http://www.nationalpost.com/financialpost/story.html?f=/stories/20011229/988939.html
Argentina not a failure of free markets.

Snip:
Is Argentina really the victim of laissez-faire? The country did go far in privatizing and opening up to trade and investment in the early 1990s. It also established monetary stability by fixing the peso to the dollar. The result was an average per capita growth rate of 6.3% until 1995, when the country felt the effects of the Mexican peso devaluation. But, as in much of Latin America, the reforms of the first half of the decade did not continue into the second half.

Reform fatigue was accompanied by a dramatic growth in the size of government. Argentine economist Pablo Guido explains that in the past 10 years, the gross domestic product grew by about 50%, while public spending grew by about 90%. In terms of spending as a share of the economy, the size of government grew by 28%, and now equals more than one third of the national output.

End of Snip

But here's Krugman's view anyway (NYT requires registration).

http://www.nytimes.com/2002/01/01/opinion/01KRUG.html

Snip:
Here's how the story looks to Latin Americans: Argentina, more than any other developing country, bought into the
promises of U.S.-promoted "neoliberalism" (that's liberal as in free markets, not as in Ted Kennedy). Tariffs were slashed, state enterprises were privatized, multinational
corporations were welcomed, and the peso was pegged to the dollar. Wall Street cheered, and money poured in; for a while, free-market economics seemed vindicated, and its advocates weren't shy about claiming credit.

Then things began to fall apart. It wasn't surprising that the 1997 Asian financial crisis had repercussions in Latin America, and at first Argentina seemed less affected than its neighbors. But while Brazil bounced back, Argentina's recession just went on and on.

End of snipView Yesterday's Discussion.

Happy 2002 GoldBugs!!!!

As I see that the clock has struck Midnight at USAGOLD in Denver -- and as it nears that time in the GREAT PACIFIC NORTHWEST -- I and all the Hobbits are wishing MK and all the other USAGOLD Forum posters and lurkers, best wishes in 2002.
<;-)

May Gold shine bright in 2002
And Silver move to heights anew,
Let the Cartel suffer disintegration
As Gold and GATA see vindication!

A Happy New Year to All,
Waverider

http://www.aei.org/eo/eo13626.htmSpartacus, that was quite a tip -- thanks! This is fractional reserve in fractional reverse, isn't it? Death spiral, as Makin says. And the only "solid" (externally supported) thing they'll have to sell on the way down -- USTbonds...

It's musical chairs with the people's bank deposits -- negative $1 trillion bank net worth -- that's a trillion more BOJ will have to print. So if the people have (???) $10 trillion in their accounts, and want it out whole, individuals (only) can take it out now at 100%, or wait till they get a 90% (or less) prospect in three months. Why wait? The issue becomes, in a land of traditional cooperators, beating your neighbor to the cash...

At least let us keep what we have so far acquired.

Many thanks to our host and his benevolent indulgence of our collective ravings.

I await the return of FOA/Another to reveal more of the map and its reasonings.

May God bless all peoples everywhere with continued indulgence of their obsessions...may we all learn our purpose for being here.

Gresham : Don't mix the childish/selfish behaviour of eurocrats with the evolvement of confluenting euro-ideas (political). Duisenberg invited the UK / Sweden and Denmark to join. Repeat : *invited* not enforced them to do so in a hurry. Leaders and builders do have so many personal weaknesess and ambitions. A children's garden.
2002 Goal : More Gold activism, education and understanding on *VALUE*. Let us hope our loyal host can attrackt more Gold soldiers to the frontline with more and more Physical Gold in their fists.

Miner49er : Your (the) paradigm : paradox of making the dollar (reserve-currency) stronger, by printing more of them. Answered by CobraII's posting of B. Bonner.
And together with Leigh's posting of the anti-cra$hmaker's tirade : Conspiracy or not, but denial of the existance of a sickenly growing paper-factory, is exactly turning away from the cancer on the economic body. Nobody wants to spoil this great monopoly game. And monopoly it is !
Any messenger must be killed. Human nature since homo sapiens.

Uponroof : Don't remember in what year...but the japanese already had a bank run with huge queus waiting for the trucks to provide (distribute) fiat-yen-paper ! It happened already without 1929 pictures and global panic. And it is not only these japanese citizens who are stucked into the Tax/Debt death-knell. We only need to hear the sound of the dollar mousetrap before global panic will emerge at the benefit of Gold in fullest. All describtions of these situations add to our intuition that setting Gold free will inevitably be very explosive.
Sector : Please keep us informed on the (changing) attitudes of the general public in Japan, as a Japan semi insider ! Hope your health will be back to normal asap in 2002.

Thanks all for the 2002 wishes.

Very curious to see what the financial fraternities have decided on the US stockmarkets for january 2002 ? TA suggests new highs for the Dow ? Where does the paper factory want us (sorry,the more ignorant) to go swimming ?

http://www.villagevoice.com/issues/0201/dibbell.phpIf I remember correctly the Village Voice is run by people who do not believe in a society based on private ownership. Money represents private ownership and therefore must be controlled and/or destroyed in the name of the "People " a.k.a. The State.

The review has the bitter sarcastic tone common to those striving for that higher moral level of a selfless totalitarian utopia. The second to the last sentence reveals the real problem that eats at the reviewer: "It's all right here in Cra$hmaker, just a wrong turn or two from the prosaic, universal insight that money rules the world."

I suspect the reviewer believes money is the root of all evil and that the right turn would be towards the abolition of money. I did find it interesting that the reviewer found G. Edward Griffin's "The Creature From Jekyll Island" to be "not quite entirely paranoid."

Happy New Year to All and good luck on those resolutions.

Thanks for reading and thinking about this article. What a slam, huh? The reviewer didn't waste his time trying to be witty or constructively critical; this was a hate piece!

John Doe, I apologize for giving out the bad link earlier. I've been having trouble with my computer since last night, and I fervently hope it's because everyone in the family (including the four year old) has been installing new CD-ROMs onto it and not because the weird link caused a virus or something.

Ax, the Lord of the Rings swords were a huge hit at our house! I found them at the fourth store I went to and was told everywhere that they were a very popular Christmas toy.

Speaking of "The Creature from Jekyll Island," I placed an order for the book in mid-November from Barnes & Noble.com. It was only supposed to take a week or two to arrive, but after six weeks it still hasn't shown up. I can't wait to read it, if it ever gets here.

Hope my "bean-counter" perspective hasn't upset your's or anyone else's line of thinking, but I tend to think a great deal in terms of liquidity and the positions, situations, (derivatives??) that may have a detrimental effect on the servicing of our debt. Bank runs and failures make me just a bit nervous.

Your post commenting on Japan's situation and our T-Bonds is right on IMO. I probably think in too simplistic of terms, but the US "debt" and position in the world economy can be very easily compared to a business that has been writing interest bearing checks (Bonds) with the ability to "greenmail" the holders (thanks Cobra(Too), I agree) into not cashing them. Only works in an expanding or stable economy. Not so great now. Japan has no realistic choice but to liquidate (our) paper assets. (It's interesting that they're 30 ton purchase of gold is public news. Are they starting to position to offset the losses when many are forced to "cash our checks", even at $.25 on the dollar. FOA's senario is still right on the money.)

All the volility, manipulations, lies, half-truths, etc.(IMO) by the US is to protect the "VALUE" of our debt. Eleven rate cuts (to stimulate the economy???), discontinuation of the 30 year, gold price control, etc.

My concern is why the US is letting the rest of the world line up like a creditors' committee in bankrupsy court. A forced devaluation of our debt appears to be comming.
Maybe "stubborn denial" (as Belgian suggested to me earlier in response to questions on devaluations), but I'm leaning more towards an unresolved "lynch pin" in the system
that if triggered, is more "horrific" than a much needed devaluation. IMO it just may be a 50 trillion +- (short??) interest rate derivative position that will go very bad - (it makes no difference whether they were "kickers" or just a bad hedge fund/bank gamble).

To you, Sir, and all - Have a great New Year. It has the potential to be one of the most "interesting" of our lives!!

Pizz

http://www.columbia.edu/~ram15/lux.htmlRe: Mundell. As I remembered, this essay has about everything as far as publicly visible economics has analyzed about the Euro's arrival (which was in mid-98 with the currencies pegged together). But not the extra kickers about letting gold run, the marking of reserves to market, and the rapid flaming out of the dollar. Mundell stays within the understandable role as "Father of the Euro" and comments mostly upon its pending advantages, but not an inevitable triumph, and certainly not about any exalted role for gold.

The first half is a highly-educational summary of the Euro's prospects, but you may want to cut to the "(8.) Conclusion" if you're not up to reading the full-length.

Pizz -- been doing some counting myself lately, and it's this time of year when I get the first look at what a lot of clients have done with their businesses. Many are great at their professions, but lousy at running a business. Bottom line: they get by most years, instead of efficiently milking the franchise they hold, and then a bump hits one year and they go into crisis. (Maybe that's why they're calling me?)

Sounds to me your experience is much like my own, where, after listening to all the anecdotal accounting and high-wire walking they've done, you realize you only have the time and patience to ask yourself "Does this business work? (generate cash flow, and hang onto it) and then try to convey, gently or otherwise, your conclusions to the owner.

That's what leads you to such succinct views of these big money issues, and perhaps find yourself wondering who is the real owner (profit-taker) in this enterprise?

Yours is a fresh viewpoint here, and I hope you keep it. (And prosper beyond your expectations, as well, this year.)

You better check on that order. I ordered my copy of "The Creature.." from Amazon and had to wait about 2 weeks (last summer) as they didn't have it in stock. I highly recommend it. I'll never look at history the same way again....or trust a banker. The last chapter deals with something that is more speculative (Council of Foreign Relations) and I have yet to be fully convinced of the magnitude of the conspiracy/plot/agenda or their ability to direct events toward that one world government. But as we have learned, there are Giants out there and we little hobbits best be aware of where those footsteps are headed.

P.S. Sorry, I'd send you mine but it's loaned out. It's also a book worth keeping for reference.

Leigh--You will be blown away by "The Creature". It is a history book that seems to be very well supported by quotes and sources.

The "new" me is trying to evolve to a higher plane during the recent past and going forward through life as I try to detach a little bit from the negativity and misguided attempts to "rule the world" by the elite who think that control and external power will bring them happiness.

The "old" me got very upset from reading that book however. It shows the power that we're all dealing with and puts a whole new and unpleasant light on recent history. Similar to GATA's claims, the book has never been refuted.

Hopefully, you will get it soon. I eagerly anticipate another person reading it. It contains knowledge that I wish everyone possessed.

Year In Review
Well we have wrapped up another year and now we face the year 2002. It is now a good time to review the performance of the self-serving Pimps of Wall Street. And what better Pimp to review and hold to account than the old cow of Goldman Sachs Abby Joseph Cohen and her predictions for 2001. Old Abby made several predictions and as her horrendous record attests she blew it again - "Big Time". First the closing market indices numbers for 2001 are: DOW 10,021.50, NASDAQ 1,950.40, and S&P500 1,148.08.

What did Abby Jo predict for the year end close on Wall Street? She predicted DOW at 12,500, NASDAQ 6500, and S&P 500 1650. She missed by a country mile (especially on the NASDAQ). Her DOW prediction was off by 2478.50 (-19.8%), NASDAQ off by 4549.6 (-69.99%), and S&P 500 off by 501.92 (-30.42%). This is worse than dismal performance, it is absolutely pathetic! She is not alone as other "analysts" have had similar pathetic performances. One example is Merrill Lynch's Henry Blodgett who recently was "allowed" to make an exit to "pursue other interests".

Why stop at Abby Jo's pathetic market predictions? She recently said that Enron (ENE) was an exceptional value just days before the energy trader was exposed in a massive fraud. Enron was trading at nearly $90 a share and has since plummeted to worthless. Way to go Abby Jo!

She makes a hell of a lot of predictions. Some are even right on occasion, but she is wrong far more than she is right. Make enough predictions and eventually some will be right. It is like the water dowser who will search for water using a forked branch. No one recalls the mistakes, however, everyone remembers the successes However, Abby Jo's market predictions are wrong because she gets the underlying economic analysis wrong. Some may have noticed is that she has a self-serving way of shading her statements so as not to call attention to her horrendous record, while at the same time dropping subtle reminders of the few things she was right about. She also twists the record to make it appear that she was right, while being dead wrong.

In short Pimp Abby Jo Cohen is a pathetic analyst. She's a self-serving spinner, who never ever takes responsibility for being wrong. It's the market who gets it wrong, investors who get it wrong. It appears that the market and media talking heads are taking notice. On CNBC's "Squawk Box" talking heads Mark Haines, David Faber, and Joe Kernan seem to go out of their way to make fun of her. I can hardly wait until next year when we can review Abby Jo's next pathetic yearly predictions. Maybe she should take up water dowsing.

- Black Blade

"Creature" was my eye-opener, too, in Spring of '99. Incredible to believe that I had never heard of or at least comprehended "Fiat" and "Fractional Reserve" before that. We fish truly cannot describe the water we swim in.

I've had the library's copy a few times, and mean to go out to Amazon or wherever and order my own. Maybe the author deserves to sell his own supply of them?

I think Griffin did get pulled in by a few extreme ("paranoid"?) theories, but I also think inquiring minds can stand to have it all put before them, without swallowing too much. For example, he seems to have gotten pulled in on the "Iron Mountain" report, which its author claims was a spoof, but the right wing continues to claim was for real. No big deal, either way, as I see it.

I just didn't find too many places to put my grain of salt, and I enjoyed reading, and liked the author's attitude (one of humble discovery, rather than lambasting us with Important Conclusions -- lends credibility, IMO).

Who knows what to believe anymore. I always remember "Goldstein's Book" from "1984". So after some efforts to reach out and research what lies "out there" -- easy in this 'Net age -- I try to remember to practice seeing what's right in front of my own face. (But then, didn't Richard Pryor ask "Who are you going to believe: me, or your own lying eyes?"

Enjoy.

http://www.cbsnews.com/now/story/0,1597,322486-412,00.shtml
CHICAGO, (CBS) The United States is on pace to record more job losses in 2001 than it has in at least nine years, the job placement firm Challenger, Gray & Christmas said. Through the end of November companies had announced close to 1.8 million job cuts in 2001, nearly three times more than were announced in 2000 and the largest number since Challenger began tabulating such figures in 1993. "This year the downsizing just dwarfs anything we've seen before that," John Challenger, chief executive officer of the company that tracks employment trends, said Wednesday.

Black Blade: I would expect to see continued layoffs going forward in 2002. The deepening recession will add to the "Bone Pile".

Thank you for your kind words and encouragement. I'm still months and years behind all on this forum, but will catch up as fast as I can. (I did read the link to Mundell in its entirety yesterday. Very informative read).

As a practitioner yourself, you've more than likely encountered the situation in business very similar to the old Indian fighter whose early warning signal was the hair starting to stand up on the back of his neck. Mine have been acting like porcupine quills starting about June of this year. After 30 years in the trenches (and still professionally alive and well), my intuitions are forcasting a major "blind-side", hence my self-imposed crash course in international finance. Thank-you Microsoft, the internet bubble, all the miles of fiber optics, Mr. Greenspan for the financing, that are allowing me to further my education. (Some good usually does come from even the biggest mal-investments. How else could a forum like this have been possible?)

Back to reading and thinking - I've got another "feeling" that Silver is going to play a much more critical role than most realize. The price doesn't anyway near support basic supply and demand. If derivatives are my "Lynch pin", the slippery string that's attached is probably paper gold, and physical silver might just be the handle.

Pizz

http://stockcharts.com/def/servlet/SC.web?c=$GOLD,uu[m,a]daclyymy[pb50!b200!d20,2!b50!g10!e5!a!h.02,.20][vc60][iUb14!La12,26,9!Lp14,3,3!Lk14!Lo14!Lv25!Lw25!Lr14]<;-)>>

On Abby Jo, remember your comment on used car salesmen and lemons. All she needs is a cowboy hat, a monkey, and a catchy jingle like "Go see Abby... Go see Abby...

Pizz

I just wanted to pop in and wish everyone at the best Forum on the internet a Happy New Year!

-Beowulf

Saw your note about silver. I like the concept of silver being consumed but am weary of the digital photography thing. I watched the digital cameras roll out of the big electronic retailers this holiday season, selling like hot-cakes.....hmmmmm?

I started my PM collection strictly in gold a year or so pre-Y2K, switched to silver almost exclusively in 2000 and first half of 2001. During the summer I switched back to gold.

I am presently holding silver to gold at a ratio of 25:1, probably will close that down a bit.

Canuck.

Mr. Blade,

Seasons Greetings.

I have observed your 'Bone Pile' posts over the last few months; good job.

Have you seen numbers showing payments by your government(s) to the unfortunate souls entering the Pile Zone. I wonder what kind of liability occurs at 4%, 5%, 6% etc. This may reflect a staggering viewpoint.

Canuck

We have Sherry Cooper north of the 49th. I read half of her book 'Ride the Wave', almost puked.

How do these analysts who are so far from reality (especially for so long) stay employed (or kept from bankruptcy due to lawsuits)?

Baffling.

I believe that there have to be a lot of currency driven metal purchases taking place in Argentina and Japan. If that is correct,I don't understand why physical is still available at these cheap prices. I would think a couple of Argentine or Japanese investors with deep pockets would have thrown the supply of metals into chaos by now. I could sure use some thoughts on this.

Happy New Year

movermeg

We should see the bonepile hit 1 Million in January. Standing at 985,400 at Forbes layoff tracker and that is only counting Forbes 500. Like you Canuck, I follow Black Blades Bone Pile but it lacks information. Nothing that Black Blade can do about it. You have to think further into what they choose to release to the public.

O.K.. 985,400 out of work. Not a big number unless you are one of THEM.
How many are first time subscribers to unemployment benefits?
How many have been dropped from this list cause they run out of benefits.
How many have taken employment with a wage well below what they did earn?
How many will work TWO JOBS to make ends meet?
How many will go on welfare and recieve Food Stamps?
How many will become Street People?

Companies loose profits and layoff workers.
The Government looses part of its Tax base and then on top of that pays benefits.
Then the company gets into trouble and the Government bails them out with my Tax money.
So they either raise my Taxes or Print more money up. I'M screwed both ways.
If the average household has a $8,000 in credit card debt and a large Mortgage to boot. Plus a negative savings. Unemployment could be a major factor being downplayed this year. If only they put some fiat into Gold. The stock market became their savings account and their retirement.
The Taxman waits for them to cash in the stocks too!
We do not know for sure what 2002 has in store for us. As a Goldbug,I am better prepared this year than I was last year.

There is a soft whisper on the wind, JI PAN GUUUUUUU.
Slingshot

His overuse of adjectives is the sure mark of an amateur. Also, "...the readers likely to get the most out of this...may well be those of us who...have never come so close to the edge of consensus reality that we fell off." Spoken like a true member of the Flat Earth Society.

Happy New Year!

At the end of the review there's a link to the editor. You should send in your opinion! Though it may not get the appreciation it's due.

This poorly-written review does what it accuses the book of doing - moving at a slow, ponderous pace. Oh, and did the reviewer mean to insult us by stating that our souls are stirred by the words "sound money and honest banking?" That cretin's slimy soul is probably stirred by the words "Hillary in 2004."

The topic of Uranium is a bit off topic here on the forum. However, a brief note on its behavior over the past year seems to be in order.

On or about 1-29-01 I noted on this forum that the spot price of uranium had just made its FIRST up-move in a couple of years. I also noted at that time that the price of uranium moves like a giant supertanker at sea. Once it makes a new move, it contines in that direction for long periods of time WITHOUT making the normal "two steps forward; one step back" move that every other market seems to do.

Spot uranium started the year at $7.10 and ended the year at $9.60. These do not seem like big numbers as the price rose $2.50 over the year. However, IN PERCENTAGE TERMS this represents an increase of 35.2% for the year..... Quite a significant number!

Also worth noting is that spot uranium did not even record a single down number over the entire year. Thus holding true to the supertanker syndrome.

......................

In the text above I noted that the actual numbers for spot uranium are not particularly impressive however IN PERCENTAGE TERMS it had made a singificant jump. It has been my experience with novice investors that they tend to focus on ACTUAL NUMBERS rather than PERCENTAGE NUMBERS. With $1,000 to invest, they would prefer to purchase a $100 stock that goes up to $110 rather than a $1 stock that goes up to $2. In the first case you made 10% and in the second ... 100%!

I suspect that many novice gold bugs make this same mistake when they compare gold's price to the price of silver. The lesson here is that you want to be invested in the market that you believe will make the HIGHEST PERCENTAGE MOVE.

Many on this forum have been made aware of the upcoming change in deposit insurance in Japan. In short, the upper level that an savings account is insured for will be lowered considerably; leaving large amounts of savings at risk. It also appears that some of this risk money has moved into gold as imports and sales of gold have significantly increased.

While pondering the above, a little light finally clicked on in my noggin'. I recalled an economic principle that I had jotted down after reading somebody's investment book long ago. (Perhaps R. Prechter or Doug Casey)

The economic principle went like this: "Demand is an economic concept, a function of PEOPLES WEALTH, not their DESIRES or even their NUMBERS (population)."

The essence of the above quote says this: When considering a major economic change, it is a mistake to weigh the level of DESIRE or POPULATION that would like to participate in a given economic activity. What is much more important is THE LEVEL OF WEALTH of the individual. In other words, any number of people may have a DESIRE to own gold or other precious metals, but they can do nothing about their DESIRE unless they also possess the WEALTH to act on their desire.

Back to Japan

Japan is NOT "just another country". I am not aware of any other nation on the planet with more savings in the bank per person. Because of the immense pool of savings (wealth) and the banking changes, we now have a situation that has all of the necessary tools in place to successfully influence the precious metals arena. Will the Japanese move into this arena in a large enough way to "upset the apple cart" and "jump start" the long awaited move in gold? I wish that I knew. But what we all now know is that at least THIS TIME the POTENTIAL EXISTS for it to REALLY HAPPEN!

http://quotes.ino.com/chart/chart.cgi?s=NYBOT_DXY0&t=f&w=1&a=1&v=sDown half a buck this first evening of 2002.

http://biz.yahoo.com/rb/020101/business_retail_outlook_dc_1.html
Snippit:

CHICAGO (Reuters) - Only the fittest survive in lean times, and that could mean store closures, consolidation or even bankruptcies for weaker U.S. retailers banking on good holiday sales to pull them through the year, consultants said. ``Anybody counting on a great Christmas for survival better start preparing their Chapter 11 bankruptcy petition,'' Dominic DiNapoli, managing partner in business recovery Services at PriceWaterhouseCoopers, said.

Most retail chains will be glad to close the books on 2001, as weak holiday sales capped a year already marked by the recession and the Sept. 11 attacks. Consumers slashed spending on items like clothing and luxury goods and stayed clear of malls, and spent more time at home. Holiday purchases are critical to retailers' health because they can account for as much as 25 percent of annual sales. A weak season, coupled with economic damage inflicted by the U.S. recession may spell trouble for some.


Black Blade: With more store closures and corporate bankruptcies, we shall see many more "Bones" added to the "Bone Pile". We should see a lot of such activity probably starting next week as Christmas holiday help is the first to get the axe, and then a continuation of firings of the rank and file. In a word - "GRIM"

By now, everyone around here is aware that silver lease rates are acting very unusual. Many here have discussed this phenomenon at length and have expressed frustration that no one seems to know for sure why this is happening.

While I very much appreciate what others have posted on this subject, I also believe that if you are waiting for the FINAL ANSWER on lease rates before you commit additional investment money to silver, you may wait a long time and miss part of the opportunity being presented to you.

Why do I think this? Simply this: In my view, the whole playing field for lease rates includes very basic supply and demand principles. While at the same time, it also includes elements of secrecy, deception and intrigue that circumvent the basic supply and demand rules.

It has been said that Americans are "checker players". But the "lease rate game" is much more like a fine game of "chess". Any number of apparently conflicting strateies may all be taking place at the same time in an attempt to confuse and mislead the opponent.

Conclusion, we many never know for sure what forces or motivations are behind higher silver lease rates.
Investors can easily get caught in the trap of "waiting until everything is perfect" before moving ahead. I suspect that we could be waiting for a long time for the final answer on silver lease rates. And even then, I'm not sure that we will have a truthful, accurate answer.

As a final thought, one of many investment principle that I operate on is this: "When a market closes above or below a key target for three days in a row, assume the trend is in place." (from Jim Mckeever)

Nuff said .....

If some "lynch pin" event happens, or just a string of smaller tremblors, and the US ends up being forced into a devaluation (let's say 10:1...what cost $10,000 now ends up $1,000; a person making $50,000 now ends up making $5,000; etc, etc). Is this even the way it works? What happens to gold prices/oz and its purchasing power? I'm an economic rookie still in the minor leagues and I need help from all the seasoned pros. Intuitively I've "known" the things we're seeing these days were coming (I just thought it was the cynic in me), and I believe things will get much worse before they get better (there's that cynic again). I'm a Patrick Henry kind of person...

"Are we disposed to be of the number of those who, having eyes, see not, and, having ears, hear not? For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth, to know the worst, and to provide for it."
Patrick Henry, 23 Mar 1775

I need info...I also believe God helps those who help themselves! TIA

http://biz.yahoo.com/rb/020101/business_economy_argentina_dc_1.html
Snippit:

BUENOS AIRES, Argentina (Reuters) - Argentina's new President Eduardo Duhalde, facing massive pressure to save the economy from a four-year recession, could abandon or radically change the country's one-to-one currency peg to the dollar, his advisers said on Tuesday. ``The depreciation of the peso is being analyzed,'' an adviser to Duhalde said. The new government could change the peg to 1.30 pesos or 1.40 pesos to the dollar, said the source, who asked to remain anonymous. The devalued peso would then be pegged to a new basket of currencies, including the Brazilian real, euro, dollar and the Japanese yen.

Black Blade: Obviously. What a surprise! Like no one here saw this one coming. BTW, what are the odds on the new prez making it to end of term? "Interesting Times"

BTW, Mark Mobius of Templeton Funds was in South Africa a couple of years ago and he made the suggestion to the Government officials that they should consider backing the Rand with Gold. The currency situation in SA could be a lot different today if that advice was followed.

The Best Hopes for 2002 to All "Honest Weights and Measures" folk here at USAGOLD land!!! May you Prosper.

How will the world's transition from the seventh "$system" to the eighth transpire? Through collapse or amalgamation?

My bet ...... collapse.

FOA/TG/SD, miss your postulations, friend. Hope all is well, patience is priceless.

A peaceful and prosperous 2002 to all here at the USAGold Forum!
Had to reduce my time here to just an occassional lurk over the last few months. This holiday season was murder in my retail business. Even though I just run the computer end of it, the pressure to keep sales up was tremendous.
Looking forward to catching up,
simply

http://www.satirewire.com/news/0111/enron.shtmland you wonder why we have trouble figuring it all out!

Hello, Darkhorse. Good question. However, I think you have things reversed. That is, an item that cost $1,000 normally will be $10,000 after a 10:1 devaluation. Note that it is the money that is devaluing. It's not that simple though. The prices of goods don't move exactly 10:1 in a "10:1" devaluation. Some move more, and some move less.

For instance, wages will move much more slowly than prices. If you're earning $30,000 per year and just getting by now with a mortgage payment, taxes, utilities and consumer debt, you can expect to be blasted with rising costs of groceries, gas and what-not before your wages can catch up. Since the same is happening to your employer your wages may never catch up. That is, you'll be unemployed. During this period the stock market blue chips might do pretty good until the taxes on your gains hit.

If you think about it, you've probably seen quite a bit of devaluation during your lifetime. This devaluation has been carried on slowly over time. That's the nature of modern fiat inflation. Please believe this, it's not a matter of "if" this lynch-pin event happens. It's a matter of "when".

What happens to your gold when the fiat dies? Since physical gold is money that can't be inflated, it represents wealth that will endure such a currency storm. In addition, unlike real property, it's easily transported and its ownership isn't taxed. Because of this, gold is a political metal, and its value is controlled through the paper markets that we've all read about here and elsewhere. It has quite a bit of catching up to do before its dollar price reflects past dollar inflation. If history is any guide, you can expect our beloved representatives in government to either a.) attempt to steal it, or b.) attempt to place hefty gains taxes on its exchange.

I urge you to follow the events in Argentina closely. You can easily learn the lessons now which the common man in that nation is learning the hard way. Do you think any of those folks care about what interest rate the banks are paying on their savings? Do you think any of them will ever see a penny of their "401(k)" again? Anyone with an American 401(k) should understand that these are assets registered with the Feds who will grab them in a heartbeat when it comes time to bailout our own banking system.

It appears the smart money in Japan is starting to load up on gold, and the government boys are making noises about using other people's money to save the banks. Do you think they could be next? When (not if) Japan goes, America will go soon afterwards. Believe it.

ElwoodView Yesterday's Discussion.

http://news.ninemsn.com.au/business/story_24091.aspAn excerpt:

Wed 2 Jan 2002 -- Argentina's new president Eduardo Duhalde has confirmed the country would defer payments on its $US132 billion ($A260 billion) public debt, said the peso-dollar peg was as good as dead, and declared the country bankrupt.
-----------

Here it is -- a new year, and a good time to slip on a comfortable old pair of shoes. I always did like this view of the world -- as TownCrier -- much moreso than the one in the trenches, pits, and at the anvil. But I must say without further hesitation that I'm EXTREMELY happy with the new "workhorse" that Santa and his elves have brought out here to the Tower this holiday season. But enough about that for now, I'm nearly done in with pneumonia and need to retire to a warmer room.

I hope this attached article helps each and every one here to think about the vital need for gold as a portion of your wealth portfolio.

Randy

Here's a side note that everyone can do. Go to your public library and find a newspaper dated the day or year of your own birth. Look at the prices in the ads, the real estate section and so forth.

Back then the price may have been $X for an item. Today the price may be (depending on your age) much more.

That difference, between what the price is today and what it was back then, represents the amount stolen from the common man through fiat inflation over that period of time. Now extend that amount to every item bought and sold over that period of time in this great nation of ours.

Getting the picture? Are you mad yet?

Elwood

Welcome back, Town Crier!! Sorry to hear about your having pneumonia. Hope you had a very Merry Christmas anyway.

News in from the Netherlands (Holland) : An Iranian (not Irak) local newspaper, named "Iran News", had a very positive article on the euro. Including a straigthforward suggestion of oil for euros ! Haven't seen the article myself.

M.V.M. : You ...currency driven metal (Au/Ag) purchases...
May I suggest you pick up the Gresham's link on Father euro : R.Mundell < The euro and the stability of the international monetary system >
The competition between the � and $ is a dangerous venture for both currencies, at present ! The aging father ($) and the maturing son (�). The Mundell essay gives some good insights on this.
The Japan and Argentina crisis are of the nature that a AMU (american monetary union) is out of the question.
The above Iran-news (eurasia) suggests that the young euro has ambitions.

Gresham : Indeed Sir, R.Mundell is very quiet about the Gold factor. But there are some flaws in his projections.
For example the theoreticals about GDP growth of 6%/year for the next 10 years ? And POG -reserves from 300$ to 600$?? A bit simplistic. GDP = units of production (goods+services) x price per unit !!!! Both factors of this product don't evolve linear and non-cyclic !
Theoretical GDP can explode with a declining number of produced units and hyperinflated prices per unit. The dollar block (AMU-hehoi) nor EMU are able to maintain present illusionary stability for the next decade !!!
Some drastic corrections will claim their rights. And one of these corrections is certainly the exchange from obsolete dollar rerserves (globally) into euros and Gold.
Gresham take a look at Mundell's chapter 6, where the present Argentina's events are contradicting his suggestion of a AMU.
The "fall back"-factor for currencies on the dollar and for the euro on...GOLD (!!) haven't been elaborated in that essay.
Thanks for bringing the article up Sir.

Ski : ...deposit insurance in Japan...
Multiply your deposits (splits) and you are covered again !
Keep us updated on the POU (uranium). Thanks
Japan's Gold potential (trends) : There are hundreds (and more) of Gold potentials on this globe. Let there be no doubt about this. Do some simple math on your own with the known trillions of $ available and the obscene Gold valuation in combination with 2.500 tonnes of new gold + 3.000 tonnes hedged gold and a yearly demand above the offer. And put the total above of 140.000 tonnes = 1 trillion $ into that perspective. The Gold Rush has simply to be initiated by only one identity (out of the hundreds)at the right (!!) moment. Yes, I agree it is a boring statement. But at present the financial brotherhood is tackling much other more acute problems to avoid disaster and haven't yet embarked on the ultimate lifeboat (cfr. Titanic).

BB : M.M. Templeton in South Africa and his advise about their Gold and the rand. A higher rand is a guarantee for goldmine's collapse due to non profitability. A low/lower rand is ensuring that they can keep on competing with the export of their products in a global contracting and currency competing world economy. Sout Africa is to some extend another example as to how dollar supremacy is killing the kids one by one.
Make your currency close to worthless and you remain alive.
It is * The Dollar * guys ! Nothing but the dollar. And it is not a cyclic event but "systemic" and therefore irreversable without desastrous collapse.

Nice to see you posting. I know how you feel, we are going through the same problem...I've been sick since Thanksgiving, and it truly wears a person down.

I spent my free time from Christmas to New Years going through FOA's posts from the Bonsai series forward. An excellent read; I'm looking forward to the return of our friend on the Trail.

I ran across this little bit from the "Trail #91" the other night. I enjoy going back and reading these older posts, it gives me a better perspective on where we were, and where were headed.

Snippit:

I expect that "our" crisis will begin by year end as the Euro foundation becomes complete in the issuance of real currency. The new designation of our gold reserves is a classic signal that a major crisis is coming. A suspicion will eventually arise that native US money growth, now approaching 20%, will accelerate in hyper form to save it's banking function and political gold stores will not be
available to redenominate the currency. The very thought of a loss of reserve status for the dollar is on everyone's minds and will soon break out into open currency warfare. By then; the Washington Agreement's restrictions of bullion supplies will begin to bite as players demand gold and rush from the failure of contract credibility. By then: it will become known that the only way to stay whole, without bullion relief, will be in aligning one's self within the Euro Zone of financing. Those that started early in resolving some of their political gold debts will be the first to receive backing. England? Swiss? The rush will be on!


I think 2002 is going to be a real interesting year. I'm just glad to be around to enjoy it...

For the Silver Bugs: Noticed 1m rates were moving to the + side...

All take care, and have a great new year,

The CoinGuy

Usually there is a 3 cent spread between bid and ask for silver. This morning there is a 6 cent spread. Is this another sign of a shortage? The spread for gold is wider, but not by such a wide margin

http://www.msnbc.com/news/680026.asp
Analysts sound alarm as borrowing climbs

Snippit:

Dec. 31 - Heavy debts are hounding companies in almost every industry, from telecommunications to textiles. Could that be enough to keep the stock-market recovery at bay? BECAUSE U.S. CORPORATIONS are continuing to add to their debt, instead of cutting back, analysts have begun to sound the alarm. U.S. nonfinancial, nonfarm companies had racked up a record $4.9 trillion of debt as of the end of the third quarter, according to recently released figures from the Federal Reserve. That was up 6.6% from the third quarter of 2000, even as the economy entered a recession, the stock market swooned and many companies saw their credit ratings slashed.

The fear among analysts is that the debt deluge will put a cap on corporate spending, cutting off what many economists see as a spark for an earnings turnaround next year. That could quickly put a damper on stocks, if earnings improvements that have now been predicted for months begin to look much further off. What is happening on the corporate level mirrors Americans' household budgets, which also are stretched to the breaking point with a record $7.5 trillion in debt, up 8.5% from the end of the third quarter in 2000. If consumers begin to reduce all this debt, it could put a crimp in consumer spending in 2002.

Black Blade: I have hit on this subject several times before. Corporate and Consumer debt is at record high levels and as a result it is almost certain that there will be no real economic recovery. I will say it again - get out of debt, get Gold and Silver portfolio insurance, get a supply of nonperishable foods and basic necessities, and have a few months of cash for expenses. Prepare as you would for an extended period of unemployment or a natural disaster. It should be an "Interesting" year.

http://www.kitco.com/market/LFrate.html
Silver lease rates jump into extreme backwardation with silver one month at over 14%, two month at ovr 12%, etc. This suggests that supply is tightening once again (or just still tight). The rumor remain strong that Warren Buffett is not renewing leases, and that JPMC and Citibank are covering Enron silver short positions. If any of these rumors prove to be true, then look out - musch higher rates and prices could be in store.

- Black Blade

http://www.usagold.com/Order_Form.htmlThe Commentary & Review page has been updated with all new Short & Sweet.

A Snippet:

"One of the more popular gifts in Argentina this past #Christmas was a board game called "Eternal Debt" -- Deuda Eterna in the photograph right. The subtitle "Do You Dare to Defeat the IMF?" suggests an attitude of which few in the Northern hemisphere are aware. . . . . . . . . . . . . . . If you are looking for some insight as to why Rodriguez Saa disappeared from the Buenos Aires political scene nearly as fast he entered it -- four days was I believe the length of interment -- the following three snippets (as a group) may provide an answer. . . . . . . . . ."It [the new Argentine government now displaced] is the abandonment of the technocrat approach and the rejection of the Washington consensus," said BCP Securities' analyst, Peter Molano, at the time of the Saa proposal. "There are no PhDs from Harvard or Chicago in the Cabinet. All of the IMF/World Bank alumni are gone,'' said Molano. "They were replaced by Peronist Party loyalists." . . . . . . . .From a Reuters article (12/31/01): "The collapse of the latest government signaled the probable demise of plans by Rodriguez Saa for a parallel currency, the Argentino, which was intended to help put money in the hands of cash-hungry Argentines.

http://dailynews.yahoo.com/h/nm/20020102/bs/euro_dc_15.html'Europhoria' Sweeps Public, Currency Markets
.......Solbes said he expect the euro to be used increasingly for international oil transactions........

Well Well, an old discussion resurfaces for consideration. ? is how long till America gets it?

http://www.usagold.com/gildedopinion/Jensen/index.htmlHEADLINE: Euro launch, 59 conflicts, huge debt default greet '02

In this article he paints a picture where the full-fledged launch of the euro is intended to help foster economic stability within Europe -- even as elsewhere the world is racked with violent conflict and national bankruptcy is declared in Argentina.

excerpt:
-----The world enters the New Year with history's largest currency changeover, the biggest debt default, an open-ended war on terrorism and at least 58 other unresolved conflicts of varying intensity.
+
Today's euro launch brings 15 billion new bank notes and 52 billion coins into circulation in 12 European nations. Their total value: 646 billion euros, or $568 billion. ... Three members of the 15-nation European Union -- Britain, Sweden and Denmark -- opted out of the euro. But it will enter their borders through tourism and trade, increasing pressure on them to join...along with non-EU member Switzerland.
+
Argentina's $132 billion debt default was the largest the world had ever seen. It sparked bloody riots, toppled two governments in 10 days and sent shock waves throughout Latin America. ... Optimists say Argentina could rebound as quickly as Russia did after its 1998 default. Pessimists predict a messy devaluation, a return to hyperinflation and spiraling poverty, sparking further unrest and violence.----

Another update in the index includes this article on U.S. foreign policy.

HEADLINE: Has Bush really moderated his unilateral view of the world?

Excerpt:
------Sept. 11, it is said, dramatically altered President Bush's foreign policy. Or did it?
+
Prior to the terrorist attacks on the World Trade Center and the Pentagon, Bush had pursued a unilateral, even isolationist, course on the principle that the United States should act alone in what it saw as its own best interests. ... In hindsight, said Anatoli Lieven of the Carnegie Endowment for International Peace, "the supposed commitment to multilateralism was purely tactical."-------

Click the link above to enjoy them both right here at USAGOLD.

R.

http://www.usagold.com/gildedopinion/RocketSchool/vonBraun.htmlThe latest from THE ROCKET SCHOOL OF ECONOMICS: 2002 -- A Perspective.

Introductory excerpt:

------It has been difficult over the last few months to find something of interest to write about. The world of economic activity continues to act in some rather peculiar way that seems to be a cross between total denial and ongoing bedazzlement. The insistence that the next great bull-market for stocks is just around the corner becomes tedious and the buffoons on CNBC are reaching their "use by" date. Meanwhile we have financial debacles that simply appear and disappear with no major repercussions being apparent. Enron is one example and Argentina is another. The CRB index is holding up rather well and we now have cheap gasoline again, which is nice.
+
As of today we have the official Euro, which conveniently reduces the paper currency game to three major players and a few bit players on the side. To some degree it could be said that the attempt by Central Bankers to fool the gullible public into believing that paper money is real is now in the last act. The Argentineans certainly have lost faith in paper it seems except for lighting fires perhaps.-------

Click the URL above to access the full commentary. You'll want to know why the professor offers these words among his concluding remarks:

------"Once again we point out that owning a basket of gold stocks for the long term is not a practice we would partake of. ... The physical is a lot safer, providing that you take delivery."------

R.

http://www.publicdebt.treas.gov/opd/opdpenny.htm$5,943,438,563,436.13

It's January 2nd 2002 for God sakes! The second day of the new year, and already economists are sure that the stocks are rallying and everybody is going to get their job back, and we've seen clues that we're at the bottom of a slump etc.. etc... THIS IS DRIVING ME NUTZ!!! How on earth can a slight rally in the markets after the Federal Government force feeds fiat to the people determine the consequences of an entire year??? Listen carefully smart lemming... Wait, perhaps if you were a lemming, you would never visit this forum,.. nevermind. Honestly I am completely baffled. I know a great number of people who have just lost their jobs. They're not being called back tomorrow., or the next day. It's bizarre to try to stop history from occurring through media confidence instillation. We are in my opinion, and in the opinion of many others in this forum about to experience the usefulness of our rudimentary survival skills. I think by inspiring lemmings to continue market activity we are not only creating a bubble, but this bubble is cylindrical, and it pops funny. We must go through the historical slump and slow before we return to bust and boom. If we try to force bust and boom, we simply exagerate the inevitable waveform. The waveform is almost apparent in all forms of existence, why should it not be part of our social economy?

http://www.fms.treas.gov/dts/index.htmlHipplebeck: That "debt to the penny" figure from the Treasury rates an even bigger "ouch" considering two further points.

First - from Dec 28 to Dec 31, the debt jumped about $US 70 Billion

Second: The debt ceiling, as of December 31, was still $US 5.95 TRILLION. The Treasury formally requested that Congress raise the ceiling to $US 6.7 TRILLION about three weeks ago but as yet, they haven't.

The URL is to the Treasury's daily statement, which includes the current level of the debt ceiling. The latest figures are for December 31.

http://biz.yahoo.com/rf/020102/n02347076_1.htmlBUENOS AIRES, Argentina, Jan 2 (Reuters) - - Populist Eduardo Duhalde took office on Wednesday as Argentina's fifth president in two weeks and began plotting a possible devaluation to pull the economy out of a recession that sparked bloody riots.
+
After Congress chose Duhalde on Tuesday to lead Argentina until 2003, the Peronist Party powerbroker vowed to scrap "an economic model that has brought desperation to a vast majority" -- the currency system created by his own party a decade ago.
+
....Argentines can do little to preempt a devaluation since a 12-day-long ban on foreign exchange transactions remains in force as well as a $1,000 monthly limit on cash withdrawals.
-------------

The initial size of the peso devaluation being considered (nearly inevitable) has been mentioned at 30 - 40 percent. That takes real toll on the purchasing power of a person's digital- or paper-based bank account.

When currencies float (or rather sink) in accordance with their ease of issue, you need to embark on a regular program obtaining gold, in-hand, as a rock-solid means to preserve the liquid purchasing power of your life's accumulated wealth. Centennial can help you weigh your options, and they deliver the goods.

R.

While watching the Business Week television show last Sunday 12/30. One of the talking heads (a putz) said,
"historically, in a recession, businesses usually lay off a total of 2 million people. They are now around the 1.8 million mark now".
Wow! only 200,000 more to the bone pile before the economy starts recovering. Any volunteers? Ah come on folks. The faster we reach 2 million the sooner the recovery starts.

(Sorry, I'm getting cynical in my old age)

http://biz.yahoo.com/rf/020102/n02592794_2.html
Snippit:

NEW YORK, Jan 2 (Reuters) - Investors yanked more than $52 billion of cash from money market mutual funds in the week ending on Tuesday, capping a rough year for savers, who saw yields plunge by nearly three-fourths to well below 2 percent, according to the Money Fund Report. Investors pulled $52.1 billion out of the funds, or 2.3 percent of overall assets, leaving assets just shy of $2.24 trillion, according to the report, published by fund tracker iMoneyNet of Westborough, Massachusetts. Institutions accounted for nearly all of the outflows. The average seven-day simple yield for taxable funds rose to 1.59 percent as of Jan. 1 from the prior record low of 1.58 percent a week ago, the report said. The average compound yield rose to 1.6 percent from 1.59 percent.

Black Blade: Add inflation into the equation and the result is a net loss. Add insult to injury when one realizes that short-term taxes must be paid on interest gains as well. Money Fund investors are getting a royal screwing. No wonder cash is flowing from Money and Bond Funds. Many poor investors are scared not knowing where to turn next - take a chance on the stock market? Pay off debt? Go to Real Estate? Maybe even - God forbid - that barbarous relic Gold? "Interesting Times"

http://biz.yahoo.com/rb/020102/business_economy_jobs_dc_1.html
Snippit:

WASHINGTON (Reuters) - Job cuts still loom for American workers despite signs the U.S. economy may be headed for a recovery soon, analysts predicted. The December employment report, due out on Friday, is expected to paint a somber picture of the labor market at a time when some economic data lately have offered hopeful signs. The unemployment rate is seen rising to 5.8 percent from 5.7 percent in November. The jobs report will be released at 8:30 a.m. EST on Friday.

Black Blade: In a couple of weeks when we get past the data covering the holiday season, we should see the "Bone Pile" grow much higher. In a word - "GRIM"

Gasoline took a major jump about 5 hours ago (20%), I don't see any news?

Three excellent articles in the Globe today. The most neutral to gold (increase equities) mentioned of the 14 sectors in the TSE300, precious metals was #2 in 2001. The most bullish article mentioned a prominent investment firm that is 'heavily overweight non-hedged gold producers'. He expects 1Q02 to be great for gold.

Notice; Solbes said, "increasingly used". The mystery guest said that Euro was being used a ways back on the Trail--though not in a major way. With the Gulf States now adopting their own monetary unit (today's agreement) and the UAE (CB I think) stating their confidence in Euro as a significant reserve asset, the wheel turns slowly yet covers a lot of ground.

You are one of the very best "big picture" and clear thinkers I have come across in two years plus on the web. Please visit more often.

Who loves 'ya baby?

Ok buddy, spill your guts about Ari!

http://biz.yahoo.com/rb/020102/business_health_pacificare_dc_1.html
Snippit:

CHICAGO (Reuters) - Health insurer PacifiCare Health Systems Inc. (Nasdaq:PHSY) said on Wednesday it will eliminate about 1,300 jobs, or 15 percent of its workforce, and take a $60 million pretax charge in the fourth quarter to cover severance and other related costs.

Black Blade: It didn't take long. "Bone Pile" growth begins next day after holidays. 1300 more "Bones" cast upon the "Bone Pile."

http://biz.yahoo.com/rf/020102/syb006287_1.html
Snippit:

SYDNEY, Jan 3 (Reuters) - A trading halt was imposed on shares in takeover target Normandy Mining Ltd on Thursday, pending an announcement from the company. Normandy, which is the subject of a heated battle between South Africa's AngloGold and U.S. rival Newmont Mining (NYSE:NEM), told shareholders on Monday to take no action before it provided updated advice by the end of the week. The Australian Financial Review daily newspaper said on Thursday in an unsourced report that Newmont appeared set to increase its bid by almost 10 cents a share to bring the battle for Normandy to an end.

Black Blade: A 10 cent increase in Newmont-franco bid? This is "interesting" as it really puts the screws to Booby Goodsell and his cohorts. It should be next to impossible for Booby to go it alone to match such an increased NEM bid. Now the question is whether another desperate Gold Hedge Fund by the name of Barrick under the leadership of Randolf Olipants will join this bidding war to save the Hedgers. Both AngloGold and Barrick are apparently very desperate to keep the Gold short sales program alive and the POG depressed. There is a continuing rumor from some that I know in the Gold mining industry that should Barrick join AngloGold in order to defeat the Newmont-Franco bid, we could possibly see Gold Fields cut a deal with Newmont-Franco for a piece of the action. As I have been saying this is an apparently desperate "do or die" action as far as AngloGold is concerned. Stay tuned - this soap opera is sure to have a few more twists and turns in a rather sordid plot.

Thanks Black Blade
Sounds like NEM is about to put this to deal bed.


Anglosoldout and Barrick had better use that buyout capital, that was until recently burning a hole in their very nervous pockets, to purchase gold instead.

Better do it now boys....BEFORE NDY's hedges get covered. Tic...Tock...Tic...Tock..........BOOOOOOOOOOOOM

HEEE HEEE HEEE!

One more thing that the financial media and so-called "analysts" are missing here is the $38+ million breakup fee that goes to Newmont if Newmont loses out on the bid. That fee must also be considered in the overall costs associated with this bidding war should AngloGold-Barrick win. That is $38+ million on top of all current bids which actually drops the value of the AngloGold bid.

Actually one more thing. What if Newmont-France run the price up and then let AngloGold have the winning bid at a hefty price while walking away with an easy $38+ million payoff and leaving AngloGold with some large writeoffs and lowered expected profits from future forward sales? This soap opera could have some very interesting twists in a bizarre plot that makes the "who shot JR" episode of "Dallas" look rather amateurish in comparison. No matter how it plays out AngloGold does not look to have such a good deal. It comes down to AngloGold-Barrick wins = the forward sales game continues with more Gold sold forward, and if Newmont-Franco wins = large blocks of forward Gold sales are unwound and the POG rises. "Interesting Times" Cheers!

- Black Blade

http://finance.news.com.au/common/story_page/0,4057,3521536%255E521,00.htmlYou are very informed on this and I do appreciate the view you're providing.

The 10 centavos kicker that NEM is apparently throwing out there is probably designed to offset Anglosoldout's advantage in deal timing.

AU has an unconditional bid which is scheduled to close Jan 11. NEM offer is being delayed due to various international regulatory meetings. The uncertainty of the NEM deadline is a disadvantage....and, the SEC is the judge and jury on how long the GAAP procedure will take! THAT'S one thing that bothers me. Harvey Pitt and the paid hacks at the SEC deciding between hedged and unhedged. It could get dirty at very high levels here.

So what does NEM do?

BUMPS THE BID UP 10 CENTS!

I LOVE IT!

Just announced on CNNfn that Newmont-Franco has officially raised the offer 10 cents for Normandy. I guess it is no longer just a rumor. "Interesting Times"

- Black Blade

http://www.prudentbear.com/Comm%20Archive/markcomm/122801.htmReply to your question: How did the dollar appreciate 7% this year while losing a positive yield?

Hey Cavan Man - I had the pleasure of reading Doug Noland's latest offering (link above). He says so much more eloquently and thoroughly what I tried to stuff into about 8 lines the other day as a backdrop to answering your question. I want to provide lots of preface here basically because I feel this is an important issue, and too often we answer it glibly, and all assume we all "get it," including ourselves, but do we ever really try to dissect it and become satisfied with what's really taking place?

This is not going to be the "definitive" answer, as there are several aspects that all contribute. However, this I feel is perhaps the most significant part to the overall answer in today's world, and, save for people like Mr. Noland, the least often and least adequately addressed.

I am including 4 other links to archived essays of his that each look at different components that make up the environment that allow today's credit excess and derivatives monsters to exist. Each contains follow-along examples of these components. While the essays in entirety are worth your reading, searching for the bracketed phrase will take you to the pertinent parts. They address 1) credit creation outside the banking system, and the role of money market funds (1st two links), 2) a prototypical spread trade tying overseas dollars to mortgage issuance via a hedge fund and GSEs, and 3) the miracle of transforming junk debt into investment grade using structured debt. If this stuff is not that familiar to anyone, then these examples are well worth your effort. Take your time and doodle along with a pencil as you go through them.

http://www.prudentbear.com/Comm%20Archive/markcomm/031000.htm
[In the past, when banks were the predominant intermediaries]

http://www.prudentbear.com/Comm%20Archive/markcomm/062201.htm
[The contemporary monetary system, as detailed in the past]

http://www.prudentbear.com/Comm%20Archive/markcomm/042701.htm
[Just for "fun," let's "follow the money"]

http://www.prudentbear.com/Comm%20Archive/markcomm/072001.htm
[It may be helpful to look at a recent CDO deal]

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

If something loses yield, even to the point of negative real returns, but the market price of it keeps going up, then, as I prefaced the other day, either the yield is mis-represented, or there is extra hidden value perceived and priced into the instrument.

Now, our instinct and logic, as developed within the framework of our conventional teaching, tell us that such an instrument should be declining in value. In the case of the US dollar, all the charts of money supply, and credit growth are in end-game vertical assault, and we spend more every single hour than we make to the tune of $50,000,000. Even with the generously low official inflation rate, yields on risk-free dollar debt are negative in real terms. What additional benefit to using dollars is found that makes it worth people's while to hold them, even to the point that they seem to lose value? Without a commensurate increase in worthwhile goods and services being produced that can match the potential claims outstanding in all these dollar credits, then the value of these credits must necessarily decline.

Surely all these extant claims on our future production, as their holders observe their relentless and precipitous dilution, will one day invade our shores in search of something to buy like one global financial D-Day. Surely...

But time and again, that day eludes us. I maintain that there is no contradiction here. What needs be done is to stretch our concept of a "worthwhile good." Worthwhile means something whose "use" has value. As mentioned the other day, the price of something is always based on the evaluation of perceived marginal (additional) benefits vs. perceived marginal costs. Simply, if I use, consume, (eat, wear, save, hang up on the wall, invest, lend... whatever) something and I believe the additional satisfaction (real, imagined, tangible, and intangible) that I derive is sufficiently worth what I believe I'm paying for it (i.e., the cost, and again: real, imagined, tangible, and intangible), then I will be disposed to act. Therefore something IS apparently worthwhile to the scads of people who have been climbing all over each other trying to get more of these US dollar units. But just what IS it?

Now this "something" may not be worthwhile to you or me. We may not discern it in the first place. We may perceive it, but it may be beyond the scope of availability or practicality in our life situation, or we may just not fancy the thing at all.

A most amazing statistic is cited by Mr. Noland in last Friday's essay. He mentions a ratio of "structured" finance to GDP. From the article: "Nowhere is the financial system transformation made more conspicuous than with what we call the 'structured finance ratio' -- the combination of GSE assets and outstanding mortgage and asset-backed securities as a percentage of GDP. Back in 1984, $608 billion of 'structured' securities were about 15% of GDP. At the conclusion of 1994 outstanding GSE and mortgage/asset-backed securities had surged to $2.8 trillion, or 40% of GDP. By the end of the third quarter, $7 trillion of these securities were 69% of GDP and growing rapidly."
69% and rising; more than two-thirds of GDP. Astonishing! He goes on to declare that in the last 15 quarters (from end of 1997), these "structured" finance assets have increased $962.8 billion (16%), while GDP has increased only $250 billion (3%). As he exclaims, "What's going on here?"

The clue is succinctly phrased in the essay's title. After outlining several types of capital financing that are found (and even evolve sequentially as an economy matures), he maintains that in the last stages of an economy yet one more "type" of financing arises: Financial Arbitrage Capitalism.

Long having tapped productive enterprise opportunities for all they're worth (and some...), financing evolves into non-productive betting on the inevitability of convergences, or pricing ingeniously devised contingent claim abstractions. Rest assured, all these new dollar credit units ARE being spent, and literally as fast as they are created (via their digital engines, and transport networks). They are being spent on something the buyer perceives to gain him additional benefits that adequately exceed his perceived costs in undertaking the transaction. The benefits from his bet are esteemed worth enough to take on the risks of making the bet. The bet is the "worthwhile good" produced.

So far so good... not really different from the concept of any investment, and we already know that our hemorrhaging current account deficit is kept in check by subsequent flow into and surpluses in our capital account. But why the gadzillions of dollars that kept on coming in? Certainly a point of diminishing returns is (has been) reached? Well, if these were just straightforward shareholdings, or credit lending investments, or simple variations on those themes, then this could not happen. Today's environment could not sustain the flows we are facing. The costs are too high, and the returns are too low. What is it about these bets? These trades? These coveted "worthwhile goods" that our US dollar economy produces?

Arbitraged trades are conceived like this: divergences are found in the pricing of securities that have something they both revolve around (i.e., something that you can "peg" them to). Complex mathematical modelling and statistical analysis calculates your risk and return. These models are so good (provided nothing really breaks), you can be "guaranteed" of the outcome. The profit margins on these "guaranteed" bets -- bets that the mispricings will converge, or that prices will continue to move as your "peg" indicates -- are necessarily very, very slim (what do you want, everything!?). So to make anything on them, you must make very, very, very big bets. A 10 basis point spread on a 3 month trade gets me a dime for every $100.00 (before taxes and commission). Say the typical individual puts in $1000 to, oh... $100,000. 3 months later their returns range from $1.00 to $100.00. Not the stuff that makes The Street buzz...

But what if I commit, say, $1 billion? 3 months return: a respectable $1 million. No hassles, no worries, none of the endless vagaries that press against you daily with your conventional investments. Just the purr and hum of other-worldly mathematics executing flawlessly under the raw power of contemporary computer technology instructing you what to do.

Now since we don't generally have a billion dollars just sitting around in the sock drawer, we must somehow finance our bet. So we go to our local broker, he gets a few parties together to loan us the money, and presto, we are now the proud parents of a bubbling baby hedge fund (pun intended). Now grant it, my 10 bp spread would be uneconomic once we include borrowing costs as well, so more realistically we might be working with a few basis points spread after borrowing costs. (Big guys also set themselves up to avoid taxation, and can usually get a better deal on commissions, too.

Two problems arise however: 1) others want in on the trade once it is figured out, and attempt to copy the bet. This narrows the spread as the trade becomes "crowded." You must now either commit more capital to the same bet (e.g., if spreads narrow from 10 to 5 bp, you will now need $2 billion to leverage the same returns), or you must seek greener pastures; i.e., another bet. Well just as the quest for productive new business opportunities soon results in less viable propositions, so the search for mis-priced securities soon leads to riskier ventures.

In both cases there is one overarching requirement: the need for ever more and frequent helpings of gargantuan credit -- liquidity. And as each bet is made, and new credit created, this credit is used for the basis of yet additional new credit And in the typically non-banking world in which this takes place (hence without reserve requirements, and so on), this credit created on top of credit can approach endless proportions -- ref. Doug Noland's "Infinite Multiplier" effect. Thus as the deal comes to an end, you better find something to roll these funds into, lest giant credit contractions risk convulsing the markets. And by the same token, the people who had so much fun making "free" money, will want to return to the gaming table as quickly as possible, anyway. So you better have a game to play.

But as the bets get more crowded, and spreads get thinner, and new bets pioneer even riskier frontiers, ever cheaper financing becomes incumbent to the stability and ultimately the survival of the system. The lender of last resort is sought for this ever cheaper fix. And at this juncture, lend he must, and lend he has, and lend he shall continue to do -- and in spades...

This is why the U.S. cannot share its currency's principal reserve status. It cannot share with the euro and continue to expand like this -- unchecked and unabated. It cannot stop expanding ever again. It cannot even slow down the rate of expansion, or keep the status quo. If it raises rates it not only contracts the system, but removes its well-telegraphed peg of continually lower rates, and thus risks blowing gadzillions of dollars notional into the herafter and throwing the markets into uncertainty. If it reduces its various market operations that introduce "temporary" and "permanent" additons to the system, then new bets can't get funding; crowded bets can't increase exposure to compensate; bad bets pleading for another day have nothing to roll into; and riskier bets become too risky. And if anyone of these falters, the credit contraction dynamics that would take place would risk seizing the system like an unoiled lawnmower attacking buffalo grass in the Texas summer.

So, this is one explanation, anyway, of why the US dollar can keep expanding into oblivion, yields go negative, and yet the markets still can't get enough of them. This unique property of its "use" value, namely that it is deep and liquid enough to sustain unfathomable mountains of arbitrage financing, permits the "production" of seemingly endless amounts of "worthwhile" (profitable) financial goods that the buyers still perceive to be worth the buck. At least that's how I see it from the back row of the cheap seats...

Good night, I'm tired...
miner
View Yesterday's Discussion.

http://biz.yahoo.com/prnews/020103/lath049_1.html
Snippit:

Cash Consideration Increased to A$0.50 Per Share - Recommended by Normandy Board - On Track To Close in Mid-February.

Superior Offer

Wayne Murdy, Chairman, President and Chief Executive Officer of Newmont, said, `Our bid is clearly superior to AngloGold's and provides Normandy shareholders significantly higher overall value, approximately 67 percent more cash up front and the ability to participate in the world's premier gold company.'' Based on closing prices on the New York Stock Exchange on January 2, 2002, Newmont's revised bid has a value of A$1.93 per Normandy share, while AngloGold's offer has a value of A$1.81.

Mr. Murdy noted that Newmont's acquisitions of Normandy and Franco-Nevada continue to be compelling strategically and financially. ``The revised bid does not in any way alter our plans for the new company,'' Mr. Murdy said. ``Newmont's bid offers the greatest long-term value potential through an investment in an industry leader with a diversified asset base, balanced risk portfolio, the industry's greatest upside participation in rising gold prices, greater trading liquidity, and a solid balance sheet. The royalty stream and merchant banking skills brought to the company by Franco-Nevada will contribute a solid base of stable cash flows even in a low gold price environment.''

``We intend to be a leader in the rationalization of various property interests over time for the benefit of our shareholders. However, unlike AngloGold, we will be disciplined in this process, and we will not be required to confront the disposition of important assets, such as the sale of the management of the Kalgoorlie Super Pit and the participation in the Boddington Expansion Project that are being contemplated by AngloGold.''


Black Blade: No pulled punches here! Now time for the "Hard Sell" as the squeeze is put on Gold Hedge Fund AngloGold. Normandy management tonight gives their nod to the deal. Booby Forwardsell and his Orcs are probably plotting how to counter this latest offer by Non-Hedger Newmont. Oh to be a fly on the wall! I think that the war between the Hedgers vs. Non-hedgers has yet to be fully played out, however, this A10 cent bid increase really makes it difficult for Hedge Fund AngloGold to successfully counter Newmont-Franco's offer. If Barrick wishes to come to AngloGold's rescue - Now's the time. "Interesting Times"

http://biz.yahoo.com/rf/020103/l0355749_1.html
Snippit:

JOHANNESBURG, Jan 3 (Reuters) - The world's largest bullion producer AngloGold said on Thursday it was studying rival Newmont Mining Corp's (NYSE:NEM) increased offer for Australia's Normandy Mining (Australia:NDY.AX). ``We are looking at this and we will respond in due course,'' said AngloGold spokeswoman Shelagh Blackman.

Black Blade: Yep, the Orcs are plotting and scheming tonight. Not a lot of happy campers in the AngloGold Boardroom. Desperate times for Hedge Funds like AngloGold. "Interesting Times"

http://www.gold-eagle.com/research/ascanindx.htmlGood historical perspective... Multi-part essay, I think #s 3, 8, 11 had parts echoing FOA on the Euro's threat to the Dollar via reinstatement of gold as measure of value. Get in a mellow mood, skim, and let centuries of gold's "operational wealth" wash over you (and erase these past few years of travesty).

I had a post started earlier today in response to many good earlier ones; postus interruptus, and all lost, alas...

Now to read backward...

http://quotes.ino.com/exchanges/?c=metals
Gold is currently up $2.65 an oz. on the news of the recent increased bid by Non-Hedger Newmont-Franco and the supposed conclusion of the bidding war with Hedger AngloGold. Once settled and forward sales positions are unwound we should see higher Gold prices. Tonight Silver rebounds 5 cents in sympathy. Barrick just may be forced to play their hand.

- Black Blade

Golden Dreams All!

http://groups.yahoo.com/group/gata/message/840There are numerous reasons to despise the so called 'miners' at AU and ABX, but let me just refresh your memories regarding but a few....which by the way also explains the obviou PANIC they are now oozing.

Au and ABX have always had intentions to wipe out high cost producers and non-hedgers through their gold cartel and political (WGC) connections. It would then be easy to take over those assets. Not exactly looking out for the industry at large either by their extremely hedged books, obvious ulterior motives, and pathetic attemps to justify these positions in the press.

Recall just before GATA went to South Africa for their gold summit? Here are some excerpts from a July 29 GATA report (see link above):
********

"...What reward did the presenters (GATA) receive for their unpaid efforts to go all the way to Durban, South Africa from the World Gold Council's biggest contributor, AngloGold?

Steve Lenahan, a nice enough chap, told South Africa's Business Day that ," Reg Howe is wrong on one of his charges which makes all his other claims suspect. "

Yet, Lenahan did not explain to the press nor to any of the GATA camp what Reg what he was wrong about and Anglogold has not yet responded to me about the matter.

Why did Lenahan not bring this up during the Q&A period? We were there to help THEM. To my utmost regret, I am forced to come to the conclusion that the AngloGold senior management are not only the most cowardly of folk, but they would sell their soul to the devil to perpetuate the visions of The Gold Cartel.

In February, 2001 Reg Howe and I attended a prominent gold conference in Capetown, South Africa. Well known AngloGold Marketing Manager, Kelvin Williams, launched into his presentation to an impressive crowd of attendees by mocking the "conspiracy" crowd.

I had hoped that GATA's sincere effort to lay our cards on the table in Durban would elicit some serious query and follow up probing from Anglogold because of the profoundness of what the speakers had to say.

Instead, AngloGold, the World Gold Council's single largest
contributor, used the opportunity to bash us in the South African business press.

SO BE IT. Remember those words AngloGold!
(uponroof-REMEMBER THEM NOW INDEED!)


Which brings me to the other most visible hedger, Barrick Gold.

Like AngloGold, they have taken every public opportunity to give GATA the zinger. At a New York analyst gathering last year, their spokesman said that GATA was partly responsible for their stock price's poor performance because we said there was a conspiracy to hold down the gold price. I suggest that there are other reasons that the share price of Barrick is not performing well.

The following revelation should scare the pants off Barrick
shareholders!

Harvey O sent me the following email on Friday:

"Jamie Sokalsky was on CNBC today and he totally lied about total demand for gold. He stipulated it is about 10% higher than supply.

"He was questioned by Mark Haynes and Haynes thought that central banks are supplying the excess gold to meet the demand. Solalsky said that central bank sales and leasing only represent 10% or about 250 tonnes. You could tell on the screen that he was nervous in his response to Haynes."

I happened to catch the same interview. Sokalsky was on as Barrick reported earnings a penny below expectations. I could not believe what I heard either.

This is a man who is supposed to be a NUMBERS genius. Randall Oliphant is now the Barrick President, promoted from his financial officer position. Solalsky succeeded Oliphant to that position. They have both told the investment community that their massive hedge position is 100%"bullet proof." They are on record for that statement
during conference calls and during public gold analyst presentations.

OK, maybe that is so, but Harvey O is also right. Sokalsky was either lying on CNBC or he is a dummy. According to the official statistics, mine gold supply is around 2500 tonnes and scrap supply is around 600 tonnes - for a total of 3100 tonnes. According to their own numbers, the WGC says that gold demand is around 4000 tonnes. That means that the answer to Mark Haynes' question should have been around 33%, not 10%. Frank Veneroso and GATA say those numbers are way too low.

Frank's work shows demand numbers closer to a total of 4900 tonnes.

If Frank is right, mathematical guru Sokalsky is only off by 62%. That figure is derived by dividing mine supply of 2500 tonnes into Frank's demand over supply number of 1800 tonnes, minus his 10% number.

Now, if Sokalsky can be THAT WRONG in making a statement about the supply of gold being fed by the central banks to hold down the gold price on CNBC, how wrong could he and Oliphant be about the "sancro-sanctity" of their forward sale positions? What if they are 33% to 62% off in their calculations on that too?

If they are, kiss Barrick bye-bye when the inevitable gold price explosion arrives.
********

uponroof-yes AU and ABX's days of creative bookeeping are about to end. Can't bluff people when they call your hand. Newmont-Franco are calling their hand, now it's almost time to lay down the cards. The rise in POG this morning is proof that there is going to be hell to pay. Emjoy every minute of it all you true gold longs. This is the beginning of the end for hedging.

Thanks for exposing extensively *the cancer* in your recent posting. Nice work !

Thank you so much gentlemen for your hard work and selfless dedication to the education of others. I, for one, know that what I learn reading this forum are lessons that are not only priceless, but could not be found anywhere else.
I follow in the footsteps of giants.

Thank you so muchThere are so many of us in "lurker" mode that really appreciate it when someone points out where to get "the basics" from the wealth of material that is around. Thanks.

Go Gold & Silver

http://www.theglobeandmail.com/servlet/RTGAMArticleHTMLTemplate/C/20020103/wnormand?hub=businessBN&tf=tgam%252Frealtime%252Ffullstory_Bus.html&cf=tgam/realtime/config-neutral&vg=BigAdVariableGenerator&slug=wnormand&date=20020103&archive=RTGAM&site=Business&ad_page_name=breakingnews-businesshappy reading folks

Great Post

The End of the Beginning.

Re: Anglo

Had the unpleasure of working as a corporate controller for a division of Anglo American in late 80's. Their corporate philosophy is somewhere between arrogant and totally unreasonable. They hire "yes" men as CEOs and dictate the impossible and expect it yesterday. You ought to talk to their "security" people. Scared the ____ out of me and I'm Sicilian!!!!!

Pizz

Great posts Minor, Black Blade, Mr. Gresham, uponroof - thank you.
Re: Lease Rates - what happened to todays quotes? Is that a computer glitch?
A great day to All,
Waverider

Sorry Miner.
Waverider

For your expansions on the merger. My mind has been just "skimming" that deal as I tend to focus more on the macro issues of gold/economics as opposed to the specific going ons of a couple of the miners (that I don't own stock in). But your recent posts have clearly brought this into a more "macro" focus for me to ponder.
The world is sooo big, that we have to pick our spots.
Again, thank you for bringing this front into focus for me and us.

http://quotes.ino.com/exchanges/?c=metals
Silver is still moving higher by about 9 cents this morning. The COMEX supply is a bit higher at over 100 million oz. Of course the majority of that I believe is registered and not "supposedly" available for delivery expect to the reciept holders or unless they agree to lease their Silver. Available Silver supply appears to perhaps a bit tight still. Gold is still a bit higher after the initial shock of the higher Newmont-Franco bid for Normandy. This is not a good day for the Hedge Fund miners. There must be a lot of hurried boardroom meetings today. Oh to be a fly on the wall.

- Black Blade

http://biz.yahoo.com/rb/020103/business_economy_jobless_dc_2.html
Snippit:

WASHINGTON (Reuters) - The number of Americans lining up to file for first-time unemployment benefits rose sharply during the week ended Dec. 29, in a sign that the labor market remains soft, a government report showed on Thursday. Initial claims for unemployment benefits posted a rise of 36,000 to 447,000 from the previous week's revised figure of 411,000, the Labor Department said.

Black Blade: The "Bone Pile" clinks a bit louder each week as more "Bones" are dumped on the ever-growing pile of discarded US workers. This should continue for some time and even accelerate as the recession deepens. Get prepared: get out of debt, get a months of nonperishable food and basic goods, get Gold and Silver portfolio insurance, and get cash on hand to ride out a few months expenses. If you are one of the unfortunate "Bones" cast upon the "Bone Pile" then you just might ride out the storm a bit easier. If anything as long as your prepared you will sleep a bit easier at night.

http://biz.yahoo.com/rf/020103/n03157107_2.html
Snippit:

NEW YORK, Jan 3 (Reuters) - Struggling credit card company Providian Financial Corp. (NYSE:PVN) on Thursday said it would cut 800 jobs by the end of next week, and signaled possible further job reductions and the sale of assets to boost performance.

Black Blade: More bankers "Bones" off to the "Bone Pile".

http://biz.yahoo.com/rf/020103/sd172899_3.html
Snippit:

JOHANNESBURG/SYDNEY, Jan 3 (Reuters) - Newmont Mining (NYSE:NEM) looked poised to win a takeover battle for Australia's Normandy Mining (Australia:NDY.AX) with a sweetened bid on Thursday, as AngloGold Ltd refused to up its latest offer.

Black Blade: Done deal? Maybe. Time will tell. Just when we were having fun too. This must be a bitter pill for AngloGold to swallow. Still there is probably a lot of backroom discussions with other Hedge Fund miners for a possible response. For now they must scramble and look for other miners to satisfy the insatiable hunger of the hedge book. "Interesting Times"

Franco has its hand in many mines,and with most of them they receive a royalty or what they describe as a percentage of net- smelter.In my opinion they are the smartest of all the gold mine companies.They make money as long as gold is being mined ,no matter what the cash cost is.They own part of some mines that hedge and as such thay are a hedger except that they can make money no matter what price is,as long as gold comes out of the ground.They can make money at 200/oz from thier hedging partners as long as gold comes out of the ground.That what a net smelter agreement does.
To suggest that Newmont does not hedge is inaccurate,as long as Franco gets a percent of net smelter from mines that do.Franco makes money even if thier partners loses money,as long as gold comes out of the ground.If gold goes up they make money even if thier partners don't.If gold goes down, they make money even if thier partners don't.As long as gold comes out of the ground to the smelter,they make money.

I have a gut feeling your bone pile population is going to do exactly what you say BB.
What happens when most companies get slow around Christmas? They keep people on for awhile at a cost so as not to ruin their Christmas. What happens after Christmas?
"Were really sorry to have to tell you this guys, but it looks like the "Big Boys" want to do some more chopping." I've been there, and I'm sure I'll be there again in my industry. Unfortunate, but it's the way the cookie crumbles.

On Argentina If the country defaults on all their obligations, and the country comes out of it OK, then won't other countries see that they too can do the same. What is the worst that can happen by a country declaring bankruptsy? They will not get invaded will they? I hope this spells the end of the IMF.
On deep storage gold. I believe that this new way of describing US gold could be a way of saying that through gold swaps, deep storage gold now represents ownership of forward sold gold still in the ground traded for physical bars.
On Afghanistan. I think there is a great battle going on for control of the Caspean oil route between Russia and the US. Russia controls the northwest and US controls the southeast. That is why the Northern alliance fighters were stopped from going south to Kandahar. The temporary president and the foriegn minister of Afghanistan are US puppets, and the rest of the ministers are Russia's. There is a great silent war being played out there. Russia has the advantage IMO and they now control both oil routes out of the Caspean region

You miss one "minor" detail here. Both Newmont and Franco-Nevada are not subject to any margin risk if the POG rises, whereas the truly Hedged miners are. Having a royalty interest in a Hedged miners operations is not the same as being hedged by any stretch of the imagination. Even Royal Gold (RGLD) has many royalty interests and they too would dispute that they are hedged. Franco (either it was Franco-Nevada or Euro-Nevada) a few years ago used to hold onto physical gold as part of their portfolio. I am not sure what your point is here. They never referred to their "forward sold" gold position in their annual reports - go figure. Cheers!

- Black Blade

My most favoured television show of all times. In one particular episode Bart's friend Milhouse holds up a bottle of medication called "Represitol." I think of this and laugh every time I see the POG lose gains.

Don't be too hard on the hedgers,they have removed a great deal of supply overhanging the market.If they hadn't done that, the price might never go up and gumment would retain control of gold prices.This way the overhang is reduced and we can look forward to the day when gumment influence is reduced and market forces can resume control.
Hedging simply took some marginal mines out of production
and sold off inventory awaiting the day when a better balance of supply -demand will allow prices to rise above production costs.The hedgers didn't create the oversupply,they are simply selling someone elses inventory.That inventory existed no matter what the hedgers did.If you want to blame someone,blame the Gumment that removed gold from a reserve statis as money.Do you really think if all the mines were closed,the price of gold would go up?I don't think so !That would leave ALL the control in the gumments hands,they would set prices and ration supply.
During WW2 the Gumment rationed Coffee,Sugar,Gasoline,cooking oils,butter etc.The price didn't go up 'supply was controlled via ration stamps.
I have a vivid memory of that.
Either way the Gumment has an interest in keeping the price of gold down.It competes with fiat Dollars.
They don't want you to have an alternative to the DOLLAR.
THe whole Bond market and stock market depends on a strong Dollar.Its all about control ,and removing control from the Gumment via hedging is beneficial even if it seems destructive in the short term.

CHRONOLOGY-Battle for Australia's Normandy Mining
January 03, 2002 11:12:00 AM ET


(Updates with AngloGold statement in para 13)

SYDNEY, Jan 3 (Reuters) - The battle for Normandy Mining Ltd, Australia's biggest gold miner, has provoked a fierce bidding war between two of the world's largest gold miners. The following chronology highlights the main points.

The A$ value of the rival bids, which include stock and cash, has varied in line with changes in the bidders' share prices and exchange rates.

- - - -

Sept 5, 2001 - South Africa's AngloGold Ltd launches surprise scrip bid for Normandy Mining Ltd , offering 2.15 AngloGold shares for every 100 Normandy shares.

The A$3.2 billion (US$1.7 billion) bid values Normandy at A$1.42 a share, compared with its closing price the previous day of A$1.10 a share.

Nov 14 - Denver-based Newmont Mining Corp (NEM) makes rival bid, offering 0.0385 Newmont shares for each Normandy share plus up to five Australian cents in cash. The bid values Normandy at up to A$1.70 a share.

Newmont's bid is tied in with an offer to buy Canada's Franco-Nevada Mining Corp and would make Newmont the world's biggest gold miner.

Nov 15 - Normandy says directors to accept Newmont offer.

Nov 29 - AngloGold sweetens bid with 20 cents a share cash, boosting its bid to A$1.65 per Normandy share or A$3.7 billion. This tops Newmont's offer, which has fallen to A$1.51 a share due to a weaker Newmont share price.

Dec 10 - Newmont strengthens cash component of bid, offering an unconditional 40 cents as well as scrip, valuing Normandy at A$1.90 a share. Normandy says it will recommend the bid, which tops an independent valuation of A$1.48-A$1.88 a share.

Dec 27 - AngloGold sweetens bid for second time, adding another 10 cents cash to take value of bid A$1.83 a share.

Dec 31 - Normandy says it will update its advice to shareholders by end of week.

Jan 3 - Newmont also sweetens bid a second time, adding a further 10 cents a share cash to its offer, valuing Normandy at A$1.93 a share or A$4.3 billion. Normandy recommends bid.

AngloGold later says it will not raise its offer, currently worth A$1.82 a share, saying it had no basis to justify an increase.


Source: Reuters, company announcements. REUTERS

� 2002 Reuters

Which mining company is more moral in your mind,Newmont who continues to mine gold and sells it into a market that has been in oversupply and thereby increaseing the oversupply or Barrick who sells existing above ground inventory and reduces oversupply and replaces the above ground inventory with in ground reserves.?
Who is doing more to improve the out of balance supply /demand situation?

http://biz.yahoo.com/rf/020103/l03533859_1.html
Snippit:

LONDON, Jan 3 (Reuters) - Silver advanced to three-month highs in a nervous European market on Thursday, boosted by speculative fund buying and uncertainty triggered by an incorrect new release from the LBMA concerning delivery times. ``Trading is very much speculative at the moment. It's purely a fund-driven thing in New York...The market is still nervous about prices and forwards and that's keeping the upside pressure on prices,'' one trader said.

Others said confusion over a press release issued late Wednesday by the London Bullion Market Association (LBMA) was the catalyst pushing prices higher during the day. The LBMA said it had extended the period for physical delivery of silver between clearing members to 15 days from five working days, but subsequently retracted this on Thursday. Extending delivery times would have eased a delivery logjam, but maintaining them at five days suggests that the current administrative bottleneck at warehouses outside the UK will continue in the short term. ``...we are staying very cautious on the silver...(we) can't stay short of it at the moment and risk being caught without it,'' a third trader said. One month lease rates were quoted steady at around 19 percent on Thursday afternoon.

Black Blade: Delivery logjam, extended delivery dates, lease rates jump higher and remain in extreme backwardation. If I were short I would be worried and would cover. Something very unusual going on here. The rumors of JPMC and Citibank covering Enron Silver contracts coupled with Warren Buffett not renewing leases continue to plague the market as well. "Interesting Times"

OK, I'll bite - where is this Gold supply overhang at? I can't access the World Gold Council data today (that part of the site is under construction). Maybe MK here at USAGOLD could repost that data as he has several times before in "News and Views" or maybe someone here has an alternative site for Gold supply-demand tables. The demand for Gold has outstripped supply by several hundred tons for several years now, only to have that demand ultimately met by those Central Banks willing to loan out Gold to Hedge Funds and Hedge Fund miners that is eventually to be paid back (in Gold). Much of that loaned Gold is - surprise surprise - Sold by by the Hedge Fund miners! Go figure.

So really now, where pray tell is this Gold supply overhang? If anything it is an artificial supply overhang - not a physical one. The Central Banks do demand repayment. If the POG rises sharply the Central Banks will definitely want the Gold returned or higher risk margin. That is where the Hedgers have themselves trapped. When the POG rises it is Ashanti, Cambior, and Emperor all over again - and if the POG rises sharply the Hedgers are toast.

- Black Blade

"Interesting Times"

That was an amazing post! You really captured the asymptotic vision of how tiny and vulnerable the profit margins on massive trades are. And how they are operating on a "debtor in possession" bankruptcy regime. When you're bk, you might as well run up the total, 'cause it's the same penalty if you double it, and you get to play (collect salary, fees) longer.

When it (when _anything_, especially interest rates) reverses, everything seizes up at once. Instant Argentina.

(We can assume, can't we, that no one has had time to run up any such games in Euro terms, requiring ECB compromising its stability principles to rescue them?)

Cheers.

During the course of the day three different newschannels have mentioned the 'upped bid' of Newmont and have declared them the winners of the bidding war.

Is it a done deal, and if not yet done what would you guesstimate the possibilities of Newmont not succeeding?

Canuck

In some 40 minutes John Ing will be on ROBTV to comment on the Newmont-Anglo battle for Normandy and the future of gold.

I am still waiting for the Fat Lady to sing. Anything is possible such as Barrick teaming up with AngloGold for another round. There was also some rumor that Gold Fields could even team up with Newmont-Franco to counter an AngloGold-Barrick tag-team. As it stands now, AngloGold would have a very tough time to finance any further bids. They probably regret selling off their Free State mines to Harmony under the recent Rand-USD exchange rates. However, if nothing new materializes in the form of a white knight, I would assume that Newmont-Franco will win the Normandy bidding war. This is a "Grim" day for the Hedge Fund miners as there is nearly a 9.5 million oz hedge book that will be unwound at Normandy. Also we should see another 1.5 million oz hedge book unwound if Harmony's acquisition of Hill 50 Mines goes through. Meanwhile, even Durban Roodeport is unwinding their hedge book as well. There is a real shift away from forward sales occurring in the mining industry. As for the Hedge Fund miners - "The Heat is On!" Cheers!

- Black Blade

I take it you're somewhere around 65-70+ y/o if you remember rationing (I'm assuming it was here in the states). I'll be the first to admit I'm a rookie at most of this stuff, but I've learned quite a bit here and done some homework on my own...I don't see how you can logically
make the arguments you've posted. If F-N owns parts of mines that hedge, that doesn't make THEM a hedger...might not show a lot of integrity, but it still doesn't make them a hedger. And as far as gummints controlling, rationing, confiscating, setting prices or whatever...I think we all know any government can/will do whatever it thinks is best for those that run it, not what's right/best for their people. And the argument that Barrick is doing the world a favor by selling above ground supplies (thereby reducing the supposed supply overhang) and then replacing the above ground supply with mined gold...is that a Zen thing? I'll have to make an appointment for a cat scan if that sort of logic ever makes sense! Sorry, (and really no offense intended, I just totally disagree with you) but you sound a lot like that Barrick, uh, pusher at the site around the corner.

http://www.usagold.com/gildedopinion/BakerSigns.htmlWandered by and caught the conversation:

Here's the Supply/Demand numbers as published by Leanne Baker at our Gilded Opinion page. The source is Gold Fields / Salomon Smith Barney.

http://investor.cnet.com/investor/news/newsitem/0-9900-1028-8347395-0.html?tag=a
ts

A little perspective.

NDY's 9,500,000 ozs. that are going to be bought back on the open market equates to 270+- tonnes.

(9,500,000 divided by 35270 = 269+ tonnes)

In other words, NEM-FN could buy all the gold at the next 12 BoE 'auctions', and still be 30 tonnes short!

Point is there is a lot of hedged mines out there who are beginning to wonder how long they can safely wait before they cover, or be late-and have to pay more than they can afford....which will trigger 'en faillite' or is that 'force manure' (majure).

Oh and let's not forget about the Japanese. They still want their fair share. hee hee hee

I sure am glad I am not a gold hedge fund right now.
********

Canuck-this deal still has to get through the SEC. We all know how gummints feel about higher gold prices. And on that note, well said, sir darkhorse. You make some very good points.

Redo your math on Horatio's age. I well remember the ration coupons and metal drives during WWII and I am not yet 65. Some of us remember things VERY well when we were 2-4 years old. Later, Interstate

You see exactly my point why NEM-FN will likely set into motion a cascade of events that will probably lead to a sharp rising POG. Now think of the unwinding of an additional 1.5 million oz with the HGMCY acquisition of Hill 50. That is just the beginning, DROOY is unwinding their hedge book as well. I understand that Kinross may be considering doing the same. A change is in the air. Cheers!

- Black Blade

Oops, sorry...I took the early 40's and assumed an approximate age of five. I should know better than to think that everybody else has as much of a problem with CRS disease as I do. :)

http://www.usagold.com/gildedopinion/BakerSigns.html
That is exactly what I was looking for! I should've known to check there first. I should think that this data will put to rest any idea of a Gold supply overhang. Cheers!

- Black Blade

http://www.gold-eagle.com/research/ascanindx.htmlAbout half way through this series...very interesting. Perhaps the great influx of new money we are seeing is an attempt to maintain stable money supply through the Enron and Argentine defaults...great destroyers of money. Deflation upon US being offset by currency creation to maintain stable pricingof goods and services?

http://biz.yahoo.com/rf/020103/n03198509_2.html
Snippit:

NEW YORK, Jan 3 (Reuters) - Merrill Lynch & Co. (NYSE:MER) said on Thursday it is closing an office in Denver with 1,200 employees, in the latest cost-cutting move by the largest U.S. securities firm.

Black Blade: The "Bone Pile" growth resumes. Not a sign of a healthy robust economy or a sign of an economic recovery. We should see many more layoffs as the Recession deepens over the next several months.

http://quote.bloomberg.com/fgcgi.cgi?T=marketsquote99_news.ht&s=APDQCqBSDSGlsbCA1Enjoyed your posts today! I saw your mention of Harmony's bid for Hill 50. Something I was looking forward to as a holder of Harmony's shares. Any company that is going to unwind hedges gets an extra star in my book, but the story gets more interesting. Enjoy the article...


The CoinGuy

Thanks for the note.

I watched John Ing at 4:40pm (Eastern) on RoBTV (Canuck version of CNBC). He said of the latest NEM development "that although the deal is not final, it looks like a done deal to me".

He believed "gold would average $325 in 2002." (Cool, $300 first quarter, 325 2nd and 3rd and $350 4th, then the hedgers pop and we have 4 digit gold in 2003)

He mentioned Kinross might be gobbled up in the consolidation process and he saw an association "with the intermediate, low-cost producers such as Goldcorp, Agnico and Meridian".

In a word, awesome!

Canuck

Black Blade - I totally concur with you - any notion of gold oversupply is ludicrous and as MK suggested the Leanne Baker analysis written about a year ago the numbers are congruent of my own analysis - which may not mean all to much. Still in L.B's numbers a decline in producer forward selling was already anticipated, though numbers seem a bit low now.

The real "swing"-factor always was and will be new public investment demand - as disinvestment may have have run its course - it seems that overall public gold investment demand was up substantially almost everywhere last year.

All else being equal, here are the main positives for a generally higher POG level:
* Rising Investment Demand - (ask your PM dealer about the
brisk pace of sales over the year.)
* Declining forward sales by producers and trimming of
hedge books - and, yes even by AU/ABX/PDG - and more
get trimmed by takeovers - forcefully! (Forward sales will
only accentuate tomorrows shortfall - since you can't sell
the same product twice - tsk, at least not if you're not
allowed the same accounting procedures as CB's ...)
* New production slightly lower (as highgrading and lack of
defining new reserves start to bite - early wake-up call
to the main producers as they've been burning the
candle from both ends. Consolidation doesn't add to
overall reserves and lack of reserve replacement will
severely curb production down the road.

Assuming that forward sales and CB leasing (a/o sales) have filled the gap, so far; Assuming that Frank Venoroso and GATA is correct by an overall gold short position of about 15.000 tons. Further assume, that both producer forwards and CB leases are creatures of similar heritage, and then mix in the WA of Sept. 1999 ...

Again, assuming the official holds 33.000 tons of au - even as it seems about half of the gold is gone (or in deep storage?), another 40%, or so is held in EU CB's, the maneuvering room seems to become extremely tight, to say the least...

...And not last, if NEM wins the battle over NDY, together with cash rich FN, I would conclude, that a major sea change of perception will occur pretty fast.

... and this may lead to a very dangerous novel perception
that the overall price finding mechanism of the US $-based futures markets for most of all important commodities may be perceived as coming close to green-mail! - So do cry for Argentina ... and pray another Enron may not surface, though it may have only been the tip of the ice-berg ...

... And finally, let the latest monetary injections of the boomers 401 K's filter into the SM's - until, maybe mid January - and then you may learn what a lesson a blow off top can deliver to the psyche of a generation of the buy and beholders.

... And lastly the euro had a nice debut - and whatever you and I, for that matter think - it is the first contender to the $-supremacy, hegemony as the sole reserve currency of all unbacked, true currencies in 30 plus years.

Sorry, for boring you - cb2

Tonight, according to the e-mail I just received. He's scheduled on the Roger Fredinburg Show at 9:00 central and 7:00 Pacific time which, I think, is 11:00 my time (EST). I have trouble staying awake until 9:00! I've never heard of Fredinburg.?
I put Roger Fredinburg in the search box and found KWRO 630 and KBTK 1310 which I'm guessing are AM radio stations.
Go get'em Bill !!!

CoinGuy -

I knew that the RFC group was looking into the Hill 50 deal as possible advisors to some outside group. The possible suitors mentioned are generally unhedged expect for Sons of Gwalia (with an extreme hedge book). Personally I think even Gold Fields would be a good candidate as well. Now that they have swallowed up Delta I wonder how quick that hedge book will be unwound.

Then again, I also hold shares in Harmony, Gold Fields, Franco-Nevada, and a few weeks ago took some shares of GoldCorp. Hopefully I can get through tax season and extinguish debt (incurred on some capital improvements) in the next couple of months because I will be looking to increase the physical portion of the portfolio for some "balance."

Canuck-

I think I can almost hear the "Fat Lady" warming up in her dressing room. Sounds like Wagner.

Cheers!

- Black Blade

http://www.usagold.com/THEGILDEDOPINION.html



THE GILDED OPINION is privileged to present another timely article by the highly regarded analyst Paul van Eeden. In "Making Sense of the Gold Price" van Eeden explores the background behind the current market and puts prices in the perspective of currencies from around the world. Read why van Eeden believes, "Gold appears to be the single best investment for anyone interested in capital preservation today."

http://www.lbma.org.uk/Al25vat.pdfFor your analysis and interest from Rothschild's Kozlowski and for the record. MK

http://biz.yahoo.com/rb/020103/business_economy_argentina_default_dc_1.html
Snippit:

BUENOS AIRES, Argentina (Reuters) - Argentina missed a $28 million bond payment due on Thursday, a government source said, touching off a debt default that could become the biggest in history. ``We are now in default. The bond payment was not made,'' a government source told Reuters on condition of anonymity on the same day that new President Eduardo Duhalde swore in his cabinet.

Black Blade: Just the Tip O' the Berg. Just $132 Billion to go.

http://biz.yahoo.com/rb/020103/business_airlines_united_dc_2.html
CHICAGO (Reuters) - United Airlines said on Thursday that it will close five domestic reservations centers and furlough 899 workers as a smaller flight schedule following the attacks on the United States reduced reservation activity.

Black Blade: Dem Bones - Dem Bones - Dem Dry Bones �..

From CB2's 67640, "Sorry, for boring you - cb2"
Don't be, you never have.
******
Thanks for a great summation
Of the much talked about hedge situation
Whether, in gold, unhedging decisions
by volition
Or, in silver, not renewing leases is
the suspicion
Both may result in metals that
higher prices command
And surely then, our long awaited
new public investment demand.
Rich

http://www2.marketwatch.com/news/newsfinder/newsArticles.asp?guid=%7B4D1FBBFD%2DED93%2D45B4%2DB7DB%2DFE76E7229FED%7D&doctype=2005&siteid=mktw&selCount=50&value=gold∝erty=word&1/2/2002 3:15:00 PM

Jan 02, 2002 (FWN Financial via COMTEX) -- New York, Jan. 2 (ODJ)
snippet: Although gold has been loathe to respond much to the recent terrorist attacks or to the Argentine loan default, it may stand to gain more from further deterioration in the Japanese economy, according to Leonard Kaplan, president of Prospector Asset Management in Evanston, Ill. "With the huge pool of capital in Japan perhaps looking for a new home, it is indeed possible that gold and other precious metals may finally be seen as a hedge against their rapid depreciation of their currency and a store of value for the notoriously conservative Japanese mainstream investor," Kaplan said in a market report.

For the moment, however, gold will be focused on currency moves and will probably avoid any major price movement. How the dollar receives U.S. monthly payroll data due for release Friday will be watched closely. "Unless it gets above $280, you won't really see any short covering. You may see some selling under $275. Otherwise it will be trapped in that range," the bank trader said. Comex silver futures may have dropped a few cents but continue to look steady because of a lack of aggressive selling, a second trader here said. The bank trader dismissed the notion that the strength of shorter-term silver lease rates was related to loans being called in before the end of the year, but said he wasn't sure what was behind the firmness. "But with lease rates still negative 15% for one month lets you know the squeeze isn't over yet," he noted. While initial support for March is seen around $4.50 an ounce, the price could tumble back to the $4.20s, from whence the runup started, if lease rates come off, warned trader Jim Pogoda of Mitsubishi International Corp. Liquidity will only be eased by long liquidation, which isn't likely while dollar interest rates hover around 2% a year, making it cheap to hold silver. Standard Bank London Limited predicted the price of silver could surge above $5 an ounce again in the first quarter of the year but its ability to hold that level depends on the balance of Chinese selling above $4.75 versus the Indian preference to buy it nearer $4 an ounce.

USAGOLD67640"What he said."

Get physical :>).....CM

Wisdom has no boundaries in space and time."These are the times in which a genius would wish to live. It is not in the still calm of life, or the repose of a pacific station, that great characters are formed. The habits of a vigourous mind are formed in contending with difficulties. Great necessities call out great virtues. When a mind is raised, and animated by scenes that engage the heart, then those qualities that would otherwise lay dormant, wake into life and form the character of the hero and the statesman".

John Adams

I believe he was right then and is right as rain still.

Take heart Canuck!!!

http://www.latimes.com/news/nationworld/politics/la-000000671jan03.story?coll=la%2Dnews%2Dpolitics%2DnationalQuick Snippit:
"Treasury Secretary Paul H. O'Neill has notified Congress that the current $5.95-trillion debt ceiling could be breached as early as February. He asked lawmakers to move quickly to raise the limit to $6.7 trillion. The outcome is not in question. Failing to boost the ceiling would cause an unprecedented default on payments to holders of government bonds. But the vote will reopen a rancorous debate over the tax and spending priorities of the Bush administration and its allies."

Nice thing about January, all the funds have to do is buy, buy, buy for the first 5 days, because "as the first five days go, so goes January, and therefore the rest of the year." Or so the oddsmakers' say.

Kind of puts a (psyco)logical floor under the SMs. Would not suprise me to see us stay above 10K thru summer with a late push to 12,500. As $ and bonds delcline, rates and inflation increasing, hot $'s got to go somewhere. Has similar situation to about 1970 with a false break over 1000 and then drop to 600 or so.

Also have to consider the "political" cycle. Too early for any type of sustained run....don't think they could hold it thru 2004.... earnings running too far behind valuations.... Best guess would be the false breakout and a CRASH this fall, then a slow sustained grind....flat basing for a year or so and then grind it up thru 2004 for reelection.

Similarities to late 60's thru 70's are all over the place.
War, inflation, (stag-flation if we're luckier than I think) Dow stock charts look similar (run a monthly from 1950 - 1980 on the Dow). Anyone want to bet we won't have some type of oil shock in the next few years? (Back then had a 71 Jag XKE (GREAT CAR) but it only held 10 gallons. Spent about as much time in gas lines as I did drivin' it.)

Gold & Silver lookin' better all the time, just going to be one heck of a lot more "exciting" this time around. Like comparing an Apollo launch to Deep Impact!!!

Pizz

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3OCP4LZVC&live=true&tagid=ZZZINS5VA0C⊂heading=middle%20east%20and%20africaSnippit:
"Ashanti Goldfields, the African gold mining company, has contacted its two biggest shareholders to approve the terms of a deal aimed at refinancing $219m (�151m) in convertible bonds. Ashanti, once one of the world's largest gold miners, was pushed to the brink of default in 1999 when the gold price moved against its bets in the futures market. That prompted a wave of calls on its hedge book."

Waverider: Black Blade - you've repeatedly warned us to remember the Ghost of Ashanti Past...sounds now like they want the Ghana government to relinquish its "golden share" in Ashanti to free the company to take part in industry consolidation.

The Times puts Champion de Crespigny, the founder of Normandy, in the spotlight and says that he, or at least Normandy's board, prefers Newmont to AngloGold and Barrick. It says that the offer from Newmont also spells almost certain death to a bid by AngloGold.
http://www.thetimes.co.uk/article/0,,37-2002003332,00.html

The FT, on the other hand, gives full marks to AngloGold for unilaterally calling a halt to the bidding war for Normandy Mining - even if it has not yet thrown in the towel.
It says that Investors can take (on January 11, 2002) AngloGold's offer as it stands, or collect more cash from Newmont in the future. Given the volatility of share prices, and if they believe gold prices will rise, Normandy shareholders may prefer to wait and opt for Newmont's UNHEDGED gold position, says the FT's Lex column. Concerning the consolidation talks between AngloGold and Barrick Gold even as it raised its offer for Normandy. It could be a daunting prospect: gold miners' return on equity rarely exceeds single digits, and Newmont has shown how strong is the temptation to overpay. Yet less fragmentation, if that helped push up the gold price, would benefit all.
(The Invisible Hand: would that benefit hedgers?)
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3I0CL01WC&live=true

http://biz.yahoo.com/rf/020104/syd211363_1.html
Snippit:

SYDNEY, Jan 4 (Reuters) - Australian gold stocks rallied on Friday as an intensified bidding war for sector leader Normandy Gold Ltd (Australia:NDY.AX) shored up confidence that offers would emerge for other likely targets. Shares in Normandy jumped nearly three percent to a new four-year intraday high in early trade after Denver-based Newmont Mining Inc (NYSE:NEM) boosted its offer by 10 cents, taking it to A$4.3 billion (US$2.2 billion).

The latest offer in the drawn-out battle between Newmont and South Africa's AngloGold Ltd propelled other Australian gold players higher on speculation they are already on offshore predators' radar screens. ``The likelihood is there is going to be more action. There is going to be even more focus on those companies that are left because there is a diminishing pool of takeover targets in our market,'' Intersuisse mining analyst Gavin Wendt said.

Analysts and fund managers said it remained uncertain whether Newmont's latest bid, which valued Normandy at A$4.3 billion (US$2.2 billion) on Thursday, would knock AngloGold out of the race. AngloGold declined to raise its offer, but neither has it declared it final. A dip in Newmont's New York-listed shares late Thursday and a rise in AngloGold stock also closed the gap between the rival bids. Newmont's offer stands at A$1.92 per share, six cents above AngloGold's offer. Analysts said while AngloGold had a range of other offshore options if it did not win Normandy, it remained keen to diversify outside South Africa.


Black Blade: AngloGold is desperate to feed the hedge book at all costs. The only question that remains now is what miner will be the next target? Then again, is this Normandy battle really over? "Interesting Times"
View Yesterday's Discussion.

http://biz.yahoo.com/rb/020104/business_markets_bonds_dc_1.html
Snippit:

NEW YORK (Reuters) - Treasuries could rally on Friday if a U.S. government report shows unemployment rising enough to suggest the U.S. job market is deteriorating faster than investors have been predicting, analysts said. While sharp job losses in December could boost Treasuries as investors hope for another Federal Reserve rate cut, a report in line with market estimates might leave prices stuck in a trading range. Also, traders are looking to the stock market for direction.

Economists polled by Reuters estimate U.S. employers in the non-farm sector shed 139,000 jobs in December, after a 331,000 reduction in payrolls for November. That would push the December unemployment rate higher, to 5.8 percent from 5.7 percent in the prior month. The Labor Department is set to release the report at 8:30 a.m. EST on Friday.

But some market participants countered that employment statistics are backward-looking, and that joblessness is likely to keep rising even after economic growth has hit bottom. ``People are looking at unemployment as a lagging indicator at this point,'' Fimat's Hsu said.

Black Blade: Nice spin! Say it enough times and some people may actually believe it. I wouldn't say that rising unemployment is a lagging indicator in this economic environment. I expect to see an accelerating rate of unemployment leading to a deepening Recession. Remember we have RECORD HIGH corporate and consumer debt accompanied by RECORD HIGH bankruptcies. Stock index valuations are falling fast and furious as share prices rise while earnings fall into the abyss. Consumer confidence is still well below normal and many are beginning to worry about paying debt as they see mounting job losses. In a word - "GRIM"

http://www.moneynet.com/content/MONEYNET/CategoryNews/NewsStory.asp?Cat=FINMKT⋐Cat=FMFE&ID=SF-01/03-AnL03323719@NEWS-P1&Index=5&HeadlineURL=../CategoryNews/CategoryNews.asp&DISABLE_FORM=&NAVSVC=News\Category
BERLIN, Jan 3 (Reuters) - German Finance Minister Hans Eichel will begin a four-day trip to China and Iran next week to promote the euro as a reserve currency to rival the U.S. dollar, his ministry said on Thursday.

http://biz.yahoo.com/rb/020104/business_economy_jobs_dc_2.html
Snippit:

WASHINGTON (Reuters) - The U.S. job market weakened further in December as factories continued to lay off workers and department and toy stores kept their staffs lean over the holiday period, the government said on Friday. But although layoffs mounted and the jobless rate neared 6 percent, the pace of job losses slowed compared to the initial few months after the Sept. 11 attacks, which badly shook confidence in the economy and prompted a surge in layoffs.

The Labor Department said the number of workers on U.S. payrolls outside the farm sector fell a seasonally adjusted 124,000 in December after a 371,000 drop in November. The November figure was originally reported as a slightly milder 331,000 jobs decline. The unemployment rate rose to 5.8 percent from 5.6 percent in November. The November jobless rate was originally reported as 5.7 percent.

Black Blade: The unemployment rate grows to 5.8%, however, the rate slowed some. Hmmm� Now why would the unemployment rate slow just before the holiday season? I suggest that most waited until after the holidays to "slash and burn." The point is that the unemployment rate is still growing - not declining. This is not a good sign for those who look for a recovery - especially in light of the rate picking up over the last couple of weeks. In a word - "GRIM"

http://www.guardian.co.uk/argentina/story/0,11439,627453,00.html
...Argentine politicians are braced for a strong popular backlash that is likely to follow the announcement of a major devaluation of the peso currency today, a policy that most economists agree will force thousands of middle class households and small businesses into bankruptcy...

http://biz.yahoo.com/rf/020104/n04235538_1.html
Snippit:

ROCHESTER, N.Y., Jan 4 (Reuters) - Eyecare company Bausch & Lomb (NYSE:BOL), attempting to right itself after missing earnings expectations repeatedly over the past two years, set a restructuring plan on Friday that includes slashing another 700 jobs globally.

Black Blade: These "Bones" are added on top of 800 "bones" announced earlier. The "Bone Pile" grows again. The rate must be slowing, this is 100 less than earlier this year - nah!

http://biz.yahoo.com/rf/020104/104162483_1.html Kitco has the one month rate listed at 16.8% while this article from 7:30 this morning speaks of 18-19% one month rates. Kitco has the one year down slightly at 5.4%.
In keeping with the recent pattern, London took POS higher hitting 4.69 as the high. New York opened at 4.64 and quickly hammered the price down to 4.57. The London market is much bigger and stronger than New York so the move down doesn't scare me too much, especially with the lease rates still indicating that something is out of kilter. Many are voicing opinions of a short squeeze or a temporary (?) shortage perhaps caused by Buffet refusing to re-new silver leases. Nothing definitive, of course, all speculation or "supposins".
If this is the real thing, in that remaining silver supplies may be in strong hands and the supply/demand deficit may be now revealing itself in price rationing, then the upside has IMHO just begun. If memory serves well, Buffet bought most of his stash in the summer and fall of 1997 between approximately $5.50.
As always, too many supposins and not enough factual information but it's all I can find at the moment.
Any news?
Rich

http://www.kitco.com/market/LFrate.htmlSilver rates are higher still. The rates are in backwardation. Nothing new has come to light. The rumors of Enron bailout of silver contracts and Warren Buffett not renewing silver leases continues to pressure this market. Apparently the silver supply is still tight.

http://www.moneynet.com/content/MONEYNET/CategoryNews/NewsStory.asp?Cat=EQUITY⋐Cat=EQTH&ID=SF-01/04-AnN04236070@NEWS-P2&Index=2&HeadlineURL=../CategoryNews/CategoryNews.asp&DISABLE_FORM=&NAVSVC=News\Category
Clipping from article posted above(snippet):

"The market seems to be gaining momentum," said Peter Cardillo, chief strategist at Global Partners Securities Inc. "Traditionally what happens in the first week or two of the new year generally indicates what is going to happen for the balance of the new year and right now there appears to be a lot of hope the economy is going to rebound."


Does that mean there was a terrorist attack during the first two weeks of last year? This has got to be one of the most feeble statements I've ever read. Who buys this crap?
Here,.. I'd like to submit a feeble statement similar to that above just for the sake of idiocy:

At the end of every rainbow is a pot of gold.

Someone better tell Peter that a complete rainbow is actually a circle, so he doesn't go chasing his tail. I send my utmost sympathies to individuals who simply devour information they read in news articles and accept it as truth.

Sorry,.. felt like groaning out loud.

To hear the Wall Street Trolls and Pied Pipers tell it, this economy is strong and getting stronger everyday. It's all in the "spin". Good is bad, up is down, right is left, black is white, etc. Just a cursory look at the data suggests that the US and Global economies are poised for a very serious deepening Recession. Cheers!

- Black Blade

Gotta run and help the Grasshoppers keep warm this winter!

http://www.members.home.net/fallstreet1/plungeprotection/observersept01/observersept01.htmThe article from the Observer (Sept 16, 2001) referenced above states "The Fed, supported by the banks, will buy equities from mutual funds and other institutional sellers if there is evidence of panic selling in the wake of last week's carnage." Maybe also if the markets just need to go higher.

With the refinancing boom over there needs to be a new source of liquidity. A "wealth effect" from rising stock prices may be the plan.

Who knows how much banks now have at stake in the stock market. I suspect that the liquidity provided by the Fed is going more to stocks than to new business loans. With Argentina going broke (and Enron and PG&E and ...) there must be extreme stress in the system. Are U.S. banks becoming like Japan where a decline in the markets will make them insolvent? Speculators are rewarded and savers punished right up until the time there is a phase change in the system. The fragility of it all is frightening.

I know exactly what you're talking about, but I lack the ability to express it as formally. I fully believe that is what's going on. Instill a confidence that hopefully snowballs into a rumbling market. If enough people believe everything is taking off, it might add more height to the cylindrical bubble. By cylindrical bubble, I visualise it vertically with a flat top. When this bubble pops, the walls collapse in on themselves, and the top smacks the bottom with a loud painful clap. They should have let the market take it's course long ago, we would probably be back to a level plane by now. A spherical bubble pops more softly.

I know,.. I'm warped.

Thanks USAGOLD for the link !
UK row today about the euro remark of Treasury official Gus O'Donnell : The UK entry into EMU is a *Political* decision rather than an economical one !!!! Boehhhhhh.
Cfr. The Sir Douglas's Political will aspect. Yeahhh, in the heat off the battle....
Prompt denials of other officials and the whole idea must be considered as a lapsus. Noooo noooooohhhh, it isn't.
London will soon have to choose camp: dollar or euro.
Finito with riding two horses and play go between. With us or them ? Is it really that black or white ?

Peter Mandelson had a nice oped in yesterday's FT. He believes Mr. Blair will take the Euro issue to task in this Parliament if the opportunity presents itself rather than waiting upon Mr. (thanks a bullion!) Brown and the "five tests". He remarks that both gentlemen are men of "conviction" and politically pragmatic. Bottom line for Mr. Mandelson: England cannot flounder in the "middle of the atlantic". This was precisely my point to our mystery speaker many months ago back on the Trail--that the UK would ,out of geographic and trade REALITY need to move in monetary conjunction. Meanwhile, London will still be calling most of the financial tunes as they have for centuries. You can, "believe it". Kind regards...CM

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APDXHjhZ0QXJnZW50CHAMPION OF THE SMALL GUY, THE NEW PRES. IS GOING TO ALLOW INDIVIDUALS TO DEFAULT/DEVALUE THEIR DEBTS ALONG WITH THE GOV.. A VERY BRAVE PATRIOTIC MOVE ON HIS PART. I SEE THE "INTERNATIONAL BANK WRITEDOWN EXPOSURE" TAKING A QUANTUM LEAP! BANK STOCKS SHOULD TAKE A REAL HIT ON THIS NEWS (LETS SEE HOW THE PPT KEEPS UP AS THE FLAMES OF RIGHTEOUSNESS CONSUME THEIR DEN OF DECIET)

01/04 10:17
Argentina to Convert Dollar Loans to Pesos Before Devaluation
By John Lyons


Buenos Aires, Jan. 4 (Bloomberg) -- Argentina will convert dollar-denominated bank loans, mortgages and credit card debt to pesos before devaluing the currency, a government official said.

The plan, which President Eduardo Duhalde is scheduled to disclose today, is aimed at easing the effects of a devaluation, which would drive up the cost of financing dollar debts. About 90 percent of Argentina's $245 billion of sovereign, corporate and provincial debt is denominated in dollars.

``The economic team is going to apply all of the tools that it can, because the policy of Duhalde is going to be to protect Argentines,'' Cabinet Chief Jorge Capitanich said at a press conference.

The peso may depreciate by as much as 40 percent once the government abandons a decade-old exchange rate that fixes the currency at par with the dollar, analysts said. Government officials say devaluation will help revive the $280 billion economy by making domestic making domestic manufacturers more competitive.

Since Brazil devalued its currency in 1999, Argentine companies have been unable to compete with a flood of cheaper imports from its neighbor and chief trading partner.

Official Rate

Duhalde plans to convert dollar loans of as much as $100,000 into pesos at the one-to-one rate for individuals and small and medium-sized businesses, the El Cronista newspaper reported, citing unnamed government officials.

Capitanich said that light, gas and water utilities will be restricted from raising prices. He also urged shopkeepers and other companies not to raise prices in advance of a currency devaluation in a bid to avoid soaring inflation.

Companies such as the nation's biggest office products distributer OfficeNet SA already have marked up price lists by at least 10 percent to offset devaluation.

``We cannot enter into a phase of marking up prices,'' Capitanich said. ``We need comprehension from all sectors.''

Argentina tied its peso to the dollar in 1991 to tame inflation that peaked at nearly 5,000 percent. The fixed exchange rate ushered in four years of growth of more than 8 percent a year and attracted $32 billion of foreign investment.

Critics of the peg say that it locked in high labor and production costs.

Argentina's former President Fernando de la Rua, who was forced from office two weeks ago following food riots, froze deposits in early December to prevent a run on the banks that threatened to break the dollar peg.

RE: EU Gold DirectiveMK: Thanks for the link. Nice to see the LBMA humbled by another political will.

http://www.jonesheward.com/commentary.cfmLong discussion regarding Yen devaluation, deflation in Asia, and impact on markets.

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3DWYP72WC&live=true&useoverridetemplate=ZZZ99ZVV70C&tagid=FTDO9DHMZJCQuick Snippit:
"Santander Central Hispano (SCH), Spain's largest bank, had up to $7.1bn of loans outstanding in Argentina at the end of November, it emerged on Friday. Fellow Spanish bank BBVA is also heavily exposed via its Banco Frances subsidiary, though it has so far declined to give any financial details. Both banks could be severely affected by the Argentine government's latest economic plan - due to be unveiled on Friday - which may devalue the currency and force banks to switch loans into devalued pesos."

My apologies!
Waverider

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Stock%20Market%20Update&s1=ad_top1_snapshot&tp=ad_topright_snapshot&refer=snapshot&T=markets_frontsummary_content99.ht&s2=ad_top2_snapshot&bt=ad_position1_snapshot&bt2=ad_bottom2_snapshot∣dle=ad_frame2_snapshot&s=APDXk6BSTVS5TLiBGNo hint of a problem for U.S. banks now that the markets are rising.

"U.S. financial stocks rose on optimism a market rebound will lift earnings from investment banking and trading. J.P. Morgan Chase & Co. and Citigroup Inc. rose, helping boost the Dow Jones Industrial Average a third day."

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APDXiOhSZQXJnZW50THIS POLITICIAN MAY HAVE SOME STAYING POWER!

01/04 12:11
Argentina to Devalue, Restore Order, Duhalde Says (Update4)
By John Lyons

...........``We have to end the decades in Argentina of an alliance that has made the country suffer, and that's the alliance between the political power and the financial sector and not an alliance with the productive sector,'' Duhalde said. ``The financial sector is important, but in its proper place.''

Cabinet Chief Jorge Capitanich earlier in the day aid the government would force banks to convert dollar-denominated bank loans, mortgages and credit card debt into pesos, a plan analysts said may lead to the collapse of some banks. Most of Argentina's $245 billion sovereign, corporate and provincial debt is in dollars.

`Insolvency'

``It's a recipe for pushing banks into insolvency,'' said Christian Stracke, Latin American debt strategist at Commerzbank Capital Inc. in New York. ``They are essentially saying the banks no longer have dollar assets.''...........

PS "NO WORRIES" WAVERIDER, JUST STAY ON THE BOARD! YEE HAW

Craig Harris
Harris Capital Management, Inc. CTA
January 3, 2002

As we start off the year in 2002, there is a substantial amount of uncertainty and turmoil in the world. Many investors are still waiting for the return of the double digit returns they got used to in the "roaring 90's." I'll argue that people should be concerned with a return of their capital going forward rather than a return on their capital.

In the final month of 2001, we witnessed a complete collapse of Enron, the 7th largest US fortune 500 company worth over 80 billion dollars at it's peak... now all but worthless. This was an unprecedented event... one that was unthinkable as the year began in 2001. Currently we are witnessing a complete economic collapse in Argentina along with a default of 140 billion or so in sovereign government debt. Again... unthinkable... Argentina was not a third world economy. Japan is in trouble, and there is no clear or easy fix in sight. It is in no way clear how Japan is going to clean up the bankrupt banks and it is within the realm of possibility that the situation in Japan could deteriorate from here and become a serious global financial crisis. Unthinkable? India and Pakistan are on the verge of a war which could cause the worlds first nuclear exchange. The Israel Palestine conflict is threatening to spiral out of control and could provoke a regional war that could escalate into WWIII. Unthinkable? The US is fighting a war on terrorism at a cost of 1 Billion dollars a month with no clear or easy victory in sight. Is it possible that the war on terror is not winnable? Unthinkable! I think you get my point. In this environment it is critical not to get your thinking stuck in the box so to speak. It's also critical to think independently and not to be part of the herd. The herd will ultimately be wrong... they always are. There are serious risks in the world right now that are being downplayed and distorted in the media in the name of patriotism and public good... but it isn't reality.

Against this ominous backdrop, the world central banks have embarked on a financial engineering program designed to bolster the financial markets, control the currency markets and print paper money with reckless abandon in a noble effort to "save" the financial system. The hope of the Financial Engineers is that all of the "inflation" being created by the huge increase in the money supply will be directed into the equity markets. I have been saying for the past few months that wherever this box of money lands is where the inflation will show up. Interest rates in the US have hit 40 year lows. For fixed income investors, it is now nearly impossible to earn a positive real return without taking on additional risk. After 2 years of declining share prices, the equity markets are still priced at the extreme high end of historical valuation levels based on PE ratios, Dividend Yield, price to book and price to sales.

What is an investor to do?

Clearly, in an effort to save the global economy, the financial engineers of the FED and the G7 have targeted the equity markets. Every possible effort is being made to prop up share prices because if they didn't, it's likely that the global economy would collapse. Based on valuation, it's very difficult to see how one could expect the equity markets to rise but if you understand what's going on underneath the surface it's clear to me that every effort will continue to be made to keep share prices up. I was recently quoted on CBS Marketwatch as saying that we are building a new equity market bubble but from lower levels. I think that's a good way to look at it. So, I'm not opposed to the idea of trading this sponsored market, but the idea of a buy and hold strategy from these levels is a prescription for disaster in my opinion.

If you buy a company like AOL Time Warner at 70 something times earnings expecting to hold it for the long term, you aren't likely to even earn your original investment back before you are dead. People have gotten used to the idea that public companies are like lottery tickets... well, they aren't. Taking the AOL example, you are paying 34 dollars for 43 cents in earnings with no dividend. Even if you assume a healthy 10% growth rate, you'll probably be dead by the time you've earned back your original investment. Why would anyone in their right mind see this as a reasonable investment? Well, because the public (who don't understand things like valuation) blindly invests their money with mutual fund companies whose charter it is to stay fully invested in stocks. The financial engineering program encourages this "dumb money" to flow into the mutual funds by many, many mechanisms.

The physical Euro got off to a good start in 2002 with no glitches reported. The Euro gained vs the US dollar on optimism about the smooth transition. The Euro is now poised to offer competition against the US dollar... really the only competition except the Yen. I was talking about this financial engineering strategy a lot last year... although the Euro is poised to offer more competition vs the USD, overall the competition has decreased. The financial engineers are in the process of eliminating alternatives. So now we're down to 3 choices (USD, Euro, Yen) and the financial engineers do not want ANYTHING to compete with these fiat currencies for investment dollars... that is the biggest reason that suppression of the gold price is critical. Gold (or oil or anything else) cannot be allowed to be seen by the investment community as a viable alternative to fiat money for the storage of wealth or else we could have big problems. The financial engineers do not want an anchor from the fiat currencies to anything real. If there was, then they would have to deal with issues like printing too much money, etc. So... that's the plan... prop up the equity markets, restrict investment alternatives... I don't claim to know the next step in this master scheme but I suspect that it will be to continue to eliminate currencies other than the "big three" through more "mergers," with Britain, Denmark, and Sweden being pressured to join the Euro now.

The important point is that we are entering new uncharted territory in terms of global financial management. We no longer have free markets... we have coerced, controlled markets. The world has not been technologically and financially sophisticated enough to pull this "financial engineering" off until now. Europe has not seen a shared single currency since the Roman empire. As to whether or not it can work over the long term... there has never been a fiat currency that has survived the test of time and my concern this time around is that there are too many ways and too many incentives for the central banks and counterfeiters to "cheat."

Counterfeiting may sound like a lame concern but I suspect that many extremely well organized crime entities will produce a lot of Euro's using advanced technology... hey... they can pay for all the equipment and technology in Euros! The thing is that the stakes are so high... if this plan were to fail somehow it would be a global catastrophe the likes of which we have never seen... like a big global Argentina. For the plan to work, public confidence and trust must be managed effectively.

It's really interesting to look at it that way... the actual numbers are really less important than confidence that your paper money will maintain its value and exchangeability because the paper doesn't even have any implied intrinsic value at all any more. Remember when people talked about governments debasing their currencies and it was seen as a central banking sin? Well, now at this point the currencies have been debased... there is no promise that the notes are backed by anything. If you take a step back and think about it, it's amazing that people go along with the idea at all. You are willing to give up something you produced for a piece of paper with some printing on it... and the only reason you are willing to do so is that you believe the implied guarantee that the paper will maintain its exchangeability for things you want and need. It implies supreme confidence and it will be required that the global central banks maintain this supreme confidence... a tall order... especially in these uncertain times.

With all that said, I am encouraging my clients to look at investing in real things... to seek value. I'm not that keen on real estate as an investment because real estate prices are still inflated but not nearly so much as share prices. I do believe however, that doing something like paying off your mortgage rather than investing the money in the stock market makes sense. I wouldn't advocate being short the equity markets, for the simple reason that they are sponsored and it's likely that they may get even more overvalued than they are now. The "Don't fight the FED" axiom has new meaning now with the the financial engineering program.

Commodities have been in a 20-plus year bear market. Many commodities, including some of the precious metals are selling at or below their production cost. In my opinion this is the area for investors to look for value. I do believe that the price of gold is being manipulated as I discussed above, but I also think it is the best hedge in the event that the financial engineers management plan does not work out. In other words, it's part of my "hope for the best, plan for the worst" idea. I don't expect a lot of downside in the gold price if the financial engineering plan is successful, but if it doesn't work out I think it's likely that there will be a mad scramble for wealth storage with intrinsic value, and a very sharp dramatic shift against financial assets.

Do not allow yourself to be lulled into complacency by the stock market cheerleaders on television. Think independently. Don't listen to me or anyone else... take control of your future by using common sense, thinking for yourself and doing your own research. The internet provides a wonderful tool.

I wish everyone a happy and prosperous 2002.

Craig Harris
President
Harris Capital Management, Inc. CTA
http://www.HarrisCapitalManagement.com
bcharris@gate.net

Such fragility....I think MK asked awhile back if anyone knew which US banks have exposure in Argentina..have any admitted to it yet?
Cheers,
Waverider

I don't know who Mr. harris is or what his credentials are but I do believe he is 100% accurate in his assessment. The only point I might offer is the Euro has a safety valve built into their monetary model and that is the marking to market of POG every quarter. If an EU member state or statesman comes out publicly in favor of gold for investment purpose than back up the truck to USAGOLD in Denver.

Unlike investments which bear interest, gold makes no promises nor does it need to.

Gold is an asset which grows only when you add to it.

Gold is like love. If you extend your giving to others with the expectation of return, you sometimes get what you expect. This is not true love. True love is given without expectation of return. It is unconditional. When love is received by one who recognizes it. It is returned many fold. But sometimes not.

Like gold, love grows only when you add to it.

http://www.ecb.int/key/02/sp020103.htmThe following exchange reveals an international monetary shift that is in process which is sure to have a significant effect on the dollar -- downwards. While the response to the question rightly indicates that such matters as these take time to fully unfold in the marketplace, it is also important for YOU as an individual to realize the capacity for both domestic and international flows of "hot money" to punish the failing currency with lightening speed -- once the overall trend has become critically clear.

Argentina makes for a good case study on a small scale, as did the asian contagion of recent memory. Like we see in Argentina, capital controls restricting your access to your accounts makes a compelling statement for the importance of personal gold reserves, and notably pre-33 coins, held close at hand.

Here is a look at an important portion of the monetary trend in the changes ahead for the international monetary system.....

----(the following is from the press conference)---

Question:
A question to you, Mr. President, and to the Vice-President also if he maybe has something to add to the question. Do you expect a wider use of the euro as a reserve currency of central banks outside the euro zone as a denomination for bonds, especially corporate ones, or do you think it is possible that all will be paid in euro instead of dollars one day and, if so, when?

ECB President Willem F. Duisenberg:
The last parts of the question will undoubtedly be answered by Mr. Noyer. The use of the euro as an international reserve currency is increasing, but very slowly. And it was expected to be very slow, but increasingly we are getting signals that countries, especially central banks of countries, are beginning to realise the possibilities they now have to diversify their reserve holdings.

But it is not something we are aiming for, we will just let it happen. But it is happening, and the fact that, for example, in the recent experiences of the cash changeover, we have frontloaded to more than 20 non-euro area central banks sizeable sums, billions and billions worth of euro banknotes, is already an indication of this.

The fact also that in the eastern hemisphere, where we are, more than 50 countries, in one way or the other, link their currency or align their currency to the euro is also a telling aspect of the phenomenon. But I don't want to ask Mr. Noyer to speculate about the "when", precisely if I assume he knows as much as I do.

Vice-President Christian Noyer:
Certainly, I do not know more than you do. But I can just confirm that this move that we expect is not an objective per se, but that what we expect to happen will probably take place in all fields. We have seen that already in the field of the debt market, where euro issues are now broadly comparable with issues in US dollars. We have seen slow shifts in the portfolio managed by international managers, both in the debt instruments and equity, around, let's say, one-quarter of internationally managed portfolio now.

There is a clear consolidation, as the President just mentioned, in terms of using the euro as a reference currency, for pegging, as a central element of a basket, etc. In the field of official foreign exchange reserves, that develops very slowly.

Of course, the figures are difficult to interpret because very often the comparison which is given is between the figures of official reserves of the European currencies before 1 January 1999 and after. And before 1 January 1999, all European central banks � euro area central banks, I mean � had European currencies in their foreign exchange reserves. And then the Deutsche Mark or the Dutch guilders or French francs disappeared to become internal currencies. So that in terms of the word "reserves", the share of the dollar increased simply because the European currencies disappeared from the European reserves, and of course this blurs the view of developments.

But I was in Beijing myself on the day the Vice-Governor of the central bank of China, the People's Bank of China, announced that they had decided to increase their reserves in euro. I think that is a movement that is quite natural given the importance of the euro area in terms of world trade. But that will happen if and when the countries and central banks deem it appropriate.

I am personally sure that it will develop, perhaps slowly, we will see. And for your final question on invoices and settlements, well, we will see. It took decades for the US dollar to overcome the importance of the pound sterling, long after the US economy had become much more important than the British economy. That is something that simply takes a very long time to develop.

---end press conference excerpt---

R.

http://quote.bloomberg.com/fgcgi.cgi?touch=1&btitle=Top%20News&T=sa_content.ht&s=APDODhhKqVS5TLiBCWaverider....The above article claims $21 billion is at risk. This seems a little low to me considering the total defaulting is somewhere around $140 billion. The article claims FleetBoston is most exposed with $7.3 billion. However, JPMC refused to say how much is at risk other than that that it's affiliates in Argentina cut lending to $900 million in the third quarter from $1.4 Billion 9 months earlier. I recall reading that Goldman Sacks and others also refuse to say what their exposure is. If these banks don't disclose how much is at risk how would the author of this article, Michael Nol (Bloomberg News), know the total is $21 billion? I thought all information was now supposed to be released to the general public or not at all. Maybe what Mr. Nol really means is that $21 Billion have been acknowledged to date.

Buena Fe.......a statement from your article caught my eye. ``We have to end the decades in Argentina of an alliance that has made the country suffer, and that's the alliance between the political power and the financial sector and not an alliance with the productive sector,'' Duhalde said. "The financial sector is important, but in its proper place.''

You : ...London calling most of the financial tools...
Hoy Hoy, that's why that eurotunnel ( not Great Brittain-tunnel) has been build, buddy ! (joke)
2002 Intervieuws with euro-officials was interesting because EMU was unanimously defined as a "platform" (a political platform, that is) for expansionary ambitions.
And Europ will call London in the sense of...don't call us, we call you. Am I exagerating with eu(ro)phoria ? (smile compassionately).
Euro-officials, all got the same question about competition with the dollar. All answers were *subtle* neutral stances.
But I smelled the undertone of a definitely "yes", we are at the point of starting to compete.
Funny anecdote on the Brussels news: Foreigners (UK-US) residing in Belgium, wanted to exchange their pounds / dollars for euros. They were disappointed.

All : Watch China very closely in many aspects.
Our western economies can extend prosperity thanks to China's cheap labor for the production and trade of real goods. China is importing on a massive scale, the western high tech as to aim for an economic/political force to reckon with. Cfr. their support for Pakistan.
China is also building on its currency, not only within Asia but on the global platform. Why else are they digging for more and more Gold (140 tonnes/yr) within China, not ment for export ? China's fast upcoming force is driving Japan further and further (irreversable) into the dollar-block . * The Global Currency War*

Voyager : Thanks for your posting that is again a confirmation of the financial tail (engineering) that wags the economic dog.

Max Rabbit, you caught the it too! Sounds like GATA in the Presidency! doesn't it?

The fact that the Argentine default bank exposure has now DOUBLED to include individuals and small company's (245 billion+), will be ignored/spun as much as possible by Wall Street until critical mass is attained within the US perception of GATA's (and others) shoutings of "The king has no clothes"!

At a point ahead of us the world of financial lemmings will "snap", and the unthinkable crash will begin.

Craig Harris was one of the first that I know of to advance the possibility that derivatives were being used by various "trading" organizations to hold down a spectrum of commodity prices and thus keep a lid on dollar inflation. ( I hope I got this right, Craig, if you're lurking out there. I'm going from memory. If not, please correct me.) An interesting theory since the Keynsians hold as bedrock that production (in wild and copious quantities), not monetary and fiscal restraint, is the key to holding down prices. Even Alan Greenspan has succumbed to this ridiculous notion. It would be interesting to hear FOA expound on these new ideas (ala Craig Harris and others) just surfacing.

If you produce anything these days, no matter what or where you produce it, you are a second class citizen, I believe in service to keeping a lid on the inflation rate. Middlemen and speculators reign supreme at the expense of those who attempt to make an honest buck out of Mother Earth and what she provides. Unfortunately, our natural clientele at USAGOLD / CPM are the producers -- the salt of the earth types who make it all happen -- the cattle rancher, farmer, oil man, small manufacturer, (and yes) the gold miner, and so on. Sometimes I think producers have become dinosaurs. And we suffer with you, my friends, because our business relies on you.

I listened to an interview on Colorado public radio this morning that was supposed to be on the subject of Aussie sheep dogs -- an interest of mine since I own two of them (our second pair). Terrific dogs, by the way -- smart as the canine gets.

The interview drifted away from dogs to the plight of the American sheep rancher -- a sad story. It's gotten so bad they've had to sell their ranch. If you like eating lamb (and Voyager I happen to know that you do), you might be interested to know that very little of the high price you pay for a lamb chop makes its way to the producer -- I think he mentioned they get something like 50� a pound (and I know that lamb prices at the store are near outrageous). I thought to myself: These people sound like our typical clients. I felt like I knew them. Like I say, a sad story.

At any rate, Craig Harris (though I haven't had time to read what Voyager just posted) appears to be onto something.

One wonders. . . . .

Hoi Henri, this is the most beautifull picture of Gold and Love you framed in your post ! My I add *understanding* next to Love. Great !

CM, wanted to make exactly the same remark (euro safety valve) on voyager's posting.

I am missing some other regular posters here and am in desperate need for some more Trail Guidance.

Ditto the fate of the "salt of the earth" for the fishing industry in Canada. I worked many years commercial fishing (family business)and have watched its' slow demise, along with the demise of numerous coastal communities that relied on it. Beautiful wild salmon caught in the Queen Charlotte's were sold for around $1.50/lb, yet sell in the local market here at around $14.00/lb. One hardly covered fuel expenses, not to mention 10 day trips at sea, rough weather, etc. To add insult to injury, farmed salmon (horrible stuff) sells wholesale for around $7.00/lb. This past summer just about all the fishing boats sat at the dock with sale signs on them - very sad. BTW I have a nice 54lb spring on my wall I picked up at Langara - best spot in the world for sports fishing!
Cheers,
Waverider

Belgian - you wrote a very thoughtful response a while back re: Arab repatriation of $$. I believe I neglected to thank you for your post, so..thank you.

Henri- beautiful words that touch the heart.

R Powell - that was a clever verse yesterday and much enjoyed.

Max Rabbitz & Buena Fe - thank you for your thoughts/info.

Back to work now,
Waverider

I believe that we have all been struck by the same effect from these thoughts. We here at USAGold and The Caf� are not governed by and do not live by "feelings", but by Thoughts and Ideas and Beliefs.

Mr. Harris, in a most eloquent and simple way stated what we already know and believe. We just need to be reminded.

CNN reports today that the federal "budget surplus" has been consumed by the recent income tax breaks (yeah right- an oxymoron if ever there was one)...

Easy come, easy go.
At least now we can drop the inane debate over what to do with "all that money".
I believe I'll just declare a huge surplus in my own budget. I'll use the money to buy Maple Leafs. Yeah, yeah, that's the ticket...

"StockMarket Cheerleaders" ---- I like that one. Credit to Mr. Harris.

HaaaaHaa LOLOLOLOLOLOL

I was referring to the phrase "income tax break" as an oxymoron. An absurdity, anyway.

I find it increasingly amusing that whenever someone expresses an opinion here that doesent agree with some posters ,they attack him personally.Someone complained that the public were becoming SHEEPLE ,that is somewhat true and many of them are right here.
This is becoming a "politically correct" forum that looks for scrapegoats and Demonizes anybody that has a different point of view.With that said ,I am still of the opinion that this whole hedging mess was started by the S.African miners namely Anglo as a means to get wealth out of the ground and out of the hands of a government that will eventually nationalize the mines.
The Rand is collapsing, money and brains are leaving the country and the mine owners will continue to hedge as a means of getting wealth out of the ground.The idea is to borrow gold and sell it and move the money out of the country leaving a lein or mortgage on the mines.
It is with this in mind that I find S.African mines to be too much risk for me.This is just a personal opinion .I was a stockholder of Homestake and now find myself in Barrick .I didn't like what happened but I don't blame Barrick for hedging ,they found a way to survive until this mess which was started by Anglo and the Brits finally ends.I found nothing in the last 3 years to change my opinion about who started this hedging business. We gold investers need diverse ideas in order to try to find the truth and make sound decisions on gold investing.
I don't see how demonizing Barrick helps anybody,its just a distraction and gives people someone to hate while they ponder how to get out of the mistakes they made.
I expect that Barrick may merge with Anglo and in the process shift all of thier hedges to Anglo
leaving Anglo as a partner with Barrick with NO No. American hedges.
This will leave Anglo -Barrack without hedges and headquartered in Canada,a country friendly to miners.At that point hedging will no longer be needed and gold will rise.
All this other stuff about individual mines hedging and merging and Goldman Sachs involvement is nothing more that people trying to survive and others trying to exploit the situation to make a buck.S.Africa is where it started and where it will end.
.IMHO

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B3240BD45%2D47C1%2D4C42%2DAC5B%2D4C4C355942B7%7DBy Thom Calandra, CBS.MarketWatch.com
Last Update: 12:34 PM ET Jan. 4, 2002

Snippits:

..."I'm a bear on silver but a bull on gold," says Edelson, who had been reluctant to endorse long-languishing gold.

Gold, says Edelson, will need to clear many hurdles before it sheds its reputation as a losing investment. Many technicians, the folks who study trading patterns for commodity futures contracts, agree.

Amanda Sells, an independent consultant used by Mitsui Global Precious Metals in London, says, "Gold's upside potential will only increase to $328 on a clear and confirmed break of $292." Her comments came in a year-end report issued by Mitsui and its headline metals analyst, Andy Smith, a London-based researcher who went positive on gold in mid-2001 after shunning the metal for years.

Smith himself sees gold making strides this year as gold producers move away from their practice of selling their delivery of the metal forward to lock in higher prices. Such hedging stimulates lending of gold by central banks and others, thus diluting any gold metal rallies.

The debate between those who hedge, like South Africa's Anglogold (AU: news, chart, profile), and those who do not, like North America's Newmont Mining (NEM: news, chart, profile), will probably take center stage this year in the gold industry, says Robert Bishop, longtime editor of The Gold Mining Stock Report.

Still, the question for investors, and stymied executives at gold mining companies, both hedgers and straight producers, is entirely a $300 one. Is this the year gold breaks the $300 mark and stays there?

Edelson at The Safe Money Report says yes.

"Gold's not there yet, but it's getting closer," he said Friday. The price of an ounce trades at about $279 in New York and London. "First signal, look for a close above $282. If gold can do that, then a test of $300 would be sure to follow. And after that, any close above $306, and it's off to the races."

Analysts say investors should expect the share price of a non-hedged gold mining company to triple the percentage gain in the price of the metal. Of course, that works in reverse on the down side of the slope.

Edelson, a former Europe-based commodities trader whose job is to coach investors on the safest possible investments for their hard-earned money, sees several reasons why gold could go to $340 an ounce or "possibly higher" this year.

One is an acceleration of debt crises around the world. "Argentina isn't the only problem with debt, not by a long shot," he says.

Another is global worries about central banks' reinflation attempts. Banks such as the European Central Bank and the Federal Reserve conceivably could flood their economies with cash as they keep lowering interest rates. The likely result would be accelerating inflation, which is almost always a positive development for gold, a commodity whose net worth is burdened by no country's currency, debt levels or politics.

"This is a biggie," says Edelson. "Look at how the long bond market (in the United States and elsewhere) has had its worst crash since 1996 on reinflation concerns. Soon, that will spread, giving gold a boost," he says.

Edelson sees investors slowly registering their concerns with global politics, starting with America's war on terrorism and spreading to South American finances and things nuclear in India and Pakistan. "The wars are far from over," says Edelson.

As Smith in London points out, gold will need the support of aggressive fund managers, ordinary investors and those dastardly hedging gold miners who promote the loose lending of the metal.

The tightly knit community of gold bugs, including this writer, has its fingers, arms and legs crossed.

Hello good Sir Horatio,

Personally I really enjoy your points of view. You constantly bring a perspective that is indeed different from the general consensus, and make your argument well. You have certainly given me food for thought, and the more plausible variables we can include in our analytical formulae, the more likely we are to approach a better understanding of how it all really works.

Please keep it coming. I, for one, (and I know I also speak on behalf of many), certainly do enjoy it.

Best regards,
miner

Waverider and I are having trub with the keyboard lately...

Remember the Iran News (local newspaper) that had a (very) positive article on euro and oil for euros...
Today, Israel accuses the palestines of having shipped arms/munition from...yes, exactly, Iran !? Israel intercepted the sophisticated weaponary cargo.
T.G. : crude oil...US$...euro

What an awesome day, momentum is building.

I hedged into a tech fund (smile) just before Christmas in case this little run had some legs. I saw the 'Duck' and the TSE up during the morning so I bailed out just before the 1:00pm deadline. The fund is up near 12% and now the talking heads are asking if tech is getting ahead of itself...duh?

I played the superhedge in oil late December in a oil & gas trust (if economy improves or war escalates ie: Iraq) and the trust is up 8 % in 2 holiday interrupted weeks.

Unhedged silver and gold (PAA, G, FN, etc.) setting or near setting 52 week highs. Newmont/Franco putting the boots to AU.

My old lady.....er....better half, won on all 3 fronts, index fund (TSE300), energy fund & PM fund. I have her equally split between the 3 and no 'guff', I have checked her portfolio every 2 months or so and she has never been down over two years.

Sorry for the boasting, after the thorough whipping, trouncing, shellacking, mutilation and financial scarring that I have taken in the last couple of years I need to vent.

Hope everyone is rocking and rolling.

Says Horatio, "I am still of the opinion that this whole hedging mess was started by the S.African miners namely Anglo as a means to get wealth out of the ground and out of the hands of a government that will eventually nationalize the mines. The Rand is collapsing, money and brains are leaving the country and the mine owners will continue to hedge as a means of getting wealth out of the ground.The idea is to borrow gold and sell it and move the money out of the country leaving a lein or mortgage on the mines."

Many people would do well to consider your thoughts here more closely, bearing also in mind that the government inventories are not the only source of fungible gold deposits being lent among the bullion banking system.

To the point, one must ask how it can be that there exists a group of people that vilify hedgers and gold lending in one breath, while calling for a return to a gold standard with their next breath -- the so called "honest weights and measures" or "sound money" people. If they only took time to think, they would see how a return to a true gold standard would turn the financing of ALL corporations into gold hedgers. Joining the ranks of Barrick and AngloGold as gold borrowers (i.e., forward sellers) would be Exxon, GE, Ford, Microsoft, AT&T...joined also by the ranks of families with home mortgages.

In their conflicting breath it would not seem that this would be the desired effect they anticipate, yet they would have it. They vilify gold banking as it occurs on a "small" scale, yet want it on a grand scale. The mind reels with such demonstrations of foolishness. Better for them if they come to terms in understanding what is and what shall be. There is only one 'Gold Trail', and it is for everyone. You are on it now, know it or not. Best to recognize the landmarks and travel accordingly -- with gold as wholly-owned PROPERTY.

How do we convince our government to return to a gold backed fiat? We must make everyone scream. convince all easily moved lemmings. If we really work at it, and back our arguments with legimate arguments similar to those found in this forum we might be able to at least get some media attention. Other countries are headed in the golden direction, we must join to survive. Like Mr. Craig Harris said, 'it's amazing we actually exchange our hard work for paper.' I will begin by formulating a simple (in my own words) e-mail for my friends, and ask them to chain mail it. I really believe this is the best thing Canada can do right now given the current world situation. Maybe someone with an idea or loud voice will agree and assist. Isn't the government really supposed to do what the people want and need? We don't necessarily need our dollar to be 100% gold backed, but at least partially. Don't you agree?

I hope USAGold doesn't mind if I include a link to this discussion forum, I believe this is the best thing on the internet.

Thank you All for your abundance of information and variety of expression!

P.S.,.. Why is the one ounce Maple leaf only a 50$ denomination?? Maybe I can convince someone to sell me all theirs for 60$ apiece! Haaa YaRight.

$100 fiat to a gold & silver education program using main stream media advertising. Come on, lets put our fiat where our mouthes are. What do you think MK?

Apparently, the Bush administration has links with Enron. The Securities & Exchange Commission and the US Justice Department are therefore examining what may be America's worst financial scandal, writes this Saturday's London Telegraph.
http://www.portal.telegraph.co.uk/money/main.jhtml?xml=/money/2002/01/04/cnbush04.xml&sSheet=/money/2002/01/04/ixcity.html

Belgian wrote to me recently on the Forum (and I'm paraphrasing because quoting from memory) that when the dinosaurs will change their view on gold, the FT's Barry Riley will inform us of this. Well, Barry Riley is quitting. He's writing his final column in Saturday's FT.

Interesting for goldbugs is however that he writes that the longest recent history which professional investors take into account covers 20 years (and, adds The Invisible Hand, that in those 20 years, gold has been languishing).

Two snippets (which don't do justice to the entire column):

This is fundamentally a post-bubble crisis. Bubbles are generated by excessive growth of debt, and they typically blow up in the stock and real estate markets. While they are inflating they create apparently free wealth and great political windfalls, usually credited at the time to an economic miracle, and never to financial recklessness. When they collapse, though, they destroy consumer confidence, sharply raise the cost of capital for companies, and expose banks and bond investors to substantial bad debt risks.
+
Recently I have been gloomier about the prospects for markets and investors than I would have liked, but as I wrote two years ago in the millennium issue: "The late 1990s technology bubble has represented one of the great manias of stock market history, and it will end like all the others".
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT38J2B82WC&live=true&tagid=FTDZ14FSNUC

Belgium's De Standaard newspaper is reporting this Saturday morning that although the Belgian Money Laundering Act forces banks to ask for identification to a customer who wants to change euro 10,000 of Belgian francs into euros, banks are even asking for identification for transactions below the threshold of euro 5,000 set by the Belgian Securities & Exchange Commission for the euro conversion.
http://www.standaard.be/nieuws/economie/index.asp?articleID=DST05012002_077&Doctype=detail.asp

Euroland inhabitants still have two months to convert their black money to gold.

http://biz.yahoo.com/rf/020104/n04266332_1.htmlThe rules of the game will likely change, thus limiting your options or trapping you to the common fate of the population.

Argentina continues to serve as an example of changes in rules in financial affairs, including new government impositions on imports, exports and the disposition of natural resources. Where you see in this article that taxes are imposed on oil and gas exports, you can easily imagine heavy taxes applying to the new production from mines, too. In such an event, what would that do to the bottom-line profitability of your mining investments through which you sought to leverage yourself to a rising price of the metal?

To be sure, the trend these days is to remove the tax impediments to private gold ownership, while at the same time retaining authority to tax corporations or to selectively set other controls as deemed to be in the natioinal interest in times of economic/currency crisis.

From the article:

--------BUENOS AIRES, Argentina, Jan 4 (Reuters) - Argentina's new government sent a bill to Congress Friday seeking powers to reform the foreign exchange and banking systems -- to pave the way for devaluation and a dual exchange rate.

[some of] the main points of the bill:

- Special powers requested for executive to reorganize financial, banking and foreign exchange system.

- Public emergency declared on economic, financial and exchange matters.

- Authority requested to regulate the prices of goods and services to protect consumers from possible price distortion ``or monopolistic acts.''

- Private contracts in dollars to be converted to pesos...

- Temporary tax on oil and gas exports to compensate banks for loss implied in ensuring value of deposits and converting dollar debts to pesos.-------------


If you have become rightfully concerned with your ability to "play the game" to your own advantage, you are hereby encouraged to learn all you can about stacking the deck in your favor to the extent possible. For that, this page has been provided for your additional enlightenment and full consideration: (copy the URL into your browser's address window)

http://www.usagold.com/cpm/Hoppe.html

Good luck!

R.

Why not? Count me in. I will even be happy to suggest a 7 point strategy to create and promote a "self directed" 24(K) Precious Metals Savings Plan to get things started, if no one else is willing to step forward.

It has been some time since my last post, partly because of the holidays and partly because I am on the phone constantly with clients of Centennial. While I don't post as often as I would like, I do try and read as much as possible. So here are my latest thoughts.

As my clients already know, in the past I did not think silver had as much upside potential as gold, Ted Butler notwithstanding. You know, I was cleaning out some papers in my office recently and I came across a Ted Butler article dated in 1998. He was saying the same thing ($50 to $100 silver) back then as he is now. You know what they say about a broken clock. Well, anyway, my attitude towards silver has changed and I find myself in the bull camp on silver, even if just for a short time. Here is why.

Silver has been driven down by short sellers as well as a fall off in industrial demand due to the recession. We at Centennial could not figure out who would be selling short at such low prices ($4.50 and lower) until the bankruptcy of Enron occurred. Then all the dirty laundry came to light. Apparently, Enron used Rudolf Wolff as its commodities broker to clear its trades. And so did Warren Buffet. And good old Warren deposited his physical silver with Rudolf Wolff and Enron helped themselves to it through the leasing program. Everything was going along just fine until Enron went bust.

The story out on the street (which has been mentioned on this site before) is that Warren Buffet now wants his silver back--approximately 50 million ounces of his 130 million ounces total. The problem is that Enron sold it into the market and now it is gone. Normally, that would be the end of the story because bankruptcy discharges all obligations. But in silver and gold leasing deals, a third-party guarantor is required just in case things go sour. That third-party guarantor is one of the major bullion banks. (Take your pick from Goldman Sachs, Deutsche Bank, JP Morgan Chase, et al. Nobody knows for sure because nobody is talking.)

My "deep throat" source who tipped me off back in November has been 100% correct so far. As the silver price broke above the downtrend line at $4.24, an acceleration occurred up to around $4.50. Then a minor selloff back to $4.30 before its recent advance to $4.72 (London spot). Yesterday's and today's action moved silver right up to and slightly above the 200-day moving average at $4.66. Comex March futures are at $4.65 which is a 7 cent discount to spot. So depending on whether we use spot or March futures, as far as this indicator goes, the jury is still out. It is entirely possible for a sharp selloff to occur from this level. It is my personal belief that silver will punch through the 200-day moving average before it falls back towards $4.50. (Today's low in Comex March futures was $4.52 early in the session). And here is the real kicker.

Silver trades in both London and New York. The upward pressure is now occurring in the London spot market, most probably because that is where Warren Buffet had delivered his silver initially way back in 1998. You all remember the story of "someone" draining the Comex warehouse of silver and then shipping it to London. It took a lawsuit by "injured" parties against Phibro Salomon before Warren Buffet emerged from the shadows as the client. And I presume that the leasing arrangement took place in London as well. This makes sense to require the borrowers of Buffet's silver to return it to London, not New York. And here is where it gets interesting.

I have been tracking the Comex warehouse silver stocks since the third week of December where they stood at roughly 103 million ounces. Silver lease rates in the meantime have fluctuated between 7% (bid) on the low side and 29% (ask) on the high side. As the price of silver has risen in both New York and London, so have the New York Comex warehouse stocks. This increase is most likely attributed to the high lease rates. Where else can you earn 20% on your money (silver) annually? As a result, there are now 2 million more ounces of silver in the Comex warehouse (approx. 105 million ounces) than just two weeks ago on December 20, 2001. Normally, more supply drives down prices and not the reverse. How could this happen?

The answer lies in the fact that the silver on this side of the Atlantic Ocean does not meet the specifications for delivery in London. So it is not simply a case of loading a bunch of silver bars onto an airplane and flying it to London. The bars must first be refined and then delivered. In the meantime, there is an appearance of a glut of silver in the U.S. which could be drawn down to meet demand. I am sure that the "monied interests" on Wall Street who are short silver up the wazoo are very happy to see rising silver warehouse stockpiles. Furthermore, I am sure these same people want every silver speculator to sweat it out and have sleepless nights, fearful that the spot price could crash without notice.

Bottom line here is: until sufficient supplies of deliverable silver arrive in London, we will see the spot price trade about 7 to 10 cents above March futures. For a change, we will see the spot physical market leading the futures market, i.e. the dog wagging its tail and not the tail wagging the dog. Also I think silver will breach the 200-day moving average and go higher. Technically, the weekly trend has turned up and silver just completed a 114/115 week cycle low in mid-December. Thirdly, when (not if) events in Argentina spin totally out of control, both gold and silver will jump dramatically. I expect this to happen in January, maybe next week. Please read related articles posted on this site earlier today about Argentina's defaulted debt doubling to around $270 billion. ( I bet the banksters did not count on this happening.)

Now add to the foregoing points the introduction of the Euro as a real trading currency on Tuesday; the burgeoning M3 money supply (over $1 trillion increase last year); the rising consumer and government debt with the need to raise the federal debt ceiling another $750 billion (so say the Republicans); the lowest interest rates in almost 40 years; political and military confrontations (India v. Pakistan, Israel v. Arab world) around the globe which could lead to a major war at any time; now we have the real makings of a bull market in gold and silver to be accompanied by a collapse in the U.S. Dollar. I seriously doubt that foreigners (and especially the Arab oil interests) will want to hold Dollars exclusively especially when we are now running huge deficits and there is an alternative (the Euro) which is partially backed by gold. I consider the arrival of a real physical Euro to be the final piece in the puzzle. In short, all of these events coming together at this time is truly prodigious and it augers well for gold and silver in 2002 and beyond.

For those clients of mine who want to add to their holdings, now is the time to act. For those prospective clients who want to get started, now is a good time as well. Just give me a phone call at extension 102.

GC

At no other time in the history of mankind has there been so much information IMMEDIATELY available for investors to make "informed" decisions regarding either the purchase or sale of financial assets and liabilities.

At no other time in history has there been so many world-wide investment "choices" executed at the speed of light, for as many diversified reasons as there are diversified individiuals making these "choices".

My perspective is from accounting, control, and management. Others base decisions from economics, statistics, industry fundamentals, public service, education, etc. It's not who's right or wrong or who agrees or disagrees. It's how we, as individuals, use the knowledge, experience, opinions, and advice of others to increase our collective wisdom and further our own specific goals - whatever they may be.

Thank-you for your contribution regarding your perspective for the reasoning behind producer hedging. Do I agree for the reasons you state? Not entirely. (I'll post a view from MY PERSPECTIVE later this weekend.) What your post did do for ME was make me start thinking about nationalization, the INTERNATIONAL mining merger rush, deep-vault gold on the US balance sheet, and that it could be just possible that the mergers may be in part due to fear of nationalization. I believe, like a few others, that the US may just have a "gold-gap" that will have to be filled.

One thing I do know, I'll be more knowledgeable and a bit wiser by Sunday. It's the synergy of a group that makes the group more successful than any one participant. Again, thank you.

Pizz

At no other time in the history of mankind has there been so much information IMMEDIATELY available for investors to make "informed" decisions regarding either the purchase or sale of financial assets and liabilities.

At no other time in history has there been so many world-wide investment "choices" executed at the speed of light, for as many diversified reasons as there are diversified individiuals making these "choices".

My perspective is from accounting, control, and management. Others base decisions from economics, statistics, industry fundamentals, public service, education, etc. It's not who's right or wrong or who agrees or disagrees. It's how we, as individuals, use the knowledge, experience, opinions, and advice of others to increase our collective wisdom and further our own specific goals - whatever they may be.

Thank-you for your contribution regarding your perspective for the reasoning behind producer hedging. Do I agree for the reasons you state? Not entirely. (I'll post a view from MY PERSPECTIVE later this weekend.) What your post did do for ME was make me start thinking about nationalization, the INTERNATIONAL mining merger rush, deep-vault gold on the US balance sheet, and that it could be just possible that the mergers may be in part due to fear of nationalization. I believe, like a few others, that the US may just have a "gold-gap" that will have to be filled.

One thing I do know, I'll be more knowledgeable and a bit wiser by Sunday. It's the synergy of a group that makes the group more successful than any one participant. Again, thank you.

Pizz

Sorry for the double. XP has done some strange thinks to my computer lately.

Good reading. The question that I have is how much of that 105 million oz. in the COMEX warehouse is registered and how much is readily available for leasing? It would not surprise me if Warren Buffett is a bit nervous about the security of his investment under the current environment of high lease rates, supposed silver supply tightness, and the Enron silver position.

Just a couple of days ago the LBMA made a curious statement about extending delivery dates and then quickly reversed its decision. Several primary Silver mines and base metal mines with by-product Silver have closed or reduced production over the last several months. Now the US Mint must go onto the open market to purchase Silver for its Silver Eagle and commemorative issues (if that will continue or not). Strange happenings in the Silver markets. Cheers!

- Black Blade

http://dailynews.yahoo.com/h/ap/20020104/tc/at_t_restructuring_2.html
Snippit:

NEW YORK (AP) - Long-distance carrier AT&T Corp. announced Friday it will cut another 5,000 jobs and take a related $1 billion fourth-quarter restructuring charge to cover the cost of those staff cuts as well as 5,100 others that were already planned.

Black Blade: The "Bone Pile" grows as more phone "Bones" are cast aside and discarded. Not a good sign for a supposed "recovering economy."

http://www.businessweek.com/bwdaily/dnflash/jan2002/nf2002014_2151.htmProvided just as a balance to other perspectives...

For some reason I am fascinated by CNBC's morning show and particularly two of its main characters: Ludlow and the loud mouth (no disrespect intended). What fascinates me is that their loud and vexacious spirits seem to have propelled them to their own evening show, where you get even more of the same.

These two fellows are all wrapped up in themselves. They believe the recovery is just around the corner, are excited about the recent gains in the stock markets, and lay a line of economic drivel to support their claims.

What fascinates me about this duet is their insistence of 1) a recovery and their 2) virtual disregard of the main subject matter of this website. They spin economic theory that ignores the third leg of the triad of investments. Correct me if I am wrong, but there is stock, bonds, and commodities, isn't there (with subsets of other things here and there)?

There whole spin doctoring theories rely only upon the first two legs, while insisting that the third leg has lost signficance because the price is at a 20-year low during times that if it hasn't broken out now, it never will.

Well, I have got a theory: you can't cartwheel on just two legs and no hands. If you ignore the hands, you land on your head and break something. Well folks, something is broke, and they just ignore it. Makes for good entertainment though. And it makes one wonder, who the heck found these guys anyway?

Now, what was it that Anonymous said? "Avoid the loud and vexacious for they are bad for the spirit...???

http://www.worldtribune.com/worldtribune/breaking_2.html
Snippit:

ABU DHABI - Saudi Arabia is downplaying reports of widespead rioting last month but diplomatic sources said the nation was rocked by the worst Islamic unrest in years. The Saudi government as well as Western diplomatic sources have confirmed reports of massive riots by fundamentalists who attacked foreigners and Saudi families. The fundamentalists destroyed property and even voiced calls against the regime for what they asserted was its refusal to abide by Islamic principles. A diplomatic source said the riot in Jedda was assessed to have been aimed directly at the regime. Several leading members of the royal family were in the port city during the Muslim holiday when several thousand fundamentalists took to the street. "The riot was organized and came within one step of being an actual attack on the royal family," the source said. "The family was in complete panic."

Black Blade: If true then this disturbing situation is dire for the Global Economy. Without Saudi, Russia, or Venezuela we have NO economy. The WTC attack is nothing compared to the loss of Saudi oil. If Islamic fundamentalists topple the Saudi Royals - then the western economies are toast. Absolutely no doubt about it! A good read.

Gold (and silver) became a dollar enemy a few years ago. At that time, rising commodity prices and a rising market and dollar could not exist in the same universe. This is an abnormal situation, I believe, because each time this has happened the event reversed itself.

I believe much of the discussion here revolves around gold as a solution. Perhaps it is, but I believe that it isn't necesarily a solution, rather, it is a symbol of rightness. What does that mean?

I mean that gold trading along with the dollar and markets and rising should be a right thing. They should all be able to exist in the same financial universe. That they don't is what is not right. Getting gold to trade properly (freely) is what is a rightness. That it will be caused by a financial crisis of some order of magnitude beyond our control, shouldn't excite us or render us goldbugs, rather it should remind us that we elect (or should) those that manage our money and we should have done a better job.

So, the next time you go to the voting polls, ask yourself, what kind of political party system allowed gold to be relegated to an evil asset that could be sold at auctions as a non-performing inventory asset of Central Banks? Who hired the Harvard MBA's who learned about Spreadsheets but forgot about sound economic theory? Who are these people and do they represent and have they represented our best interests? And vote accordingly.

I know I will.

ps. Remember that gold is not the solution, it is a gauge or reflection of the problems we are and will face. There is no rightness in igoring sound economic theory that got the USA up through the 1971.

Aside from nationalization being identified on a few occasions as a risk of holding South African mining shares, I've found that very little has actually been discussed about it (yet it seems many here have SA investments). Horatio posted a word of caution on Nov. 23, 2001 (65789)in relation to the political instability in Zimbabwe and the nationalization there of the white farms under the nation's land reform laws. Since then I have kept a close watch on the South African "Business Day" website to keep abreast of further political developments. What I've learned is that there is extreme instability in Zimbabwe - there is a national election in March and Mugabe's political opponents have either "disappeared" or been unjustly arrested. Inflation is running at 100% in Zimbabwe, and the fifth white judge has just resigned from the their High Court. One article that caught my attention pointed out the fact that South African's Mbeki didn't speak out against the nationalization of white farms, and this was interpreted as a sign of political support for Mugabe. Last week I posted an article indicating that taxes on commercial fishing catch in SA are due to increase 275% over the next few years. Tonight I had dinner with a friend who grew up in South Africa and whose parents are still there. Her take is that there is a very real risk of nationalization of the mines and were that to happen, there would be *no* forewarning. Should Mugabe win the election in Zimbabwe, the economic chaos there will worsen and continue to spill over to SA, and should he not, then there'll likely be civil war which will also effect SA stability.

I only get the news on SA that I can glean from the internet, but I see alot of "red flags" here. I am most interested in other's opinions. As we've learned from Argentina, one day you can own it, the next day it belongs to the government. Can anyone provide me with sound argument on why Mbeki would *not* nationalize the mines, with/without a significant movement in the POG? All thoughts, opinions, and a cold beer welcome!
Cheers,
Waverider

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT314DEH2WC&live=true&tagid=ZZZINS5VA0C&reutr=1⊂heading=middle%20east%20and%20africaTimely Snippit:
"Zimbabwe's main opposition leader has accused President Robert Mugabe's ruling ZANU-PF party of driving the country towards a civil war by deploying "shock troops" to lead a violent re-election campaign. Tsvangirai, who poses the biggest challenge to Mugabe since the 77-year-old former guerrilla leader came to power in 1980, said four MDC members had been killed by "ZANU-PF shock troops" in the last 10 days. The Zimbabwean leader has said his re-election effort will be run like a military campaign -- which critics say shows the party will be stepping up political violence."

The situation in Zim has many in SA concerned, especially those in the SA government. Since the mines are the major employers in SA are the mines and any nationalization of the mines would disrupt SA society. This is the last thing that the SA people (black, colored or white) want. Besides the whites, coloreds, Zulus, and even many Shonas would unite to bring down the government if they tried anything remotely similar to what is happening in Zim. Also there are a lot of powerful weapons stashed away and accessable. So there is a fairly decent political division among the populace. No one (white, colored, or black) wishes a return to Apartheid.

On the other hand, the dictator of Zim (formerly Rhodesia) Robert Mugabe is old, senile and certifiably insane - he knows that he could not win a fair election. That is why he uses his goons to terrorize the population. The leader of the occupiers even named himself "Hitler". Mugabe has openly supported the squatters (they call themselve "veterans") on the white farms. The situation is near critical as most crops will not be harvested and brought to market. There is a famine and a growing fuel shortage developing in Zim as well as a few mine closures. In spite of all this SA is rather stable. Sure crime is high and AIDs is rampant but Mbeki, the SA government, and the people do not want the same problems in SA as in Zim.

It should also be noted that the SA mines have and are diversifying outside of SA. I would also suggest that investment in mega-hedgers like AngloGold and Barrick is more risky than investment in SA Gold mines. That said, no investment is a sure thing. Cheers!

- Black Blade

Thank you, as always I appreciate your thoughts and opinions. It's difficult getting a picture when you're not there or connected. I try to keep an open mind and examine/question as much as possible and I guess that's the best one can do. Anyway, you have put my mind at ease and I shall say good-night. :)
Cheers,
WaveriderView Yesterday's Discussion.

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B3240BD45%2D47C1%2D4C42%2DAC5B%2D4C4C355942B7%7D
There's a silver squeeze, but gold is in doldrums

Snippit:

SAN FRANCISCO (CBS.MW) - Gold sure could use some of the squeeze that is pushing silver prices to nearly one-year highs. While gold prices start the new year tamely flirting with $280 an ounce, silver, thanks to delivery snafus and tight lending of the metal, is rising smartly. The metal, which has more industrial uses than gold, has risen in recent weeks to almost $4.70 an ounce, an 11-month high, from just above $4. "I'm a bear on silver but a bull on gold," says Edelson, managing editor of the highly regarded Safe Money Report, who had been reluctant to endorse long-languishing gold.

Black Blade: It appears that Edelson missed out on this Silver rally.

Beware etc, From Whence it came..http://expage.com/page/howlingonee

DESIDERADA

http://in.biz.yahoo.com/020103/7/1cobv.html
Snippit:

JOHANNESBURG (Dow Jones)--If AngloGold Ltd. (AU) is pipped at the post by Newmont Mining Corp (NEM) in its bid for control of Australia's Normandy Mining Co. A.NDY), it will face a dwindling range of growth strategies. AngloGold has twice sweetened its initial offer for Normandy - Australia's largest gold group producing 2.3 million ounces a year - only to be trumped each time by a stronger Newmont response. "If they miss out on Normandy, they must sit back and assess things carefully before making any other moves," said Nick Goodwin, gold analyst at SG Securities.

Black Blade: A lot of possibilities exist. A good read on the situation for a very desperate AngloGold.

http://in.biz.yahoo.com/020103/7/1cof8.html
Snippit:

SYDNEY (Dow Jones)--Speculation has intensified that South Africa's Gold Fields Ltd. (GOLD) is the new mystery suitor for takeover target Hill 50 Gold NL (A.HGD), the Australian newspaper reports Friday. Hill 50 earlier this week recommended its shareholders do nothing in response to South Africa's Harmony Gold Mining Co.'s (HGMCY) A$230 million takeover bid, saying an alternative offer was possible.

Black Blade: Either Harmony or Gold Fields would be good as both are unhedged and both would quickly unwind the Hill 50 hedge book. The days of the hedgers are numbered. Note the recent desperate moves by AngloGold. "Interesting Times"

Thanks.

Didn't quite get it right, must be a slipping memmory. ;-)

DESIDERATA

"...Avoid loud and aggressive persons;
they are vexations to the spirit...."

Interesting post. (67705)

The rumours of Buffett's leased silver gobbled up by Enron and now waiting to return draws a multitude of questions.

How long does it take to refine silver to meet London's specifications? You mentioned that Comex inventory is net up 2 millions ounces. Over the last couple weeks what has been the total silver into Comex and what has left? The net movement is +2 million put do we have an idea on how much 'moves'? This will give us an indication of how long this squeeze will last.

Please allow me to ramble, I need to see this in my own sketchy thoughts.

Suppose no silver moved out of Comex and 2 million came in over the last 2 weeks. This might suggest a 25 week squeeze to accumulate 50 million ounces to replenish Mr. Buffett's stock. There is of course the relationship of registered vs eligible as BB mentioned and secondly how much larger is the LMBA to Comex? I am sure that there are a zillion other variables. This scenario paints a bullish stance, yes?

Now suppose 25 million ounces have moved out of Comex and 27 million have moved in (again a net +2 million). This suggests a short duration to clean up the 'Buffett mess'. Further considering LMBA's size and other variables this points to a false breakout. Is this what JPM's public blast was all about; silver is overbought?

The inventory movement, eligible/registered etc. of Comex are available; I know very little of Comex so I do not offer an opinion. I guess what I am asking, is this a viable squeeze or do we look forward to a silver bust in a week or two?

The Enron bust, bullion bank short to Buffett and now a 50 million ounce squeeze all sounds very logical but now do longs (physical) jump onto the squeeze bandwagon (hold) or do they sell?

This 'good delivery' difference between NY and London sounds bogus, I thought 'good delivery' has specific parameters? Can Mr. Buffett demand certain 'good delivery' bullion? "No I want square '999' bars not rectangular '999' bars" What's up with that?

Quote:

"The Master of the Universe seems invisible at a time of extreme stress. That can mean only one thing...he's gone and his replacement is already calling the shots...really BIG shots.

Susan Schmidt Bies, Olsen and the departure of Ed Kelly signal a sea change at the Fed. See...the current FOMC folks KNOW about the gold manipulation, the incoming guys and gals DON'T. So the Chairman has to "explain" the situation to them gently as they set up their desks.

Hearing that it is Official Fed policy to smash the economies of already debilitated Sub-Saharan Africa so thirty somethings in the US can have three suvs, two homes plus a vacation villa just isn't going to go down too easily. Unless there's a NEW Chairman and a new plan to implement. A plan that scraps the Rubin/Greenspan/Summers weak gold era in place of a strong industry, weak dollar and a back-of-the-class financial sector. With the rancorous Enron hearings ahead, you really didn't think the Master of the Universe would survive did you? Can you see him fielding questions about how he brushed aside derivatives regulation last year? Or explaining the $37 Trillion in derivatives concentrated in TWO banks? [JPMC and Citibank]

There will be carnage in the financial sector with bank failures to be deftly hidden. After all the Japanese have had ten years of invisibly insolvent banks for us to emulate. Remember that the yen is falling and the yen value of gold is moving up smartly and THIS good precious metals scenario is not avoidable. But how can the Fed get out of this mess? There might be a way...

Devalue the dollar. Chapman has a source that indicates this will happen at about 19%. But Chapman's source probably doesn't know that it is much worse than the source knows. This means the deval will most likely be greater than 19%. More like 30%. Things like this ALWAYS change at the 11th hour as the stench boils over and the need-to-know guys learn that they didn't know everything.

Bush wins with a deval by supporting the industrial base of America since our exports are 30% less expensive over night. He can couch it in the cloak of a stimulus package that the Dems were dragging their feet at a time when America really needed help. Especially multi Nationals will like it whose foreign assets grow by 30% over night. Argentine loves it because their debt gets cut and they just might squeeze by on an austerity budget.

The banks love it since their debt is payable in devalued dollars. Some banks may even survive. The bond guys hate it. JPMC and Citibank merge into a "new" entity refloated by Fed funny money...you know repos that never get repoed. Whose accounting these days anyway?

The financial press goes into a full court "management" mode. As we saw tonight with Abby Cohen on Wall Street Week...in fact she may just be the trigger for this move!

Watch out on Monday."

RE: Dollar de-valuationA devaluation of the dollar to the tune of 30% would significantly affect sovereign forex reserves so the other CB's would, of necessity and agreement, have to play along. Will they allow the dollar this privilage? There is an alternative now in the Euro. Of course, the ECB could play along knowing full well their reserves are redundant anyway and gold is their cover. Their consent to this tactic would be a good faith gesture and would certianly hasten the rise of their own fiat monster. The Euro zone has an escape mechanism now that is functioning so they could agree to this. However, what of China and Japan??

Thank you Sir for your #67596. It is an excellent post and I am still pondering it. There is also some extraordinary value (apparently anyway) for buyers of US equities at lofty multiples relative to fundamentals and common sense yes?

This might be an excellent topic for discussion here drawing upon the fine intellects that vist the friendly confines of USAGOLD.

The supply of $'s (debt) is increasing 8 times as fast as GDP. More and more money goes into debt service, thus creating a shortage of dollars. This shortage is causing the value of the $ to increase. In my area (concervative area) average household debt went from $40,000 to $90,000 during the last 5 years. That average $40,000 x .085% = $3,400 interest is still cheaper then todays $90,000 x .075% = $6,750 interest cost. Now add on the additional cost of higher monthly principal cost, property taxes and the added cost of upkeep. The money supply can not exceed the debt level for money has to be borrowed into existence before it enters circulation. ********* The stock market is going up and will continue to go up because the FED is doing most of the buying. Index mutual funds are the best buy because they buy what the FED is buying. The index funds are also the best to short when the FED is selling. We should have another week or two of up movement in the stock market before the selling starts. The FED is doing this to make a profit. The FED is not a charitable institution. It is not a governmental institution. It is privatly owned and has the right to print money at a cost of $0.025 cost per $1,000. The Argentina debt default is not a loss to our banking interests. After all we gave them worthless paper as a loan in return for physical raw or proccessed commodities. The Fed owns the GSE's and in the same way when we the ever stupid people borrow to buy a $100,000 home it costs them $2.50 to provide that $100,000 and you the ever stupid borrower has the privilege to slave for the rest of you stupid life to pay back that $100,000 plus interest. This is free slavery which is like free trade. Free trade = our central banks give them our chits that cost them nothing in exchange for goods where as in free slavery, we the ever more stupid borrower borrow chits that we have to pay back plus interest that cost the central banks nothing. The more educated we are the dummer we get.

Steve H quote:
So, the next time you go to the voting polls, ask yourself, what kind of political party system allowed gold to be relegated to an evil asset that could be sold at auctions as a non-performing inventory asset of Central Banks? Who hired the Harvard MBA's who learned about Spreadsheets but forgot about sound economic theory? Who are these people and do they represent and have they represented our best interests?
---------------------------------------------------
Steve, bless you for posting this!


If we go to the polls and vote for state and local representatives who knowingly ignore Article 1, Section 10 of the Constitution, how can we complain about ANYTHING they do?
And if we allow our local/state elected officials to ignore the law of the land, then how can we expect the federal officials to behave any better?
If we then find that they blatantly ignore the rest of the Constitution (such as the 2nd Amendment), why should we be surprised?
There has been much discussion here regarding the possible seizure of privately held gold. We rely upon the provisions of the 5th Amendment and the 2nd Amendment to protect our private property from the force of government abuse.
Why should we expect the administration to have any more respect for these particular provisions of our cherished governing document than they have for Article 1, Section 10?

The current administration is not our government. The Constitution is our government.
If we endorse its abrogation at the polls, what then are we left with?

There is only one basis for sound government: honest money. Without it, in the end we will have nothing WORTH governing.

..................................................
The Constitution of the united States, Article 1, Section 10:
"No State shall... make ANY THING but gold and silver Coin a Tender in Payment of Debts..."
..................................................
Un-amended, and still the law of the land.

The Constitution of the united States, Article 1, Section 10: "No State shall... make ANY THING but gold and silver Coin a Tender in Payment of Debts..."

Just thinking.....this says nothing about what the Federal Government is allowed to do. We now have Federal Reserve Notes not State Notes.

For several years, I have had half my retirement account invested in PMM funds. Assuming silver is ready to break out again, I would like to put some sidelined cash directly into the most solid silver mining stock. Would that be SIL?


Gimli

Max,
There was much talk about money and government debt at the Constitutional convention. Notes kept at the time by George Mason and others tell us that it was one of the big hot-button topics.
After all, the Revolution was sparked primarily by money issues. The English crown was deeply in debt to the european bankers, and this prompted King George to lean on the colonys for every penny he could squeeze out of us.

Also, to finance the war the Continental Congress was forced to issue scrip which was greatly inflated during the course of the war. Thus the orign of the expression "not worth a Continental".

At the time, there was no expectation that the Federal government should ever have any direct interaction with individual Americans. The intention was that the several States, where the people had direct representation, would have far more power than the federal government.

It was felt that by limiting the States to dealing in specie, it would prevent the widespread introduction of fiat. If the States were limited to the collection of taxes and legal fines in specie only, then the people would always think of gold and silver as money.

This works only so long as the people know and protect the Constitution as the rulebook and "operating manual" for our government.

http://www.gold-eagle.com/editorials_02/wallybently010402pv.htmlGimli_ (1/5/02; 08:30:24MT - usagold.com msg#: 67732)
What Silver Mining Stock Is Best To Buy?
=======
There was some such USAGOLD Forum discussion within the last week with some suggestions, BUT, the above link (from another site) is an EXTENSIVE discussion for your own evaluation. BUT REMEMBER, old friend Gimil, HOLDING on to PRECIOUS, (physical that is) may be better than paper.
<;-)

MarkeTalk, it's not often enough that we hear from you! It's also encouraging to hear that someone as close to the market as yourself now holds a bullish outlook on silver.
There has been, as you mentioned, speculation that Enron was short silver. Why? If they were just shorting silver to raise fiat capital, then were they also short gold? There may be much more to come from Enron's default and, with closer bookkeeping scrutiny, the coming financial shortfall of others.
Buffet managed to take possession of 89 million ounces of his 129.7 million purchase in 1997-8. When, as you mentioned, Philbro (Solomon) was accused of trying to corner the market, Buffet was forced to reveal himself. I've always wondered why the lawsuit was shortly thereafter dropped. Can it be that he made a deal, that being to let the shorts off the hook through leasing (instead of delivering) the remaining 40.7 million ounces? So, instead of delivery, the shorts found themselves paying the lease interest and still owing the posponed delivery. In return for this arrangement, the suit was dropped.
Also, rumor has it that the squeeze, centered in London, may have been precipitated by Buffet's decision not to renew again these ongoing leases. Perhaps, but it may not be that complicated. It may be that the supply of available silver for leasing is simply drying up but, because of his name and fame, Buffet has once again come into the spotlight. He may be quite happy to renew the leases at the now inflated lease rates. Either way, whether Buffet initiated or supply initiated, the squeeze does not work unless all other available supply is scarce.
That Buffet moved his physical holdings out of the country is perfectly understandable when we remember that, as a commodity trader for Solomon Brothers in his younger days, he once did corner the silver market by exercising a great number of call options even though these calls were out-of-the-money when exercised. The story goes that the government asked Solomon to back off when the market could not deliver (even at the higher call prices). In return, supposedly, the government covered Solomon's loses. Even if the story is only half true, Mr. Buffet certainly is no stranger to the silver market.
Whenever I try to figure out what's happening in silver I always seem to return to the basics of supply and demand which, as Butler and others have correctly (IMHO) assessed, is screaming that price rationing should have started years ago and POS should be much higher. If my "supposin" that Buffet took an IOU and interest payments for 40.7 million ounces in early 1998 instead of physical delivery, then what would have the POS reached in Feb. 1998 if he had demanded physical delivery?
Most any market can be squeezed if enough longs stand for delivery, but the outstanding feature of silver is that the world has consumed more than production for years and, most importantly, we are running out. What is left is probably in strong hands and demand is inelastic. If the POS does really rise for lack of only 40 or 50 million ounces, then I'll be more convinced of the suspect total world supply estimates I'm using. Whether through a market squeeze which always has the connotation of manipulation, or the natural squeeze that has to result when immediate supply can not meet demand, the time will come when it does happen (unless there is a moutain range of pure silver hidden somewhere). It should happen shortly depending upon how strongly the remaining supply resists buying efforts.
I guess if this market were more transparent it wouldn't be as much fun and this potential money making opportunity would never have existed. It certainly is a great puzzle!
Please keep your ears open to whatever sources you have and don't be a stranger here. We need all the information and opinions we can digest and you have unique sources and sound opinions.
Thanks
Rich

Lot`s of discussion about nationalization in S.A.
Who owns Canada`s "in ground" gold reserves?
Do not the people of Canada, represented by the Government`s of Canada, own all Canadian resources?
Be it oil,gas, base metals, forests,water, and Precious Metals?
In return for various taxes on production and export, the government allows the rights to these commodities to be produced and sold.
Canada produces between 150 and 200 tonnes of gold annually.
I would think a doubling of gold price would cause production to rise to surpass the 200 tonne mark.
If /when worldwide economic disaster erupts and the world returns to a time tested gold based fiat, would Canada nationalize commodity reserves?
Somebody has to produce and refine these commodities to a point where they are in a form ready for sale. Would not the preferred method be to adjust the tax to allow a return on investment, decided by government, just as utilities are (have) been handled?
Would the government/s of Canada require tax to be payed in the form of the commodity?
If a Canadian gold producer is granted a license to mine and sell gold that allows them a return of 25-50%, the government would take the rest (100-150 tonne per annum).
We have a national debt of 600 billion Canadian((not sure of provincial obligations), If Canada is on the ball, in which currency should they be converting our debt to, our own?, U.S?, Euro?, yen?
Which currency will fall the most in relation to Canadian? Should we be converting all national debt into U.S dollars? While taking tax from gold production in GOLD?(and purchasing the rest with our own currency or foreign reserves)
Should the CDN government make efforts to have our citizens replace some of our private paper assets with gold?
Does the fall of America mean the fall of Canada?
30 million people owe 600 billion CDN (SOME TO THEMSELVES)with potential assets of 200 tonnes of GOLD annually.
For myself, I`m happy to be a Canadian, living in Canada, we are rich and don`t even realize it.
How many people in the U.S,with how much government/state debt, and how much gold assets annually?
It is difficult to give everyone free health care and it costs us dearly but that is what WE choose to spend our wealth on. Maybe we should hear the phrase "GOD BLESS CANADA", and "THANKS FOR LETTING ME BE BORNE HERE."
P.S. come on up, we could use more people, especially of the type that visit here!

http://www.usagold.com/gildedopinion/Jensen/20020105.htmlIn the wake of recent conversation here about government powers in Africa, this is a timely piece by international editor Holger Jensen.

------Robert Mugabe, the only president Zimbabwe has ever had in its 21 years of independence... has done everything he can to cow his opponents but faces a strong electoral challenge in March from Morgan Tsvangirai, leader of the Movement for Democratic Change... its support has grown because of Mugabe's misrule. Inflation is 100 percent and rising, interest rates are above 70 percent and unemployment is estimated at 60 to 80 percent. Investor confidence in Zimbabwe is nil and foreign aid has dried up because of Mugabe's seizure of white-owned farms to resettle landless blacks. What he calls "land reform" has caused severe shortfalls in food production and export crops. Crippled by a lack of fuel and foreign exchange, Zimbabwe now faces famine.

Unfazed by this looming disaster, Mugabe launched his bid for re-election by declaring "real war" on his opponents. This translated into rising political violence against the predominantly black MDC, stepped up farm seizures and a host of new laws suppressing freedom of speech, freedom of assembly and even freedom to vote.---------

(click URL for full article)

R.

RS....I agree the Constitution is the highest law and intent (Federalist papers) is important. Alexander Hamilton, our first secretary of the Treasury, always wanted and pushed for a National Bank with fractional reserve type powers of expansion. Washington supported Hamilton, perhaps because he saw the need to fund the Federal Government and pay off debts. Without review I'm speculating that the Federalists, especially Hamilton, wanted Article 1 section 10 partly to limit the ability of States to compete with credit creation by their future National Bank. Jefferson thought Hamilton a monster and his National Bank the ruin of free men (visons of the Fed). John Adams thought true wealth was found in land and seemed to have had little understanding of banking. However, Abigail and later John found Hamilton to be treacherous and had little regard for him. Perhaps the key here is the intentions of James Madison, the father of the Constitution. In the end the Hamiltonians won. I need to study this more but it is not clear to me from the strict written word that limitations were placed on the Federal Government with regard to money creation. At least this is what the lawyers would argue.

The other question of course, is where is the authority for Congress to delegate the power to coin money to a private corporation (the "Fed")?

....................................................
Article 1, Section 8, Clause 5:
The Congress shall have Power To... coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
....................................................

Be well, and thanks for your reply!

I think the lawyers would argue that the Treasury still coins money and the Exchange Stabilization Fund regulates the value with respect to foreign coins. However, it is clear to me that private banking interests have become the supreme power in the land and that Congress no longer regulates our money. We are not so different from Argentina. Our time will come.

Best Wishes,
Max

As a resident of BC,I share your concerns,especially now as the impostion of lumber tariffs and duties brings our efficient and modernized forest industry to it's knees.As our currency underperforms and our forest companies' financial health deteriorates,it opens up opportunities for US producers to scoop up undervalued assets with incredible long term potential for fractions of what they're worth.One of the treasures of the BC forest is the red cedar,an incredibly beautiful and versatile wood that is more or less totally depleted in the lower 48.For some reason,this wood is included in the tariffs,denying both the free market a reasonable price;as well as the producer a reasonable profit.Why is this fact overlooked on the authors of the tariff?

I would submit that the not so indifferent powers that shape US Economic policy are well aware of this inconsistency.When the smoke clears on this travesty,our resources will be US owned and the profits from our public assets will flow to those who have hatched and promulgated this tariff war over the past 20 odd years.

It is increasingly obvious that our politicians have sold our heritage and potential out,by hitching our destiny to the US bandwagon.We are regaled on almost a daily basis on our hapless currency and the inevitability of adopting the US dollar.Does it have to be this way?

Of course not,the Bank of Canada is well aware that a smaller country can have an independent strong currency that garners world respect.Look at the SF as an example.Instead of asserting our potential and diversifying our reserves,they continually sell our gold and increase the US dollar reserves.They also ape US monetary policy and issue no objections as our biased and cowed media work diligently on promoting our national inferiority complex.

Meanwhile,the people of the country soldier on,forgetting our past history and accomplishments as we are slowly subsumed as lessor participants in the American way.It is extremely frustrating to me that a nation founded on the frontiers,that has a long history of facing down extreme hardships and prospering in spite of the odds,would allow herself to befall this fate.

Argh,where have all the true Canadians gone?

The PM markets are the most intriguing and interesting (fun) place in the world! The most imaginative brains in Hollywood can not dream up anything close to the real life story we're all trying to decipher.

Agree entirely. However, I have been warned by mikal to restrain my "premature outbursts of Greenspin exuberance". I have requested that this requirement be suspended when POS breaks above the 2001 high around 4.80 but haven't yet received my outburst clearance papers.
Hey, mikal, can I yell when POS clears 480?
If I do, you probably won't even hear me over the noise some others will be making, no?
Waiting to yell
Rich

GATA lays its hope these days on Ralph Nader, at least on a Conference soon to be organised by him.

Indeed in a message sent on Saturday, January 5, 2002 at 12:39pm ET, GATA's Secretary/Treasurer appends Ralph Nader's latest newspaper column concerning a conference Nader has called for Monday in Washington about the work of the Federal Reserve, to be attended by the GATA Chairman.

The column starts by saying that the Federal Reserve wields enormous power over the national economy and is allowed to make its decisions in secret, Fed minutes being destroyed or heavily edited when the Fed made critical decisions.

In sponsoring this conference, Nader hopes "that we can place a spotlight on this dark corner of our democracy and begin a campaign for a more open process in establishing economic policies that affect the daily lives of working families and well-being of the entire economy" because "the Federal Reserve does not face the normal checks and balances of the congressional appropriations and budget process" and therefore "the Federal Reserve feels free to operate as virtually a separate government".

Greenspan's Objectivist past would make him unsuitable to carry out the Federal Reserve's wide-ranging regulatory power for consumer protection over the financial community.

So the conference is about taking "a deep look at how well this former foe of regulation is representing the public in his current position as chief government regulator of banks, big financial services corporations, and the economy".

=

Let me first state this: Earlier in these pages, I have criticised GATA because it (s name) relies on Anti-Trust (law) against private corporations. I do not criticise GATA when, or to the extent, it criticises government for manipulation. I only criticise it when it advocates the use of antitrust law against corporations which have no links to governments.

If I can agree with the Conference's objective of looking at the secrecy of the Fed's decision making, I can however not refrain from looking at who's talking. Ralph Nader criticises Greenspan for his past. Well, let's look at Mr. Nader's past and present ideas.

One does not have look far for Nader's ideology, it's all in the main objective of the Conference which Nader describes as taking "a deep look at how well this former foe of regulation is representing the public in his current position as chief government regulator of banks, big financial services corporations, and the economy".

Nader's real objective is thus the regulation of banks, big financial services corporations, and the economy. In other words, the real objective is the attack on corporate America through the attack on its watchdog who would be failing in its task.

Nader is no newcomer in the area. He started writing in the early seventies. The books he co-authored in 1976 were titled "Taming the giant Corporation" and "Constitutionalizing the Corporation: The Case for the Federal Chartering of Giant Corporations"

The books and the Monday Conference are only the first steps on a long journey. What is this journey, which should be, taking Nader's age into consideration, nearing its end, of which GATA wants to be a part? I'll quote from Robert HESSEN's book "In Defense of the Corporation" (Stanford: Hoover Institution, 1979, pp. 111 et seq.)

As I said Federal Chartering of corporations and questioning the representative qualities of Alan Greenspan are only the first steps of a long journey. But we are entitled to know the final destination: Nader's vision of an ideal society. But this is a subject which Nader rarely discusses � so his philosophy must be pieced together from the hints scattered in his numerous articles, interviews and reports.
Nader's critics usually call him a statist because he attacks business and calls for greater governmental controls. But for Nader, statism is only a transitional astage. �
What is his ideal society? Nader wants people to live in small, self-sufficient communities �
In order to make this vision a reality, giant corporations have to be broken up and their individual plants and factories transformed into cooperatives owned by their customers, not by their workers who might, Nader fears, pursue their own advantage rather than making service to the community their highest ideal�
Rousseau's "The Social Contract" (1762) seems to be the seminal source of Nader's political philosophy. �
For Rousseau and his intellectual descendants, the appeal of a small community is that it will be easier to enforce self-renunciation and conformity. �
As Gar Alperovitz, the man whom Nader recommended to President-elect Carter for an appointment to the Council of Economic Advisers as a man with fresh ideas and insights to contribute to the nation wrote "the key to making the whole system work will be to reduce �individual and community motivation for exorbitant living standards� " (ALPEROVITZ, "Notes towards a Pluralist Economy", p.85).

Is this what (the) GOLD (Antitrust Action Committee) stands for?

We at GATA might have expected that our chairman's
using a conference sponsored by Ralph Nader to spread
the word about the surreptitious suppression of the
price of gold would bother some folks. But that
something called the Gold Anti-Trust Action Committee
would favor anti-trust law should hardly surprise
Invisible Hand or anyone else.

In any case, in our struggle to liberate gold, we'll be
glad to associate with people without much regard to
their ideology. If we can find support on the political
left for putting gold's enemies in their place, so be
it. One's biggest enemy must come first. As Churchill
said: "If Hitler invaded Hell, I would find an opportunity
in the House of Commons to make a favorable reference
to the Devil."

If Invisible Hand thinks the destruction of free markets
is bad when accomplished by the government is good when
accomplished by private parties, he can be no friend
of anyone who believes in gold's traditional monetary
functions. Those of us who do believe in gold will find
no consolation in its being killed by J.P. Morgan/Chase
rather than by Alan Greenspan, for gold will be dead
either way.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

We at GATA might have expected that our chairman's
using a conference sponsored by Ralph Nader to spread
the word about the surreptitious suppression of the
price of gold would bother some folks. But that
something called the Gold Anti-Trust Action Committee
would favor anti-trust law should hardly surprise
Invisible Hand or anyone else.

In any case, in our struggle to liberate gold, we'll be
glad to associate with people without much regard to
their ideology. If we can find support on the political
left for putting gold's enemies in their place, so be
it. One's biggest enemy must come first. As Churchill
said: "If Hitler invaded Hell, I would find an opportunity
in the House of Commons to make a favorable reference
to the Devil."

If Invisible Hand thinks the destruction of free markets
is bad when accomplished by the government but is good
when accomplished by private parties, he can be no friend
of anyone who believes in gold's traditional monetary
functions. Those of us who do believe in gold will find
no consolation in its being killed by J.P. Morgan/Chase
rather than by Alan Greenspan, for gold will be dead
either way.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Just pulling your legs....sorry, this is a response to the 'GATA and Nader' controversy:
********

Politics makes for strange bedfellows. Gold is political. That should be all that needs to be said, but let me elaborate just a little.

Schmoozing of this sort increases visibility and builds an understanding which crosses all parties, social-economic standings, ethnic backgrounds, etc, etc. In fact the public notices more when issues of commom concern are embraced by folks with vastly differing agendas. That kind of universal appeal is news in itself, and news is what we need.

Would anyone be offended if Hillary Clinton devoted her next dozen press conferences to exposing the gold cartel? Personally, I can't stomach the bit.....er, lady, and despise most, if not all, of what she stands for. But, if she is willing to line up with us on this political issue, I'll take her (no, not in that way!), meet with her, discuss plans for attack on our commom enemy, and encourage the support she brings to speak out and be heard.

No, it's not easy to take this position, but we must remember:

"War is hell" and "All's fair in love, politics and war"

If we're going to restrict ourselves to selected political allies in this war, we might as well sell our gold right now.

I know, Ralph Nader is so far left he makes Hillary look like William F. Buckley...BUT:
PEOPLE LISTEN TO HIM.
HE RAN FOR PRESIDENT LAST YEAR.
HIS LIBERAL SUPPORTERS ARE VERY GOOD AT GETTING ATTENTION.

Sorry, I know this is unnatural to say the least. Liberals are the last folks one would wish for, or expect, to fight for conservative values (of any sort) BUT...I would like to win this fight. Even if it means with the strangest of political bedfellows. .02

Exposing the abuses (any abuses) on the valuation of Gold is an honorable cause. This aspect of the Gold-Activism will have a catalytic effect when Gold's time has finally come. But our infinitesimal contribution to *the cause* lies in a consequent behaviour and action. That is giving Physical Gold in Possesion is right place in the patrimonium of each and every one of us. This can only be achieved on a broadening scale if proper education and insights are massively propagated. And here we (myself included) are making mistakes ! We = all goldbugs/advocates !

We are mixing things up. Gold Activism, should distantiate itself from the ongoing gambling game of the financial fraternity in collusion with elitist (?) oliarchic leadership. He/she who is still in the process of acquiring fiat paper for later exchange into Physical Gold in Possesion, should not promote the paper-gold (derivatives + goldmines) bull fight, wich is exactly the one and only instrument of Gold-Suppression !
Multiplying your fiat must/should be done in the much more volatile financial arena (stockmarket) that is the anti-thesis of Physical Gold. Our Guides were already aware of this a long time ago. It is not only the dollar that is cornered...it is the financial system that is heavely endangered. Reread all print-outs of TG, again and again, up until the underlying insights are fully understood.

Yep, I'm boring you, dear reader. But the more I study TG's integrated visions...the more I keep discovering and realizing that "the transition" is there for us generation to experience.

This posting is a result of spending the night with Waverider...'s question on goldmine confiscation. I do own shares of one SA goldmine, Gold Fields and it is irrelevant to me if this underground gold is confiscated/regulated/taxed/nationalized or whatever. Paradoxal ? No, it isn't. This Gold Fields paper is only a pousse caf� (desert) on the Physical in Possession. And not the other way around. Simply because I do *BELIEVE* in GOLD and its renaissance (rebirth). And this within my 20 years of shelf live, expiry date, left.

TG's *map* is a very, very special one ! So few individuals have copied or memorized that map. It is the map of treasure island. We only need to sail around the island whilst chacking if all map-indications are corresponding with the island's geography. Gold activists (CPM included) are providing the wind for sailing.

To all goldmine shareholders : Do you believe that POG, once started to re-value, will lose that value afterwards ?
If and when POG rises or explodes out of its paper-trading range ...will it be manoeuvered back down for continuation of the aging falsification ? Are you still trading/holding goldmine shares for fiat generation ? Why have you chosen goldmines and not other stocks that had/have, roller coasters ad nausem ? If your goldmine profits are cashed in fiat and POG does not decline or worse, increases into the projected thousands of dollars...what opportunity have you gained or lost with trading/holding/ and finally selling your woreshipped goldmine shares ? You are locking yourself out of being the proud owner of your piece of treasure island. Do the math yourself within different POG scenarios.

It takes an in dept study of all TG's archives to get the whole Gold picture. The present re-bubbling efforts of the stockmarket is even (correctly) explained in TG's archives.
You buy a house with the engagement of working for it during the next 20 years (a generation). Why should you buy and hold a participation in a quoted company (stock) that is valued (to be paid for) at 35 years of profit, wich were (!!) the highest ones in history ? Think profoundly about the why's.

Don't be afraid of PHYSICAL GOLD !!!

Some very astute and very intelligent (wise) posters have gone quiet on this forum. They already identified with the treasure on archives here available. We are still students and seekers of the holy grail. These silent posters (still lurking) haven't left out of dis-illusion but are discretely watching things evolve as outlined on *The Map*.

In friendship, Belgian.View Yesterday's Discussion.

Nice post, warms the heart.

When I get disenchanted with gold's performance I always look back at things that were. When I was a kid growing up in the '60's I listened to my father and grandfather speak of their childhood days in the '40's and '10's respectively.
It was a simple life (boring I thought as a kid). I remember my father rushing out to buy our first color television in 1972 to watch the Canada-Russian hockey series. We had basic electronic games as kids, we had an 'Atari' video game! Do you remember the black and white tennis game; it was a marvel in electronics. I shutter to think of my father's stories, that was the stone age I surmissed.

So now we have closed the books on the 1900's and we are over 2 years into the 21st century, a hundred years since my grandfather was born. My son listens to my horror stories now. I remember telling him, 3 or 4 years ago, about getting the first color TV in '72, he probably wondered what we ate 'way back then.' He just rolled his 14th birthday over the holidays and recently I have heard him say that the world is doomed. I asked him to elaborate. He said that he has been listening to me rant and rave over gold the last few years. He pointed out the squabbles over oil, NG, fishing rights and of wars etc., etc. I told him that these issues have been around for awhile. He reminded me of my rants about the US-Canada lumber disagreement, the garbage exportation issue involving Toronto and Wisconsin, the exportation of fresh water.

So I guess the question is where will the world be in 10 or 20 years. Major wars are beginning to occur more frequently now. Is this world going to be a better place in a generation? Looking back in time starting from this moment to your childhook, then to your father's generation etc, how can one feel positive about the future. I fear the future and I fear most for my children's future. I agree with my son; by the time he's 40 (26 years) the world (if it still exists?) will be one scarey place.

"While I gaze from the 40th floor window of this lonely building I see oxen plowing fields"

...maybe it's time gold investors got back to basics for analysis: supply and demand. Recently I've been running across figures that as much as 40% of the world's above ground supply of gold has only been mined in the last twenty years, which is an incredible amount of gold to hit the markets in so short a span, considering it's been in use for thousands of years. And this in a time period when investors have gradually lost interest in gold as an investment so that now over 80% of production is now "consumed" as jewelry. Concurrent to those market conditions, we've seen a continuing sell-off by central banks looking towards interest-bearing assets that can be financially engineered. I'm aware conspiracy theories are the vogue among us goldbugs, but is the disposal of central bank gold stocks a gross manipulation of the market? Or could it be, given bullion's lackluster performance and inability to produce income, an attempt at a sounder management?

Methinks we're in for another boring year in gold.

Hello, my good and even better gold friend Belgian, and please forgive me only partially agreeing with your last post. I agree in the context of accumulating physical gold, -(and some ag, also, as the short situation of another historical real money equivalent may be even more dramatic at this stage, given the dwindling supply for years now)- though, as the mainly unhedged gold mining industry NEM/FN fired a crippling volley at the hedgers, which may initiate a revision of the concept of gold hedging.

Or hedging for financial gain, alltogether, with the advent of the carry trade game. Producer hedging is and was restricted to one year of produc(e)t (CFTC)in order to protect from market volatility - well, hedging, opposite to hedge funds - derivative leveraging.

Over the last year or so some of the unhedged gold producers
appreciated up to 100%, even without trading. And I miss HM (Homestake), which miracolously made more than 100% for me, which again boosted my capacity to acquire more physical.

The hedge a/o derivative players as AU, ABX, PDG ... didn't really make any headway over the year and Bob Chapman feels they may be the next Enrons. This may well be and it would serve them right as they've proved to be destructive to their own industry.

I still have to stress, that after the consolidation in the gold mining industry has run its course, not one NEW OUNCE will have been added to the reserve equation. So reserve replacement will be the name of the game, as some of the paper games will have paupered the main players the rush to take over a/o establish new reserves will become imperative.

OK, Belgian, I notice I haven't really addressed your quest for physical gold, which I share. I've made it my policy to convert 30% of any profit/earnings into physical reality. I still feel, though, some diversification - even in other areas - can't steal my show, though the main thing today is not to be caught in any kind of debt (or mortgage), instead hold some liquidity (nice to have some euros) and even some silver along the way, as you can never have 'enough' gold.

Lastly, I think that the window of opportunity to accumulate more physical is coming to an end - So call MK (or George -good essay Marke Talke, BTW -for silver) today - in peace cb2

PS: ... seems to me - forgot the missing link - CLINK!

Thanks all for the continued exchange of news and views.

As CoBra(too) finised with the comment ... "seems to me - forgot the missing link - CLINK!"
--
All the Hobbits "know what the Wiz likes" and the Holiday Season and the advent of another Birthday, brought the Wiz the following: CLINK CLINK CLINK CLINK CLINK !! All Different BEAUTIES.
<;-)

http://biz.yahoo.com/rf/020105/n05321177_1.html-------BUENOS AIRES, Argentina, Jan 6 (Reuters) - ...Medicines including insulin are running short and prices on staples like bread are rising as businesses hedge against devaluation. A $1,000 monthly limit on cash withdrawals remains in place, reducing purchasing power to a trickle and infuriating many middle class Argentines.
+
``They drugged us Argentines with convertibility (the dollar peg),'' said opposition lawmaker Gustavo Gutierrez. ``This plan is about jumping off a cliff.''
+
A 30 percent devaluation studied by the government could wreak havoc on an economy built on 10 years of peso stability, in which 80 percent of loans are in dollars but wages are paid in pesos. But the government plans to soften the blow by allowing Argentines to pay dollar debts with pesos at a one-to-one parity.----------

While the peso may no longer be "good as" the dollar, it would seem that with the repayment scheme proposed in the last sentence a dollar becomes "bad as" the peso.

See value for what it is, and know what you own.

R.

Well, Uponroof we would like all the help we can get but Hillary as a spokesperson for gold! Are we that DESPARATE!
Oh Boy, Next we will have Hanoi Jane on recruitment posters.
Just had to poke fun at you on that one.

My trip to the coin dealer revealed he has stocked the displays to the MAX. All the silver and gold you can handle.
He said business is very good. Seems to be selling in volume and not too much premium attached. My window of accumulation
is still open and PM's are still available and affordable.


Hope everyone had nice Holidays.

Where is Arnold The Pig,when you need him? OINK, OINK.

Slingshot

Snippets:


The US Reserve Assets are reported in the Treasury Bulletin on a gross basis. But the CFS is prepared using GAAP, and therefore these assets must be reported 'net' of any offsetting liabilities (for example, just like account receivables are reported in GAAP on a 'net' basis).

Therefore, the comparison of these two reports on a gross and net basis shows that the US government has a $20 billion liability, but not just for foreign currency. There is a liability for gold as well because footnote #2 says so. As noted above, it defined IMA to "include the U.S. reserve position in the International Monetary Fund (IMF), U.S. holdings of Special Drawing Rights (SDRs), official reserves of foreign currency, AND gold." [emphasis added] The word gold was added in there in 2000 for a reason, and that reason is to record the US government's gold liability - it owes gold. But to whom?

Last April in "Behind Closed Doors", I presented evidence that the US government had swapped with the Bundesbank some 1,700 tonnes of gold stored at the depository in West Point. At the time, I wasn't able to figure out where the transaction was hidden in the US governments accounts, but I now have the answer. This 1700 tonnes at $280 per ounce is a $15.3 billion transaction. This accounting entry is in the $20 billion liability explained above, which at $280 per ounce allows for the possibility that the size of the gold swap has increased to $20 billion. I say 'possible' because the rest of this liability may have arisen from a currency swap.

So here's the accounting. The US government swaps gold with the Bundesbank, which now owns the gold in West Point. Further, to secure this transaction, the Bundesbank receives SDR Certificates, which solves "The Mystery of the Disappearing SDR Certificates" (Letter No. 289, August 13th, 2001). The ESF gets the gold in the Bundesbank's vault, which it then lends to the bullion banks in an off-balance sheet transaction

Finally, there is one last point to consider. Why didn't the GAO require this gold liability to be offset directly against the US Gold Reserve, instead of the foreign currency holdings?

Clearly, that accounting would have laid bare for all to see that the West Point gold has been swapped, so that is one reason why the Treasury/ESF didn't report it that way. But I actually think GAAP standards are being met by the way the accounting was handled. First, possession is 9/10ths of the law. The gold is still in Treasury vaults, so what is the Bundesbank going to do to get its gold back if the Treasury refuses to release it? Send in the German army? Besides, the Bundesbank got the SDR Certificates as security, so one could reasonably argue that the Bundesbank could be made whole by replacing on its balance sheet the gold it formerly owned with the SDR Certificates it now owns. Of course, I would have never accepted paper as equivalent value in exchange for gold, but then, I'm not a central banker.

In summary, there is still some room for more interpretations about the precise accounting, but I think we have taken one more giant step forward by providing this evidence to account for the gold swap. We have explained how the ESF has been surreptitiously intervening in the gold market. We know where they get the metal that they need. We now also know how they account for it. And we know their motive - to keep the illusion that the dollar is worthy of being the world's 'reserve currency'. And all of this ESF gold-related activity has been occurring without Congressional approval, which as noted, is not needed.

TG: Hope that you are well and that we will be hiking again soon...It feels like the rains are starting to soak in........Happy 2002 to all.

http://groups.yahoo.com/group/gata/message/955GATA consultant James Turk reveals that U.S.
government accounts disclose a $20 billion
liability in gold. Using these accounts, Turk
also reveals exactly how the U.S. government's
surreptitious scheme to suppress the gold
price works.

http://groups.yahoo.com/group/gata/message/955


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

Canuck, each and everyone of us has to model his/her own cosy little
universe of peace and harmony. Yep, that is still possible good man ! Must be some precox winter-fatique that has spoiled your dynamics. Tomorrow it's another beautifull day.

CBII : Clue of the matter is that they (ECB) want *GOLD* as a dollar replacing asset !!! All these dollar (future-loses) must be compensated with so little stashes of Physical....
In his late 2001 postings, TG is very concrete and ultra lucide on the why's and how's.
Glad you cashed on Homestake but watch out for that "political will" thing out there !
It is not going to be that classic old fashioned currency backing stuff anymore. Europ is going to replay the LGP '71 coup de Gold, for the second time. It was a pure Physical coup ! This time the dollar mountains can't be unloaded anymore and compensation will/is be organized. Don't you feel this with your intuition ?

Goldminers must hate these thoughts and consequent POG explosion into the thousands. Goldminers are commodity diggers who desire the present staus quo !

Have a warm, dreamy end of the week, both of you.

http://www.weeklypost.com/020104/020104a.htm#oneA very interesting inside look at the Japanese eco-political scene.

Every word Koizumi utters is disected for multiple interpretation reflection. The markets....for that matter the world, are watching him relentlessly. One false 'word' or poorly presented intention, leading to a misunderstanding, might incite a financial meltdown.

But wait, this is good....

Notice Goldman Sachs is not at all concerned with causing economic damage, which could lead to a global crisis, through shorting Japanese bank stocks. What a bunch of scum sucking, insider abusing, backstabbing pricks.... and here I thought they were working with the best interests of the US, indirectly Japan in this instance, always at heart (sic). Obviously there is no limit to their greed.
********

"...When Prime Minister Koizumi instructed that preparations be made for a meeting of the Financial Crisis Management Conference Board, one serious problem arose.

One source of the Financial Services Agency (FSA) remarked, "The leak of Prime Minister Koizumi's instruction for convening the Conference Board meeting may lead the financial markets to overreact, which could deepen the financial crisis. Investors will sell off their stocks based on insider information spread around the market."

If the conference is held, the major bank referred to by one cabinet member will be forced to file for bankruptcy. This could immediately lead the country into a financial panic.

Prime Minister Koizumi said, "We cannot let any major banks go bankrupt." Financial Affairs Minister Yanagisawa made a remark about the major bank in question, "I will not let it go bankrupt."

It is clearly understood that the major reason for the recent sharp drop in Japanese bank stock prices is due to aggressive short sales by US hedge funds.

On December 21, the FSA ordered Goldman Sachs to suspended its operations in Japan until January 11. Goldman Sachs had been conducting short selling repeatedly without registration, which was in violation of Japanese Security and Exchange Law.

The order given to Goldman Sachs by the FSA was a warning for US hedge funds to stop their short selling of Japanese banks' stocks as well.

The Japanese government entered the new year under emergency watch, but it cannot say that it has overcome the financial crisis. As predicted by BOJ Governor Hayami, specialists are expecting that something serious may happen to the ailing Japanese economy between January and March..."
********

slingshot-Here's a tough question....what if GS and specifically queen Abby came out to endorse GATA's cause. In doing so she offered insider trading evidence to damage the cartel? Could you forgive? Hummmmm. Sometimes the strangest things ocurr when you keep your options open. Along those lines notice how generous GATA was with Godsell in their NDY updates, being careful not to alienate one of the world's biggest hedgers? This is just good political strategy. Godsell, Nader, Hillary or who knows who else down the line, just might turn out to be (part of) the trigger which shoots up the gold market.

http://www.prudentbear.com/boards/user/non-frames/message.asp?forumid=4&messageid=96800&threadid=96800
Budget problems are looming larger,the popular perception of the stubborness of sticky long term interest rates is that the market is anticipating a quick V shape recovery.It would appear that this might have some bearing;

"In a report completed on Friday,the Democratic staff of the House Budget Committee estimated that the surplus for the 10 years ending in 2011 would be 1.79 trillion,compared with a projection by the Congressional Budget Office a year ago of 5.61 trillion for the same period."

Darn,missed by 3.82 trillion and we are only one year into the process.Meanwhile'stimulus packages,nebulous war expenses,declining tax receipts and corporate bail-outs loom in the future.

Wonder where we'll be next year?

http://www.atimes.com/japan-econ/DA05Dh01.html
Looks like the ice is breaking on the river of denial.

http://www.atimes.com/oceania/DA05Ah01.htmlBHP Billiton leave the scene of the crime
By Danielle Knight

For over a decade, Papua New Guinea's Ok Tedi mine has been the subject of environmental complaints. In the latest development, its Australian-majority owner is finally pulling out - but not without generating fresh controversy.

Watchdog groups and activists assert that Melbourne-based Broken Hill Properties (BHP) Billiton is avoiding responsibility for years of dumping toxic waste in nearby rivers, among other environmental offenses. Mine executives counter that the company is merely seeking to shield itself from liability arising from any future incidents.

BHP Billiton is in the final stages of selling its 52 percent stake in Ok Tedi, located in the mountains 18 kilometers east of the Indonesia-Papua New Guinea border. Papua New Guinea Sustainable Development Program, a newly created Singapore-based company, is the buyer. The Papua New Guinea government remains a 30-percent owner and Inmet Corp of Canada retains the remaining 18 percent.

The Papua New Guinea parliament approved the deal earlier this month but prominent citizens, some landowners near the mine, and environmental groups worldwide say that BHP Billiton has admitted to contamination of local rivers and rainforest but is walking away with a guarantee of immunity against any claims for these damages.

Roger Higgins, managing director of Ok Tedi Mining Ltd, disputes this interpretation of the agreement, saying that it only protects BHP against lawsuits stemming from incidents that occur after it gives up the mine. "The indemnity is for actions that are consequential after BHP leaves and does not cover anything that has consequence of the operations while BHP was the manager," Higgins told ABC News.

BHP Billiton originally had sought to close the mine rather than face environmental litigation. The World Bank recommended in 2000 that Ok Tedi be closed because of environmental damage caused by mine waste, also known as tailings.

Papua New Guinea Prime Minister Mekere Morauta and local communities economically dependent on the mine, however, strongly oppose closing Ok Tedi. Morauta has said that he regards the mine as a national asset and fears that closing it would devastate the national economy. Ok Tedi accounts for 10 percent of gross national product and 20 percent of exports. The 16-year-old mine is one of the richest in the Southern Hemisphere, yielding some 600,000 tonnes of high-grade copper concentrate and 15 tonnes of gold per year.

The Mine Continuation Agreement proposed by BHP Billiton and approved by Papua New Guinea lawmakers prohibits the state from pursuing or supporting any environmental claim against the company. "The new law will leave Ok Tedi's environmental and social problems for local people and an impoverished Papua New Guinea government to fix up, while BHP Billiton - the world's largest mining corporation - will walk away," said Geoff Evans, director of the Australia-based Mineral Policy Institute.

Former Papua New Guinea prime minister Michael Somare agrees and on Tuesday submitted a constitutional challenge to the agreement. "This law will now prevent any landowner from taking any court action against a developer," said Somare.

Environmentalists estimate that the mine dumped 80,000 tonnes of waste into nearby rivers every day, devastating fisheries and drinking water supplies. BHP Billiton has acknowledged that the waste will kill more than 2,000 square kilometers of the forest along nearby rivers. "Nothing should cloud BHP's full responsibility for these problems," said Stephen D'Esposito, president of the Washington-based Mineral Policy Center, an environmental advocacy group.

In 1996, Ok Tedi Mining paid US$39 million in an out-of-court settlement to 30,000 villagers whose livelihood relies on fishing the nearby rivers. As part of the agreement, the company committed to stop dumping its waste. But in April 2000, villagers were in court arguing that the waste was still being dumped.

Landowners are now seeking to extend an interim injunction to prevent the mine's owners from collecting signatures to approve a Community Mine Continuation Agreement. This accord, an adjunct to the main agreement penned by BHP Billiton, would also shield the company from litigation, including the April 2000 lawsuit, according to critics.

In order to become law, the agreement must be signed by a representative of communities living near the mine. Matilda Koma, an activist with Papua New Guinea-based Environmental Watch Group, said that she worries that the agreement will be given legal force no matter who signs it on behalf of the community. She points to part of the agreement that states that it must be signed by a member of the community even if "there is no express authority for that person to sign or execute the Community Mine Continuation Agreement on behalf of the members of the community or clan concerned". The agreement, said Koma, "deprives a whole community or clan of their rights".
----
<;-)

......you still keepin' score over here?Ford set to shed 20,000 jobs and shut plants
By Tim Burt and Nikki Tait in Detroit
Published: January 6 2002 20:55 | Last Updated: January 6 2002 22:25

The board of Ford Motor Company will this week approve
a wide-ranging US restructuring expected to involve up to
20,000 job losses, the closure of plants and aggressive
capacity cutbacks.

A special board meeting has been convened, and the
restructuring measures will be unveiled on Friday.

It is understood that at least 8,000 white collar jobs could
be shed - 20 per cent of the total - while up to 12,000 hourly workers could be
encouraged to take early retirement or voluntary severance packages.

The move marks the culmination of a six-month strategic review led by Nick
Scheele, who was promoted to chief operating officer following the removal of Jac
Nasser as Ford chief executive in October.

Mr Nasser's departure cleared the way for Bill Ford, great-grandson of founder
Henry Ford, to become chairman and chief executive with a mandate to unveil the
overhaul of Ford's US operations.

Ford is thought to be seeking savings of $3bn-$5bn to rebuild profitability in its
core North American market, the minimum Wall Street views as essential if the
company is to remain competitive with foreign automakers.

Ford has warned that it will make a loss of around 50 cents a share, or about
$900m, in the fourth quarter. That will leave the group with a deficit of about $1.3bn
for the year - although additional charges to cover the restructuring could make the
loss much higher.

Ford has already announced plans for single-shift output at its Edison plant in
New Jersey, and other plants thought to be at risk include its Ontario plant in
Canada, and facilities in Atlanta and St Louis.

The overhaul is likely to involve a shake-up in Ford's powertrain operations. The
company could also farm out more engine development to Mazda, its Japanese
affiliate.

http:\www.SelectSectors.com\goldindx.gif The 41 Fidelity Select Sectors collectively perform similar
To the S&P500 and therefore act as a proxy for the Market.
A risk adjusted regression analysis of these 41 sectors over the Past 30 Market days place Gold ( FSAGX )in First place.

This is great news for Gold and a great way to start the New Year.

snippits
Berlusconi becomes foreign minister

Italian Prime Minister Silvio Berlusconi has named himself foreign minister following the resignation of Renato Ruggiero.
+
Mr Ruggiero resigned after a disagreement with other cabinet members over the government's unenthusiastic response to the new euro currency
http://news.bbc.co.uk/hi/english/world/europe/newsid_1745000/1745713.stm


snippit:

SHANGHAI China's finance minister, Xiang Huaicheng, said Sunday that his government should consider buying more euros as soon as possible so as not to be overreliant on the U.S. dollar in its foreign-exchange reserves.
.
"China has always thought the euro important and thinks that it will someday be on an equal footing with the U.S. dollar," Mr. Xiang said after a meeting in Shanghai with Germany's finance minister, Hans Eichel.
"I've noticed that the euro has firmed in the past days, so I will suggest to the relevant authorities that we should not put all our eggs in one basket, and consider buying more euros as soon as possible. It is inevitable that the euro will become some countries' reserve currency.
http://www.iht.com/articles/43896.html

Ruggiero's resignation is clearly a setback for the euro. But why is Berlusconi wanting to keep the reins on the day China "recognises" the euro?
Couple this with sector's Gold-Eagle Jan 04, 2002 22:52 message, quoted by Canuck in Usagold's 1/5/02 message # 67752, saying that not the Argentine peso but also the US dollar would be devalued by 30% by Tuesday morning and we could be in for �
Has anybody seen any reaction to or confirmation of sector's ramblings except on this Forum?

Politics sure make strange bedfellows and GS, Abbey Joe and GATA would be one. They would only volunteer this information to save their rear ends. A last resort I am sure.
To join forces with them would tarnish all that GATA set out to do. The end justifies the means in this case would have no Honor for me. Although I would enjoy this manipulation coming to an end in a more timely manner, I feel we do not need them. They have created an Frankenstein which preys upon a blind public and in the end will destroy his creators with himself. Confidence, patience and a desire to seek the truth is the right way and we should resist unusual alliances just for the sake of winning.

On the subject of forgiveness.

Hillary----Maybe
Jane-------Never
Arnold-----Well, He's just a Pig

Slingshot

..revealed that the attack was easily predictable.

There is a popular coffee table book that details copies of the headlines from the World's newspapers covering the weeks just prior to Pearl Harbor. Viewed individually they painted a picture of rising stress. Viewed collectively [as we can do today via the internet] they reveal a clear picture of a pending military conflict.

Today's macro economic news picture contains all the ingredients for a sharp break. Just as 9/11 changed everything so too will the economic break.

Silver may be the final straw. Not to mention Japan's banking latrine, falling yen and rising gold/yen price. Further, if JPMC can't stop this slow silver rise it will constitute a very reliable indicator indeed.

There seems to be no way the Treasury Department or the Federal Reserve can turn back a freshly launched gold/silver bull without endangering ALL markets. There already is great stress in the accounting fiasco at JPMC and ENRON. Soon coming to a Congressional Committee TV set near you.

BTW I was impressed with Jim Turk's latest confirmation that there is a $20 billion discrepancy between the Consolidated Financial Statement of the US and the GAAP's FMS Statement concerning the gold/foreign currency account.

Especially since I first brought to light the West Point, NY 1,700 tonne treasury gold classification of Bullion Reserve to "Custodial" status. Now we have strong indications that the US doesn't really own that 1,700 tonnes of West Point gold...Treasury Department "Deep Storage" fairy tales and now Enron style accounting aside.

...only THAT indicators tilt towards it and probabilities rise.

Is Greenspan gone? Would YOU like to be pilloried by junior Congressman when you KNOW the end is right around the corner? What did Phil Gramm do and when did he do it?

Their only out is a deval. And it will be an ugly out at that.

If the dollar goes down by 30% and gold rises a corresponding percentage we are talking about less than $360 which I have seen mentioned a number of times by different sources as being the threshold to the point of no return based upon the paper marketplace. Would be great for mine shares though setting another maginot line for the POG.

BTW, "Day of Deceit" by Robert Stinnett is a good read if you are interested in PH.

http://www.treas.gov/fms/Scroll down to "Gold Report." Note the huge amount of gold held at the Ferderal Reserve Bank of NY, in the Jan. 2001 report. Then note the small amount held by the FRN of NY in the Nov. of 2001 report! GATA should study these reports carefully! Something is "amiss!"

Looks like the same amount to me...are you sure you didn't confuse the "bullion" and "coins" lines?

http://www.jonesheward.com/commentary.cfmHope you guys get a chancee to listen to Don Coxe this week before his next weekly conference call. (By the way, do you guys and gals know of other 'audio' links).

Mr. Coxe dwells on Japan and its probable devaluation. He expects competing devaluation with other Asian nations, particularly China. (Will the USD strengthen?)

I noted a post or link this weekend that the J.A.Pan company has to have its banking issues sorted out by April 1, 2002. (Is this some sort of year-end or other deadline?)

No one noticed (liked) my silver question yesterday morning? Did I ask a left-field question? Is the 50 million ounce silver shortage (Rich mentioned 43 million) owed to Mr. Buffett significantly large enough to cause a silver explosion? How long would it take to get Warren his silver, a couple weeks, a couple months, years, never? Is Mr. Buffett going to be 'persuaded' to re-lease? Why is the sky blue?

Hope everyone had a great festive season, back to work tomorrow for me.

Canuck.

That's exactly what I did! My confusion, my error and my apologies!

http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20020106&ID=1325661 Argentina has devalued, what's the implications? Who bites the bullet?

http://globalresearch.ca/articles//MCM112A.html
Would you like the red pill or the blue one?

Before discounting this as a raving of a madman,consider the source.Consider the recurrent themes and events of this piece that are often discussed at this forum.These are not necessarily views that I would subscribe to in their entirety,however,a lot of the behind the scenes maneuvering is certainly familiar to all of us.

An unaccountable fiat currency,created with debt dynamics that ensure a constant demand.Paired together with a government resistant to all attempts at independent verification of purported official gold holdings(it's chief competitor) would certainly be a key ingredient of this scenario.

And so it is.

About the Deval ThingLooks like the Japanese are poking around the devaluation thing too...along with a host of other Asian folks. We have the Argents already at 40% down. The euro is really a competitor, not just an abstraction. The Chinese are already jawboning about a shift of their dollars to euros. The Chinese gold market is poised to open for real trading any day now. The puny few thousand tonnes the Treasury has left will evaporate in weeks under another squeeze similar to the WA.

The macroeconomics mix is chaotic. Forget standard predictors and predictions.

It makes zero sense to stand by and watch other world currencies fall with the dollar at stratospheric levels. Mr. Bush is catching hell from the National Association of Manufacturers...one of his biggest supporters. So...what to do? Try to "manage" an across the board devaluation but that is the stuff of FOMC dreams. Recall these Fed economists are the guys that proposed a magnetic timer on our paper currency which would "expire" if not "used" in a specified time. So we should expect anything from the Fed...they ARE in a panic. Chairman Greenspan's silence in this situation stands as a vivid indicator.

See...the Japanese, Chinese and other Asian devaluers will see, at last, the logic of gold...and a true rush will surely follow.

Our problem will be how long to hold?

http://mwhodges.home.att.net/hodges.htmHi Belgian.

No its not the 'winter blues'.

It's this..http://mwhodges.home.att.net/hodges.htm

This guy has his head screwed on straight.

Cavan Man

Once the zero interest sales end we shall see auto manufacturers get hurt. We will see rising layoffs and corporate bankruptcies as companies have to deal with crushing debt amid lower earnings.

Gandolf

I worked on a couple of projects for BHP in the 1980's. I don't know much about hteir non-US operations except that they own Fosters Brewing. Company parties must be a blast.

BTW, I have been a bit under the weather due to a flare up of malaria. I will try to check back in tomorrow. Cheers!

- Black Blade

Golden Dreams All!

http://news.bbc.co.uk/hi/english/business/newsid_1746000/1746313.stm
Snippit:
(Argentine) Economy Minister Jorge Remes Lenicov said 1.4 pesos would buy $1 - a devaluation of nearly 30% - and suggested the new rate could take effect within days.
=
An earlier version of this BBC �message� this morning (I'm writing on Hong-Kong time) said that it was NOT specified when it would take effect. Now they're saying �within days�.
My question: Will the peso be pegged at 1.40 to the greenback or will it fluctuate? Why don't they specify that?

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&refer=topsum&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APDkcVRShQXJnZW50snippit:
The peso will be fixed at 1.4 per dollar compared with the previous one-to-one rate, Economy Minister Jorge Remes Lenicov said. The government will allow the peso to trade freely within a ``few months,'' he said.
=
Is sector's scenario then so far (a ``few months'') away?

...and the obvious global indicators (headlines) which went unnoticed until a later macro view was taken.

Not so today, as you say. Thought I'd post a portion of this MIDAS from Jan 2 (which I'm sure you've already seen) revealing how telling the reading of collective news, feedback, and 'noise' can be.

It also addresses timing, which the invisible hand mentions. Speaking of 'a few months' don't forget this quote: "...As predicted by BOJ Governor Hayami, specialists are expecting that something serious may happen to the ailing Japanese economy between January and March..."

Fascinating stuff for those of you who haven't seen this 'web bot' yet...

We might soon be able to acurrately predict, through analyzing global news and the resulting mass sentiment (noise) projected through computer models....the future.

Is this the next level in political poll taking in the coming one world gummint? 'Polls' that not only indicate current individual opinions, but then projects how those collective mass opinions become the future. What a tool for making money! But let's not get too swept away too quickly....isn't this akin what John Meriwether and LTCM tried to pull off? Has the tech increased enough since 98?
********


A change of pace in Midas commentary tonight. The following was sent to me by George Ure. MANY Caf� members also sent me emails to apprise me of George's commentary. It is most intriguing. Let's hope the GATA part pans out:

-----

Bill,
Some time ago, I sent you a note about the web bot project that I've been running in conjunction with a data mining think tank in the Pacific Northwest. Essentially, we are running a system of spiders, agents, and wanderers that send back changes in the "noise" of conversation on the web and make predictions based on those noise changes.
I thought you would find the latest outputs of interest, as they could be signaling a watershed development in the GATA case in the January -February if not in the next two weeks or so. Here's in part what they are reporting:
-----

As to things financial, the model suggests the coming of some pretty monumental events. In fact, a conflict has begun between a strong and a weak entity that the model says will move ALL markets over the next two weeks. Bear in mind our timing interpretation sucks so could be 2 weeks to 2 months away. But not much longer than that in that the timing indicators all are shading toward immediate or very short term.

The strong entity is termed [the community] as this is apparently how the members of this grouping conceive of their association to the group. Interpretations of this entity rightly suggest that it represents the 'alignment of interests' which bind the establishment of the financial 'community' of the planet. This entity represents to the financial interests, what incumbency might represent to the political interests. In that sense, the entity thinks of it self as, and tends to express this, the 'establishment'.

The weak entity is the [contender] as in one who would begin a quarrel. This entity has an amazing array of positively associated attributes which would lend the interpretation of a champion as in one who would stand for others. Some of the positive attributes include a strength of conviction, nourished on virtue, allegiance to ancient virtue, perseverance through correctness, and the like.

The model is pointing to a battle that was recently begun The conflict between our two entities here does NOT refer to the current war on terrorism (I think) as these both are restricted to the financial realm and are both well centered within the financial processing programs of the model. These entities have already begun their conflict.

The [contender] is below and [the community] is above. While [the community] is a very strong entity, it nonetheless is currently expressing impotence as its strength cannot be used in the current situation. In fact, [the community] is barely hiding fear over their position. Their view of the [contender] below them is as one might view a danger, but with the peculiar nuance of a danger occupying a correct position. In other words, it is as though a burglar viewing a guard dog who has him trapped in the rafters, unable to move, frustrated, scared, yet acknowledging internally that the guard dog is very good at his work and is being correct in all its moves.

Now, in the drama to emerge over the next short period, and which will move ALL the markets over this period, an [official] will arise. This entity is smack in the middle of our conflict, and from its associations, I interpret to represent a judge of some form. This entity as it has developed is clearly not representing the executive branch of things, but more of an official nature, suggesting either a real judiciary member or perhaps some regulatory official in government with the power to decide disputes. What is clear is that [the community] finds itself in a very delicate and potentially hamstrung position. The entities suggest that the markets of the next weeks will be moved by the actions of this [official] in relation to this conflict. They further show that [the community] recognizes the virtue of the character of the [official], his clarity of vision, and the nature of his respect for order. They are also aware of both his knowledge and personal strength of will. They see this [official] as the gate that represents either success or destruction. There is fear associated here as interpretations suggest [the community] is aware that the [contender] strives on the part of correctness and will be favored in that righteousness by the [official].

So as the conflict is now shaping up, a [vessel] (corporation?) associated with the organization of the clans (drawing together groups with a common bond) will be the visible point of contention over the next period. The [contender] has (will make) a correct move. The [official] will favor that move, and as a result, [the community] will be placed at risk.

[the community] will respond by placing a high hill as a block to delay their exposure. In the mean time, they debate internally about the use of their hidden weapons. They recognize that they have a hard man as an opponent and that his perseverance is evident in the 3 years it has taken for him to reach this stage of the conflict. They also see the conflict starting to rise in visibility. This is threatening as their weapons only work if hidden. [the community] is even now trying to prevent this rising to view of the conflict. It finds that it cannot use it's strength(s) without betraying its position. [the community] is stymied by the correctness of the [contender]'s position. [the community] is only able to "peep out" at its opponent but dare not come forth.

This is the beginning of a 3 year period of general destruction for the community. The model is suggesting that the [official] will stand for the correct position and that this will be the end for [the community]. The model further suggests that ruin will be clearly visible and in place by mid-summer. It shows the [contender] arising from the west of [the community] and that the initial confrontation or opening in the conflict has already occurred.

An attribute of [the community] is a developing coming out into the open. This is not viewed as a good thing by the entity as there is much trepidation associated internally with this attribute. The response being prepared is to show that [the community] stands for the collective flow, is beneficial for social aims, and it will promise success. There will also be a move to promulgate a 'new endeavor' as a distraction to the emerging of [the community] into the open.

A note on interpretation:
There is much more information but basically repetitious and all to the same theme. While the above could show some elements of actual conflict and might well be trying to indicate to my dense brain an impending attack by the Wahabiites, I am choosing the interpretation which is more focused on the financial side of things as these entities are reasonably clear about that. That preface made, while it is easily possible to interpret the above as relating to all sorts of developing nasties from Argentina to Turkey, from Enron to FuneralGate, my personal view is that the entities are describing the current and pending situation of the GATA suit. This fits so well that I am blinded to any other interpretation. But, I have been and am frequently wrong about these entities once I stop reporting on them and try to position the interpretation onto current events. So this is by way of a disclaimer of a sort. The interpretation stands, and if correct we will see an event within the next 2 weeks to 2 months (though I favor 2 weeks) which will be shown to have caused a huge financial problem likened to destruction fully underway by mid-summer but which will take the better part of 3 years to run its course..."

snip

George Ure
********
sector-hope your 'back' to normal soon.

http://biz.yahoo.com/rb/020106/business_minerals_newmont_gold_dc_1.htmlSnippit:
"The purchase of Australia's Normandy Mining (Australia:NDY.AX - news) by Newmont Mining (NYSE:NEM - news) after a four-month bidding war will not be a one-way ticket higher for gold prices, but should be beneficial for the downsizing gold industry over the long haul, experts said..."

Get better Black Blade - you're needed here.

http://sg.news.yahoo.com/reuters/asia-82218.htmlSnippit:
China's Finance Minister said on Sunday the country should consider buying more euros as soon as possible so as not to be over-reliant on the U.S. dollar in its foreign exchange reserves, the second largest in the world [$200 billion].
"China has always thought the euro important and thinks that it will some day be on an equal footing with the U.S. dollar," Finance Minister Xiang Huaicheng told a news conference after meeting German Finance Minister Hans Eichel on Sunday.

View Yesterday's Discussion.

http://www.google.com/search?q=cache:VIQe14bTa5EC:www.senate.gov/~budget/democratic/testimony/2001/wesbury_econhrng062701.pdf+Brian+Wesbury&hl=en
Stumbled over this little speculation in Northern Trust's weekly economic report;

"Greenspan is creating credit like mad now to put off the inevitable sharp correction in consumer spending that will take place when the household debt situation must be addressed.That time will come when the Fed has to raise interest rates again.My bet is when that time comes,it will be Fed Chairman Brian Wesbury's problem,not retired Chairman Greenspan."

The link posted is a speech presented by Mr. Wesbury'sounding eerily similiar to speeches by A.G. in the not too distant past.

http://www.bday.co.za/bday/content/direct/1,3523,998277-6078-0,00.htmlSnippit:(South Africa Business Day: Jan.7, 2002)
"Consolidation in the global gold industry is continuing apace both at home and overseas. Although AngloGold may have lost out in its fight to secure Australian gold firm Normandy Mining after rival Newmont increased its offer again last week, it is doubtful AngloGold will sit on its hands for too long and its management will already be mulling its next move. In SA it was consolidation of some of the oldest and deepest mines in the country that grabbed headlines during the final quarter of 2001, a trend likely to continue into the new year."

http://www.newsday.com/news/nationworld/wire/sns-ap-argentina-economy-glance0107jan06.story?coll=sns%2Dap%2Dnationworld%2DheadlinesNow we see how simple it is to change the rules in the cuurency merry-go-round..
maybe for now we derive"comfort"in the "belief" that this couldn't possibly ever occur to the US$,YEN or even the EURO...or could it..

http://quote.bloomberg.com/fgcgi.cgi?touch=1&btitle=Business&T=sa_content.ht&s=APDlYkhPHU2FudGFuSnippit:
"Repsol YPF SA, Banco Santander Central Hispano SA, and other Spanish companies that have invested $24 billion in Argentina plunged on concern a peso devaluation will reduce earnings from the South American country. Repsol, Europe's fifth biggest oil company and the biggest oil exporter in Argentina, will be hit by a new oil export tax imposed by Argentina. The rate has not been announced, though Clarin newspaper reported it may be as high as 40 percent. That would cost Repsol about $920 million, based on exports of $2.3 billion in 2000. Santander's Banco Rio de la Plata SA has commercial loans of about $6.4 billion, and owns about $2.5 billion in government loans and bonds. BBVA, owner of Banco Frances SA, has about $4.6 billion in commercial loans and more than $3.4 billion in government debt. "

http://www.thisislondon.co.uk/dynamic/news/top_story.html?in_review_id=486881∈_review_text_id=443853
Brown loses �52m on gold sale


BRITAIN is nursing a �52m loss over the controversial switch of official reserves out of gold and into the ailing euro, Financial Mail has established. The money lost would be enough to finance more than half the extra funds pledged by Chancellor Gordon Brown in his pre-Budget report for British involvement in the war against terrorism.

Alternatively, it would cover the whole �30m bill for beefing up domestic policing and security measures in the wake of 11 September.

On top of this, the cash would cover three key programmes for improving public services - the �6 million incentive scheme to keep experienced RAF pilots and navigators, the �5m plan to tempt doctors into general practice and a �9.2m project to recruit graduates into fasttrack teaching careers leading to senior positions.

The bullion sales triggered a furore when they were announced in 1999. Brown said the proceeds of the 415-tonne sale would be invested 40% in euros, 40% in dollars and 20% in the Japanese yen.

He was accused by some of trying to take Britain into the euro by stealth. The Treasury replied that it was trying to achieve a 'better balance' in Britain's official reserves.

Since then, the Bank of England - acting on Treasury instructions - has held 15 auctions. Two remain to be held, the next this Wednesday, after which the sale programme will be complete. To date, Britain has switched 142 tonnes of gold into euros. But the single currency's dismal performance means it has lost value against bullion as well as against most major currencies.

Britain is now saddled with about 1.4bn euros, at present worth �832m. But the gold that was sold would, at today's prices, be worth �884m.

Once the auctions have finished, Britain's gold holdings will be among the smallest of any major country, accounting for just seven% of total reserves. The reserves are held by the Treasury against a rainy day

Tsarist Russia Gold?
Nazi Gold?

or by agreement:

USA Gov Gold?
Englands Gold?
So Many Questions So Little Time Left?

Cheers "S"

http://www.kitco.com/charts/livesilver.htmlNice to see Spike up early this morning...

Canuck -- Those were a great lineup of questions from you Saturday morning. I know less about Comex, and only what others bring here. The drop in lease rates today looks to me like one big transaction that got "re-agreed" to -- it doesn't look like the rational pricing transitions of a market comprising many smaller players. (And lease rates ARE a price, if only of a very specialized type.)

I figure, since we regularly get two and only two major statistics about silver and gold -- price and lease rates -- and since price is the one you buy in on or cash in on, i.e., "it's too late by the time you know", then lease rates are the only smoke signal we might get ahead of a price move.

If it happens this time, great; if it doesn't, fine, it will soon enough. If the rate drop means this "market" has accommodated Buffett or his like for another few months, fine, but I doubt any pricing adjustment from here will be very much downward. The shorts have to expend exponentially more "juice" for each nickel or dime downward, and whoever's behind this is playing more for time than for profit. (Heck! How could they be in this for profit, when their trading capital sits on a powderkeg?)

OK, that's enough sleepless wanderings; back to Dreamland...

Your smoke signal lease rates are indeed one of the few price prediction indicaters available. Kitco is the only source that I know about. Anyone know another link to metals' lease rates? I'm going to look for news releases to confirm or deny that the rates have fallen so sharply. Kitco has fooled me many times before.
Rich

Can be reached from the lease rates link. I wandered around looking for silver lease rates. No luck, buy I did ask by e-mail for a copy of their yearly forecast for gold and silver prices.
I received a copy of their quarterly "Alchemist" publication just last week although I had requested it some time ago. I'm guessing that requests are sent the next published issue rather than a back issue. There was no charge. They also offer statistics if you like, I find the ones offered there enough for me although I wish they gave the silver lease rates. The rates at Kitco sometimes vary greatly in a short period of time. I don't know if this a flaw at Kitco or if the market is that unstable??
Do we have another lease rates source??
Rich

Sounds like the shorts are getting covered now. I have my doubts this is some kind of a systematic breakdown here. A number of analysts are exaggerating the silver shortage. Robert Chapman writes over at Gold-Eagle that "mine production will fall in 2002 probably to 485 million ounces and consumption should be close to 900 million ounces. That is about 415 million ounces that will have to be pulled from inventory." What he doesn't mention is that besides mine production, there's recycled silver coming into the market to the tune of about 250 million ounces a year, or that last year, 400 million ounces of silver came from unverified inventories into verified invertories (such as Comex) according to GFMS. MarkeTalk's #67705 was notable, but was also old news (November's insider info). When I hear talk like this, it's time to go short.

Stick to basics in these markets: supply and demand.

Current lease rates can be found at"the bullion desk.com".

I should have known. Kitco now lists the lease rate for all four precious metals as 0% for all time frames.
Ah, the never ending battle for truth, justice, the American way and reliable, basic information.
Rich

Thanks, but beware that the date given for the bullion desk rates is 03/01 which I guess means Jan. 3rd.

My guess is that whoever prepared the 2000 government GAAP report is going to be called as a witness in the Reg Howe lawsuit.

Interesting report although there is a great deal of guessing involved. It does seem credible that it is an accurate assessment of what has been done.

Suprising that Congress does not need to approve the placement of US gold reserves "at risk".

When the S... hits the fan do you think the Bundesbank will settle for SDR's or SDR certs?

Is this the gold that FOA believes will start flowing over to the eurozone? I guess only FOA can answer this one. About time for a trail update?

Is the IMF bankrupt? When was it authorized to exceed its 200 million dollar authorization? What impact does the Argentine default have on IMF liquidity?

Next to last sentence should read:
When was the ESF authorized to exceed its original 200 million dollar authorization?

OOPS! Sorry, I didn't notice. I have e-mailed them with the question. Let's see if they respond &/or update their numbers.

http://gold-eagle.com/dmr1.php Thanks to bitsboy at the neighboring castle for the link to todays lease rates as of this morning in London.
*****
"Silver bullion prices jumped to near one year highs, as lease rates increased to their highest level for nearly four years after another brisk round of borrowing on the London market."
*****
Silver is down a few pennies right now but I feel safer knowing the lease rates are still outrageously high.
Rich

http://www.usagold.com/Order_Form.htmlNote: If you would like to receive an information packet on gold (how to buy it -- our products and services) and a free trial subscription to our newsletter, News & Views, please go to the link above. For those seeking a higher level of understanding with respect to the gold market, many of the portfolio issues addressed briefly below are covered in detail in our latest 32-page Quarterly Review. Please go to the link above to register for your packet. Registration includes trial period access to our Commentary & Review page.

When we couple Turk's information with [1] http://www.zealllc.com/commentary/monster.htm and
[2] http://www.zealllc.com/2002/jpmgrows.htm
it gets bloody scary really fast.

There is something in the fan and it ain't wholesome.

Date: Mon Jan 07 2002 10:41
uptick (LATEST QUOTE) ID#84266:

re: silver lease rates 19.5%/22.5%

http://www.usagold.com/ProductsPage.html

Get the Legendary SECURITY of a Swiss Account...

...Delivered to Your Door.

Call Centennial for Arrangements
1-800-869-5115

"250 million ounces from unverified sources" is vague, of course, but beyond that, suspicious. Is GFMS reliable? Where do they get this information? Is this a source that can be relied on to deliver another quarter billion ounces into the market this year? I think sticking to supply and demand is very good advice, but the way I see it, there is a huge shortfall on the supply side.

http://www.bday.co.za/bday/content/direct/1,3523,998426-6078-0,00.htmlSnippit:
AngloGold Chief Executive Bobby Godsell took his company's campaign to conquer Normandy to Australia this week.
He will continue wooing fund managers and will address a major press conference in Sydney at 11am (3am SA time) on Tuesday morning. AngloGold is battling US-based Newmont Mining for the possession of Australia's largest gold producer, Normandy Mining. It is offering the Australians 2.15 of its shares for every 100 Normandy shares and 30 Australian cents per share in cash. The offer to Normandy's shareholder is valid until Friday.

But a fall in Newmont's shareprice and an increase in AngloGold's over the weekend roughly equalised the bids, with Newmont's offer only about six cents more than AngloGold's. Normandy's board has recommended the Newmont bid. When Godsell refused to increase his company's bid for a fourth time to match Newmont, it caused some speculation that the company was backing down. Spokeswoman Shelagh Blackman told Sapa on Monday nothing could be further from the truth.

"It is not over till the fat lady sings. The offer closes on Friday. It has not been withdrawn," she said. "We certainly have not given up."

Waverider: Black Blade you nailed it again!

The world reserve battle field (wrbf) is struen with the debris of dieing American ideas/agreements/relationships, ie Europe/Mexico/Russia/Argentina/soonBritian and Japan. Yet the war is not over until the white flag is flown.

This weekend Argentina broke the "bonds" of the dollar, to the tune of 250billion+. Yet all the American press is allowed to report is the exposure that a few Euro/Spanish banks/oil Co.'s have and why this is bad for Euro. Hardly, if not at all is ANY American exposure mentioned or discussed. What a farce.

Although this is not a surprise to any of the Freedom seekers here, it is a stark reminder of how chaotic things may become some after the REVELATIONS are forced into the light. I'm convinced that since 9/11 the Constitution has been burned and all US freedoms were suspended pending the reversal of the dire position that the political/bankers find themselves in today!

If enough brave Americans do not stand up and demand change now, when the cabal is at its weakest moment in decades, I believe that a very dark epoc will engulf the nation. This is not to disparage any here, but to pose the question, Are we, the few, prepared for the onslot of rage to be unleashed (began with Enron) as middle America catches up with our understanding, post the opportuntity to transfer and protect our wealth?

The seventh epoch of world financial tribute(lation) is almost over. Hopefully a period (5 to 10 yr) of "honest wieghts and measures" will ensue before the onslaught of the eighth and final tribute(lation) begins.

I'm sure many large end users hold paper commitments for future supplies.

How reliable will these prove to be?

They can't be bought out with more paper,they need metal.Will undetermined sources be willing to supply physical in a paper squeeze?

http://www.supplysideinvestor.com/showarticle.asp?articleid=1802(Of course, most of us will side with the "hard money" side of the debate...)

http://www.nytimes.com/2001/10/07/business/07STRA.html?ex=1011428112&ei=1&en=06814f70f291806bBy no means a pro-gold article, what is important is that this article points out that even gold's investment detractors admit that portfolios should include at least a representative amount of gold.

With gold representing a degree of independence from the fate of your domestic/national monetary policies, the percentage-decision is ulitmately your own based on your personal understanding of worldly economic affairs. Ultimately, we are all responsible for our own actions and our own livelihoods.

Rise to the occasion and call Centennial today.

R.

Greetings, Cavan Man...

You ask: "There is also some extraordinary value (apparently anyway) for buyers of US equities at lofty multiples relative to fundamentals and common sense yes?"

Personally I don't believe there is any "value" to these equities at the current prices, anymore than there is value to buying a nice new Porsche for $2 million dollars. Great little car, but not at that price. So what there really may be said about US equities in the short term, is that the US political will has it to revive them. This does not suggest that this intervention intends to drive the markets to the moon again. They have limited firepower and must use it judiciously. Their hope is to restore confidence among the market participants themselves so that they will again pile in and generate the momentum on their own. Official intervention comes into play at strategic times to reverse reversals, and ignite fires. As such, if there is no moonshot, the result will at least be a sustained effort to keep things on an even keel.

So there is, in my opinion, no "extraordinary value," just possible momentum plays to be had. As far as fundamentals, let's look at this issue. We base fundamental analysis on an evaluation of cash flows, balance sheet, industry and sector analysis, and comparison of an enterprise relative to its competition, etc. We necessarily have always assumed some level of "non-market" (i.e., official) intervention that we incorporate into our conclusions. These include Congressional pork-barreling, or various regulations, subsidies, quotas, tariffs and taxes that would favor particular sectors or industries, or give them an advantage over foreign competition. These considerations are old hat and so obvious that we are typically only semi-consciously aware that we are even taking them into account in pricing our investments.

With that said, we look at multiples relative to this traditional sense of fundamentals, and "common sense" tells us this is idiotic. 2 + 2 = 4. Yet 2 + 2 keeps coming out as 6, 8, 10 or 1000. What's the deal? Well, in the same sense that we traditionally took stock of certain government involvement in the past, and would have had different assessments about things had we consciously removed such consideration, perhaps we must think likewise here. The level, diversity, and sophistication of official intervention, both Federal Government and Federal Reserve, has increased and expanded immensely. If we don't actively define (as best as possible) and factor in these new variables to our equations, we are hopelessly doomed to wondering why 2 + 2 no longer equals 4. 2 + 2 are indeed 4, but the sum function (+) has come to have embedded into it some extra coding that includes these other operations.

In the end do pure market dynamics utlimately win out? Well, yes, in a sense. But this might really only be an academic question as far as our lives are concerned. You could argue that the plunderous policies of Rome exploited the planet, and drove the market value of Roman industry well above its genuinely productive levels. And in the end the market forces (working themselves out not only in the market place), finally brought things back to equilibrium, if you will, with the sack and fall of Rome -- and that only generations after Rome had reached its pinnacle. Less dramatically, events like the Tulip-mania, and South Sea bubble, run their course in more humanly observable terms, but the factors that vary are the extent, degree, and ability of the official Will to support the endeavors.

On a spectrum between Tulip-mania, and the survival of the Roman Empire, I think the U.S. financial megalith lies far more towards Rome, and consequently, we have to give far greater emphasis in our calculations to the efforts to support this beast.

I don't doubt that those with a very good sense of trading, and the savvy to see this kind of behavior for what it is, can turn a few bucks now. Certainly some here at this forum have done very well, I'm sure. But most of us are not at that point, and while we may see the opportunity and try to act on it, we often end up getting slaughtered. Kind of like me saying, "Hey, the Dallas Cowboys REALLY need quarterback help. Man, there's an opportunity!" But if I try to step in to make good on it, I would be broken into little pieces. Seeing an opportunity does not necessarily mean we are in the position to avail ourselves of it, even if we truly understand what's involved. We may just not have it. Perhaps, you, Cavan Man, are good at trading and speculating. If so, my friend, I hope you clean up, and the best of luck to you, sincerely... I, however, am not.

So, my bent is to not try and play that game where the rules are always likely to change, and the complexities are more than most mortal minds can stand. You might want to reference something I posted to Canuck awhile back on this issue: (#66486 12/6/01).

Physical gold is cheap, filled with tremendous leverage, and fits the profile of the most conservative or uninitiated individual, to the most sophisticated and involved official entities. Follow Randy's chronicling of the events in Argentina. See how the rules can change in the blink of an eye, and one can be trapped with no way out. Rest assured there were people in Argentina who were probably making some good money speculating -- in dollars -- on what was happening. And they were right perhaps! But when the window at the bank slams down on their fingers, what good does it do? So they get a statement in the mail saying, "your account has $x,000,000 dollars credited to it, but sorry, you won't be able to access these monies at this time." ...?

Hope this wasn't too round about, and is of some use to answering your question...

Best regards,
miner49er

Monday 7th January 2002

One month 21.85 +6.99
Three month 11.87 +2.01
One year 5.43 -0.47
*******
There..., after all my complaining this morning, I thought seeing them firmly in print was the least I should do. Much speculation as to why, but as of now, there is still no word other than Buffet renewal problems.
Perhaps more speculation with no definitive answers is just what we need to keep POS advancing. Any firm answer other then "Hey, we're all out of silver!" may send prices falling. Let the rumors continue!
However this turns out, the basics of supply and demand have not changed and indicate higher POS (IMHO). Any surpression through the paper game will become meaningless when the 80% of demand for photography and industrial use finds orders for metal marked "backordered" due to supply shortage. The other 20% is coinage and jewelry.
Any other news?
Rich

Test

http://finance.news.com.au/common/story_page/0,4057,3551283%255E462,00.htmlSnippit:
"ANGLOGOLD chief executive Bobby Godsell jetted into Sydney yesterday afternoon for a last-minute strategy meeting before making his company's last pitch for Australia's Normandy Mining. Mr Godsell will today target institutional investors and fund managers in Sydney, before heading to Melbourne for further one-on-one meetings with major investors.

Having already ruled out any further increase in AngloGold's offer, Mr Godsell's key theme will be the uncertainty surrounding Newmont's bid, which is conditional on winning 50.1 per cent, securing shareholder approval to make the bid, and winning US Securities and Exchange Commission approval of its US offer documents.

Mr Godsell will continue to play on investors' nerves in an effort to swing the battle AngloGold's way, guaranteeing payment within five days of acceptances being received."

From Short & Sweet at the Commentary & Review page (first published about a week in a half ago):

"It is usually at times like these -- when the international banking
system is suffering high anxiety (Enron and Argentina) -- that gold is
severely attacked in the press by Wall Street's gold haters in an attempt to
keep investors from running for the exits. I wouldn't be surprise me to
see another such attack some time soon, most likely led by CNBC & Co
-- the stock and bond industry's 24-hour a day propaganda center."

- - - - - - -

So "Is Gold Relevant?" . . . . .

Let's ask the people of Argentina.

http://biz.yahoo.com/rf/020107/n07283660_2.htmlBush promised to put forward some sort of stimulus plan in his budget proposal, which is expected to be made public on Feb. 4, and he said he did not flinch at the prospect of running a deficit.
+
``I said to the American people that this nation might have to run deficits in time of war, in times of a national emergency or in times of a recession. And we're still at all three,'' Bush said.
----------------

Deficit spending got Argentina into today's pickle, particularly when coupled with a pegged currency. America itself went through this same scenario (deficits with currency "pegs" -- to gold) during the Viet Nam "guns and butter" era of the 1960's. As we know from our present vantage point, the effect in both cases was default on the peg, soon to be followed by a floating currency and an inflationary adjustment period.

As the U.S. now walks this familiar ground this time around without a currency peg, the new monetary architecture of the eurosystem ensures that the rest of the world need not sit helplessly enthralled by the fate of the diminishing dollar.

You need to look out for your accumulated purchasing power (savings), yet if you tarry, your otherwise easy walk today to the exits may become quite difficult by the sudden international flow of hot money crowding your trading options (running down the dollar and running up every alternative) and by government-imposed capital controls.

Tomorrow is promised to nobody.

R.

http://groups.yahoo.com/group/gata/message/958Report on Nader-sponsored conference on the
Federal Reserve.

http://groups.yahoo.com/group/gata/message/958


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The Berlusconi (Italy) row on Italy's stance towards EMU came just in time to counter the positive (high profile) news from China, exchanging dollar reserves for euros.
Not that we needed further evidence for the $/� battle, but quess who's using Silvio B. (media-magnat) as an attempted EMU - wedge ...? Europ knew already from the beginning (his election) that Silvio ain't the right euro brother.
This only to confirm that another indication on TG's map is corresponding with reality.

Anglogold's stockprice was perfectly price-managed today to match the NMD take over offer. Free markets...humho ?
Why does NEM as a reputated (?) (rather poor) non-hedger, wants to overspend on a hefty hedger as NMD (270 tonnes) ? I don't see the logic of such a move ? Can't have anything to do with patriotism ?

POG ticks and dollarindex are much more frequently out of sync during daytrade ?
Have the silver bubbling tensions any influence on this ?
Is there much more air entering in the silver paper contracts-balloon, than in brother Gold balloon ?
Where is the white knight with some Physical Silver, to let some air out of the balloon ?

China has taken a participation in a Pakistani goldmine (WGC) !

What's needed is not lower interest rates or lower
taxes (which would have no impact on boosting the
economy now) but more public spending, Galbraith
said. "Modest budget deficits are normal."

More public (government) spending. Why is this always the answer to all our problems?

Greenspan should only reappear onThursday.
http://dailynews.yahoo.com/h/nm/20020107/ts/bush_economy

snippit:

Monday January 7 1:49 PM ET
President Bush Back in Washington

WASHINGTON (AP) - President Bush (news - web sites) on Monday returned to Washington and its already heated election-year blame game over the economy. Awaiting him were his economic team and Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites).
Bush scheduled the huddle with his advisers and Greenspan as his first order of post-holiday business after a reluctant farewell to the serenity of his central Texas ranch.

snippit:
http://quote.bloomberg.com/fgcgi.cgi?T=special_news2.ht&s=APDTQiRZyR3JlZW5z

Washington, Jan. 3 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan will make his first speeches of 2002 next week, including one on the U.S. economy in an address to a San Francisco public policy group, the central bank announced.
Greenspan's speech on the economy will take place next Friday at 10:45 a.m. San Francisco time before the Bay Area Council Conference. He will also discuss financial literacy and take questions at an economic summit in Oakland on Thursday at 12:45 p.m. Oakland time.

=

Is Greenspan involved in the war on terror? Or is sector's scenario unfolding?

http://dailynews.yahoo.com/h/ap/20020107/pl/bush_77.htmlThis should work.

http://www.usagold.com/onlinestore/special.htmlAt nearly four-tenths of an ounce (.3734), you won't want to drop one of these hefty Russian beauties on your foot. But you WILL want to act fast if you'd like to own a few... I'm in the process of working up our latest 'coin of the month' to be specially featured next on our online order page.

As always, you can continue to call Centennial directly if you'd like to order these coins, along with inquiries about the current availability of any past features. Adding in a few of these various coins each time are nice way to spice up your regular orders of gold sovereigns, helvetias, francs, etc.

Diversifying your portfolio is more than just a responsible duty. It's also downright fun.

R.

Saw your recent post, excellent read mon ami.

Referenced back to the Dec 6th post, yes I remember it well.
You have great wisdom Sir, I hope I can follow your trail as well.

I went back to my trading 'slips' from 2000/2001. My account (approximately 20k) went from 20k at the beginning of 2000 to 18k with just over 400 trades for the period at $29. Let's see, I spent $11,600 to make -$2000. Now if I had 'stuck' with the original 1000 shares of Goldcorp and 1000 shares of Agnico........can someone PLEASE give me a good swift kick in the ass. Chasing stock, getting caught in the 'lemmings' game, what a loser.

Oh well, older and wiser, right? I guess I was trying to burn my fiat faster than Central Banks. :)

Now the trail is clearer, I have a little holding of non-hedged producers both AU, AG. I have my physical stash awaiting the burn, the burn of fiat, it is inevitable. Even a stock 'flipping-flopping fool' like me can see it now. The big guns are postioning into 'money-makers', G.TO on another 52 week high, PAA.TO ready to break.

Forget the paper stock, its nice to watch, the ace (physical) in the back pocket will win the day. When the 'house-of-cards' falls down (JPM?) the cards will be dusted away to reveal a floor of gold.

Believe it!!

Canuck.

http://www.bundesbank.de/index_html_en.htmBefore I start reading today's posts below, I want to get this link off my other window (overloaded computer, as usual) -- I remember looking out here a year ago, when Bundesbank swap suspicions were mentioned, but I don't remember finding any actual numbers, except for "examples" of swaps, in their .pdf reports. Maybe a better detective than I can dig out the corresponding data to Turk's findings?

Good day Sir.

Saw your post; price and lease rates steal the news yes. I've been an advocate lately of the 'trend is your friend' theory. Since Nov. 2000 very liquid, unhedged gold and silver companies have been trending steadily upwards (see FN.TO and G.TO).

There are numerous 'editorials' about institutional and 'big/smart' money buying into gold funds/stocks lately and I believe its no accident, a preview of things to come.

Recently, you may have seen the same, an analyst said Goldcorp was maxed out, yet today it advanced another 3.5%.
Now let me say for the record, Goldcorp, as far as I understand, is completely unencumbered by hedges, politics, or any other phenomena that will influence its price either positive or negative. It is my opinion that IT reflects the 'nearest thing to physical'.

Now let me back off for a second. I, as BB would be careful to say, am a holder of Goldcorp. I am not flogging Goldcorp(well yes I am?) but I sincerely believe they run a ship INDEPENDANT of the BS of Central Banks, the USD, bankrupcies of Argentina, Turkey, etc. Goldcorp, which is really a mirror of physical, IMHO, has been taking off for 2 years. Franco-Nevada, Anglo, Barrick, Placer, Newmont, Durban, Harmony, Kinross, Normandy, TVX, Goldfields, etc., etc., etc., all seem to have a little story, some sort of scenario that may limit or may exaggerate their proxy to physical. Is gold company XYZ leveraged to gold or is it invertly enslaved to gold? Who is really to know? I may be out in deep left field with my opinion to Goldcorp.

Here is my bottom line, end of the day opinion. As we watch the encumberances to gold fade, it is imperative to secure our fiat (convert if you will) to gold, physical first and to other vehicles of gold 'free and clear' of any liabilities and present and future dangers.

I realize the above to be strong statements, so be it. It is my strong opinion, for which I am entitled, to bellow and brag of the merits of gold. Each and all of us, is advised, has been advised, and remains to be advised that investing in gold is as precarious as investing in the Nasdaq stock exchange.

A novice would view gold, given its 20 year history as a major losing proposition, as the last thing in the world to sink a dime into and he/she may be right.

We watch this new market together, yes, and I only hope that your riches becoming to you exceed my riches.

Sincerely,

Canuck.

http://groups.yahoo.com/group/gata/message/958Fed denounced at Washington conference;
GATA chairman gets on broadcast

http://groups.yahoo.com/group/gata/message/958

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http://groups.yahoo.com/group/gata/message/959Tim Wood of www.TheMiningWeb.com comments
on James Turk's latest discoveries about the U.S.
government's surreptitious suppression of the gold
price:

http://groups.yahoo.com/group/gata/message/959

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by email and get them immediately so
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http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20020108a4.htmSnippit:
"WASHINGTON (Kyodo) Japan is on the road to default because it is expected to incur an unsustainable debt burden of $1 trillion in protecting depositors from the collapsing banking system, according to a report released by a Washington-based think tank. The negative net worth of the Japanese banking system is somewhere above the yen equivalent of $1 trillion. When the banking system collapses . . . the Bank of Japan will need to inject at least $1 trillion into the banks to protect depositors from losses," says the latest issue of the Economic Outlook report by the American Enterprise Institute for Public Policy Research."

Waverider: Economic Outlook Report coming...

http://navigation.helper.realnames.com/framer/1000/default.asp?realname=American+Enterprise+Institute+for+Public+Policy+Research&cc=US&lc=en%2DUS&frameid=1565≺oviderid=113&url=http%3A%2F%2Fwww%2Eaei%2EorgSnippit:
"While there is plenty of argument about where the U.S. economy is headed next year, the argument about Japan's economy is over. During 2001, Japan passed from a prolonged and serious recession into outright depression. The bad news is that a depression in the world's second-largest economy will make it more difficult for the world economy to recover in 2002. The (not very) good news is that depressions as acute as the one that has emerged in Japan do not usually last very long. However, Japan's exiting its depression will require a large write-down of an unsustainable debt burden either through reflation or outright default. Japan appears poised to follow the passive route of outright default rather than the more active route of reflation. "

I have a group distribution in my email address book to about 20 or so 'public relations' addresses of gold producing companies.

I wrote a note the other day regarding the Newmont/Franco-Normandy acquistion; please read with the 'tickled-pink' pleasure that I did:





Dear ladies and gentlemen,

As a shareholder of several gold producing companies I wish to ask the
public relations department of your firms if you have any comments on the
ongoing bidding was between Newmont and Anglogold to purchase Normandy.

Although it may be an awkward time to comment but business news and the
internet is full of suppositions and I wish to separate accurate information

from speculative. Many precious metal mutual fund managers are suggesting
gold is ready to explode, or at least move sharply upward in the next 3 to 6

months.

I would like to ask specifically if you feel the merger either one way or
the other is beneficial to the price of gold and if there is truth to the
myth that this bidding war creates a 'hedger/non-hedger' enviroment and a
'non-hedger' scenario is more positive for the outlook for gold.

Thanks in advance.





Dear XXX:

Gold Fields does not hedge its production and for the last three years has
publicly decried hedging at these low gold prices.

We tend to agree with Franco-Nevada and Newmont that the gold price is
heading higher in the foreseeable future due to a weakening in the dollar.
Creating such a behemoth, "non-hedging" company should be positive for the
gold price, too. Time will tell.

We wish Franco-Nevada and Newmont the best of luck in their endeavors to
obtain Normandy, and we hope that they are successful.

Sincerely,
Cheryl A. Martin
Vice President - North American Investor Relations
Gold Fields Limited

-End-

Isn't that awesome, I must buy Cheryl a drink!!

This quote is from Lance Lewis today:

[ The Big Five accounting firms are tired of this Mickey Mousing around with the numbers. They have had it and they taking action. They action plan is: to� tell the SEC they ought to get with it and give companies more guidance. In fact, they may go so far as to send the SEC a petition. According to CFO.com, the accountants say in a letter to the SEC, "We also are considering a petition to the Commission to follow the issuance of this interpretive guidance with proposed rulemaking to establish minimum disclosure requirements in these three areas (mentioned elsewhere)."

That should give investors a warm, fuzzy feeling this winter. ]

The ramifications from Enron haven't really started yet. See...JPMC [the Federal Reserve's model bank] is now a two time commodities manipulation loser. First the Hamanaka/Sumitomo copper disaster complete with the now familiar offshore secret trading accounts stocked with $500,000,000 of repos from JPMC. Now the offshore Enron boiler rooms stocked with $500,000,000 also from JPMC. Litigation from the aggreived shareholders will certainly out the full nature of those trading casinos.

Wendy Gramm, a board menber, is said to have been involved in sweet regulatory exemptions profiting Enron. All the time the SEC went fishing.

Washington may finally be waking up to the consequences of its regulatory failures and Wall Street speculative corruption as it watches the Argentinian political leaders get skewered one at a time, as if on a conveyer belt.

The damage to American industry can't be measured. The Clinton era dammed the flow of investment capital away from our core manufacturers and funneled it to the banks and speculators on Wall Street in a pattern that matches the excesses of the late 1920's. You have heard it all before but now your neighbor is hearing it for the first time.

There will come a time when bankers and brokers will be treated as tobacco executives.

The link didn't directly link. Goto "Publications and Commentary", then Economic Outlook and viola - Depression in Japan.
Cheers,
Waverider

Cheryl Martin of GoldFields is top drawer and a friend of gold -- as is her company. Neither she nor her boss, Chris Thompson, have ever wavered. In fact, I remember the day that Goldfields put in a bid for a big chunk of the gold offered by the Bank of England -- an act of courage (and sensibility) at the time. "Reliable" is the word that comes to mind. . . .MK

You'd better buy her a CLINK instead of a drink!
Cheers,
Warverider

Hello Michael,

Long time no hear!

Goldfields is a class act. Do you HEAR the momentum!

Awesome.

Love ya; from north of 49.

Canuck.

How are you dear!

All the ladies get a drink and a CLINK. BB and I will see to that!

Canuck.

Remember that a man's as good as his word!
Cheers,
Waverider

Sorry..I was a bit too quick. All is well - studying all this week - it's hard not to pop in and post though when I see stuff in the news. I'm into the serious studying now so unless things go crazy this week, I'll be low-key.
PS - Look forward to it!
Waverider :)

With no time, no talent and NO desire for trading the US equity market at this juncture, I remain a serious physical advocate with a large stake in a tremendous junior where I know a little more than the average bear about the property and the investors in same. Thank you for your generous responses.

I got into GG even though I thought it a bit richly valued. There are other reasons that won me over however. The company's management has a very good philosophy that should be practiced by all. They keep physical gold on hand as a reserve asset. In other words they put their money where their mouth is. They obviously believe in their product. Another point in their favor is that they have no debt - none, zilch, nada - a very clean balance sheet. One more point is that they have a very strong earnings growth component. Even though they are a one-mine company, the deposit has not been fully delineated. They are open in at least two directions and at depth. Of course they are fully exposed to the POG as they do not hedge (they believe in their product). So I decided that I should have a piece of this company. Of course I have shares in Gold Fields, Harmony, and Franco-Nevada (for now at least).

BTW, did anyone hear someone on Neil Cavuto yesterday who was discussing gold. He said that there was no Gold in Fort Knox. Cavuto did not even question it. It did catch me off guard even though I was a bit ill. AngloGold and Barrick have to be a little concerned that even though there is a slow but steady shift toward Gold investments, investors are ignoring them. Barrick shares were down for the year 2001 along with over exposed Aussie hedge fund miner Newcrest. We could say that they're "irrelevant". "Interesting Times"

BTW, It turns out that I did not have malaria after all. I contracted a drug resistant strain of malaria a couple of times that even Larium (Mefloquine) could not completely cure. It turns out it was an abscess at the back of my jaw. Had a couple of choices remove tonsils and lance the abscess during surgery, or just slice it open and drain it in the office. I'm too busy for surgery so I had the doc just slice it and drain it. Some wild pain killers though. Don't think I will have beer for a couple of weeks. Cheers!

- Black Blade

Happy New Year all: short time lurker, long in PM since the mid eigthies, recently added to my (physical) holdings - soon to add again to that (just in the interest of fair disclosure).

Been trying to absorb some of the wealth of info here, and I've found many good reasons for being a PGA beyond my original reasonings (which interestingly enough, I haven't found all yet discussed on the site - no doubt I haven't looked deep enough).

Anyway, an inquiry if anyone cares to comment - and forgive the newbie here if I'm stating the obvious, but:

At today's rate of about $280 / ounce, one could purchase about 186 loaves of bread, a cheap mens suit (or two complete changes of clothes), or 7 nights at a (modest) motel. Doesn't this compare well to the purchasing power of gold throughout history? I used these particular examples because they represent the human needs of food, clothes, and shelter that remain a constant across the millennia. Just my uneducated opinion, but I suspect an ounce of gold never bought much more than this (excepting the late seventies/early eighties in recent history of course).

Leaving aside for just a moment the many (intelligent, well reasoned) discussions around the web about gold price manipulation, fiat currency concerns/debt defaults/devaluations, supply/demand economics, etc - doesn't gold today hold about the same value that it always has?

And if so, wouldn't any gold-to-fiat conversion spikes/troughs then, possibly caused by any or all of the above, quickly fall back to the historical norm of gold's purchasing power after the proverbial dust settled?

Assuming this if you will, is their any reason to believe that gold would increase in it's purchasing power and remain at that valuation for any length of time?

thanks!

http://www.kitco.com/market/LFrate.html
Silver lease rates remain in extreme backwardation and yet, no one knows for sure what is causing the run-up in rates. It appears that there is a severe tightness in supply. The Warren Buffet rumors persist and also the rumors concerning JPMC and Citibank scrambling to cover Enron paper. This march, the US Mint will likely be looking to the open market to purchase silver for the Silver Eagle and Commemoratives programs. That is if they simply don't suspend them as they have before at times.

- Black Blade

http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dscheduleDear Friend of GATA and Gold:

Here's the CBSMarketWatch.com report about the
Nader-sponsored conference on the Federal Reserve
held at the Washington Press Club today. If you
caught the proceedings on C-SPAN2, you might have
seen GATA Chairman Bill Murphy, who was shown
asking a question of the Washington editor of
Barron's, Jim McTague. Another delightful moment
came with the presentation of Cindy Artis, former
executive secretary to Fed general counsel Virgil
"The FOMC Transcripts Are Lying About Gold Swaps"
Mattingly, who reported being more or less fired
for joining a labor complaint that made Mattingly
feel "uncomfortable." Let's hope his discomfort is
only beginning.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *

OUCH! Welcome back. Glad to hear you're better - just keep popping the 292's or whatever you have and keep well!
Ice-cream helps.
Cheers,
Waverider

Hi Kludge,
A warm welcome on everyone's behalf. I too, am relatively new to the forum here. When I made the transition from "lurker" to "poster", I did so only following (inconsistently at that) the ongoing discussion here. I wasn't aware that there was a whole archive of Gold Trail wisdom. In retrospect, I wish I had read it prior to participating. What I'm suggesting is that I think you'll find the answer to your question there. Go to the Gold Trail link at the top, and you'll find 5 sets of archives. I printed them all out a few weeks ago and have a 2" binder full of material that is still only partially read. I think mikals words to me were, "A new gold value, a new and unfamiliar financial system, a new market across the ocean."
Cheers,
Waverider

http://quote.yahoo.com/m2?u
Looks a little ugly in Asia tonight.

http://biz.yahoo.com/rb/020107/business_autos_show_dc_2.html
Snippit:

DETROIT (Reuters) - The world's two largest automakers, General Motors Corp (NYSE:GM) and Ford Motor Co. (NYSE:F), will announce thousands more job cuts later this week, casting a pall over the industry's premier annual event, industry sources said on Monday. While neither company would say exactly how many jobs will go, the numbers are expected to reach the thousands, possibly tens of thousands in Ford's case, as the battered automakers prepare for a tough year ahead.

Black Blade: Thousands - maybe tens of thousands of "Bones" to be added to the growing "Bone Pile". The Trolls of Wall Street first say that unemployment is "backward looking" when the data shows increases week over week. Next they gleefully tout how the recession is coming to an end when the rate appears to be slowing. Now as the unemployment rate jumps higher (and much higher after the holidays) the Trolls say it is a sign of a "bottom". These guys really need to get their stories straight and get on the same page. The growing "Bone Pile" suggests that this is going to be one hell of a Recession. It is well known that it is a "consumer-led" economy as corporations have thrown in the towel.

http://biz.yahoo.com/apf/020107/paper_cuts_2.html
Snippit:

International Paper to Cut 350 Jobs, Close a Mill in Oswego, N.Y. and Cut Container Board Capacity.

Black Blade: This reminds me, where's "Boxman" these days? 350 "Bones" cast upon the growing "Bone Pile." This is not a good sign of a growing robust economy.

Isn't it wonderful to finally see gold pull out of the doldrums? Perhaps I am being premature but a think we really have the makings of a true gold bull tugging on the reins. Now to pick some good beat down gold coins and stocks to invest in. So many choices, so little time!

Euro coin accused of unfair flipping The introduction of the Euro, the largest currency switch in history, has proceeded with few problems - until now. Polish statisticians say the one Euro coin, at least in Belgium, does not have an equal chance of landing "heads" or "tails". They allege that, when spun on a smooth surface, the coin comes up heads more often.

Anyone tried this with Gold eagles?

Those who blindly join in Mr. Turk's wild goose chase will likely as not feast on naught but crow when the day is done. To be led to the fowl that yields the golden egg requires that you pursue a gander in yet another direction.

OK, sorry but I haven't been paying attention. What's going on with silver right now?

http://www.thisislondon.co.uk/dynamic/news/top_story.html?in_review_id=486881∈_review_text_id=443853
Snippit:

BRITAIN is nursing a �52m loss over the controversial switch of official reserves out of gold and into the ailing euro, Financial Mail has established. The money lost would be enough to finance more than half the extra funds pledged by Chancellor Gordon Brown in his pre-Budget report for British involvement in the war against terrorism. Alternatively, it would cover the whole �30m bill for beefing up domestic policing and security measures in the wake of 11 September.

The bullion sales triggered a furore when they were announced in 1999. Brown said the proceeds of the 415-tonne sale would be invested 40% in euros, 40% in dollars and 20% in the Japanese yen. He was accused by some of trying to take Britain into the euro by stealth. The Treasury replied that it was trying to achieve a 'better balance' in Britain's official reserves. Since then, the Bank of England - acting on Treasury instructions - has held 15 auctions. Two remain to be held, the next this Wednesday, after which the sale programme will be complete. To date, Britain has switched 142 tonnes of gold into euros. But the single currency's dismal performance means it has lost value against bullion as well as against most major currencies. Britain is now saddled with about 1.4bn euros, at present worth �832m. But the gold that was sold would, at today's prices, be worth �884m.

Black Blade: Gordie is one hell of a financial genius. And those yen investments must be the high point in his career. Now the World enters into a Global Recession that could very well rival the Great Depression. Of course hardly anyone pays attention to the UK Gold auctions anymore as they are largely "irrelevant".

Golden Dreams All!
View Yesterday's Discussion.

What they didn't teach at Harvard was to look at where you exports are and what per cent of your economy is from exports, then hold currencies reserves in the same amounts as the percentage of trade from each .Or hold reserves in gold as a protection against devaluation.
Do your borrowing from weak currencies.Does this make any sence?
Simple common sence to protect jobs and exports.
If anybody managed a business like Governments do bankruptsy would be the order of the day.
Guess what! Its a form of hedging!!
If Durban Deep had hedged and shorted the Rand they wouldent
have lost 1/3 of thier gold sales.
Gold companies are long gold (price in Dollars),why not short the local currency as long as dollar is strong?
Hedging for insurance makes sence for importers and exporters as long as they limit themselves to thier financial risk and do not speculate beyond that!
Management needs to keep a close watch on financial officers to be sure they don't speculate ,but limit thier hedging to the import export risk!Sometimes when a financial officer does a successful hedge,he see a chance to expand on a good thing right? WRONG!Thats when management needs to say NO to him and his promises of easy money !Limit the hedge to the risk your taking!!!

With great interest, I have been reading all of the recent posts about the POS. Worth noting is that nearly all of the recent discussion focus' on the silver leasing area.

It might be worth remembering that there are a great many different issues that influence the POS, NOT JUST LEASE RATES!!

On 3-20-2001 at 00:43 I posted "29 forces for higher silver prices" post #50380. Very few of those "29 forces" had to do with lease rates. (#'s 26, 27, 28, and 29 may be kicking in.) My point is that if you are only concentrating on the LEASE RATE ISSUE, you may be missing the bigger picture. The silver market has made a very nice move lately. That fact ALONE will attract the technical analysis crowd, momentum players, sideline watchers, and brand new players. In other words .... new money from four new areas.

Incidently, since that original post, two more "Forces" have come to mind:

#30 Trade Balance Reverse ..... Billions of dollars have gone overseas as part of our negative trade balance. At some point, part of this mountain of money will come back to our shores. Buying our PM's would seem like a logical choice for a portion of this foreign money.

#31 More people will discover that both PROFITS and POSSESSION of precious metals are almost invisible to the govt.

Just trying to maintain a BALANCED perspective ...

Kind Sir - Please Elaborate
And�ril (1/7/02; 23:49:08MT - usagold.com msg#: 67850)
Know what it is you hunt
Those who blindly join in Mr. Turk's wild goose chase will likely as not feast on naught but crow when the day is done. To be led to the fowl that yields the golden egg requires that you pursue a gander in yet another direction.

Something just out from the corridors of India and Pakistani
meets ?, vertical Ag. If I was a fly on that wall Id say I'll flip ya .

http://biz.yahoo.com/rf/020108/108508364_1.html Once again the London market pushed POS higher. Lease rates are holding (outrageously high) and no one seems to have a plausible explanation for the runup in prices.
There is talk of a pullback as the market is "oversold". This has never made sense to me as there has to one contract sold for every contract bought and vice-versa. Total long position HAS to equal total short all the time. So how can the market be oversold or overbought? This is not to say there will not be a pullback but, if it occurs, it will have nothing to do with overbought or oversold. If it occurs, it will be explained as profittaking.
One analyst stated that the price move is either technical or speculative. What does that mean? At least a few are honest enough to say, "I don't know." Many of them attribute any unexplained move as technical. Either that's the ever convenient answer or my lack of technical analysis is even worse than I thought.
I still think continued rumors and no verifiable information are just what the doctor ordered to keep the prices rising. Continued high lease rates are also necessary. I'm amazed at the lack of attention silver is receiving among so-called commodity analysts and the great roar from internet silverbugs. But, I'll be the first to admit I never even noticed when the techies and dot coms advanced in price by 20% during the bubble years.
Any news or rumors?
Rich

http://www.futuresource.com/news/news.asp?story=i4217442935360782912
London, Jan. 8 (OsterDowJones) - The London Metal Exchange has suspended its silver contract with effect from close of business on March 1, 2002, and therefore, with immediate effect, no trades in this contract will be permitted
if they have a prompt date beyond this time, the Exchange said.

Welcome Sir to the forum!

If you read the gold trail links, I think you will find that your perspective is adhered to and will be the very least of the benefits of holding physical. Stable purchasing power through the ages.

One might also get the impression that gold trail points to events that will occur making gold the holding of the ages with value never before attained.

I can see that for gold to move upward in US$ terms, the event may begin as a major devaluation of the dollar. Here, yes the ounce of gold will still by a new suit but its corresponding cost in inflated dollars will be high.

I am still awaiting the unfolding story of how and why gold will attain a status far above this level. I am optimistic as the events so far fortold have played well showing the FOA and Another are well grounded in what will come to pass.
Awaiting new words on the trail.

What is the deal with the suspension of this contract?!?!

THE EURO - AT LAST
by Bill Bonner


We have euros in our wallets now. Nearly half a century
in the making, you can buy anything you want with them.
Even a little bit of monetary security.

"Let's see, you gave me 4 coats...and you want to pay in
euros," said the woman tending the cloakroom at the
Champs Elysees theatre last night. "Oh my, that must be
7 euros. No, 7.5 euros. No, 6.5...Oh I don't know...
It's 50 francs!"

If nothing else, the euro is improving Europe's math
skills. Every transaction involves long division or
multiplication.

"That's not very much," said Edward, 8, when I switched
his allowance to euros. "I'd rather have francs. I got
more of them."

Edward's math skills are weak. So is his understanding
of monetary economics. He thinks more currency is
better. But then, so does Alan Greenspan.

Here at the Daily Reckoning office in Paris, we
preferred francs. Our French isn't good enough to
pronounce "euro" correctly. Each time we try, waiters
run for the English-language menus and clerks insist on
talking to us in an English that is as bad as our
French.

But apart from the language problem, we're beginning to
like the new currency. Especially the 500 euro bills.

With less than half an inch of paper, you could carry
enough currency to buy a new Mercedes or spend a summer
in Europe. Drug dealers, we predict, will not be loyal
to the $100 bill. They will find the new 500 euro note
useful for conducting business. Others - perhaps the
silent majority - will find it useful for preserving
their assets.

Reflecting on the future of paper money, the average
shopkeeper in Dusseldorf, as well as the hedge fund
manager in Manhattan, will find in the euro a way to
protect himself from America's debt problem.

American consumers doubled their debt in the 1990s. So
did American businesses. Bankruptcies for both groups
are hitting new records.

The money for America's spending spree came from
overseas. America's trade with the rest of the world has
become lopsided - about a billion dollars out of balance
every day. That is the measure of the difference between
what Americans buy from overseas and what they sell.
This huge gap wouldn't have been possible had not the
foreigners decided to send the money back to America...
buying stocks and bonds in huge quantity. Over the
years, this is how more than $2.5 trillion worth of U.S.
obligations has ended up in foreign hands.

We have no less faith in the Fed and Congress than we
have in drug dealers. Neither will steadfastly defend
the dollar. Already the Fed seems to be doing all it can
to reduce the dollar's value - increasing the supply of
dollars at many times the growth rate of GDP. And why
not? People seem to want more of them.

Besides, the U.S is the world's largest debtor. It also
controls the value of the currency in which those debts
are measured. America will, we predict, meet an
irresistible temptation: to pay down its loans with
cheaper money than it borrowed.

All paper currencies, sooner or later, end up in the
trash bin. But while the euro dallies, the dollar seems
to be headed to destruction with a greater sense of
urgency:

* While America runs a huge trade deficit, Europe's
trade position is positive.

* While America's economy is in recession, Euroland is
still growing, though slowly.

* While Americans have billions in credit card debt;
Europeans don't even have credit cards.

* While America's central bankers are quick to cut
rates, Europe's central bankers are reluctant to do
anything.

* While Americans take out more and more "home equity,"
sometimes without even an appraisal, Europe's lenders
are typically very cautious and conservative.

The inflation rate in Europe is only half the U.S. rate.
Productivity growth, meanwhile, is higher in Europe.
Stock prices are only about half as high (in P/E terms)
in Europe as in America. Plus, earnings tend to be
understated in Europe and overstated in America.

Even Alan Greenspan admires the euro:

"There can be little doubt that the euro is a sound
currency," said the Fed custodian of the dollar,
speaking of his competition. "The mandate of the
European Central Bank to maintain a stable purchasing
power for the currency is doubtless firmer than that of
the Federal reserve or any other major central bank."

The ECB has no reason to want to drive down the value of
the euro. Its temptation is towards stability. If the
currency rises too high...or sinks too low...member
nations might forsake it.

Of the dollar, on the other hand, it was often said: "it
has no competition." It will be interesting to see what
happens to it now that it has some.

Your correspondent in Euroland...

Bill Bonner

Excellent HEADS UP! from you, sirYour post should have included the whole piece, "short" and sweet that it is. Expect the NYMEX to follow up this event
"shortly". This is history unfolding and I have saved this piece to my hd:
********
By Andrea Hotter

London, Jan. 8 (OsterDowJones) - The London Metal Exchange has suspended its
silver contract with effect from close of business on March 1, 2002, and
therefore, with immediate effect, no trades in this contract will be permitted
if they have a prompt date beyond this time, the Exchange said.

The last day on which cash trading will be permitted is Feb. 27, with Feb. 28
to be the last day on which cash today trading will be permitted, the LME
added. The contract will be suspended in the LME matching and clearing system,
or MCS, and on the Exchange's electronic trading system LME Select at the close
of business.

The last day on which deliveries can take place will be March 1.

The LME will continue to keep the silver contract under review, either in its
current form or in a modified form, it said.

In order to implement the suspension of trading, the London Clearing House
will reset each clearing member's parameter file to prevent entry of LME silver
trades into MCS. However, the contract details remain within MCS should a
resumption of trading take place.

Andrea Hotter, OsterDowJones (ODJ), +44 20 7979 5740, ahotter@fwn.com


(END) Dow Jones Newswires 08-01-02

1323GMT
************

Step one is now complete.

G.

http://dailynews.yahoo.com/h/wdiv/20020108/lo/1041928_1.html
Snippit:

Detroit Public Schools are cutting nearly 700 positions in all areas, including assistant principals, substitute teachers, social workers, custodians and clerical staff.

Black Blade: 700 teachers "Bones" sent to "Time Out" even as Dubya signs Education Bill.

Last week we have a press release that delivery dates would be extended 15 days, then it is quickly rescinded. Now this what appears to be a "Force Majuere" on short term Silver contracts, or at least a very restricted trade on a very tight Silver supply. This is getting very "interesting" as I don't think that the commodities investment community has picked up on this yet. I saw near-term Silver down 6 cents. Maybe Warren Buffett is demanding his Silver and is calling in a penalty payment for non-delivery resulting in high short-term lease rates? A lot of unusual events must be happening behind the scenes. Waiting for the other shoe to drop.

http://www.mips1.net/mggold.nsf/Current/4225685F0043D1B242256B3B00430DAE?OpenDocument... Now the battle gets dirty ... cb2

Booby GoodForwardSell gives his sales pitch in OZ today (or was it yesterday?). The Normandy bidding war is a "do or die" effort for AU as they "MUST" win or very quickly find another pidgeon. I think that Newmont has the "win" here, but I still wait for the Fat Lady to sing. Cheers!

- Black Blade

Gotta run

http://www.mips1.net/mggold.nsf/Current/4225685F0043D1B242256B3B00307A5C?OpenDocumentOops - Sorry wrong link before - cb2

The cabal has been trying every secret trick to suppress au/ag and nem, and it isn't working! Get ready for more conflict out in the open, slam nem, slam au/ag at comex etc.. They are being drawn out into the light, they must win normandy.

..has been "suspended" on the London Bullion Market.

Uhmmmm...doesn't that mean they don't HAVE any more silver to trade? Moreover, doesn't it mean that the "prices" quoted are BOGUS since deliveries can't be made?

Further, the "suspension" of silver trading is the final, irrefutable confirmation of a corrupt, manipulated metals market between London and New York.

Since there IS no silver at the LME there can BE no meaningful price discovery mechanism located there! Therefore, OTHER World markets will set the price of deliverable silver [which they HAVE on hand] and soon set the price of...gold.

The loaners of silver may have a BIT of a problem going forward since there isn't any metal to replace their loans with...at least not on the LME and from what I hear, on the COMEX either.

The loaners of gold are now just realizing that their "loans" were nothing more than sales and that they are in dire straights.

Now you know why the Master of the Universe has been silent all these last weeks. And why he will be giving nothing more than a coffee table speech on Friday in California. The advertised topic of the speech doesn't mention derivatives, Enron, Argentina, currency turmoil or ANY other currrent financial situations of importance.

The reason for this odd stump by the Chairman is that he has already been replaced at the FED and is acting as a diversion to the real events at the Fed. A significant policy change. A policy change that will effect precious metals and for that matter all natural resource holders.

The trading is to be suspended on the LME, not the LBMA. It is my understanding that the trading volumes on LME were very small to begin with. Strange timing, though.

http://www.usagold.com/ProductsPage.html

Empires rise and fall, as do economic freedoms,
and common fortunes fade away
like memories of common events.

Why should YOU buy gold Sovereigns today?

Because no one else will do it for you.

Centennial is here to help.
1-800-869-5115

Hihi Sir. My 2 cts on buying capacity of an ounce of Gold.
The suit story is a pro fiat myth ! How many different suits can you buy around the globe for that same ounce ? Thousands of different suits ! Forget about this effort to standardize the value of Gold. And beside...
From 1933 to 1971 POG was fixed and Gold was prohibited to americans. From 1971 to 1980, Gold's valuation efforts were capped because the rocket was launched too early. From 1980 till now, Gold and Oil are at king fiat's service and capped into an artificial price range.

Gold will revalue itself once it has been set free. It is that *setting free*, that must be properly understood.
And that is exactly *THE* main problem for the general public, as it has been for myself.
It is much easier to understand why Gold hasn't been free for the past 70 years. Ask Russian communists what it means to remain un-free for exactly the same period of 70 years !
They also lost all sense of valuations and proportions.(that's an aside)

TG does explain extensively what is ment by *Free Gold*.
But declined to explain where he got that 30.000 $ per ounce from. Let us suppose that the euro-builders who reached enough critical mass for a pro Gold "Political Will", have some price-protocols as to compensate for the losses caused by the floods of accumulated dollars in reserve.
Or should we try to guess the amount of real wealth that rests in global GDP of 40 trillion $ and give this total as a valuation to the 140.000 tonnes of above ground Gold ?
Wealth being the excess surplusses not needed for the particular lifestyle of each and everyone of us on this globe. Now what will happen if what we defined as wealth will come out and exchange that fiat-number of wealth for Physical Gold in Possession ? Are you doubting this could ever happen ? Than reread/study the Goldtrail archives, please.

What the euro-builders have been planning is exactly a climate where Gold gets more and more chances to be set free and remain free. Not some kind of artificial standardization but a dynamic adapting (flexible) real valuation of the available Gold mass. A trustworthy *GUIDE*
for a Golden currency as the alternative for a malmanaged dominator. Nice theory and meticulously prepared and gaining increased sympathy as expressed in more and more subtle declarations and acts.

Yes you can buy a suit for an ounce worth 278$. How many people can say...I want to buy some ounces of Gold now for a new suit later ? Do you follow ? These 278$ of today is only the price of Gold for the people who don't want to possess that Gold !!!!!
300 million europeans have been exchanging their local currency for another one, the euro. Soon they will consider to do the same with the dollar currency they possess. And the euro builders wanted /planned to associate that euro paper with "free" Gold. And they planned a very special marketing trick (bad word) for convincing many other non europeans to do the same ! The euro builders are the real Gold marketeers / promotors / valuators.
Do you think that the dollar as it is can stop this initiative ? Who can stop Gold, once it is broadly advertised and justified for wealth storage ? That's why *burning the paper* must also be understood properly.

Hope You can look against Gold's valuation a bit different than before. Thanks Kludge.

...and is the largest precious metals market in the world in measured volume. The table below is copied from the LBMA website. The voulme figures are in troy ounces.

Silver
+++++1997++1998++1999+++2000+++2001
Jan.+++294.4 330.4 214.2 149.2 105.1
Feb. ++275 347.8 277.3 172.7 102
Mar. ++284.1 272.1 188.8 134 131.3
April ++253 230.7 198.2 106.9 121.6
May++ 236.6 266.5 189 121 110.2
June ++270.5 217.9 161.3 97 99.8
July+++270.6 233.5 191.3 93.3 99.5
Aug.+++263.3 223.4 196.1 100.5 89.4
Sept.++314.3 232.2 176.3 117 96.7
Oct.+++345.5 249.4 182.4 82.2 101.9
Nov. ++327.9 169.1 125.9 97.6 91.4
Dec.+++395.8 202.2 119.9 116.4

This default of the silver contract by the LBMA through its LME affiliate is no different that Argentina's default on its obligation to pay interest on its sovereign debt. Note the use of terms such as "suspended". All too familiar terms used by Argentina's ...what...fifth ex president?

jumping the starter pistolMy surmise was only partially on the money. Apologies. It is just that expectations often cloud the eyes when these stories surface. Additional, a repost from Kitco from Ted Butler:
******
Date: Tue Jan 08 2002 11:24
ted butler (@way on down south.....in London town....dire s.) ID#370209:
Copyright � 2001 ted butler/Kitco Inc. All rights reserved
The real reason the LME silver contract never got off the ground was two-fold. One, it represented a threat to the crooks at the LBMA, in that it would have required more disclosure and documentation and transparency, of which there is zero on the LBMA. Two, there wasn't enough physical silver in London to support trading. I made these same comments, right here on kitco, many times since the contract was introduced several years ago. Admittedly, at the time my claims on no silver in London looked off-base, since others were saying the real shortage was in places to store all the silver they had in London, which was burdensome, it was supposedly so ample. With the premiums that London commands over NY, and the level of lease rates, the silver supply in London doesn't look so burdensome any mo'. ha ha ha
********
But it does go to show how much easier it is to cancel the paper than it is the metal (smile).

G.

eom

http://www.lme.co.uk/data_prices/monthly_volumes.aspSector:

Perhaps I am under the wrong impression, however the above shows metals clearing data for the LME. Note the Dec 2001 contract turnover of ZERO. This is in contrast to the numbers reported on the London Bullion Market website, which I believe you have previously posted.

"There is a story circulating that Mr. Buffet leased 30M oz of silver to Enron, who is now in default on the loan. And that some bullion bank (JPM?) is the guarantor of said lease.

"Would make for some interesting PM fireworks if true. Anyone have any definitive info on this story?"

Da2G

If you examine the copied data from the LBMA website you will see that there was no entry for Silver Dec 2001 nor for gold since they report around the 12th to the 14th each month.
*************
Mrt. Buffet's Silver leased to Enron? Now in default?

There may be some truth to this rumor since the cancellation of the March LME LBMA contract would allow the debtor [JPMC?] to take whatever silver there was to be offered IN the March contract and ship it to Mr. Buffet in order to avoid an embarassing news conference which I don't doubt has been suggested by Mr. Buffet...if indeed this rumor is true.

Some of that may have started right here. Check post 67705 on 1/04/02 and also post 67735 on 1/05/02.
I subscribe to a few newsletters for opinions and information. One (metals but especially silver) comes in monthly e-mail form with special updates of spectacular breaking news. Post 67705 was forwarded to me in this manner. I don't know how many subscribers received this but I do know it was news at both Kitco and Gold-eagle.
Hey, guys, we are on the cutting edge!
Rich

Where do silver and gold trade after New York shuts down and before Sydney opens?? Is is San Francisco?
Wherever it is, I'm guessing it's a small, thinly traded market but they're making waves these days with silver. POS dropped 8 cents after the New York close and is now back up the 8 cents to 4.71 which was the N.Y. close.
Is there an open market in this time or is this some kind of magic? Magic brings to mind wizardry. Hmm, has anyone seen Gandolf?
Rich

http://dailynews.yahoo.com/h/ap/20020108/bs/life_savers_plant_1.html
Snippit:

HOLLAND, Mich. (AP) - Kraft Foods Inc. says it will close its 35-year-old Life Savers plant here by fall 2003 in a move that will cost more than 600 jobs.

Black Blade: More "Bones" added to the growing "Bone Pile".

http://www.kitco.com/market/LFrate.html
Silver lease rates go wild again - One month about 25%, two month 18%, three month 13%, etc. Very extreme backwardation as LME effectively declares "force majuere" on physical silver delivery. Some major investor could be putting the screws to the bullion market at a time when Enron paper silver contracts are probably being covered by their third party backers. "Interesting Times"

- Black Blade

http://www.usagold.com/cpmforum/wgc.htmlSummary of last year, a real grinder for financial markets, was "steady-as-she-goes" upward for gold:

"On the basis of the London p.m. fix, gold traded in a range between $255.95/ounce (2 nd April) and $293.10/ounce (September 28 th ) last year, and averaged $271.05. The final fix of the year was $276.50 on New Year's Eve."

Click the URL for a couple of nice year-at-a-glance charts of the spot price in several important trading- and producer currencies.

R.

http://www.usagold.com/wgc.html:-)

http://www.usagold.com/WGCimages/wsjgoldadv.jpegFlash forward to Argentina today... the more things change in the world, the more they stay the same.

Gold: Serving Humanity Since 2500 BC

(Thanks to Gandalf for forwarding this WGC ad image from an old WSJ)

R.

Black Blade, I am honored that you still remember me. I am "always" lurking. I follow many sites daily, but this site is the creme de la creme, and you sir, are my favorite. No disrespect to the many Knights at this round table. It is your prescient articles and sense of humor that I find so appealing. A few days of hunting, and a few nights at the hunting lodge with you, and I imagine that I would die a happy man. Enough of the slobber, on to business.

As you know, I sell corrugated packaging (boxes) for one of the largest forestry companies in the world, and the news is not so good. Our plant is the flagship, and we have had a remarkable year. The reasons for our success are to lengthy to go into here, but there are storm clouds on the horizon. Orders softened in December, but we believe that we will weather the storm fairly well, as we have been working on some large accounts, that would offset any more down turn in the economy. However, news from our sister plants is grim (now where did that word come from?). Word has it that there will be several plant closings this year, and price decreases are continuing, and there was an earnings warning given a couple of weeks ago (zero profits in the fourth quarter). The usual directives have started to come forth, ie, reduce travel and entertainment expenses, no raises until midyear (longer than that is my guess), turn the computers off, etc. It is my feeling that things will get as bad as we saw in the late 70's and early 80's. Anything worse than that, and I may take early retirement, as the pressure is immense, even working at a top performing plant ( I am hoping for some early retirement offers). The corporation has had minimal layoff annnouncements to this point, but I don't believe we can avoid this much longer.

We are also huge in the lumber business, and when the housing bubble bursts, Katie bar the door.

There is another sector that I believe is another barometer of the economy, and that is the shipping business. Maybe we have a Knight, or lurker that is in the rail or trucking business who could shed some light on this.

I hope that you are fully recovered, and I was glad to hear that it was not the malaria that had knocked you for a loop.

Have a great year, and much luck to you with helping to keep the grasshoppers warm, and well lit.

file:///Macintosh%20HD/Desktop%20Folder/Gold%20mining%20mergers%20seen%20pinchiFor several months, I have demonstrated to the best of my ability that the gold carry trade was a dying proposition and that its death lied at the heart of the emerging bull market for gold. The "reduction of the trade" was a process to which we must lend patience and a push now and again when appropriate. But the process is inevitable. . . .The carry trade will surely die. The article linked above titled "Gold mining mergers seen pinching bullion banks" lends support to that proposition-- now becoming increasingly evident to a large number of players in the gold market.

The portion I found most telling follows. . . .And Andy Smith and I are now partners in an understanding. Who would have thunk it??


"If Newmont's bid prevails, it would mean that the world's new largest miner would be a strict non-hedger, as opposed to Anglogold, and this could change trading conditions for the rest of the industry. 'Adding to hedges is not a good thing because the market can't stand any more hedging. It's too illiquid and what they have already is too big,' analyst Andy Smith of London-based Mitsui Precious Metals said. 'This is a signal for the end of a trend, which is hedging, that has been dominant for the last 15 years. It's now become a liability because the market has become too small to trade these books,' Smith added."

Gold. . .inexplicably to some. . .up a $1.10.

Good to see that all is well with you. When I read that article I thought about the nature of your work and how in a sense your sector is like a canary in the gold mine. When your company or sector is under performing, it is a good bet that the economy is in trouble as fewer shipping containers are needed or your clients demand lower costs. It's good to have an ear to the ground so to speak. Cheers!

- Black Blade

BTW, I see that Silver just added another 9 cents per oz. in OZ. The squeeze is on and we're off to the races. This could be just the beginning of a run on the Silver market. Gold could rally in sympathy at first and then follow up further on renewed Gold interest. "Interesting Times"

3 dollar spike right now at Kitco 280.40. Silver up and down 10 cents at a time.

It's got to be up and down like a whore's drawers - I see 279.20 and 4.63!
Cheers
Waverider

http://www.usagold.com/THEGILDEDOPINION.htmlAnd after you'd had a look at Stein's View of the India-Pakistan faceoff, be sure to click through to the latest update from international editor Holger Jensen.

ARTICLE: U.S. won't evade fallout by waging 'proxy wars'

-----Defense Secretary Donald Rumsfeld has confirmed that the next phase of President Bush's war on terrorism will not be fought as openly -- at least by American forces -- as it was in Afghanistan. ... In the Philippines, President Gloria Macapagal-Arroyo politely refused Bush's offer of American troops to help rid her country of the Abu Sayyaf terrorist group. But she eagerly accepted a C-130 military transport plane, helicopter gunships, a Navy patrol boat, armored personnel carriers and 30,000 M-16 rifles.
+
Showered with U.S. military assistance, trade subsidies and pledges of private-sector investment, a beaming Arroyo described her November visit to Washington as "$4 billion and counting."-----------

(Click on the 'Inside Foreign Affairs' link while at the Gilded Opinion to reach the Jensen Index.)

R.

http://www.usagold.com/cpm/goldhelp.htmland consider clicking here even if you have!

R.

http://www.yomiuri.co.jp/index-e.htmO'Neill, Lindsay, and Hubbard were in Japan Monday to eyeball top Japanese finacial officials regarding bad loans and deflation. There's some serious mental hand holding going on right now between Japan and the US.

Japan threatens the entire global financial system with it's strong dollar-weak yen devaluation fiasco. The weak yen is being engineered and strategically talked into position by untrusted, hated politicians who by all accounts have (over the years) worsened this financial disaster through poor policy decisions.

Meanwhile, O'Neill's old '8 to 5', Alcoa, was busy reporting a $142 loss this past quarter thanks to aluminum prices hitting 2 1/2 year lows, which is a direct result of the entire American manufacturing sector being in recession.... which is a direct result of the strong dollar policy.... which is precisely what O'Neill stands for (at least until we hear differently sir sector) and is now in Japan to protect.

Not to be outdone in the 'kharma' department, Japan's Sumitomo Mitsui Bank was busy selling all of it's 8.67 million shares of Goldman Sachs ($740 million) to raise money against it's bad loan situation.... which in turn will help prevent a Japanese banking crisis.... which in turn will help prevent a dollar-yen calamity... which in turn, of course, will help prevent a global financial meltdown. btw, Goldman Sachs was reprimanded by the Japanese last week for illegally short selling their troubled banks. SMILE

So who is ultimately responsible for their 'poor policy decisions'? Japan for becomming dependent on the dollar's fortunes? Or America for allowing Japan to become dependent on their fortunes.... which in turn now has America dependent on Japan's fortunes?

The kharma wheel is speeding up.

http://www.cnn.com/2002/TECH/space/01/04/sun.burst/index.html
Snippit:

(CNN) -- The sun discharged a powerful burst of energy on Friday, igniting the most complex coronal mass ejection since an international solar observatory launched six years ago, according to astronomers. Packed with charged molecules and magnetic forces, solar storms headed in our direction can smash into the upper atmosphere, producing colorful aurora displays and making electrical systems go haywire on everything from satellites to power grids. In 1989, one such geomagnetic storm knocked out the main electrical utility in Quebec, Canada, plunging millions into darkness for hours and costing billions of dollars to fix.

Black Blade: Sun farts but fortunately Earth is not downwind. Not only do these massive coronal mass ejections create a lot of havoc with energy grids, they also have occurred during periods of Global Climate change. This link between sunspot activity (associated with coronal mass ejections) has been recorded since the 16th century. A massive pulse knocking out the energy grid now as the global recession deepens would probably be enough to push the recession to another whole level. We may have just dodged a bullet.

Japan and GSSounds like they don't know whether to crap or go blind.
Military expression when things get tense.
Thanks for the laugh.
Slingshot

I printed out your 3/20/2001 post number 50380.
Yes, indeed, it may be actually happening. If not, that is if this is just some market "bulling" or other shenanigans then it will pass but the supply/demand situation will raise POS. It's when, not if.
Personally, I think this is the beginning right now as remaining silver supply is IMHO in strong hands and this shortage will not prove temporary. Anyway, can I use post 50380 in my coming bestseller "The Great Silver Market of 2002"? I'll start writing right after POS roars through $20.00/oz and I exit "the struggle for the legal tender".
Michael's description of the ending of gold hedging, leased and sold, and/or forward sales is also applicable to the silver market. Watching the silver market may give insight into what is to come in gold as the silver market reversal from extra supply through hedging to (not only less supply but) more demand through the unwinding process has already begun in silver. No one seems to know how much has been leased/sold in either metal but probably more than can be repaid, especially with silver supplies actually running out according to some well-know analysts. Even as a trader I must agree, if you want physical, better get your hands right on it. However, I won't cry if my market positions are settled in tons of fiat.
Physical in hand
Leverage in the casino
Rich

January 9, 2002
Mystery buyer causing silver prices to soar

Dealers rule out buying from Warren Buffett

By
Neil Behrmann
In London



A MYSTERY buyer has created a squeeze in the silver market, causing prices to surge.

London, Swiss and New York dealers report that the buyer or consortium of buyers has been buying the silver on the London market.

The result is that cash prices of silver have soared to a 12-month peak of US$4.78 an ounce, up 18 per cent from the 12-month low point at the end of November.

The identity of the buyer hasn't been disclosed, but dealers say that it isn't Warren Buffett, the billionaire US investor.





His company Berkshire Hathaway bought 130 million ounces of silver or 4,000 tonnes in 1997 and early 1998. Traders said that a large proportion of that silver was sold, but Berkshire hasn't confirmed any sales or further purchases.

The finger is thus being pointed at an undisclosed macro hedge fund.

The purchases have been carried out by a technique known as 'leasing'. The buyers have 'borrowed' the silver by purchasing physical metal from dealers and have sold it forward. The borrowing began when monthly lease rates were around 2 to 3 per cent and traders say that forward sales had expiry dates of up to two years.

The operation which is described as 'manipulation' by Swiss and New York traders took place in the quiet December month, causing an artificial shortage of silver.

Precious metals firms and US and London commodity firms that had sold silver derivatives on expectation that the price would fall further had to frantically cover their positions by repurchasing metal on the market or borrowing metal to deliver to the buyers.

http://biz.yahoo.com/rf/020108/n08222997_1.html
Snippit:

NEW YORK, Jan 8 (Reuters) - Wall Street expects Argentina's peso to sink below its new exchange rate of 71 U.S. cents soon enough, but when the country's markets open Wednesday, analysts will also look at whether the peso will also drag down the Brazilian real. ``There will be a lot of focus on where Argentina's black market exchange rate goes'' in relation to the official rate of 1.4 pesos to the dollar, said David Rolley, emerging markets strategist at Loomis Sayles & Co. ``We've been getting quotes of black market rates between 1.50 and 2.40 (pesos per dollar), which is not that far away from where the Brazilian real is,'' Rolley said.

Black Blade: There once was the "Asian Contagion", and now the "Tango of Death". Actually we have both. The Bank of Japan has dropped rates to near zero. They have nothing left - except to devalue again that is. We shall see the yen crash in a desperate effort to generate demand for Japanese exports. Here's the rub - China and Korea have publicly stated that it will lead to a regional competitive devaluation and regional depression. Now we also see Argentina dragging down Latin American currencies with a trashed peso that threatens the same results as in Asia. For Argentines it is worse - the Argentine government screwed over the people by confiscating pension funds and limiting access to 1000 pegged pesos per month. Now the peso is devalued and access is limited to 1500 pesos per month. Sound familiar? The US government under Franklin D. Roosevelt screwed US citizens just like this once. The US dollar was pegged to Gold at $20.00/oz. after FDR stole the peoples Gold he pegged the US dollar at $32.00/oz. We are just seeing history repeating once again is all. The outcome may be just as inevitable - get out of debt, get Gold and Silver insurance (Argentines, Brazilians, Japanese, etc. sure wish they did), get a storage program of nonperishable food and basic necessities (remember the Argentine riots - "We are hungry!" and "Give us our money!"), and have enough cash on hand for several months expenses (Argentine banks limit withdrawals). "Interesting Times"

If the mystery buyer is purchasing silver in London and it isn't Warren Buffet, then the first names that come to mind are George and Paul Soros even with their major position in Apex Silver (SIL). Still, Warren Buffett is the name that keeps floating to the surface whenever the discussion turns to Silver purchases and not renewing Silver leases. Now, what if both George Soros and Warren Buffett have entered the long side of Silver at the same time? If so - it's "off to the races".

- Black Blade

Silver marches up 17% over about 1 month and the market can't take it ? ? ? ? ? ? ? ?

With an estimated 500-750 million ounces of silver leased (and sold short) do we really need to wonder who the "mystery buyer" is.....I mean don't most market pundits know that buying is the flip side of selling...

reminds me of a quote from Another.....don't remember it perfectly...but he said something like "why is the price of gold falling ? . . . because so many people are buying".

POS....Poor old Solomon

http://m1.mny.co.za/MGGold.nsf/Current/4225685F0043D1B285256B3B00839836?OpenDocumentSnippit
"Over 2001, unhedged gold stocks returned a huge 11 per cent more � including dividends and after tax � than their hedged peers. I can hear a lot of people saying "duh". The data presented below could be more accurate by weighting the stocks according to the degree of hedging undertaken (in which case the unhedged producer out performance would have been even better), but it suffices as a rough guide.
While it has become axiomatic to say unhedged gold stocks perform best because of superior exposure to the gold price, this is the first full year it has proved a reliable indicator.

Waverider: Black Blade I remember you mentioned that the articles/tables at this website aren't always factual/accurate, but this seems a pretty fair summary of the points that've been made re: hedgers vs. non-hedgers.

http://page.auctions.shopping.yahoo.com/auction/59594142Or is it easy to get cheated buying nuggets? Are these really worth $200,000? Think I would rather invest in coins.

Michael,

I tried your link from your post #67887, it doesn't seem to be working, I was interested in reading the story.

I received an e-mail from Chris Powell this evening(Thanks Chris), I noticed it was dated the 7th, so it might have been posted, but I didn't see it, and others might not have had the chance to see it either. So here is a repost.

By Ambrose Evans-Pritchard
London Telegraph
January 7, 2002

BRUSSELS -- The Chinese government gave the euro its
much-coveted seal of approval yesterday, announcing that
it would switch part of its vast dollar reserves into the
world's emerging "reserve currency."

Chinese finance minister Xiang Huaicheng said the flawless
launch of notes and coins had swept away the lingering doubts
about monetary union and opened the way for a recovery on
the exchange markets.

"I will instruct the responsible authorities that they should not
just have a currency basket but rather that they should buy
euros as quickly as possible," he said after a meeting in
Shanghai with the German finance minister, Hans Eichel.

"It is an inevitable tendency that the euro will become a
reserve currency for a lot of states," he said, predicting
that it would regain parity with the dollar.

China has roughly $200 billion (L140 billion) in foreign
reserves, the second largest in the world. A small
proportion is believed to be in euros already in the
form of deutschmark and French franc bonds, but a
major switch in asset allocation from dollars to euros
could be large enough to influence the currency markets.

The European Commission said yesterday that it was
the political gesture that really mattered. "What's
important is the political signal of confidence that this
transmits, not the volume of money," said monetary affairs
spokesman Gerassimos Thomas.

China and the European Union share a joint suspicion of
American "hegemony" in the global economic system
and have been edging toward mutual embrace for several
years. Beijing has a strong interest in promoting a rival
currency, but it has been waiting for clear evidence that
the euro is a viable long-term currency before committing
itself.

The Chinese backing for the currency came as a leading
consultancy said that the economic case for Britain entering
the euro will weaken in 2002 as UK interest rates rise and
eurozone rates fall sharply.

The Centre for Economic Business Research also said
that Britons' increasing familiarity with the new currency
could present an "unusual opportunity for the UK to have its
cake and eat it by staying outside."

It estimates that, by the end of 2002, just over half the UK
population will have used euro notes and coins and that,
as a result, the present majority against joining will erode.

However, CEBR believes the Government is unlikely to
call a referendum within the next 18 months because it says
55-65 percent of voters would still come out against entry.

If this isn't an endorsement to the accuracy of our Trail Guide, and Another's argument, I must be reading them incorrectly. Looking forward to hitting the trail again some time soon(HINT HINT!).

I particularly found the following paragraph to be very interesting:

The European Commission said yesterday that it was
the political gesture that really mattered. "What's
important is the political signal of confidence that this
transmits, not the volume of money," said monetary affairs
spokesman Gerassimos Thomas.


Political will? I smell several arguments about to "go into that good night".

The Coinguy

Stargold Shooter (1/8/02; 22:20:20MT - usagold.com msg#: 67902) Are gold nuggets a better investment than bullion and coins?
----
Stargold Shooter, please notice that NO ONE has placed a bid on those offered nuggets!! Nuggets come in ALL shapes and sizes. Some have quartz and other "impurities" inbedded within them. Purity also ranges from 0.70 to 0.97 fine depending on the source and type of "nuggets". The price of nuggets is only limited by the funds of the person that desires the nugget. One of the best nugget market areas is in Las Vegas, NV. WINNERS love to buy those yellow rocks with that FREE cash that they won. The price only depends on what the market will "bare", but the price is always greater than spot. (Also see discussions of "Black Gold".
The Hobbits suggest that you stick with the 0.9999 stuff, BUT, IF you really are interested in some nuggets, ----
<;-)

Miningweb has been the apologist for the hedgers since its beginning. I notice that novice analyst Tim Wood now has been converted into a "Gold Price Manipulation" believer and apparent "Gold Bug". David McKay as far as I can tell is still enamored with Barrick and AngloGold (hedgers in general). I used to post there a drive for the hard answers with hard-hitting questions. I would also point out misleading data in graphs, etc. I noticed that soon my questions and comments were quietly deleted (as well as a couple of others). Obviously they were not adequately prepared to address the issues of forward sales, strong balance sheets, operating profits vs. actual profits, etc. I would also present cold hard facts from corporate balance sheets and even crunch the numbers. The same was true with the other departments (energy, base metals, etc.). I haven't been there for some time but I hear that they are slowing waking up to reality. Maybe I should drop in and visit sometime. Perhaps they may be ready for serious discussion. Who knows. Besides we cover it all here. Cheers!

- Black Blade
View Yesterday's Discussion.

Two disasters to the western world,Blair is selling out the former colonies and financial centers that Britan has any gouvernmental influence over.He is forcing the financial centers offshore into giving up thier clients in a desperate attempt to get thier hands on more taxes.He made a deal with Clinton to push taxes on each other and give up to each others tax collectors.Bush is caving it too,despite his "over my dead body" pledges .Push is coming to shove for Britan and the U.S. A final step to depression will be when the two gouvernments attempt to remove Depositor Insurance from the banks as is being attempted in Japan and in my opinion will be tried in U.S. and Britan in an effort to save the Gouvernment from the hugh losses the banks will have .This will cause a scramble out of fiat and out of the banks and into tangables.Money will go back under the mattress for security causing a severe decline in liquidity and cash in the economy.Credit will dry up as cash leaves the banks .Its deja vue all over again as YOGI would say.
The map to depression is well known and now we see in this generation how it all came about.
These gouvernments are deliberatly causing a depression
in order to try to save themselves(gouvernments and thier fiat)at the expense of the people.
They believe the depression option will save them from gouvernment collapse as it did in the 30's.We had a financial collapse ,but we did not throw the gouvernment out.History has shown the
inflation option leads to war and revolution and a radical gouvernment change.
Depression will be the choice.
Maybe this time it will be different !
Maybe we the people will throw them out anyway!

You've been 'hangin' with BB and I too long.

"..like a whore's drawer's...."!

(lol)

http://www.washingtonpost.com/wp-dyn/articles/A16533-2002Jan8.htmlThe Washington Post has completed a four part series on the MicroStrategy dot-bomb, and the apparent similarities to Enron are not to be missed. (For that matter, maybe Argentina, though that's probably a stretch.) Click on the above link, then click on the first 3 articles, before the final one.

I did like the CEO's motto: to BEND REALITY THROUGH SHEER FORCE OF WILL. Everytime we look at our paper/electronic fiat monetary system backed by nothing whatsoever, we should remember this one.

Go gold. Go silver.

snippet:


Merrill Lynch, the nation's top broker, said it's trimming 9,000 jobs and taking a $2.2 billion pre-tax charge. It says the move will save it $1.4 billion.


Apparently this number is a combination of last years layoffs, and some fresh ones. The most recent data is not provided.

http://www.msnbc.com/news/684512.asp
Officials see recovery further off than private analysts do

Snippit:

WASHINGTON, Jan. 9 - Federal Reserve officials appear to be less optimistic about economic recovery than many private analysts, and that suggests interest rates could remain low for a while or even fall again.


Black Blade: "Praise the Lord and pass the ammuninish �Uh oh!" AG is running out of bullets. A couple hundred more bps and "That's All Folks!"

http://biz.yahoo.com/apf/020108/consumer_credit_1.html
Fed: Consumers Increase Borrowing by Record Amount in November

Snippit:

WASHINGTON (AP) -- Americans increased their borrowing in November by the largest amount on record. A big rise in auto loans spurred by zero-interest rate financing offers led the way. Consumer credit soared by a seasonally adjusted $19.8 billion in November, or a 14.6 percent annual rate, the Federal Reserve reported Tuesday. The dollar increase was the biggest since the Fed began record-keeping in January 1943 and the percentage increase was the largest since November 1995. Economists were expecting consumer borrowing to rise, but by a lot less -- around $3 billion to $4 billion during the month. While consumer confidence rebounded in December, it was down sharply in November. The nation's unemployment rate shot up to 5.6 percent in November and layoffs also rose. But for consumers, the lure of zero-percent financing for cars and heavy discounting on many products was hard to resist, economists said. ``It's apparent consumers haven't been too concerned with softer economic conditions and a weak labor market,'' said economist Richard Yamarone of Argus Research Corp. ``Without the burden of high energy prices and lofty mortgage rates, consumers felt comfortable to borrow briskly.''

Black Blade: As I said this Recession will be longer and deeper than many expect. The US consumer and US corporation is digging itself into a deeper hole each passing day. I still say get out of debt, get Gold and Silver portfolio insurance, get strong conservative investments, get nonperishable food and basic necessities, and have enough cash for several month expenses. It just does not look good now matter how you spin the data. People just got to get out of the "borrow and spend" mentality. Look at the World around us - Argentina, Brazil, Japan, etc. BTW, in the US bankruptcy reform looms in the near future - escape routes are being blocked as the sheep are being led into the feedlot pens next to the kill floor. Sorry I have been listening to Pink Floyd's "Animals".

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APDvOrBZkR29vZHdp
Snippit:

New York, Jan. 9 (Bloomberg) -- U.S. companies, led by AOL Time Warner Inc., AT&T Corp. and Viacom Inc., this year may write down much as $1 trillion of goodwill created when they overspent on acquisitions, analysts said. The actions may leave many companies with record losses. Blame a new U.S. accounting rule forcing companies to regularly size up the goodwill on their books to determine if the businesses they bought will generate enough of a return to justify the price. If not, then the buyer must write down some of the goodwill. ``It's the dam breaking,'' said Alfred King, vice chairman of Valuation Research Corp., a research firm that helps companies value their assets and predicts the writeoffs may reach $1 trillion this year. ``The first guy that does it will open the floodgates.''

Black Blade: Kill the patient in order to cure the disease. This economy is a virtual minefield with booby traps and enough incompetent leadership to make a rational conservative investor as nervous as a virgin in a brothel. As if misleading practices such as "Pro Forma" accounting standards weren't bad enough.

http://www.thebulliondesk.com/
Gold jumps $3.20 higher this morning. Silver had spiked 11 cents higher and now pulled back a bit. Lease rates remain high for Silver as supply tightness still in effect. Hell, maybe I should revive the morning "Wake Up Call". PM volatility and economic uncertainty is making a comeback.

- Black Blade

Russian central Bank values its Gold reserves at 300$/ounce (mark to market-� la EMU-?)wich suggests an increase from 416 tonnes to 423 tonnes of Gold (WGC).
Isn't it remarkable that the otherwise so secretive Russians are that cooperative in making their Gold-figures publicly available for everyone ? Are they copying EMU Gold-Styling, as a build up for their rouble with some intrinsic value, for future trade-expansion with Europ ?
I would like to see the Chineze central bank doing the same ! Wouldn't that be wonderfull evidence of "the" theory ?

There are 8 euro coins. 3 of them look exactly like gold-coins and 2 are bimetallic. The symbolism in fiat is a reflection of the underlying ideas ?

Any news on the Gold Euro coin? I thought that there was a plan to promote the Euro with a Gold Euro issue and maybe an old German Mark Gold Coin for old times sake.

Gotta run, the Grasshoppers want some more methane. I'll check back in tonight. Cheers!

- Black Blade

http://biz.yahoo.com/bw/020109/92252_1.htmlSmall but very efficent, that's what I like.

http://www.usagold.com/ProductsPage.html

Empires rise and fall, as do economic freedoms,
and common fortunes fade away
like memories of common events.

Why should YOU buy gold Sovereigns today?

Because no one else will do it for you.

Centennial is here to help.
1-800-869-5115

http://www.usagold.com/Order_Form.htmlBelow is a portion of today's Commentary & Review available normally by private password only. You can gain free access to this (almost) daily report on the gold market (and all that affects it) as well as our widely read hard copy newsletter, News & Views: A Quarterly Review ofForecasts, Commentary & Analysis on the Economy and Precious Metals by going to the link above or calling USAGOLD's offices -- 800-869-5115. Available to current and prospective clientele in the United States, Europe, Canada and Australia. If longevity and growing readership are the test, these may be the best reporting services on gold available anywhere. Thank you for your interest.


Gold Market Brief (1/9/02). . . . . . . Gold rose sharply in international markets this morning on continued strong physical demand particularly in the Far East and the continued unwinding of gold carry trade positions in London and New York. A London analysts quoted yesterday by Reuters frames the situation: "It's the banks that are losing out from consolidation. They have fewer clients, less margins and lower contangos. The bullion banks are already saying that they're not getting any business from the supply side, so they're going to the demand side." The net result has been a steady reduction in forward selling, leasing and gold carry trades -- the very activity that has kept a lid on the gold price. Mitsui's Andy Smith added that "This is a signal for the end of a trend, which is hedging, that has been dominant for the last 15 years. It's now become a liability because the market has become too small to trade these books." I imagine these thoughts prey heavily on the minds of those who have been short the gold market all these years. The tone and tenor of things is changing -- perhaps rapidly.


Short & Sweet. . . . . . . . . . . . . .One trend we may have difficulty quantifying, though it may also add substance to gold's new-found strength, is the switch in Europe from local currencies to the euro. TheMinesite.com offers this assessment of euro introduction with respect to how it might affect demand for gold: "All agreed that it was an experiment which the people of France had not been asked to approve. And like all experiments there was a good chance it would fail. Already the Italians are showing discontent and the Spanish refer to it dismissively as the eurito. Small wonder then that gold is in favour as the French will not have missed the slight increase in the bullion price, the fact that silver hit an 11 month high, nor the improvement in the dollar/euro exchange rate in the first week of the new currency. It may take time to get through the system, but the switch from francs could add up to a lot of tonnes of the yellow metal." . . . . . . . . . . . . . . . . .We have had quite a few questions on gold- bull-turned-bear Blanchard & Co's anti-gold marketing campaign. I came across this interpretation by Richard Russell (Dow Theory Letter) over the weekend which we file under "Wish I Would Have Said That": "What do I think of the Blanchard & Co. turn of events? I think if my old friend, Jim Blanchard, read the above, he'd turn in his grave. I think that Blanchard & Co. is probably not doing well in the gold business and they're smart to get out of it. I also think that Blanchard & Co. is dead wrong about gold. But 'to each his own.' My guess, however, is that gold will be around and considered to be money long after Blanchard & Co. ceases to exist. Twenty years of central bank baloney will not void the value of gold. Twenty years of declining gold prices against paper currency proves nothing except that people will believe a lie if it is repeated often enough and loud enough by the prevailing authorities. The lie? The lie is that paper money issued by governments and proclaimed as legal tender has finally triumphed permanently over gold. Governments have tried for centuries to produce their own paper money while denigrating or even outlawing gold. Has never worked for long. The Chinese were the first to issue paper money. But you know something -- the Chinese love gold.". . . . . . . . . . . . . . .Along these lines, we had no sooner warned that we might see an organized attack on gold in the press (See "Worth Keeping" below) than an article surfaced in the New York Times under the title, "Is Gold Relevant?" The attacks always surface when world events demonstrate that owing gold probably makes a great deal of sense. Of course the Times went on to say that the yellow's relevance is muted, waning, next to non-existent in this near perfect socialist paradise, etc. Is Gold Relevant? Try asking the people of Argentina. . . . . . . . . . . . . . . . . . . We suspect a gold breakout might be on the horizon this year for reasons we have talked about consistently here -- mostly having to do with the gold carry trade. Standard Bank/London summarizes the situation nicely: "Low contangos may deter forward sales by gold producers, while the disappearing interest rate differential between gold and the dollar lowers the opportunity cost of holding gold. Also the investment community has long seen the short selling of gold as a cost effective method of financing investments in other instruments, a valid strategy when there was a 5% cushion before the play went wrong. But with gold interest rates barely distinguishable from US dollars, the Funds will have to look elsewhere for cheap leverage. The lack of return from holding the Greenback may also hurt the dollar next year, another positive factor for gold. I would be very surprised to see gold anywhere near the low levels seen in the first two years of the new Millennium and see the price finding strong support on any move below $270." . . . . . . . . . . .73% of the British people think their country should keep the pound for the foreseeable future, according to a poll conducted for the News of the World. . . . . . . . . . . .The Financial Mail says the United Kingdom has already lost�52 million on its gold auction program the result of poor performances by the euro and yen -- two of the three currencies the British Treasury claimed it preferred over gold when the sales were first announced. The penultimate sale in the series will occur on Wednesday. The article concludes that upon completion of the controversial sales Britain will own the smallest gold reserve of any major nation. .. . . . . . . . . .Veteran chart analystMartin Pring says (via Bill Murphy -- Le Metropole Cafe): "Gold remains below the critical $280 level flagged by the converging trendlines....a break above $280 appears likely. At that point there is a very real possibility that the metal could...challenge..$295, probably launching the price into a primary bull market." An article in the New York Times on the Greek drachma over the New Year break drives home the point that currency devaluations are nothing new to history. The drachma became the national currency of Greece in 1832 and has had at best a checkered history. After roughly 100 years of relative stability, the Greek government went bankrupt in 1922. It ordered all bills cut in half with one half going in the owners pocket and the other half to the central bank in what amounted to a forced seizure of one half of the citizenry's assets. The ploy, of course, didn't work. By 1942 hyperinflation had struck the Greek economy. It began to print bills denominated at 100 billion drachma -- the price of a loaf of bread. . . . . . . . . . .An interesting aside for those who like to dabble in the psychology of money: Throughout the article which was meant to contrast the world's oldest currency (the drachma) with the newest (the euro), Greek citizens interviewed likened their currency to a woman and referred to it in discussion in the feminine. "I still don't get it," said one Greek citizen, "Why must we give up the drachma within Greece? She means more to us than just money. She is the mirror of who we are. She's in our math books, our history books, our folk tales, our daily parlance. She's everywhere." At the time of the hyperinflation according to the Times article, "the vulnerable drachma was regarded with great affection, and Greeks called it "drachmoula" likening it to a feisty woman." . . . . #. . . .As fabled Zorba might have put it: "Never give up a good woman!". . . .I never thought about referring to a currency as a woman before, but now that I've been introduced to the idea. (Oh boy. . .Better not go there.) . . . . . The Stein cartoon to the left illustrates the uses of language with respect to politics and the politically correct. The palatable "recession" was coined by the spin-makers in the 1950s to replace the politically dangerous "depression" used in the 1930s. The word "depression" in its own right was coined in the 1930s to replace the wholly unsavory "panic" of the 1890s. Now "contraction" is used extensively to replace the unpalatable "recession." A rose by any other name is still a rose, or as one clever writer put it: "A rose is a rose is a rose is a rose. . . . . . ". . . ..Can it be that at the turn of a new century and one hundred years later, we will return full circle to use of the word "panic." Why do I sense that could happen? The Panic of 2002? Has a ring to it, doesn't it?. . . . . . . . . . . . .Speaking of "panic," if you want to know what's in store for the United States should the dollar break down, study Argentina and the on-going destruction of its currency, the peso. It offers some telling insights into the nature of a currency breakdown that can be applied to any economy. Government officials and central bankers are left with a limited set of options when a currency goes bad -- options they click through with a great deal of predictability, i.e., close the banks, restrict capital flows, raise taxes, and force the public to hold the currency even as it depreciates rapidly and equity markets go into the tank. . . . . . . . These are the best reasons for you to own a gold insurance policy. Gold is disconnected from the debt-based economy. Needless to say, those drachma or peso holders holders who essentially had their savings destroyed by the government sponsored currency policies would have done well to put at least 10% of their assets into gold. Stored safely nearby, it is the best defense against a collapsing currency, hyperinflation, deflation and financial systemic collapse -- the gamut of financial ills visited upon a population by over-reaching, incompetent government (which many of us have come to recognize as a sad fact of life). . . . . . . . . . Along these lines, the Japanese financial press reports "sales of gold ingots have soared in recent months, particularly since the beginning of December, as individuals try to diversify their investments ahead of the government's halt on full guarantees for deposits at bankrupt financial institutions in April 2002. Gold ingot sales in December have tripled on the year at Tanaka Kikinzoku KK, the largest domestic dealer of the precious metal, while Mitsubishi Materials Corp. posted a 100% jump and Sumitomo Metal Mining Co. saw a 200% increase. (Thanks Uponroof at the Forum for posting this article.) . . . . . . . . . . .It now appears that the IMF/United States has decided it is all right to let Argentina fail and that any contagion can be contained. They may be underestimating the danger. Time magazine's Latin America Bureau chief, Peter Katel says, "What you hear from people in international financial community is that the problems are so deep that simply throwing money at Argentina would ultimately only extend the crisis and delay an inevitable collapse. The immediate danger, of course, is that Argentina defaults on its debt and creates a crisis in the international financial system. That would certainly hurt investor confidence in emerging markets, particularly during a global slowdown or recession. But the other view is that this crisis has been so long in the making that it constitutes a special case with characteristics that don't apply to other cases. I think the jury is still out on this one. It's simply too early to tell.". . . . . . It looks like we're going to find out since Argentina has officially defaulted on its $132 billion external debt -- the largest such default in financial history. . . . . . . . . . . One of the more popular gifts in Argentina this past #Christmas was a board game called "Eternal Debt" -- Deuda Eterna in the photograph right. The subtitle "Do You Dare to Defeat the IMF?" suggests an attitude of which few in the Northern hemisphere are aware. . . . . . . . . . . . . . . If you are looking for some insight as to why Rodriguez Saa disappeared from the Buenos Aires political scene nearly as fast he entered it -- four days was I believe the length of interment -- the following three snippets (as a group) may provide an answer. . . . . . . . . ."It [the new Argentine government now displaced] is the abandonment of the technocrat approach and the rejection of the Washington consensus," said BCP Securities' analyst, Peter Molano, at the time of the Saa proposal. "There are no PhDs from Harvard or Chicago in the Cabinet. All of the IMF/World Bank alumni are gone,'' said Molano. "They were replaced by Peronist Party loyalists."

Those of you with access to the Commentary and Review page might find it more enjoyable to read the report at the page itself replete with photos and the proper emphasis, etc. This looks like alot of text as it is. . . . . ..If you can wade through it though, it's worth the trouble as it sets the stage for what's now going on in the gold market. ..Gold by the way is up over $4 at the moment . . . .MK

Nice to see that you have come out to PLAY today !
JUMP SPOT, JUMP !!!
<;-)

http://www.bankofengland.co.uk/Links/setframe.html<;-)

Should be "Interesting" !
<;-)

(I posted this piece on this site at about 01:30 this morning but for some reason it disappeared a few hours later. Have I violated some site guideline or was there a computer glitch?? I would NEVER intentionally violate a guideline just bcause that's just the kind of guy I am.)

..................

A quote from Doug Casey's book, Crisis Investing for the rest of the 90's .... page 213

"..... it was similar to the penny SILVER STOCKS during the '60s. When industrials of every description were going through the roof, the speculative fever, and lots of supermoney created by the boom, flowed into Spokane and sent the average piece of moose pasture on that exchange upward MORE THAN 100 TIMES. Spokane silver stocks exploded not because silver itself DOUBLED, but because stocks as a whole were in an historic bull market. The mountain of funny money created by the '60s market boom flowed over into these silver stocks as objects of speculative interest. ....."

......................................

Some time ago, I addressed this issue on this forum but did not have the direct quote handy. Now you have the actual tidbit of silver history.

Prior to the Famous Internet Stock Boom, I believe that silver mining stocks held the distinction of being the world's single most volatile class of North American equities. Even more volatile than gold mining stocks.....

Now, on with the show ........

Brilliant work Michael! A real pleasure to digest.
Thank You

http://wbln0018.worldbank.org/NEWS/DEVNEWS.NSF/46773469c477da9285256716000f7221/d1202fa170ff887d85256b3c004deb0e?OpenDocumentContinuing lessons (and the threat of knockon international effects) from Argentina's current experience...

Excerpts from the World Bank's news briefs:

----------Argentina is expected to announce new regulations for currency operations today, including easing the limits on withdrawals from bank accounts, following the scrapping of the peso-dollar parity on Sunday, reports AFP. Currency markets were supposed to be reopened today, but the government yesterday announced they would remain closed while the new regulations were worked out.

The government is expected to raise the limit on bank withdrawals from 1,000 to 1,500 pesos, while keeping the 250-peso ceiling on savings accounts withdrawals until March, an economy ministry spokesman said.

The news comes as the Financial Times (p.6) reports that Sunday's devaluation and the braking of the peso's dollar peg, together with the government's default on its bonds, has hit the country's banks hard. According to many analysts, the country's banking system will shortly be bankrupt itself.

Even a relatively benign estimate of the costs the banks face would leave them unable to function. Merrill Lynch estimates the losses at $10 billion to $12 billion, wiping out most of the $17 billion of capital the banks have. "It is at a stage where the financial system cannot operate," an analyst is quoted as saying. "They need an international bailout."

....The Washington Post (p.E1) reports that Argentina's attempt to minimize the pain citizens will bear in the wake of its recent currency devaluation is arousing concern among economic officials and analysts outside the country, who consider the effort unrealistic. The result, some warn, could propel the Duhalde government into a confrontation with the US Bush administration and the IMF, from which Buenos Aires hopes to obtain aid to revive its stricken economy.

Among the main worries is the prospect the government is risking a total collapse of the country's banking system by trying to protect both borrowers and depositors against losses arising from the drop in the value of the peso.

.....Le Figaro (France, p.XI) notes that although countries that fail to honor their debts cannot in principle continue to receive aid from the international financial institutions, IMF Managing Director Horst K�hler has said he was "ready to work with the new Argentine government," ....In spite of the legal and practical obstacles [to further IMF lending to Argentina], the story notes, the Fund could intervene in the name of its big shareholders. In an unprecedented move, K�hler on Monday attended the meeting of G10 central bankers.------------

What more can I add? In situations like this the pain and cost of the bailout are spread all around, both foreign and domestic, savers and bankers. If Earth had Martian trading partners, you can be sure we'd somehow get them to pony up their "fair share", too. Such is the reality we face, like it or not, when such a widespread system of our human infrastructure goes down.

Through taxes and exchange rate adjustments and freemarket fallout effects on international trade, you can't isolate yourself from shouldering some element of the economic pain and loss. The best you can do is limit your exposure by vesting your savings in tangible assets that are outside of the stricken and vulnerable financial system(s).

While many hard assets are available to choose from, gold functions best as a convenient, universally accepted, liquid substitute for bank money to carry your wealth safely through time and space (geography).

R.

http://www.agora-inc.com/reports/RCKN/DarwinAwards/Financial Darwin Awards: This was a fun read from Bill Bonner's site last year -- I hope he does it again.

What's the #1 reaction to a Spike? My pick: "Wish I'd bought more."

(I'll also tell you my first thought when I find USAGold's site down, like this morning: "They're jamming us on Spike Day! First target in wartime: Communications.")

Now, to read the goodies below...

http://wbln0018.worldbank.org/NEWS/DEVNEWS.NSF/46773469c477da9285256716000f7221/d1202fa170ff887d85256b3c004deb0e?OpenDocument#Story3(World Bank) -- Solid growth in developing countries will help the global economy expand in 2002 despite a worldwide slump aggravated by the September 11 terror attacks, AFP reports a senior official from the IMF said in Tokyo today. "Our projections for world growth of 2.4 percentage points is in fact higher than our projection for growth in all the major industrial countries," said Charles Adams, assistant director of the Fund's regional office for Asia and the Pacific. "Essentially the world growth number is being kept up by a somewhat more rapid growth in the developing rather than the advanced parts of the world."

...While GDP in the US -- the world's largest economy -- is projected to slow to 0.7 percent in 2002 from 1.0 percent last year, growth in developing countries was seen up 0.4 percent to 4.4 percent.
---end---

Need a key to unlock your thoughts? Consider how a U.S. dollar "magically" enjoys a greater purchasing power in many of these developing economies that it does in the United States. (Meaning, you can buy more kilos of rice with a dollar in an Indian market than you can in a U.S. grocery store.) Like the dollar, gold also enjoys this imparity of purchasing power in the developing world. Now, in our advancing world, consider the "arbitrage opportunities" available through trade -- not for a nominal gain in currency units, but for meaningful gains in the real wealth of real things. I'll leave it to your own sharp mind to form the appropriate forecast for gold and its in-hand value.

R.

Last night replaced our server, and this morning a few additional tweaks were needed, resulting in the downtime observed. If this changeover was the cause of the lost late-night post that ski has indicated, I offer my sincere apologies.

On the upside, we should have better performance with less downtime from our new server. I'm sure that's something we will all appreciate in the days ahead.

R.

I remember reading an article yesterday, or the day before about gold hitting $282. Does anyone know what I'm talking about? Could you help me find that article again? I'd like to keep tabs on that guy, cause if he's wrong, I know he's one less person I have to pay attention to.

There was a rather strong statement saying something like "if gold hits the $282 level, than shortly thereafter it will toy with the $300 level." Im not one for specific predictions.

Let's not forget that there are still two public auctions to fondle with the POG.

Good to see you in the identity I remember from days of yore.

Argentina: "...(the crisis) has hit the country's banks hard. According to many analysts, the country's banking system will shortly be bankrupt itself....risking a total collapse of the country's banking system by trying to protect both borrowers and depositors against losses."

Gee, do you think they had --- (may we even say it in public? Boo!) Fractional Reserve Banking --- in Argentina?

1/9/02 13:05 Dow Jones News -TD Newcrest Ups target of Goldcorp from 20 to 26....also upgrades to Buy from Hold

-----"Gee, do you think they had --- (may we even say it in public? Boo!) Fractional Reserve Banking --- in Argentina?"----

:-)

Bless you, good sir, for making that important yet understated point.

Such a system design is flawed with convertibility, and shall take its inevitable toll on similar systems. Hong Kong is advised to use periods of market calm to smoothly transition out of their own peg as a devised proaction rather than as crisis-reaction as seen in Argentina. Bullion banks also come to mind, but their fate is unique -- a banking system built upon "gold contracts" becomes meaningless when all pretence of convertiblity is necessarily suspended. The day draws nearer.

R.

http://cbs.marketwatch.com/news/story.asp?guid=%7B3240BD45%2D47C1%2D4C42%2DAC5B%2D4C4C355942B7%7D&siteid=mktw Sniffit:

Edelson at The Safe Money Report says yes.

"Gold's not there yet, but it's getting closer," he said Friday. The price of an ounce trades at about $279 in New York and London. "First signal, look for a close above $282. If gold can do that, then a test of $300 would be sure to follow. And after that, any close above $306, and it's off to the races."


I'd like to see what he's saying now. When does test of 300 take place?

the epoch of american luxury (the "green span"), paid for in fiat (at the exspense of others), is coming to a close!

good night green-back you time is up

we are waking up to a "golden" sunrise

Let's play three guesses. The reason that the top three US economic officials are in Japan is...

(i) They like the latest yellow carp sushi rolls

(ii) They are begging the Japanese NOT to sell their enormous hoard of US T-Bills and bonds as THAT would immediately drive interest rates UP [by definition] and hence topple JPMCs interest rate derivatives book, thus causing the loss of at least $400,000,000,000 in JPMC capital [the entire capital base of the bank].

(iii) They are there to break the news of a change in the strong dollar policy. See...they NEED some advance warning so they too can buy gold BEFORE the pending deval.

(iii) Guess (iii) + guess (iiii).

The Japanese are fuming mad over Goldman Sachs back stab shorting of their banks. Kicking them when they are down. This sort of thing just isn't DONE! The meeting with US officials will NOT be pleasant for O'Neill and Company. Absent a triumphant post meeting press conference, expect the Japanese to solidify relationships with the Chinese.

Note again the thunderous silence from the Master of the Universe. Going to a garden party in California.
************
Spot Jumped because the Normandy deal has already been won by the good guys and they have begun covering Normandy's massive hedges.

Chapman predicted $300 gold by the end of January.

So many days left...so little gold to sell it down.

TheCoinGuy ... was it you very early this morning that asked me a question? If it was important, ask again... Was likely lost with the glitch this AM.

Was wondering what happened to my post this morning? Anyway, glitch or no, here it is again...I was looking at the Kitco silver 24 hour chart, and it looked as though the market was going up and staying flat in the London market and then coming down for the US market for three days in a row. The market looked as though it was following this exact track. What I was asking is this the differential in rates between the LBMA and the Comex, or is it just going up and down. At any rate, the 3 days looked eerily close to each other in their chart patterns, thought this to be strange.

Broke down and bought some silver today!! They tell me each box will weigh 54 pounds? Home the mailman has a strong back...I'll also admit, I haven't paid much attention to silver until now, I'm strictly a gold advocate, but even this hard headed individual sees a shortage over the horizon?!

You know it's probably going south now...

The CoinGuy

Sorry about the typos, kind of in a hurry. Looks like those college tuition fees were a waste...

Gotta Run,

The CoinGuy

http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Bond%20Market%20World&tp=ad_uknews&T=news_storypage99.ht&ad=world_bonds&s=APDy10BVlUGltY28n--------New York, Jan. 9 (Bloomberg) -- The U.S. dollar may weaken against major currencies, fueling faster inflation and driving 10- and 30-year debt yields higher, according to Bill Gross, managing director of Pacific Investment Management Co.
+
Gross, who manages the $48.2 billion Pimco Total Return Fund, the biggest bond mutual fund, said he expects a weaker dollar to drive down stocks too. His comments were published on the company's Web site.
+
``The dollar may not explode but it has got a leak with an almost indistinguishable hiss that should grow louder as 2002 winds on,'' Gross wrote. ``Best to keep one ear close to the dollar bubble.''--------

HA! You do that and you're likely to have your head blown clean off.

Gross is telling the mainstream press nothing that we haven't already provided advanced warning of right here at USAGOLD. Wouldn't you agree that his comments, including the following, look familiar?

----``Repatriation, whether it's simply to avoid a potentially weak dollar versus the Euro or, perhaps, to shore up a bankrupt economy as in Japan, is an increasing possibility and could most easily affect 10- to 30-year maturities,'' Gross wrote.--------

Learn from Argentina. Under crisis conditions, with bank holidays and rule changes there is no safe haven to be found in paper contracts or accounts, regardless of the currency denomination. You need hard assets in hand. Gold is reliable wealth for the ages.

R.

UP:
DROOY (a lot)
Starfield
Corner Bay
High River Gold
Nova Gold
PAAS
Coeur d'Alene


DOWN:
CBJ
Golden Goliath
Golden Phoenix
Golden Star (a lot)

OTHER MISTAKES:
Sold HGMCY at breakeven

Lessons:
Never chase a (penny) stock upward.
Just because Jipangu bought it doesn't mean it's good (or bad).
Just because a goldbug MBA with a website recommends it, doesn't mean it's good.

http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20020108a4.htmbut when they start attaching it to countries.....NOT GOOD!
Here's a subtle headline out of Japan:
********


'JAPAN SEEN ON THE ROAD TO DEFAULT'

WASHINGTON (Kyodo) Japan is on the road to default because it is expected to incur an unsustainable debt burden of $1 trillion in protecting depositors from the collapsing banking system, according to a report released by a Washington-based think tank.

"The negative net worth of the Japanese banking system is somewhere above the yen equivalent of $1 trillion. When the banking system collapses . . . the Bank of Japan will need to inject at least $1 trillion into the banks to protect depositors from losses," says the latest issue of the Economic Outlook report by the American Enterprise Institute for Public Policy Research.

The report says the inability of the Japanese government and the BOJ to remove deflationary pressure will inevitably lead to the failure of one or several large banks, and ultimately to the failure of the entire banking system.

As the banking system collapses, the Japanese government will have to stave off additional losses of households and business depositors in the banks through recapitalization, it says.

The report says the Japanese government will be forced to issue $1 trillion worth of securities that the BOJ will buy and inject into the banking system.

"Such systems will probably result in nationalization of Japan's banking system, since the government will have underwritten its solvency," it says.

As a result of the issuance of a huge amount of government securities, Japan's public debt will jump immediately by about 15 percent, and the surge in liquidity will cause Japan's currency and bonds to collapse, the report says.

"Japan's deflation and debt crisis now constitute systemic risk to the global economy," it says.

The report also says that the Japanese government, foreseeing a run on banks, may postpone the March 31 termination of its full refund guarantee for deposits at failed banks. But this will only delay the outright collapse of the banking system.

Japan needs "a massive direct injection of liquidity into the economy -- not into the moribund banking system -- through the direct purchase of foreign bonds, corporate bonds and land by the BOJ," the report says.

The Japan Times: Jan. 8, 2002
********

OK sector, looks like you're back to full health these days. Thanks for your thoughts.

If that's the case (a new stealth weak dollar policy), and I most certainly hope so, there is but one way to know for sure (until it is announced or leaked)....

That is of course....the new smile on O'Neill's face and the twinkle in his eye.

If he is grinning for the cameras these days, with a smile which cannot be removed without hydralic equipment, I think it is safe to assume you are correct.

If on the other hand he is still miserable, picking fights with the Kudlows and Cramers of the world over careless remarks, then perhaps he still walks as a prisoner to the strong dollar.

This guy is bleeding manufacturer's blood, at the equity markets expense and it's bringing out his piss and vinegar at every turn. He is not a politician, nor a poker player. His heart is on his sleeve. So, it shouldn't be too hard to see a difference, if there is one.

The O'Neill watch is now officially on. I will be watching for confirmation of your theory. Thanks.

http://navigation.helper.realnames.com/framer/1000/default.asp?realname=American+Enterprise+Institute+for+Public+Policy+Research&cc=US&lc=en%2DUS&frameid=1565≺oviderid=113&url=http%3A%2F%2Fwww%2Eaei%2EorgUponroof - here's the complete report - if it doesn't link directly, it's in Publications and Commentaries.
Cheers,
Waverider

ON MY COMMAND....RELEASE HELL!!!



"STRENGTH AND HONOR"

Saw you mention that you just bought some silver and each box weighs 54 pounds. Each box? 54 pounds! Lordy, guy, how much did you buy? I like your style. Are these bars you bought? I'm green with envy.
Buying may be the easy decision. How high before you think of selling some? There's something difficult about parting with real metal. I won't cry when I offset some paper. Hopefully, I'll never face the necessity of selling coins.
Silver rally? "We've only just begun."
Rich

What makes you feel Japan will cozy up to China?

Interesting day for the Nem-FN/Anglo battle. I am watching the share prices of those involved. Franco had a wicked day and interestingly AU and Nem are separated by one cent on the NYSE (19.40 & 19.41) Nem had the better day today up 71 cents vs. Anglo's 68 cents.

http://www.pimco.com/bonds_commentary_index.htmBill Gross of PIMCO probably runs more money than anybody else in the investment management business. Use the link above to read the whole story of what this very widely respected bond manager is presently saying about the plight of the dollar and the world economy.

Quotes:

"...it seems likely to me that the dollar is in the process of peaking and that it can no longer be counted on to positively influence inflation downward, nor to lure foreign investors to our shores in search of a can't miss currency and securities market double play.

"Whatever takes place, there is no doubt in my mind that despite the beginning of a mild recovery in the U.S. economy in early 2002, that it's a dangerous world out there, both militarily and financially. Lots of imbalances exist, from consumer and business balance sheets, to imploding economies such as those of Argentina and Japan, to overvalued currencies such as the U.S. dollar. There are likely more bubbles to go pop�the secret is in knowing when, and which ones have enough air to stay afloat.

THE DOLLAR MAY NOT EXPLODE BUT IT HAS GOT A LEAK WITH AN

ALMOST INDISTINGUISHABLE HISS THAT SHOULD GROW LOUDER AS

2002 WINDS ON." (Stranger's emphasis)

William H. Gross
Managing Director

http://finance.news.com.au/common/story_page/0,4057,3566202%255E462,00.htmlCanuck - here's the latest from Down Under...
Snippit:
From AAP
10jan02
"SHARES in takeover target Normandy Mining Ltd shot two per cent higher in opening trade after its rival suitors soared higher in New York trade overnight. By 1022 AEDT 19.7 million Normandy shares had changed hands, making it the most traded stock by volume in the market."

http://www.kitco.com/market/LFrate.html
Silver lease rates surge again - 1 month 28%, two month 20%, three month 18%, etc. Extreme backwardation amid very tight supply concerns. Also silver up another 8 cents tonight and Gold hitchin a ride up another 70 cents. Newmont-Franco takeover of Normandy looks strong as AngloGold CEO Booby squirms looking for love in all the wrong places. And all that after giving up marginal Free State mines to Harmony that are now suddenly very profitable. Mega-short Hedge Funds Barrick and Newcrest end the year in the red and below year ago price as non-hedgers race away with improved performance and increasing profits.

There is a change in the air and the economic Recession is draining away American wealth. A strong move into Silver and Gold is underway. I heard on NPR tonight about millions of Americans who are approaching retirement with grand plans who are now forgetting about early retirement as they see their tech heavy and New Economy portfolios vaporize. Fools they were of course but too late to cry over spilt milk. Gold, Silver, and defensive - conservative investments are the way of the future - at least until this current deepening Recession ends. Many people will be forced into retiremengt as the "Bone Pile" grows higher sapping the cash needed to generate corporate earnings that are needed to keep their employees.... etc. A vicious cycle that propels this Recession into a depression into a panic into a .... well you get the picture. This time it could very well rival or even surpass 1929. Already we see over $5 Trillion vaporize with the dot.gone mania implosion. That's right! $5 TILLION - GONE! GONE TO MONEY HEAVEN! And we have only just started. In one very depressing word - "GRIM"

- Black Blade

Doesn't it seem that the bodings of default in Japan have come upon the news mighty fast, given the blase (or numb?) receptions to Argentina and Enron (and PGE, and X, Y, and Z)? (thanks uponroof)

I know it is the biggest (and final) domino standing next to King Dollar, but I had thought there were likely a few more buffering between Japan and Argentina.

The bullish Potemkin consensus has such a thin facade? In times of such confusion, even the most bearish are left with heads spinning when the idols they've lassooed finally crash to earth.

(Buena Fe -- I like that "Green-span". Or maybe it's more like the "Green Mile"? (movie about Death Row in Mississippi))

Maybe they're just "fresh out of miracles" this week?

I must admit that I am having trouble with this 'arbitrage' (can't even spell the word) thing with Anglo and Newmont.

I notice share price is flat between the 2 (19.40/19.41) as I mentioned and Newmont edged out Anglo by 3 three higher today.

Franco had a stellar day today (+1.15, 5.04%) which I believe is a new 52 week high and must bode well in terms of confidence in the Newmont/Normandy merger.

Thoughts?

Hey dude, can you elaborate on what factors point "as strong" regarding the Newmont/Normandy merger. A few days ago Booby was seen as gaining a little momemtum but I feel today was a 'bad hair day' for the guy.

I read an article the other day where the author (correctly I feel) states that retirement fund redemptions will begin in earnest starting around 2010, the 'retirement of the baby-boomers'. Oro spoke often of demographics and the huge role it will play in upcoming years. I just thought of something, isn't Japan some 5-10 years older than us, are they beginning to feel the pinch of 'old age'?

Interesting times.

www.kitco.comrepost that was resurrected today:

Date: Mon Dec 24 2001 17:29
ANOTHER ( THOUGHTS! ) ID#216326:
Copyright � 2001 ANOTHER/Kitco Inc. All rights reserved
Friends,
Our journey has been long and many know of my "THOUGHTS". All should know where we are going, yes? Many have followed this path and we have watched together as the world changes. My Thoughts of four years has finally arrived. We wait no longer for it is now time. On January 11th, 2002 gold will be above $300. Why you ask this date? Look and you will see! Noone can stop what must be. This is the beginning of the end and gold will not trade as before.

A genius on another forum pointed out that the silver lease rates were '2-digit' right thru to one-year. He surmissed that MAYBE the short squeeze is taking on more of a long-term look!!

I was driving down the road today and thought of 4 dollar/5 dollar silver, I felt insulted.

Just a thought.

http://sg.biz.yahoo.com/020109/16/29xtm.html
Snippit:

MELBOURNE, Jan 9 Asia Pulse - The $A230 million ($US120.18 million) takeover offer for Hill 50 Gold NL (ASX:HFY) by South Africa's Harmony Gold Mining has won the support of the Australian miner's biggest shareholder Robert Pittorino.

Black Blade: That's another 1.5 million oz. in forward sales that are to be taken off the table by Non-Hedger Harmony. Gold short hedge funds Barrick and AngloGold are dinosaurs that find their circle of friends getting smaller each day. An explosion in POG and the extinction will be complete.

Did some balance transfers to new credit cards with 0% interest thru 8&9/02. Ordered 10 100oz. Ag bars. The train has left the station and on board! The investment of a lifetime.

If, as has been supposed, the heavily hedged miners are desparately attempting to acquire unhedged companies to get their hands on physical to offset what they've already sold, And if they are not successful, then what?
Wouldn't they be forced to try another approach to somehow offset the sold forward gold? If all else fails, they'll be forced to simply buy back to offset (even if at a net loss) or worse (dissolve, bankruptcy or ?)
Was today's rise in POG an attempt to catch up with sister silver or the opening round of buy-to-offset the hedge by those lossing the bidding war to acquire the assets of unhedged companies?
It will be interesting to see how much oversubscibed next week's Bank of England gold give-away is.
If (when) serious trouble starts in unwinding the gold carry trade of the last many years, will we see much higher lease rates in gold as we have with silver?
So many questions, so little knowledge!
Rich

Canuck,
My understanding of arbitrage is that it's the simultaneous purchase of a security on one stock exchange and the sale of the same on another exchange. The purpose is for the arbitrageur to make a profit in the spread - speculative trading it sounds like to me, although I would imagine the arbitrageur could influence the price. Maybe someone with a more in-depth understanding of the markets can comment.

Yes, I've been keeping a close eye on Franco Nevada, but just about all gold shares made a nice jump today. FN has a news release today - "Aquisitions of Normandy and FN on Track" - it's in PDF so I can't post it - when you get your quote on the TSE it's in the News link.
Cheers,
Waverider

And if this other poster is right in that higher silver rates may be with us for a while then all the past leases that are coming due in the months ahead will have to be somehow offset and not renewed. More fuel for the demand bonfire. Less supply.
Silver's move now is partly rumor driven but with each passing day of sustained high lease rates, the chances are greater that the underlying cause isn't Buffet, isn't (as CNBC talking head said today- time delay necessary to count the recovered silver from under the WTC) a temporary delivery problem and isn't solely the unwinding of hedges.
The real cause may that there is no more available silver at current low prices. This may be the cause which started the unwinding which then caused the higher rates which then started the rumors. I'm, of course, speculating much of this based on my knowledge of almost gone supply and the supposition that what silver remains is only for sale at higher prices. Think of it this way, the bartender has only one cold beer left on a 90+ degree day with a bar full of just paid-in-cash construction workers. How much is that cold one worth?
Rich

While you were driving and thinking about $4/$5 per ounce silver, did you think that in a registered, weighed, readily acceptable and market available form, there is more gold stored in the world now than silver? I agree, the price is an insult.
Rich

Poor ol' Booby thought he come along with everything in his favor. The POG was stuck in a range around $270/oz, he unloaded some marginal mines in SA to a Non-Hedger, he even wanted to look about to find some quick easy ounces to dump on the market for some cash and to feed AngloGold's humongous massive overexposed position in forward Gold sales.

Then along comes this upstart company Newmont along with some Canadian Natural Resource Royalty company named Franco-Nevada that threatened everything by announcing plans to merge with Mega-hedger Normandy. They also threatened to unwind Normandy's humongous hedge book. Well, this would not do! If the market learned that nearly 10 million oz. of forward sales would not be forth coming it would collapse the whole slight of hand that is called "forward sales" and throw AngloGold and Barrick into a very precarious situation - possibly create a cascade of events leading to a higher POG and even bankruptcy for the Mega-Hedgers. Can you imagine if Barrick, AngloGold and Placer Dome were suddenly deep under water with their massive hedge books all gone "tits up?"

This pursuit for Normandy became a bidding war with very serious consequences. The very survival of AngloGold (and possibly Barrick) could be at stake. Many thought that Barrick would even come to AngloGold's aid with possibly even a ABX-AU merger along the way. However, ABX is deep in the red (again) and cannot afford to bid for anyone now, let alone give Booby a helping hand. Finally Newmont offered a higher bid that AngloGold could not match. So far it looks like "Game Over." The problem is, AU looks to be "tapped out." They may go after Newcrest next, however, Newcrest is not in any better shape than AngloGold and are even Mega-Hedgers themselves. Consider that other Gold miners are on the prowl as well. Consider Non-Hedger Gold Fields. Gold Fields is reported to be on the prowl for non SA Gold miners. They publicly state that they will unwind any and all forward sales of any company that they acquire. Harmony has made some acquisitions, this time with cash and self-financing all the while telling the banksters to "kiss our ass!" Now there are even rumors that both Gold Fields and Harmony could team up to pursue some acquisitions and even finance some Black Empowerment corporations for any possible SA acquisitions.

As I said, there appears to be "a change in the air." There is a growing attitude and optimism surrounding a coming Gold Bull market and Gold hedges simply do not fit in the overall plan. The only ones who are negative about Gold's future are the major Hedgers like Barrick, AngloGold and Placer Dome. But they are in too deep and can't get out - they're trapped. Even middle tier hedgers like Durban have announced that they are unwinding their hedge books and DROOY plans to be unhedged by this June. Yep - there's "a change in the air."

- Black Blade

The Japanese have grown NOT to trust the US. Can you blame them with the likes of Rubin/Summers track record? The Japanese will cozy up to the Chinese because their economy is rapidly growing and really needs infrastructure building skill sets of which the Japanese have an abundance. Moreover they want to get as far away from the American economic Kryptonite as they can.

******

Pimco's Bill Gross seems to think there MIGHT be a big policy change coming vis a vis the "strong dollar". Geeze... who ELSE said such a thing!

There is NOTHING in macroeconomics that Bill Gross doesn't know well before mere mortals. Repos that never get repoed. The Fannie Mae $9 Billion float "loan" to bail out LTCM AND the whole bond market.

When Mr. Bill talks get long in whatever he says to get long in. Right now that would be g-o-l-d.

IF there is a photo op for the Master during his coffee table, garden party "speech" in California. Look closely at the Master's visage. He may need a vitamin B-12 shot.

****
Gotta go. Its my 37th wedding anniversary...and the desert is waiting.

The quick and dirty version of explaining arbs:

Arbitrage - Attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. The ideal version is riskless arbitrage (aka determinstic arbitrage) - A risk-free transaction consisting of purchasing an asset at one price and simultaneously selling that same asset at a higher price, generating a profit on the difference.

Technically, arbitrage consists of purchasing a commodity or security in one market for immediate sale in another market (deterministic arbitrage). OK, so now the more complex versions.

Popular usage has expanded the meaning of the term to include any activity which attempts to buy a relatively underpriced item and sell a similar, relatively overpriced item, expecting to profit when the prices resume a more appropriate theoretical or historical relationship (statistical arbitrage).

If your cup of tea is in trading options, convertible securities, and futures, arbitrage techniques can be applied whenever a strategy involves buying and selling packages of related instruments. Risk arbitrage applies the principles of risk offset to mergers and other major corporate developments. The risk offsetting position(s) do not insulate the investor from certain event risks (such as termination of a merger agreement or the risk of delay in the completion of a transaction) so the arbitrage is incomplete.

Of course there are the more exotic arbitrage transactions. Tax arbitrage transactions are undertaken to share the benefit of differential tax rates or circumstances of two or more parties to a transaction.

Regulatory arbitrage transactions are designed to provide indirect access to a market where one party is denied direct access by law or regulation.

Swap-driven arbitrage transactions are motivated by the comparative advantages which swap counterparties enjoy in different debt and currency markets. One counterparty may borrow relatively cheaper in the intermediate or long-term United States dollar market while the other may have a comparative advantage in floating rate sterling. A cross-currency swap can improve both of their positions.

Whew! Confused yet? Cheers!

- Black Blade

http://www.usagold.com/GoldTrail/archives/ANOTHER2.htmlAlways good to see you post -- and keep your handle going through my mind for the rest of the evening.

A-OK. I believe we have LiftOff.

I'm reading a bit more in "Another" window each time my browser signs me out and I have to wait to get back online.

"All should make ready and be holding metal only, as the turn will move $100+ the first day and $200 the second day as comex is closed! It will trade no more from the 3rd day on! The gold market of your youth will be no more! For those who were smart from experience not to buy at $400, will look at $600 as "the deal of a lifetime"."



Where is Oro?

Thank you - was that all in one breath? Answers found serve to raise a whole new set of questions. Confused...yes...but I like to believe I'm confused on a higher level and about more important things!
Cheers,
Waverider

http://www.grantsinvestor.com/fleck/fleck.html640 advises me that Fleck is silver watching in ernest now. Let's see, I wonder how many folks read his collum each night? Wonder how many read Richard Russell? How many other mainstream advisors are talking up silver? How long before 'the movement' begins as a result of this growing awareness?
********

"...CHECK OUT THOSE GOLDEN CALVES. Away from stocks, fixed income was up a tick or two, the euro was lower, and the yen was marginally higher. Today, the metals were a font of excitement, with gold enjoying a nice pop of $4.50, to break out over what has been deemed to be "resistance." Silver was on its horse once again as well, up a couple percent.

Hi-Yo, S - L - - R! Talking about silver for a moment, there is a good deal of consternation about front-month lease rates. At the moment, silver is very "tight," and the problem has not been alleviated thus far. The bull (of which I have been a longstanding one) case for silver is that we have been consuming more than we have been producing for about 12 years now, and silver is below the cost of production for most primary silver mines. Most silver, however, is a result of co-production of either lead and zinc, copper, or gold, which makes it sort of price-inelastic from a supply standpoint, since people who make silver as a by-product don't really care about the price of it, and for quite some time (a decade or so), it has been able to trade below the cost of what a primary silver producer might be able to make. But none of that is news, nor is it news that if silver were to go up in price a whole bunch, it wouldn't curtail much usage, because the products that silver goes into constitute such a small part of the total that, from a demand viewpoint, the price is also rather inelastic. The Butcher, The Baker, The Roman Candlestick Maker? What's happening at the moment is that the Comex warehouse stocks continue to flow to London, and possibly the London warehouse stocks have shrunk to the point where the ongoing deficit is beginning to matter. But therein lies the rub -- nobody really knows what's in the London warehouses because the contents are not published the same way the Comex warehouse stocks are published. Whether this is a short-term perturbation or the beginning of something major is not knowable. But what is knowable is that recently, this has happened more often than in the past, and it is potentially a sign that we are getting closer and closer to the day when silver may have a rather gigantic move. If we were ever to see any investment dollars flow into the tiny silver market, it would be a Roman candle akin to an Internet stock in days of yore. In any case, it will be most instructive to see where this rally in silver fails and to see what happens on that decline. Will it turn out to be "business as usual," or will we see more signs that these many years of deficits are finally starting to matter? I will keep readers apprised of the details as I ferret them out.
********

Thanks waverider for the link.
********

Nic Hopkins at the Times (London) has a story out about an AU/ABX merger. Now there's an ugly thought.

btw, saw a reuters release today about the TSE 300 getting bumped up from their gold sector as investors move in. This is where ABX (and AU) gets support. From faceless, nameless, out of touch investors who trust their fund managers judgement. These same 'managers' who are working from years old 'knowledge', that comes from equity market 'experts' who wouldn't know a gold mine from a land mine! Think about it....how many Wall Street 'experts', the same guys who get all the primetime on CNBC and the like, really know the gold industry? ZIP/NADA/NONE! Without institutional jackass buying, these two dogs would be TOAST. Kinda like Abby at GS, and the rest of the 'inside' gang talkin up Enron.

Hello Rich,

I purchased a few of the government green label boxes. There is 500 in each box. I asked my buddy about shipping, and he said, "Well there about 54 pounds". I thought thats awfully heavy, but I have an Englehard 100 ozer I use as a paperweight on the desk, so I picked it up, multiplied it by 5 in my mind, and thought he could be about right.

That old bar is deceiving, I love to play a joke on people when I hand it to them for inspection. I act like its light, and then slap it in their palm...It's only been dropped once, but it sure gets their atttention.

Yes, besides my coin collection(I have been collecting for 26 years), this is the first silver "bullion" purchase I have made for investment purposes. For a person like myself who believes the fallout from the financial hurricane hasn't quite hit the shores, there is a lack of investment vehicles. Silver just makes sense at this point. This is my first foray into this market, and determining on what happens going forward, it may be one of many.

I'm also looking to add to my euro and (Double Eagles)bullion positions. I wanted to let "The Stranger" know I appreciated the post from Bill Gross. I've always listened to the "bond man" because he has built up credibility over the years, something Joey Batts and Abby Blos of the world cannot muster. Everyone is right in a Bull market...except Tice of course, but I'm assuming his day is coming. Like that PSAFX too.


When will I sell? You ask..beats me,

The CoinGuy

Comex leaks againSilver is not only moving up, it's moving out,,, of Comex.
Today's change net change: 188,485 oz eligible going out(across the pond?).

Nice repost (Fleck), uponroof!
And Rich, we have had about a month of these high lease rates in silver, about the same duration of this situation when Buffett took delivery. (Although the rates spiked to twice what they are now.) If they stay up a week or so longer, we can probably start to think that this just MIGHT be IT! But so often have we been fooled before, yes?

I have to say that this one smells a little different and the REAL fundamentals are so much better than all the previous spike events. The press attention, both the favourable and the dishonourable are all to the plus.

But I think we are in the early stages of disruptions. It is too soon to call yet. Buffett would not be intimidation proof and he may be blowing up the gold market with his positions in silver. Would he know this? I think so.

It would make ME nervous!

Lovely discussions today all!

bed time.

G.

http://biz.yahoo.com/rb/020109/business_health_cigna_dc_3.html
Snippit:

NEW YORK (Reuters) - Cigna Corp. (NYSE:CI), the No. 3 health insurer, said on Wednesday it would eliminate 2,000 jobs and take a $65 million charge in the fourth quarter as it consolidates service operations in its employee health, life and disability benefits units.

Black Blade: Yep, don't forget the growing "Bone Pile." This economy is rapidly deteriorating and taking a lot of jobs with it. Get prepared as you would if you were to be unemployed for an extended period or if there were a large natural disaster. Get out of debt, get Gold and Silver portfolio insurance, get nonperishable foods (that you would normally use anyway) and basic necessities, have cash on hand for several months expenses, and get very picky on your investments. It could get very ugly out there.

http://www.thetimes.co.uk/article/0,,5-2002016609,00.htmlA fascinating article at this link. If this is for real, some pretty startlimg developments lie just ahead. Comments anyone?

http://biz.yahoo.com/rb/020109/business_telecoms_verizon_outlook_dc_2.html
Snippit:

SCOTTSDALE, Ariz. (Reuters) - Local telephone company Verizon Communications (NYSE:VZ) said on Wednesday it cut 7,000 union jobs, or 2.7 percent of its work force, and added fewer-than-expected wireless customers in the fourth quarter.

Black Blade: Yep, 7,000 more nonessential phone "Bones" off to the "Bone Pile."

http://biz.yahoo.com/apf/020109/cdi_corp_cuts_2.html
These guys are a staffing company and they can't keep their own people employed. Not a good sign for sure.

A gold stock that hedges doesen't make it the enemy.
They are all gold players .In the final anaylsis hedgers will become buyers and push prices up'so whats the problem?
The enemy is government and fiat currency.
When the public wants to panic into the gold market they will buy abx and nem and anything that looks cheap to them.
Prices will rise for all because it takes more buyers than sellers to push stocks up.This time the fund buyers will do it and they need large Cap stocks to get in.They must have liquidity and abx and nem now provide that.In fact if I had to bet ,as a long time stock student ,Id say abx would go further than nem ,and the reason is the markets have a way of doing the unexpected .They are not logical,they are PERVERSE and betting that way will make you money.
Surely you understand what a contrarian is or you woulden't be in the gold stocks ,would you?
That makes it logical as a contrarian for abx to go higher than nem ,now doesen't it?.

http://biz.yahoo.com/rf/020109/n09340496_1.html
Snippit:

CHICAGO, Jan 9 (Reuters) - Sears, Roebuck and Co. (NYSE:S), the No. 4 U.S. retailer, will stop selling carpeting, tile and linoleum as well as window treatments in its stores, resulting in the loss of 1,500 hourly jobs, or less than 1 percent of its stores' work force, a company spokeswoman said on Wednesday.

Black Blade: More nonessential "Bones" discarded on the growing "Bone Pile". This was inevitable now that the holidays are over it is time to slash and burn again.

http://finance.yahoo.com/q?s=ABX&d=c&k=c1&c=hgmcy,gold,gg&a=v&p=s&t=1y&l=on&z=m&q=l
No thanks I will continue taking profits with profitable Non-Hedgers that are exposed to the POG like GoldCorp, Gold Fields and Harmony. The performance of the Hedgers such as unprofitable Barrick has been at best - pathetic (see link). But I wish you the best. I think that you have a wonderful idea and I suggest that you go ahead and buy all the ABX shares that you can possibly afford. Ah heck, take out a second mortgage on your home and invest the proceeds in ABX shares. Let us know how you do on occasion. Lets compare notes in a year. It should be fun really. Cheers!

- Black Blade

http://biz.yahoo.com/apf/020109/wabash_jobs_1.html
Wabash National Is Cutting Another 480 Jobs at Its Lafayette, Ind., Plant

Snippit:

LAFAYETTE, Ind. (AP) -- Wabash National Corp. is cutting another 480 jobs at its Lafayette plant, blaming a continuing drop in demand for truck-trailers for the layoffs.

Black Blade: More to the "Bone Pile".

Hi Waverider, I'll take a stab at this, also... This is not meant to be the encyclopedic definition, but as I am only a lay person, I'll give my thoughts.

Arbitrage can be exactly as you highlight in your post. It is, more broadly, a taking advantage of any divergence between two like instruments, or an instrument and something against which you can peg its behavior. In other words, if I see something that is mis-priced, I would place bets on that instrument that gain as the instrument moves to its correct price (converges). The bets themselves are coordinated so as to cancel out the effect of the price movements themselves, but to profit on the spread (the amount of mis-pricing) correcting itself. In such an arrangement, there is little to be made when placing our bets at the 2-dollar window as these spreads are often real yawners. Where the munny comes in is by a) being "sure" that the bet is a winner, and b) betting the farm, and everyone else's. In this, you multiply this small spread substantially, and make what they refer to as "riskless profit" or "free money."

An attempt to arbitrage a perceived divergence can be, from a purely novice or amateur perspective, rife speculation, and akin to "swig and roll 'em" gambling. What has overwhelmed the markets today is the polar opposite, however. The mathematics applied are the most sophisticated, and the math's ability to even be calculated is unique to our computer age. In fact, the ability to simultaneously engage these trades, and take advantage of these miniscule and fleeting discrepancies, is also unique to our current technological levels.

That does not mean arbitrage opportunities did not exist before, or were not profitable. In fact, before the current technology was available, divergences may have existed for a long time, were often larger, and would often simply go undiscovered. Where today is different is that the ability to find these mis-pricings is tremendously enhanced. Also, the "sureness" of the bets because of the rigors of the math, draw people of substantial means to the gaming tables, who are willing to risk it all (or large parts of it anyway), and with what has proven eye-poppingly thin collateralization. These gambles (for all their hype as being market stabilizers, and the new economy way of pricing all instruments at their "correct" level), have done nothing but introduce massive systemic instability. If all goes well, it goes very well, indeed, but the "D" word ever looms portentously. I.e., "discontinuous," as in "discontinuous event." When something severe enough happens, that the models didn't account for, look out!

Let's look at a stick-figure illustration using equities:

Company A is selling at $100. It plans to buy out Company B, selling at $80, in a straight 1:1 exchange of shares. Since the end result is that the two issues will become identical, we know that A in relation to B is mis-priced (our divergence). We don't know, and neither will we care what the correct "price" of the shares should be. We only know, and care that the two prices will "converge."

In order to place coordinated bets that eliminate the price movement risk (our unknown), and capitalize on the "spread" between the two prices eventually going away (our "sure" thing), we do the following. (Now this is "stick-figure" so it is simpler than real life, but serves the purpose of illustration.)

Let's say we purchase 1000 shares of B, long, and sell 1000 shares of A short. Remember, our bet is that they will converge. I.e., we assume the buy-out WILL take place, and both issues will become identical, therefore the same price. Now they might converge right down the middle at $90.00; or they might end up kissin' at $40.00 or $120.00. We don't care, and our bets demonstrate this quite clearly: If they converge at $40.00, we are down $40,000 on our long bet ($80,000 cost basis in B), and in the money for $60,000 on our short sell (we borrowed (sold short) 1000 sh. A at $100 -- for $100,000 and covered at $40 -- for a $60,000 gain -- our net: $20,000). What we have done is capture the $20.00 spread.

If the shares converge at $120, then we are in the green for $40,000 on our long bet on B ($80 to $120), and out of the money for $20,000 on our short bet on A that has gone the wrong way. No matter however, as we have still captured the $20.00 spread for a net of $20,000. The same works if the price falls in between.

Our risk here is basically that something goes wrong with the buy-out, and our sure thing is no longer. Likewise, if we were betting on a price divergence that was based on a "peg" of some sort, like the Fed TELEGRAPHING its rate reduction policy, or one currency being tied to another (Asia in 97, Argentina in 02), you can structure bets to take advantage of these known quantities as well. But if the peg comes un-pegged, the sure bet is no longer so sure, and all hell breaks loose.

(In fact, the leverage amassed in all these trades has become so great, and the notional amount of these trades so inconceivable, that they are the real reasons why so much apparently screwy policy keeps coming from our decision makers. Soured industry, wiped out savings, and potential civil unrest are still "taking ought for the morrow" as far as they are concerned. If they don't keep these trades from unwinding unpropitiously, today, somehow, someway, all the above will happen anyhow. All stops are pulled now to keep the system from coming unglued. And we'll worry about people in the streets tomorrow... So in my humble opinion...)

Also in real life the spreads are much smaller, and the amounts having to be bet are much, much larger. And the betting money usually belongs to someone else. So we have borrowing costs, as well as taxes and commissions. This all trims our profit even more, tending us to make the bets even larger. We also have market exposure ("hey, who's that guy buying $2,000,000,000 of 5-Years!?"). So we would have to clandestinely place our bets in pieces (borrow from one broker, sell with another, e.g.), and stages, if possible, so as not to attract attention. Since most of these divergences only last a brief period of time, it is a task to try and buy enough to make it worth our while, without raising eyebrows. Since now so many more people have access to the same math, and the same input variables, many of these trades are almost cookie-cutter, thus crowding the bets and narrowing the spreads even more. What to do? Pile on even more leverage. It's a sure thing...right?

One additional factor about the practical implications of these trades is that they tend to overwhelm and determine the markets which they affect. XYZ may have very real investor pressure to increase in price. If however XYZ is part of some index that is being arbitraged, for instance, and the index is being shorted, then the overwhelming amount of downward pressure that these highly leveraged bets are applying to XYZ indirectly, due to the fact it is a component of the shorted index, will overwhelm the upward investor pressure.

This is essentially what has had gold longs in a knot for the past few years, and has kept the spot price down. View it as you may: either deliberate manipulation by the shorts; or arbitrageurs betting on this peg -- "knowing" the direction of official policy at the time was down; or some combination. The ability in today's financial world to procure enormous funds allows these enormous bets to be placed, and they can drive the market for a time.

I'll stop here, as I just saw Mr. Blade has put a very good reply about arbitrage on the board. Sir Blade, I always feel intimidated by you, good sir. You have an excellent way at just getting to the point, and doing so very clearly, and informatively. With that, I hope this is a worthy supplement, and does not want too much for accuracy.

cheers,
miner

yes very interesting. BTW if these companies have this kind of loss, doesn't that mean they will pay no corporate taxes . So Gov doesn't get any revenue, so the once "we have so much money to spend" gov surplus now becomes a huge deficiet. Shame we can't have some "Government bones" for BB's bone pile. Well i guess Greeny can just print more money. ;) Great posts all !!

http://dailynews.yahoo.com/h/nm/20020109/sc/autos_show_environment_dc_2.html
Snippit:

DETROIT (Reuters) - A new effort between the U.S. government and the Big Three automakers to make hydrogen-powered vehicles viable could take years if not decades to meet its goals, officials said on Wednesday. Secretary of Energy Spencer Abraham said the joint research project, called Freedom CAR, would eventually help reduce U.S. dependence on foreign oil and end pollution from vehicles.

Black Blade: If fuel cell technology becomes viable then we should see sky-rocketing Platinum, and Palladium prices. Also the price of hydrocarbons will rocket higher as hydrogen will most likely be obtained from hydrocarbons. "Interesting" plan.

http://www.thetimes.co.uk/section/0,,2001260052,00.htmlStradMaster -- nice link and nice to see you (how's the new Daddy business?); The Times continued on with a link (above) to Euro articles. Sounds like the pound is "enjoying" its fall in value.

BlackBlade -- that WAS a virtuoso rendition of the variety of arbitrages. I'm clapping, too.

uponroof -- "equity market 'experts' who wouldn't know a gold mine from a land mine!" -- That'll be my chuckle of the evening.

Galearis -- It DOES feel (and smell) "different this time".

Horatio -- Right on! I've never gotten that worked up over the hedging issue, because I thought it's just part of the "politics" of this time. We're betting on a longwave reversal of government fiat power (the ULTIMATE in contrarian betting), but then with coaching from FOA/A, we've been convinced of good odds of history catching up with this game, too, in a workable span of our lifetimes. Anyway, the risk/reward here is just a no-brainer. A real no-brainer. (I hate that term, so I used it twice; hee-hee.)

Strad's link was to an article about US corps having to declare a $1 trillion write-down of goodwill in 1st quarter. Black Blade mentioned earlier $5 trillion of stock equity "gone to money heaven". I would caution that (to the best of my understanding) this is not directly actual M3 type money supply money (except indirectly, as debts were contracted to fund them), but both are of immense psychological impact. And I think the losers of those trillions are still numbed, "deer in the headlights."

Now the former holders of those $5 trillion gone missing on their brokerage and mutual fund statements ("It was right here! It said $768,550. Just last year. It was mine! Wasn't it?") will postpone retirement (as if it was just another of their wonderful life options) -- just when the Bone Pile is growing to grab their jobs anyway.

The ones who wisely or luckily converted some of those billions to T-bond, T-bill, and money market accounts, dollar-denominated, will find those pillars of solidity questioned soon. THEN will be the real "raptures" to money heaven (or is it the other place?).

Those who've "stayed behind" in equities (both stock and real estate) will feel trapped in THEIR descending prices, as they watch those cash-equivalent pillars they've known as "bridges to safety" quake at the same time.

Only real holdings will be, well, real.

The question to face (and sometimes I wake up mornings thinking) is that most of what we white, educated Americans do is pretty $&*@(*@!@* useless anyway.

Our food is grown by 2% of our population (and most of those farmers might have trouble growing anything edible outside of their specialties.) We are parasites, or perhaps more correctly, symbiotic microorganisms inside the digestive tract of a larger beast, whose health is in question and whose diet is about to change abruptly.

http://www.gold-eagle.com/editorials_02/mayer010402.htmlChristopher Mayer (a banker) hits the nail squarely here; read a bit and see if it grabs you, too...

http://www.contraryinvestor.com/mo.htmMasters of the art -- don't miss!

Shows a very long-view comparison of this recession with past "bottoms" and the macro conditions that preceded recovery each of those times. Conclusions for now: Ain't gonna happen...

Hi CoinGuy, Congrats on your first physical silver purchase! It's hard to find anything bad to say about the white metal.

Your post: "I was looking at the Kitco silver 24 hour chart, and it looked as though the market was going up and staying flat in the London market and then coming down for the US market for three days in a row. The market looked as though it was following this exact track. What I was asking is this the differential in rates between the LBMA and the COMEX, or is it just going up and down. At any rate, the three days looked eerily close to each other in their chart patterns, thought this to be strange."

Thought I'd take a stab at answering your last sentence .... "AT ANY RATE, THE THREE DAY LOOKED EERILY CLOSE TO EACH OTHER IN THEIR CHART PATTERNS, THOUGHT THIS TO BE STRANGE" .....quite an observation on your part!!

To bring other lurkers up to speed, a little background is in order. The PM site next door displays a 24 hour spot silver chart. The chart tracks the spot POS around the globe for the last 3 day period. But, the chart is only 24 hours wide. So, what they do is give each of the three, 24-hr periods, a different color code and overlay all 3 colors across the chart at the same time. Since the spot POS often trades at an unchanged price for several hours at a time, the chart often looks like the silhouette of several different size boxes stacked side by side.

What The CoinGuy observed was that: "THE 3 DAYS LOOKED EERILY CLOSE TO EACH OTHER IN THEIR CHART PATTERNS" and he "THOUGHT THIS TO BE STRANGE."

I myself, have noticed these strange & unusual patterns in the past.

Most novice investors don't usually question things like this chart phenomenon. Advanced investors, sharpened by their years of experience, have learned to dig deeper when something looks unusual. Sometimes the outcome of their digging doesn't amount to much. But at other times, whole new vistas of useful information are discovered & exploited. The CoinGuy is digging.

In the world of investment analysis, information usually falls into one of two broad catagories: Fundamental or Technical analysis. Here, the fundamentals clearly don't hold the answers to the "STRANGE CHART PATTERNS". Oddly enough, in this particular case, technical analysis does not hold the answer to the inquiry either. IMHO, A Spock level of Logic is what we need.

CoinGuy, based on my own extensive personal experience in this particular area, I think I can now give you a precise explanation and lay this matter to rest. YOU'VE BEEN LOOKIN' AT THE CHART TOO LONG & YOUR SEEIN' THINGS THAT AIN'T THERE! Hee Hee.

To me, that particular, boxy-looking silver chart actually looks like a bunch of large silver packages under my Christmas tree. On other days the silhouette looks more like the skyline of a great silver city .... Yah, I saw that too the other day! But this as all for fun ....

Hey, can we get some extra mileage out of this spoof? If your are a lurker or a knight that hasn't posted in a long time, and we hooked you on this one, why not just check in & say hi?

View Yesterday's Discussion.

Sir,
A thank you seems so inadequate for the time and care you have spent in providing such a clear and practical explanation of arbitrage. It is genuinely appreciated. The sharing of knowledge and experience which you, Black Blade, and others do so selflessly and tirelessly outshines *any* increase in the POG - it's a priceless gift. Thank you again Sir,
Waverider

http://m1.mny.co.za/mggold.nsf/Current/4225685F0043D1B285256B3B00839836?OpenDocument
Snippit:

PRINCETON, NJ -- Over 2001, unhedged gold stocks returned a huge 11 per cent more - including dividends and after tax - than their hedged peers. I can hear a lot of people saying "duh". While it has become axiomatic to say unhedged gold stocks perform best because of superior exposure to the gold price, this is the first full year it has proved a reliable indicator. The reasons for the out performance by unhedged gold stocks are fairly obvious.

Black Blade: Obvious indeed!

Golden Dreams All!

http://biz.yahoo.com/rf/020110/n1068847_1.html
Snippit:

NEW YORK, Jan 10 (Reuters) - Tape maker Imation Corp. (NYSE:IMN) on Thursday said it would cut 500 jobs as part of its restructuring program and record up to $65 million in charges in the fourth quarter, but that it would meet fourth-quarter and 2001 earnings guidance.

Black Blade: Oops! Another 500 nonessential "Bones" among thousands that go unreported. The growth rate of the "Bone Pile" appears to be accelerating once again. In a couple of weeks we should see this increase in the BLS data.

1) Surprised that there is not more discussion on the Pakistan/India issue in relation to Ag.
2) Dispite all things said , Science alone will regard Gold
in the end as THEE most valuable possession not because of desire or beauty that transpires in the heart of me/us lay but because its inherent scientific flexible relationship with all the other elements will suit our human wills end. Worth Keeping !.
Perhaps I am to late but my horseman is TECHNOLOGY, hehe China was my second guess.
3) Micheal did you get the email/pic of the kilo coin and the stamp that impregnated it some months back ?.
hehe wondering where the focus was , well mine was on the stamp.
4) I had eight hours to cut a tree down and spent 6 sharpening the axe. Old one.

Thanks gentleman for the notes regarding 'arbs'.

Is the silver situation an 'arb' example. Short silver in London and go long in NY?

How is this 'arb' business affecting the Newmont-Anglo battle? I see 'arb' talk in the newspaper which apparently is why Anglo's bid for Normandy closes in on Newmont. If you have time please explain in novice lingo.

Thanks in advance.

Canuck.

http://biz.yahoo.com/prnews/020109/to133_1.htmlSteve,

Here's something linked to 'Another's' Jan 11 deadline.:

-Snip-

Todd Bruce, President and COO said, ``IAMGOLD's new Gold Money Policy distinguishes the Company from the bulk of its peers who are currently divided into two groups: Those companies which, through hedging programs, convert their gold to paper before it is produced, and those which convert their gold to paper the moment it is produced. Therefore, our Gold Money Policy establishes IAMGOLD as the Company that is truly backed by gold.''

John Ross, Chief Financial Officer said, ``If we as an industry don't demonstrate our belief in the monetary nature of gold, why should we expect anyone else to? We firmly believe that our industry can best promote gold by simply using it as money.''

A discussion of IAMGOLD's Gold Money Policy can be found on the Company's website. A simultaneous audio webcast and conference call regarding IAMGOLD's new Gold Money Policy will take place on January 11, 2002 at 11:00 am Eastern Standard Time. If you would like to participate in the audio webcast please see our website at www.iamgold.com or Canada Newswire's website at www.newswire.ca. If you would like to participate in the conference call, please call 416 640 4127 or 1 888 881 4892 (North American toll free) on January 11, 2002 at 10:50 am Eastern Standard Time.

Here's a quote (don't know where, irrelevant):

"The fall in the stock market value of high-tech companies since early 2000 has resulted in hundreds of billions of dollars of this goodwill being wiped out. But before the new accounting rules were introduced US companies could spread goodwill charges over a period of up to 40 years, effectively making it irrelevant. Now companies have to report changes to goodwill annually"

Some folks are suggesting that the fall in goodwill is 'already priced into the market'. Well if the goodwill which was to be 'amortitized' over 40 years suddenly becomes one year how is this not going to affect stock prices?

What am I missing?

Canuck.

I vaguely remember the subject of goodwill coming up after the S&L meltdown in '89 or whenever. A lot of money was added to the bailout, or whatever they called it. Apparently, goodwill has value, but like the dollar there is no set standard.

Renewed media hype on fuel cells-technology (see stocks) in concert with plunging POO (minus 10%) that managed to crawl back to 22$ ! A similar spin as 1 year ago with the famous declarations of Saudi Sheik Yamani (70 years of age) living in New York. Crude oil will price itself out of the market !? And now adding the alternative technology of fuel cells ! TG : Arabic oil producers (+ Russia) have fallen in love with the euro and want to divorce the dollar !

Not *one* single word this morning on POG : 278$ >>> 287$
But in a hurry looking for a TA (TI) analyst who points about an eminent fall of the euro against the dollar !

ANOTHER - FOA - TRAIL GUIDE(s) - CPM : I DON'T KNOW HOW TO THANK YOU FOR WHAT YOU HAVE BEEN COMMUNICATING ON THE MOST PROFOUND AND PRECIOUS INSIGHTS !

Looks like SPOT has learned to jump the fence...!!
The scramble seems to be finally at hand...am very curious about FOA's posting (at the "other" forum) on 12/24 and reference to 01/11/02 being the last day of "normal" Gold trading. ...Questions....How in the world did he call this?.....What are the implications?....What info does/did he have that made this call?? I have read all FOA/ANOTHER archives and of course all the TRAIL postings and don't remember specifics as to exact dates. This is eerie.
Any feedback about this is most welcome...
For now, I'm really enjoying the ride....!!

http://quotes.ino.com/exchanges/?c=metals
Just popped in to say spot Gold on a tear now up +$4.60 at $288.40/oz. Spot Silver moves higher and is repeated pushed back only to come alive again. Looks to get rather "Interesting" as the major powers in these markets are juggling too many balls to keep their attention solely focussed onone market. I have noticed that many alleged "economists" and "analysts" are now calling for a recovery in 2003. This just get better all the time. "Interesting Times"

- Black Blade

Got to run as I have a "well" to "bring in" this morning.

http://quote.yahoo.com/m2?u
Something is up - OK down, and it's the European markets. The charts all awash in RED. Looks like an "Interesting" day developing for the NY open. Now I definitely gotta run.

- Black Blade

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin∣dle=ad_frame2_topfin&s=APD1RVxKxSFNCQywgSerious reconsiderations for large Banking interests in Germany, Holland, Spain in the rapidly developing/unfolding /unwinding debacles..Is this being reflected in the Gold market?.. Is Gold reawakening as the historic currency of last resort??...hmmmm

Like in Gold last year (May),high lease rates,almost 300 $ and none knew anything.The same with silver actually,Even Gold is responding now.If we onlyknew what was May 2001?

First thought is BOE May 1999,a ghost ?

http://cbs.marketwatch.com/news/story.asp?guid=%7BFE45027D%2DDA67%2D4852%2DB706%2D75277F82B13A%7D&siteid=mktw U.S. jobless rate down 56k? Hard to believe.

You'll only wish you'd gotten more...I gotta run, too!

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B3C0D494C%2DC33A%2D43BB%2DB7F3%2DA7BB46ACE552%7Dcut and paste... old news... but he might be right...

"Heavy metal
Investors might consider precious-metal sector funds

By Marshall Loeb, CBS.MarketWatch.com
Last Update: 1:00 AM ET Nov. 26, 2001


NEW YORK (CBS.MW) -- Stocks of gold-mining companies have been surging recently. But the price of gold, compared with when the year began, is essentially flat. An ounce of gold is now $272.70, versus $272.25 on December 29. What gives?

Charles de Vaulx, manager of the First Eagle SoGen Gold mutual fund, says that gold mining stocks typically move six to nine months ahead of the price of the metal. Gold stock prices are "a leading indicator," he says. "If history is any guide, the fact that gold-related stocks are up this year while bullion prices are flat suggests that gold prices are about to move up."

That's all from Tannehill

Jan. 10, 2002@ 0953 EST
"Newmont Mining Corp. announced today that the United States Securities and Exchange Commission has declared effective its registration statements relating to Newmont's bid for Normandy Mining Ltd. "Clearing the SEC is a major milestone. We are on track to complete our aquisitions of Normandy and Franco Nevada by mid-February and to deliver value to the shareholders of all three companies with the creation of the world's premier gold investment vehicle" said Newmont Chairman Wayne W. Murdy."

Waverider: For complete story go to TSE.com, FN, News. Cheers.

They're pretty darn quiet today aren't they?

http://www.usagold.com/ProductsPage.html

Empires rise and fall, as do economic freedoms,
and common fortunes fade away
like memories of common events.

Why should YOU buy gold Sovereigns today?

Because no one else will do it for you.

Centennial is here to help.
1-800-869-5115

Is it possible to put the silver price in the INO quote box that you have at the top of page. That way we don't have to go to other sites to see what its doing. We can see both gold and silver together right here. ;~) Thanks

http://abcnews.go.com/sections/scitech/DailyNews/atmfraud020110.htmlJust one of the disagvantages of a digital money society.

http://www.mrci.com/qpday.aspThe particular selection of quotes you see in the INO box above are beyond my power to change. However, to help satisfy your needs for the whole spectrum of commodity and financial market price quotes, we've provided the "24-Hr Quotes" link found at the upper right, just three clicks over from the "(Post a New Message)" link. It will open in a new window which you might choose to keep open to monitor the various price changes in the markets throughout the day. I wish I could do more for you, but that will have to suffice for now.

R.

http://biz.yahoo.com/rb/020110/business_argentina_dc_1.htmlsnip.... In an extension of measures to protect banks from a massive bank run by panicky customers, all current accounts above $10,000 and all savings accounts above $3,000 will be turned into fixed-term deposits, untouchable for at least a year.

what better evidence than this, that gold in hand is worth ...well who knows the sky's the limit if you can't get "your money" out of the bank. Coming to a dollar market near you.

http://www.nationalpost.com/financialpost/story.html?f=/stories/20020110/1085624.htmlTHIS MAY HAVE CAUSED THE RISE IN GOLD YESTERDAY? COMMENTS?

Noted below are some comments from a morning newsletter re yesterday...the real issue IMO is whether the Investors are ready to pull the plug or go a little more on "hope"....My guess is that unless we have some bad news or break critical points say 2000 on NAZ ...then the Market will go at another run up....but the reckoning is just a matter of time.

Though there is still a possibility that FED can manage to continue pulling out bag of tricks....has worked so far.

Seems ridiculous that Market has been Up recently what with all the negative news.

Except for defense, I do not have a single client who sees any recovery in the offing,,,,plus my brother is a top VP at one of the major financial institutions and his division is down 60%...recovery????...I'll take my PM ....and just some temporary quick in and out market action for now.

From Newspicks "Wow! What a bizarre day yesterday turned out to be huh? We had a very nice day working for us with a lot of early movers simply trading sideways and life was looking pretty good. the NASDAQ had snuggled up to the 2100 level, the S&P squeaked above resistance, and the DOW was in a strong upturn after Monday and Tuesday's weak showing . Then at 2:50 the averages dipped a bit and by 3 pm we were in a full blown, program driven sell off of epic proportions.

We don't know if you were indeed watching the market that late in the day, but we were and we can say that without a doubt it was one of the top 10 reversals we have ever witnessed. Volume surged to the down side and we saw the DOW go from up 60 to down 60 in 20 minutes. The NASDAQ plunged like a rock. It was fast, it was furious and the volume was HUGE.

What was that all about? When it first hit we started hearing that the US had bombed Iraq, the FED heads were talking down the economy, Moody's was about to downgrade 3 Japanese banks, you name it, we heard it. It was all rumor. what really happened? ahh, the fun part of the market.

The January effect is generalized to encompass the first 5 trading days of the new year. This is where the bulk of the funds place their bets. If you combine the end of the fund money placement, with averages that were just at or above significant resistances, you get the perfect set up for a major league sell program. Well, we got one. Evidently a few big institutions had sell proggies set up at NASDAQ 2100, and S&P 1170, and without the addition of more fund money, the selling won the war. Down we went in a heap.

So, was it a one day abberation, or the end of the trend higher?"

Well the last question will be answered soon,,,watch if 10K and 2K hold!

http://cbs.marketwatch.com/news/default.asp?siteid=mktw You'll be humuored to know that the 'big headings' on CBSMarketWatch are generally positive notes. For example "U.S. retailers toast holidays."

Trying to inspire a sense of hope perhaps in an obviously drowning market. 'Keep buying, everything is OK.' Pay no attention to the man behind the curtain! (credit: Wizard of Oz)

Haaaaa! Good luck boys.

It's gotta be worth a little more than that. Why is our dollar drowning? Did we go and sell all our natural resources again?

I'll betcha some guys are getting real close to considering opening up the ground for some more yellow stuff. I know I'd have my rock crusher cruising right about now, and a little environmentally friendly gravitational separator. Some day......

http://www.usagold.com/cpm/Hoppe.htmlThe many new crisis-inspired rules in Argentina should suggest this to you -- having financial resources is one thing, KEEPING them and having them accessible in times of need is quite another. And truly, it is the latter condition that matters most. Typically, it is in times of crisis that the nation-state will avail itself of government powers to take resources from the "haves" to ease the pain of the "have nots".

American history (cf. 1933) shows nothing different. That is, "having" gold (to begin with) and "keeping" it (under your terms) can be two separate issues entirely. With this little bit of extra information about legal precedents in the United States (visit URL given above) you can intelligently stack the deck in your favor and employ your resourses accordingly.

For more on this, please contact the fine folks at Centennial.

R.

Banks setting aside reserves for write offs of bad loans
and announce job cuts at the same time...I wonder if those being laid off were the same ones that made those investment decisions? .

Uponroof (67965)
The Coin Guy (67966)
Galearis (67967)
Thanks! Where is Netking? Also Poor old Solomon?
Rich

Rosebud99 Did you know the U.S. did the same thing back in the thirtys.If you had a 1 year bond,they made it a 5 year bond.....your 5 year bond became a 10 year bond and so on.
Of coarse money now is worth more than money later when your dealing with fiat'so the bonds immediatly lost 50 % or varius amounts of thier current value depending on the life of the bond.
The only thing new is the history you don't know.

http://www.iii.co.uk/uknews/?articleid=4268877∾tion=articlePhiladelphia Federal Reserve Bank president Anthony Santomero told reporters today:

"I think we are in a period of transition in the economy, and it is more appropriate to be flexible and I don't think that it is necessarily appropriate for us to make any pre-conceived notion of how we should proceed, as the recovery starts to materialize."

Get flexible portfolio insurance. Gold is timeless.

R.

These banking actions in Argentina are exactly the same things that the U.S. did in the thirtys that CAUSED THE MASSIVE SHRINKAGE OF THE MONEY SUPPLY.These Harvard educated morons never knew what the causes were and they still don't know.
Government thinks its protecting itself and in so doing the Government CAUSES THE DEPRESSIONS.
People simply take thier money out of the banks to keep it from being stolen by the government and in so doing shrink the money supply. Its back to the mattress time in Argentina.

http://www.iht.com/articles/44297.htmlSnippit:
"It is hard to say what they are, but Americans generally love them and Canadians hate them: the mysterious forces that have pushed the value of Canada's dollar relentlessly downward to new lows in recent weeks. The Canadian dollar - nicknamed the loonie because of the large loon bird depicted on dollar coins - has been declining fairly steadily for three decades, a drop that has angered Canadians and puzzled leading economists in the country. Experts are at a loss to explain why the exchange rate continues to erode even when the economy itself is fundamentally sound."

re: "Digital Burglary"An excellent series of articles (clicked on "related" articles, too). Of course, when it comes to theft, one can point out the obvious disadvantages to keeping gold coins under your bed, too.

Personally, I have no problem with electronic "money", nor paper either for that matter -- as long as the bearer, on demand, is able to convert to physical gold and silver coinage "in hand". I.e., the electronic/paper "money" serves as mere RECEIPTS for the true money, as according to the defined standard.

Go gold. Go silver.

http://www.mips1.net/MGCurve.nsf/Current/8525686A00324CF585256B3D005D69F5?OpenDocumentGold: the debate rages on... should it be marketed as adornment/jewellery, or as money, or (drumroll please) as highly liquid wealth (i.e., financial property)?

Before you jump the gun and say "money", do you fully comprehend the inflationary monetary dynamic of banking? (Banking, that is to say, "fractional reserve lending" in the more expressive vernacular.) The outcry against hedgers and gold lenders is not without reason -- and it is instructive to recognize that they are *guilty* of putting gold to a monetary use.

An interesting comment from the article which is linked above...

-------"Encourage men to drill, blast and scrape tons of rock 4 kilometers underground in a 60-centimeter tall stope for the sake of extracting a few grams of gold. When they die finding that gold, do we prefer that their obituaries salute a contribution to the Paris Fashion Show or reinforcing reserve currencies?"-------

R.

It seems that the ISDA already KNOWS what caused the ENRON debacle...maybe they should tell th Justice Department...perhaps also they have the Arthur Anderson shredded documents?

Mr. Pickel...One for the books.
******************

Isda hits back at call for more derivatives regulation

10 January - The International Swaps and Derivatives Association (Isda) has hit back at calls for more derivatives regulation in the wake of Enron's demise. "Advocating regulation for regulation's sake is bad policy, and could severely affect the US role in global financial activity," said Robert Pickel, Isda chairman, in a letter to the Wall Street Journal.
Pickel said Enron's collapse was not caused by over-the-counter (OTC) derivatives trading and that the financial system remains sound.

"If OTC derivatives did not cause the bankruptcy and the bankruptcy does not pose a risk to the markets, the logical conclusion is that there is no argument for additional derivatives regulation. "It is unclear... how additional regulation of Enron's derivatives trading operations would have prevented or mitigated Enron's financial difficulties," said Pickel in the letter.

He added that Enron's trading platform, EnronOnline, provided an innovative way of trading derivatives in the OTC market, and is still a viable trading business � as demonstrated by recent interest in its acquisition by other market participants.

Pickel also pointed out that Isda Master Agreements - the legal documents used in most OTC derivatives trades - have helped the markets run smoothly since Enron's collapse, due to their robust netting and collateral provisions.
Paul Lyon
*****************

This story has legs in the Liberal Media and therefore will get covered...which is good for gold bugs.

The Law of Unintended Consequences at Work.

I agree brother, but who uses the gold standard anymore?

I would love it if we wen't back to one, perhaps Canadians could have enjoyed some of the finer luxuries in life as our American counter parts.
Wouldn't it be great if our money could always guarantee a certain mass of gold if you wanted it? Unfortunately for me right now I can't afford to go out and buy physical, and I know tomorrow is going to cost more, and the following day more etc. etc. As long as our dollar continues to fall with respect to the American dollar, and gold rise against the dollar we will be doubly hammered. Remember when you felt like you actually earned something after the first week on your very first job when you got paid? It doesn't feel that way anymore does it?

Sorry, got lost there for a second.

Let's all go back to trading in gold and silver shall we?

http://biz.yahoo.com/rf/020110/n10158223_2.htmlExcerpts from Reuters today:

-----------BUENOS AIRES, Argentina, Jan 10 (Reuters) - The new Peronist government squeezed Argentines on Thursday with more harsh banking curbs and the collapse of South America's No.2 economy hurt investors in Europe and the Americas.

A ban on withdrawals from certain bank accounts for at least a year echoed earlier restrictions that brought Argentina last month to the brink of what President Eduardo Duhalde called ``a bloodbath.''

Fears of international financial contagion from the Argentine crisis have resurfaced, pushing down stocks and bonds on both sides of the Atlantic.

...The Central Bank has extended a nearly three-week ban on foreign exchange trading until Friday, putting off again the peso's trial by fire with markets. The Buenos Aires stock market has also been closed for most of the last couple of weeks because of the banking and foreign exchange suspension.----------

Here's a glimpse of the man on the street. Has he considered what happens if the contagion spreads to Uruguay?

-------``As long as I live, I shall never again put a peso in a bank in Argentina,'' real estate agent Pablo Pechague, 48, told Reuters in central Buenos Aires. ``I'm going to put everything in Uruguay where there is a much more serious banking system.''---------

From the "outside" looking "in", it all seems so clear, doesn't it??? And so unnecessary, and therefore sad.

Do what you must to protect your own accumulated wealth. Act now, because nobody else will do it FOR you.

R.

Hang tight Robot.
The CDNX is up 10% since December 7th.
Right now CDN resource stocks trades for pennies.
Soon those same stocks will be trading in dollars
Might be a pleasant squeeze with all that "foreign" investment currency trying to get through that little Canadian door at once.
Where else can you get a ticket to ride the greatest bull in history? Australia,(rising) and Canada.(soon)

Thank you for your comforting words. I really hope you're right.

To you my fine friend I shall crack open another Heineken-- Okay, we Canadians do have some luxuries after all.

Instead of all these mining investment conferences in Canada and U.S. the provincial and federal government should be sponsoring Canadian mining investment conferences (road show) in Japan. Currency exchange is positive, Japanese NEED to diversify. We should be over there in there face, (perhaps Jipangu) could co-sponser. Diamonds, gold, opportunity for billions in investment. The great thing about "direct" mining investment, the money filters down to the little guys.
P.S. THE GAS PIPELINE PROJECTS COMING SOON SHOULD BRING IN SOME FOREIGN DOLLARS SOON.

I hope we got alotta gas!

I really truly believe this great nation of ours has a lot to offer to the rest of the global community, I just think were so used to bending over, that we have forgotten how to stand up straight. Everything we deliver, we deliver for a pittance,.. and why? Because we want everyone else to like us. Why would we want everyone else to like us? Because we don't have enough people to defend what it is we cherish so dearly.
We as Canadians have had the opportunity to experience ten times over the things individuals from other nations have never had the opportunity to experience. I have many close American friends who admire Canada for different reasons, but the most common reason is the expanse of wilderness and natural surroundings. Sorry,... I'm blabbering on. All I wanted to say is that I really do value Canada, but I am also like those other Canadians who are dissappointed with the value of our dollar compared to the rest of the world. I guess I just think it should be worth so much more.

By Allan Seccombe and Sophie Hares

JOHANNESBURG/SYDNEY, Jan 10 (Reuters) - AngloGold Ltd is bracing for an eleventh hour decision on whether to extend its bid for Normandy Mining Ltd , as the value of its offer jockeyed for front position with that of rival Newmont Mining Corp on Thursday.

A surge in AngloGold shares on the back of a strong gold price briefly pushed its offer slightly ahead of that of Newmont, which is bidding to snatch the world number one producer title from its rival.

But the advantage may be shortlived, analysts said.

Competition is fierce among the world's top gold producers to snap up smaller miners in a wave of consolidation to drive down production costs amid sluggish bullion prices.

The bullion price was fixed at $287 in London as speculation swirled that Newmont would win the bid and liquidate Normandy's hedge book.

A hair's breadth now splits the competing cash and share offers, with AngloGold's offer worth just over A$1.91 at 1314 GMT and Newmont's bid valuing the Normandy shares at A$1.92.

The offers value Normandy at over A$4.2 billion.

Analysts warned that U.S.-based Newmont (NEM) -- which has yet to trade as gold reaches levels last seen in October -- could pull further ahead again later on Thursday because it is better placed to take advantage of the buoyant bullion price.

"Newmont will also benefit from this rise in the gold price and the thing to remember is that they are more unhedged than AngloGold and they stand to benefit much more from the gold price run," said a Johannesburg-based analyst.


ANGLOGOLD SAYS 2.5 PCT ACCEPTANCES SO FAR

AngloGold said in a statement it had received acceptances representing over 2.5 percent of Normandy's shares by the close of trade in Australia on Thursday. Its offer closes on Friday.

Newmont said it was sure it could get the crucial green light from U.S. regulators for its offer in time for a February 13 special shareholders' meeting and that it was confident about the final outcome.

"The large institutions and the arbitrageurs want the liquid North American paper rather than the South African scrip," Bruce Hansen, Newmont's chief financial officer, told Reuters.

Sources close to AngloGold said a board sub-committee will hook-up by telephone just an hour before the 7:00 p.m. (0800 GMT) deadline on Friday to discuss the level of acceptances and whether to extend the bid.

A source close to the South African group said: "It's balanced on a knife edge."

SCMB Securities analyst David Davis said: "Something people are forgetting is that AngloGold said it would issue people who (support its bid) with their final dividend, which could add another three cents or so. It could be a swinging factor."

AngloGold Chief Executive Bobby Godsell warned investors earlier this week not to bank on an extension of the offer period, and reiterated the group could find no further value to justify sweetening its bid again in the four month-long tussle.

Godsell left Australia on Wednesday after spending a few days trying to convince investors of the long-term benefits of AngloGold's bid for Normandy, whose annual two million ounces of gold will make the winner the world's biggest gold producer.

Shares in Normandy closed up five cents, or 2.7 percent, to A$1.88 in heavy trade, bringing its market capitalisation to A$4.2 billion.

Newmont, whose bid is tied in with the purchase of Canada's Franco-Nevada Mining Corp Ltd and its 20 percent Normandy stake, is convinced the greater liquidity of its stock will persuade arbitrage players who hold around 40 percent of Normandy to snap up its offer.

Brokers say arbitrage players have been short selling Newmont shares to exploit the margin between Normandy's share price and Newmont's offer price.

Investors also bid up Franco-Nevada overnight, betting the gold mining royalty company will be a big winner in the battle between AngloGold and Newmont for Normandy.

Shares of Franco-Nevada closed up C$1.15 at C$24.05 on Wednesday on volume of 5.5 million shares, making it one of the most heavily traded issues on the Toronto Stock Exchange. (Additional reporting by Simone Deane in Melbourne) REUTERS

� 2002 Reuters

- - -

Solomon: Arbs who think the deal will go towards Newmont still need to "short sell" NEM to make money on the takeover (Franco) spread....anybody think that late minute surges in the share price of AngloGold could be the "cabal"?

On a different note.....noticed in the paper today that the "investigation" of Enron was being taken up by the FEDs...in order to consolidate information gathering away from the States (which had caused burdensome numbers of "local" investigators)...Sound like cover-up jockeying???

http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20020110&ID=1338671LTCM was worth saving but Enron is not!

I love Canada. My wife was born in Winnipeg. Go heli-skiing in Carriboo's, and take our boat to British Columbia each summer. The people there are great and so is the beer.

And Canada is very rich in minerals as you know. I wish all of you the best.

http://www.kitco.com/market/LFrate.html
Though Silver lease rates have eased a little today, the rates are still high and in extreme backwardation indicating a severe shortage of Silver for near term delivery. There is still the good possibility of a TOCOM and NYMEX style default on Silver contracts as in the past and as has happened recently with Palladium. The managers of the TOCOM and NYMEX are without honor and will proceed with unethical practices when it is in their best interests. Any such defaults at this stage in the game would be recognized as sheer panic in the face of a growing shortage of physical supply. "Interesting Times"

- Black Blade

...or, to put it another way, saving LTCM saved the system for another day. Enron is "a hedge-fund too far", this time with many more lined up immediately behind it -- time (though too late) to turn off the Moral Hazard Juicinator of All-Rescues.

What does it say that they're not trying to rescue Enron, but going immediately to prosecution mode? Circling the wagons?

The latest Silver related rumor is that after March 2002 the US Silver Eagle will no longer be produced except for special orders due to no remaining US Strategic Silver supply. The original plan was for the US Mint to purchase physical Silver on the open market and continue with the minting and sales of the popular one ounce $1 denominated Silver coin. However, due to high Silver lease rates that suggest a very tight physical supply of Silver and due to sharply reduced Silver production (both primary and by-product Silver) there simply may not be any Silver available for the US Mint's Silver Eagle program. If industry competes for the dwindling physical Silver we could very well see the US Mint back off making any purchases from US markets, make purchases offshore, or simply suspend the Silver Eagle program entirely. This is something to keep an eye on come April 2002. If it is suddenly difficult to obtain US Silver Eagle coins then we shall have a definitive answer. "Interesting Times"

- Black Blade

COMEX is missing a day....todayIt rather looks like Warren Buffett is hanging tough on this situation. If one assumes that Buffett is waiting with tapping fingers for his 50 million oz of metal owed to him by a responsible counterparty to the Enron lease, some bullion bank, JPM, whomever, the problem is of true crisis proportion. There is only a little over 35 m.o. eligible on Comex now (?) and not all of this may be good delivery bar quality(?). We can all do the math.

In other words, unless they come up for a source of silver besides COMEX stocks we have our big smelly default. There is obviously not enough silver in Comex to handle this. How long can they stall!?

AND....

I find it odd (as I type this now) that the Comex Ag stocks web site page is dated from yesterday - the 9th.

We should know - by POS - if this is the fuse lighting event.

I am not even going to speculate beyond this about it. I have been wrong too many times. So I am going to say that this is NOT IT!

Hoping that I am wrong again.

Regards,

G.

http://biz.yahoo.com/apf/020110/greenspan_lending_1.htmlGreenspan Warns on Discrimination (Associated Press)

Discriminating against minority groups in lending decisions hurts the economy and the financial institutions that engage in such practices, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) said Thursday.
+
Greenspan made no comments about the economy in his remarks. However, he was scheduled to address economic developments in a Friday speech in San Francisco.

==

So today Greenspan spoke about discrimination (the economic big problem of the day, you know). Will he say tomorrow that the discrimination of the gold bug has resulted in all the troubles of the US economy for the last 20 years?

http://cbs.marketwatch.com/news/story.asp?guid=%7B7BA02D82%2DD4CB%2D4255%2DACFC%2D63314688A3F5%7D&siteid=mktw
Snippit:

Who wants to talk South African gold companies? Apparently, no one. As Nasdaq investors cling to their three-month rally, the South African mining companies, especially the unhedged ones such as Harmony Mining (HGMCY) and Gold Fields Ltd. (GOLD) are thriving in the face of a tepid currency, the rand. These gold companies pay expenses in rand but book revenue in dollars (gold is denominated in dollars). At the start of the year, South African producers were getting about 64,000 rand per kilogram of gold. Now, because of the rand's slide against the dollar, Harmony and others are getting north of 90,000 rand per kilo. Operating margins at these miners are rising rapidly. Last time we talked about this, the South African miners were selling for 15 percent less than they are today. Possible bonus: the price of gold this week is making a march toward $290 an ounce, a three-month high. Keep an eye on the Bank of England gold auction next week. If investor demand for the tons of gold the bank foolishly sells in its divestiture program exceeds three-to-one, you can start wondering just which banks and hedged producers have been caught short by the metal's little rally this week.

Black Blade: Yes indeed!!! Non-Hedgers continue to outperform the Hedgers. Also - If the BOE auction is heavily oversubscribed in this current Gold rally, we should very easily see the POG bust through the $300.00/oz. and establish a new solid floor price. Then off to the races? As the economy flounders and even tanks as the Recession deepens, we should see the POG take on it's traditional role of "safe harbor" investment. At that point it is next to impossible for any organization to keep a lid on the price - that includes Treasury, Wall Street banks/brokerage houses, and even the Federal Reserve. For any would be price manipulators it would be simply - "Game Over".

Great find on the Newmont/Anglo battle. Franco had another rock and roll today convincing me that Newmont is in the drivers seat. The SEC information is good news, yes?

Thoughts?

If the short squeeze is only temporary, due to whatever situation (Buffet's leased silver, Enron, years of excess carry trade silver supply now being offset, etc.) then somehow the situation will be resolved and then become a market event of the past. If necessary, fiat may end up paying off leases, forward sales, etc. Some may be unhappy with their returns but, you can't get blood from a stone.
But what if the whole situation stems from simply no more available (at least at low prices) silver. Industrial use or "commodity" use remains, much is inelastic. Wouldn't that end the lease situation and return silver's industrial use to the old rules of supply and demand. Wouldn't that return us to price rationing?
If POS went to $10./ounce tomorrow morning, there would be stimulus for more production and probably some forward sales from miners desparate for cash to expand production but still (and for a long time) a real shortage for immediate needs. This price would set off all kinds of market turmoil, of course, but the lack measured against the need would remain, no? Isn't this the normal market functioning of any desired object?
My question is, are we witnessing a temporary anomaly or a return to normal market behavior now that the disguise of false supply is lifting? The world isn't really out of silver, of course, but it might be out of $5/oz silver.
If there's any truth to my "supposins", what signs do we look for other than price and lease rates? Many of the regulars at other forums have been talking of shortages in the shops of local dealers. What else?
Any news?
Rich

Regarding SA gold companies (and I own one of the two mentioned), what happens when sales "dollar" revenue is rocked by a significant drop in the dollar? Again, their "product" is denominated in USD.

They have problems down there similar to others we've seenSouth Africa looks into rand devaluation

PRETORIA, South Africa, Jan. 10 (UPI) -- The South African government has moved
forward on two fronts to bolster its struggling economy and to ease concerns about
the nation's worst currency crisis in history.

President Thabo Mbeki on Wednesday appointed a commission of inquiry into last month's
sudden collapse of the rand, which dropped 40 percent to an all-time low of 13.85
rand to the dollar. The commission was formed in response to allegations from the
South African Chamber of Commerce that local financial institutions and businessmen
engineered the devaluation, one that has left most economic analysts and politicians
dumbfounded.

The commission will be led by John Myburgh, who formerly presided over the Labor
Appeals Court and is widely regarded as "fiercely independent" and "a labor law pioneer,"
according to South Africa's Business Day publication. The move has been welcomed by
chamber of commerce chief executive Kevin Wakeford, who was the first to voice skepticism
last week about the intense pounding of the rand.

The arrival of the president's announcement was simultaneous with an outpouring
of positive news from several governmental sectors. On privatization, the Department
of Public Enterprises announced that it had sold the government's 20 percent stake
in M-Cell, one of the country's three mobile telephone operators. The company went
to Dutch-based Ice Finance for $475 million. The sale had been scheduled for last
year and its delay had cast doubt on the government's commitment to privatization.

Following this came a statement by South Africa's National Treasury Director-General
Maria Ramos who said the depreciation of the rand did not indicate a financial crisis.

The Treasury Department also reported that revenue for the current fiscal year would
outweigh previous expectations, and said it would begin drawing against a $4.8 billion
syndicated loan made by the Reserve Bank in 2001. The loan is designed to eliminate
a net open foreign exchange position that accumulated when the bank tried to defend
the rand during the financial crises of 1997-98. The position measures the extent
to which dollar obligations in the forward currency market are not covered by gold
and foreign exchange reserves. The government hopes to shed the position by the end
of fiscal year 2002-03.

In another wave of optimism, the government announced that its fiscal position was
secure enough to begin paying down its $1.24 billion domestic debt this month. Although
much of this confidence was attributed to the M-Cell deal, the news of its structure
disappointed traders Thursday.

The rand closed Thursday at 11.56 rand against the dollar, losing ground against
Wednesday's gains, which put the rand at 11.36 rand to the dollar.

Mr Gresham, you are right in your evaluation. LTCM had at least one x-Federal Reserve member on its management team. Thus, through the good "ole" boy system, the Fed was obligated to help out poor old LTCM for the "good" of the country! Enron, on the other hand, played the political game, padding both parties coffers. I am not to sure but what Enron might not escape free and clear, yet! The finger pointing and scramble has already started. Andersen will probably be the scapegoat for "destroying" Enron records.
The good news? All of this skulduggery has to be good for us goldbugs!

http://www.forbes.com/2001/01/30/layoffs.html
The "Body Count" surpasses the 1 million mark. However, even the BLS admits that as many as 1.8 million unemployed and possibly as many as 8.5 million if ineligible workers are counted. Then no one considers the "under-employed" who once were well paid full time employees since laid off, run out of benefits (ineligible), or took part-time or lower - minimum wage jobs. Then there are others who simply gave up or work the "underground" economy (illegal or unreported income) that with all categories added together could easily total as many a 14 million unemployed/under-employed/unrecorded. This puts a whole different wrinkle on the unemployment data doesn't it? The US economy is in serious trouble and in danger of rivaling the Great Depression of 1929. In a word - "GRIM"

Everyone makes mistakes ,I recently made a big one.
I downloaded a "free"program that remembers passwords so you don't have to remember them.A program called "Gator".
What a mistake that was!!!Its a "spy" program.Don't use it!
Even if you uninstall it according to the companies directions ,it pretends to uninstall leaving you to think its gone!but its not and it continues to try to communicate with the parent company.I found exe files that activate when you access the internet and try to send info to them without your knowledge.They bury trojan horses in your computer.
So far the only way I found to stop them is to install "Zone alarm" a program that forces any exe file that wants to access the internet to get permission first,of coarse you say "no " to a request from a program that is supposed to be "uninstalled" !I realize this is a little off subject,but the premise is the same as the governments, spy and control and I hope to save brother gold bugs the trouble I have had with this program.

Interesting isn't it? The US Dollar drop against what currency? The reason that the US Dollar is higher against other currencies isn't that the US Dollar is so strong, but rather the other currencies are just so much weaker and getting even more so. I still am not convinced that the Euro is a viable currency. I just don't see these 12 "Third World" Socialist countries keeping any real fiscal discipline. The yen is grossly overvalued by any measure - they should start lopping off some zeros before long I would think. The Rand is falling for no real reason other than some unwarranted perceived risk of neighbor Zimbabwe. The devaluing Rand certainly does not hurt the SA mining shares. Mark Mobius met with Thabo Mbeki and his cabinet a couple of years ago and recommended that they back the Rand with Gold reserves. Now we know why. But hindsight is 20/20. Nevertheless Gold is a currency without a country's tag on it. The best currency diversifier of all currencies. What else would you rather have beyond US Dollars? Euros, Yen, Pesos, Rand, Loonies or Gold? I definitely choose Gold. Cheers!

- Black Blade

BTW, I also hold shares of both companies along with FN and GG. I'm strongly in the black these days. Did someone mention an article entitled "Is Gold Relevant?" In today's markets I would say the answer is an obvious and resounding - YES!

http://biz.yahoo.com/apf/020110/gold_merger_1.html
Snippit:

Newmont Mining Clears SEC Hurdle in Merger With Normandy Mining and Franco-Nevada Mining.

Black Blade: NEM effectively gets the nod to proceed with Normandy and Franco combination. This will negate any unwanted advances and violation by lecherous AngloGold toward the unwilling maiden of OZ.

http://biz.yahoo.com/apf/020110/lockheed_martin_jobs_1.html
Snippit:

Lockheed Martin Astronautics to Cut 700 Jobs; Some Layoffs, Some Through Attrition.

Black Blade: Yep, there's also that growing "Bone Pile" that is putting a drag on the US economic recovery.

http://biz.yahoo.com/apf/020110/burlington_jobs_3.html
Snippit:

Burlington Industries Plans to Cut 4,000 Jobs and Close or Sell Five Plants.

Black Blade: Add 4,000 clothes "Bones" to the growing "Bone Pile." This deepening Recession is getting worse and will continue to get worse. Investors would do well to wait for fourth quarter earnings reports before committing to any more investments. Then they can "read it and weep". We shall see the "Bone Pile" growth accelerate now that the holidays are over. It will be about 2 weeks before we see a full weeks worth of data and it will be - "GRIM"

http://biz.yahoo.com/rb/020110/business_argentina_dc_3.html
Snippit:

BUENOS AIRES, Argentina (Reuters) - The new Peronist government squeezed Argentines on Thursday with more harsh banking curbs and the collapse of South America's No.2 economy hurt investors in Europe and the Americas. A ban on withdrawals from certain bank accounts for at least a year echoed earlier restrictions that brought Argentina last month to the brink of what President Eduardo Duhalde called ``a bloodbath.''

Black Blade: Now only if the Argentines had Gold on hand.

BTW, any Gold Argentinos left at the Castle? How ironic if there were more for sell - especially now.

http://dailynews.yahoo.com/h/nm/20020110/en/television-disney_1.html
Disney to cut half of ABC Family work force

Snippit:

LOS ANGELES (Reuters) - The Walt Disney Co. will cut about 300 jobs -- or half the work force -- at its newly acquired ABC Family cable network, as Disney integrates the channel with its other TV properties, a source familiar with the situation said Thursday.

Black Blade: Who wants to work for this Mickey Mouse operation anyway? 300 more "Bones" carted off to the growing "Bone Pile".

http://biz.yahoo.com/rf/020110/n10191583_1.html
Snippit:

ST. PAUL, Minn., Jan 10 (Reuters) - Ecolab Inc. (NYSE:ECL) said on Thursday it will cut 350 to 450 jobs over the next 12 months, and will take a $50 million to $60 million pre-tax charge, as its streamlines operations.

Black Blade: More nonessential "Bones".

Black Blade When the Dollar devalues relative to the Rand they lose the advantage of devaluations that previously lowered labor costsl.One way to counteract this would be to "hedge "the currency.I realize this sounds tonge in cheek coming from me ,but valid nonetheless.

Already been done. Harmony locked in last month.

http://www.nationalpost.com/financialpost/story.html?f=/stories/20020110/1085624.html
Dividends paid in metal

Snippit:

Cash is no longer king at IAMGOLD Corp., a Markham, Ont.-based mining company that will announce today it will pay future dividends in gold. The new policy gives IAMGOLD shareholders the right to elect to receive future dividend payments in Canadian dollars or in gold deposit certificates, issued by banks, that can be swapped for bullion or its equivalent cash value. "We are empowering our shareholders to choose whether to further expose themselves to gold," said Todd Bruce, IAMGOLD president.

"Our view is that the entire industry should believe gold is money," Mr. Bruce said. "If we don't practice that belief, then we can hardly expect central banks or anyone else to give it that dimension." For practical reasons, IAMGOLD will keep enough cash in the bank to cover about a month's worth of operating costs. The rest will be held as gold bars.


Black Blade: A long awaited event. If this option were only offered at other mines as well. GoldCorp and Franco keep physical Gold on hand as a reserve and as part of the company's belief in Gold as Money. A lot of "Interesting" events coming together these days.

Silver talkLeonard Kaplan had some interesting insights on the silver market posted today. Pretty good summation of what is going on in London with lease rates. Sorry no link... He said:

*********
Earlier this morning in London, the midpoint of the 30-day lease rate for silver was about 25%, an extremely high historical rate, not seen for about 4-5 years. This means that an investor could lease out his silver and receive almost 10 cents per month in interest or a lease payment. This would indicate that the physical market is EXTREMELY tight and silver needed to beborrowed, and badly. A very bullish sign. Now, lets look at the one-year rate which was about 3.5% per annum, or about 18.8 cents per annum or 1.6 cents per month. So....if you borrow silver for one month, your cost is almost 10 cents while if you borrow for a year, your cost is only 1.6 cents per month. Wouldn't it make eminent sense to borrow silver for a year (borrow long), and lease it out for a month (lend short)? If lease rates held for just one more month, you would recover ALL of your committed expenses for a year lease, while still having 10 months to profit from leasing your silver short term?
********
Interesting statements for someone who has been in the business for three decades. However, this train of thought would also imply that Mr. Kaplan does not understand the real meaning of shortage, deficits and what "tightness" actually means. The real mover of the very high lease rates is based on risk! 30% lease rates means that there is a fear of some loan(s) going into default. If one believes that paper markets are real (paper contracts are as good as the metal and the PRICE, doggone, it is so low meaning really good supply) then right there is the window through which confusion shines. So part of your question would seem to be answered by by the form of cashing out of leases (selling the metal on the market while paying off the 30% back of metal owed that Mr. Kaplan deems as a good idea if one believes that the lease rates REALLY do not imply a REAL shortage and that the metal will be available to pay back - at a reasonable (low) price. But the high leases rates DO indicate a much higher default potential, yes? The ENRON situation is building to a very possible default. People will not take advantage of these high lease rates as a money generator for the simple reason that the metal is very much less likely to be replaceable at the end of the lease. The potential for higher prices later for those that are considering this would also be a factor.

The classic "do ya feel lucky, punk?" scenario.

As for is this a temporary situation whereby Buffett will accept a cash-out of his metal loans. Well, that's a default, isn't it? I think so. It would also be a loser of a proposition for W.B. who as I recall bought his metal at considerably higher prices. He might be inclined to let this all go away for good of god and country if he was allowed a penalty premium of say $10 over spot - heck you pick a number. At this point I would say he is in a position to pretty much pick a figure. If this happened, we would never hear about it and the sun would shine on the sinners once more. Hiding a default? Why not. They could also shoot him and deal with his minions.....who would be more amenable.

The sun would shine, I should mention, for a few more months.

For the supply of bullion silver is not exhausted, just owned by strong and knowing hands, and the mines are not putting much back in the vaults - and won't be until the price controlling paper sham markets succumb. And prices need to recover to where they should be - around $20/oz fair value right now in order to "normalize" this sorry mess. We have a ways to go yet.

What signs do we look for? Comex stockpiles should be watched daily for ANY irregularities (see earlier post); default news - especially the Enron metal loans; rapid increases in open interest (the charts are volatile but still anemic looking); disinformation articles about India selling its silver - or more likely -China (already factored in to on the supply equation of the rough dead market timeline of July or August/based on LBMA Ag transfers - as paper dies slowly); a dramatic spike in gold, AND last but not least, a totally surprising vertical line on the Kitco chart one muzzy-headed morning over ones first coffee.

(smile)

But my opinion now is that the world is still sleeping along like it always has and the silver "problems" have yet to be noticed. (I've given up being optimistic, it doesn't work!) This rally will likely retrace (just a feeling) but with the media starting to talk (as they are now beginning to) the next rally will have a lot of eyes peering out from the wings ready to pounce, and then BOOM.

However, near term I think that this L.R. spike will only kill the practice of leasing of silver. (Not rocket science this.)The rates will likely stay relatively high maintained by rolling over. They will then not be able to flood the markets with artificial supply and the deficit will suddenly become a hole to trip over. How long will this take? We are months away at worst and this will likely go on until some company can't produce a new line of refridgerators for lack of metal - and starts yelling loudly enough.

I just hope they don't TOCOM POS at $7.00 per ounce.

And they certainly will systemically cap it! Trust me on that.

On the other hand, I probably know as much (or less) about all this as you do... Just a quick bunch of thoughts all tumbling onto the page..

(smile)

Regards,

G.

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Very astute! "I am not too sure but what Enron might not escape free and clear, yet!" I don't know how I could have been taken in so easily.

If this were the movie version of this scandal, the "authorities" would take immediate action to announce prosecution of offenders, recusing themselves in some cases, and definitely look for Accountants Who Had Destroyed Records. (Isn't that what all good accountants do at the end of a tough day? "Audit over? Relax. It's Miller Time. Got a match?")

Hey! I forgot -- this IS the movie version.

Only it will be strung out boringly after the initial speeches and investigations, until the audience has drifted from the theater. And then it will Go Away.

MoreJust a small additional muse I was having the other day. It goes like this: One of the confusing parts of Warren Buffett's behavior was his leasing of some of his metal. This never made much sense to people - why take delivery and then lease it back to kill the POS and put your metal at risk? In the back of my mind I thought that Warren KNEW he was going to lose a lot of his bullion doing this.

I'll bet he REALLY makes they pay a LOT more to get out from under than he did to buy his bullion in the first place.

I'll bet he planned it that way.

(smile)

G.nite,

G.

"...the next rally will have a lot of eyes peering out from the wings ready to pounce."

Great image! I'm imagining the Great White Hunters (out of bullets) sitting around the dying embers of their last firewood, with the cartoon-stereotype glowing eyes staring at them from all around the edge of the jungle clearing.

Who would you rather be: the "powerful" humans, or the "dumb" animals?

Let's face it: PMs are propelled by a force of Nature: basic self-preservation instinct. Yes, humans invented money. "But, hey, let's not take it _too_ far!"

Some shaman did a great dance and sold them on a bunch of wacky weed for money.

http://quotes.ino.com/exchanges/?c=metals
Gold still moving higher and Silver up a penny.

http://www.kitco.com/charts/livesilver.htmlLook at that cute little black POS line (hard to find at first) peeking out from the edge and tiptoeing out of Sydney at 471 -- quietly trying to hide between the 479 and 464 lines from the previous days, and making no wiggles to attract attention -- headed for London where the alert guardians of The City will no doubt try to swat it with very very large ostrich feathers (where is John Cleese when...?)

Rich

You of all silver bugs frequenting these halls have been doing your due diligence.....perhaps the only failure now for you as the end game nears is expecting fireworks.

The human mind has an immense power to fill in the blank stretches of a picture. And yet, many pictures are so illusive that different observers see completely different things. When money is laid on the line, based on what you see, then YOUR picture eventually dictates your profits.

Let the quiet backwoods philosopher remind you of the scents we hounds have seen along the way, and some core elements.

1. Silver use grows exponentially and new users (population) coming online exponentially as well.

2. Primary silver production decaying exponentially...silver simply a by product.

3. Warren Buffet, a pay with cash thinker, entered over 4 years ago, and bought a larger percentage of the "then" silver market supply than the Hunts ever had....and he used no leverage.....he may have been "asked" to keep some leases (i.e. did he actually buy metal already under lease contract?)...in the end he knew...the day he starts to call in the rest..the market will go right back to where it was when he was a buyer. Not only is he a legend in his own time, he has brains and he has guts, and his sell price ain't down here where we are today. His corner of the market grows every day...just by watching the rest dissapear.

4. The silver market is very small, traded mainly by a very small handful of financiers who move boxcars full of silver in and out at a whim....at least on paper that is.

5. The news on silver prices are all banter about where physical material is coming in from....always the spectre of large reserves being brought suddenly into the market...keeping the longs on edge....remember the longs pay cash up-front and hope to get more back (and are the losers in a paper default)..but are the shorts get cash up-front and (can hide behind a default) too many vested interests here are seeing the emporers chlothing. Reality is patient but has a habit of breaking illusions.

6. Contrary to the comments of some of the real gold hounds around here, silver is no less a "currency ersatz" or "store of wealth" than gold....only that you need to lug more of it around. Silver has been money. The fact that it is leased right along with gold means it is ("has been") a source of liquidity to some.

7. Silver's lease rates are far into backwardation, while all other PMs lease rates are still in contango....this implies silver "might" be able to run ahead of gold...as a matter of fact the real danger of a silver rush is triggering a gold rush...so expect gold cabal to eventually come out with bullish press on silver and all manner of arguements about why gold is not poised to follow.

8. Even legitimate "users" of silver have used leasing to move "working capital" off their books (one of the great miracles of profit generating gurus)...in the end, if silver is a productive asset which still has to sit in their factory, they need "ownership" rights...and take a hidden liability in needing to buy their way back in a higher prices. Similar to a consumer who has "leased" their autos for the last 20 years (since the lower monthly payments seem to make it more affordable)....today, with the much higher prices of cars, they can no longer afford to buy one....imagine the fiasco if auto leases were not "rolled over".

9. Anecdotal evidence of shortage in the network of pawn and coin shops.

10. Anecdotal evidence from small recyclers that less scrap is coming in.

11. Obvious reduction in the production of base metals (recession) which "may" be stronger than the reduction in silver demand....i.e. many factories still produce nearly as much and are dumping prices to stay in business.

12. Many uses of silver can afford much higher prices....with no viable substitutes (unless silver prices would stabilize near gold prices for a while - "my big dream"....

Superstition stops me.......

Brave Mr. Powell, the days of reckoning are coming...enjoy the ride...you will need even more courage ahead, when silver is up and down "dollars in a single session" and you are nervously wondering when to take profits....looking for some balance between prudence and greed (something not much in balance in Wall Street nowadays.)

Poor old Solomon

http://www.usagold.com/GoldTrail/archives/ANOTHER2.htmlSearch to the bottom for the dates "Feb 16" and "Feb 24" (no periods) (1998) where FOA explains much in a very fresh and clear way. Click into the next page and search for the Mar 7 posts. I think you'll enjoy...View Yesterday's Discussion.

Reuters reports the Anglo Gold offer to purchase Normandy
Mining has been extended for one more week.

Reuters reports that the Anglo Gold offer to purchase
Normandy Mining has been extended one more week.

http://biz.yahoo.com/rf/020111/syb006304_1.html
Snippit:

SYDNEY, Jan 11 (Reuters) - South Africa's AngloGold Ltd said on Friday it has secured acceptances for more than six percent of shares in takeover target Normandy Mining Ltd
(Australia:NDY.AX) but final numbers were still being calculated.

Black Blade: Newmont has over 20%. This is still a "MUST" win for AngloGold. If Newmont should win here it could just put this "forward sales" nonsense to bed. However, the SEC has given it's nod for Newmont to proceed and this should all come to a head in mid February. Look for AngloGold to come up with another desperate bid or team up with Mega-Hedge Fund Barrick. This should get very "Interesting".

http://www.forbes.com/global/2002/0121/053.htmlParanoids with enemies?

Snippit:

John Hathaway of Tocqueville Asset Management in New York is perhaps the most respectable Wall Street convert to another apparently crazy idea: that the gold market is being managed. Hathaway says that what got his attention was trading action at New York's COMEX on June 27. Gold had been rising on the growing perception that the authorities were panicking in the face of gathering recession. Suddenly, a massive unidentified seller broke the gold rally. A few minutes later the Fed announced one in its series of cuts in the interest rate, which normally would have sent gold soaring. But in the thin gold market, Hathaway explains, carefully timed interventions can have long-lasting reverberations. Gold continued to slump. "It sent the message 'Gold tanks-the authorities are in control!'" says Hathaway. Not for the first time. But for him, this was one depth charge too many. "Governments try to manage exchange rates and interest rates," he asks. "Why not gold?"

In back of Hathaway's question is an even more ominous possibility. Has the recent unprecedented appreciation of U.S. financial assets simply been a great credit bubble--which the authorities are struggling desperately to control through such measures as a repressed gold price? He thinks so. "The price of gold in perpetual checkmate became a central motif in the mythology of the new economic paradigm," he writes in an essay on his company's website (www.tocqueville.com). He says that a "bipartisan consensus" believes a strong U.S. dollar is necessary to attract foreign finance, and weak gold makes the dollar look better. Just wait until the jig is up, says Hathaway. "Eventually, gold will be a multiple of its current price," he says calmly. "$2,500--maybe $5,000."

Black Blade: Good article worth looking over. The GATA argument is gaining converts and picking up steam. It looks as though the Feds are juggling way too many balls now and they could easily find it too difficult to micromanage these markets with all else that is occurring in the World. I suspect that John Hathaway could be close to the mark with his POG prediction.

Speaking of GATA - I Gotta run.

http://www.washingtonpost.com/wp-dyn/articles/A28260-2002Jan10.htmlFrom this morning's Washington Post (link).

(Hmmmm, thinks Joe Sixpack, maybe you can't just blindly believe all the stuff they say on CNN et al...)

Go Gold. Go Silver.

http://www.washingtonpost.com/wp-dyn/articles/A28530-2002Jan10.htmlAnother article from today's Washington Post.

"...the indications are that Enron was moving away from energy derivatives and into those financial derivatives."

Personally, I like those things that depend on nothing else's value, noone else's promises to pay.

Go Gold. Go Silver.

http://www.usagold.com/Order_Form.htmlNote: Below is a portion of today's Commentary & Review available normally by private password only. You can gain free access to this (almost) daily report on the gold market (and all that affects it) as well as our widely read hard copy newsletter, News & Views: A Quarterly Review ofForecasts, Commentary & Analysis on the Economy and Precious Metals by going to the link above or calling USAGOLD's offices -- 800-869-5115. Available to current and prospective clientele in the United States, Europe, Canada and Australia. If longevity and growing readership are the test, these may be the best reporting services on gold available anywhere. Thank you for your interest.


Gold Market Brief (1/11/02). . . . . . . Gold inched lower this morning after the sharp rally of the past two days. Reports say the gold market will be influenced today by options expiration in both the Comex and London OTC markets and the upcoming Bank of England auction this coming Wednesday. Recent market strength which pushed the metal near the $290 mark in recent days has been attributed to:

1. General concern over the Enron situation including persistent rumors that Enron may have had silver loans outstanding at the time of its collapse, (And logically if there were silver loans, the possibility of outstanding gold loans cannot be discounted)

2. General concern on the part of investors over the Argentina default and devaluation with those concerns being more pronounced in economies experiencing problems of their own like Japan. The concern seems to be not so much the contagion effect on the world banking system but how these breakdowns affect individual investors in the form of currency controls, equity market dissolution, etc.,

3. General concern about rising tensions between Pakistan and India including the almost casual exchange of nuclear threats, (As it is, even without the tensions India is the world's largest gold market)

4. General concern within the gold carry trade industry and among professional gold bears that the Newmont / Franco-Nevada / Normandy merger will stick a fork in the already unwinding gold lending business

5. General concern over strains on the available supply of gold the result of one through four above

"Gold appears to have successfully broken into a new range between $285 and $290. . .the willingness of speculators to play gold from the long side," says UBS / Warburg, "has been demonstrated early in the New Year and this heralds well for the precious metals in 2002."

Short & Sweet. . . . . . . . . . . . . ."Eventually, gold will be a multiple of its current price," says DeTocqueville Fund's John Hathway in a Forbes magazine article, "$2,500--maybe $5,000.". . . . . . . . . A London analyst recently quoted in a Reuters article frames the developing situation in the gold lending industry (a very bullish assessment) this way: "It's the banks that are losing out from consolidation. They have fewer clients, less margins and lower contangos. The bullion banks are already saying that they're not getting any business from the supply side, so they're going to the demand side." The net result has been a steady reduction in forward selling, leasing and gold carry trades -- the very activity that in the past has kept a lid on the gold price. . . . . . . . . . Mitsui's Andy Smith added that "This is a signal for the end of a trend, which is hedging, that has been dominant for the last 15 years. It's now become a liability because the market has become too small to trade these books." I imagine these thoughts prey heavily on the minds of those who have been short the gold market all these years. The tone and tenor of things is changing -- perhaps rapidly. . . . . . . . . . . . One trend we may have difficulty quantifying, though it may also add substance to gold's new-found strength, is the switch in Europe from local currencies to the euro. TheMinesite.com offers this assessment of euro introduction with respect to how it might affect demand for gold: "All agreed that it was an experiment which the people of France had not been asked to approve. And like all experiments there was a good chance it would fail. Already the Italians are showing discontent and the Spanish refer to it dismissively as the eurito. Small wonder then that gold is in favour as the French will not have missed the slight increase in the bullion price, the fact that silver hit an 11 month high, nor the improvement in the dollar/euro exchange rate in the first week of the new currency. It may take time to get through the system, but the switch from francs could add up to a lot of tonnes of the yellow metal." . . . . . . . . . . . . . . . . .We have had quite a few questions on gold- bull-turned-bear Blanchard & Co's anti-gold marketing campaign. I came across this interpretation

http://nhnh.essortment.com/silverwhatpric_rgle.htm This article claims that leasing was the process for the depletion of the US Strategic Stockpile of Silver prior to the 1980 bull market. (Beware the pop-up adds.)
snipped****
What was the price of silver in 1980?

In 1980 silver prices dectupled�increased ten times their previous levels. Ever since the Great Depression the United States had held two billion ounces of silver in the U.S. Strategic Stockpile. They issued metal loans�loaning silver out at a certain interest rate in return for IOUs stating that the metal would be returned. In this way they kept silver prices low�any time the price escalated the government stepped in and watered the prices down by creating more "paper silver." In other words, the government loaned out, over time, two billion ounces of silver metal in return for two billion ounces of paper silver (IOUs).
*****
FWIW

G.

http://cbs.marketwatch.com/news/story.asp?column=Irwin+Kellner&siteid=mktw
NEW YORK(CBS.MW) - prices of raw steel have begun to go up-
-15 percent in the past two months-

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http://www.usagold.com/cpm/Hoppe.html--Arm Yourself With Information--

The many new crisis-inspired rules in Argentina should suggest this to you -- having financial resources is one thing, KEEPING them and having them accessible in times of need is quite another. And truly, it is the latter condition that matters most. Typically, it's in times of crisis that the nation-state will avail itself of government powers to take resources from the "haves" to ease the pain of the "have nots".

American history (cf. 1933) shows nothing different. That is, "having" gold (to begin with) and "keeping" it (under your terms) can be two separate issues entirely. With the extra bit of information about legal precedents in the United States found here (visit URL given above) you can intelligently stack the deck in your favor and employ your resources accordingly.

http://www.usagold.com/Order_Form.htmlCompliments of Centennial Precious Metals, Inc. / USAGOLD

(click URL to claim what is yours)

http://www.washingtonpost.com/wp-dyn/articles/A31047-2002Jan11.htmlLate morning article on the Internet Edition.

http://www.prudentbear.com/boards/user/non-frames/message.asp?forumid=4&messageid=98138&threadid=98138

This all sounds so familiar.Trends we have been discussing for years now,good to see someone with the weight of Roach putting the magnitude of the imbalance in it's true perspective.It's a good thing the POO has co-operated or the monthly deficit would blantantly unsustainable to even the most strident of deniers.

The dollar's fate;your time is going to come.