but the cost of financing short positions remains higher than usual and could still trigger some short covering," he said.

However, one US writer reports that the WGC recently sent out a letter to its sponsor members about problems in the physical gold market.

Jay Taylor, who edits a gold newsletter, said the council's letter complained that the Bank of England had for several days not lent any gold.

This, added the WGC, was unprecedented as the bank's short-term lending was vital to the London market.

Mr Milling-Stanley said neither the British nor the Swiss central bank had indicated a reduction in lending.

But he added: "There was certainly less gold being made available to the market from central bank lenders."

http://www.usagold.com/Order_Form.html3/5/01 www. usagold.com. . . . . Gold was up marginally in the early going after a quiet night overseas. Paper selling by one or two funds was met on Friday and this morning by counter-balancing physical demand. Gold demand is being driven worldwide by wilting financial markets, a growing energy crisis, and concern that the Bush administration has backed off the strong dollar policy. This week we have Q4 Productivity and Factory Orders on Tuesday and the Employment Report on Friday -- a relatively light week but possibly just enough to keep an edge on equity markets. The Australian Financial Review published an article (See Review section for link, right) overnight that puts an interesting spin on the recent gold rally. "As a rally," says Robin Bromby, "it was short-lived -- but just long enough to show gold's potential to catch some big players on the wrong foot. . . . . . . . . . . .

Continued at
COMMENTARY & REVIEW

Clients and Subscribers Only. Registration required. Go to link above.

http://www.usagold.com/Order_Form.html3/5/01 www. usagold.com. . . . . Gold was up marginally in the early going after a quiet night overseas. Paper selling by one or two funds was met on Friday and this morning by counter-balancing physical demand. Gold demand is being driven worldwide by wilting financial markets, a growing energy crisis, and concern that the Bush administration has backed off the strong dollar policy. This week we have Q4 Productivity and Factory Orders on Tuesday and the Employment Report on Friday -- a relatively light week but possibly just enough to keep an edge on equity markets. The Australian Financial Review published an article (See Review section for link, right) overnight that puts an interesting spin on the recent gold rally. "As a rally," says Robin Bromby, "it was short-lived -- but just long enough to show gold's potential to catch some big players on the wrong foot. . . . . . . . . . . .

Continued at
COMMENTARY & REVIEW

Clients and Subscribers Only. Registration required. Go to link above.

A very interesting exposition on gold for oil. If I might ask a question. You valued gold at $300/oz, but suppose the Arabs are valuing it at $3000 /oz knowing that it will soon be at that price. Then less gold would be needed to satisfy their requirements. How would that effect your conclusions? Thanks.

http://www.usagold.com/onlinestore/special.htmlWe have never been able to keep the German 20 Mark gold coin in stock for long. We have a group of buyers who wait until these rock solid pieces of history become available and then take them off the market almost as quickly as they appear. This is the popular Wilhelm II mintage from 1890-1913 that helped so many German families through the Nightmare German Inflation which occurred a decade after the coin's last year of issue, hence the nostalgic attachment. The Wilhelm II 20 Mark has special meaning with the descendants of those who suffered through that monetary debacle ending with the rise of Adolph Hitler. This item is also generally popular with those with an interest in financial history. Hopefully at 1000 pieces, we have enough to get us past the first week of the offering. Orders, as always, will be filled on a first-come, first-served basis. The premium is still low for the item; it will go up and down with the gold price; and the liquidity is strong.

.2304 net fine ounces. .900 fine Brilliant Uncirculated. No minimum. 1000 offered.

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

Randy @ theTower provides some interesting and instructive background for the Wilhelm 20 Mark gold coin which can be read at the link above. We urge to reserve your share of this hoard at your earliest convenience. We do not expect it to last.

http://member.usagold.com/commentaryreview.htmlWe now surmise that some entity stepped into the "yawning gap" to supply metal to borrowers last week but, at the moment we don't know who. Some speculate it was the Swiss based Bank for International Settlements (BIS) and let's assume for the purposes of discussion that it is. I have no reason to second guess the reports that filtered out late last week of its involvement. Founded just after World War I to clear German reparation payments, the traditional role for BIS evolved to play central bank for the world's central bankers -- making a loan here, clearing a payment there, essentially providing short term liquidity for those having
short term problems.

As such, one could say with some degree of confidence, that if it was the BIS that stepped into the "gap," it could just as quickly step out drying up liquidity as easily as it added it. If the BIS is indeed involved in the gold market, one would have to assume the reason would be to offer an assist to the increasingly beleaguered Bank of England. I am assuming last week's reports by the World Gold Council on the BOE's lack of gold liquidity are true. (See Review section.)Now some are saying that BOE's "liquidity problem" could cause it to cancel further gold sales -- a development which would be not only prove to be an embarrassment; it would hint at problems in the gold market much deeper that any of the shorting institutions would like to admit. For BOE, such are the problems when one has the London Bullion Marketing Association in its backyard and a large number of those members owe large amounts of gold to other financial entities -- most notably the world's central banks. For the bullion banks short the gold market, the BOE's retreat could be cause for many a sleepless night with thoughts of a bailout dancing through one's head.

Interestingly, the reports were calling for gold to open down a dollar this morning and it opened marginally higher instead. Something tugs in the back of the mind about all this that tells us we may be feeling the effects of a short term band-aid on the leaking gold liquidity. So we are going to reserve judgment, and, in fact forward the notion that perhaps this sudden cooling in the gold market may be temporary. That something tugging at the back of the mind, by the way, has to do with the relatively low gold reserves of the BIS, its penchant for hanging on to them, and the short term nature of its involvement in markets. More deeply, it has to do with a hunter's sixth sense that the quarry might be injured. We will see how injured as this
progresses.

As gold owners with our metal bought, paid for and sitting
comfortably nearby, we can afford to watch all this unfold
patiently and with the appropriate amount of interest. After
all, we aren't the ones who owe the world something on the
order of 5000 to 17000 tons of gold depending upon whose
estimates you want to believe. They are.
---------------

Note: I should emphasize that the BIS involvement is only surmised at this time and to my knowledge unverified.

If you are new to USAGOLD and would like to read these (almost) daily reports, we welcome you. Please see registration link in previous post. Those registered already can gain access thru link above.

In the current financial world, the dollar interest rates from various sources are the primary element, the money supply being a result. In the gold system and free financial markets, there is a true liquidity constraint in that the acceptable money is limited in supply at any time. Modern currency (dollar) systems respond to liquidity constraints by the monetary authority deciding to inject new "cash" by buying all paper offered it up to a certain interest rate. Since the quantity of money is the loose end of the equation, the dependent variable, interest rates play the role of the determining factor in the financial markets.

The supply and demand relationship for money is different from that balance for debt. One borrows when rates are low enough for the purpose at hand. One does not borrow first and determine the rate later. The money balance is not a determining factor for interest rates, since the lending side is inexhaustible in quantity, and the recipient of the newly created funds (the vendor of items bought on credit) can not make that money disappear, he can decide only whether to keep the money or dump it into someone else's hands. Ownership of money changes but funds remain within the financial system till someone uses them to pay down debt.

Supply and demand for money are determined by both interest rates and outstanding volumes of debt obligations (and therefore debt assets as well). Interest rates are not determined by amounts of money, but for the presence, absence, or degree of default premiums embedded in interest rates, which tend to rise when money is more restrained, and drop when fresh credit flows strongly.

The demand for money to pay debt has an indirect effect on interest rates through the currency depreciation rate. Such that the price inflation premium embedded in interest rates is smaller when debtors are forced to sell their product at a lower price than would otherwise be the case in order to increase revenues such that debt may be paid off, and assets not be lost to seizure by creditors. The price drops are limited, however, (1) to the value of the assets used as security, otherwise the assets will be given up to the creditor and liquidated on the markets or shut down, (2) prices must be such that continuing production at these relatively lower prices does not entail further growth in debt (no production at substantial loss).

To summarize:
Credit money systems have no natural liquidity constraint, only the decisions of the monetary authority.
Therefore, the fundamental value is that of interest rates. That is a driver rather than a driven factor.

Gold standard systems are liquidity constrained and thus interest rates interact with money supply and long term credit. The reason for this is plainly that the money supply is limited to the resources available in the economy, which has adjusted prices, contracts, and interest rates to the existing gold stock. Thus higher productivity would show up as higher supplies of both goods and services, and a roughly commensurate rise in gold supplies (which are affected by more efficient production, processing, and distribution systems, the same ones that make the rest of the economy improve).

Anglogold merges with Gold Fields >>>> Erases, immediately 50% Hedge position >>> POG spikes strongly, with the help of 14 th (GATA/Howe) + 15 th (BOE-aution) of march, super news >>> Goldpaper squeezed >>> Ashanti-avalanches >>> POG, through 350$ barrier ??? Impossible ?

714 : oil/gold : you have a point ! BTW, what happened with the gold-stash of the Sultan of Brunei ?
IMO, we are completely in the dark with actual oil/gold relation, if any . Other than Arab oil-producers, never stocked a percentage of their revenues in gold. And goldproducing countries are either stocking the produced gold. Gold will always be treated with outmost discretion.
The captains of the desert found other ways to seed their dollar-revenues. Prince Whaleed and friends !

Perhaps, more interesting would be the charting of the following correlation : World's GNP (now=40 trillion) and above ground gold-capitalisation (POG x tons) since 1971.
To put the actual goldcapitalisation into perspective and searching for future price-projection. Is physical (!)goldtrade in a constant relationship with the expanding worldtrade ?
Again...this is information I am expecting from the WGC !
2$ an ounce to update any fund on how much physical gold they should carry as an optimum in their portfolio. Urging an open and public accountability from central banks and their goldreserve. Argumenting with that good old confidence-factor towards paper-currency. Am I suggesting another goldstandard, again....no, no, nohhhhh...wouldn't dare.

...thanks ge for your input. Having seen that old post from Another, those very thoughts have crossed my minds regarding the paper claims. I don't doubt that gold is flowing to the ME oil producers to some extent. But the link with oil is indirect at best. You know, I work and get paid in FRNs, some of which I use to buy gold. I suppose one could construe, and suggest, a work-for-gold trade going on, but nonetheless, there is no direct link between my working for a living and gold.

Tree in the Forest, I certainly wouldn't rule that possibility out, although I'm not sure anyone truly knows where these markets are going. And why settle for gold at $3000 and ounce when you can get it for $300 an ounce? I wouldn't underestimate the shrewdness of ME businessmen. They know, for instance, that it's dollars and euros and yen that buy their imports and investments, and I'm sure they look at gold as insurance as many of us do. Much more fundamental to the gold market is the supply-and-demand picture, which is somewhat analogous to the silver industry of the 1870's when it was simultaneously being demonitized in Europe while oversupplied by a boom in production. Of course, there are somewhat different, and more bullish, circumstances at work today, particularly regarding derivatives, that are difficult to figure into the equation.

Panda, relax, no reason to go nuts. I GET EXCITED, TOO, SOMETIMES! (I hope your smiling.) I learned a long time ago there is a certain futility that goes with looking for a change in others, a futility that touched me this morning. I really don't think we see eye-to-eye on this matter, but I'm more than willing to accept that and listen to what you bring here.

I really must go...thank you...

Holtzman, these comments are meant for you and are applicable to positions presented by FOA, Randy, and Aristotle along similar lines, and echoed by many others (donnemuir being the latest). All that is wrong in modern "hard money" and "conservative" political thinking is present in abundance in your comments this last Wednesday.

Journeyman, thanks for stating the reality of the matter of artificial separation of functions of wealth money and trade money.

I will start with the basic notion that government has any purpose but for the protection of individual rights in which it may provide a net gain to a society. There is no such purpose that can be served. Bread and circuses did little for their supposed beneficiaries in Rome, and ultimately destroyed the whole of the Empire. The Roman welfare state was not popular outside of Rome's near destitute riffraff, and the aid to these people was meant to buy the loyalty of this portion of the public away from the electoral republican institutions and the courts. The majority had never supported this, but were not capable of moving against the Emperor without the Roman street mob. This is repeated throughout the world in modern times for the same reasons but in a slightly lesser form, where the state's (Caesar's) beneficiaries are slightly less concentrated. Much propaganda is necessary to maintain the situation, since it is obvious that the beneficiaries may never be a majority of the people, as the state destroys at the very least one additional unit for each unit of benefit provided. Thus the un-benefited part of society must lose at least two loafs of bread for each provided to the state's beneficiaries, the one taken away, and the one destroyed.

The possibility of majority support for this kind of proposition is near nil, but for temporary popularity of this kind of scheme with deluded masses and power hungry eunuchs of the court. For this purpose, governments have sought to control education and curb the freedoms of the press. They have sought to control opinion by buying the allegiance of the intellectuals who might otherwise voice an opinion contrary to the range of opinions not threatening to the state. Research in the social sciences is dominated by government money and it has no purpose but to squelch criticism of the state, and promote state power. The move by government from censure of opposition to subsidy of allies was not a move away from censorship and propaganda, but a move towards a more effective form of them. The imperative remains the same; to justify the absolutely impossible notion that government can provide a general beneficial value over the free markets.

The wealth of Caesar was in his power to squeeze property (agricultural land) and income (grain and livestock) out of the landowners. This came about as a result of the ease of exercising the violent threat, and the lack of alternative jurisdictions for land based wealth to seek.

Heavy industry brought the income extractable by government to new heights, as the physical capital was easy to destroy completely and the added productivity of industrial capital relative to agriculture and small industry was so great. Furthermore, alternate locations for capital were not available once capital was in place, thus the creation of new facilities in alternate locations required the building of a complete duplicate of the rest of the related infrastructure of upstream and downstream industry. It took 70% income taxes and capital gains taxes to make the construction of a duplicate heavy industry network an attractive proposition for the investor. At first it was out of the US and Britain into Europe and Japan, then taxes drove out European investment into South America and the Pacific Rim, where government was sufficiently easy to bribe so that the bribes and the risks to private property were lesser in cost than the certain taxation at home. Once this industrial infrastructure was rebuilt in multiple duplicates, it became much more difficult to prevent marginal investment from going to these places. As a result, Western policies of tax, regulation, and government ownership of industry were turned back towards free market principles, not mainly because of the popularity of such a move but because the alternative was obvious economic stagnation. The economic stagnation would have been undeniable with the contrary example of newly industrialized nations highly visible to the people.

I will say this in short: The welfare state is not desired by the people, is not provided for the people, and creates social instability rather than the other way round. Government creates new poverty with each penny it gives the "poor". Rome was lost because of bread and circuses, these kept tyrants in power and the people in bondage.

The reason for Europe's union is completely unrelated to colonization, which is well outside its diminished military and social capacity. Europe is not (at least not yet) in a position to colonize Antarctica, not to speak of a place having people in it.

The European Union is many things to many people, with differing expectations and motives that are often at odds driving the form and substance of it. First, however, it is a union of governments and politicians. As is always the case in cartels of this kind, the motive is to prevent competition among the members, and close the market to external players.

It is an attempt to keep the governments of Europe alive and their bureaucracies in power as labor and business cartels meet competitive pressures that would cause both to turn their backs against the governments that can no longer improve their lots at the expense of everyone else � not only because the bureaucracy wants all the benefits for itself, but because "everyone else" can leave; in person, in their labor, with their wealth, with their consumption. Governments of Europe hoped that these forces lose power as a result of competition within Europe, leaving the government institutions in power longer. It was also hoped that the enhanced efficiencies resulting from the union would grow the EU economies without governments having to forgo some of their income. The EU is a union of European governments against their citizens.

The businesses community and conservatives that supported monetary union and dismantling of remaining intra-European trade restrictions were more motivated by the possibility of putting governments and protected labor in competition with their counterparts among the EU member countries.

The structure of the EU still leaves open both possibilities: of governments losing power and their share of income because of jurisdictional competition, or of governments forming a cartel of coordinated tax and regulatory conditions to prevent this competition.

The second issue, that of currency, has two main purposes: displace the dollar from internal monetary use within the EU, and continue isolating Europeans from the rest of the world. The latter is intended to herd Europeans, their incomes, and their capital within the circle of the fifteen wolves that are their governments. The French government is openly talking of electronic systems to track in detail exactly what each person earns and where and how he spends it. Obviously with the intention of capturing a greater portion of income. The first is to deny the US the "free ride" at the expense of Europeans that is the effect of holding dollar reserves for internal EU trade.

The EU restriction of trade over the past 30 years has prevented Europe from benefiting from the extension of industrial culture that has occurred through the development of an industrial middle class in many emerging nations during this period. This stands in the way of Europe enjoying fully the benefit of division of labor around the globe.

The progression of events you see for the hypothetical "auri" is wrong because having a gold exchanged currency would introduce a different set of considerations than is now facing the markets. First, it is not at all applicable to set the auri as an equivalent to any given currency basket on an exchange basis because contracted interest rates were derived from a fiat monetary system with fiat inflation rates dictating interest rates. Second, the artificial auri rate of exchange pegged in this way (pegged to the dollar at parity) would make it necessary for it to be pegged on a much lesser ratio than 1:1 (no leverage), something on the ratio of 1:50 would be more realistic (2% reserve). Furthermore, the appearance of the Euro � or the auri � would bring about the transition of intra European borrowing from dollars to the new currency, thus creating an immediate drain on the gold backing the auri, while still having the dollar rise against the new currency so long as the transition is ongoing (because that forms a dollar deficit in the Eurodollar markets, since fresh Eurodollars are no longer created). Shortly after the borrowing in auri began, the gold flow out of reserves would cause the ECB to raise interest rates till the gold flow stopped, and then let go slowly, and repeat. The process would have been very long and the strengthening of the dollar would never have been so steep, and may not have occurred at all. Second issue, and likely the one of more substantial import for a CB is that of market reaction upon rumor of such a plan. The immediate response for a fully covered fixed gold exchange standard would be a blow up in gold prices as the market raises gold prices to the point of EMU gold reserves fully backing not only all outstanding legacy currency, but all potential monetization; i.e. to cover up to 40% of outstanding Euro area debt.

Greenspan's interest rise never changed the relationship with Euro interest rates, keeping the spread about constant. The defense of the dollar was not done by the pull of interest rates alone (a short term and self defeating strategy since it creates more dollar assets in the depositor's hands) but by raising the cost of debt service on the short term portion of emerging market debt, and restricting the growth rate of dollar exports by keeping liquidity within the US scarce.


The first thing to note it that the Euro is a currency, and that the alternative to the Euro currency is not a gold backed "auri". The alternative is having a market money, one chosen by the people through their interaction. It may be a composite money, it may be a competing system where various combinations of any denomination bond indexes, stock indexes, metals, etc. are the money. The gold standard is not a full substitute for a free market. Though less artificial, it is still somewhat a creature of government. A transitional system could have been planned, but none such has been proposed, because no government or banker would ever want such a system that being because it denies them the benefit of government intervention against the people.

The reason for the Euro not being a gold money is that what was desired was a currency. An inflatable currency based on debt, coupled with the possibility of having a cash gold element when necessary, so that rather than provide Euro for liquidity by buying market debt, euro would be used to purchase gold to provide liquidity. Thus assuring balanced books at the ECB and member CBs without having to hyperinflate the Euro, and without having to export Euro for goods (carrying a negative trade balance due to monetary effects) but for gold (carrying a Euro for gold trade balance). The EMU is not about solid honest money so much as it is about the political needs of EU governments and politicians to have a non-German non-French money � one that is not a political football between the two governments. Thus the need to have gold in the system results from the need for a non-partisan money within Europe. The dollar experience has made the rest of the world wary of a new Western debt money for trade designed in all its institutions to benefit only its issuer. The Gold scheme is the alternative that allows Euro to be a potentially politically neutral currency.

The one to one setting of gold to a currency unit within the existing contractual infrastructure of European currencies is obviously what one would NOT start with if a gold standard or free market standard were the ultimate goal. There is no way that the contractual obligations undertaken within a fiat world could be replaced overnight with gold denominated contracts. One would start by putting a legal tender status on gold and a number of alternatives (silver, plat, plad, etc.) at the going exchange rates. Once steady exchange rates develop and the markets have worked through the contractual legacy and established a new contractual infrastructure, then the currency denominated contracts can be converted into a basket of monetary metals and then let loose to develop monetary preferences including financial media.

The current ECB structure has nothing to do with assuring European's welfare and everything to do with assuring the welfare of the Eurocrats, the national bureaucracies, the financial and industrial cartels, and the politicians that coordinate them in the guise of pursuing the "people's business" (which is only a minor consideration). Had the ECB and the process of EMU been something like what I suggest, they would have a credible path towards a "hard money" or free market regime.

Money can be used as a weapon if the other side is vulnerable; if one is using another country's currency for trade, and perhaps the same could be said for a gold standard system where there is a set peg of a leveraged artificial currency and gold. For this reason the markets within a nation must be free to respond to the shenanigans of foreign governments. One of the political reasons one should not yearn for the old gold standard is exactly the vulnerability that creates to other government's manipulation of gold supplies using their massive holdings. A free market standard could adjust to this easily enough. Furthermore, what the US can do with its gold is substantially irrelevant because it holds a small portion of the liquid gold in the markets, and gold is much less susceptible to supply dumps than you imply. Gold, when traded in quantity, is absorbed rapidly, at any amount sold, and with relatively minor moves in purchasing power.

Your pointing out to the 1920s and 1930s as having anything to do with a gold standard implies an erroneous view of the monetary system that collapsed. It was not a gold standard system, but a leveraged gold standard, where the degree of leverage was controlled and purposely expanded by government regulation and directly by government itself. Governments manipulated the credit system into expanding to such an extent that gold constituted under 5% of the money supply. Obviously that was not a gold standard.

As to the tying of one nation's well being with another's, it is inherent to trade that this would happen. There is no gain from isolation. Living standards are hurt horribly where this misguided concept of "self sufficiency" is pursued. The 30s are the perfect demonstration of this. The depression years are not at all a demonstration of any problem inherent to the gold standard, but were the inevitable result of (1) tariff rises, (2) income tax expansion, (3) increased government spending on "make work" programs, (4) increased government regulation on all levels local to Federal that made government a partner in business decisions and provided a massive business friction equal in its economic effect to pouring molasses on a hummingbird. (5) Monetarily, the banking system was made to expand credit, which was then purposely imploded in the interest of keeping the Federal reserve system (and thus the US government) from insolvency. The 30s in the US, and the pre WWI developments in Europe were nothing more than a naked power grab by governments over the economy. Once in power, they proceeded to make economic decision making into a political game, destroying the economies end making paupers of the people they claimed to aid.

Back to gold;

The absorption capacity of the markets for gold is such that all the gold in the CB vaults can be released and would be absorbed in a short while. Even paper gold is accepted in large amounts, a proven 30,000 tonnes of bank gold obligations exist (without measuring obligations wholly internal to the banking system, nor the portion that is unallocated gold accounts), of which 3000 tonnes per year were issued in the period 1995-1999. The total gold production and paper gold printing of today is more than triple and near quadruple that of the early 80s. The sale of gold by government is regarded by the markets as a sign of currency weakness. The London Gold Pool and successor gold price control projects have absorbed three times more gold than the US has remaining, and had barely managed to keep gold in a price range.

There is no security issue at hand in a free market gold currency, and no reason to believe that gold would be released by one government in order to attack another. The only reason one finds governments releasing gold from their stores is to defend their own currency, or to pay off an ally. No government would disarm itself of its ultimate purchasing power in order to attempt a destabilization of another. It is like hurling one's cut off head at the enemy, one can do it only once, and is likely to suffer more from doing so than the target.

You repeat over and over that governments need to use their fiat currencies in order to keep "Joe Average" fed and clothed. There is no function unique to fiat currencies that assists in keeping Mr. Average fed and clothed. Any such function is much better filled by gold and the other precious metals. The mere existence of the fiat currency takes substantial portions of Joe's dinner, and takes away his best clothes. There is no value whatsoever which fiat provides the "average" person. The only beneficiaries are the thin layer of high government bureaucrats for which all Joes slave, and the politician elected by Averages to the post of slave driver.

Joe Average's current behavior regarding debt accumulation is a function of his need to protect himself from the depreciation he expects of his future monetary income. The self-indulgence we refer to often, is that resulting from the habit of trying to outwit the monetary authorities and their coterie of hangers-on. Joe does not need or want fiat money, he seeks protection from it.


Finally, the separation of the wealth and trade functions of money into currency for trade and debt, and gold for savings is not desired, required, or of general benefit to the country that adopt it. The bulk of gold's purchasing power is derived from its use in trade. Gold obtains its premium when used in trade it is a premium over its wealth value. When gold is displaced from use in trade by law (the law that establishes fiat money), by fractional reserve banking producing fiduciary gold substitutes, or by dilution of the gold content in coin, its purchasing power is low, and it is hoarded as wealth. When gold is used in trade, it obtains such a premium as to eliminate the bulk of its wealth function, thus it is not hoarded when used in trade, but dishoarded.

It is dishoarded because of the premium it obtains in trade, where it finds its best use. FOA shows the significance of gold's use as a trade money � not a wealth money. (I believe his usage of the words is a reverse of my use, but the concepts we present are identical, gold serves best in trade, not as a hoard). Governments and bankers have forever attempted to gain for themselves the premium gold obtains in trade over the value it obtains as wealth � the same kind of wealth as a precious painting or bottle of oil.

Holtzman, Aristotle and others have fallen into the intellectual trap of impossible coincidence. Namely that gold can obtain its full value - its trade premium - without being used directly or indirectly in trade and therefore in denominating contracts and debt. Yes, a portion of the gold premium may be absorbed in credit expansion and the use of fiduciary substitutes instead of gold bullion, but this portion is minor and steady in relation to the gold stock, thus having a minor effect on its value (once the fiduciary portion is created, and so long as government does not encourage further credit expansion).

In short:
Gold can not soar to its ultimate value when it is not used in trade. Gold displaces currency once currency is destroyed and no currency is available as a credible replacement for previously accepted moneys. Gold, in the form of the dollar, displaced the Pound Sterling after WWI, and continued after the first US default in 1933 (an internal default in the main, since the dollar exchange rate abroad was not significant till the UK went off gold altogether). Gold made its way back to its full value in the late 1970s. Only when political agreements were made for the central banks of the rest of the world to absorb excess dollars, did the gold price stabilize and move back down. Now that the agreement is over, the excess dollars may not find a permanent home but must slosh around in the markets. There is no excess yet on the international dollar market, but for a short period at the end of last year (see prior posts on global dollar supply and demand statistics), when emerging market debt no longer provides a sink for dollar exports (as these debts are falling at a 7% rate), the dollar will decline in purchasing power abroad.

Understanding of Gresham's law is at the core of misunderstanding of gold's relationship to currency. Bad money displaces good money use in trade ONLY when markets expect gold to be available at a certain price: a par exchange rate. Otherwise, good money displaces the bad and is actively used in trade.

Gold is on the trade routes and obtains a great premium when used for trade settlement and denomination of contracts, and none is hoarded. Gold is absent from trade and is hoarded when displaced from use in trade by a "bad money", be it fractional reserve bank notes, low gold content coin, or imposed "legal tender" fiat money. All of the bad money alternatives collapse at some point, this point of collapse is that of a break market confidence in the availability of gold at the official or historic exchange rate (or range of exchange rates) considered the par value.

E-Gold has already demonstrated that settlement costs are lower for gold accounts than for fiat money credit accounts, because of the lack of a need for estimating creditworthiness, the absence of the credit allocation process within trade settlement, and the absence of default within a fully backed gold settlement system.

...I wasn't aware of the Sultan's vast fortune in gold. I think you have a very good point about being in the dark, though even in the dark, one can develop the sense to find one's way. Fwiw, the Saudis were not the only ones to be paid royalties in gold. Iraq, Kuwait, and Iran all had gold royalty arrangements with Aramco's British counterparts.

I must go...

Thanks for responding. Regarding oil and gold relationship. If we could ask HBM or RossL to repost those charts that show this relationship over time, I believe we could agree that their must be some sort of relationship to get the charts to perform the way they do. Just an observation.

I respectfully request that you properly use the "Optional Link" field in the forum so that we may actually "get there from here". Enter the link only, without the parenthetic commentary, or else it's a dead end.

Sorry about that. It has been mentioned before. It is just me, sometimes I don't know what the actual web address is when I have got it from a roundabout way. Sometimes when I have give say 'fallstreet's' web address, the particular item has been removed.

First let me say 714 I am very much smiling. I don't think that we disagree, it is just that we are not reading each other's point correctly.

Anyway, if any of you want a wealth of information on the subject go to www.google.com and type in the search 'Arabs Oil and Gold price'. You will have enough stuff to keep you happy for hours. It is VERY well covered.

http://www.thebulliondesk.com/DJNews/4428469.htm*DJ Nymex Energy Mkts To Open 1 Hr Late At 10.45 AM EST Tue


(MORE) Dow Jones Newswires 05-03-01

1725GMT

*DJ Comex Mkts To Open 2 Hrs Late, From 10.10 AM EST Tue

(MORE) Dow Jones Newswires 05-03-01

1728GMT~200103051725
-----------------------------------------------------------
This is all I can find on this.
$hifty

snow day1726 GMT (Dow Jones) Nymex will delay the opening of all Exchange metal markets by two hours Tue due to anticipated transportation delays arising from snowstorm. (BWH)

1632 GMT (Dow Jones) Nymex to close early Mon at 1 PM EST (1800 GMT) as a snowstorm pummels New York, spokeswoman said. Also expected to close Tue as heavy snow, freezing temps seen continuing. (MSX)

Can you drop an e-mail to Sir Farfel to see if he is still among the living?

$hifty

Oil does not need to settle purely in gold, only the portion "saved" by the powerful few needs to be. Thus the bulk of funds and barter assets used to settle oil payments do not need to be gold.

As for the WWII methods of converting the excess portion of dollars and pounds sterling into gold, I suggest you look to the Jiddah gold market of the time, where gold traded at double the official US dollar rate. Obviously, someone was massively converting dollars to gold.

What the gold savings rate is for the Saudi Royals and their hangers on, or for their neighbors, is not answerable with certainty. But rest assured that it would be somewhere around the 8% minimum, or above. Also, you should not be surprised to find gold traded at different prices to different sellers and buyers, as was the case many times in the past, be it at Jiddah or in London after the gold pool closed.

The involvement of central banks in the bullion banking business is similar to their involvement elsewhere in the financial markets. Their role is only as "insurance"; to provide liquidity to the markets as lenders of last resort, and to dictate the interest rate (lease rate) from below. They lower the percieved risk in lending out gold and lend it out when tapped in order to maintain market confidence in the paper gold outstanding. As prices are derived at the margin, so is the gold interest rate. Only when gold liquidity is lacking at the lease rate dictated by the central banks, are they tapped to lend out bullion. Even then, they are only required to provide just enough to keep prices and gold interest rates from rising above the point threatening the solvency of "important" market players that are short.

The role of the central bank is to induce gold credit, not to provide it. The central banks do so by undercutting market rates; promising (rather than actually delivering) gold at a particular interest rate, quantity, or price. CB promises (and gold miner's gold obligations) are used by the bullion banking system as a reserve, and are leveraged by the routine 2.5 to 4 times, at the least. The paper they print up is used to replace the physical gold holdings of some, who then provide that gold to the markets. When you buy a gold call or futures contract and put the rest of your dollars in a treasury note, you have substituted paper for physical gold. Thus your demand for cash gold is eliminated from the bullion market, and moved to the paper arena where it is provided by the simple printing of a contract. The banker or hedge fund selling you the contract needs only to hedge as dictated by the delta calculated from models. Therefore, your purchase of paper gold removed the whole of your demand from the gold market, and replaced it with a contingent demand derived from the need to hedge. The hedges themselves, are mostly derived from the obligations of other banks and the promises of CBs and gold producers. The only portion that must be provided in bullion is that which only physical supply can settle; demand for jewelry, bar, coin, and industrial gold. Since investment demand is answered mostly by paper obligations, all that is necessary is to prevent the markets from moving into physical. The only reason the markets would move into physical would be that there is fear of the gold contracts not being filled. Propaganda is sufficient to prevent loss of confidence most of the time. The rest of the time, minor amounts of physical gold (relative to outstanding paper) must be provided to the markets so that defaults do not occur when a gold delivery obligation is due but the indebted party has insufficient gold. At this point, only the shortfall need be covered, and there is also the possibility of buying out the creditor with an alternative that is sufficiently attractive.

Thus the system may remain stable so long as gold can be displaced from current holdings, on the one hand, and demand for physical displaced with paper supply on the other. The danger is that of escalating growth of gold obligations, and the loss of confidence in solvency of those printing them. The cures are (1) restructuring of gold delivery obligation schedules to fit within available fresh supply, (2) the sale of gold by holders who value the stability of the system more than their gold (i.e. central banks) and are willing to lose some or all of what quantities they lend, (3) exchanging certain delivery obligations with contingent ones (replace futures with calls), in the hope that they expire unexercized.

We have seen all three strategies followed, confidence in the availability of gold to fill obligations is still high, and general default is still considered unlikely anytime soon. The gold deficit, at an official 1000 tonnes per annum, and my estimate of over 2000 tonnes, is being filled with only minor fluctuations in price by displacement of private gold holdings with paper backed by central bank lending promises (1/4) and by CB sales (1/4), the balance being backed by producer forward selling of their gold production many years into the future. New paper gold demand has dried up as discussions such as our own on this forum have brought many to buy physical rather than paper. However, many of the prior paper buyers had not the cash on hand to buy the whole amount at the market price, thus the amount of paper gold that can be bought posting 10% margin is not equal to the amount of physical gold that can be purchased at 100% cash payment. The few who have the whole cash balance on hand, can do so, the many who don't will buy 1/10 to 1/5 in physical relative to what they would otherwise have bought in paper. Thus for each 10 ounces diverted from paper, one would expect 3-4 ounces to be bought in physical (using the 20 80 rule).

This will continue so long as the international markets are short of dollars. When the moment arrives where these markets receive more dollars than needed to cover debt obligations, the portion of global buyers having dollars on hand will grow, as will the demand for physical gold over the demand for paper.

So THAT'S what you were working on all weekend!

And I let my reading go, thinking I would catch up on Monday. Procrastination punished.

I propose a new pronunciation for the word "thOROugh" and its relative, "thOROughness", in your honor.

His post was short and concise. I was able to understand it to the point of taking action. I appreciate that very much. Thanks again Stranger.

We have cheated ourselves of an "ORO PAGE" long enough. Randy? I know it's a big (BIG) job, but this level of scholarship freely given to us ought not to be lost in the daily rollover into Archives.

I just read my posts and must ask forgiveness for the low quality of the work - particularly on the post to Holtzman.

I will only excuse myself with the explanation that I was on vacation and had little time to write, as well as this time being restricted to short periods in the wee hours of the night.

Hopefully, the ideas come through despite the horrid writing quality and disorganization.

http://home.att.net/~strat.gt/secret_history...Oro, you are correct that the exchange rate for gold in Jeddah was $70 both during and after WWII, more than double the official rate. And I was well aware gold traded at wildly varying rates on different exchanges during this time, particularly in Asia.

But nobody was massively converting dollars to gold in Jeddah during this time. Why? There were NO dollars in Arabia at that time. The House of Saud was running massive deficits, even borrowing money from Aramco to stay afloat, their only source of income being the royalties. Saudi finances were quite a mess at that time and the King was heavily in debt. And there were no "petrodollars" yet, because the scale of the oil business was yet rather small, generating only a few million dollars in royalties every year. Not only that, Aramco was, at that time, 100% owned by Standard Oil of Texas and Standard Oil of California, thus generating no corporate revenue for the Saudis. In fact, the Saudis did not even begin taxing Aramco until '49 or '50! So the fact the exchange rate in Jeddah was twice what it was in NY and London was irrelevant. THERE WERE NO US$'s THERE FOR GOLD! Again, all this is documented in the 70 pages of documents to be found at the above website. It's a much easier read if you print it out, as I had to sacrifice some quality to keep the file a manageable size.

For those of you unable to access the site (AOL users), drop me a line at brokencrow@yahoo.com and I will forward you the document. It's a .pdf file about 1.7 mb's so it's a bit of a load on a phone modem.

"Hopefully, the ideas come through"...

We understand: it's a book-in-progress. Like I said before, Oh, to be your editor.

Economics writing is an attempt to linearize (?) flow diagrams that should be two- or three-dimensional. One can pick out a small two- or three-variable relationship for description in words, but no paragraph can hold the entire model up for observation.

As a result, one is always wondering what hooks to outside concepts are being short-changed or ignored in any paragraph of economics writing. You, Oro, succeed in referencing more of those hooks to the larger model in many of your paragraphs, while maintaining readability, than I would expect to see.

This allows me to engage my thought processes for longer runs before hitting bumps of not-understanding, or questions of my own (content to be put off till second or third readings). Even where I disagree with or would challenge your model, I am satisfied to read on, for you are gettting your ideas out clearly. At least, as clearly as one mind can suppose to know the clarity of another.

http://biz.yahoo.com/rf/010305/nat017636.htmlFrom the activity, one might think we were once again on the uncertain side of the Millennium Date Change.

Although the size of the Fed's outright purchase of Treasury securities to add permanent reserves has not yet been disclosed by the newswires, this article summarizes the details of the two morning additions of temporary reserves to the banking system. With the fed funds market trading just 1/16th percent over the FOMC target, the Fed added $2.0 billion via 28-day repos, and another $4.0 billion through overnight RPs.

Here you can see an endless supply of new paper currency available on an as needed basis to reliquify the commercial banking sector to "save" the system against any threat of a deflationary collapse and the attendant cascade of bankruptcies. (Yes, the banking system will be saved at the expense of the currecy unit's "strength".)

But as should be clear from ORO's fine summary in his recent post (msg#: 49417), this commercial banking structure stands in stark contrast to the bullion banking sector in one important regard. While it is true that the funds used in both systems expand as "ledger entries" through such normal banking activities as borrowing/lending, the important distinction is that the bullion banking system does not have unlimited access to a "lender of last resort" at such times when the lending cycle may turn deflationary. (Central Banks can only extend their physical gold so far, and happily, the Washington Agreement shows the resolve to function in that capacity is waning.) In the arrival of that dark hour for bullion banking, you will either have the benefits of physical gold in your ownership, or you will have paper gold promises which are very similar to the failing paper dollar from which you had sought safety (a paper investment situation we describe as "out of the frying pan and into the fire").

Again, if you have gold in an unallocated account that is made available to its custodians for leasing (for a quid pro quo of either cheaper storage costs or for nominal interest returns), then you really don't have gold either. Rather, you have just a ledger entry (paper gold) and, I might add, too much confidence and exposure in an overextended system. You have been warned.

I was going to refrain from posting this week, but . . .

The basic problem with the world economy - - and many other
processes - - is failure to use the universal yard-stick to
measure things. It isn't that the yardstick isn't available,
it's just that TPTB have gotten us all in bad habits. Habits
nearly guaranteed to keep us all confused for the forseeable
future if we continue them.

In the past, gold proved itself the natural universal yardstick.
Yet rather than thinking and saying 262 dollars are worth one
gold ounce today, we say one gold ounce is worth 262 dollars
today. As if the dollar were the yardstick.

This is like trying to measure how much the shore is moving up
and down from the bucking deck of a ship on a stormy sea.

You look across the heaving deck and see the euro moving
relatively downwards, riding a neighboring wave. If you look way
down over the rail into the trough, you see the Turkish lira
foundering. (You've heard a rumor that divers were looking for
the Ecuadorian Sucre somewhere in this area.)

Similarly you see that oil tanker. While seemingly vibrating up
and down on the waves just like the other "ships," you wonder how
it has stayed so much in sync with the apparent up-and-down
motion of the golden shore. You see the name "M.E. OIL" out of
Dubai. You call the Arabic captain and he explains: "Our goal is
to keep in sync with the shore as much as possible."

You get the idea.

Once folks begin to price things in gold-weight units, as they
can do on-line through things like e-gold.com, we'll switch from
ptolemaic economics to auro-centric economics and things will be
much easier to understand and predict.

Regards,
Journeyman

P.S. The Ptolemaic system was an early very complicated model
used to explain the observed "retrograde" apparent motion of the
planets. It was replaced by the helio-centric (sun-centered)
model, which stopped assuming the earth (rather than the sun) was
the center of the universe. This made the solar system much
easier to understand.

Re: Dollars and gold in the Saud household of WWII.

Well, yes and no... Depends on what "is" is...Who "they" are...

The hangers on to the house of Saud were sucking both Saud and Aramco in the way of the vampire. They were the converters of dollars to gold. Their income came from exclusive license and monopoly contracts with suppliers to Saud, Arabia, and Aramco, which gave them up to 80% margins on key supplies and services. The well documented financial sclerosis of the Saudi Royals and their government is not an indication of the Saudi "establishment" (and other oil royalty establishments around the globe) being in dire straits. A portion of the oil company revenue, about 1/4 to 1/3 was spent locally and much of that was the profit margin of the local "establishment" that kept the royals in power and profited from that power.

These people's gold buying with dollars was the cause for gold prices being so much higher in Jiddah and various markets than official values.

Please, allow me to say that I don't understand what you are trying to communicate. It must be surely me and for this reason, I hope, I am not offending you in one way or another. I can't even explain "what" I don't understand. Is there a possibility of simplifying your precious insights ? Apologise my impertinence. Thanks

Just as the amount of physical gold an individual investor should own should be proportional to that investor's total net worth, each country should have gold reserves in proportion to their Gross National Product.

The U.S. with its huge GNP had a much larger ratio of gold reserves/GNP in 1960 than it has now. U.S. Central Bank Gold reserves should be raised proportionally to the increase in GNP since 1960.

Belgian mentions the relationship of above ground gold/ world gnp(see post Belgian (03/05/01; 10:50:31MT - usagold.com msg#: 49406) Also see AX post
ax (2/24/2001; 17:57:46MT - usagold.com msg#: 48889)
INCREASE U.S. GOLD RESERVES

AX

...but that seems to contradict much of what I have if I understand you correctly. The lack of liquidity in the Jeddah gold market is well-documented in a number of works. Try "Oil, God and Gold" by Anthony Cave Brown.

Interestingly enough, at the end of the war, the US government stepped in to help the Saudis out of their liquidity mess by making a large silver loan, then minting the silver into riyals, so there would be a circulating currency for that country.

According to my sources, the King's biggest expense far and away was his household which consisted of 120+ wives, another 100+ concubines, and all their children. His household expenses alone were $5 million a year (and this is in the 1940's). And then there was the expense of maintaining lessor sheiks, no doubt.

But I don't recall in my research Aramco taking issue with contractors and suppliers, with the exception of labor. I had the impression they were a pretty tightly run outfit that imported most of what they needed, refraining from much dealings with the Saudis, save for labor. Where do you get your figures? For instance, the 1/4 to 1/3 was spent locally (of course, that's almost a standard breakdown for labor in many businesses). Can you be more specific? And what are your sources?

Tia.

There is $1,000,000,000,000 (one trillion) worth of gold (already mined) in the world.

which is roughly 3,846,153,846 ounces ($1,000,000,000,000 divided by $260 spot pog).

There are currently 6,000,000,000 people calling planet earth home.

this means that there is only .641 ounces of gold for each man, woman, and child alive. (3,846,153,846 divided by 6,000,000,000)

does this figure sound right?

There is $1,000,000,000,000 (one trillion) worth of gold (already mined) in the world.

which is roughly 3,846,153,846 ounces ($1,000,000,000,000 divided by $260 spot pog).

There are currently 6,000,000,000 people calling planet earth home.

this means that there is only .641 ounces of gold for each man, woman, and child alive. (3,846,153,846 divided by 6,000,000,000)

does this figure sound right?

March 14 should be very interesting. I have been opining that this BOE auction will be the last. If they announce this on the 14th, it is unquestionably capitulation. If on the other hand they play the old bankers game, (thanks for this info sir ORO) they will maintain the charade right up to default. They would announce a third series of auctions with the next one late in May and cancel the auction just beforehand. With Comex open interest for April still at 80,000 contracts there is still the possibility of default on April contracts.

test

ORO'so good to see you back,especially after the events of the last two weeks.

I feel we all have,in varying degrees,grown to accept and try to work around the background machinations in the gold market.Seeing your statement:"Only when gold liquidity is lacking at the lease rate dictated by the central banks,are they tapped to lend gold bullion.Even then,they are only required to provide just enough to keep prices and gold interest rates from rising above the point threatening the solvency of "important" market players that are short.",put in such a concise and revealing fashion,however,triggers the outrage of the ethical and deceitful imbalance of this situation.

I live for the day when central banks will be accountable to all people;both in their country of domocile and to the world at large.Thanks to people such as yourself,hopefully that day may arrive sooner than they expect.

http://www.polyconomics.com/searchbase/les9.html"The circular flow of dollars between the U.S. and Europe formally ended on August 15, 1971, when Nixon broke the US promise made at Bretton Woods in 1944, to keep the dollar at $35 per ounce. Because the rest of the world was tied to the dollar, when we broke the link, that linkage was severed for all currencies. The dollar gold price quickly advanced, first to about $70 at the end of 1971, then up to $200 at the end of 1972, then drifting back to $140 for the first part of �73. The Arab oil companies had been selling us oil at $2 a barrel, and in 1973 they realized they were being cheated at that price, which would mean it would take four times as much oil to buy an ounce of gold with the dollars they were receiving. So they announced they would quadruple the oil price."

-End snip-

Well, well, well; "Cheated at that price"

So now with overvalued dollars they must 'feel cheated again'. Raise the POO and "keep the price of gold down if you want to see oil flowing at reasonable prices"

Now where have I heard that!!!

I read Brown's book and used his info and of a couple of his references from which quotes are available on the net. I ran searches on authors of some of his reference to find info, and had enough to use.

The thinness of the Jiddah market, even by the standards of that day, is not an indication of the conversion volumes, because those would have been outside that market precisely because it was thin. The point is the price. A 100% pricing discrepancy is alot of room for arbitrage on something as dense in value as gold, even in war times. If the price held for so long, then it was so because that was the market clearing price that had dollars and sterling exchange for gold.

As for the dollars leaking out of the oil company budgets, Brown provides some idea of the labor and local expenses, but no square figures. The congratulatory book celebrating Shell's centennial in 1997 written by Stephen Howarth, "A Century in Oil", also provides some insight as to local spending.

As to the value of the Saudi court, including its various hangers on, to the US and Aramco's then undisputed owners, it should be obvious that the undertakings of the US and Aramco to liquify the Saudi barter economy with coinage, and otherwise develop the country as a whole, were not done out of charity, but as part of the continuously escalating costs of doing business with this group - which ended up being the capital of Aramco in the 80's, when it was "sold" to the Saudi government.

Meaning that the US investor's interest was always threatened, and in WWII, when no forces could be spared for "taking care" of these threats, the US interests simply paid up what was necessary to make the oil flow. If it was a railway, a silver coinage system, military assistance, or anything else, it was just a cost of doing business. The US government's idea of the business was (and remains) the continued flow of oil, and that of the oil companies was the continued control of supplies to sell. The cost of maintaining oil flow were met, or the multiple costs of occupation would be considered the alternative, not least of which is the enmity of the actual customers of Arab oil in Europe and Asia.

The supply cost estimate was taken from an old (1954?) petroleum handbook from the local State university library, and Brown's book. Brown shows the relationships within the court, and how they were used by the hangers on to obtain trade concessions that were, in turn, used to extract much money out of Aramco beginning in the 40s, and accelerating as time went on.

On a general note:

The particular arrangements for payments of royalty should be seen as part of a whole picture, one in which dollars flow in and out of Arabia and its Gulf neighbors, and gold accumulates both at home and in vaults abroad. The payoff does not usually come into the the recipient's country in whole, but just in part; often a minor part. There is no reason to expect to see these payoffs, be they royalties or bribes, in the official economic numbers, nor to see them spur local economic development. Often, the economic development takes place outside the courtier's land, where he and his employees spend their money and hold their assets and investments.

It is not as simple as paying official royalties to the state. The state was nearly non-existent when the arrangements started, and is still largely controlled by a narrow segment of Saudi people, who are paid off in the traditional manner of the place ("bakshish") in order to make state decisions favoring one interested party or another. The state is most nakedly the private domain of the elite in Arabia. The courtiers are not at court just to bend down their necks in recognition of the king's glory. The kingdom was Saud's private property, and the concession his to give. Unlike a private individual, he also had the power of the state to force law and policy in favor of his private interests. Courtiers were charged to keep the King in power and in return got positions of power that could be sold. Without this kind of trade in state power, not the Saudi royal house nor any other ruling individual or oligarchy could rule.

Same link"The dollar gold price quickly advanced, first to about $70 at the end of 1971, then up to $200 at the end of 1972, then drifting back to $140 for the first part of �73. The Arab oil companies had been selling us oil at $2 a barrel, and in 1973 they realized they were being cheated at that price, which would mean it would take four times as much oil to buy an ounce of gold with the dollars they were receiving. So they announced they would quadruple the oil price. When the Federal Reserve kept pumping dollars into the banking system to accommodate the rise in the oil price, gold went from $140 to $280, and the Arabs doubled the price again"

-End-

So the FEDs are pumping dollars again 'cheating' the Arabs again; can we expect further increases in POO?

Ticked at $2, (cheated in buying gold) so they quadrupled to $8, then (cheated in diluted dollars) so they doubled to $16.

So today TPTB are keeping one side of the equation (low gold) but failing on the diluted currency which buys their oil.

So here we are with a miserable, overvalued buck selling/leasing the physical away.

HAVE A GOLDEN DAY.

http://numismaticgoldcoins.com/wormartod.html"There are MANY around the world that know of the historical oil/gold price relationship. Especially the Arabs. They may have kowtowed to the Clinton Administration in recent years and refrained from buying gold. As the price of oil takes off and with the dollar so fundamentally overvalued, it will be hard for them to refrain from buying gold. They will have the money to do so and the incentive. A sharply rising gold price in early November could be the Achilles Heel of the Democrats"

I have a long time friend who would like to buy 150 ounces of gold in his IRA to replace his devalued tech stocks. He nor I can remember if that is legal. I think I remember that American Eagles were allowed to be an investment in IRAs. Can anyone help me and our gracious host who will be receiving the order?

And at the lower portion of the right-hand column of MK's Commentary & Review page, he has this to say...

"Please call Centennial and ask for George Cooper if you would like to move IRA funds into gold. Rollovers available. Good program. With gold at 22 year lows, here's a good way to preserve stock market profits, or diversify if you are taking a hit in your retirement plan."

So, in simple answer to your question, Yes...this is legal. Thankfully, Americans have many freedoms (and it is up to each person to keep them well exercised). Thanks for considering Centennial for your portfolio's metal needs!

I noticed your post, and I am sure you are not alone in finding my writing rather more opaque than enlightening.

If you don't mind, I suggest you write up a few questions of principle on the issues I write about and I will try to answer them as clearly as I can.

This should serve both of us well.

I'm sure this question is redundant,but I'm in need of a refresher.In the event of a hedged mining company's bankruptcy,does the property title revert to the bullion bank?Is this clear-cut,especially in a country like Australia,which appears to be so massively over exposed?Or is it a legal black hole that would force central bank physical gold liquidation in order to stave off a total gold derivative meltdown?

http://groups.yahoo.com/group/gata/message/694... and a big gun in South Africa enlists
in the GATA cause there.


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http://groups.yahoo.com/group/gang8/message/3291From: "Henry C.K. Liu"
Date: Mon Mar 5, 2001 11:20pm
Subject: Value of US$

US Government debt: $5,726,774,439,028.95
US Gov. gold holdings: 261,000,000 ounces

POG required to pay back gov't deb in gold = $21,941

Market Price Friday March 2 2001: $262.70

Interesting........

Henry C.K. Liu

http://www.lemetropolecafe.com/guest.cfm
A good fellow who calls himself uponroof at the other castle (G-E) alerted those listening of a free two week guest membership at the Metropole Cafe. I followed the link and got in after filling out a few forms and recieving an access number from the Cafe by e-mail. I'm now allowed in and can wonder about without an escort to listen but not speak. Speaking is still a privilege reserved for members only. I believe it may have been Twain who said, "Never give advice, a wise man doesn't need it and a fool won't heed it". I'm always interested in the thoughts of the man who listens but rarely speaks. I have never presented myself in the presence of others where expressing one's thoughts were forbidden or, to be precise, one has to pay to have the right to speak. It's a little strange.
The guest pass is free and there are indeed many hours worth of interesting reading there so I've inclosed the link. Just remember, it's like being in church during the sermon- NO TALKING ALLOWED!
Rich

http://www.lemetropolecafe.com/guests.cfm
Maybe this is it?

First the questions, which follow some of your statements:

"The particular arrangements for payments of royalty should be seen as part of a whole picture, one in which dollars flow in and out of Arabia and its Gulf neighbors, and gold accumulates both at home and in vaults abroad."

What money was flowing into Saudi Arabia besides royalties? Yes, we have local payrolls (at third-world pay rates, no doubt), and some Saudi suppliers, but what else? I thought I painted the broader picture in my #49422.
-----------------------------------------------------------
"A 100% pricing discrepancy is alot of room for arbitrage on something as dense in value as gold, even in war times."

Where would King Saud, head of a remote and primitive desert kingdom, or his court/government conduct such an arbitrage? Or for that matter, the hangers-on or whoever else you imagine would conduct this arbitrage? You seem to be assuming modern market mechanisms were in place at that time in Saudi Arabia. They weren't! Not only that, there was no gold trading in NY or London during this period. Remember LBMA was closed during the war and there was no gold trade at that time under US law. For instance, we know Aramco went to the LBMA went to LBMA to buy gold, under special dispensation from the US government, to buy sovereigns for these payments before the war.
-----------------------------------------------------------
Who were these hangers-on? I've never seen Brown refer to "hangers-on", or any other such references that use such a term. Could you be more precise?
-----------------------------------------------------------
"The thinness of the Jiddah market, even by the standards of that day, is not an indication of the conversion volumes, because those would have been outside that market precisely because it was thin. The point is the price."

Really? A thin market is not indicative of conversion volumes? Since when? I think it's safe to say that the dollar price of gold reflected the expectation of inflation (typical during wars) and that country's increased supply of US$ (tiny by today's standards) relative to gold. What Saudi moneychanger would particularly want this strange new currency, from a country that for all they knew, would lose the war? A thin market indeed, very thin. In every way.
-----------------------------------------------------------
"The US government's idea of the business was (and remains) the continued flow of oil, and that of the oil companies was the continued control of supplies to sell."

Well, if you read a bit more closely, you might realize the US government was very much at odds with Aramco on a number of issues. In fact, it was the US Navy which desired this oil more than any other government entity, for obvious reasons. In contrast, the State Department let Aramco know in no uncertain terms they were opposed to the building of the Dhahran-Riyadh railroad.
-----------------------------------------------------------
"The state is most nakedly the private domain of the elite in Arabia."

Has anything changed? Fwiw, you never did address the debt problems King Saud himself faced. They should be obvious in any read of Brown's book, where he commented on them extensively.
-----------------------------------------------------------
"I ran searches on authors of some of his reference to find info, and had enough to use."

That is too bad. I NEVER feel I have enough to use.
-----------------------------------------------------------
I fear I've burnt up too much of Mr. Kosares' bandwidth on this issue over the last few days. I'll leave you with the last word for now. I'll be back in a few days or weeks, maybe months.

Salaam (peace).

From ORO (49417) and mentioned again by Old Yeller,
"Only when gold liquidity is lacking at the lease rate dictated by the central banks, are they tapped to lend out bullion."
Speculation has mentioned the BIS as the sourse of this just in time sourse of liquidity. Whether by sales or by leasing, is this increase enough to break the limits set by the Washington Agreement? Was the BIS one of the fifteen signature members of the agreement? If so, should we now assume the agreement has been broken or are we going to hear of revised figures or changed timetables such that the BIS's gold imput is somehow not a violation of the Sept. 1999 accord??
TIA for any thoughts. It's nice to be able to ask questions. Good way to learn!
Rich

Thanks 714 for your comments and questions. I very much appreciate your work and this discussion. The Arab oil countries and the house of Saud are not the core of my work, but have a significant bearing on it. Therefore, I stop looking when I have enough information that bears on my work. I can't emphasize enough the importance of the kind of detailed work that you point to and do yourself, but will warn of a couple of routine problems.
First is that of believing official positions, data, laws, etc. in a world as informal as that of Saud and even of today's Arabia. Think of it instead as a Mafia organization with the Saudi government being just one of its "fronts". Granted, that is where you will find official documentation. But this paperwork is nothing but an artificial record to cover up the reality of action and motive, not a source from which it may be revealed as written.
Second, the basic motives and principles of economics don't somehow disappear when they come into conflict with official law, institutions, and bookkeeping. They remain in action and over time will subvert completely any alternate intent. The stated purpose of an official government action is most commonly unrelated, or opposed to the actual motives of the people who arranged it. Often, this is also true of official organizations such as corporations.


Oro: "The particular arrangements for payments of royalty should be seen as part of a whole picture, one in which dollars flow in and out of Arabia and its Gulf neighbors, and gold accumulates both at home and in vaults abroad."

714: What money was flowing into Saudi Arabia besides royalties? Yes, we have local payrolls (at third-world pay rates, no doubt), and some Saudi suppliers, but what else? I thought I painted the broader picture in my #49422.
-----------------------------------------------------------
For example, in chapter 5, Brown notes the advance Saud requested from FDR of $6 mil per annum (4 mil oil barrel's worth per year, or $120 mil of today's dollars), and of Aramco's fear of Saudi expropriation of the concession in favor of British interests. State department mistrust of big oil and primitive despots brought them to push the job of Saud's support onto the Brits, who gave $40 mil ($800 mil in current dollars) over the period 1943-4. Aramco's situation (pg 107) was described by Brown as "'subjected to a squeeze play between the Saudi Government and Britain� in which both were pressing the company to the limit."
Though Brown never specifies what it was that was "squeezed" out of Aramco, we can be sure that it included cash dollars gold and goods. As Brown writes in page 109 that Ibn Saud had in Dec 1942, while pleading for money to run his administration claiming that he is nearly broke, displayed "conspicuous wealth" to the US delegates who came to meet him. Included in the display, according to CJ McIntosh of the US delegation, was a 5000 American car caravan including Saud's brand new personal custom Packard with external handrails for guards to hold while hanging on to the car. The crown prince alone took 500 cars to move his household, and each princess had her own little fleet of curtained black limousines and hundreds of attendants. Obviously there was no shortage of cash (or goods) flow coming in.

On pg 115 Brown says Col. Eddy, the US representative complained to a congressional delegation of the English representative Laurence Grafftey Smith supplying American trucks, Jeeps, gold, food and other lend lease materiel in order to take the Aramco concessions.

By 1943, the State department resistance was overcome and funds flowed from the US government to Saud's variously labeled pockets, and from there to his various suppliers, friends, etc. The Brewster commission report (see Brown pg 170) indicated $100 mil of support to Saud by the end of WWII. With the British support, we have $140 mil, that on top of the royalties.

By 1950, 546,703 barrels of oil per day were produced in Saudi, and production was substantial by the end of WWII, approaching 300 thousand. That was quite a neat bundle of revenues to lose, wasn't it? $200 mil per year? As Aramco had to constantly protect itself from expropriation and odd maneuvers such as the Onassis attempt at gaining shipping rights, it was repeatedly raided by the Royals and their court for bakshish.

Second point is that the funds did not come "into Saudi Arabia", but into the hands of the Royals and their court who did not bring this money into the country. More likely, whatever funds did arrive in dollars were quickly removed from the government and the court to the separate treasuries of Saud and each of his princes and courtiers.
----------------------------------------------------------

ORO:"A 100% pricing discrepancy is alot of room for arbitrage on something as dense in value as gold, even in war times."

714:Where would King Saud, head of a remote and primitive desert kingdom, or his court/government conduct such an arbitrage? Or for that matter, the hangers-on or whoever else you imagine would conduct this arbitrage? You seem to be assuming modern market mechanisms were in place at that time in Saudi Arabia. They weren't! Not only that, there was no gold trading in NY or London during this period. Remember LBMA was closed during the war and there was no gold trade at that time under US law. For instance, we know Aramco went to the LBMA went to LBMA to buy gold, under special dispensation from the US government, to buy sovereigns for these payments before the war.
-----------------------------------------------------------

Gold continued trading in Hong Kong, in Cairo and Alexandria, in Casablanca, in Switzerland, Lisbon, Madrid, and even in London proper. That no official trading occurred is no indication at all as to whether such trade had taken place. The arbitrage I speak of is bringing gold to the holders of dollars anywhere in the world from where gold could be had at the official price, notably from the DeGaulle government in exile's funds in Canada, from the Dutch gold in the US and Canada, and from the central banks of neutral countries that could exchange dollars for gold. The gold could then be delivered to Saud and company with no more trouble than encountered in bringing him 5000 cars.

Arbitrage is older than the COMEX or the MERC or the LBMA, or the Chicago and Kansas grain futures markets. It is a fancy term for the common practice of using price discrepancies between two markets for profit.

As for the primitive Saud, he had Philby on his side among Western educated people to keep him informed of his options and of his interests (all, of course, for goodly fees).

The LBMA was not yet in existence.



714:Who were these hangers-on? I've never seen Brown refer to "hangers-on", or any other such references that use such a term. Could you be more precise?
-----------------------------------------------------------
Philby, for one, the various Emir's like bin Jiluwi, the eastern governor who is described in Brown's (pg 162) quote from Aramco's Marinovic describing a 1955 incident where Jiluwi announced that he was coming to pick up $200K for a loan, which was returned in Saudi silver Riyals two months later. Jiluwi was one of Saud's old war buddies and had the last word in the Eastern Province, capable of summary prosecution, judgment, and execution.

Examples abound throughout the book, so I will stop here.



ORO: "The thinness of the Jiddah market, even by the standards of that day, is not an indication of the conversion volumes, because those would have been outside that market precisely because it was thin. The point is the price."

714: Really? A thin market is not indicative of conversion volumes? Since when? I think it's safe to say that the dollar price of gold reflected the expectation of inflation (typical during wars) and that country's increased supply of US$ (tiny by today's standards) relative to gold. What Saudi moneychanger would particularly want this strange new currency, from a country that for all they knew, would lose the war? A thin market indeed, very thin. In every way.
-----------------------------------------------------------
Again, the conversion would definitely not have happened on the Jidda market, where Hajis were changing money because the market was thin, because the conversion would become common knowledge instantly, and because as good a price, or better, could be had elsewhere. The price is the only indicator of conversion, because the Shuk responded to any opportunity it could to arbitrage in this meeting place of Islam to any other market from Casablanca to Bombay.



ORO: "The US government's idea of the business was (and remains) the continued flow of oil, and that of the oil companies was the continued control of supplies to sell."

714: Well, if you read a bit more closely, you might realize the US government was very much at odds with Aramco on a number of issues. In fact, it was the US Navy which desired this oil more than any other government entity, for obvious reasons. In contrast, the State Department let Aramco know in no uncertain terms they were opposed to the building of the Dhahran-Riyadh railroad.
-----------------------------------------------------------
One thing to remember is that Hull, the war time Secretary of State, had requested and succeeded in having Jordan, and then Smith, the English representatives, removed by the English Foreign Office after complaints came in from Col. Eddy and congressmen visiting there, about the Englishmen's attempts at booting Aramco off its concession.

FDR and the rest of the administration was told of the significance of the oil findings in Saudi by his Secretary of the Navy and others in his administration, who were lobbied hard by Aramco parent companies. The group that used FDR as their persona (outside of the socialist idiots of the department of State) was sufficiently convinced of the importance of Aramco's concessions to have FDR draw a map of the Gulf for English Ambassador Lord Halifax splitting Iranian oil for the Brits, Iraqi and Kuwaiti oil an even split for the US and the Brits, and Saudi for the US (meeting of 2/8/44 � pg 111 in Brown). Then Secretary of War Harold Ickes� expert on oil matters Lee DeGolyer was sent on behalf of the US government and came back with an astounding report of the region's potential, with his estimate of potential reserves reaching to 300 billion barrels, a third in Saudi Arabia, and stating that this would be very substantial for world politics from that point on. Aramco's concession interests were recognized even before that as identical to those of the US.



ORO: "The state is most nakedly the private domain of the elite in Arabia."

714:Has anything changed? Fwiw, you never did address the debt problems King Saud himself faced. They should be obvious in any read of Brown's book, where he commented on them extensively.
-----------------------------------------------------------
Again, Saud may have been a near bankrupt in his official kitty just as Saudi was officially "in the hole" for over $100 bil in 1998, while prince AlWalid had a $400 bil portfolio to manage. But that is just the point I am making here. The Saud royalty and their coterie were not identical to the government or the country, they engulfed the government as a subsidiary. The fact of the subsidiary being near bankruptcy did not diminish the rich parent organization.


714: I fear I've burnt up too much of Mr. Kosares' bandwidth on this issue over the last few days. I'll leave you with the last word for now. I'll be back in a few days or weeks, maybe months.

I suggest that MK and the rest of the forum would benefit from your insights on the oil matter.
View Yesterday's Discussion.

http://www.kitco.com/market/LFrate.html
Lease Rates

(Expressed as an annual percentage rate)

Gold
March 06 2001
Silver
March 06 2001
Platinum
March 06 2001
Palladium
March 06 2001

Bid
Change
Bid
Change
Bid
Change
Bid
Change

1-month
2.8375%
+0.5500
1.4375%
+0.5000
8.5375%
0.0000
3.5375%
0.0000

2-month
2.4750%
+0.5000
1.1750%
+0.4500
9.2750%
0.0000
3.2750%
0.0000

3-month
2.1488%
+0.3500
1.1487%
+0.4000
10.1487%
0.0000
4.1487%
0.0000

6-month
1.8000%
+0.1500
1.2000%
+0.4000
10.0000%
0.0000
5.0000%
0.0000

1-year
1.7225%
+0.0500
1.3225%
+0.1000
9.9225%
0.0000
5.9225%
0.0000

Is the oil/gold/Arab history of 30 years ago (before 1971), still relevant for today's extrapolations ? IMO, it is not. Things have changed dramatically. Kings and Princes have also been lured into stockmarket speculation as well. All that's left is the natural strong - physical gold - affinity of oil people.We are overackting this given in today's actuality.
We are trying to look into Gold's future and are ready to use historical events + today's evidence, for pragmatic projections. Oro, your detailed knowledge of what happened is not helping me in projecting, possible, gold-involvement and/or "strategy" by the Arab oil-producers.

Who can pinpoint the exact reason, why POO went from 10$ to 35$, without any POG move ? Vital importance ! Since we still have not the slightiest evidence of world-gold-buyers (accumulators)...we do have to remain sceptical towards old stories, wished to be repeated. If any identidy on this world, should have (secret) plans to accumulate a large amount of cheap physical gold...the biggiest paper-giant would not be able to suppress POG for such a long period of time. For how many years can you fool powerfull gold-investors ? With the offer/demand-balance, sitting as tight as it is for the last 5 years...where is the intuitive, gut-feeling, accumulation-reflex of the jewellery industry ?

In what sense is the oil/gold -past helping us, today, for jumping to conclusions. The POG high of 414$ ('96) and its decline to 252$ is the EMU-period. Also a US$ rise period (rebound from a dizzy decline) and POO decline. Now, AU/OIL/$ correlation before 1971 - after - and now : is there a fundamental difference or not ? And are the Arab oilproducers, proactive in this correlation or is gold simply, nothing more than a side-effect for them, closely related with their passionate affinity for gold as everything except a pure monetary and personal-power item ?

I would be glad to share the finding of answers on my own questions through search for contact with the Arabs. But for the time being I am on a Central Bank crusade.

My general question remains : QUO VADIS GOLD ?
And the answer must be found by the ones who are willing to accumulate or hold onto the physical ! How much investment gold-bars are stocked in Arab vaults ? Thanks for answering ORO.

And finally, a little teaser,...is there an analogy between the stockmarket en gold ?? Stockmarket-INDEXES , are keeping up relatively well against the reality of people selling shares, cleary evidenced by the decline Advance/Decline-indicator....and...a very low POG, with no evidence (?) of goldaccumulation ? Is it the ultimate preparation for "the auri" ?

Shifty,
Here we go again, Link showing wacko numbers (same as last week, during the spike)
714,
Can I echo Sir ORO's thought's re: your continued input here.
With a combination of both pragmatism and faith we will no doubt be able to roll back a lot more stones.
You Sir have demonstrated an ability to help roll back some of the heavier ones.

If I may butt in?
I consider the "all-pervasive" nature of POO is now being manifested in the continued tanking of global markets. IMO the price hike to "a little above affordable" is directly related to the INABILITY of POG to reflect current Fiat indiscressions.
What they're basically saying is, "let Gold better reflect the status-quo or learn to live (or die) with unaffordable OIL"
If gold traded freely, Oil would return to $12 o/nite.

Just guessing though!!

http://www.dailyreckoning.com/The FT goes on to point out (as Dr. Richebacher has already) that not all downturns are alike. Typically, the post-war pattern has been for "overheating" to produce higher inflation rates, which the central bank then stifles with higher interest rates, which produce the downturn. But this time, there was little inflation. Why? Because it is a "supply side" recession...more like the recession in Japan of the last 11 years...or the one that followed the '29 crash in America. It is marked by too much capacity, which helps keep prices down.

*** For the first time in more than 50 years," says the FT, "the U.S. is experiencing a downturn against a background of suppressed inflation. And just as the Fed's role in producing this period of weakness was relatively limited... so it may also be not much more than a bit player in determining how quickly it ends."

*** All the discussion, debate and whining about whether the Fed is going to raise or lower interest rates - upon which the entire nation turns its attention as if it were the Second Coming...and Alan Greenspan the Messiah - is probably nothing more than a sideshow. Higher rates didn't cause the collapse of the Nasdaq. Lower rates won't bring it back.

http://www.lbma.org.uk/2001gofo.htmStraight from the horses mouth.

Aren't we all complicating things un-necesarrely ? Do have oil producers the intention of saying something with POG ?
I don't think so. POG is momentarely in the ban of the Central Banks. And if one wants to give any signal at all...they will do this with the US$ - only- and the rest will follow. POO past (from 1990) and recent has IMO more to do with the unwinding aftermaths of Desert storm. The bills are paid. The liberator has been rewarded and the oil-producers want to get on with their live. Saddam and Irak's reserves are the joker in this card play.

Arab gold-stashers also see, that official gold stored for generartions, is no longer officially fostered as before.
The UK/Suisse - signal is a very strong one. One would think (hope) that they are profitting from EMU/Gold reshuffle, to accumulate silently. They probably haven't got the chance to accumulate enough dollar-surplusses to do the gold-trick. What do we know about the war-repayements and secret agreements to the US? Acquiring consideral amounts of physical gold is done at very low prices in tempo non suspecto and with enormous dollar-surplusses, lying idle. All the other rest (moves) is for speculative purposes. At this forum we must surely be part of a small cognant goldbuyers. The movers aren't moving IMO. This does not implicate that they are acting wisely.

If POG dives under total production cost of 250$, another move � la WA, might signal that the goldreserves may be taken seriously. But the IMF 3.200 tons are still booked at 38$/ounce (number 3-holder). What difference does a periodical 50$ an ounce make for them ? Goldavenue.com, claims that the goldproducers were responsable for preventing another 10% sale of IMF gold. Again, who were the buyers, if any. Why has the goldproduction declined as to absorb the official sales ? Let us remain realistic and pragmatic, without unproductive fantasy. Let us encourage private gold-accumulation with solid arguments. Almost everything is in place to have a high degree of succes into the nearby but unknown future. We don't ask 2$/ounce for that. smile faithfully !

...for the feedback. I do think we're splitting hairs on this oil issue at this point, and perhaps Belgian is right: How relevant is all this to the current market? My work in this area was simply to examine, and possibly verify, this oil-for-gold trade as it was being portrayed on gold forums.
More importantly, we need to "ground" ourselves a bit and get back to the basics of gold investing. Gold is perceived as such a "fringe" investment by almost everybody I know, one that is highly speculative, which of course, is not necessarily the case. I often wonder if gold forums aren't doing the gold industry a bit of a disservice by disseminating so many wild theories and conjectures. But of course, it is not my place to be a censor, nor would I care to be one.

I would urge anyone lurking here, who may be deciding whether or not to get their feet wet in the gold market, to go ahead and step in. There's an old adage, "Buy low, sell high." This is certainly a time to buy gold bullion "low". I got into gold investing in 1998, when the price was slightly higher, and cannot claim to have made much money on this end so far, but I've lost much more on some other investments. One in particular, a blue chip consumer company comes to mind, one that dropped 30% IN A DAY last year on an earnings report (they are blue chip!). And I certainly would have fared far, far worse in tech stocks (fortunately I have nary a dime on such stocks).

So go ahead, come on in, give Mr. Kosares a call, the water's fine....

Appreciate your comments and opinion very much. Best...CM

Pandagold (03/04/01; msg#: 49360): "Up until the first world war
there was no history of hate between Germany and England. We are
both from the same stock, and if we were involved in any battles
it was both on the same side. Then suddenly, almost overnight we
were taught to hate. But, as that first Christmas of 1914 showed,
even though war had been declared, the hate was not there in the
common man. Who will we be told to hate the next time? It shows
how media ... is used to manipulate our thinking and our actions.
Control a people's thinking, and you control the people."

J-MAN: Indeed. "They" are so confident, they even have a key
part of the process nailed and named - - and sometimes they even
fess-up to the whole thing:

"Well Jim, it is very important in a democracy that you have the
support of the people. One of the reasons why George Bush [Sr.]
had to demonize Saddam Hussein was to get the support of the
people, and Bill Clinton has done the same thing, Vice President
Gore has done the same thing with respect to Milosevic." -Raymond
Tanter, Fmr. Natl. Security Council Staffer, WATCH IT!, MSNBC, 2
Apr. 1999, ~11:56:45 AM EST

"Demonization" is clearly a part of all "their" modern war-
mongering - - - and "they" use it elsewhere too:

_Gerry Spence_: "It was called the demonization of the defandant.
... Look what they did at Waco. They turned everybody against
those people at Waco. They said that they were sex fiends, and
that they were child molesters, and by the time it was all over,
the next morning after that fire there was a poll, and I think it
was by USA TODAY, that showed that 87% of America was in favor of
what the FBI did. Now here's what they did, they burned ...
twenty-two, twenty-five little kids, little babies on a, as if
they were on a spit, they burned those little children to death.
And the American public said "That's all right," and you know
why? Because [they] had been demonized, those people had been
demonized. ... they do this by pre-trial publicity. They did this
to Randy Weaver." -CNN Burden Of Proof, Oct 14, 1996, 12:45
PM{TC00G 08:05}

They did it to gold too - - - that "barbarous relic," remember?

Regards,
Journeyman

seriousbackwardation.

Now.

G.

Naopleon was not only a great statesman, and militaty leader, but he had a good understanding of what is 'power', and had a prophetic vision of the future.

Two statements attributed to him that I remember from my schooldays ( a long tome ago) where I was blessed with one of the best history and geography teachers one could wish for are:-

" I would rather face a thousand bayonets than a writer's pen"

After he had conquered most of Europe, and he was on a high, someone said to him - "Now, what about China?"

He replied: "Let the tiger sleep, for when she wakes, all the world will hear her roar"

What has all this to to do with the present, and to gold?

More than you think, as you will see as events unfold.

It was the Russian weather that really defeated him, for had he taken Russia, there would have been no Waterloo.

Someone else made the same mistake more recently.

I owe you this. Didn't want you to think I was ducking. Hope I addressed your post correctly - well most of it. I apologise now, itf I didn't. Have to rush as must keep my eye on the market. When things happen, it will be sudden and without much, if any, warning.

Well, it took me a long time to wade through that #49342. Some of it re-your college betting pool was a little beyond me � the principle I understood. In fact I illustrated a similar principle when I talked about how an acquaintance of mine showed me, by personal experience, how easy the markets can be manipulated.

I understand all that you say, and, on the surface, that your comments are generally accepted.

It is not my aim, or desire, to tell others how to operate a strategy in the markets.

In many things in life, it depends upon mindset. As a qualified psychologist, I know how difficult it is to get people to be in control of their minds and channel their mind energies in a positive way. The vast majority of people are defeated in things they wish to do by FEAR, and are, as a consequence, skewed towards the negative.

This creates more fear...and so it goes on.

Another influence is that most have an inability to free their minds from the constraints put there from birth by 'well-meaning' parents, and some teachers who should never have been allowed to practise their profession.

We are NEVER taught to think big enough, and many do not possess the 'devious' minds that permit them to imagine that there can exist people who have such minds and who have been able to build up, over centuries, a network by which they have been able to create a power base that far exceed any government, past or present.

Those who control media, do so for much more than money, in fact sometimes they will run things at loss (financial). They know your weaknesses, and how you (general, not personal) are so easily influenced.

If you are wondering why I am dwelling on this, it is because I am addressing one of your sentences, a very important one to assure you � it is impossible, repeat IMPOSSIBLE, to over estimate those who are shaping and moving this world in a direction they choose. This will be the hardest thing I would have to get across to you, or anyone, not just hard, I can almost say impossible, if I apply the 'law of averages'.

TPTB, I can tell from the many postings, mean many things to many people. I do not intend to get into further explanations, it is not really important. Only when one accepts that such an entity (power structure) exists do things begin to make sense, and therefore free you from mental confusion, and wasted time and effort trying to figure things out, that appear irrational otherwise.

If you read my post carefully, you will see that I do not say it (trading) is easy, especially right now, before the tide has changed. I told you I am not getting over excited, but then one should NEVER, even when things are going very good. This leads to over confidence and error.

I honestly believe that those who can free their minds � open them fully, remove all indoctrination from false beliefs, take a good look at the history of man � ignoring the details (it is focusing on details which clog the brain, and deflect energy), and see things with a broad view, will see the truth. The truth really is out there.

You could make a movie illustrating everything I am trying to say, build it round a good plot and people would say 'Hey wasn't that something' But they still would not believe it could really exist. Like they see a warning on a cigarette packet but say 'well it may, or may not be, but if it did happen it would be to someone else, I'm different'. We are well and truly conditioned to think in a certain way.

Once again � who or what doesn't really matter. I do not need to know the geological properties of Icebergs, or how and why they are formed. All I need to know is that they exist and that they can sink the unsinkable. This is far from a perfect analogy but it should get the message across.

And, I am not from Missouri so no need to meet one to accept they exist. And no good sailor would ever believe, no matter how many times he had successfully sailed round the globe that he had conquered the sea.

I use a mixture of methods in my trading. I do rely a lot on charts, volume, trend lines, etc., and the direction of the wind. I also look at what the media by concessus of opinion is trying to get me to believe. On the top of this, from my belief in my assessment and understanding where TPTB are heading, and noting any problems that could send things a little off course for a while, I make my trading decisions.

Am I right 100% every time? No? One does not have to be. Market trading is not like sports betting it is not all over after one match. That is what I love about it.

Someone once said "Fear is a little dark room where negatives are developed" To me fear is a luxury that I reserve for those special occasions where all else has failed - As I mature those special occasions grow less and less � haven't had one for a long time.

When I have studied all my trading and reviewed all my errors, they have always been because my timing was wrong, or that I ignored the signs of the changing tied. Oh, I saw them, but ignored them. As for timing well, one gets better with practice and study, and remember � even a stopped clock is correct twice a day. In other words � you get a second chance (and usually a third and a forth.....

We attract what we dwell upon, therefore, be positive. Look for the opportunity and seize the day. It has NEVER been better for we mere mortals than with today's technology.

.

'Changing tide'

http://www2.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B71737A6C%2D02D1%2D4B95%2DBA46%2DE561A1EA9F0A%7Dhttp://www2.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B71737A6C%2D02D1%2D4B95%2DBA46%2DE561A1EA9F0A%7D

Sorry if this was posted earlier. Was on the wire this mornng.

>>WASHINGTON (CBS.MW) - President Bush on Monday tapped Kenneth Dam to be second in command at the Treasury Department, a post that will renew the close public and private sector ties the law professor already shares with Secretary Paul O'Neill.

As Deputy Secretary of the Treasury, Dam will play a key role in the international financial policy of the United States. He has been a critic of the International Monetary Fund, favoring scaling back the fund's activities and limiting the size of its loans, and has also been critical of past financial bailouts of countries.

Dam's nomination completes the roster of top officials at Treasury, including Friday's widely expected nomination of Stanford professor John Taylor to serve as Undersecretary for International Affairs. Taylor once advocated abolishing the IMF.

White House economic adviser Lawrence Lindsey has also been critical of IMF bailouts, and the Bush team is expected to be much more hesitant to approve large-scale international rescue packages than was the Clinton administration.

Dam served as assistant director of the Office of Management and Budget in Washington from 1971 to 1973, during O'Neill's 10-year service for the agency.

Their past extends to aluminum giant Alcoa Inc. (AA: news, msgs, alerts) , where Dam has been a director since 1987 and where O'Neill served as chairman from 1979 until he accepted Bush's nomination to head Treasury.

Dam has been a professor of American and international law at the University of Chicago Law School since 1992. Previously he was a vice president at IBM (IBM: news, msgs, alerts) from 1985 to 1992. Other public sector experience includes a stint as former Secretary of State George Shultz's deputy secretary of state between 1982 and 1985.

The nomination requires Senate approval.
Rachel Koning is a reporter for CBS.MarketWatch.com.<<

Has anybody else noticed the Wall St. shills have brought out the "wall of worry",again.

You know,maybe I'm unduly pessimistic,but it strikes me as more of a "wall of reality"and no safety ropes are being provided.Furthermore,there appears to be a lot of jagged rocks at the base.

Belgian,

In the interest of clarity I will touch on things you mentioned one by one.

First, you say
"� we still have not the slightest evidence of world-gold-buyers (accumulators)".
We do have the strongest piece of information on the presence of gold buyers, and that is the presence of gold sellers, advertised loudly in the media, and documented in the data collected by BIS and the OCC, as well as on the books of gold producers. Had there been no buyers there would have been no sellers. In order to have a clap one needs two hands. Someone bought the nearly 6000 tonnes of EMU member's leased gold, someone bought some 2/3 of Barrick's proven reserves while they were still in the ground, similarly for Anglogold's 1/2 of reserves. Years of production have been sold forward. Is that not evidence enough of buyers, and on a large scale? Also, there were people buying the 30,000 tonnes of net paper positions reported by BIS. The fact of people buying is obvious when you consider that there were people selling � not only what they have in inventory, but also what they expect to produce in the future, and what they hope to be able to supply later.

It is nonsensical to talk of selling without buying. It is proof positive of a propaganda effort that media focus is on the selling part, while buying is not mentioned. The buyers obviously prefer to have prices low because they can buy more gold that way. If many sellers have sold other people's gold, which is what gold leasing is all about, they share an interest with the buyers in seeing a low gold price for as long as further gold is made available at that price. The buyers would start their own propaganda effort for a high gold price only once no further substantial gold supply is expected to be forthcoming at these low gold prices, and there is no gain from the continued support of leveraged gold sellers (who borrowed gold in order to sell it).

Understanding this general principle of the relationship between interests is key.

We also have WGC data that is known to be an understatement of gold inflows through customs. When adjusted for measurement error due to poor sampling and due to the circumvention of customs by many of the gold buyers, the WGC data reveal a cumulative gold demand and production deficit that has accumulated to at least 17000 tonnes this decade alone. Due to the law of mass preservation, we know that the quantities supplied to answer this demand came from someone's inventory. We know 1/3 came from the CBs as leased gold. We know that there is a gold banking system containing allocated and unallocated accounts, of which no record is publicly available, and no reporting is required by any of the regulatory institutions. We can't know who exactly has done the selling, but we know that the gold must have come from some hoard (inventory), and that this is the only possible remaining source. The fact of a lack of publicly available documentation is not in any way opposing this notion. Perhaps the opposite; this fact of known existence and unknown scale and limited information on flows is enough for us to conclude that there is a community of interest within the gold markets (regulators, bankers, producers, buyers) to keep the statistics hidden, otherwise they would have published their full data on accounts outstanding (and reserves) rather than just net transactions on LBMA and outstanding derivatives. Market participants will prefer transparency because it is favorable to all parties, unless there is mutual interest in hiding this information from the public. Such mutual interest can only come from a condition in which bankers are overleveraged, having lent out too much of their client's gold, the major buyers still have outstanding delivery obligations owed by the bankers that can not be filled if gold depositors withdraw their gold, producers have oversold their future production and stand to become insolvent (see Ashanti and Cambior) if gold prices rise, and regulators have not filled their mission of regulating the industry and wish only that the system survive till they retire.

If a 100% profit arbitrage was available in 40s Saudi, I can almost guarantee you SOMEBODY was playing it. One way new counters make money in the gambling business is called "smurfing." (The term has also been applied to some sort of drug-related thing.)

Typically what happens is that an American casino will offer a slightly better exchange rate than normal on, say, Canadian currency - - - if it's played at the table. The enterprising "smurf" finds a source of Canadian currency, and shuttles his funds through the Canadian-->American-->Canadian loop as often as possible.
The difference in rates can be quite low, in the range of even 1% and still yield enough to make quite a tidy profit.
These offers invariably attract enough smart players to cost the casinos money and cause them to end the offers.

So you can imagine what kind of attention a 100% profit would attract.

Incidentally, pro gamblers fan out across the world and no such opportunity goes unrecognized for long. A friend of mine discovered a similar opportunity in Latvia last year for example.

Is this relative to Saudi in the fortys? I think so. We humans are an opportunistic bunch, and professional gamblers that play casino games are only a sub-set of the gamblers that have been with us since our hunter-gatherer days. We have all those "carry trades" don't we?

SOMEONE knew about the opportunity - - - and he/she told friends. SOME took advantage, guaranteed. What volume? Don't ask me!

Regards,
Journeyman

http://www.mises.org/fullstory.asp?control=620&titlenum=&FS=Greenspan
This is a rather revealing insight into the Maestro's thought processes.Rather long,probably somewhat off topic,but I'm sure this is going to be influential in our future trajectory.

Man,Mr.G is one unusual duck!

http://www.kitco.com/market/LFrate.htmlThis is the best I could do in 10 minutes, under your continuing inspiration.

Lily leased a lotta gold
From sharks and alligators
But never saw their opening jaws
Because the Backward ate her.

To those who grow impatient or weary while waiting for gold to be released from its prison, a few words from one of our greatest presidents, dour Cal:

"Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."

Calvin Coolidge

This morning NPR had a good spot on the Turkish currency exchange market and its gold exchange market around the corner. The broadcast proclaimed the Turkish hard currency market "the freeset market in the entire world"

It is evident from the excellent article by Salerno on Mr. Greenspan, that Greenspan is suffering from what is truly a profound mental illness: Social Metaphysics.

Social Metaphysics is an illness or "disability" which was examined and defined by Ayn Rand. She coined the term herself. It is curious that Greenspan, who was a member of Ayn Ran's "Inner Circle", a very exclusive coterie, has succumbed to the mental illness defined by Ayn Rand herself.

Social Metaphysics is the mental stance or attitude of people who consider that what is prioritary in the world, in Existence, is not Reality, That Which Is, but the mental attitudes of significant people with regard to that Reality.

That is why Greenspan is so concerned with "perceptions".

For him, it is not the facts - the reckless increase in the Money Supply, for instance - that are important, but rather what people (of course, the important people, the movers and shakers) are thinking or imagining.

This disregard for reality and focus on perceptions of others as the ultimate and important reality, is actually a mental illness. So we can truly say that Mr. Greenspan is a madman. Notice how Greenspan, according to the article, has recourse not to reality dealt with through strict logic (e.g. Austrian theory) but rather through hunches, feelings which he cannot fully explain. A typical "witch doctor" as described in the Randian philosophy.

It is a sad comment on the state of the world's philosophy, or lack of philosophy, that Greenspan has mesmerized the whole world. The world has lost its way and is now run by a madman, a "witch doctor"; the fact that Greenspan is the most important financial man in the world, is terrifying.

All the more important, to accumulate gold. This episode in the history of the world is going forward into utter chaos.

Sierra

Holtzman here,

--------------
Where have all the fiats gone?
--------------

Excellent critique, ORO. Your impressions of EU intent are very similar to mine.

Your vision of a 'reserve auri' is, as I see it, a third alternative distinct from the real euro and from my physical-gold-in-hand fiction. All I was attempting with my quickly invented mythical auri was a demonstration that a government which adopted such a thing would simply be surrendering one of its most potent weapons. As a result, of course, it could be relied upon never even to contemplate such a move. But I am intrigued by your 'reserve auri' as a third alternative that might have been yet wasn't.

There is one place I would beg to differ, however. You state that 'The mere existence of the fiat currency takes substantial portions of Joe's dinner, and takes away his best clothes.' Perhaps it depends upon which Joe we're speaking of. For clarity's sake, let's use names other than Joe.

Paul, the man with his hand out towards the government, receives crisp new fiat currency and immediately spends it to purchase Paul's dinner, Paul's cat's dinner, Paul's pint of the best, and Paul's new wardrobe, all before prices have a chance to rise.

Peter, the upstanding but unobservant middle class citizen, carries on working for two whilst the fiat currency in his retirement accounts is steadily diluted by inflation. Fiat provides government with the ability to 'sneak' taxes past Peter in order to keep Paul well fed and less motivated to run amok in the streets. In a gold standard system, the government would have to overtly tax Peter in order to pay Paul... it's always easier to be a pickpocket than a highwayman.

Mary, the observant me-first-society-second middle class citizen, realised some time ago that inflation causes to-day's debts to be paid off with tomorrow's cheaper currency, so she lives in a negative net-worth world until her personal debt spiral implodes into bankruptcy.

Jackie, the observant and savvy investor, never goes into debt for things which have no resale value, and he allocates his wealth across many classes of asset: some in his own domestic fiat currency in term accounts, some in domestic stocks, some in foreign stocks, some in gold, some in good furniture (Jackie will never waste money on particleboard), some in real estate, perhaps some in artworks, etc.

The point is that whilst Peter, Paul & Mary puff with indignation yet drag on through life under the pirate ship of their own government, Jackie's broadly allocated wealth continues to grow in the despite of any one government.

--------------
Bread and Circuses
--------------

I agree with the majority of your historical points, although of course I would read the tea leaves a tad differently. For example, you stated that 'Bread and circuses did little for their supposed beneficiaries in Rome, and ultimately destroyed the whole of the Empire.' In contrast, I would say that 'Bread and circuses kept Rome's huddled masses just content enough that nearly twenty generations of aristocrats could maintain a quality of life almost the equal of to-day's technological elite.'

You are correct in characterising my last post as 'All that is wrong' with the world as it is. However, it IS the world as it is, and it is the world as it almost certainly shall continue to be. Of all the different visionary groups to attempt building a different world, the most successful were the Bolsheviks, but even their utopia eventually caved in on itself. One cannot bottle up human nature indefinitely. It will, sooner or later, burst through any restraint devised.

The only thing which works is what has been proven time and again to work: keep the masses just sufficiently content and just sufficiently afraid of the ruling class. As Machiavelli pointed out, given a choice between being loved or being feared, it is more effective to be feared. Though he did allow that being both was best, if possible.

To-day, contentment is managed in the EU and NAFTA with a combination of government handouts, a sense of participation by way of voting for representatives, and the opportunity (for those with the will to pursue it) of raising oneself out of the masses and into the aristocracy. Contrast Nelson Mandela with Colin Powell. Both self-made men arrived in positions of power in nations where that was phenomenally unlikely, yet the U.S. system allowed it (indeed encouraged it) and so did not invite revolution as did South Africa.

However, fear is managed in the EU and NAFTA by the threat that special police units will come knocking if you break laws. And be assured they'll see you if you break the law, what with all the surveillance equipment around nowadays.

The details vary from era to era, but the pattern remains the same. A little over half a century ago, fear was focused around the threat that Stalin would get you (both within the USSR and in the West). For many centuries before that, it was the threat that god's representative the Pope would get you. In Rome, it was the threat that the Emperor would get you. In Egypt, it was the threat that the living god Pharaoh would get you.

Interesting thought: Egypt's Queen Cleopatra is nearer in time to us than she is to her predecessors who built the pyramids. One of the rare occasions when Julius Caesar felt humble was during his first visit to the Giza plateau. Those manmade mountains, already four times older than Rome, silently assured him that nothing he would ever accomplish would be as long-lasting. Eighteen hundred years later, they gave the same assurance to Napoleon.

For over twenty five centuries, Egypt had gone through dozens of dynasties punctuated by numerous chaotic periods wherein there was no Pharaoh. But time and again, the same form of government rose from its predecessor's ashes... until increasingly strong outside forces found Egypt. The ancient Hittites were barely superior to the Egyptians upon first contact, and were soon enough evicted. The Alexandrian Greeks supplanted the old ruling class but quickly went native and became Pharaohs themselves. But then came Rome.

After Rome got hold of her, Egypt became ruled from a distance. By the time the Eastern Empire abandoned Egypt, she didn't remember how to restore her own Empire and so fell victim to the Arabs who've had her ever since. Many of the non-Arab Egyptians were driven out of their homeland and migrated north through Constantinople into Eastern Europe... hence the word Gypsy.

In contrast, Rome as an Empire lasted only about four centuries and, thanks mainly to bread and circuses, it was not torn down by a revolt of its own native population. It was, however, weakened by bread and circuses, and both its popular resolve and its military readiness were eaten away. But even yet, had there simply been an ocean north of the Alps rather than the forests of Germania, we'd still be speaking Latin to-day. It was Rome's indefensible northern border which ultimately doomed it, not its style of government.

This ties in nicely with your points about landowners, ORO. A man should never place all of his wealth in his land (or in any other single asset class, for that matter). Americans have a stronger sense of land possession than do Britons or Europeans owing to their 'bang stop or I'll shoot' negotiating style. I expect there are still sections of the Pacific Northwest where it would be unwise for federal officials to barge in unarmed. Still, as demonstrated all too often, the government does have the resources necessary to come onto anyone's land and separate him from it no matter who he is.

Since few of us to-day are nomads, we need to acquire a place to sleep most nights, but we should also own enough portable wealth to allow us to run for our lives should such a dark day ever present itself. I recall reading somewhere years ago about an American who travelled across the U.S. wearing his wealth as gold coins sewn into his vest. As needed, he'd simply find a spot of privacy and cut out the required coin. Sadly, this wonderful lifestyle has since been made obsolete by metal detectors and strip searches.

As someone once said, the only certainties in life are death and taxes. However, as someone else later pointed out, the insertion of the Inland Revenue into one's business is made substantially more bearable by a generous application of emolument. Ahem.

Oh, and speaking of propaganda, ORO, it's quite illuminating to consider how symbols are employed and reemployed over the centuries...

--------------
Bundles of twigs
--------------

Americans are rightfully proud of their slogan, 'United we stand, divided we fall.' The phrase is often illustrated by first demonstrating how easily a single twig may be broken, then demonstrating how a tightly tied bundle of twigs is nearly impossible to break. This concept, of course, pre-dates the revolt of the Colonies by several millennia. The original American expressers of that phrase proudly adopted what they knew was a Roman symbol.

Repeated again and again in ancient Roman political and military art were images of pole-axes whose shafts were bound round with twigs. These objects were carried in processions and were either laid or mounted in places of honour in order to proclaim the power of SPQR (Senatus Populusque Romanum, Senate and People of Rome).

Those of you who collect U.S. silver coins should have a glance at the reverses of your Mercury dimes. You'll find the same symbol there, proudly declaring America's manifest destiny as the new Republic, the new SPQR.

Of course, Americans weren't the only ones who've ever thought of themselves as the natural heirs of Rome. To this day in the UK, royal maces are carried in procession and are laid in places of honour in Parliament in much the same manner as a twig-bound pole-axe was placed before the Roman Senate two thousand years ago.

But what of the Italians themselves since then? How in the world does the child live up to the reputation of a father such as ancient Rome? Not since the Renaissance have Italians been world leaders, and even at that pinnacle they were but a faint glimmer of Rome's original splendour. Time and again, Italian leaders have attempted to rekindle that ancient greatness, most recently Mussolini. As part of that attempt, he sought out every emotion-stirring image he could find from the glory that had once been Rome. Italy in his time was not so dissimilar to America of the 1770s: it was a patchwork quilt, most of whose inhabitants didn't think of their peninsula as a single nation. In the image of those weak twigs uniting into an unbreakable bundle, Mussolini found the rallying symbol he needed. He even adopted the original name for it.

North of the Alps, Mussolini's vision inspired another leader to unite the patchwork quilt of German-speaking peoples. Again, the bundle of twigs symbol was used, and its old name adopted, and both symbol and name were tarnished by the use. As, by the way, was the other Nazi-appropriated symbol, the swastika. Indians (of both sorts) and Chinese who visit Europe are invariably astonished to find that their millennia-old symbol for good luck has other meanings which may even attract violence. For precisely the same reason that swastikas are no longer tolerated in view, the bundles of twigs also fell from grace. Even America dropped them from her dimes. It did seem somehow inappropriate to put such a recently misused symbol behind the face of FDR. Still, it's often startling how truly close two things are which on face value seem so diametrically opposed.

So what's this name I keep talking about? Well you see, in America, those bundles of twigs are most often associated with the English phrase 'United we stand, divided we fall' and the Latin phrase 'E Pluribus Unum' (out of many, one).

But the Romans themselves used a single Latin word for those bundles of twigs: fasces (FASS-kes)... hence Mussolini's word fascist. As anyone who attended the movie Gladiator or saw the much earlier television programme I,Claudius can affirm, Rome was the original fascist state.

There truly is very little new under the sun, though the details do tend to get quite twisted from age to age, often entirely out of their original implications. For example, if one could run back in time, abduct a Roman-on-the-street from the time of Julius Caesar, bring him forward in time and show him around Westminster Abbey, the poor fellow would be absolutely mystified by the cross' place of honour in the building. What to many modern people is a symbol of supreme self-sacrifice on behalf of others was, to that 2000-year-old Roman, nothing more than a terrifying symbol of his nation's fascist iron will.

To put yourselves in that Roman's position, imagine jumping ahead to the year 4000 AD and being shown a vast room filled with headsman's axes and electric chairs, only to be told that this is a place of worship and that these tokens which seem nightmarish to you are in fact regarded by them as symbols of devotion. As Aldous Huxley put it, Ford's in his flivver, all's right with the world.


Yours,
I.V. Holtzman

Good point on the War repairations Sir, though the cause/effect of that little skirmish are as deeply hidden as our (presumed) gold scam.
On the UK/Suisse "sales" it's comforting to note both Countries have recently been found "fit" to now join EMU and we wait with bated breath to see whether UK will suspend the Auctions. (Swiss have deferred via ballot... for the moment!)
Does it not strike you as odd that 125T per Month are being "re-allocated" through BIS without market movement (swiss) but whenever the UK auctions happen, the POG goes bananas?
Sir, if a pragmatic approach alone was all that was required to unscramble the gold egg, it would have been done years ago - alas, the bulk of research into this "most opaque" of markets, must remain conjecture.

The following excerpts from tg msg: 49455 (notice the
capitalization emphasis which I added) - - -

tg's post: "But this time, there was LITTLE INFLATION. Why?
Because it is a "supply side" recession...more like the recession
in Japan of the last 11 years...or the one that followed the '29
crash in America. It is marked by too much capacity, which HELPS
KEEP PRICES DOWN. . . . For the first time in more than 50
years," says the FT, "the U.S. is experiencing a downturn against
a background of SUPPRESSED INFLATION. [Caps emphasis added -j.]

- - - illustrate a common confusion in discussions about
"deflation." Notice neither of the included statements claim
"MONETARY deflation," that is, a decrease in money supply. Quite
the contrary - - - they say LITTLE INFLATION and SUPPRESSED
INFLATION, which is not even "no inflation," let alone "monetary
deflation."

Thus it's clear that people using the word "deflation" in this
way have (understandably I guess) confused economic contraction
with monetary deflation. This is understandable because while the
U.S. was supposedly on the gold standard at the beginning of the
"Great Depression," the situation was indeed blamed on the
concurrent contraction in the money supply caused by the
discovery (in the form of bank-runs) that the Federal Reserve had
fraudulently issued "Redeemable In Gold On Demand" certificates
well in excess of the gold they had available to redeem them.

Especially for those individuals and businesses which had been
conned into borrowing this easy money, the literal monetary
deflation that resulted (because enough gold couldn't be
"printed" to cover, even with the government-FED heist of the
peoples' gold), this created an impossible situation - - -
including a huge number of bankruptcies.

We here at USAGOLD don't need to continue this confusion between
monetary deflation and economic recession in our posts. Do we?
There is no longer any constraint what-so-ever on money creation.
Or perhaps I should say that while as ORO so eloquently pointed
out recently, the only path to money creation that matters today
is the leverage from fractional reserve banking, the FED's
ability to monetize existing debt (convert it to credit ("money")
book entries) is limited only by the FED's "conscience."

Regards,
Journeyman

P.S. And another chronic and related bugaboo of mine: I just
can't resist reminding you that "dis-inflation" is still
inflation.

P.P.S. We may not have hyper-inflation (I suspect we will
though), but we definitely WON'T have MONETARY deflation, that
is, general prices won't fall, at least not for long!

What inflation does is to coax resources people and societies
would normally have stored-up for emergencies and retirement into
speculative ventures on new things. It encourages to some
degree, in other words, eating your seed corn.

Displaced prose and praise (smile)I thank you kind sir for your praise. But I am also mystified that I could inspire such a poem from so little incentive.

Perhaps it is a variation of the 1000 monkeys bringing forth a play worthy of Shakespear, but try as I may, I cannot see the poetry of mine words as compared to yours. (smile)(hence my monkeylike allusion)(big smile)

I just slapped this lease rate message on this morning on my way to my word processor. I have an orchid article to complete - but my post was definitely not a warming up exercise.

Notwithstanding, the lease rate plays do forcast some wild and toothy creatures coming out of the cages. Methinks (that Shakespear theme again) we should post some look-outs to watch for casualties. Most of us would know this as a default watch.

We are getting closer, faster

Now.

(J.P. Donleavy) (smile)

Best...

G.

Watching the current backroom gyrations makes me think of a paragraph in Elwood's Gold Export Analysis;

"My grandfather once told me"Use the right tool for the job"Applying that here,we'd expect them to use physical flows only when nothing else will do.In'96 and '97 it took physical delivery of hundreds of tonsto get the price down from $400 to $300.Of course,we can assume the heavy hitters,to a man,know the difference between the paper and the physical so there's no way to "fill the gap"with them using paper.See the article on Golden Sextant by Reg Howe for a world class analysis of the derivatives"

Reminds one of the frequent question Butch and Sundance kept asking each other through the movie."Who are these guys?"

Just an aside on your commment on Egyptian emigration to Europe.

I have not heard of this emigration before, but it might well have happened.

Just by the way, Alexander Del Mar in one of his books, perhaps "History of the Precious Metals" (facinating!) says that the reason the Moslems were able to overrun North Africa so easily, is to be found in the fact that they promised liberation to all slaves held by the Christian masters. This because Islam forbids any Moslem to enslave any other Moslem - but enslaving Christians was acceptable.
This of course provided a great incentive to turn Moslem, for the large number of slaves in North Africa.

Perhaps a large number of Egyptians did emigrate North into Europe. But...they weren't the people known to us as "Gypsies".

The Gypsies themselves believe their origin was Egypt, and their songs mention Egypt frequently.

The fact is, they are mistaken about their origin. They are actually the descendants of a low-caste tribe that left India centuries ago. Their language has been examined and proved to be evolved from Sanskrit roots, with accretions of words, from places through which they moved over the course of centuries.

Gypsies are a most interesting subject of study. There are the colorful works of George Borrow, "The Romany Rye", "Lavengro", and "With the Bible in Spain" - which describes in hilarious terms, Borrow's fruitless efforts to Christianize the Gypsies of Spain, early 1800's.

This group has managed to avoid integration; they do not marry outside of the Gypsy tribe, and their notorious customs are indeed a refreshing contrast to today's ever more dull Disneyfied world. They do not have a written literature.

By the way, they love gold, today, as they did five hundred years ago. They keep it in their possession, and will splurge all their stash on a single grand celebration of some family event such as a marriage.

They call themselves the "Rom", or "the Men", and regard all wealth of those who are not Gypsies, as for the taking.

Sierra

http://www.geocities.com/goldtango/analysis1.htm
Just in case anybody out there is unfamiliar with Elwood's fantastic work.

http://biz.yahoo.com/rf/010306/nat017642.htmlThe Fed has once again injected permanent reserves to the banking system, this time with a purchase of $469 milliion in U.S. Treasury securites for the System Account in New York.

In earlier open market operations today, the System Account manager added $2.0 billion in temporary reserves via overnight repos....with the fed funds market trading over the FOMC target by 1/16th percent.

This activity has long since passed any point of parading as an exact science...a child could do it, adding billions in round round numbers with an eye toward saving the banking system from consequences of its past excesses. The value of the dollar shall suffer as a result. And given the quantities of overseas dollar-denominated holdings, in this action our monetary authorities are effectively saying, "We shall have the hyperinflation."

Holtzman,

The Roman Aristocracy lived in terror of their own Emperor and had themselves devoured by his need to increase the scope of bread and circuses endlessly. Emperors had to deal with the fact that they had created an increasing class of dependents close to home which must be fed and entertained lest they riot. Once far away lands were being abandoned, the provincial aristocracy was targeted. Progressively less of the aristocracy could survive, and practically the whole of them were killed and their property confiscated. Each generation of the aristocracy was smaller than the one preceding it. Even the Soviet elite, the "nomenclatura", could not take the terror against themselves that was necessary in order for them to retain their privilege. If you pay close attention to the names, you will see that the aristocracy of Rome had changed; that the 20 generations were not of the same families, and that fewer families belonged to it as generations progressed.

Your discussion of Paul, Peter, Mary, and Jackie ignores the fact that by taking from the one and giving to the other, the government is creating a negative sum game. As taxes and legislation/regulation driven income shifts grow, the marginal income from marginal effort is reduced, as is that from investment. The result is that in order to provide Paul with his food, grog, and clothes, the government not only eliminates those from the rest of the bunch, but also employs Elisabeth social worker to determine Paul's needs (Paul obviously needs Elisabeth to have an assistant so that she can get supervisor's pay), but also employs Nick to find out how much Peter, Mary, and Jackie earn, and how to take it. Most significant, however, it reduces the future gain from additional work and investment that Peter, Mary and Jackie will not do because they will see no gain from the marginal extra effort. The present value of that lost productivity, and that of Elisabeth and Nick who are doing unproductive work, is greater than all the benefits Paul, Elisabeth, and Nick and their successors will ever see. Thus the government's benefit to Paul of a square meal, a decent pair of shoes and a visit to the pub costs as much as a 15 course French dinner, Gucci shoes, and a bottle of Rothschild's best. Paul loses an opportunity for the job that Peter, Mary, and Jackie could have created had their income not been taxed or inflated away, and Paul loses the opportunity to buy the products of Elisabeth and Nick would have produced had they been working in the marketplace. The loss to the whole bunch over their lifetimes is equal to the portion of their life lost by dying an early death at age 32.
The ratio of lost productivity and direct benefit cost to benefit provided by government is at least 2, and most probably 4.

http://biz.yahoo.com/rf/010306/nat017642.htmlFor those who have not yet seen his commentary, "The Other Bubble", it is now available for viewing at The Guilded Opinion.

Personally, I am most delighted with it for recalling the 1997 June warnings offered by Japan's PM Hashimoto to this effect:
-----
'Our American friends were paying little attention to maintaining the value of the U.S. dollar as an international key currency, and we were tempted to sell off (bond holdings). In terms of funds, it is true that we have not really made the right choice, shall I say, or advantageous choice. By selling Treasury bonds, we might increase our gold holdings. That is an option we had. Among countries around the world, there are many who hold their foreign currency reserves in the form of U.S. Treasury bonds. As long as they continue to maintain the U.S. government bonds -- even when the U.S. dollar is weakening relatively -- it is because these countries are holding onto these government bonds that the U.S. economy is being maintained. Many people, in fact, don't realize this.'
+
`I hope the U.S. will engage in efforts and cooperation to maintain exchange stability so that we will not succumb to this temptation to sell off government bonds and switch our foreign reserves to gold.'
-----
If you can grasp the wider implications in this, then you are light-years ahead of the game.

Click the link to see the context in which Mr. Corrigan chooses to bring forth this quote.

http://www.usagold.com/gildedopinion/CorriganBubble.htmlClearly, this link will serve you better!

http://www.webleyweb.com/tle/libe53-19990815-04.html
Sir Holtzman,

Excuse me for butting in and shooting from the hip; I guess I'm
on a hair trigger today for some reason.

Your paragraph - - -

"Peter, the upstanding but unobservant middle class citizen,
carries on working for two whilst the fiat currency in his
retirement accounts is steadily diluted by inflation. Fiat
provides government with the ability to 'sneak' taxes past Peter
in order to keep Paul well fed and less motivated to run amok in
the streets. In a gold standard system, the government would have
to overtly tax Peter in order to pay Paul... it's always easier
to be a pickpocket than a highwayman."

- - - ASS-u-MEs that government is somehow the "best" way, if not
perhaps the only way, we humans handle problems. This assumption
is not only patently incorrect (which I can document more than
abundantly) but the truth is just the opposite. The fact that
grown and otherwise intelligent adults believe the fairytale that
governments help the poor more than they hurt them is a monument
to disinformation, the power of brainwashing, and the modern
press.

Further more, humans, at least the ones I know, don't "run amok
in the streets" in times of disaster, we help each other. It's in
our genes, and any notion to the contrary is slander. Hobbes'
"war of all against all" is complete and utter malarky. Period.
Before government butted itself in, families took care of their
own and private charities took care of the rest just fine.

A quote from one of Pandagold's recent posts is apropos:

"The Christmas Truce was the last twitch of the 19th Century. By
that, I mean it was the last public moment in which it was
assumed that people were nice. It's the last gesture that human
beings are getting better the longer the human race goes on." -
Paul Fussell, University of Pennsylvania

Our model of human nature has been skewed beyond recognition by
government, pro-government propaganda and media's "dramatic
imperative." (See link for a passable presentation of this.)

In fact, governments create poverty. What's more, the more
govenments try to "redistribute wealth," supposedly to "the
poor," the more disparity of wealth they create. (If you don't
believe this, ask me.)

I can safely say that ALL of the excuses presented by the "macro-
econ" manipulation apologists, especially when put into practice
in the real world, not only fail to accomplish their PR-hyped
goals, they often accomplish just the opposite. There are very
good, logical, economic reasons this is so. Ask me.

Thus there's a high probability that, to the extent some Pauls
are ticked off and in danger of running amok, this is closely
related to some government machination, boondoggle or sell-out.
A great example (though by no means the only one): The "Great
Depression" --resulting in a lot of ticked-off Pauls-- was caused
by the illegal activities of the Federal Reserve (illegally
issuing unbacked paper promises to deliver gold it didn't have,)
itself the result of illegal laws passed by the U.S. government
in chartering it. Thus in actual operation, governments are
often a great source of disorder and chaos rather than the "font
of order" they claim and we assume.

Therefore, for order, morality, and the good of mankind
(including the "poor",) down with all government fiat currencies.
Period.

Regards,
Journeyman

P.S. Someone could of course argue that, because the dollar finds
itself as the "reserve currency of the world," dollar users have
benefited at the expense of the people in the rest of the world.
So-far. Anyone care to have that discussion?

P.P.S. I agree with your characterization of government as either
a pickpocket or a highwayman. Both actually.

Allow me to answer first the easy bits of your reply. Wich is, by the way, exactly, what I wanted to hear !

Media : no need to spend much effort on manipulating them. They just follow, events, the "lemming" way. With POG in a declining mode for 21 years...no probs.

WGC : cumulative demand/production deficit of 17.000 tons for the last 10 years : it is per definition totally impossible to gather a global correctly matching gold account! Russia, China etc...
I even don't consider their or anyone else's figures as to make any conclusions out of it.

Now the most interesting part : Screeming Sellers and Silent Buyers ! A /SHARING THE SAME MUTUAL INTEREST !
B / HIDING INFORMATION FROM THE PUBLIC !
Here we have to come up with plausable scenarios and actors. That's exactly the part where a lot of VERY DISTURBING "confusion" is installed. Not the least by ourselves. A collorfull series of bits and pieces from possible scenarios have incompleteness as main characteristic. The stories have no beginning or end.
We are collecting remains of a sunken ship, dispersed along the coastal line.

Actors with mutual interest : I only see two of them and all the others must be "intermediares" (go-between)(profit-pirates) :
1/ Goldproducers + 2/ goldholders . Not all producers and not all holders can be involved in the same mutual interest play. Before searching for the actors idendities, we must come up with the "motive" for the natural confluence of that mutual interest. Again a new series of possible motives has already been produced.

I humbly admit, not being capable of producing a complete story with high probability. As long as POG doesn't fly to the moon, it will remain an intellectual challenge.

Getting late and after zzzzzzzzmmm, hope we can come one step further into this gold-thriller. Thanks ORO...very stimulating. Feels good.

For those who still doubt what this is all about

From an article in the' London Times' December 1997 by Janet Bush (no relation) headed "How the West cages Asian Tigers in IMF trap".

She quotes Mickey, Cantor former US Commerce Secretary, made to the Confederation of British Industry, that month:-

" He told his audience: "....the troubles of the tiger economies should be seized as a golden opportunity for the West to reasert its commercial interests. When countries seek help from the IMF", he said, ". America and Europe should use the IMF as a battering ram to gain advantage" ( economic gunboats up the river)

A battering ram? These are the words of a man who held a senior position of government. Many of these people were just moving up from one bowl of rice to two bowls of rice per day.

And you think this mentality would stop at manipulating gold to gain advantage?

Thanks for your latest 'flation post. A joy to read, as usual.

I want to add that Japan could suffer deflation (however mild) because it is a creditor nation, and has assets abroad to lose. It is only at last year's end that Japan's trade balance moved into negative territory (it still has a strong trade surplus with the US). It should be obvious that the enormous historical excess production not going abroad any longer, the local supply is being consumed locally. Thus Japanese yen expansion (see their huge growth in M1 as a result of monetization by BOJ), grew to match the existing production levels, to the point of eliminating net exports. Thus prices did not have to move up. The export driven economic policy of Japan that created (among other things) the enormous productive capacity there and denied Japanese the ability to buy their own product, was reversed some time ago, and Japanese are now consuming the whole of their production.

The second item of note, is that internal Japanese financial assets and some real estate kept for financial purposes (i.e. for resale or collateral for loans) had deflated substantially, thus eliminating some $5 trillion of purchasing power from Japanese hands (mostly in money substitutes in stocks and bonds) - only partially replaced with foreign assets, a sea of liquidity eliminating most of the default premium on bonds, and an expanded monetary base. As a result, one can only imagine a deflationary scenario in Japan. They still have many foreign assets to liquidate before they turn to a negative cash flow. Thus they may purchase imports to continue supplying local imports without exporting any Yen, but instead exporting some of their dollar income and assets.

In the US, a debtor nation, there is a different situation, most debt is of the household sector, and a minor portion is owned abroad. Commercial and government debt are 20% and 44% owned by foreigners, and some 20% of equity. Americans have seen purchasing power - in the form of money substitutes of bonds and stocks - grow mightily, and have seen a growth in home values in proportion to their debt, but much slower than their accessible financial assets (held mostly in inaccessible pension funds). Thus a Japanese price deflation is not as likely, with fewer net assets to lose than Japanese had, and with a substantial net trade deficit (5% of nominal GDP, 20% of volume GDP by my estimate). Thus a local loss of purchasing power through asset value loss would be gained back in income as prices rise in response to the closure of the trade deficit (commensurate with the loss of investment flows from abroad which must coincide with a fall in asset values, since someone must sell them in order for their values to fall, and so many of them are held by foreign creditors). The replacement of imports with local production would raise local prices and incomes relative to assets and debts outstanding, thus no price drag would be generally available as a result of Japanese style export trimming, but a price push would result instead. Not a price push according to the 5% nominal net trade deficit, but according to the volume net trade deficit of something like 20%.

Exporting nation dollar debts are shrinking (down 7%) relative to nominal dollar trade (up 25%) by a third. They are becoming far easier to pay off and thus the inducement to sell product for dollars rather than consume it locally is falling. As these dollar debt payments are made, the creditors in Europe and Japan (Korea, Malaysia, and China too) are going to have less dollars to use for purchasing dollar assets, but they will have more dollar income from the growth of their portfolios from prior trade deficits.

Thus while Japan has purchasing power abroad, the US faces purchasing power from abroad buying in the US at the same time Americans are also competing for the same production as import supplies dwindle and must be replaced with local manufacture. Thus prices are destined to rise both from lack of import supply and an increase in export demand. Where deflation would continue further is in the creditor nations where asset values will fall while the import flow into the US is diverted in part towards them.

The US is in a negative investment position, income flow negative, and trade flow negative.

Japan was strongly positive in investment position, income flow positive, and trade flow positive.

Should anyone consider for a second that out price patterns should follow Japan's?

http://www.bearforum.com/cgi-bin/bbs.pl?read=119257Here is a good discussion among Da Bears, which I hope you will not find excessively long, if I post the best parts from each contributor:

M. Uncle Walter
"Which of these is wrong?
"Am considering renaming meself Pooh, Bear of Little Brain. The following pair of statements have been bothering me for at least two years now.

1. The debt level in dollars is awesome. Therefore people will become wary of the dollar, leading to devaluation, hence inflation in the U.S.

2. The debt level in dollars is awesome. Therefore we'll see a huge default rate, wherein "dollars" (whatever they are) will vanish into thin air, increasing the value of remaining dollars, hence deflation in the U.S.

Perceptive bears please explain which of the above statements is WRONG! (You may prefer to explain that both are wrong. I hope that few bears claim that neither is wrong. )


Ripley
"Does inflation preclude default?
I don't think that it does, despite the expectation that one will pay off their debts in depreciated dollars in an inflationary period. If a debtor is unable to pay off their debts, or at least pay them off at a rapid enough rate to satisfy their creditors, the inflation or deflation rate is irrelevant. The debtor will default and/or file bankruptcy.

A related question concerns the macroeconomic effects of such defaults on a large scale. I would argue that as individual debtors default, the quality of securitized debt will decline, and so the purchasers of such debt will demand a risk premium. I'm trying to consider the effect of exchange rates here. Suppose that US debt is lower quality than European debt. Would the risk premium lead to a weakening of the dollar against the Euro? I am inclined to think so, though I may be wrong. There has to be a purchasing power parity argument that I can use to compare these "baskets of debt", but I haven't thought it through.

It comes down to the scale of defaults and the type of debts defaulted upon, and we won't know that until it happens. Consider Xerox's problems as a sort of "canary in the coal mine" on the corporate level and 125% mortgages to be the same sort of "early warning" for individuals.

I'm sorry that I haven't been more helpful.


J.Buck
"1. The debt level in dollars is awesome. Therefore people will become wary of the dollar, leading to devaluation, hence inflation in the U.S.

2. The debt level in dollars is awesome. Therefore we'll see a huge default rate, wherein "dollars" (whatever they are) will vanish into thin air, increasing the value of remaining dollars, hence deflation in the U.S.

Which one is "wrong"?
Eventually both could come to pass -- even one leading to the other.

However:
Right now I see #1 being the outcome we are looking at, with "things" the way they are.

Doug Noland (prudent bear), for example, leads the crowd looking for deflation. It seems to be the view most hold.

However, we cannot ignore key "elements of control" in place...like the Fed (Greenspan in particular).

The debt issue is just too horrendous for Greenspan to let market forces "take care of it". He has, and will continue to, look to inflate his way out of trouble by providing liquidity at any and all cost in order to short cut a debt crisis coming to a head.

All one needs to do is look at one example....LTCM and see which way his instincts go. Market forces are not what he sides with when the chips are really down...his rhetoric, notwithstanding.

Debt, if it can be "refinanced", can be rolled over (in the broadest sense of the word) repeatedly (and indefinitely) as long as the world economies remain -- relative to each other -- basically the same as we have now.

If Europe (for example) were to take over as the world economic leader, then deflation would be the likely outcome, here.

I sincerely believe that the Fed sees NO choice but to prop up the banking system -- and credit market in general...period. While AG is at the helm, I have NO doubt he will/would risk a revisit to the stagflation of the 70s in order to (hopefuly) avoid repeating the 30s (or Japan). If Volcker was at the helm, I think it might be different...though I cannot feel sure.

With AG, I am pretty positive. If you look at his 14 years as the Fed Chairman, his "successes" (and kudos) have come when he cut...and his "failures" when he raised.

His fed funds "ammo" can only run to zero -- but -- he can run the presses forever, like he did leading up to Y2K.

Faced with a disaster, he will inflate before he would take the pain to set the system right.

Someday, the pain will be unavoidable. But as long as the US is -- relative to the rest of the world -- the engine for the world economy, he (or a successor of a similar mind) can probably keep the balls in the air.

Anyway, that's my 2 cents worth (in 1970 dollars <>)

JB

nemax-90 {from Germany}
"Wouldn't it be reasonable to assume, that defaulting debtors lead to a significant decrease of "negative dollars" which will lead to a tremendous devaluation of equity and real estate assets (their natural counterparts) to keep the balance on the ledger?. I think, a deflation of the bubble, leading to more purchasing power with respect to stocks and real estate must not be mixed with an appreciation vs. foreign currencies i.e a rising dollar.

Will the foreigners, that so far delivered goods in exchange for paper ("investment opportunities"), demand more dollars for their merchandise in the future? I don't think so! What should they do with all those dollars? Naturally, if the US goes into R-mode, the demand for foreign goods will decline (which will have serious ramifications in those countries heavily depending on the US as a buyer). I'm afraid, that the dollar could - theoretically - lose its value altogether outside America. Of course this development will come to a halt as soon as the trade imbalances are corrected. In a slowing economy this may be achieved relatively soon, after all, the imbalance, however huge it may appear right now, represents only a small fraction of the overall GDP.

My prognosis:

There will be serious deflation in the USA, particularly in real estate and in stock prices.
There will be inflation in the price of imported goods
The dollar will drop vs. foreign currencies UNTIL a new equlibrium is found. I believe, it will lose to the tune of 25% to 40% vs major foreign currencies before it bottoms.
Once the demand has fallen because of the economic slowdown, the exporters (oil?) will be forced to lower prices which in turn will have consequences on their home turf.

regards, nemax-90

PS: Of cause, I'm not an economist - so consider the above just my personal, subjective musings about this issue.

Vilnis {in Latvia}
"Both statements are in part correct.

I forget who said this but: It is the hallmark of true genius to be able to consider two apparently inconsistent ideas and use them both to advantage.

The two ideas:

1. The debt level in dollars is awesome. Therefore people will become wary of the dollar, leading to devaluation, hence inflation in the U.S.

2. The debt level in dollars is awesome. Therefore we'll see a huge default rate, wherein "dollars" (whatever they are) will vanish into thin air, increasing the value of remaining dollars, hence deflation in the U.S.

The view from Riga:

The confusion, IMHO, comes from the fact that we still tend to think that the dollar is real, as in gold backed or restricted in some other way as to supply: i.e., restricted by the free market as for instance by the bond vigilantes or restricted by the moral character and good sense of America's political leaders. In such circumstances there would be lower prices in certain sectors as for instance in shares and real estate most prominently.

If, on the other hand, there is no restriction on the creation of dollars then the dollar would, as all paper currencies historically have, revert to its intrinsic value: the value of paper. There are many historic examples of this, most recently the USSR/Russia. In every case, it has been a political decision.

So, IMHO, it comes down to predicting what the political leaders of the USA will chose. This is not to say that they will chose one or the other. They can choose a combination or some middle ground. I do not, however, believe it is an economic issue. I think it is purely a political issue and one that will be based on the good sense and moral character of the American people. AG and Slick Willy reflect a significant part of the society that produced them. Every society has the leadership it has earned.

The answer is to be found by looking in the mirror.

My opinion? I am short the USA$, long the precious metals and short companies I expect to go out of business. I do not claim any special merit for my position and I am not the first person who has followed this plan. It appears to me that shorting companies that are merely overpriced could, if the USA$ really falls out of bed, be a financial disaster. If you are short USA shares, you are long the USA$. That may be part of the reason that the Prudent Bear Fund has done so poorly relative to the drop in NASDAQ or the Internet shares or________. To answer your question again: I think there is merit to both positions and investment decisions need to take that into consideration.

Short/m/2/0 (but hold real money)
Vilnis

Visited the webleyweb site to read article. Then scrolled down to Holtzman Msg. 49474. Everything from human nature, fiat money and the history of Rome. Very informative, but very dispersed. May I add some JUNGLE RULES and try to bring it all together. They do apply to Gold if you think about it.
The bad guy wants what you have.
You will always be attacked when conditions are least advantages to you and most advantages to your attacker.
If it can go wrong, it will.
Proper preparation prevents poor performance.
GO LIGHTLY.
Your most powerful weapon sits on your shoulders.
You reap what you sow.
Look for trouble and you'll always find more than you can handle.
There is always someone sharper, tougher, meaner, nastier, Hungrier, and more prepared than you.

To Note; On human nature. If you ever been confronted by a street gang. It can get very violent in a heartbeat.

Slingshot

So much, so much here today. You outdo yourselves once more.

The inflation/deflation question from below moves forward in my mind to a question of a great wealth transfer (as these things always are). Think of the U.S corporate jungle, with its prey and predators awaiting a time of famine.

"Moral hazard" turns into market opportunity for these players. Some organizations will maintain enough of a balance sheet and cash flow to be chosen for survival and growth by swallowing the market share of the losers.

When AG inflates money supply, buys commercial paper of certain corporations, bails out certain mutual funds, he will be writing the structural framework of the recovery years. Those will be the equities to buy with conserved capital at turnaround time. The rest will sell for scrap value.

(How best to conserve capital to the other side of stagflationary debt default scenario is our topic here.)

So, the big banks, big PC box- and chip-makers, big retailers, don't need to have pristine 1955-style balance sheets. They've already leveraged "moral hazard" into their financial tightrope-walking. Somewhat like the S&L workout, they just need to be TBTBATF (that's "be allowed to fail").

(If they misjudge the OVERALL level of default, beyond what Fed & FDIC & GSE's etc. can handle, well that's another "brave new world" for them to operate in, kind of like Russia in the '90s with industry at least in possession of its productive capacity, if not the traditional means of financing. Right now, they would probably only be strategizing vs their immediate competitors in same or similar industries.)

They would see it as just needing to outrun the others in their industry, rather than outrun the bear.

NEWS BRIEF: "Threat of War", Israel National News, Arutz Sheva Commentary March 3, 2001, http://www.israelnationalnews.com/news.php3?id=702

"Military historian Dr. Aryeh Yitzchaki was asked today how he reads the reported Egyptian decision to call up its reserves for "exercises." His response: 'All the classic warning signs are there, and it is clear that we are poised for war, possibly within two months. I don't want to scare anyone, but as opposed to IDF Military Intelligence, my opinion for the last two years has been that war will erupt in the spring of 2001, and it will involve not only the Palestinian Authority and Hizbollah, but also Egypt, Syria, and Iraq. The Egyptian Army does not need reserves - it's an army built on its standing force, and therefore Israel's denials of the Egyptian call-up are not relevant. The Egyptian Army is poised for war; it has created new regiments, has been training intensively, and has acquired the most up-to-date American equipment..."

As we reported in NEWS1056, the U.S. House of Representatives' Task Force On Terrorism And Unconventional Warfare, entitled, 'Approaching the New Cycle of Arab-Israeli Fighting', submitted to Congress on December 10, 1996, spoke of this upcoming war. The report said: "... Syria, Iran, Iraq, Pakistan, and Egypt are planning and building for a final, devastating war of annihilation against Israel. This includes acquiring nuclear, biological and chemical weapons (NBC) in a mix with conventional weapons, e.g., tanks, aircraft, and soldiers, all in massive, overwhelming numbers." [P. 43]

This line-up is now formed against Israel, with the lone exception of Pakistan. Syria, Iraq, and Egypt are now on full military alert, and hardly a week goes by lately within some Israeli or American official expressing concern over the preparations Iran is making to acquire nuclear weapons. Further, Iran has been supplying Hizbollah guerillas and terrorists with weaponry that will allow them to attack Israel from Lebanon in a conventional manner.

Notice the information here that Egypt is "forming new regiments". In addition to other war signs, forming new units, or reorganizing units and communications is usually considered a definite sign of war. Units and their communications needed to fight a hot war are very different than those needed in peace time.

Further, military "exercises" are very often the prelude to attack, because units can come up close to the enemy's border without causing a reaction from their enemy because they are just engaged in "exercises". This tactic is one of the oldest in the books, and is not fooling Israel, I am sure, given the general high state of military readiness and tension throughout the entire region. The only people who will be fooled by these "exercises" will be the gullible Western public.

Egypt is actually the latest Muslim nation to fully mobilize her forces. Syria mobilized her forces last December 12, 2000. This action immediately caused Israel to mobilize her forces fully. Syria has also encouraged the Hizbollah fighters in Lebanon to attack Israeli towns and villages on the northern border. Thus, Israel is threatened by Egypt on the Southeast and by Syria on the North and Northwest.

While I have not detected any military action on the part of the Jordanians, we do know that they have refused to renew their diplomatic post with Israel. Their "peace" with Israel is mighty cold these days.

The Palestinian Authority is also reorganizing their paramilitary forces -- the PLO -- to prepare for war against Israel from within. In this story reported above, we read: "PA Communications Chief Imad Falouji told a PLO rally in southern Lebanon on Friday ... that the PLO is now reorganizing to escalate the violence against Israel: 'We are going back to the '60s, '70s, and '80s. The Fatah Hawks, the Kassam Brigades, the Red Eagle, and all the military action groups are returning to work'." [Ibid.]

In the U.S. House of Representatives report quoted above, we see that the PLO has been assigned the task of attacking Israel from within, causing as much infrastructure damage as possible, preventing Israeli troops from moving freely to the borders, and forcing regular military units to turn back from facing their external borders to fight the PLO within. This action would weaken Israel's ability to fight against Syria, Iraq, and Egypt whose forces will be attacking from across the border.


NEWS BRIEF: "Iraqis out-smarted U.S.-U.K. Smart Bombs", by Ian Bruce, The London Herald, http://www.theherald.co.uk/news/archive/28-2-19101-0-24-33.html, February 28, 2001.

"IRAQ managed to decoy 20 of the 25 special standoff weapons dropped in the joint US-UK raids near Baghdad two weeks ago by fooling their guidance systems into exploding hundreds of yards short of their targets. NATO intelligence sources say only one of the five radar sites and command centres attacked was destroyed, two others sustained damage, and two were unscathed and remain operational. It is believed that the Iraqis used a combination of jamming and false signals to confuse the new Raytheon joint standoff weapons' global positioning system. The 40-mile range smart bombs depend on a last-second satellite fix to guarantee a direct hit."

"The US carried out a dress rehearsal to test the weapons a few days before the actual raids on Iraq. The 66 bombs launched by US navy aircraft achieved 100% success. In [real] action, they chalked up an 80% failure rate ... With global positioning, the weapons should be spot on target. But if you can emit a powerful enough signal to alter the satellite information being received by the bomb on its final approach, accuracy goes out of the window. Against hardened military sites, you need a direct hit to be sure of a kill. An aim point error of just a couple of hundred yards spells the difference between total destruction and a light peppering with shrapnel and minimum blast damage."

Apparently, the Serbian Communists who fought against U.S. forces have been sharing data with Saddam Hussein. Serbian forces were able to learn much of our technology during this air war against them, and developed certain strategies that countered much of our technological advantage. This article concludes with just such a strategy:

"The latest Iraqi trick of targeting allied aircraft with long-range radars and then launching missiles at them from unrelated positions was pioneered by the Serbs during UN intervention in Bosnia and Nato's aerial assault during the Kosovo conflict. They [Serbs] downed one British Harrier, an American F16 and a Nighthawk F117, the first stealth aircraft ever shot down in combat. US sources say privately that it is 'only a matter of time' before the technique brings results for Saddam Hussein."

As I stated in NEWS1474, Hussein's military commanders tested US and Israeli defenses and intelligence capabilities on February 22, when he took his theater missiles right up to the last stage of firing before he shut them down. Now, Iraqi military commanders know exactly what we can and cannot detect, how much time it takes us to react, and from which direction our counterattack will come. All of this is a prelude to war; and now, we discover that Iraq has learned to defeat our smart bombs and to inflict some casualties among the American and Israeli attacking aircraft.

But, the worst revelation is yet to come -- Iraq is reportedly nuclear-capable right now!

NEWS BRIEF: "Was This Saddam's Bomb?", Prophezine Newsbites, 26 February 2001, originally in www.sunday-times.co.uk/news/pages/sti/2001/02/25/stirevnws01015.html

"Intelligence agencies, including Israel's Mossad, insist that Saddam has never had the technology or the fuel to fulfil his ambition of creating a nuclear arsenal. Yet Leone, and other defectors who have corroborated his story, insist that Saddam not only has nuclear weapons but has tested them."

If this story is true, then Saddam Hussein has the capability right now to annihilate Israel, if he can only deliver the warheads he is reported to possess. Thus, the story of the Iraqi theater missiles recently parked near the Syrian border take on greater significance. Remember the charade we all were forced to endure as United Nations "inspectors" were tromping all over Iraq to discover any evidence that Hussein was building nuclear, chemical, and biological weapons, so we could destroy them? Remember how Hussein regularly defied the inspectors, with the U.N. meekly submitting to his belligerence? I believed then that this whole inspection nonsense was a public charade, and now this story confirms it.

Iraq has reportedly been mightily assisted in this effort by the Russians, and were able to buy the fissionable material from the International Black Market. Even as his people starved to death, Hussein was able to spend oil money like a drunken sailor to buy what he needed, for bribing officials from Brazil to South Africa when he needed, and to hide his weapons program from a United Nations inspection team that always gave him more slack than they ever should have given.

Remember that Hussein in the highest-ranking Freemason in the Arab world which means that he is fully cooperating with the Illuminati in its plan to produce Antichrist. Thus, Hussein's Masonry plus his leadership in the plan to produce Antichrist is also the reason President George Bush [Senior] pulled American forces off the attack on Baghdad, just when they were within 72 hours of overthrowing his regime. Now, you can see the full picture emerging, can you not?

As this story unfolds, we learn that Hussein likely has three warheads of three different technologies, each one more advanced than the previous one. This would give him a total of nine (9) nuclear warheads. "He [Iraqi scientist] said it worked on the principle of the Hiroshima gun-type bomb, in which high explosives drive pieces of highly enriched uranium together at high velocity. This triggers a nuclear explosion. Leone's design was unusual. The uranium was contained in a series of finely engineered tubes, like the control rods of a nuclear reactor. It was not the type of design one might find from a search of textbooks or the internet." Hussein has three of these Hiroshima gun-type atomic bombs.

Later in this interview, the Iraqi scientist claimed that Hussein now had three implosion nuclear warheads and three thermonuclear weapons. As I read the article, I attempted to keep a skeptical mindset, but was eventually won over by the journalist's interviews with Western experts on the many different technical aspects of the scientist's story. These Western experts examined the Iraqi diagrams and found them credible, other experts examined the claims that the material was bought on the Black Market, and found them credible, and American experts in satellite capabilities were able to confirm this scientist's claim that the Iraqi's had carried out a test explosion before the Gulf War. Finally, this journalist interviewed other Iraqi scientists who had defected, and was able to verify that this scientist was who he said he was, and that he was in the position of scientific leadership on the project to be able to know what he claimed to know.

Thus, this story claiming that Iraq now has nine nuclear warheads seemed exceedingly credible to me. But, American, British, and Israeli intelligences have been telling the world for a very long time that Iraq does not have nuclear capability now, and is probably two to three years away from developing such capability. Now that we know they have been publicly lying to us all this time, the question is whether they were also lying to key leaders within their respective governments.

However, the ultimate verification of the truthfulness of this story seems to lie in the reaction of Prime Minister Elect Ariel Sharon. This recent short story seems to indicate the truthfulness of the claims of this Iraqi scientist.

NEWS BRIEF: "Sharon: A Plan To Strike Iraq", British Sunday Times, February 26, 2001.

"The British 'Sunday Times' daily reported in its Sunday's issue, reporting Israeli military sources that the Israeli prime minister elect Ariel Sharon gave his instructions to the Israeli army chief of staff Shaoul Mofaz to prepare for directing an early strike to the missile- launching area in the west of Iraq.The Israeli radio quoted these sources as saying to the British paper that Sharon is planning to deploy neutron ( tactical) bombs to target this Iraqi area and destroy it, as intelligence information reported that Iraq is about to attack Israel by mass-annihilation weapons."

I find it hard to believe that Israeli Intelligence did not know that Hussein already has nuclear weapons, or that they did not share this information with Israel's highest leaders. However, Prime Minister Elect Sharon might have been attempting to assure his Jewish citizens that he was on top of the situation, and would act to preemptively take the nuclear warheads out. The one key piece of information this news story does give us is confirmation that these nuclear weapons are placed on top of the theater missiles Hussein has placed at the Syrian border, well within range of Israeli targets.

This story also confirms that Israel does possess the Neutron Bomb, and fully intends to use it during this upcoming war. We can also see the importance of Hussein testing the Israeli intelligence capability, the reaction time of the Israeli military, and the way in which American and Israeli bombers will attack his missiles. Hussein has spent over $10 billion and 20 years of work in developing these nuclear warheads. Hussein now does not want Israel to destroy the missiles on which these warheads will be launched before he can fire them. He fully intends to fire these missiles before Israel or America can destroy them.

THIS WOULD BE THE CATALYST TO END THE CURRENT FINANCIAL STRUCTURE. WHAT ABOUT THE IMPLICATIONS FOR GOLD, SILVER, OIL,.....

I am hoping some of the great minds out there may help.

My hypothesis is that during any periods of substantial inflation, the savings rate of US citizens was generally well into the positive ( and probably the same for Weimar Germany). Anyone have any figures

With negative savings rates, there is not enough liquidity about to force up prices, let alone room for the over indebted to take up more borrowings, no matter how attractive the rates. The psychological feeling of wealth is now fast disappearing in the U.S and people are no longer as confident about taking on debt.

Simplistic, I know. But valid none the less.

PS Greenspan is not the messiah, he is just a very naughty boy

All you are likely to get is a quick fire knock-out strike against Iraq.(which would probably be done by the US and the UK) All this is Israeli propaganda to serve as an excuse.

The other Arab nations, like Egypt, will need their armies on alert not to attack Israel but to put down insurrection among their population who are likely to attempt an overthrow of their 'puppet' regimes when Saddam and many Iraqi people are 'murdered'. Which is one of the main reason that it wasn't done at the end of the Gulf war, or up until now.

Israel has the most devastating arsenal of weapons of mass destruction in the world next to the US, and the Arabs know it.

If Israel is ever destroyed it would be from within, and for that the whole Arab world would have to hold out an olive branch and leave them completely at peace, and withdraw all their labour - an unlikely event.

If there was any real substance to all this, gold would have moved up. It didn't do much in the Gulf war because even then there was 'no contest' and America, and TPTB, knew it.

Say it, as it is.

I like that in you

http://groups.yahoo.com/group/gata/message/696Start your own operation, wherever you are!

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According to Gary Shilling in his recent book "Deflation", savings rates RISE in deflation, and drop in inflation. If your holding a currency that's falling in value, why save it? Spend it on something tangible, like property or gold, that holds its value. Interestingly, with Japan's deflation over the last ten years, their savings rates have risen. Fwiw.

All those things you suggest about the "jungle" are good advice.
But you rarely need them. I've carried what most people would
consider extremely large amounts of cash around the world on my
person for over twenty-five years and have never been robbed.
Neither have any of my associates. Most cops retire without ever
firing a single shot in the line of duty.

How many times have you confronted a street gang? When was the
last time?

Danger of violence is a matter of frequency, and the idea we are all in
imminent danger is the monument to government-related violence - - -
AND the media's "dramatic imperative."

AND a large proportion of dangerous street gangs persist because
they are protecting their drug turf. In fact, a large percentage
of the "crime" that actually exists, perhaps more than 60%, does
so because a certain very arbitrary group of drugs have been
turned into so-called "controlled substances."

Relax. Even so, you probably won't be robbed.

When we carry money, we worry more about being robbed by
"organized crime with a flag." A few of my associates have been
robbed by these highwaymen.

Regards,
Journeyman

Much of the danger from other humans stems from "clique selfishness," that is, each group attempting to take care of their own at any expense.

This is a development of modern populations that are too large for face-to-face knowledge with each other - - - usually in combination with a lack of understanding of the advantage of trade because "division of labor" makes such trade a win-win situation.

Regards,
Journeyman

Randy did you drop Farfel a note?

$hifty

From ORO earlier;

"Market participants will prefer transparency because it is favorable to all parties, unless there is mutual interest in hiding this information from the public. Such mutual interest can only come from a condition in which bankers are overleveraged, having lent out too much of their client's gold, the major buyers still have outstanding delivery obligations owed by the bankers that can not be filled if gold depositors withdraw their gold, producers have oversold their future production and stand to become insolvent (see Ashanti and Cambior) if gold prices rise, and regulators have not filled their mission of regulating the industry and wish only that the system survive till they retire."
--------------------------------
This is a very, very good statement, please read and understand.

There is not transparency and openness in gold transactions because of the probable overextention of the sellors thus they must be quiet(and probably crooked). Buyers are quiet because they accumulate; if they boast of buying, it will inflate the price of gold. Earnest buyers love the sell, sell scorn of the media.

It seems (from the Another/Foa archives) that China and oil are purchasing gold. It seems Japan and Russia are possible buyers, maybe more than they let on. See the movement of gold from fiat currency to hard currency . This movement is the line that Another speaks of from South Africa through ME to Asia.

The picture becomes clearer, yes.

Further,

It seems (from earlier today) that the Bank of Japan has warned the US (in 1997) that 'dumping' of US debt will occur if the bullying of the USD were to continue.

However with some 60% of reserves in USD one cannot boast of the 'dumping' of US debt without taking a beating at home. However, QUIET accumulation of gold (international currency of last resort; claims of debt, zero) while reducing foreign held debt may be 'in the cards'.

QUIET buying, QUIET buying, and when the hammer falls it will truely be earth-shattering.

So in conclusion WHO is buying, anyone looking to get out of the USD tightly strung noose around their neck.

So how does ME, China, Russia, south-east Asia and Japan look for starters?

Thoughts?

Canuck.

I do not agree with you Pandagold. There may be plenty of hype but this will not be a small skirmish. It will be bigger than desert storm. I have info from other sources pointing to a larger war, possibly bio-chemical and thermonuclear. And terrorism in the US also possibly bio-chemical and thermonuclear. We might be looking at WWIII but probably not an Armegeddon like scenario. Defense stocks have been moving up for over a year now because smart money knows what's coming. Also see my previous post with a link to K wave analysis.

I agree the danger of violence is a matter of frequency. The illusion created by the media is hyped and gives creditability and approval to the actions of the goverment to inflict violent and illegal acts upon the people. Can you say Waco or Taxes. Goverment, just one more reason to buy gold. The gang incident, Once. Drove into the wrong part of town I was unfamilar with. While back, Just a good scare. More alert of my surroundings.
Good night all!
Slingshot

http://www.bday.co.za/bday/content/direct/1,3523,806030-6094-0,00.htmlThe delay is due to technical and legal reasons rather than rivalry between bidders for the quotas, sources claim
MOSCOW Russian action to finalise export quotas for platinum and rhodium has been stalled at the legal department of the Kremlin, Moscow sources say.

The new source of the delay, sources claim, is technical and legal, rather than continuing rivalry between bidders for the quota among Russian platinum producers, banks, and the state stockpile agency Gokhran.

Larisa Brycheva, the powerful head of the presidential legal department, declined to respond to questions. Brycheva provides legal clearance of all presidential documents before signing; her judgments can involve important policy issues, and shift the balance of influence in the Kremlin between contending interest groups, such as the platinum producers, the Central Bank and Vneshtorgbank, and state stocking and selling agencies like Gokhran and Almazjuvelirexport.

Nikolai Kozin, vice-president of Koryakgeoldobycha (KGD), the leading alluvial platinum producer, said he believes all the necessary approvals were given to the quota authorisation documents by the last week of February. KGD has been seeking its own export allocation to relieve the pressure it felt last year from Gokhran to deliver its platinum at a deep discount to the spot market price.

The mining company can produce between 130000oz and 200000oz of platinum a year, depending on the delivery, price, and financing terms it can negotiate. Last year, rather than sell to Gokhran, the company decided to stock metal itself, and wait for this year's quota decision.

Kozin said he is certain "it is not Gokhran that postpones the signing of the quota documents. Probably the delay is due to the purely technical reasons." He said he does not know when the quotas will be approved, or this year's shipments begin.

International market speculation that the quota signing for platinum is imminent halted the rise of spot-market prices for platinum last week the price peak was just under $615/oz , with resistance reported by traders at $625.

It fell to just below $577, with support reported at $560.

According to Yevgeny Ivanov, chairman of Rosbank, the quota documents may be signed "any day now". Rosbank is part of the Interros group, which controls Norilsk Nickel, Russia's largest producer of platinum group metals.

The group has lost influence and fallen afoul of several branches of the Putin administration in recent months.

Norilsk Nickel is delivering palladium to contract customers without delays, on the authorisation of a 10-year quota. Norilsk Nickel has asked the Kremlin this year for a five-year quota for platinum and rhodium, but Ivanov says he does not know if this will be granted.

He said the delay is "due to the lack of final decision of the state bodies on the volumes of quotas for state sales of platinum group metals".

He could not say whether it is Gokhran or the Central Bank that is the stumbling block. Last year, the Central Bank was not allowed to export any platinum, and it lost control of the bulk of its palladium stock to the Finance Ministry and Gokhran's chief, Valery Rudakov.

A substantial volume of this palladium is reportedly sitting in German bank vaults, where it was deposited by Rudakov as collateral for loans. Industry sources expect to see another tranche of up to 1-million oz of palladium released from this source to Switzerland by the end of March. The Russians and their German bankers performed a similar manoeuvre at this time for the past two years. The Central Bank has said it wants to resume buying of domestic platinum, in conjunction with the state-owned Vneshtorgbank. Vneshtorgbank received export authorisation last year for 161000 oz of platinum, and it applied for a larger quota this year.

Regarding Russian shipments of rhodium this year, Ivanov said he is confident that rhodium will be placed on a 5year quota, eliminating firstquarter delays in 2002. According to Johnson Matthey's interim review of the trade, last year Russian rhodium shipments jumped to 280000oz, a record for the decade.

Ross Norman, of The BullionDesk.com in London, said he expects this year's sales to be much closer to his estimate of annual production at 115000 oz. Other analysts have put the annual output figure for Russian rhodium at between a low of 70000 oz and a high of 118000 oz. "We believe Russian stocks (of rhodium) will be in a similar state to their platinum ones not big, six to nine months' production at best. So rhodium prices may, like its sister metals, remain pretty steady."

Russian production and stockpile figures are state secrets, and there are wide divergencies between the published estimates.

Hey Ken you still with us?

Shifty

Journeyman, you're talking nonsense.

First your chances of being robbed by a street gang is a lot more than being stuck by lightning.

You asked when was the last time you were confronted by a street gang?

Today. Actually I confronted them. They were confronting somebody else. They were asking some lady for spare change and it was just setting them up to robbed them. I told them quietly to leave those ladies alone. They did but then I fought with them before. You see, I grew up with gangs and violence and worse. I am not the toughtest nor the meanest
but,... I am a black male who grew up in the worse ghetto of Boston and I've managed to pass my 40 birthday without ending up in jail or dead. To my knowledge, I am the only one who beat the odds against me.

So I not only know how to fight but I am very very lucky.
Would you say you would be as lucky facing the same situation. There are others. You could have been a child growing up in an war-zone, or the poverty of the third world

I think you're making a feww basic mistakes. First you assume the risk of assault by is gang is low and so it probably won't happen to you. Second I get the impression you'll be able to fight them off.

Slingshot listed these rules

> The bad guy wants what you have.
> You will always be attacked when conditions are least
> advantages to you and most advantages to your attacker.
> If it can go wrong, it will.
> Proper preparation prevents poor performance.
> GO LIGHTLY.
> Your most powerful weapon sits on your shoulders.
> You reap what you sow.
> Look for trouble and you'll always find more than
> you can handle.
> There is always someone sharper, tougher, meaner,
> nastier, Hungrier, and more prepared than you.

> To Note; On human nature. If you ever been confronted
> by a street gang. It can get very violent in a heartbeat.

Those are wise rules

I would add my own personal observations

1.) No matter what much violence or chaos you have encountered in your life, you will always be very surprised when the next episode pops up. Accept that you will be surprised. That way, you will be quicker to act. Most people freeze because they are surprised. It's part of the flight or fight instinct. You freeze and your attacker have the advantage. So When I am surprised I start to fight immediately. That surprises your attacker because most people do freeze. When they are surprised, you then have the opportunity to run away safely or continue fighting. (By the way, if you haven't been in these situations if best to fork over the money. Like Slingshot says: It can get ugly REAL Fast.

2. Using your head and thinking is good. Instinct is better! When you think, you try to go through several options. Instinct immediately picks one and it is the one that will get you through alive with the least amount of harm. Note: I didn't say unharmed. Sometime the situatiion you're in is so bad, there is no way to get through it unharmed.

The best book I read about using your instinct in any danergous situation is by Gavin Becker and it is called:
The Gift of Fear.

In today's situation, my instinct told me several things.

1.) If I got invovled the gang would be surprised and wonder
what my relationship was with these two women

2.) Even through they were going to rob them the situation was: The robbery would have to take place fast and they would be pressed for time.

3.) By my stepping up, I let the women and other know this was a potential robbery. These people like overwhelming odds. Even if noone else got involved the number of people who knew there was a robbery going on and so the odds would appear more even

There have been other times when I've seen somebody being robbed and my instinct told me to grab the victim's hand and start running. I can never say what will happen but I do trust my instinct

Since this is a gold forum I should reference gold in some way. At this point. Few people recognize gold. But if things get chaotic, you will need the same wits to keep your gold and you would have to in order to keep your life when being robbed by a gang. SInce I can't fortell the future, I plan to use the instincts I developed in street fights when paper money becomes worthless.





Journeyman (03/06/01; 19:26:05MT - usagold.com msg#: 49499)
> It's true, people DO get struck by lightening @slingshot msg#: 49490

> All those things you suggest about the "jungle"
> are good advice. But you rarely need them. I've
> carried what most people would consider extremely
> large amounts of cash around the world on my person
> for over twenty-five years and have never been robbed.
> Neither have any of my associates. Most cops retire
> without ever firing a single shot in the line of duty.

> How many times have you confronted a street gang?
> When was> the last time?

> Danger of violence is a matter of frequency, and the idea > we are all in imminent danger is the monument to
> government-related violence - - -
> AND the media's "dramatic imperative."

> AND a large proportion of dangerous street gangs persist
> because they are protecting their drug turf. In fact, a
> large percentage of the "crime" that actually exists,
> perhaps more than 60%, does so because a certain very
> arbitrary group of drugs have been turned into so-called
> "controlled substances."

> Relax. Even so, you probably won't be robbed.

> When we carry money, we worry more about being robbed by
> "organized crime with a flag." A few of my associates
> have been robbed by these highwaymen.

Regards,
JourneymanView Yesterday's Discussion.

Febr.'96 POG fails to break trough 414$ after an abnormal 2 years topping pattern. POG, was on its way up and something stopped it, in a very particular way. What ?
EMU was on the rails. Different European countries, where each one had a complete different Gold-History. A very strong divergence in their Gold-reserves, far as many different reasons. This divergence had to uniformised. Some Gold-Backing was decided for the Euro (ECU). The Gold vaults were opened and the reshuffling started. The previous Gold-reserves had to be aligned and homogenisased.
European nations had TOO MUCH GOLD ! An unkown amount of above-ground gold, became suddenly available FOR SALE !
The ideal MOTIVE for gold-actors to spin on a win-win strategy. Here we enter the oligopoly arena...

To be continiued...duty calls.

Tree in the Forest
I agree that things can always get out of hand. It could have done during the Gulf conflict � not from Iraq, but from the Arab and anti-US world.

But we are always in danger as long as the affluent West continues to rip off the third world (what a terrible euphemism), or a certain power hungry small ME nation wants to dominate the region, and deny people their human rights to live with hope and dignity in their homeland.

When you push people too far and they have nowhere else to go they will seek remedies, or revenge in ways unimaginable.

Think about it. You don't need nukes or rockets to fire them. All you need is a deadly virus which could be contained in a small phial in the pocket.

There need be no declaration of war, no warning. We in the UK are witnessing how a deadly virus can quickly spread among cattle, and yet this disease is well known to the world, and has been for a long time.

There could be people living among us now already equipped and only waiting for a signal. These people have nothing to lose, we have made it that way, and they would be prepared to die for their cause. This is the real danger -even if we won the 'fighting' war.

If I see gold rising significantly before towards the end of the year, and until the Euro is around level pegging with the dollar, and holding, then I will get a little worried ( as much as I have a financial interest in an improved POG).

What will be, will be. Fear not, as Sophocles said "To he who is in fear, everything rustles"

http://www.futuresource.com/cgi-bin/art?010307/004430
FWN: 004430 CT
Precious Metals Update: China Aims to Set Up First Gold...

Mar. 7-MAR--


(BridgeNews) March 7, 0651 GMT/1551 JT
.................................................................
TOP STORIES:

Hong Kong Press: China aims to set up first gold exchange in June
Hong Kong, March 7 (BridgeNews) - China is aiming to set up its first
gold exchange in Shanghai in June, which will end the half-century
monopoly on gold trading held by the People's Bank of China (PBOC), the
central bank, the Chinese-language Beijing-funded daily Wen Wei Po's Hong
Kong edition reported Wednesday, quoting Dai Xianglong, the director of
the PBOC, as saying.
( Story .11181 )

Hecla sees 2001 silver output steady with 2000; higher prices
New York, March 6 (BridgeNews) - Hecla Mining Co. expects silver
production from its major mines in 2001 to be similar to last year's
levels, company officials said Tuesday. While opportunity to make money in
the gold market is very limited in today's environment, silver
fundamentals continue to look favorable and prices should perform better
over the next few months, they said.
( Story .18877 )

Gokhran sees Russia's 2001 gold output up on year at 147 tns
Moscow, March 6 (BridgeNews) - Russian gold output is likely to total
147 tonnes this year, a senior official at Gokhran, the State Depository
for Precious Metals, said Tuesday. According to the Union of Gold
Producers, Russia produced 142.5 tonnes of gold in 2000, up 13.2% on the
year. Gokhran also said it bought 25 tonnes of gold last year and had
already signed contracts for purchasing 18 tonnes of gold and 40 tonnes of
silver this year.
( Story .17637 )

.................................................................
OF INTEREST:

Taiwan Feb gold imports at 10.830 tonnes vs. 5.262 tonnes in Feb 00
Taipei, March 7 (BridgeNews) - Taiwan's gold imports totaled 10.830
tonnes in February 2001, compared with 5.262 tonnes in February 2000, a
statement released by the Ministry of Finance Wednesday said.
( Story .6016 )

Hong Kong Press: Tycoon Li to buy stake in gold refiner
Hong Kong, March 7 (BridgeNews) - Hong Kong tycoon Li Ka-shing's
Cheung Kong (Holdings) and Hutchison Whampoa were to increase stake in
gold refiner TemFat Hing Fung and its two subsidiaries, RNA Holdings and
Can Do Holdings, the Hong Kong Economic Journal reported Wednesday. The
newspaper quoted market sources as saying that the consideration would be
approximately H.K. $180 million.
( Story .23604 )

Japan's FX, gold reserves total $363.690 billion in February
Tokyo, March 7 (BridgeNews) - Japan's foreign currency and gold
reserves in February totaled $363.690 billion, down $529 million from a
month earlier, the Finance Ministry said Wednesday. A key reason for the
fall in foreign reserves was the decline in the value of non-U.S. dollar
assets, a ministry official said.
( Story .697 )

http://www.kitco.com/market/LFrate.htmlRates moving up again (4.2%ish)
Hist precedent (recent) 29 Sept 1999 = 9.93% (for 1 day only) 4's either side - Libor is the constant = 5% ish, Gofo CAN go negative.
POG on an upswing.

I forgot to add - so now we have a date - June. Not much time to make your decisions and get stocked up on those Pandas, or whatever takes your fancy. The Chinese population is over 1.000,000,000, and rising. And what is more impotant, the country and its people are getting richer which is a precursor to gold investment.

Have you also noted the gold purchases in Taiwan?

As you will have guessed the word is 'important' not impotent

http://www.ftmarketwatch.com/news/story.asp?guid={E8F64758-4D0D-459C-BBA4-57AD48EA1FF7}&source=yahoo1LONDON (FTMW)-- Ashanti Goldfields [UK:ASN] [US:ASL] has overcome heavy losses from hedging against a gold price rise in 1999 to announce a reduction in both losses and debt last year.
The Ghana-based gold mining company's hedge book of derivatives, which brought the company close to bankruptcy at the end of 1999, has since turned positive as the price of gold has dropped. See story on FT.com.



The company's shares are listed on the London Stock Exchange but were not trading on Wednesday morning (see FTMW chart). The stock rose 0.78 percent to $2.58 on the New York Stock Exchange on Tuesday.

Ashanti reported a narrowing in its 2000 pretax losses after exceptionals to $130.8 million, from a $183.6 million loss the year before. Year turnover was flat at $582.2 million, compared with �582.1 million in 1999. Meanwhile, the company said annual gold production rose by 11 percent to a record 1.74 million ounces in 2000.

Chief executive and group managing director Sam Jonah said: "The group exceeded its mid-year revised production and cost targets for the full year in an environment which remained difficult for the industry as a whole."

He said that it had been a challenge to reduce debt at the prevailing gold price, but the sale of 50% of the profitable Geita mine to AnloGold for $205 million, had helped cut the company's gross debt level from a peak of $693.3 million to $365.7 million.

Looking ahead, Jonah said Ashanti still faced a "formidable task" in reducing its debt. And he admitted the company was anticipating a shortfall in planned production targets for the first quarter of 2001 due to temporary production difficulties.

www.gold-eagle/gold_digest_01/ackerman.030801.html
Felt this to be of interest
Of Babes, Bear Traps and Bullion

Sometimes we should cast aside our charts and listen closely to what Wall Street is saying. Then leap to do the opposite. Yesterday, for instance, there came such a potential telltale from The Street, Circe-like, in the form of a stunning blonde who held forth briefly on CNBC. She was seated behind a desk, so there was no judging how well she stacks up against the reigning callipygian of moviedom, Jennifer Lopez.

But above the waist she was very nearly the equal of Charlize Theron, or the young Tuesday Weld. Or perhaps Mod Squad's Peggy Lipton. Pressed into a public relations role by a retail institution whose name I did not think to write down, this vision of heaven made as improbable a Wall Street bear as any we could have imagined.

Yet, the Dark Side was the ostensible substance of her message, which took a deeply skeptical view of Amazon's unwonted, 2 5/8-point leap earlier in the day. Putting aside our suspicion that her employer has probably been touting Amazon's virtues throughout the last 50 points of its decline, we couldn't help but remark the fact of their pointed reluctance to view the company's shares as the perfect candidate for a meteoric rally.

Traditionally, is it not the role of the retail analyst to vent his suspicions of a dead-cat bounce when a stock that has fallen from $112 to $10 in a little more than a year summons the gumption to rise from the dead?

True, Amazon's surge may prove to be nothing more than the bear blip so many seem to suspect. But when it is greeted with such blunt incredulity by Wall Street's best and brightest, it behooves us to take note, in contrarian fashion, of other possibilities.

Such as: Maybe this rally is the real thing. Moreover, perhaps it presages a broader upturn in stocks that have been beaten down nearly as hard as Amazon. We should not be overly eager to infer this is so, but neither should we reject it out of hand, as our Wall Street centerfold evidently has.

To state the case more succinctly, we should be prepared to give the bull the benefit of the doubt, at least for the next 4-6 weeks, if the broad averages gain upside momentum in each of the four sessions that remain this week. Accordingly, my minimum target for the S&P 500 futures would be 1320.00, mid-way through an ugly downside gap on the daily chart that was made in mid-February.

If the March contract can close above 1320.00 by Friday -- with the stealth of a big cat lengthening its stride as it closes on its prey -- a fine trap will have been sprung on shorts, and they will be panicking from the opening bell next week to get 'em back. We shall see. (Late note: A repeat of the aforementioned CNBC segment reveals that Wall Street cuddlebun is one Sara d'Eathe, representing Thomas Weisel Partners.)

Meanwhile, it is not too early to consider what we shall do once this bear rally has runs its course and stocks resume their descent into the abyss. Gold bugs in particular should already be forming some useful ideas, given the promising surge of bullion futures from mid-February's lows.

Gold's further resuscitation will depend, of course, on the condition of the dollar, which after a decade-long bull market is finally starting to show signs of fatigue. Expect it to linger, then to gain momentum later this year.

I have long argued that the dollar's strength in recent years has been driven, not by global trade in goods and services, as in generations past, but by demand arising from leveraged financial transactions.

This is self-evident, given the fact that a world GDP approaching $30 trillion has given rise to a dollar-denominated derivatives market exceeding $100 trillion.

The ratio has a close analog in the U.S. stock market, which in recent years has traded a daily dollar volume of more than three times the daily GDP -- a fact of which Alan Newman of H.D. Brous has made much in his highly regarded newsletter, Crosscurrents.

From this relationship we might infer that the dollar's eventual fall from grace will be similar in demeanor to the stock market's. Which is to say, it will occur in rolling fashion, with steady losses first against the euro, D-Mark and British pound, then against a basket of relatively weaker currencies, most significantly the yen.

As this process unfolds, gold should remain buoyant at the very least. But in another 6-12 months or so, when the dollar and the still-strong blue chip stocks begin to plummet in unison, gold will take off from what by then will be a base near $300.

Given the huge amount of forward hedging by bullion producers, we should expect spot to reach $420 without even drawing a breath. Thereafter, it will quickly make up for the disappointments of the last two decades.

By Rick Ackerman
Special to The Sunday San Francisco Chronicle

March 8, 2001

Author/analyst Ackerman contributes a regular column to the San Fransciso Chronicle. He also forecasts stock, index and commodity futures prices for market professionals in his daily newsletter, Black Box Forecasts: www.blackboxforecasts.com

Have a look at site MONEYWEB.CO.Uk
There is an article in resource section asking
IS Bank Of England behing Gold Price Rally?

http://www.telegraph.co.uk/et?ac=001851641145319&rtmo=3SSxHwYM&atmo=99999999&pg=/et/01/3/7/weuc07.html
From the article;

"THE European Court of Justice ruled yesterday that the
European Union can lawfully suppress political criticism of its
institutions and of leading figures, sweeping aside English
Common Law and 50 years of European precedents on civil
liberties.

"The EU's top court found that the European Commission was
entitled to sack Bernard Connolly, a British economist
dismissed in 1995 for writing a critique of European monetary
integration entitled The Rotten Heart of Europe.

"The ruling stated that the commission could restrict dissent in
order to "protect the rights of others" and punish individuals
who "damaged the institution's image and reputation". The
case has wider implications for free speech that could extend
to EU citizens who do not work for the Brussels bureaucracy."

http://www.lewrockwell.com/rockwell/americanopinion.html
From the article;

"We live in times that are both despotic and revolutionary. We know what despotism
means. Never before has any people lived under a government this well-funded, this
technologically sophisticated, this well-armed, which daily undertakes activities that
would have been inconceivable to governments of ages past. The great tax and
political revolts in history occurred under regimes that mostly look like paradises of
liberty by comparison.

"We shell out 40 percent and more of our income to fund a government to oppress us
with its regulations and routine invasions of our private life, to erect and run schools to
which we are loathe to send our children, to engage in far-flung wars that create
nothing but wreckage and death, to gouge us with their mail and utility services, to
seize or guns, to fund welfare schemes and entitlements that drain life from economic
affairs.

"An even greater loss consists in what we do not see. How many innovations have been
lost due to regulations? How many businesses have left their plans unfulfilled due to
discrimination lawsuits and taxes? How many good minds have been lost to the
public-school system? These are the sunk costs of statism, and they are incalculable."

As you know,GrailTide made a guess recently:Jo'burg,Dubai,major European financial centers and Shanghai will create the EBES (EuroBullionExchangeSystem).In China it was unclear then which city will participate-now it is announced ,Shanghai.What if this was the only guess he had to make?The rest of it ready for the go?

http://www.kitco.com/market/LFrate.htmlSee for yourself.

"Let freedom ring."

I don't know how to say this without sounding clumsy, perhaps, but: It is an honor to be in your company, Sir.

http://www.usagold.com/onlinestore/special.html3/7/01 www. usagold.com. . . . . On Monday, this Commentary & Review suggested that if the Bank for International Settlements was indeed in the gold lending market as some suggested (though we had our doubts) then their presence was likely to be temporary. Again yesterday, we re-worked the theme to say: "Lease rates remain at the historically high end of the range this morning indicating a continuation of tight supply situation. The stubbornly high lease rate might be an indicator that the lull in the gold wars, which followed late February's big run-up, might be temporary." Well, this morning lease rates nearly doubled with the one month going from 2.47% to 4.46%. The price of gold rallied with the lease rate. This is confirmation of an important trend, my fellow goldmeisters, and a strong indicator that our analysis from the beginning that a gold shortage was underway appears to be correct. We do not know how far this will go -- whether or not this is the big one -- but if you have been thinking about adding to your holdings or beginning your gold diversification, now would be a good time to step up that interest with at least a partial fulfillment of your needs.

P.S. I will leave yesterday's report posted for your review and I've re-posted the BIS centered article below it. For our newcomers, we extend our welcome and invite you to read WHY GOLD WHY NOW down the page.

P.P.S. It is a happy coincidence that we were able to reserve a fairly nice sized hoard of the German 20 mark gold coins a few days ago. This would be a good addition for those of you who have a strong position in the pre-1933 already. It would also amount to a good start for first-timers as at least part of their order. For consultation, please contact either George Cooper or myself. Those interested in placing orders of less than 10 ounces are requested to contact Marie Ballard at our Small Order Desk. (Same number, just ask for Small Orders) We expect today to be another busy one. Please be patient if you are placed on hold since the retrenchment of lease rates will be a buy signal for a large number of gold buyers. Michael Kosares
800-869-5115

You can also order on-line by going to the link above.

http://www.usagold.com/Order_Form.htmlNewcomers: There may be some confusion about my P.S. below. To read "WHY GOLD, WHY NOW" and an in depth treatment why we thought "The Lull in the Gold Wars* Might Be Temporary" you have to go to the Daily Market Report page and then the Commentary & Review page which can be accessed there.

Entry requires registration, which can be secured on a trial basis by going to the link above.

Thank you and sorry for the confusion.

*(of the past few days)

Both gold and silver lease rates are surging this morning.
Gold's one month rate is up 1.57% This is huge, in
that it reduces the forward rate to just over 1%, and that
is no wwhere near the yield necessary to compensate for
inflation in a gold carry scenario. So this leased gold
is not for investment purposes, but for control. As fast
as it is leased, it is either dumped on the spot market,
or used for delta hedging derivatives (wow, is that dangerous!) If this carries on to the end of the
week, we may be on our way. This is getting very expensive
as a means of controlling the spot gold market.
Meanwhile, one year rates are up only .45%, so the backwardation has increased significantly as well. Mines
are hedging (Barrick, Anglogold?) at 20 year lows here
but it must be to protect their hedge exposures. The
mines are not a goldbug's friends.
Silver is beginning to mimic gold, only not as extreme.
This implies that silver is not in crisis illiquidity
yet, but it too will blow. The mere fact that silver
is acting like gold here is proof that the powers of fiat
fear this metal as a commodity money nearly as much as they fear gold as a commodity money.
Is there any greater proof of a manipulated market
than this lease rate pattern. Lease rates are screaming
dire metal shortage, yet the spot price drops. The
financial system must be really unstable!

Do LBMA & Kitco report different rates, or am I missing something?

LBMA link http://www.lbma.org.uk/2001gofo.htm
Kitco link http://www.kitco.com/market/LFrate.html

http://www.lbma.org.uk/2001gofo.htmLooks like the gold lease rate must be the right-hand column: LIBOR minus GOFO. Maybe slightly different from Kitco because of different markets/time of day it is set? Still shows backwardation. (Just LOVE that word. Don't get the opportunity to learn new vocabulary very often these days.)

Has FOA ever referred specifically to the implications of a lease rate spike, or is that just part of paper gold market breakdown?

Have CBs ever even tried to offer an excuse for their low lease rates?

I mean, any non-Treasury (US or Euro) enterprise must be considered to have a default risk of at least .5% (once every 200 years). Also, gold does not track inflation, either, these past 20 years, so that component of chargeable interest is lost. And, a base 3% non-inflationary rate of any lending of any savings seems expectable.

The rate spike now seems to put it into a normal market mode (of course, threatening the carry) and shouldn't we see this both as an ongoing market rate zone, and as a precursor to a real market POG?

(And how can we borrow some Yen -- at .15% -- to indulge our POGster appetites? Someone, somewhere's doing it, I'll bet.)

http://www.kitco.com/lease.chart.htmlSince 1988, no rate spikes above 4% until late 1995 (before big POG drop of 96-97), then the 9% WA spike. Now 4% again, twice. Big hmmmmm....

BOE announced today that 25 tonnes of Au will be auctioned March 14. Their site also says that they have announced their 2001-2002 auctions but there is currently no info for this on their site. Therefore they are continuing the sham right up to default (see my last post). There is definitely a liquidity problem now in the PM markets but like true blue bankers they won't give in to the last. Is this entertainment or what!? (LOL)

http://www.amex.com/quote.dll?page=quick&mode=stock&symbol=GOLD&symbol=HGMCY&symbol=GLG&symbol=ABX&symbol=PDG&symbol=NEM&symbol=HM&symbol=AU&symbol=&symbol=Take a look .
Hope the link works.

$hifty

Holtzman here,

--------------
Gypsy switch
--------------

To Sierra Madre, who pointed out in (03/06/01; 12:51:26MT - usagold.com msg#: 49479) that the present-day 'Gypsies' are not from Egypt.

True, true. Like so many other traditions, things meander over the millennia. So far as I understand it, the first people to be referred to as 'Gypsies' were the refugee Egyptians, most of them Coptic Christians, who fled towards Constantinople from what was becoming a lost frontier in Egypt proper.

Over the centuries since then, the term 'Gypsy' came to embrace any people who wandered nomadic through an otherwise settled countryside. Is there any Egyptian ancestry in even one of the present-day Rom? Not much I daresay, but there's probably a tiny bit of ancient Egyptian ancestry in everyone whose lineage traces to south-eastern Europe. And there's not much more ancient Egyptian ancestry among the people who presently call themselves Egyptian. Anwar Sadat was far more closely related to Muhammad than to Pharaoh.

I always hesitate before typing these sorts of things, but (fool that I am) I usually carry on recklessly and type them out anyway... what is true of present-day Egyptians is also true of present-day Israelis. That is, only a very few people who to-day call themselves Jews ever had any ancestors who really lived in Palestine in earlier times. Menachem Begin was far more closely related to Pope John Paul II than to any resident of Jerusalem during the reign of the Caesars.

These statements are in no way meant to disparage the faiths or the men, but rather to help clarify why most other residents of the Middle East do not regard present-day Israelis as their brothers under Abraham. Quite the contrary: they see modern Israelis as invading Europeans. The absence of the New Testament from this most recent Crusade is rather beside the point insofar as the displaced Muslims are concerned. Indeed, the present-day Israelis are far more literally Templars than were the original users of that name.

In the end, though, it is deeds rather than bloodlines which distinguish men. Polish Begin and Arabian Sadat as individual men made peace between two nations whose present-day populations are no more original than is the Anglo-Saxon population of England or nearly the entire population of the U.S. If we trace back far enough, we are all Gypsies and/or Crusaders.

--------------
Four hundred years is a long time
--------------

To Journeyman and ORO, I agree with both of you that bureaucratic government is a blight on humanity. I also agree that every government, regardless of how noble its beginnings, ultimately becomes bureaucratic and inefficient to the point of seizing up. However, the only thing worse than government is the total absence of government, which is why, even in such anarchic places as the American West of the 1800s, sheriffs and marshals and the cavalry were repeatedly called for. And why no-one with any sense wants to live in Moscow to-day.

But whether we live with too little government or too much, whether the armed man at the door is wearing a bandana or a badge, it is nonetheless up to each of us as individuals to figure out how to make the best of our lot in life.

The same set of jungle rules proposed by slingshot in his excellent (03/06/01; 15:20:00MT - usagold.com msg#: 49490) apply just as surely to men of means. That which does not make you stronger only gets you killed.

As to aristocratic family names failing to survive in Roman records for 20 generations, how many aristocratic families in existence in 1601 are still powerful and still go by their same names to-day? House Windsor now rules where House Tudor once ruled, though by coincidence the individual monarchs on both dates were christened Elizabeth.

And although it hasn't been quite four hundred years yet, does anyone recognise the name of Elias Haskett Derby? Even the somehow feared name of Rothschild is a mere two centuries old. If its descendents ten generations hence are still wealthy and still called Rothschild, they will be one of the phenomenally few families to manage such a feat.

Let's pull the timeframe in a bit to just one hundred thirty years. Though we find the occasional still-wealthy family such as the Rockefellers, most late-1800s captains of industry have left no trace apart from the occasional corporate name. And why is that? A combination of government jealousy and the simple truth that those who inherit wealth are rarely so successful at preserving it as were their benefactors at assembling it.

Even to-day, Bill Gates has already said that he'll be disbursing his ridiculously vast fortune upon his death. Come 2401, I daresay he might have descendents still going by the name of Gates, but if any of them are in any manner worthy of note it will be because of their own actions, not his.

The point I was attempting to make was very simply that the Roman system of bread and circuses was not in any way the result of true charity coming from the ruling class. Rather, it was the result of the ruling class doing what ruling classes have always done: whatever was necessary to preserve their hold on power at that moment and as far into the future as was practicable.

The Roman rabble was in no material way different from the street gangs of to-day. Caligula was in no way more dangerous than was Henry VIII. Roman aristocrats were no more likely to be killed by their monarch than were Tudor-era nobles likely to be killed by theirs. For that matter, there were many different Roman imperial family names just as there were many different English ones in the past four centuries: Tudor, Stuart and so on up to Windsor and soon enough Spencer.

The names change, yet the system continues.

Yours,
I.V. Holtzman

http://www.mips1.net/422567CB004DBB8F/UNID/4225685F0043D1B24225696E004342D2?OpenDocumentHe blames miners not CBs, but sees big deriv blowup. What do you think?

http://www.spectator.co.uk/article.php3?table=old§ion=current&issue=2000-11-18&id=251More can be found in this article in the standard, including a short critique of the misleadingly titled "Charter of Fundamental Rights" to be approved this year at the Nice meeting. The same treaty will give the court that ruled that the European Commission can punish and retaliate against those who criticize it, the status of final arbiter for Europe, above any national court and the Human Rights court in Strassbourg.

The EU project is plainly the pure evil it all know it to be. It is the union of the German and French political elite against the whole of the world. But foremost, it is a union of the French and German Elites against their own people.

Here's a quote from the URL above:
"You have only to read Article 52 (latest version) of the Charter to see where this is heading. It states that the European Union may limit all rights and freedoms enumerated in the Charter �subject to the principle of proportionality�, where �necessary� in order to �meet objectives of general interest recognised by the Union�. When I asked the top figures of the drafting convention at a press conference what was to stop this �raison d��tat� clause being misused for authoritarian purposes, there were audible hisses from a number of EU journalists in the room, and the justice commissioner, Antonio Vitorino, let out one of those patronising little laughs that the EU elite has so perfected. Nobody really answered the question."

As this makes clear, the EU bureaucratic and political powers are on a collision course with the rights of humanity, particularly the freedoms of the European people.

IF YOU ARE IN EUROPE FIGHT THIS NOW. You will not have a chance for a non-violent fight afterwards. Europe is again falling under a black curtain. We in America should do our best to keep any of our political representatives from falling under this blanket of darkness, and keep them from approving any treaty or legislation that would promote cooperation with the despotic bureaucracy of Europe.

The European Supreme Court of Justice have just declared their EU institutions are to be the new king and church, and have made their criticism into the crimes of L�se Majeste and Blasphemy.

The European Supreme Court of Justice is an evil abomination, part of the greater evil of unprecedented proportions imposed on an unwilling European populace, it stands in direct opposition to its title and the principles of freedom and justice humanity cherishes. The smell of sulfur pervades their presence.

Protect yourself. Be at Nice, and demonstrate. Organize demonstrations in front of all possible decision makers on the matter so that further union, particularly on jusicial matters, may never proceed forward. The European Union institutions are not your friends, they are your enemies - so are your politicians and bureaucrats who support it.

See also related to Conolly:
http://www.bahnhof.se/~englund/emucon.html

Buy his book.
http://shop.barnesandnoble.com/booksearch/isbnInquiry.asp?userid=3L6ZL8KWKA&mscssid=K49U0446NT4D8H9MS3Q5NE98F5G8E1NA&isbn=0571175201

In the UK
http://www.amazon.co.uk/exec/obidos/ASIN/057117521X/r/202-7715629-4691823

http://www.wnd.com/news/article.asp?ARTICLE_ID=21970
This looks interesting.Thanks to shebesavvy at the prudentbear forum for the link.

Genetic testing has shown that Egyptians are more genetically related to the mummies in the tombs than to Arabs in today's Arabia.

Similarly, such tests have shown Jews to be related to each other and to Semitic populations in the ME. Point being that Jews of Eastern Europe are related to the dark skinned Sephardic Jews of the Mediterranean, and to the Ethiopian Jews.

Have you read 'The Thirteenth Tribe' by Arthur Koestler?

Sir you treatment of all Romans being the same is not accurate.I am a direct decendant of Horatio also known as the Horatian family or Oratii.They do have a Italian spelling now that is slightly different.They were a considerable influence in establishing the FIRST Republic to address grievences from the early Kings of Rome(640BC).Horatio being responsible for saving Rome from the Albans ,a battle which if had lost would have resulted in Rome being called something else.Another battle of note was Horatio at the bridge,where he single handedly defended Rome from the Etruscians.Rome in the Early days was a Noble cause,it was hundreds of years later that the people lost thier Rebublic and thier Noble heros to Politicians.Its a lesson we face today with the loss of our Rebublic to a (Democracy),also know as mob rule.

Though you are right about the absence of longevity in family power, there is something to be said for the progeny remaining in existence rather than the Roman way by which the whole of a family was killed and their property seized.

It should stand as a warning to all seeking power that the more power is allowed them, the more can be used against them. The people who end up in power after a power grab are rarely those that had done the deed of creating the power and those that had initially grabbed it. The original supporters of juntas around the globe were often the first to be "disappeared".

Thank you for the interesting link to Mr. Sinclair's thinking. I would like to expand the endorsement of the link you provide to say that there is an interesting exchange there between Sinclair and perennial gold bear, Andy Smith. Scroll to below the initial essay by Mr. Sinclair.

Really enjoyed reading your posts the last couple of days! We want more!

http://www.eurocritic.demon.co.uk/bg-rsrc9.htmConnolly excerpts the core of the purpose of the EU: to preserve the despicable tradition of tyrrany where none in Continental Europe have ever enjoyed freedom but for those few periods of light in the Netherlands and Switzerland.

From the URL:

"Tony Blair, in his equally notorious speech in Warsaw just last month: "Europe is no longer just about peace" � as if it had ever been anything to do with peace � "It is about the projection of collective power." "Europe", he said, echoing Jacques Delors, "must become a superpower."

Now an earlier declaration, one made 40 years ago in secret by Harold Macmillan to General de Gaulle: "European civilization is what at all cost we must preserve. It has survived for 3,000 years, but it is menaced from all quarters, by Africans, Asians and Communists � and the North Americans, Australians and New Zealanders. More than ever there is a need for real political unity in Europe."

More recently again, in 1996, Phillippe Maystadt, then the Belgian Finance Minister and now president of the European Investment Bank, said that: "The purpose of the single currency is to prevent the encroachment of Anglo-Saxon values in Europe." "

and later:

"...throughout 3000 years of European civilisation that Macmillan wished to protect against the English-speaking world and the British Commonwealth, those values have been ones of absolutist power and tyranny. Nothing has changed."

http://www.eurocritic.demon.co.uk/bg-rsrc9.htmTony Blair has said it, "Europe" is about the projection of collective power: the power of unaccountable elites over ordinary people, of the Establishment over � in the words of a Europhile Foreign Office official � "the sort of scum who read The Sun". It is about the power of the Blairs, the Booths, the Irvings, the Falconers, the Mandelsons. The Jenkinses, the Ashdowns, the Heseltines, the Howes, the Clarkes and the Hurds. It is about ripping our country away from the liberal, democratic, Anglo-Saxon world. It is about subjecting it to the 3000-year-old European values of tyranny and oppression.

We must have nothing to do with it.

NASDAQ (rather than Yahoo! itself) unilaterally halted trading on
Yahoo! stock this morning until 5:00PM tonight. NASDAQ may do
this without consulting the company who's stock is involved, but
this is relatively rare. NASDAQ may halt trading on a stock in
the interest of stock holders and the trading public, but
normally 30 minutes is the longest suspension of trading mandated
in the rules. Usually such halts indicate a major change in
company management or a major restructuring. -Composite info from
CNBC, March 7, 2001

Would a Yahoo! bankruptcy shake-up the markets?

Regards,
Journeyman

So, where does one find the best place for housekeeping? One thing about Europe; I do believe the schools in many countries are better and more importantly SAFER than here. Pols, central bankers and the otherwise powerful and elite are of the same stripe generally (everywhere) yes?

What about Montana?

Public schools there are better in teaching some basics than those in the US today, but that is not to mean that they are of an overall higher value to the student. They are not. Most particularly because they teach pro-government propaganda as part of civics, and vary between ignoring and distorting the notions of rights and civil life. They are represive of creativity in the latter grades, and do not encourage critical thinking any more than US schools do.

The main point is that the schools of the EU nations are the only choice one can make, because private schools are much less accessible to most people. That is predominantly because of the high tax rates in Europe - when VAT, tariffs, and income taxes are taken together, the EU tax rates are some 60% of the income of a middle class earner. While they are 40-50% in the US. Regulatory costs also restrict your spending's effectiveness by restricting choices and extending the effort involved in obtaining merchandise.

Yesterday I was travelling home from work listening to ABC news (Australian) and the ABC's Tokyo reporter said that Prime Minister Mori was about to announce new policy to stimulate the ailing Japanese stockmarket. There were rumours in the day that Mori had actually resigned and the market spiked about 0.75% only to later collapse yet again. Things are getting desperate after a 10 year recession (depression). Fiscal stimulation of many trillions of Yen for the last few years since the beginning of Asian contagion have not improved the parlous Japanese economy. Interest rates are at 0.15% in Japan and they are talking about cutting them further!
The ABC reporter Peter Martin mentioned that an argument to devalue the Yen was gaining credence in Japan. The idea is to make the Yen 1/100th of the value it is today! Prices would have two zeros knocked off the end so that 1000Y would now be 10 Yen. It would be called the new Yen. I not sure whether the reporter meant that 1 Yen would equal 1 US$ or not. It would seem that Mori's statement whatever the move will be announced Friday. His political days are numbered anyway. It is apparent that the Asian flu has not gone away and that the second biggest economy in the world will not collapse without bringing down its friend the US.
The Australian dullar is now 50.9 cents to the US dollar only 0.17cents above its all time low in November last year. We had another .25% rate cut yesterday and the currency got hammered again. This comes on the back of a 0.6 % decline in December quarter GDP. The 'r' word is getting increasingly more airplay even though a low currency earns heaps in foreign currency from exports. Gold is Australia's seecond largest export earner. At $512 an ounce we are smiling.
----
Question for FOA.

Would you give this Japanese move to devalue any currency?(joke)

Working-kirk, pandagold, Topaz, Stranger, USAGOLD, Rhody, Mr. Gresham, Shifty, Journeyman and all. If you keep up posting like today, I'll be forced to spend even more time reading and thinking. Used more than my daily quota of brain cells today, I'll have to eat some bananas to upgrade the power output.
Thanks
Rich

I don't have anything more on this but
apparently the Bank of England has
announced that it will reduce its next
gold auction by 5 tonnes.

I had heard this at GE but the BOE website announcment dated today says March 14 will be for 25 tonnes. Correct me if I am wrong but I believe this is the same amount as usual no? What I am trying to find out is info on their announcement for the third series of auctions. Todays announcement says that the third series announcment is also dated today but I could not find it on their website.

http://groups.yahoo.com/group/gata/message/700Full Reuters story.

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@yahoogroups.com

Why always the choice between lessers of comparable evils.

So, are you taking the position that the mush they teach in schools here is preferable to Europe? Many a US college campus could be considered a hotbed of socialism could they not?

Well their announcement does say "about" 25 tonnes so is 20 tonnes "about" 25 tonnes? Doesn't seeing them squirm as the noose draws tighter provide true entertainment?

Thanks for the link Chris. An excerpt:

"I can't see why they have persisted with this method when every other seller has consistently used the traditional route through the market," said Martin Potts, analyst at Williams de Broe.

"It gives people the incentive to go short and therefore depress the price. How does that therefore generate value over and above what would otherwise be achievable?"

The reason why they do what they do is becoming more and more obvious to everyone. As I quoted previously, no discernible difference between what they are doing and the London Gold Pool of the late 70's.

http://www.hm-treasury.gov.uk/press/2001/p30_01.html
Message from the neighbors.

http://www.usagold.com/wgc.htmlThe link above will take you to the gold's market's "week in review" commentary by the World Gold Council where they track the price and lease rate movements seen in last week's bullion banking activity.
- - - -
On another note, it should come as no surprise that the Federal Reserve's System Account Manager participated in open market operations this morning even though the fed funds market was trading at the target rate. Through use of overnight repurchase agreements the Fed added $4.925 billion in temporary reserves to the banking system. What does come as a small surprise was that the Fed refrained from making an outright purchase of Treasuries...something that we have seen developing into a regular routine, relatively speaking.

This Gold trivia was takem from Harmony's new website which is quite something for such a normally staid industry'
Lots of 'western' music and you can enjoy a shoot out in the saloon


Some of these you know, but some may add to your understanding of the object of our interest.

Africa's gold deposits were formed some 3,4 billion years ago.

An estimated 10 billion tons of gold is suspended in the seas of the world.

Each mine's gold has its own DNA, so the exact origins of, say, a piece of jewellery made from 'virgin gold' (or gold unblended with gold from another source) could be ascertained.

The deepest mine in the world is Western Deep Levels gold mine on the Far West Rand, now approaching a depth of 4 kilometres. (approx. 13000 feet). Mining does not as yet take place at that depth.

The total volume of rock cut away each year in South Africa's gold mines would make a railway tunnel 3500 kilometres (approx. 2200 miles) long reaching between London and Leningrad.

For every ton of rock mined, nearly 15 tons of ventilation air is pumped underground.

The volume of water pumped daily from the mines would fill 3 million domestic bath tubs to the brim.

Cooling plants on South African gold mines have a capacity equal to nearly 3.5 million domestic refrigerators.

Virgin rock temperatures higher than 52?C (126?F) have been recorded in South African gold mines.

The South African gold mining industry consumes enough electricity - over 23 million megawatt hours - to power a city with 3 million inhabitants.

It is estimated that the portion of mineworkers' earnings remitted to Lesotho account for some 60 per cent of that country's Gross Domestic Product.

Gold can be beaten wafer thin - technically that's 0.00001mm thick. One ounce of gold can be beaten into 16 square metres/yards of gold leaf.

One ounce can be drawn into eight kilometres (five miles) of gold wire.

Gold is used in the electronics industry to make more than 10 billion tiny electrical contacts every year.

The world's dentists use over 60 tons of gold every year.
Gold has medicinal and healing properties - it can be used in treating rheumatoid arthritis, chronic ulcers and tuberculosis.

Nearly 40 tons of gold were used in the construction of space shuttle "Columbia" in preparation for its maiden flight in April 1981.

Gold can be eaten - it is indeed eaten in many Asian cultures.

Gold is found in minute proportions in the human body, whether you have eaten it or not.

The largest South African gold nugget weighed 7.8 kilograms (approx. 17 lbs.) and was found at the town of Pilgrim's Rest (near the Kruger National Park) between 1875 and 1881.

The largest nugget ever discovered weighed 70.92 kilograms (approx. 160 lbs.) and was found in Victoria, Australia.

All the gold ever mined in the world would fit into a store room measuring 17 metres long, 17 metres high and 17 metres wide (approx. 5000 cubic metres/yards). More steel is poured in an hour than gold has been poured since the beginning of time.

The American Federal Reserve on Wall Street, New York, is the biggest repository of gold in the world; some 13000 tons of gold are kept behind 90 ton steel doors in vaults blasted out of solid granite.

Of the estimated 127000 tons of refined gold in the world - bullion, jewellery, coin - no less than 42000 tons (or 33 %) has been mined in South Africa since 1886.

Gold has been used as a currency for over 5000 years.

The oldest gold jewellery ever was crafted in Africa (3200BC). � India has by far the biggest annual offtake of gold: 508 tons in 1996, enough to make about 175 million plain, 18 carat wedding rings.

Sir OY.

Your subject:

"Ron Paul'standard bearer for the 21st century?"

Excerpt from your link:

"Williamson is not confident that current members of Congress will attempt to change the system -- save one.
"The citizens' best bet is Rep. Ron Paul, who understands this issue top to bottom and always crosses swords with Mr. Greenspan in his annual testimonies," she says. "He is a brilliant gentleman and a great defender, and really, American citizens would not be able to own gold today were it not for Ron Paul."

I too greatly admire Congressman Paul. Sad thing is I would't give a 1 10th ounce Eagle for his life. He reminds me too much of McFadden. We all know what happened to him.

Sad, Sad post, I know.

But truth?

HBM

Looks like it is all systems go for the UK elections around May 3rd.
After today's budget - lots of give-aways across the board looks like Tony will be home and dry. No close run thing like in the US.
There are now likely to be interest rate cuts which should lower the � against the Euro in the near future.

If the UK (and I am sure it has) has been working in collusion with the US on holding gold down, they are hardly going to hit Tony where it will hurt by allowing gold to move up much until after the election. It would be very embarrassing for Gordon Brown ( who's hoping to become Prime Minister) and Tony. (Just a thought to keep in mind)

From:
"Robin Asher"

This virus alert is high risk. It comes directly from McAfee.com, from my
subscription to the Clinic. Not a hoax.

Best,

Robin
>
> ----- Original Message -----
> From: McAfee.com Dispatch
> Sent: Tuesday, March 06, 2001 8:40 PM
> Subject: VIRUS ALERT - W32/Naked@MM

> Dear McAfee.com Dispatch Subscriber:
>
> Since its discovery early on March 6, 2001, McAfee.com has
> seen a large and growing number of computers infected with
> W32/Naked@MM. This is a HIGH RISK virus that is spreading
> rapidly via the Windows email program Outlook. The infected
> email can come from addresses that you recognize. Attached
> is a file named NakedWife.exe, which poses as a Flash movie.
> The email message can appear as follows:
>
> Subject: Fw: Naked Wife
> Body:
> My wife never look like that! ;-)
>
> Best regards,
> (sender's name)
>
> Attachment: NakedWife.exe
>
> When run, it copies itself to a TEMP directory and displays
> a window entitled "Flash" which reads "JibJab loading". It
> then attempts to delete all .BMP, .COM, .DLL, .EXE, .INI,
> and .LOG files in the WINDOWS and WINDOWS\SYSTEM directories
> and emails itself to all recipients in the Windows Address
> Book using Microsoft Outlook.
>
> If you are not a subscriber to the McAfee.com Clinic please
> click here to get anti-virus protection.
> -> http://clinic.mcafee.com/clinic/ibuy/campaign.asp?cid=2164

>
> Find out more about this virus. Click here to go to the
> W32/Naked@MM Help Center.

http://clinic.mcafee.com/clinic/ibuy/campaign.asp?cid=2164
>
This Virus Alert has been issued by the
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http://www.lewrockwell.com/rothbard/ir/Ch44.html
I was hoping to stir some interest in a possible solution for the Europeans with the Rockwell speech. If any url needs to be immediately distributed throughout EU Europe, it is Lew Rockwell's. Although he focuses on the US situation, the same applies for the Europeans and on a more immediate note.

http://www.lewrockwell.com/rockwell/americanopinion.html

It's my perception that the fiat currency regime is coming under great stress and could fail giving the EU bureaucracy an opportunity to enshrine themselves for decades should their currency succeed at this point in this form. A new fiat currency only perpetuates the despotism. A return to sound money is of utmost importance to the world today if liberty is to prevail. Despite calls here and elsewhere for a more "reasonable" solution, retaining liberty and rejecting despotism requires courage and commitment, not compromise. Whatever liberty that may remain in Europe today is about to be lost for decades if not longer should the EU bureaucracy succeed in stifling all dissent.

We are approaching another crossroad that will have worldwide implications. I agree with ORO and Murray Rothbard, it is time to be heard if liberty is to remain something other than a term of antiquity.

Gold is LIBERTY America has been fighting to maintain Liberty not only for ourselves but others for some time. Never has our liberty been under such an attack as it has in the past ten years.Gold physical or a gold standard is the only way to save this country. Now you'al I'm going to get Hot about this, Please hang with me. If everyone in this USA brought One stinkin once we could send a message to put substance back into our money. Noooooooo. Why? We are Dumb! To control a country you must first control the institutions of education. Wow! Forty years of liberal social-democratic, touchy feely crap we have been teaching our kids. We are not Americans! We are Hypenated Americans. Second, control the Media. Do I need to express myself here. Third. Control the money supply. We are so far in debt its unreal. Not to mention taxes. Finally remove all guns from the public. Don't want anyone shooting back now even if they take you property unjustly. So Joe Sixpack will not believe till they take his Liberty away. I can hear him now, "You can't do that, This is America'.

So, ET, There are just about as many people who will stand up as there are Gold bugs. Europe will have to grapel with her own trouble which is the same plight as ours.

How can some one not buy GOLD at this price with what is unfolding before our very eyes.


We are a nation of Sheeple and dumb as you know what.

Slingshot

The announcement today couldn't be more bullish. Flying in the face of everything that is known about market: supply/demand fundamentals, derivatives, global monetary travails, inflation etc., etc., (did I forget to mention common sense?); the BOE keeps a stiff upper lip and continues to send her gold off to foreign shores to fight her battles where once she sent her navies and her merchant marine--so typically English. These are desperate times for gold shorts and enemies of sound money. Anyone who has been closely following the gold market these last two years should be buying with both hands. History is repeating itself once more.

http://www.jonesheward.com/commentary.cfmDon Coxe starts off about gold.

I think he must be a short!

$hifty

I know Mr. Coxe is much smarter and much wealthier than I am. However, after listening to him for just a few minutes, I am absolutely convinced (from his opening remarks) that he is wrong.

I would say you are correct!

That's why I think he is a short!

He cant be that dumb.

$hifty

Very curious to me that a G7 country like Canada who is apparently in a SURPLUS!!! situation would sell 20,000 ounces of gold in FEB. @ $280.US. The measly amount generated wouldn't cover lunch in Ottawa. This is obviously an attempt to reliquify SOMEBODY or repair a potential derivatives blowout. How much more obvious does this need to get? $8 mil. CDN +/- is NOTHING to the human pig socialists that inhabit that filth-hole. It is related to the Bank of Canada's derivative exposure in gold and securities like Nortel. As for the Aug 3, 1993 'event' in the gold market, I can only chuckle as my mind goes back to that fateful day 1 MONTH LATER that the socialist Liberal party was elected into goverment of what was then a technically bankrupt country. Very curious.......

The Japanese could solve the gold problem simply by raiseing interest rates.This would remove the yen carry trade and atract investment capital to thier stock market and currency.They have been getting advice from Goldman Sachs to do the opposite supposidly to aid thier exports which has failed.Of course Sachs will say look how bad it could have been!Or they could buy gold instead of U.S.paper investments which are looking more and more risky. Wake up Japan!
The Brits would do well to change governments ,Mr.Blair seems to be on a policy of "To big to fail"sell the gold and watch the Pound sink ,when it gets uncontrollable then ask for U.S. help cause there to big to fail.
The Germans should do likewise,things were much better with Reagan,Thatcher,and Kohl. Imho.

http://dailynews.yahoo.com/h/ap/20010306/bs/mystery_invention_1.htmlTuesday March 6 10:53 PM ET
Report: 'IT,' a Hydrogen Scooter


MANCHESTER, N.H. (AP) - Inventor Dean Kamen's mystery invention, dubbed ``IT'' or ``Ginger,'' is a two-wheeled, hydrogen-powered scooter that is emission-free and for which he is building a New Hampshire factory, Inside magazine reports.

The print publication of Inside.com says it used corporate surveillance experts to uncover the details on the invention.

'``Ginger represents the first generation of a new mode of transportation that will compete with and possibly replace automobiles. The ramifications of a 'hydrogen economy' would be profound on everything from the environment to the energy business to global politics,'' the magazine said.

Kamen created a company called ACROS to build ``motorized, self-propelled, wheeled personal mobility aides, namely wheelchairs, scooters, carts and chariots,'' the magazine said.

The Manchester inventor has refused to discuss the project, saying he will not reveal what IT is until next year.

But IT has created waves already. Some of the biggest wheels of industry, like Steve Jobs (news - web sites) of Apple and Jeff Bezos of Amazon.com, who reportedly have seen the machine, have offered financial support and say the invention will change transportation.

Such devices presumably would draw on the development of the I-bot, a mechanical wheelchair that can drive through sand and climb stairs, created by Kamen and his medical-research firm, DEKA Research and Development.

The I-bot was part of the reason Kamen was among recipients of the 2000 National Medal of Technology.

Last week at an appearance before the New Hampshire Society of Professional Engineers, Kamen would only say he was amazed at the amount of attention IT has received.

Kamen is a prolific and successful inventor who has come up with innovative wheelchairs and an insulin pump.

currie@mqcinc.com
I have been thinking a good deal about your post. I can see a very definite need for such skills in the world I see unfolding, and unfortunately am ignorant enough that I may not even be able to ask an intelligent question.

Nevertheless, I would like to try, and invite you to e mail me at the above address since this is obviously an off topic subject. Perhaps some of my preparations may be of interest to you as a quid pro quo

Thanks
j'Bear

http://www.webleyweb.com/lneil/index.htmlWhy Did it Have to be ... Guns?
by L. Neil Smith
lneil@ezlink.com

Over the past 30 years, I've been paid to write almost two million words, every one of which, sooner or later, came back to the issue of guns and gun-ownership. Naturally, I've thought about the issue a lot, and it has always determined the way I vote.

People accuse me of being a single-issue writer, a single- issue thinker, and a single- issue voter, but it isn't true. What I've chosen, in a world where there's never enough time and energy, is to focus on the one political issue which most clearly and unmistakably demonstrates what any politician -- or political philosophy -- is made of, right down to the creamy liquid center.

Make no mistake: all politicians -- even those ostensibly on the side of guns and gun ownership -- hate the issue and anyone, like me, who insists on bringing it up. They hate it because it's an X-ray machine. It's a Vulcan mind-meld. It's the ultimate test to which any politician -- or political philosophy -- can be put.

If a politician isn't perfectly comfortable with the idea of his average constituent, any man, woman, or responsible child, walking into a hardware store and paying cash -- for any rifle, shotgun, handgun, machinegun, anything -- without producing ID or signing one scrap of paper, he isn't your friend no matter what he tells you.

If he isn't genuinely enthusiastic about his average constituent stuffing that weapon into a purse or pocket or tucking it under a coat and walking home without asking anybody's permission, he's a four-flusher, no matter what he claims.

What his attitude -- toward your ownership and use of weapons -- conveys is his real attitude about you. And if he doesn't trust you, then why in the name of John Moses Browning should you trust him?

If he doesn't want you to have the means of defending your life, do you want him in a position to control it?

If he makes excuses about obeying a law he's sworn to uphold and defend -- the highest law of the land, the Bill of Rights -- do you want to entrust him with anything?

If he ignores you, sneers at you, complains about you, or defames you, if he calls you names only he thinks are evil -- like "Constitutionalist" -- when you insist that he account for himself, hasn't he betrayed his oath, isn't he unfit to hold office, and doesn't he really belong in jail?

Sure, these are all leading questions. They're the questions that led me to the issue of guns and gun ownership as the clearest and most unmistakable demonstration of what any given politician -- or political philosophy -- is really made of.

He may lecture you about the dangerous weirdos out there who shouldn't have a gun -- but what does that have to do with you? Why in the name of John Moses Browning should you be made to suffer for the misdeeds of others? Didn't you lay aside the infantile notion of group punishment when you left public school -- or the military? Isn't it an essentially European notion, anyway -- Prussian, maybe -- and certainly not what America was supposed to be all about?

And if there are dangerous weirdos out there, does it make sense to deprive you of the means of protecting yourself from them? Forget about those other people, those dangerous weirdos, this is about you, and it has been, all along.

Try it yourself: if a politician won't trust you, why should you trust him? If he's a man -- and you're not -- what does his lack of trust tell you about his real attitude toward women? If "he" happens to be a woman, what makes her so perverse that she's eager to render her fellow women helpless on the mean and seedy streets her policies helped create? Should you believe her when she says she wants to help you by imposing some infantile group health care program on you at the point of the kind of gun she doesn't want you to have?

On the other hand -- or the other party -- should you believe anything politicians say who claim they stand for freedom, but drag their feet and make excuses about repealing limits on your right to own and carry weapons? What does this tell you about their real motives for ignoring voters and ramming through one infantile group trade agreement after another with other countries?

Makes voting simpler, doesn't it? You don't have to study every issue -- health care, international trade -- all you have to do is use this X-ray machine, this Vulcan mind-meld, to get beyond their empty words and find out how politicians really feel. About you. And that, of course, is why they hate it.

And that's why I'm accused of being a single-issue writer, thinker, and voter.

But it isn't true, is it?

Trail Guide : I sure would enjoy a hike on the gold trail. Do you feel up to it?

$hiftyView Yesterday's Discussion.

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3IDRVH1KC&live=true&useoverridetemplate=ZZZUGORQ00C&tagid=ZZZ1XPDX70C⊂heading=uk
Excerpt from the link:"It is understood the gold market said that 25 tons was too much for the market to absorb in a single day."

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=AOqdFjhX5WWVuIExp"...Japanese Finance Minister Kiichi Miyazawa said the financial system in the world's second biggest economy is ``close to collapse.''

I don't want you to think that I have ignored your suggestion to "rattle Farfel's cage", so to speak....it's just that I view the privacy of our posters as being of utmost importance, and therefore do not make a habit of sending them unsolicited e-mails on non-business-related items unless they have previously established a friendly rapport with me of their own initiative, in which case The Tower door swings easily both ways.

ORO, as you seem to participate as the perfect living sponge, absorbing everything and filtering only that which serves you, I am comfortable offering you once again words of constructive criticism. Much of this was penned Monday evening in the comfort of a coffee shop as a response inspired by your early Monday critique offered to Sir Holtzman. Unfortunately, my resources were spread thin over the past two days and I was unable to get this typed for the forum until now. Meanwhile, subsequent posts by Holtzman covered many of the sentiments I had addressed on paper, and I nearly held back with this as it would be an exercise in redundancy. However, my presentation varies in degrees from Holtzman's, and further, seeing Sir Journeyman weigh in in opposition, it seemed best to proceed with this posting for balance. (It has been ever so slightly altered from its original form in light of the post-Monday commentary.)

To state this as directly as possible, as a long-time reader of your commentary I continue to see in your words such a prevailing and apparently ideological rejection of "all things governmental" that I submit to you stands in the way of your achieving the most effective analysis or economic forecast. [Journeyman goes so far as to say in (3/06/01 msg#49485):

--BEGIN--"The fact that grown and otherwise intelligent adults believe
the fairytale that governments help the poor more than they hurt them is
a monument to disinformation, the power of brainwashing, and the modern press."

[To which I must interject, for the sake of this discussion, it is patently wrong to place the foundation of government's necessity upon the fiction that it exists to help the poor. Whether or not it attempts to do so is another issue entirely.]

"...in actual operation, governments are often a great source of disorder
and chaos rather than the "fonts of order" they claim and we assume.
Therefore, for order, morality, and the good of mankind
(including the "poor",) down with all government fiat currencies.
Period." --END--

This leap to make recommendations about fiat currencies is a non sequitur that I hope to address in due course.]

To be sure, ORO, your analysis stands strong in the theoretical world which you frequently construct with your ideologically tainted views of government. But, the economic utility of your work is diminished by the degree of departure of your ideology from our living reality.

Whether you "like it or not" the governments we have today are part of the landscape. You will not move a mountain by shouting at it or making arguments against it; (but thankfully, it is up to each man alone to decide how he chooses to spend his own precious allotment of time and energy.)

So, what of this governmental mountain? Taking the large view, it can be said that under threat of "mob rule" governments operate today and tomorrow under terms acceptable to their constituents and their neighbors, and similarly, we see citizens operating today and tomorrow under terms acceptable to their system of government and their neighbors. Significant imbalances on either side tend to bring about a compromise in the acceptable terms of operation to restore the dynamic state of harmony.

It could be argued that as the realm of mankind's interactions become more intricate and complex, governments exist -- if for no other reason -- to institutionalize/formalize the "custom" of the natural social order of the day. This is seen as man's own attempt to guarantee that the collective well-being of the present time extends into the foreseeable future. (A simple judicial system comes to mind as the start point, distinctly *not* as a "babysitter" to help "the poor" however they might be defined.)

Surprisingly, it was none other than Journeyman himself who offers credibility to the reason for this inevitable/necessary preservationary role for government in his post (3/06/01 msg#49500):

--- "Much of the danger from other humans stems from
"clique selfishness," that is, each group attempting to take
care of their own at any expense. This is a development of
modern populations that are too large for face-to-face
knowledge with each other - - - usually in combination with
a lack of understanding of the advantage of trade because
"division of labor" makes such trade a win-win situation."---

My comments portray an oversimplification, surely, because they have not thus far fully acknowledged the potential difference we might have seen from an unfettered free-will progression of social interaction ("custom") as it might otherwise have evolved outside of the insidious coercionary influence of government's less-flexible and less-timely institutionalization of **yesterday's** customs. This, along with government's incremental legislation of self-serving appropriations and arrangements.

But more importantly, I think -- to an extent far greater than your current ideological framework allows you to accept -- that the whole of the banking structure stands quite apart from this concession of a "privileged" position enjoyed in degree by government alone as an institution participating in the give-and-take of a dynamic society.

You may not be aware or share this perception, but as an individual (particularly an economist), it is in your best interest to at least know something of the thoughts from behind the eyes of the population you study. In consequence, my next post to you will address what I see to be a principle flaw in your Monday commentary (3/05/01 msg#49408 directed to Holtzman) regarding the motivations of people and the subsequent value of currency and gold used in trade and savings.

If it counts for anything as you read this and what follows, please know that for a time in the past I once shared your lines of reason, but found that these such flowers of thought seldom bore fruit over the course of the season, always to whither on the vine. I have since changed my views as perhaps you will do one day, also. We simply cannot continue to discount the human element in our forecasts -- as you are seemingly inclined to do in favor of briefly glimpsing unattainable perfection, or shall I say, you embrace unreasonable human expectations given all we have seen.

[My advance apologies for the length. Scroll by if you already view gold and currency as necessarily two separate and useful tools for two separate economic functions.]

To reiterate from the previous, many persons having strong dissatisfactions with government make a fundamental error in extending or projecting this same anti-government sentiment upon the unrelated realm of currency and banking. Feel free to "hate" none, one, or both, but recognize that you must not level charges at one based on the sins of the other. No matter what wide range of passions a person might harbor toward government, they must analyze the issues of banking and currency with an untainted eye....and only then might they justly hurl stones if any such airborne deliveries are found to be warranted.

This commentary stems from the need for a response to ORO's Monday rejection of an explanation (one of many possible) offered by Holtzman regarding why the euro was not crafted to be a fixed gold-standard type currency. In fairness, ORO, you make some sound counterpoints, my favorite of which was: ---"No government would disarm itself of its ultimate purchasing power in order to attempt a destabilization of another. It is like hurling one's cut off head at the enemy, one can do it only once, and is likely to suffer more from doing so than the target."---

But in pitting "Joe Average" against "The Evil Government" as you so often do, you set yourself up for what I feel is a fundamental flaw in your thinking. You say:
--- "The mere existence of the fiat currency takes substantial portions of Joe's dinner, and takes away his best clothes."---

[An interjection: are you sure you are not confusing "fiat currency" with direct taxes upon Joe in that previous sentence? But let's continue...]

--- "There is no value whatsoever which fiat provides the "average" person. The only beneficiaries are the thin layer of high government bureaucrats for which all Joes slave, and the politician elected by Averages to the post of slave driver.
+
Joe Average's current behavior regarding debt accumulation is a function of his need to protect himself from the depreciation he expects of his future monetary income. The self-indulgence we refer to often, is that resulting from the habit of trying to outwit the monetary authorities and their coterie of hangers-on. Joe does not need or want fiat money, he seeks protection from it."---

ORO, you have misidentified precisely what it is that Joe is seeking protection from, and the seeds of my objection to this passage quoted above are found within your own excellent thoughts offered earlier in that same post. Regarding the nature of the euro currency itself, you provided:

--- "The reason for the Euro not being a gold money is that what was desired was a currency. An inflatable currency based on debt, coupled with the possibility of having a cash gold element when necessary, so that rather than provide Euro for liquidity by buying market debt, euro would be used to purchase gold to provide liquidity. Thus assuring balanced books at the ECB and member CBs without having to hyperinflate the Euro.......
+
The EMU is not about solid honest money so much as it is about the political needs of EU governments and politicians to have a non-German non-French money -- one that is not a political football between the two governments. Thus the need to have gold in the system results from the need for a non-partisan money within Europe. The dollar experience has made the rest of the world wary of a new Western debt money for trade designed in all its institutions to benefit only its issuer. The Gold scheme is the alternative that allows Euro to be a potentially politically neutral currency."---

Who truly has any strong objection to that as a starting point? But now, lets get back to the meat of the matter and reflect on your key comment, "Joe does not need or want fiat money, he seeks protection from it." Again, it is important that we understand from what it is precisely that we, the "Joes of the world", are truly seeking protection. Yes, it is the currency, but not because it is fiat. Let's use your own words against you from this same post to Holtzman.

--- "Your [Holtzman's] pointing out to the 1920s and 1930s as having anything to do with a gold standard implies an erroneous view of the monetary system that collapsed. It was not a gold standard system, but a leveraged gold standard, where the degree of leverage was controlled and purposely expanded by government regulation and directly by government itself. Governments manipulated the credit system into expanding to such an extent that gold constituted under 5% of the money supply. Obviously that was not a gold standard."---

It absolutely was a gold standard! And Centennial can sell you the authentic $20 gold coinage to prove it. And that was the exactly the problem with the currency! And to be sure, this is the same expansionary (supply) problem to be expected with any currency used in banking. You lay blame on the government for the problem, but in truth, the issue of such problematic collapses is only an issue of scale versus timing as guaranteed by human nature. The problem is one banking, and to be sure, the expansion/contraction problem is independent of the currency and the role of good or bad governments. And just as Journeyman might be heard to say, "If you don't believe me, just ask me!"

So, getting right to it, let's address your flawed issue by beating this dead horse some more. You say, "Joe does not need or want fiat money, he seeks protection from it." But please consider this odd notion of mine: in truth, Joe needs fiat currency so that he can attain MEANINGFUL protection FROM it.

History has taught this lesson, and for the first time on a grand scale "someone" has taken notice and acted accordingly. ORO, I know you have been exposed to this full line of thought before and have recently offered your resisting thoughts, but I must nevertheless reiterate this counterpoint now for those newly arrived or following along slowly so that each man is armed to be his own judge and act accordingly. (In the end, what a happy circumstance it is that despite our differing views, you and I both recommend gold acquisition as the conclusion of our thoughts.)

In the course of normal commercial banking activity any fundamental asset which is selected (naturally or "artificially") and put into use as the circulating unit of currency experiences an unavoidable inflation (expansion) of its apparently available supply. As you should know, this holds true with or without the presence of a central bank, though is arguably apt to be more pronounced sooner in the timeline if a central bank is providing a moral hazard as lender of last resort.

Notably, with a central bank comes a mixed blessing -- that banking dislocations are much fewer, yet they are more colossal when they do inevitably occur. (Though we must consider modern bullion banking...there is no single global lender of last resort, and yet look at the expansion that was eventually attained in this modern day thanks to good business communication/cooperation by the parties involved. And yet, the eventual collapse will be colossal because the system is running on a global scale.)

When you propose the workability (and the mild inflations) of "free banking", you ignore both history and human nature, and have thus placed any of your subsequent economic thought upon a fictional foundation.

It is during the time that the banking system is functioning normally and with high confidence that the currency expansion runs at its greatest while at the same time undermining the purchasing value of all long-term savings denominated (as would seem natural to "Joe") in the fundamental asset defining the currency system.

Even if originally built upon such solid fundamental assets of gold for use as hard-money currency, the banking system soon evolves into a predominant system of elaborate accounting with an attendant waning of the perceived importance of the physicality of the fundamental currency unit. Thus, the phenomenon you describe of Joe seeking protection from fiat currencies actually has a parallel in those seeking general protection from ANY currency used in banking, including hard-money banking. (Witness the experience of modern bullion banking and the diminishing effect of its paper ledger supply upon the value of physical savings acquired in the fundamental denominating asset of that banking system, gold.)

ANY thing can serve as the basis for the accounting units we use as our currency. (Just look what we are using now...credit! Mere contracts of promises, promises to repay units of other people's contracted promises!) But, only gold is suited best for use as instantly liquid non-bank savings. Gold works uniquely well in this savings regard because it is "monetary" by its nature, independent of any mandate.

And thus, if the currency unit itself is to be gold, by your insistence upon a wide continuation of bullion banking rather than some other form of currency banking, you have effectively cut off Joe's most natural choice of savings alternatives outside the commercial banking system. The savings asset of choice must be something other than the currency asset to remain safely immune from the naturally occurring ledger-induced inflations and deflations experienced by the fundamental currency asset which is itself further represented systemwide by the banking paper that is lent and circulated as its equivalent.

As we see, when it comes to currency and its supporting banking system, the function is more important than the form. So, to modify your original premise, Joe needs the existence of fiat (paper) currency as a means to set gold free...because he has a greater need for this unique yellow asset for the preservation of his wealth. He must, in ANY circumstance, seek meaningful savings protected from banking's effect on any manner of currency, be that dollars, silver (HA!), or euros. These are two distinct "jobs" (currency and savings) that require two distinct asset "tools". And given the relative importance of each "job", it is more important that Savings be the one that utilizes the best of the monetary assets, gold. And as Currency ultimately devolves to an elaborate system of paper accounting via banking, it might as well drag nothing physical down with it.

The temporary problem with the system today, as FOA has said recently, is that our current system is only halfway complete. We have expansionary fiat currency AND we have expansionary gold banking operating side by side. We don't need both. With gold wrapped up in the banking intrigue, it cannot yet provide the expected performance as a savings asset keeping score of our wealth. (Not yet, that is, if you are looking at it as a savings asset versus the dollar currency. To the folks in Turkey, it is doing just fine versus the lira currency!) Because we and the euro framers recognize that human nature will dictate the terms in the end, we are aggressively acquiring cheap physical gold today for the coming collapse of bullion banking and the resulting upward revaluation of gold in its role as a wealth saving asset.