in all you wish for, and work for!

Still is an honor to be in company with those of such integrity. May it spread from here to all others in need of it.

http://www.latimes.com/news/nationworld/world/la-fg-russgas1jan01,1,2436665.story?coll=la-headlines-worldsnip:

MOSCOW � Russia started reducing the pressure in its natural-gas pipelines to Ukraine today after Kiev rejected Moscow's last-minute offer to briefly delay a crippling increase in prices. The move toward a cutoff raised the possibility that European gas supplies also could be interrupted within the next few weeks.

Gazprom officials said this morning that they would begin a partial shutdown in the gas lines on the Russia-Ukraine border, which delivers about 40% of Ukraine's gas and as much as 30% of Europe's.

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The state-controlled energy giant made its move after Ukraine rejected an offer Saturday from Russian President Vladimir V. Putin to hold off on a price increase on the heating fuel until April if Ukraine agreed to pay market prices after that date.

"Yesterday, we made an offer to the Ukrainian side. We were ready to compromise in order to provide comfortable conditions to Ukraine during the winter period. But we got a refusal," Gazprom spokesman Sergei Kupriyanov told reporters this morning.

"As a result, we're reducing pressure on the pipeline," he said.

Gazprom officials said a computerized delivery system would determine how to reduce the supply of gas to Ukraine while still ensuring full contract deliveries to Europe. Possibly, they said, they will cut the flow in the two pipelines that go most directly to Ukraine, while leaving uninterrupted three other Europe-bound pipelines, but that had not yet been determined.

Russian television this morning showed workers at a control room in the town of Sudzha, near the border, scrutinizing computer terminals that control the giant red, yellow and gray gas lines that run across the border.

In Ukraine, demands for a rate increase are widely seen as a response to the "Orange Revolution." The largely peaceful uprising a little more than a year ago toppled Ukraine's pro-Russian government and helped elect President Viktor Yushchenko, whose leanings are toward the market economics of the West.

"Russia's firm position that Ukraine should buy gas at European prices is certainly a reaction to the new political course Ukraine is pursuing now," Socialist Party parliament deputy Mikola Rudkovsky said in a telephone interview from Kiev, the Ukrainian capital.

On Saturday, Putin had been more conciliatory. "Ukraine is not an abstract bunch of senior officials, and not a lot of oil and gas barons looking out for their own interests, but above all it is the brotherly Ukrainian people, and we must think about all aspects of relations between Russia and Ukraine," he said Saturday afternoon at a meeting with his Security Council.

Putin instructed Gazprom to supply gas to Ukraine through the first three months of the year at current prices, provided that by the end of the day Kiev sign a contract agreeing to pay market prices thereafter. But Ukraine said shortly before midnight that it would not sign the document.

Ukrainian lawmaker Rudkovsky said the events of the last few weeks had demonstrated Ukraine's continuing dependence on good relations with Moscow. "You can raise your campaign rating by struggling against Russia, but this is a very dangerous game in which you end up building a road which leads nowhere," he said.

Russia is demanding that Ukraine begin to pay rates similar to those it charges Western European customers, which are more than four times higher. Ukraine has been paying the equivalent of $50 per 1,000 cubic meters in exchange for shipping additional Russian gas to Europe.

Gazprom has demanded that Ukraine pay $230 per 1,000 cubic meters. The Ukraine government has said it is ready to pay market prices but insists on phasing them in gradually; Yushchenko is said to favor an initial increase to about $90.

"If Ukraine agrees to buy gas at $230, the consequences will be catastrophic," Rudkovsky said. "The chemical and metallurgical industries that now make Ukraine's economy highly competitive will immediately become unviable.

"This � will in its turn destabilize the national currency. And all of this will catastrophically affect the investment climate in Ukraine."

-Goldilox

While Putin battles to keep his Iranian nuke contracts alive, he has energy-based political issues even closer to home.

I hope we all prosper and continue to share knowledge and civilly expressed opinions in 2006! Thanks for all the years gone by. Yukon Gold Miner (YGM)....Ken

May you have peace, prosperity, good tidings and happiness in 2006.

Love the news, knowledge and demeaner that is exibited here kind people.

I guess that the high for 2006 when measured in US pesos is $900, and the final price for 2006 (1 year from now) will be $830.

Anyone else want to try their hand at this?

http://www.wpherald.com/storyview.php?StoryID=20051230-124328-9385rGerman media: U.S. preparing Iran strike

By Martin Walker
UPI Editor
Published December 30, 2005

WASHINGTON -- The Bush administration is preparing its NATO allies for a possible military strike against suspected nuclear sites in Iran in the New Year, according to German media reports, reinforcing similar earlier suggestions in the Turkish media.

The Berlin daily Der Tagesspiegel this week quoted "NATO intelligence sources" who claimed that the NATO allies had been informed that the United States is currently investigating all possibilities of bringing the mullah-led regime into line, including military options. This "all options are open" line has been President George W Bush's publicly stated policy throughout the past 18 months.


But the respected German weekly Der Spiegel notes "What is new here is that Washington appears to be dispatching high-level officials to prepare its allies for a possible attack rather than merely implying the possibility as it has repeatedly done during the past year."

The German news agency DDP cited "Western security sources" to claim that CIA Director Porter Goss asked Turkey's premier Recep Tayyip Erdogan to provide political and logistic support for air strikes against Iranian nuclear and military targets. Goss, who visited Ankara and met Erdogan on Dec. 12, was also reported to have to have asked for special cooperation from Turkish intelligence to help prepare and monitor the operation.

The DDP report added that Goss had delivered to the Turkish prime minister and his security aides a series of dossiers, one on the latest status of Iran's nuclear development and another containing intelligence on new links between Iran and al-Qaida.

DDP cited German security sources who added that the Turks had been assured of a warning in advance if and when the military strikes took place, and had also been given "a green light" to mount their own attacks on the bases in Iran of the PKK, (Kurdish Workers party), which Turkey sees as a separatist group responsible for terrorist attacks inside Turkey.

Goss's visit to the Turkish capital followed the rising international concern over recent statements by the new Iranian President Mahmoud Ahmadinejad that Israel should be "wiped off the map," denying the existence of Holocaust, and suggesting that Israel's Jewish population might be re-located to Europe.

In a December 23 report, the DDP agency quoted an anonymous but "high-ranking German military official" telling their reporter: "I would be very surprised if the Americans, in the mid-term, didn't take advantage of the opportunity delivered by Tehran. The Americans have to attack Iran before the country can develop nuclear weapons. After that would be too late."

The DDP report also said that several friendly Arab governments, including Saudi Arabia, Jordan, Oman and Pakistan, had also been informed in general terms that the Pentagon was preparing contingency plans, including "the option of air strikes," in the event of the new Iranian government precipitating a crisis.

Arab diplomatic sources have told United Press International that they have been given no briefings on any policy change beyond President Bush's "all option are open."

Bush's most recent such statement in public came on Aug. 13, during an interview at his ranch in Crawford, Texas, when he told Israeli TV: "As I say, all options are on the table. The use of force is the last option for any president and, you know, we've used force in the recent past to secure our country."

Other NATO sources have told United Press International that "all this may be mood music, a way to step up the diplomatic pressure on Tehran."

It is possible that leaks from NATO and German security sources are part of a ploy to convince the Iranian government that the Americans and their NATO allies are in dead earnest when they say a nuclear-armed Iran would not be tolerated, and that Iran had better start negotiating seriously.

But the German media speculation about the supposed U.S. plans has been fueled by a number of high-profile visits to Turkey this month, including trips by Secretary of State Condoleezza Rice, by the CIA's Porter Goss and by the FBI Director Robert Mueller, who also delivered U.S. intelligence reports on Iranian backing for PKK operations aimed against Turkey. There have also been some significant Turkish visits to Washington, as reported by Der Spiegel.

"Two weeks ago, Yasar Buyukanit, the commander of the Turkish army and probable future chief of staff of the country's armed forces, flew to Washington. After the visit he made a statement that relations between the Turkish army and the American army were once again on an excellent footing," Der Spiegel reported Friday.

"Buyukanit's warm and fuzzy words, contrasted greatly with his past statements that if the United States and the Kurds in northern Iraq proved incapable of containing the PKK in the Kurd-dominated northern part of the country and preventing it from attacking Turkey, Buyukanit would march into northern Iraq himself," the German weekly added.

The CIA Director's Dec. 12 call on the Turkish prime minister last for over an hour, far longer than customary for a mere courtesy call, and followed an even longer meeting with senior staff of MIT, Turkish intelligence. The Turkish Daily Cumhuriyet reported on December 13: "Goss also asked Ankara to be ready for a possible U.S. air operation against Iran and Syria."

Der Spiegel noted Friday that the latest high-level visitor to the Turkish premier was NATO Secretary-General Jaap De Hoop Scheffer. This is not unusual, since Turkey is a member of NATO, but the coincidence of these various trips prompted Spiegel to comment "the number of American and NATO security officials heading to Ankara has increased dramatically."

"In Berlin, the issue is largely being played down," Der Spiegel reported Friday. "During his inaugural visit with U.S. Defense Secretary Donald Rumsfeld in Washington last week, the possibility of a U.S. air strike against Iran 'had not been an issue,' for new German Defense Minister Franz Josef Jung, a Defense Ministry spokesman told Spiegel."

The original story in the German press which provoked the wider media furore was written for the DDP agency by a veteran reporter on security and intelligence matters, Udo Ulfkotte, who has in the past been criticized in the German media for being "too close to sources at Germany's foreign intelligence agency, the BND" (Bundesnachrichtendienst).

At the same time, Ulfkotte has himself come under scrutiny by German security services, and his home and offices have been repeatedly searched in the course of inquiries into allegations that he had published official secrets.

After a nice 18% runup last year, I figure a healthy 30% is due this year with increased interest in the metal. This would put the price around $672. Put me down for $672 high and a $660 close.

Happy New Year to all. I look forward to another year of intelligent financial conversation, even if it includes silver!

When incoming Christian Democratic Union finance minister Peer Steinbrueck publicly pressured Bundesbank to sell 120 tonnes of gold in Novermber of this year, president Axel Weber had an answer for him. Weber went public himself to say that the central bank would not cave-in to political pressure from the Angela Merkel government. "I assume," he replied angrily, "that we can agree to respect each other's responsibilities." One month later senior conservative lawmakers within the CDU fell in line with Bundesbank stating their continued opposition to gold sales. By taking this position, Bundesbank sent a loud and clear message that resounded in the gold market and bullion bank trading rooms around the world. Central banks can no longer be relied upon as a ready source of metal to support gold lending schemes. In early November gold traded in the $450 range. By December, it had pushed over the $500 mark and briefly nudged $540 per ounce. Weber's courage in the face of political pressure earns him our Man of the Year award.

This announcement touched off a string of similar announcements from other central banks including South Africa's. An article appearing in China's Peoples� Daily called for the Chinese central bank to increase its gold reserves from 600 tonnes to 2500 tonnes as a means of diversifying out of its huge dollar position. Government policy in China is often presaged with articles in the People's Daily, and the thought of China being in the market for that amount of physical metal is likely to loom large in the gold market in the months (if not years) to come.

Here's wishing all of you a happy new year and a golden sunrise! Gold will reach 677.00 by April and 745.00 by year end.
*el dorado*

I am quite optimistic for the POG in 2006. Gold will continue to rise in value, while fiat will continue to decline in value.
I must admit however, if gold went to $10,000, it wouldn't lessen the deep, profound shame I have for the torture, rape, murder, fraud and extortion the US gov't perpetrates with impunity at home and abroad.

May 2006 be a year of growing vocal uprising among the decent people of the world.

"Beware of the risen people" � Thomas Moore, The Hunt for Confederate Gold


Best Wishes

2006 could be a breakout year. My $525 2005 forecast hinged on G-8 programmed dollar weakness. Instead we had the dollar and gold going in the same direction for most of the year. The obvious question is "If gold managed to rise over 25% with the dollar appreciating, what might it do should the dollar resume its bear market?"

2005 brought us many surprises -- two of which I allude to below in my Man of the Year and Event of the Year choices, but none larger than gold's breaking its shackles with the dollar.

Another big surprise for me was the changeover in the mainstream press from anti-gold to pro-gold. In the last two months of the year, many gold market articles on the finance pages started with "Gold pushed higher on the prospect of central bank buying. . ." How many of us would have guessed at that change??

Much of this was signaled early in the Financial Times as I brought up here in a previous post. It all culminated December 21st in a full page opinion section article headlined: "Precious mettle - Why the world is daring to get a grip on gold." (The "mettle" instead of "metal" is deliberate.) I cannot recall in all my years of reading FT a full page article in the opinion section on gold's prospects -- and a largely positive one at that. To me it signals acceptance of gold's new role in personal, institutional and official portfolios - a major crossover.

One wonders what all of this might mean for the mining companies that have sold a goodly portion of their production forward at much lower prices and the bullion banks which have sponsored them. We could see a major Ashanti-style meltdown in 2006. I wouldn't surprised if we did. Although those who have acted against the gold price in the past have been humbled, I do not believe they have been taken out of the picture completely -- so we will still have bouts of price weakness as they attempt to assert their authority. There may yet be a battle between the commercial bullion banks and the international accumulators. Short-covering is likely come into play at any sign of weakness, and by the end of the year, we might be able to claim final victory in the long battle between the bulls and the bears.

_______________

In the background, rising oil is consistently and constantly pushing the inflation rate in countries all over the world. High oil prices are here to stay and the reality will wreak havoc from end of the globe to the other. As a result, big-time investor gold demand has become global in scope. All investors -- large and small -- no matter where they live must hedge or lose to currency depreciation versus goods and services.

Simultaneously, mine production has gone into a long term decline that might not right itself for a decade or more, and central banks are backing off their previous liberal policies with respect to their gold reserves. I don't think any of us can fully comprehend what central bank gold demand might do to the price particularly in light of the huge dollar reserves building up in the petro-states as well as the export-based economies.

And then on top of it all, we have the "Big X-Factor" for 2006 -- the ascendancy of Ben Bernanke to head of the table at the Federal Reserve. Who knows what that might mean for the economy and gold? I have always wondered if Alan Greenspan acted directly against gold all these years through the New York Fed trading desk, but how can anyone really know? We might learn more on that score as 2006 and the Bernanke chairmanship takes on a character of its own.

All in all, I agree with several commentators who have said:

"Gold may have entered a new era."

When you combine all of the above with the fact that none of the disturbing trends (the twin deficits, etc) driving gold demand has been addressed, it all adds up to what could be a breakout year for gold.

Rather than a semi-objective specific dollar forecast like I made last year, I will just say that gold could experience a break out year in 2006. As is the case in any breakout, the top will be difficult to call. If I were to make a wild guess though, I would look for a interim top in the $760 range.

___________________________

As with any forecast published here, those trading on these opinions and forecasts take full responsibility themselves. Anything can happen and a down year in gold is not out of the realm of possibility.

The best-kept secret in the investment world is this:
"Almost nothing turns out as expected"
Forecasts rarely come true, trading systems never produce the results advertised for them, investment advisers with records of phenomenal success fail to deliver when your money is on the line, the best investment analysis is contradicted by reality.
In short, the best laid investment plans usually go wrong. Not sometimes, not occasionally � but "usually�
(Harry Browne, "Why the Best-Laid Investment Plans Usually Go Wrong", New York: William morrow and Company, Inc., 1987, p. 1)

But of course, these are not usual times. Isn't what everybody thinks about the time at which she's living?

To all goldbugs wherever you view this site.

A HAPPY AND PROPEROUS GOLDEN NEW YEAR!!!

My portends: Gold at 30% higher by June 1st 2006 = US$ 672.00

Balzac

MY apologies , I hadn"t read far enough down to see your prediction, sometimes people think alike, maybe we are right???
Balzac.

Sadly, I agree, longing for the day when I can be a proud American once again. I doubt, however, that this will be possible under the aspices of the "Empire of Debt" -- http://www.lewrockwell.com/french/french35.html -- whose days look increasingly numbered.

White Rose - please put me down for a POG high of $850.00 in 2006, with a close at $775.00. I think Bernanke and his helicopter $$ and an invasion into Iran will impact POG in 2006. We could also see POO hit $100.00. Cheers,

Waverider

"When incoming Christian Democratic Union finance minister Peer Steinbrueck"

Not to be picky,but Peer Steinbr�ck is member of the SPD,the so called "great coalition" is made of CDU and SPD.

I know that USA gold has somewhat relaxed the language and the subjects that can be discussed here; however you, Sir, have gone far beyond what would be normal a discourse in interjecting your radical beliefs by accusing the USA of murder, torture, rape, fraud and extortion at home and abroad. The shame you say you are feeling should be because of your outrageous statements about this country. Normally a malcontent like you would just be laughed at but during this time of war when men are dying to defend this country and at the same time make other men free it is no laughing matter. I pity you if you believe the garbage you spew over this forum. It make everything else you say irrelevant to any discussion on any subject. God Bless America. White Hills

@ White Hills,

You continually wave the flag but flatly close your eyes to any and all evidence.

It's sad that you can't understand that someone can love their country enough to not blindly follow those who stoop to the depths of the Mena Drug Gang that have bought their way into the White House for the last 22 years. By the way, when Ollie North was pardoned by Bush 41 for refusing to testify about his arms for drug deals, who was he selling all those drugs to? Is flooding our streets with heroin and cocaine REALLY in the best interest of National Security?

You can echo the babble that we are "not supporting the troops", but who is actually supporting them? Those who want them home alive to do their real job of defending America, or those who send them on misadventures to secure the poppy fields in Afghanistan and the oil fields in Iraq for their private stash?

Yes, we get the leaders we deserve. The history of the Bush family profiting from Nazi spoils, running drugs through Noriega, arming hit squads to kidnap college students in South America, propping up Saddam for 25 years, and escorting their bin Laden family business partners from the US on 9-12-01 speaks for itself.

Maybe these are all excusable actions to you, but a growing number of Americans are seeking a higher moral ground. We are no longer buying the line that "National Security" means enriching a few campaign contributors and selling out the American worker.

I have offered to explore the evidence with you on any Saturday or Sunday, but it seems you are more interested in blind loyalty than examining evidence of abuse.

What is really patriotic:

1. To "support the troops" and to support the Government's actions and policies.

2. To question the Government's actions and motives and to hold Goverment to higher standards ?

Both actually. The common thread is eternal vigilance.

I hear all these things about domestic spying, outing of CIA agents, and so on and so on. I hear things about possible attacks on Iran and Syria (what about North Korea ?). An eternal "War on Terror". Whatever happend to the "War on Drugs" ? That is one thing I don't hear much about any more. I guess they found a better war ?
I hear plans for keeping the troops in Iraq until the "job" is done. When China ramps up it's space program, will we enter a new space race ? I haven't heard much about plans to "fix" Social Security and Medicare lately. Energy suppliers are realizing the pricing power that they have, but I don't hear much about conservation or alternate energy technologies.

So with that, on with the predictions in no particular order or logic, and with no particular reasoning other than gut feelings (I'm psychic, no ?).

1. Only one thing IS sure. All of the above is (and will be) very expensive !!! And with the cessation of M3 reporting, the only way we will know how expensive it all really is, is by the price of gold (and silver, etc., etc.). Gold will reach a high of $785 and end the year at $760. Silver will reach a high of $13.05 and end the year at $11.90 .

2. Russia has shut off gas supplies to the Ukraine. Ukraine always wanted a "market economy". And now they have it. Be careful what you wish for. Now they must pay market prices for natual gas or shiver. I predict that the Ukraine will threaten to block the pipelines that run through their country from Russia to Europe. A sort of blackmail, if you will. Eventually a deal will be struck - Ukraine will pay higher prices, and Russia will give them a reasonable discount (for a time). Crude oil will hit $86 and end the year at $86.

3. The Bush administration will continue to feel the heat of threatened impeachment proceedings. But those proceedings will be averted. The US will suffer a series of small-scale conventional terrorist attacks.

4. Iran will be bombed and special forces will conduct limited operations in the country. But no large-scale invasion will occur. The terrain of Iran is vastly more difficult than Iraq. Internal Iranian resistance to the hard-line government will increase, but not enough to overthrow the government. The Iranian oil bourse will proceed as planned, although it will have somewhat of a slow start due to attempts to thwart it.

5. Hurricanes will cause more damage in 2006, but not nealy as bad as in 2005. Major (but not catastrophic) damage will be caused by an earthquake in the US.

6. The "Housing Bubble" will lose some air, but will continue to float along defying gravity and expectations of deflation.

7. The stock market will not suffer a major crash. The bond market, however, will see a major "event". This will be unprecedented and nothing like it has ever happened before. It will be the conundrum for all time. The bond market will falter, and the masses (like they always do) will initially run to the bond market for cover ! The action will be highly chaotic, and the chips could fall in many different ways. The FED will indeed lose control of interest rates. The yield curve will remain stubbornly flat, but yields themselves will be highly volatile.

8. Emergency controls on capital flows may be initiated. Many dollars from overseas attempting to flow into sectors other than the bond market will be blocked. But that will only work for a while as the back-pressure builds and the flows find other routes to avoid the blockage - like water through a leaking (or blown) dike.

http://biz.thestar.com.my/news/story.asp?file=/2006/1/2/business/20060102075421&sec=businessJanuary 2, 2006 -- THE price of gold is expected to continue its upward momentum and remain on the high side this year on good investor demand.�

Analysts believe the climb in global gold price will be driven by strong jewellery sales from the burgeoning middle class in China and India, Japanese consumers' concerns about inflation, recycling of petro-dollars by Middle Eastern investors and muted gold supply growth.�

"Buying by the central bank will also boost gold price," said an analyst.

...a trader found last year's run-up in gold price puzzling.�"Inflation was tame and the US dollar firmed," he said.

^---(from url)---^

The trader ought to spend more time reading at USAGOLD; then he'd not be so puzzled by the evolving price.

R.

http://www.bloomberg.com/apps/news?pid=10000082&sid=aro6l2lEXSHI&refer=canadaJan. 2 (Bloomberg) -- Gold traded near its highest annual close in 25 years as hedge funds and other large speculators may buy more bullion to diversify their holdings.

Gold ended 2005 at $517 an ounce, the highest since 1980, after having reached a 24-year high of $541 an ounce on Dec. 12 by buying from investors concerned over widening U.S. budget and current account deficit.

...The U.S. government reported a budget deficit of $83.1 billion, a record for November. The country's U.S.'s current- account deficit, a shortfall in trade and investment flows, is projected to widen to $759 billion this year from last year's $668.1 billion. That means more dollars need to be converted to pay for goods.

The U.S. current account deficit and oil prices pose a "significant risk" to the world economy, European Central Bank Governing Council member Nicholas Garganas said...

^---(from url)---^

Just as it ever has, the system evolves as necessary in corrective response to similar evolutions of problems and imbalances that arise under the shortcomings of the existent framework.

Hence the latest rise of gold, as the major players seek it out, mindful that the era of the dollar as reserve asset has grown past its prime.

R.

What about "unintended" collateral damage to the Iranian oil bourse by some "terrorist" attack?

I'm just wondering if the Europeans have more safe "free trading aces" in petto than the likes of Iraq,Cuba,Iran.

Btw,during this holiday season I started to read "Geld,Gold und Gottspieler" by Roland Baader,very important book in my view,1 or 2 faults in FreeGold suddenly sticking out.

Anyone familiar with the work of Baader?

http://www.iht.com/articles/2006/01/01/news/bxfund.phpBloomberg; JANUARY 2, 2006 -- The investor Warren Buffett and the biggest banks in the currency market - Deutsche Bank, UBS and Citigroup - missed the dollar's rally in 2005. But for 2006, they are standing by their old predictions.

These investors and analysts missed the gain by focusing on the U.S. trade deficit instead of a widening gap in interest rates in the dollar's favor, driven by eight Federal Reserve rate increases.

Buffett and the analysts say they were not wrong, just early.

"There are signs the Fed may stop raising rates, so the dollar may go down," said Benedikt Germanier, a currency strategist in Zurich at UBS, the large foreign exchange trading bank.

Deutsche Bank, forecasts a drop in the dollar, with the euro rising to $1.27 by the end of 2006. UBS in London, expects a euro rate of $1.30, and Citigroup in London is the most bearish on the dollar, at $1.36 for the euro.

Together, the banks account for about 37 percent of the trading in the $1.9 trillion-a-day market for foreign exchange, according to Euromoney magazine.

Buffett, who has been selling the dollar since 2002, said the currency should fall because the trade deficit, which grew to a record $68.9 billion in October, keeps widening.

...according to a statement from Berkshire Hathaway on Nov. 4, the company, which had $926 million of pretax currency losses in the first half, used forward contracts, or agreements to purchase or sell a currency in the future at a preset price.

Buffett, based in Omaha, Nebraska, said the United States must introduce tariffs to make imports more costly and do more to promote exports.

"The policies that we're following are likely to lead to a weaker dollar over a long period of years," Buffett said at a news conference in Boise, Idaho, on June 20. "It's not a forecast for next week or next month or even next year."

Debbie Bosanek, an assistant to Buffett in Omaha, said Buffett had no further comment.

^---(from url)---^

With the above-stated banks accounting for "about 37 percent of the trading in the $1.9 trillion-a-day market for foreign exchange", one has to consider the impact their dollar-bearishness in the coming year may have by way of self-fullfilling activity in the market.

R.

@TC,

"Deutsche Bank, forecasts a drop in the dollar, with the euro rising to $1.27 by the end of 2006. UBS in London, expects a euro rate of $1.30, and Citigroup in London is the most bearish on the dollar, at $1.36 for the euro."

Should we assume by these comments that the prominent bankers expect the "bugger-thy-neighbor's currency" tactics to:

1) desist, or
2) not work?


Although, these levels really just put us back at 2004 equilibria.

I propose an unofficial contest to guess the high price for gold in 2006 as measured in US "dollars", as well as the closing price for the year. Here are the entries so far:

24karat: $672 for 2006 high, $660 for EOY 2006
Balzac: $672 for June 1, 2006
el dorado: $745 for EOY 2006, $677 for April 2006
MK: $760 or 2006 high
waverider: $850 for 2006 high, $775 for EOY 2006
White Rose: $900 for 2006 high, $830 for EOY 2006

Let me add my main prediction for 2006: everyone will be disappointed.

I invite everyone to try their hand at predicting the gold price high and ending price for 2006.

Sir Goldilox, AMAZING! White Hills

Its my guess that gold will hit 752 and closet the year at 726.40. Going to be a very good year for gold bugs. I also suspect silver to close at 22 which will be better than gold. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Your item #7 is clear as mud.I hate it when people don't use plain, understandable English. Please be specific. What do you mean in #7?

http://www.newsmax.com/archives/articles/2003/11/20/185048.shtml@White Hills,

Even more amazing that you never address a single issue in your smug responses.

POG is not rising in a vaccuum. As many have remarked, it is a very political metal, and reflects the world's political climate.

Not that rising repression is "good" for anyone, but many goldophiles recognize that the insurance value of private gold ownership is even more important as we move toward martial law.

General Tommy Frank's "Cigar Afficionado" interview was quite revealing.

Check it out.

@ specieman,

"Energy suppliers are realizing the pricing power that they have, but I don't hear much about conservation or alternate energy technologies."

Without going into tangential detail here, the mainstream media is passing over this topic, but there is actually a lot going on that can be accessed on the internet. Here are just a few favorites for your reading pleasure.

http://www.americanantigravity.com/ (news site)

http://www.infinite-energy.com/ (news site)

http://pesn.com/ThisWeekinFreeEnergy/ (news site)

http://www.newscientist.com/ (news site)

http://depalma.pair.com/index.html (recently passed on researcher with great position papers)

http://www.cheniere.org/ (ret. Lockheed and US Army researcher)

http://www.powerlabs.org/ (young post-grad researcher)

http://www.jmccanneyscience.com (independent rsearcher)

I have enjoyed your discussions the past year and looking forward to the coming year.$640 high,$640 eoy.M.

http://www.usagold.com/gold/special/starter.html

In years past, when a major economic risk developed, investors would typically undertake a flight to "quality" or "safety". That usually meant buying US Treasury bonds.

But what if a major "event" were to occur in the US bond market ? Suppose Asian banks slowed their buying of US bonds, all the while M3 exploded upwards due to the twin deficits (and monetization of those deficits by the Fed). If no one buys the bonds, then the Fed has to.

In other words, the so-called bond market "conundrum" is really this:

The current flat (or slightly inverted) yield curve is artificial. It is an artifact, purposly created by the Fed to depress inflation expectations. Everyone thinks that an inverted yield curve signals a coming recession. What better way to manage inflation expectations than to engineer an inverted yield curve by raising short-term interest rates and by buying (monetizing) longer-term US Treasury bonds ?

In the end, as investors flee the bond market, the Fed will enter the bond market, all the while saying anything and doing anything in an attempt to cover their tracks and to manage expectations and sentiment.

In sum: the Dollar will go down against "things".

@ specieman,

"What better way to manage inflation expectations than to engineer an inverted yield curve by raising short-term interest rates and by buying (monetizing) longer-term US Treasury bonds ?"

Better than stright monetization has been the buying of debt by "trading partners" and "silent" Caribbean accounts.

This keeps the spotlght off the FED as an open participant.

With foreign CBs falling "out of line", it will be interesting to see who assumes their role.

Thanks. That's what I thought you may be alluding to; but I don't see why or how the masses would rush to the bond market for safety under those conditions. I'm not convinced the Fed can manipulate the long end rates w/o flooding the world with dollars. They certainly would have to offer to buy more than were offered for sale to keep the long rates low. I remember the early 80s when rates on the long end hit the high teens or more.Folks who bought then are sitting fat & sassy today, if they held on.
This is all interesting conjecture anyway. I guess we can't say how this will end, except we are pretty sure it will end badly.Regards.

"In sum: the Dollar will go down against "things"."


Druid: Great commentary Sman. As this plays out, the inversion will become more pronounced but what will become of all that "money" that is scrambling for some form of safety? It's my guess that the Bond Apprentices will head for equities which will cause a massive re-inflation of those markets both here and abroad thus fooling local investors. I believe this is already occurring with the Nikkei. While this plays out, certain Central Bank Masters will be reconfiguring their portfolios by swapping out of US debt and dollar reserves with the ultimate wealth reserve of all time, gold bullion.

I'm still trying to figure out the Iran angle and how this fits into the puzzle. It could be that we're in the initial stages of the mother of all re-inflations and that this additional buying power into the equity markets could foretell that the "markets" like the idea of going into Iran and thus provide the justification for it. I don't know but am still thinking on this one. Great post Sman.

When the Fed raises short-term interest rates, that sends a signal that they are serious about maintaining the "Strong" dollar. With the yield curve tilting towards negative, that sends an additional (but false) signal that recession is coming and that bonds are the thing to buy. So the "masses" (or perhaps I should instead call them "fools" since the "masses" generally don't have any money to invest) come in and buy bonds (and the Fed picks up the slack). And the "smart money" will be more than happy to sell them the bonds.

Greenspan appears to enjoy superfolous public speaking. Bernanke seems like a quiet guy. But don't be suprised if "Fed Speak" actually increases in 2006. As the danger level rises, more Fed Speak will be spoken.

@Goldilox,

Yes, obviously there are prive entities working on energy technology. But I don't see much evidence of Governemnt activity in that arena. And if there was, that would be just one more thing to pile onto the budget deficit.

Last I heard, they were actually laying off people at NREL (the National Renewable Energy Laboratory).

"private" entities

Thanks,
Yes, I think equities may perform reasonably well in 2006. If you buy ownership into a corporation, and that corporation owns assets such as real estate, mineral deposits, intellectual property, etc., then you are indirectly buying "things".

@ White Rose
Please see my guess in message # 139930 (point #1).

High: $750
Close: $725

Sir Goldilox:

I was waiting to answer you in detail on Saturday or Sunday, when political discussion is allowed, and I will still do that, but here is one fact you can chew on in the meanwhile.

The bin Laden flight was on September 20 (see footnote 28 in the 9/11 Commission report, with supporting documents). That was one week after the FAA allowed commercial air traffic to resume at 11am on Sept. 13.
Keep the facts straight and don't depend on Michael Moore for your information. If this is representative of your "facts" I am sure that I will find other misinformation when I have time to check all of your other accusations, falsehoods, half-truths, insinuations and "left-wing talking points" parroted from left-wing blog sites such as "freerepublic" See you on the weekend. WhiteHills

Dear Goldilox:

Many of us (as I'm sure you would claim) "knee jerk" patriots do not wish to engage in "issue" politics as so typifies a liberal or the "win the battle - loose the war" libertarian. We generally start from some Acoms Razor view of the world that deals quite easily with the likes of you and all your petty and mostly irrelevant issues. For example, here's a glimpse of General Franks' world view that I happen to agree with � (taken from the General Franks interview you posted)

((Franks ended his interview with a less-than-optimistic note. "It's not in the history of civilization for peace ever to reign. Never has in the history of man. ... I doubt that we'll ever have a time when the world will actually be at peace.")).

Now, try to reconcile this statement with your criticisms of the USA and your desire for higher "moral ground". Do our reactions to the events of 9/11/01 square with Frank's statement? You bet. Can these events be explained solely on the basis of the greed of the Bush family? Please! Where would your so called 'higher moral ground' lead us? hmmmmm? To a refutation of Franks world view? Please! Speaking of vagueness, your reference to higher moral ground is well cloaked in mystery but is in fact your acoms razor. So don't be shy - put it to the test.

I'll remind you that our founding fathers were quite wealthy � but chose a path that put their lives, the lives of their families, and their fortunes at mortal risk. Of course, extreme pessimism would chalk up their actions to simple greed for power. But my personal reflections yield that people can have convictions that transcend personal aggrandizements. I guess that makes me a hopeless idealist. Of course I don't care - Whether humans can intrinsically transcend their inner evolutionary animal, is not important, a belief in that transcendence,is. No?
What else is there worth believing in?

Let me supply an alternative explanation for current events. The larger view IMHO and a little lesson on reality as it is not what you want it to be. Iraq and conflicts in the middle east (and this includes control of oil) is fundementally a cultural conflict. Now I don't harbor misgivings against the people in Islamic nations any more than I harbored against the American Indian � but the simple fact is that irreconcilable cultural differences must be resolved one way on another. That is the fundamental defining feature of the history of civilization that Franks refers to. Does the West have irreconcilable differences with Islamic culture? You bet. If you would have us believe that reconciliation can be accomplished through the application of pure reason (akin to the Rodney King "just get along" montra) � then you, my fellow gold bug, are the naive idealist. Trust me when I tell you that within Franks� statement is an acknowledgment that war, and the threat of war, has been and will always be, the primary reconciling agent.

Now if you don't think this is fundamentally a cultural conflict � or if you don't see any security need to preserve U.S. global hegemony, then your issues of personal motivation through greed and other selfishness may have more validity. But state your world view first so I can know if your Sunday morning chats can be productive. Based on your posting to White Hills, I won't be missing church.

Now here's the part where you will call me a fascist. Do I think the West should prevail in this cultural war. Yes. Why? Because on balance it is the superior and more adaptable cultural. Are there elements of islam that I like? Yes. Are there western cultural elements I don't agree with? Yes. But I won't throw the baby out with the bath water when there's so much at stake. And that's what all your issues amount to � bathwater. My willingness to stategically suspend a few freedoms to protect the baby is what makes me, and IMO, all true citizens, a patriot.

Finally, what makes me a believer in real money? Fiat has placed our Judeo Christian/ Roman Greco cultural at great risk. Can we survive it? I don't know. But when it is combined with the other forces of secularism and the collapse of our social institutions, I must admit to harboring a "half empty" demeanor. And to be quite honest, you and others, who seemingly operate without a larger philosophy, are stealing what little water I have left.

Please forgive me for my inability to participate in the forum on a continuing basis � I just don't have the time and today's "day off" posting is a rare exception. I do however have the time to appreciate responses.

I don't think we need an excuse about Iran other than self preservation. If Iran develops a nuclear weapon, they will use it.I think the groundwork is being layed right now amongst our allies & aquaintences for a strike either by us or Israel or both against the facilities in Iran. Of course oil & gold prices will explode with the first detonation in Iran. My only problem with this is that I don't think we should do it without having first instituted conscription again.We need more "feet on the ground" capability. We should not undertake such activity w/o having considered all possible "unintended consequences" & w/o overwhelming force on our side.
By the way, my guess on the 2006 gold high & close is $823.

@ Gene,

Using your "logic", someone should have nuked the US long ago, as it is the only country who, once having a nuclear arsernal, immediately used them on civilian targets.

In fact, the US is still the only force using nuclear contaminated ammo, preferring to expose its own troops and continue to deny the reality of "Gulf War Syndrome" until most of those soldiers affected are already dead from slow nuclear poisoning.This is the same insane policy as the chemical and biological weapons employed in Viet-Nam. My brother came home from Nam and suffered for 15 more years from officially denied "friendly fire poisoning," and was finally awarded his due "honor" posthumously. I hope your children and grandchildren are treated better by your blood thirst than my family has been.

Thankfully, everyone in the world does not as readily promote mutually assured destruction as you do.

As much as I would like to respond, I know from experience that no amount of reason or logic will convince a left wing whacko of anything. Boy, did Bound Spirit ever have you pegged correctly. Discussion over!

Thanks Gene,

I cetainly expected no less than childish epithets after reading your first post.

I have some very conservative friends who are more than willing to engage in intelligent "no-name-calling" debate, but you obviously aren't prepared for that level of discourse.

What is it about people who speak the truth, that they must be crucified?
What is it about people who hear the truth, that they must crucify?
Does the truth not remain long after the messenger has been demeaned and murdered?

Best Wishes, from one who has been condemned to eternal irrelevance.

http://www.gold-eagle.com/editorials_05/lundeen123105.html
Gold And "A Mug's Game"
The Gold / US Currency in Circulation Ratio
by Mark J. Lundeen

Ssnipses:

"For the better part of the past 86 years, holding gold has been what Humphrey Bogart in a 1938 gangster movie would have called "a mug's game". A mug's game being an occupation best left to losers. In this article I will discuss an oscillator that for 86 years has correctly called the turns when gold was the smart play and when gold was best left to the mugs. I call it, "The Gold / US Currency in Circulation Ratio" (The Gold / CinC Ratio or just The Ratio). Right now, The Ratio is telling us that gold is a mugs game - no more."

"The Gold / CinC Ratio is very simple. To construct it, one only uses as variables the price of gold and US Currency in Circulation (CinC) both indexed to 1.00 on 05-January-1920."

"The Ratio trends downward as CinC increases at a rate faster than the price of gold and holding gold becomes a mug's game. As The Ratio trends down towards its lower end point in the cycle, the markets reach a point of revulsion to Federal Reserve Notes (dollars). Confidence in "the full faith and credit" behind those controlling the issue of US currency is shaken, serious money sell their dollar assets to buy hard assets including gold, and gold is no longer a mug's game."

-----

A different... ssimple way of showing how It prices dollars...and what we all know is coming for dollars and they that keep and use them. Ssir Gandalf would like the chartses, they resembles "dollar-waterfalls" he likes so much.

May you find safe ways through 2006 and beyond, precious.

S.

Thanks for the reply. I differ with your thoughts, but I have never labeled you "facist", or anything else - those, my friend, are your own words. I'm surprised that you would stoop to accuse me of that, given the thoughtfulness of the rest of your reply. I'm happy to engage your ideas in open discource when appropriate without resorting to name calling. I leave that tactic to less thouhgtful posters.

As to the sources of my "world view", I rely on reports and anlayses by those who review the largest slate of facts that can be assembled. One of my favorites is a book promoted on the very right wing Puplava site entitled "Confessions of an Economic Hitman", a rather scathng treatise on the tactics of dollar hegemony.

As to White Hills accusation that I get my facts from Michael Moore, I have referenced a lot of sources in the last few years, but never Michael Moore, as I believe he is no more independent than FOX "bought and paid for" News. If WH is unable to differentiate those sources, I suggest he should do more in-depth research before posting such off-the-cuff remarks. As to left-leaning tendencies, I have no more love for the Democratic Party's "government trough" agenda than I do for the NeoCons "conquest" agenda. I agree more with Ron Paul more than anyone on the left side of the carpet, but I don't let spinster's labels prejudice my opinion of someone's ideas.

I won't go into any more detail in deference to the host and topical preferences, as I do not reference these issues anymore except when responding to someone else's post.

As POG reflects the world political climate, among other things, I think we are likely to experience MK's projected "breakout" in the coming months. I concur with those who are predicting some large increases and wild volatility in response to dollar weakness and political unrest.

Prosperous New Year to all.

It's the "other" gold forum that discusses everything except gold and precious metals.
They are also, experts at insults, religion bashing and keeping their forum in an constant hostile enviroment.
If the members of this great gold forum want that kind of a dialogue, then I wish everyone a "Happy New Year," and a goodbye.

@ Sir Smeagol,

Interesting article. Despite all efforts to sweep abuses like Barrick-Banchard under the table, the "smart money" responds to the bigger picture, which is not very fortuitous for unabated dollar hegemeny.

I still question the bankster predictions TC posted yesterday, as I wonder how willing they are to continue their "bugger thy neighbor's currency" policies, but it is very likely that in the nearer term, gold will respond well irregardless of CB reactionism.

-G

http://www.gold-eagle.com/editorials_05/rkirby010106.html
The End Of The Innocence
Rob Kirby

"To any untrained [or uninformed] eye, viewing the stockpile data of physical gold 'warehoused' at the NYMEX's COMEX division in NY - admittedly nothing seems to be amiss [ie. warehoused totals don't seem to change much]."

"The "churn" on COMEX - for now - serves as strictly a 'change of ownership' of the physical stockpile. It seems the physical metal ownership is being acquired by some entity [s] in such a way as not to draw attention by significantly drawing down on stockpiles - so it's all optics."

"Over the next three months, the U.S. dollar faces an uncertain future owing to likely significant liquidations in favor of the Euro with the establishment of a Petro Euro Oil Bourse - [March 20/06]. This uncertainty could significantly jeopardize the U.S. dollar's standing as the world's reserve currency."

"March 20, 2006 - like it or not - is shaping up to be a date of significance. As this date approaches it will be interesting, indeed, to observe the machinations of COMEX warehouse stocks of metal as well as the fortunes of Iran - geopolitically on the world stage."

-----

The dots are being connected...we watches...

Thoughtses?

S.

in our last Post, about the Fed susspending their M3 publishing at the ssame time.

And the Ides of March to boot. What a confluence.

Ssir Goldilox, the Banksters will do what they have always done...meddle in affairs better left to the natural order of things...until everyone wises up... or worse.

S.

http://sltrib.com/utah/ci_3356234A very interesting article on mining in Nevada.Never realized Nevada is the third largest gold producer in the world behind South Africa,and Austraila,and produces four fifths of the gold in the united states.

Dear Mr. Gene,

Thank you for articulating in advance your fascist point of view by calling Goldilox a few names and quickly declaring your contribution to the discussion over. At least this is something we can agree on, even as the content of your and Bound Spirits' remarks turn stomachs throughout the thinking world.

Thoughtful members of the world community do not take General Frank's opinion as the word of law any more than they support conscription as a way to get "our" oil out from under "their" countries. For your information, the "clash of civilizations" that warmongers like to cite as the reason for present-day conflicts already happened a thousand years ago. Rather, it is the racist character of the State of Israel that is the root cause of the state of today's world. When apartheid was the official policy of South Africa, the civilized world brought pressure against that rogue nation until it was abolished. This will happen eventually to Israel, too. No matter how many fascists and religious racists promote war as a solution until it happens.

If you want to support the "institution of conscription" as preparation for your "final solutions" may I suggest that you make your move by signing up yourself. You might consider requesting that the daughters of our oh-so-brave President Bush join you, too. Such a "voting with your feet" action would be far more persuasive than any list of names you might like to call the "liberals" and "left wing whackos" that find your views repulsive.

For my part, I will continue to oppose aggressive war just as I did during the Vietnam war. I will never support the government of the United States in any use of nuclear weapons to subdue any other part of the world, nor will I support the ongoing commission of crimes against humanity, war crimes and/or violations of US laws, all of which are trademarks of our current government, in any misbegotten bid to preserve "U.S. global hegemony" or whatever other fancy name you would like to use to describe tyranny and/or human oppression.

@ Smeagol,

Kirby's observations bring up an interesting point. Many posters have suggested that nationalization of in-ground resources may be imminent if more drastic measures are needed to retain national wealth, but what about a Nixonesque nationalization of the Comex to keep inventories in-house?

Or maybe not a complete nationalization, but serious export restrictions, instead.

That would certainly add fodder to the fan.

@ PH,

Please don't lump Bound Spirit with posters as unwilling to converse intelligently as Gene. At least Bound Spirit states his case and is willing it defend it. As with White Hills, I am always willing to debate when he is willing to bring his research to the table (on weekends and holidays).

The bottom line is that none of this is about my or anyone else's beliefs, but the revelation of goings on about us to our mutual enlightenment as a group.

Some affect gold overtly, and some, as Another revealed in his oil for gold analogy, are more covert in their actions and effects.

The wars, as dollar hegemony actions, certainly affect POG (the last Iraq invasion saw a 25% run up in a short time), but not always as expected.

Nor do we always immediately recognize the cause and effect. Was the POG run up just a natural response to political instability, or a more specific response to the policy of printing $billions more debt to purchase a "coalition"? Between Pakistan, Turkey and Israel, there were more than $50 Billions on the table for coalition support. That's a lot of overnight debt to add, on top of the direct costs of war.

http://www.business-standard.com/smartinvestor/storypage.php?leftnm=lmnu6≤ftindx=6&lselect=10&chklogin=N&autono=210343snip:

Buoyant global rates seen as trigger
Dilip Kumar Jha / Mumbai January 03, 2006
Domestic base metal producers have increased their prices substantially, effective January 1, in sync with international rates.

State-owned integrated copper producer Hindustan Copper, in one of the largest-ever price hike, has increased rates by Rs 11,000 a tonne across the board,.

Aluminium major Hindalco Industries has hiked selling prices by Rs 4,000 a metric tonne, while state-run National Aluminum has raised prices by Rs 3,500 a metric tonne across all product categories.

Hindustan Zinc, the largest zinc producer in the country, also raised its selling prices by about Rs 1,300 a tonne to Rs 107,300 per tonne (SHG) effective January 1, 2006. In the case of aluminium, this is the second price rise within a span of 15 days, following the 5,000 a tonne hike on December 17.

The current hike has increased prices of aluminium ingot IC20 to Rs 111,450 a tonne, while billets CH10 has increased to Rs 114,450 a tonne. Aluminium wire rods WE20 surged to Rs 120,050 a tonne, while aluminium cast strip CS10 has shot up to Rs 120,800 a tonne.

Aluminium prices are going up interruptedly in the international market with the white metal touching all time high of $ 2300 on the London Metal Exchange (LME).

Lower than expected aluminium inventories in November are mainly attributed to the current price rise. Total world aluminum inventories in November fell by 30,000 metric tonne to 3.195 million tonne, from a revised 3.225 million tonne in October. Total unwrought aluminum inventories in November fell by 18,000 tonne to 1.765 million tonne compared with the previous month.

Indian aluminium production, however, was higher at 612,247 tonne, up 6.7 per cent in the first eight months of the financial year.

"A similar price rise in the international market is not the only criterion on which we decide the new price trend. There a number of other factors including comparative realisation in the international markets. If the realisation is better in the international markets, then we increase prices. Ultimately, all are working for making money," a Nalco official said.

An official from Hindustan Copper said, "Monthly average LME copper prices, on which prices are decided, are calculated at $4576.78 in December compared with $4269.34 in November. We had no choice but to raise them in order to bring them at par with international rates."

Despite a 25 per cent surge in output at 329,465 tonne during April-November 2005, prices have picked up owing to higher international prices and declining stocks across global warehouses.

-Goldilox

As energy is a major cost item in mining and delivery, this is hardly unexpected, especially as demand is experiencing no abatement either.

Please go back and read my first post. You are attributing volumes to me that I did not write. I never said anything about Gen. Franks. I have never read anything he has written. I certainly do not advocate any nuclear strike against anyone. I am not a fascist or a racist and have never been so accused. I was not in favor of our participation in any war in places where we were not directly threatened, including this one and the two before it.I served in one & am too old now to do it again. Though I think the South Koreans are mighty glad they are not living the life they would have had we not been there.
What I said was that I believe Iran will use a nuclear weapon if they can get one; and they would use it against us if they could. There is still a diplomatic door open to them. They don't need to enrich their own uranium. If a crazed criminal stands before me armed and says he's going to kill me, I'm going to do my utmost to shoot first. If you say that's wrong, so be it. I'll still shoot.As far as I'm concerned, American hegemony, crooked politicians, and the other things you both mention, they are not even relevant in this instance. This is strictly a case of survival.
By the way, we get most of the oil we use from our neighbor to the north.

goldquest (1/2/06; 16:24:28MT - usagold.com msg#: 139964)
Wrong Gold Forum!
It's the "other" gold forum that discusses everything except gold and precious metals.
They are also, experts at insults, religion bashing and keeping their forum in an constant hostile enviroment.
If the members of this great gold forum want that kind of a dialogue, then I wish everyone a "Happy New Year," and a goodbye.

.........................
Lots of pathetic posts here today and other days. Can't speak of Silver w/o flak and insults but we have to wade thru the piles of crap posted today to follow any PM conversation. One or two manage to slip in politics and conspiracy crap ANY day of the week now. Maybe this is not the USA Gold Forum of old anymore. Too bad as this was always the best Gold & PM talk site. What next? HuTu's vs Tutsi's? Religion? Anti fur lobby?...YGM.

Ssir Goldilox: "...what about a Nixonesque nationalization of the Comex to keep inventories in-house?"

Hmmm...we thinks that level of interference in the marketses would be a thing of lasst resort, precious, but COMEX is not the ONLY place to get It, anymore. If the US-country does something like that it will only add to the "Dumb Things We've Done" side of the ledger.

S.

White Rose (1/2/06; 08:32:44MT - usagold.com msg#: 139936)
"I propose an unofficial contest to guess the high price for gold in 2006 as measured in US "dollars", as well as the closing price for the year."

Predict the high AND ending price of It a year from now...with all that is on (and above, and below) the horizon?? You might as well have assked us to pull Melda Laure's elven bow! Ssss...what tassks they sets us, precious! But, ssince we loves to guess It sso much, we must try...sss...even with no or little hope, and less training!

Will a kind Giant please hoisst us up... sso we can use this?.... thank you!

For the ending price of It in 2006.......errrrr-r-rghH!TWANG!sshhhhhhhhh >Thunk!<

FRN$632

sss...and for the peak price of It in 2006.....errrr-r-r-aaaAARGH-H-H!...TWANG!!OWWWW! Our fingers!! sshhhhhhhhhh >THUNK!!<

FRN$670

Ach! Sset uss down now and take away this tricksy thing! It's jusst as bad for us as elf-cakes!

Not as high as others... but we will cover that by saying our guesses might be out the window anyways if some unexpected major "event" happens during the year.

S.

Personally as far the thought of western world, democratic Nations usurping publicly owned Mining Company's Gold reserves goes, I find the notion is totally ridiculous. We have many laws that would have to be legislated and changed and outside of total Gov martial law these transitions would take years. The dollar amount which would have to be paid in compensation would be staggering. If it ever did come to pass you wouldn't own any private Gold long before they take the Gold in ground. Confiscation will come long before Nationalization.

After much thought and discussion, including input from USAGOLD-Centennial Precious Metals clientele who either participate in this forum or visit it regularly, we have decided to return to the gold only discussion format and that includes the weekend. As of this post, this forum is no longer an open forum. If you see a post disappear, it is most likely because we have deemed sufficiently off-topic to warrant removal. We see this return to our original format as in the best interest of both the firm and the forum itself.

With the New Year upon us, we felt it would be a good time to make this change. We are looking forward to 2006 as an important year for gold and the international economy. It is our sincere hope that this unique forum will serve as a source of information and opinion for our current and prospective clientele.

Thank you for your co-operation.

High--$$$ 999.99 $$$
Close--$$$ 999.95 $$$

If wishes were horses, beggars would ride. Now awaiting Invisible Hands quote (smile) I KNOW from past experience I'll like his 2006 estimates much better.

Finally...after all these years...we are in complete harmony! Salutations...CM

http://www.wired.com/news/politics/0,1283,42745,00.html
by Declan McCullagh
2001-03-30 15:00:00.0

Ssnips:

"WASHINGTON -- The Secret Service has raided a New York state business that exchanged dollars for grams of the digital currency called e-gold.

A bevy of agents from the Secret Service, Postal Service and local police recently detained the owners of Gold-Age, based in Syracuse, and seized computers, files and documents from the fledgling firm.

U.S. Attorney Daniel French said Friday that the investigation involved charges of credit card fraud. "We haven't brought charges yet," French said. "We're in the investigative phase."

Gold-Age owner Parker Bradley says that during his eight-hour interrogation on March 12, the Secret Service seemed less interested in credit card fraud and more interested in the mechanics of e-gold. Until last year, Bradley accepted credit cards and paid out e-gold, but said he quit because too many people used stolen credit cards when conducting business with him.

"The interrogation became less about me and more about politics and e-gold," Bradley said. "They were trying to get me to blame e-gold for fraud. Just to be blunt, these guys have no clue about how e-commerce works, how e-gold works or what I was doing." ....


"Bradley, who was raided, says that he's retained a lawyer and is asking that his computer equipment be returned. He said that in addition to the Secret Service seizing his business records, the raid seemed personal: They snatched his passport, birth certificate and personal checkbook."

"When it was obvious I had done nothing wrong, they tried to get me and my wife -- interrogating us separately -- to implicate e-gold," Bradley said. "They said, 'Might (e-gold) be doing this, could they be doing this?'"

----

More at link.

The REAL quesstion is - why are "THEY" (U.S.) doing THIS? ~>8-(

S.

Ssir YGM (msg#: 139977)

"We have many laws that would have to be legislated and changed and outside of total Gov martial law these transitions would take years."

Two words, precious:

Executive Order.

S.

@Smeagol,

VERY interesting...
Someone views E-Gold as a threat, it would seem.

@ YGM,

I think that these are two horses of only slightly different color. You suggest that too many laws would need to change and it would take months to implement nationalization. One might have originally thought that of confiscation, as well, but it took only an overnight emergency Presidential proclamation, and laws followed later to support its enforcement.

More and more things that constitutionally "require" legislation are finding their source in admin orders that are later supported by legislation, so while there may be many reasons to doubt nationalization, your explanation doesn't strike me as one that would hinder today's governmental processes.

@ MK,

Does this mean discussions of silver, oil, and NatGas and non-gold currencies are now considered out of bounds, as well?

Not trying to be facetious, but would appreciate some clarification of the boundaries.

Au & Ag off to a running start. Let er rip!

Actually moviing in opposite directions at the HK open, but the night is young!

Make sure you relate your posts to gold is some way, shape or form. You will know that a warning has been issued if your post[s] are removed.

Essentially, we will be looking for patterns of abuse. I think most of us have been around long enough to know what's acceptable. Use your best judgement. We value you and everyone else here as posters. We just need to keep things under control. That's a personal commitment that all of us need to incorporate into our thinking as posters here. Look at it this way: It's in the best interest of the Table as a whole. We are asking for co-operation.

Smeagol, The link is very interesting. The listed date makes me question why it took so long to find it's way into this great forum. Did this happen recently or (years ago) back in 2001?

MK, Your discipline for this forum earns you and this site great respect. My hat is off to you and all who selflessly reach out to improve the financial lives of those who visit here. Thank you.

http://www.independent.org/newsroom/article.asp?id=1594
snip
Despite the gold standard's success it's unlikely to be reintroduced by the U.S. government very soon. However, other monetary arrangements are still possible. As technology evolves, private forms of money may crowd out the importance of government money. Peter Thiel, co-founder of PayPal, said that in 2000 his company thought, "we're going to replace every government currency in the world." Although PayPal is an alternative payment system it's not an actual alternative money since it is denominated in national currencies. If other companies, which denominate accounts in commodities such as gold, like E-gold, increase to PayPal's size, technology may yet provide alternatives to government money.

Nobel Laureate F.A. Hayek argued in his 1976 monograph, The Denationalization of Money, that private firms should be allowed to compete with government money and that the competition would provide a more stable and sound currency. With globalization, technological change, and firms like PayPal and E-gold we may eventually get there. In the meantime, as the Fed changes personalities, it is important to keep in mind that our modern monetary system, based entirely on expectations, has existed for only a brief time and its stability should be monitored cautiously.
---------------


Smeagol
The REAL quesstion is - why are "THEY" (U.S.) doing THIS? ~>8-(

Liberty Head

Competition me thinkss is unwelcome.

Best Wishes

I started watching this discussion about a year ago.What has kept me coming back is the things i learn when listening to you folks.I have made a couple of posts in the last few weeks and would like to continue to participate.I do not really know what set off this last round of debates,but i am not seeing what i have in the past.Even though i am the new guy,i,think that everyone in this forum needs to take 5 minutes and go back and read the rules to take place in these discussions,as i did just before making this post.I did not see one rule that has not been broken in the past few weeks.CPM has the right to negate this forum at any second with no warning.

http://news.bbc.co.uk/2/hi/europe/4576534.stmsnip:

International efforts are taking place to solve the dispute between Russia and Ukraine over gas prices, which has disrupted supplies across Europe. EU foreign policy chief Javier Solana said he was trying to persuade both sides to resume talks. Ukraine said it would call for arbitration.

Russia says it will pump more gas to countries that said supplies had fallen after Moscow cut Kiev's provision.

Gas firm Gazprom said full supply would be restored by Wednesday evening.

EU energy officials are set to discuss the crisis at a meeting on Wednesday.

-Goldilox

Price jumps in NatGas might seem like Putin's political manipulation from one perspective, but during this bitter cold winter in Europe, no one wants to see interruption of NatGas deliveries, or any upset of energy/economic equilibria. Perhaps cooler heads will prevail.

Not directly gold related, but certainly well within our pre-open forum topical guidelines. I hope I'm not on thin ice with this one.

Sorry folks,i left the discussion and went to the doctor and went directley to the rules.I had not seen MK'S POST.I appoligize.M.

We should be a bit more specific, as we really do not want to inhibit good and useful conversation. Let me put it in a simple framework:

Acceptable posts include discussion of economics, financial and monetary markets, and geopolitics -- that is, insofar as they each are made to demonstrate relevance to the topic of GOLD ownership.

We'll go with that and I will leave the rest to all of you in the spirit with which we created this forum and with which we would like to see it proceed in the future. Lets not forget that it wasn't too many years ago that discussions like this on gold as it relates to our political, financial and economic well-being did not even exist. The mainstream press controlled what was said about gold and each and every one of us was a quiet voice with a limited audience. We have had something special here over the past nearly eight years (Yes! approaching eight years now). Let us all appreciate and take personal responsibility for what we have here and make it better place for all visitors -- both new and old. By this we will nourish something special for ourselves.

Let the discussion continue. . .

My best to all of you with best wishes for a happy and successful 2006!

they are becoming a sub-state of the global corporations (US, Britan, European, Japan) who run the world, and who they have allowed to control their economy since 95, it's likely they will start to react in a negative fashion, particularly as they recognize they will not be allowed control of Taiwan. This will be the trigger for a negative world event.

I for one am grateful for less politics on the forum.

One guy asked me this year where to invest 50000 dollars. I told him (again) that my choice would be gold. I put usagold on his favorites list for him. I mentioned that gold had risen since 98, and thought it would reach 500 this year. Following MK's lead on that. Later I happened to talk to him and he said he had mentioned to some people that I had told him it would reach 500 and it did. I said there was no good reason why it will not continue to trend up. If he does follow the link I gave him, I know he would never settle into the forum with the moveon.org blogger style politics we have fostered. I have another freind, well, I will call him freind, can you ever call the obscenely wealthy people freind? None the less, we have a happy record of encounters, and numerous at his house, and I wonder if there is another person who is in love with gold leaf as he is. His cielings, some doors, virtually all fixtures, including sink fixtures, gold plated or leafed. I mentioned to him, why dont you buy gold bars for door stops? He has statues and other works of art that are costly, I recommend that usagold offer solid gold statues and gold plated items. Send me a package you want me to give him. No big explanations. Do you have a way to get some Napolean gold coins? Were some ever made? He has a new Napolean bust with spotlight. I bet he would spring for some Napolean gold coins.
He just bought a home on the beach, Palm Beach. Right after the big hurricane season. Why? because it is opulent.
Dont send me a package to give him that is all logical. Promote the beauty of your coins and whatever.

Oh, and I think you could clinch a sale if you include some small amount of creatively made chocolate. I'm serious! He would react positively. If you had pieces made in a fancy -- H -- shape, you would have him calling.
I kid you not.

http://www.usagold.com/gold/coins/FrenchNapIII.htmlNot quite the Napeoleons you're looking for, but have the advantage of being both reasonably priced and available.

R.

Ok, wow!! First post after years of lurking and I become part of the straw that breaks the camels back. My sincere apologies for any offenses my argumentative and philosophical proclivities caused. I do however believe that these off topic topics are critically important and need to be discussed - especially in light of the dark places I believe we are heading. I also believe that this forum is frequented by a caliber of people where these broader discussions will be productive. Few things generate self reflection more than the alienation felt by true gold (i.e real money) advocates. But that said, I promise to stick closer to the home topic.

In the short time I have left before the responsibilities of previous commitments take hold again in 06, I will summarize my latest thinking about the concept "gold" lest other forum participants get the idea that I'm a true interloper. Unfortunately for those here, my contributions are almost wholly philosophical � it's just my nature and can't be helped.

I'm an Gold investor, not for its investment qualities, but because I believe in Gold as a devinely derived "concept" which aids living an intended and purposeful life. To that end, I couldn't be more indifferent as to its fiat measured value. For me, gold is literally one of those - put your money where your mouth is � things. There's nothing apart from "gold as a concept" that is attractive to me. So, to briefly elaborate, what is my long held "concept" of gold as I see it?

I believe our founding fathers felt that people should be free to pursue their interests and accumulate wealth through hard work and the successful implementation of their ideas. There's a lot to focus on in life: the pursuit of happiness, the security of family, the education and civic participation responsibilities of the self governed, and the time to reflect upon the larger questions of life. Today, thanks to the use of fiat currency, we have unnecessarily added to those responsibilities to the diminishment of others. Now we must kept a constant vigil that our accumulated wealth is safe from theft and/or erosion. With gold, if you had a good hiding place, it was an easy thing to do. Today? � take your eyes off the screen at your own risk!

I personally resent being compelled to know so much about, and stay abreast of; global macro economics, trade issues, bond markets, currency markets, derivatives, real estate, etc. And especially the transitory monetary and fiscal policy's that fiat money management demands. Inflation doesn't just steal money while its still in our wallets, it steals precious time away from,IMO, vastly more important concerns. Concerns that is fundamental to preserving our eroding way of life. Fiat money is a destabilizing force used in the name of funding things without tacit authorization of those living and not yet born. Gold as a concept, properly understood and implemented, avoids all this. That is its power, and that's mostly why our founding fathers believed in it and that's why its worth owning, period.

Great posts! I reminded me of what I read in the Sovereign Individual, by Davidson and Rees-Mogg, Ch. 7. The reference to the von Hayek paper is there together with an explanation of why cybercurrency (backed by gold) as a competitive currency would threaten the government's monopoly on legal tender. When that happens, governments lose the abitlity to expropriate whealth via inflation. Even the transaction fee required by firms who make e-gold available is lower than inflation. No wonder If I understand it correctly, this is all very exciting.
I am very thankful to all the poster in this great forum where so much good education and useful knowledge is discussed.

This is a guy who will value it more if it is high priced.
He wont go competitive shopping. Pitch it as valuable, a work of art, and he will become a guy with gold coins lying around. With one to flip as he walks around. I will email my address. He will be back in late february. I know I just meandered into this sale idea, but I know the guy, he will go for it.

http://www.usagold.com/cpm/aboutcpm.htmlGiven that USAGOLD-Centennial's prices are so very low, may I suggest the happier solution that your friend be informed of the benefits of accepting a greater quantity rather than taking the trouble to find another gold dealer/broker who'd be both eager and willing to give him less for the same money.

R.

http://www.business-standard.com/smartinvestor/storypage.php?hpFlag=Y&chklogin=N&autono=210397≤ftnm=lmnu6≤ftindx=6&lselect=0Indian banks are cutting interest rates on personal loans to buy Gold (only Gold)

Randy, your right, I will pitch him on a chest of gold coins for the living room.

The gold price should rise all year long. I expect to see it hit $900 by the end of January 2006. The high for the year and the year end price will both be the same. Namely, $1900. Why? Look to China accumulating some 2,500 tons of gold in the short term. Their implementation of the new paper gold strategy on January 5 will effectively offset the rising costs in the spot market.

Year-to-date change in PM prices as of 12-29-05 as posted at Rude-Awakening.

Silver $8.85 YTD +29.9%
Gold $516.70 YTD +18.1%
Thus silver advanced 11.8% more than gold in 2005.
..................

I have been here at the forum for several years and my tune has never changed. I have simply stated, that on a percentage basis, silver will outperform gold. But as we all know, we cannot profit from the past.... the record books for 2005 have been closed. Therefore the important question of the day is, "What will happen in 2006?" I'll make three observations.

1. Silver will outperform gold on a percentage basis.

2. The difference between gold and silver will be even GREATER than the 11.8% difference in 2005.

3. The fact that there is less above-ground silver than gold will finally be recognized. (No one can know exactly how much of each commodity there is. I work with these figures: Gold, 5 Billion ounces and growing by the day. Silver, 1 Billion ounces and GETTING SMALLER by the day.)

Either way, both precious metals seem to have a very bright future.

http://www.businessweek.com/magazine/content/06_02/b3966094.htmBusinessWeek
JANUARY 9, 2006

INVESTIGATIVE REPORT: Online payment systems like e-gold Ltd. are becoming the currency of choice for cybercrooks.

Diverse as they are, many cybercriminals have something important in common: e-gold Ltd.

Customers can use a false name if they like because no one checks. With a credit card or wire transfer, a user buys units of e-gold. Those units can then be transferred with a few more clicks to anyone else with an e-gold account. For the recipient, cashing out -- changing e-gold back to regular money -- is just as convenient and often just as anonymous.

Law enforcement officials worry that the little-known digital currency industry is becoming the money laundering machine of choice for cybercriminals. On the evening of Dec. 19, agents with the Federal Bureau of Investigation and Secret Service raided the Melbourne (Fla.) office of e-gold's parent company, Gold & Silver Reserve Inc., and the nearby home of its founder, Douglas L. Jackson.

The FBI separately is pursuing about a dozen probes in which e-gold appears as a "common denominator," a senior agent says.

...e-gold appeals to savvy online crooks who want to move money quickly and without detection. American banks and conventional cash transmitters like Western Union are legally required to monitor customers and report suspicious transactions to the government. E-gold seems to go out of its way to avoid such obligations. Its operations are in Florida, but in 2000, its principals registered the company in the lightly regulated Caribbean haven of Nevis.

The man behind e-gold, Doug Jackson, is a tall, powerfully built former oncologist. A fan of the gold standard, Jackson, 49, became a pioneer in digital currency when he set out a decade ago to create what he describes as a private gold-based monetary system. He envisioned e-gold as a currency that would be accepted at Wal-Mart while also permitting peasants from China to Peru to offer products at stable prices. "I thought there would be this flock of e-gold users, and I would be their messiah," he says. "It just didn't happen."

What did happen, according to law enforcement officials, was that a pack of felons flocked to Jackson's brainchild.

...Started in 1996, e-gold was part of an early wave of Internet payment systems that converted conventional money into a Web currency. Most of those pioneers soon flopped, because consumers resisted paying fees to get Web cash. Others, such as PayPal, now a unit of online auction giant eBay Inc, evolved into credit-card processing services.

...Investigators say Jackson may have begun his quirky business with innocent intentions. But in recent years he has turned a blind eye, the officials say, to mounting evidence that e-gold has attracted a seamy clientele.

The federal raid suggests that agents are intensifying their focus on e-gold and its potential criminal liability.

...Whatever its legal status, e-gold's usefulness to scam artists was colorfully illustrated by E-Biz Ventures, which allegedly portrayed itself as a Christian-influenced organization that offered investors returns as high as 100%. E-Biz' proprietor, Donald A. English of Midwest City, Okla., allegedly highlighted his reliance on e-gold to appeal to victims' fear of the federal government and their desire for anonymity. E-Biz investors opened e-gold accounts and transferred funds to accounts controlled by English. He shifted e-gold among more than 25,000 accounts, using new investors' money to pay off some older ones. The scam took in $50 million before the SEC shut it down in 2001. Investors lost $8.8 million. Later prosecuted in federal court in Oklahoma City, English pled guilty to wire fraud and last May was sentenced to five years in prison.

etc...

^---(see url for full article)---^

To be sure, the nature of the problem -- the exploitation an the resulting suspicion and scrutiny -- has NOTHING to do with gold, but has EVERYTHING to do with the platform of exchange.

In a manner of interpretation, the French assignats of the late 18th Century were an early expression of this as a sort of e-land (or rather "p-land", paper land), with the representative currency unit conveniently circulating in place of the confiscated lands that were supposed to backed them.

Note, however, that the various abuses which were facilitated by assignats as an platform of exchange were in NO WAY WHATSOEVER an idictment or taint upon the wholesome principles of land ownership and the use/husbandry thereof.

Similarly, there is no reason any gold owner need feel tainted by the stain of others illicit activities, nor incur the scrutiny that follows close by. Simple, direct ownership of gold coins and bullion has served honest hardworking people very well -- as an honorable avenue of reliable savings by accumulating gold as a significant fraction of their personal property.

Start the new year off right with a resolution to own gold.

Call USAGOLD-Centennial Precious Metals as your gateway to the sound principle and practice of actual gold ownership as a means of savings -- consolidating your wealth in an indestructible form that is above reproach. The firm has been in business, in Denver Colorado, since 1973, helping diversify the portfolios of honest and reputable investors and savers just like yourself.

TOLL FREE 1-800-869-5115

R.

http://www.chinadaily.com.cn/english/doc/2006-01/03/content_508835.htmPure Gold !

@ Rook.

How about some "Hanukkah Gelt" chocolate coins wrapped in pure gold foil? Now that would be pure opulence for your illogical friend. He could battle the urge to ruin the gold foil to get at the tasty chocolate.

Sounds more like Hammaker-Schlemmer than CPM, though.

I suggest you re-read the post precisely as written, and then evaluate it with your head, not your gut.

R.

I propose an unofficial contest to guess the high price for gold in 2006 as measured in US "dollars", as well as the closing price for the year. Here are the entries so far:

24karat: $672 for 2006 high, $660 for EOY 2006
Balzac: $672 for June 1, 2006
Beamer: $1900 for both 2006 high and EOY
el dorado: $745 for EOY 2006, $677 for April 2006
MK: $760 or 2006 high
Slowman: $752 for 2006 high, $726.40 for EOY 2006
Smeagol: $670 for 2006 high, $632 for EOY 2006
Specie-Man: $785 for 2006 high, $760 for EOY 2006
Thoreauly: $750 for 2006 high, $725 for EOY 2006
waverider: $850 for 2006 high, $775 for EOY 2006
White Rose: $900 for 2006 high, $830 for EOY 2006
YGM: $999.99 for 2006 high, $999.95 for EOY 2006

I invite everyone to try their hand at predicting the gold price high and ending price for 2006.

My belief is that gold's 2006 high will stun us all, at $860.80

End of Year price will be a slightly conservative $790.30.

http://www.omo.co.nz/Plots-US.htmQuite a revealing chart picked up on the other castle!

Completely agree; however, I think the discontinuation of the release of M3 has had much more of an impact on the smart money crowd--significant.

Up 14, or 5%, at 290, as investors replace their window dressing sales from 2005.

I'm having some troubles with those #'s from 600-800,they might be possible but I'm still in the school of a "gap-up".Technically,theres much air between these 600-900.For me,therefore,the only question is,will it be this year,the gap,the long awaited revaluation?Many stars are aligning to this,but then,I thought this before.In fact,I truly expected a false start into 2006 with a fall back to the 450 level,and somehow still do-well,I still have a buy on hold,now look at Spot the Bulldogg :-( . Might be more prove to the "air theory" from above.If the market is really cooking it will be impossible to control,and I assume the Gold reallocations are mostly done and Gold has gotten the okay by the masters.

Is it too cheeky to have some powder dry for an eventual paperGoldcrash to get a few REALLY obscene cheap fruits?

So my forecasts for the contest would be: high: 2500$/oz.,close 1000$/oz.

http://quotes.ino.com/chart/?s=NYBOT_DXWAY to start the NEW YEAR, SPIKE and SPOT !!!
GO YELLOW !!!
Look at the BEAUTIFUL Waterfall US$ today also -- LINK
YES, this will be a GOLDEN year !
<;-)

It had to happen.

Either you steer a close ship - and have a closed society of your own crew - or you allow some kind of renegade free thinkers.

In both ways you will eventually win! - Or will you?

If you allow gold spin only, totally and top it with "free gold" advocates it is your priviledge... and you may even be right.

Still, I'm a bit of the renegade and have my qualms with the TC's, Belgians et al true and blue "free gold" advocates.

For the last several years they've been totally correct in their assesement ... only the outcome was more than than cumbersome. In part the paper players, including shareholders of deep storage did a lot better than the purists.

Though, that's not my point - My point is pure and simple - don't ever sever politics from gold and silver ...
cb2

PS: And if you have to - too bad ... for you!

Free Gold advocacy : Today, I've been observing the markets' behavior with a lot more of intense attention than usual. Especially, because of the developping fundamental background events, against which this behavior was unfolding (Russia).
Free gold is on its way, dearest cobra...and at a faster pace ! Forgive me for not repeating the same list of arguments that got some more evidence added, today.

The paper mutants of gold (and silver-metal) will gradually lose their affinity (old links) with the growing free gold. The prices are distributed at the END of the race, Sir !!! And it is free gold that is going to win the race and collect the BIG price.

It is indeed very difficult to select those specific political facts that do relate directly + indirectly to the gold matters. Because politics do have a strong polarizing effect and make observers much too subjective (one sighted).

Let's keep racing and that the best may win...-:)(:-

A question for the experts on this forum. At what POG level will the physical and paper markets go their separate ways?

http://www.usagold.com/gold-coins.html

"Treasure chests throughout history
have been filled with gold, and not by idle choice."

-- R. Strauss

Yes, those long-ago times, when we were limited to only $6 up days ? I must be getting old, it seems so far away - was it.... November ?!

Hmm. There doesn't appear to have been much of a pause in the upwards trajectory moving into the Access hours. We're about $16 up on the day as I type. A trivia question - when was the last time this happened ? The first WAG announcement ?

C!

That is the proverbial $64,000 question. Which might also turn out to be the answer too !

C!

This is not a matter of goldprice but "gold-market" !
But be careful...and don't hope for being able to switch racing-car (paper gold to goldmetal) during the ongoing race (gold-market evolution) as to catch the big price at the finale.
Many (an increasing number) of paper goldbugs are thinking about this smart (?) strategy. Taking profits on paper gold instruments...gradually losing their leverage...and switch to physical gold...just in time for the spurt. Good luck !

I believe it was Feb 4, 2000 when Placer announced they were going to reduce their hedges (I think I recall that as the news that day, but I could be wrong) - not that they made much effort to follow through on that announcement, but that's a mute point now......

I have some very interesting news about the gold and silver markets (to do with the supply/government sales side) from a well informed citizen of India. His was the letter posted on Midas from last night about Indian PM markets, but I find myself leaning toward reticence with the new posting policy of accepting gold discussions only. I regret this shift because the news would be quite gold positive too. But as the forum wishes to return to the narrower focus, I feel I should not go against the desires of our hosts,,,who I feel now have only been (just) tolerating our discussions. I do not feel comfortable about posting information that may or may not be appreciated so,...

It is time to move on.

Best regards, and good luck in the years ahead.

G.

Belgian
Re:
Your statement:
"The paper mutants of gold (and silver-metal) will gradually lose their affinity (old links) with the growing free gold. The prices are distributed at the END of the race, Sir !!! And it is free gold that is going to win the race and collect the BIG price."

I believe most of us here are fundamentalists at heart'so would be interested in your reasons why Physical gold will leave gold stocks (paper gold) behind.

I have my own reasons to be wary, but would like to hear yours.

May you have a wonderful journey.

I don't think Mr Koasares is condeming Ag discussions to the trash heap at all. Silver has always been contentious here by some, but I (correct me if wrong) think Michael is urging "moderation" (not aguementative repitition) and respectful discussions. Not the my way or the highway mentality. Silver is also purveyed by CPM don't forget. I cannot think in terms of one without the other myself and many others who have posted here for years are of similar mindset. I favour owning alot more of the Yellow than the White on a personal level, but I still want to hear and read about both, and would miss your input. If all the posters leave who have some interest or holdings in Silver (alongside their Gold) or even paper traders left the hall who would be here to grace these pages with thought? Not very many!

I'm sure it's not as strict as you (or I) have put it.

Your info was and will be most appreciated - IMHO - everything else will be our loss.

... and if I'm wrong - so be it! ... But then it's probably time to wander off any way and not just wonder!

Thank you - USAGOLD (for 7 years, I guess also true as a poster) - of a great learning experience ... the last thing I want to see spoiled by purists only is this great website!

It may be time to listen to a free market news interview by Edward G. Griffin - author of the Creature of Jekyll Island:

http://www.freemarketnews.com/News-Video.aspn

Meanwhile Gold and Silver is showing stealth in view of the marketeers calling for a big reaction. Free gold marketeers will have their day anyway - give us other guys, having put in their stash before playing paper and other games some credit and please don't disservice your own agenda, by paraphrasing every and any suspected "dissenter" as a renegade.

I guess, most of us have loaded up on physical before the purists have even arrived.

... and in the end I'm not really challenged by people calling me "my dear cb2 or whatever else"; Since I really hate any kind of governess, however well-meaning it may be!

Thank you all and have a great year!

cb2

A snip from tonight's Midas :-

And Adrian:

Bill,
In case you haven't had time to look back through the database, gold today made its BIGGEST one day gain in this bull market to date closing up a whopping $13.30. The closest big move to this was on May 18, 2001 when gold rocketed up +$12.65 in a single day.

There has only been one day that has beaten this move in the last 21 years which was +$14.20 on September 27, 1999 due to the announcement of the Washington Agreement.

End snip.

I don't know if the 2001 date is yours, Rimh (you seemed to specific for that to be the case), but as the POG is currently at $534.80 (up $17.80), this largely eclipses the WAG spike. Mind you, I suppose he is probably quoting closing numbers, so we will have to wait till tomorrow to see if it can be bettered !

More roo ! More roo !

C!

For the moment separating gold/silver stocks from the malevalent paper gold players meaning futures and options...the price will of course break free when there is no more gold coming onto the market to be sold in the future. Then all existing contracts will be settled for cash and not much since there will be no real gold backing the action. Naked shorts will be saved by regulators settling contracts at a price far below the free market gold price...just an opinion...

Maybe this wasn't at all your point, but given comments that I've read in the past, I'm under the impression that persons such as Belgian and myself are part of this unsavory lot which you call 'purists'.

But that begs the question: What's the opposite of a purist? A 'spoilist'???

I certainly wouldn't count myself among any group of 'spoilists'.

Closer to the mark, however, I would call myself a 'realist'.

I have assessed to the best of my ability (and to the extent that it matters) the lay of the political and economic landscape. There are certain driving forces akin to gravity, and there are certain constraints akin to 'immoveable' mountains. In the same way that one can assess the trend of future erosion or even public works that affect the actual landscape, one can also reasonably assess a realistic pattern of development upon the monetary landscape.

In making the most useful assessment possible, there is no room for me to cling to any sort of 'purist' mindset that sees only gravity-like drivers while ignoring the various (usually social) constraints. But with that said, in the end, even the highest immoveable mountain is inevitably worn down to the golden shores of the sea.

Is it possible that the difference in interpreting whether a person is a 'realist' or a 'purist' is in their available time and energy to describe the intervening erosion in mind-numbing detail?

Respectfully, no thanks!!

So speaking for myself, I'll continue to make assessments as a 'realist', even though my necessarily brief commentary in this format may risk giving me the outward appearance of a 'purist'.

R.

Whiterose,would you please put me down for $640 high and $640 EOY.Thank you.M.

No Thanks - says (un-)graciously TC.

Well, we'll forgive the young ones - They may have a lot to learn - still - even if they feel it's their order to feed us with their own un-distilled magnitude of pro gold fodder.

Even that may become its own main stream (street) nonsense. Knowing what your aiming at it's like an arrow missing the apple of old - your repetitive pro-active gold advocacy is missing the crucial point - as you've never experienced it in reality!

I'm as aware as yopu and other spoilists are, that the ever growing debt situation in the West has to be redeemed. Redemption is pro'lly beyond reality and so ... what?!

Let's blow up the world as we've known it - as we might be slowly adapting to the old Club of Rome asessement of Limits to Growth! Only 35 years later the (then seemingly)idiotic logic was deemed to be correct - only having lost 35 plus years of preparation.

The same logic is bound to specify purists, realists and potentially spoilists. And before you want to really engage me - please grow up and try to learn your own lessons.

So, my friend don't ever try to teach me the lesson I've personally learned and don't ever try to convert to me to to your "purist" ideas - been there and have gone through all phases you try to re-convert me to.

Anyway - Thanks for your consideration - but as you've hinted - NO Thanks!
and
Good Bye - cb2

Lacking some real depth! As I figure - still fair enough to say fare well ... cb2

The last clarification from MK suggested a return to pre-open-forum topics. Silver, energies, and currencies are NOT out-of-bounds in the flavor of the forum, especially as they relate to POG and/or gold markets.


"Acceptable posts include discussion of economics, financial and monetary markets, and geopolitics -- that is, insofar as they each are made to demonstrate relevance to the topic of GOLD ownership. "

The gold fuse is now lit in light of the recent strength above $500 and there are those lurking who feel the end of the US - IMF system is ney. Not so as nature abhors a vacuum and no country or entity is ready to replace the US or the dollar. If fact the US is racing the printing presses as fast as possible and are still having difficulty bringing the dollar to a lower level. No military, technology base, or free market orientation can currently match the good old USA. MTM all you want but all players will be forced into a "Bretten Woods II" agreement because right now all other options lead to a responsible system which the insiders of course cannot tolerate. Keep up the the good work gang and watch the ECU dishoard the only real wealth they have while falling futher behind the rest of the world with there socialist ways.

@ Cobra (too),

The Griffin link didn't work, but it gets us to the home page, where we can search on Griffin as a guest to get to the interview.

Muchas Gracias for the reference.

As I refer again metaphorically to the process by which a mountain range is picked apart grain by grain and atom by atom and delivered to the seashore, what part of the the erosional process in "mind-numbing" detail are you eager to have described?

When I said, "Respectfully, no thanks", I am fairly sure that that sentiment applied EQUALLY both to the weary audience of such a mind-numbing geologic dissertation as well as to the prospective writer who, I'm sure, has more interesting ore to mine in the use of his fingers' remaining energy.

R.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

If you are considering investments in gold we invite you to request our freeintroductory information packet detailing the products and services offeredby USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and lookforward to working with you.

TUESDAY Market Excerpts

Gold begins New Year with a Bang

January 3 (from MarketWatch) -- Gold futures stretched their winning streak to seven sessions Tuesday.

COMEX February contract climbed to a session high of $533.20 and finished the session up $13.60 at $532.50 an ounce, the highest futures closing level since April 1981.

"There's a lot of upside left in the entire metals complex," said Dale Doelling, chief market technician at Trends In Commodities. And "as some of the financial uncertainties become more clear as we head into 2006, gold is going to take the lead and achieve exceptional returns for traders who continue to focus on the long-term trends in these markets," he said.

Echoing this theme, the factors that drove gold up by more than $80 an ounce over 2005 remain intact, said Peter Grandich, editor of The Grandich Letter.

The foremost of these -- physical and investment demand -- shows no sign of cooling down.

"The rapidly growing economies in China and India have been key and while soft patches are likely going forward, the enormous wealth creation ongoing there appears to assure strong demand for gold for the foreseeable future," Grandich said.

---(see url for full news, 24-hr newswire, market quotes)---

I can't care less, if I miss the the gist of it! (What gist of what), nor am I enjoying my own sense of drama.

I personally think young man, you're way ahead of yourself. That's fine with me and you're probably doing a great service to the rest of the world.

TC, Randy or whoever - think again - there may be some not appreciating your recurring lectures - as they may have arrived at your goals long before you've ever thought about it .

Dramatize your own future and please never mention cb2 again - he's gone . from here forever ...

You got to know you'll be missed. Alot of water passed under the bridge over the years. Maybe we can still swap some stories one day. Just ask B Murphy or C Powell (GATA) to put you in touch w/ the Yukon Gold Miner and you can find me. Adios` and stay well. Vancouver Gold Show Jan 22 & 23. I'll be there for a week....Ken

I tend to think that's a lot of drama for a 'young man' like me to cope with, cb2!

:-)

Randy

http://quotes.ino.com/chart/?s=NYBOT_DXI thought I'd given up on my brother-in-law (as others at this Table may have given up on some friend or relative?), but I went ahead and included him in an email I sent earlier today. Nothing new for anyone here, but I tried to make it so clear that maybe even my brother-in-law (or yours?) could read the handwriting on the wall.

To enhance the odds that some addressees would actually read it rather than just say "It's him again ranting about gold" and delete it unread, I titled the email "Implications of Fed ceasing to report M3 and what to do about it."

Text follows and any of you can feel free to relay some or all of it to any friends, inlaws, or outlaws who are likely to hit you up for help when TSHIF.

Caradoc

***text follows***

All:

Check out the recent surge in how much the feds are pumping into the economy as overnight (so-called "repo") money to the banks. Since this overnight money is one of the differences between M2 and M3, it might well explain why the feds are going to cease reporting M3 in March.

M3 is in red charted against S&P 500 in blue:
http://www.omo.co.nz/Plots-US.htm

Throw in the fact that March is when Iran begins selling its oil for Euros rather than dollars...
* less international demand for the dollar since countries like France, Germany and Japan will no longer have to buy dollars first in order to pay for oil
* greater stateside supply of dollars since existing Petrodollars/Eurodollars will gradually leave Swiss bank accounts and shift back to the US every time a Middle Easterner buys a Cadillac or some other US product and redeposits Euros rather than dollars into his Swiss account.
* Between greater supply of dollars competing with the ones in your pocket and less demand for dollars, the old "supply and demand" thing kicks in and the dollar is due to head south. More specifically, it's due to have already headed south by March. And since markets generally anticipate when there's clear handwriting on the wall, we've already got the dollar down sharply today (the first trading day of the year):

[Paste in graphic from link above by doing a right-click on chart and selecting "copy" or "copy image" before doing "edit, paste" into the message.]

and gold up by more than $13 per ounce to over $530.

Last thing to consider: some 43% of US debt is owed to China and Japan. They've been real obliging about propping up the dollar by buying our debt so that US consumers can afford to buy their products, but as the dollar tanks they're likely to buy less of our new debt (less demand for debt denominated in dollars) while cashing in the dollar instruments they hold for things like Chevy Suburbans and Boeing jets (more dollars headed back to stateside).

Bottom line is twofold:
(1) Over the next few weeks, we should begin to head into a deflationary depression.
(2) High likelihood that feds will respond by cranking up the printing presses and creating enough dollars to stave off any deflation. Instead, we'll have inflation like nothing any of us have ever experienced.

So, if you have a foreign car you plan to keep, I'd suggest buying all the parts needed for a couple of brake jobs. Other than that, every financial asset you own has a lot in common with Cinderella's carriage because sometime between now and March it's going to turn into something the color of pumpkin. To avoid that outcome, switch to some mix of (1) physical gold held in your possession and (2) stock in gold mining companies that have NOT sold their future product into the futures market; i.e., won't benefit from gold going up and which are not involved in so-called "non-recourse" loans for their operations since such loans invariably include a derivitive short-sell put against gold (sometimes labeled as "variable cost of financing") placed by the original lender at the time the loan was made for protection against the chance that gold would go down. Using those two criteria, I've focused in on producer Goldcorp (GG), royalty collector Royal Gold (RLGD) and explorer/ would-be royalty collector Tan Range (TRE). As a matter of disclosure, I'm in both GG and RLGD and am kicking myself for having sold TRE.

Just my opinion, but I'll bet you a nickel I'm right.

***end of text***

Those here might consider buying a few extra ounces to be able to help those you fail to convince.

Regards to all,

Caradoc

http://www.financialsense.com/fsu/editorials/karn/2006/0101.htmlsnip:

If the American central bank's goals are to provide monetary stability and to control inflation, gold standard advocates submit they are not doing a very good job. According to this chart, the US dollar has lost about 93% of its purchasing power since going off the gold standard in 1933. To put that in perspective, when the US was on the gold standard, a $100 basket of goods purchased in 1800 could be purchased in 1900 for $102, amounting to a 2% inflation rate over the course of a century; today that same basket of goods would cost more than $4,000. On the gold standard, they claim inflation is next to impossible simply because without increasing the gold in its vaults, a government cannot create more money.

Supporters of the gold standard suggest that the inflation created by a government operating a fiat currency amounts to a secret, or hidden, tax its citizens neither recognize nor understand. By unilaterally printing money whenever it wants to, without either explanation or public debate, the government is in fact defrauding its constituents by diluting the purchasing power of their money. And this ability to increase the amount of monetary instruments in circulation is the fatal flaw of all fiat currencies, for there has never been a successful fiat currency.

Not one.

The failure of every fiat currency in history has been due to miscreant politicians, aided and abetted by clever bankers, creating so much money and credit to finance their various agendas, including enriching themselves and their cronies, that the money in circulation eventually becomes worthless and collapses under its own weight. This idea is best summed up by the phrase "confiscation by inflation"[6]: the deft transference of naive citizens� savings to slick operators who understand how to manipulate the financial system.

Whereas in more than 800 years of fiat currency use there has never once been a successful fiat currency, during that same time there has never been a currency based on the gold standard that failed�until it was either corrupted or taken off the gold standard. In fact, fiat currency crises resulting in either outright collapse of severe devaluation are so common the public hardly notices anymore. In the last generation, Mexico, Thailand, South Korea, Indonesia, and Russia, to name but a few, have experienced currency crises that adversely effected the economic well being of their citizens. And do not be lulled into dismissing such events as phenomena that only occur in third world countries: the British pound's most recent crisis was in 1967; the US dollar-gold convertibility crisis of 1971 resulted in the dollar devaluation of 1973, which led to the inflation prevalent for the rest of the 1970's and was followed by the dollar exchange crisis in the mid-1980's[7]. Fiat currencies over time simply do not work.

- Goldilox

Nothing new here, but a solid restatement.

I suggest we stop declaring that fiat currencies always fail. It sends the wrong message. It makes the gov't seem stupid rather than fraudulent.
Fiat currencies have always been successful for their respective gov't. The fiat schemes just don't last forever.
Fiat currencies are like syringes for drawing blood. Sooner or later the syringe gets thrown out, but only after the blood has been extracted.

To paraphrase an old saying; You can't bleed a bar of gold.
Get you some!

Best Wishes

This is a sad day indeed witnessing the departure of a friend. I will miss your witty rhymes. You were a welcome messenger from afar. For my own part, I believe the forum benefits enormously from your input. I sense that for you the discussions have grown stale and the table round has become suddenly less noble. Farewell Sir, and I hope that we shall meet someday at a gold conference.

One does not need to be a fundamentalist/purist to realise that the financial industry succeeded in having misformed "the markets" into a mutant where paper instruments (positions) enjoy the unprecedented privilege of "HUGE" leverage on top of the (minimalized) underlyings. >>> DERIVATIZATION ! And this did not happen exclusively to goldmine or any other gold paper. It was organized (!!!) for all papers (stocks-bonds-currencies).

Yes, the motivations behind this organized phenomenon (not a conondrum) are "political". This is exactly what divides us here into the 2 camps (purists-non purists).

Let us watch the race without argumenting about the betting on the horses, anymore. Because the very fundamentals are of a pure political nature.

@ Liberty Head,

No complaints with your analogy from me, but you'll probably hear it from the "never attribute to malice that which can be explained by stupidity" apologists. Of course, the problem here is that the perpetrators aren't the ones apologizing. They're enjoying a free pass from the blind suckers.

The reason I agree with you, is that there has never been a recorded case of reparations for FIAT destruction once the "stupidity" has run its course.

No remorse = No repentance

The banksters and their government lackies are ALWAYS ready to "give it another go", and the first thing they institute is their own "golden parachutes".

http://www.jsmineset.com/snip:

What an interesting difference a day can make. One CIGA asked me today: "Now that the $530 mark has been hit, what will gold do?"

The answer is "just what it did today."

Forget for a moment the truths you already know about the gold price. Gold, as I see it, is headed to $682 and then through $750. All the rest is drama.

It doesn't matter if it happens now or later this year. No one can be absolutely sure of the timing because there is a hidden hand in the market equation called over-the-counter derivatives which supersedes the US Dollar/Gold relationship, the price of oil, the Fed minutes or any other potential motivator.

What is most critical today is what the media refuses to discuss in print or on business television. The code of silence being applied to OTC derivatives is not happening without a good reason.

-Goldilox

Speaking of DRAMA, JS just hates to be right, doesn't he!

When it falls, I'll bet it'll all fall together...stocks, bonds, dollars, paper, etc. It's an interconnected chain teetering on the brink of collapse. Stock market alone is a rotting, mad cow-infected carcass tottering on one leg. And who knows, per Sinclair, gold may even be the trigger to unleash the derivatives monster and every foul paper creation along with it, upon the world.

http://www.bloomberg.com/apps/news?pid=10000087&sid=amhsfVpQx2Ro&refer=top_world_newsJan. 4 (Bloomberg) -- Gold prices may extend gains for a sixth year in 2006 as hedge funds buy the precious metal to diversify from stocks, bonds and currencies.

``It's all about fund diversification. That's the bottom- line,'' said Peter Hillyard, head of commodities sales in London at ANZ Banking Group.

Investors have been ``heavily dependent on equities, bonds and currencies.''

BETTER GAINS

Investors are buying gold because it's outperforming stocks and bonds. Gold rose 90 percent in the five years to the end of 2005, while the Standard & Poor's 500 Index returned 2.7 percent with dividends reinvested.

An index of Treasuries maturing in two years or more returned about 30 percent including interest reinvested, Merrill Lynch & Co. indexes show.

CB's SLOW FLOAT PROGRAM GAINS MOMENTUM

A sixth year of gains would be the longest winning streak since central banks allowed the price of gold to find its own level in the free market in 1968.

Bullion is a ``top trading pick'' for 2006, Goldman Sachs Group Inc., the third-biggest securities company, said in a Dec. 19 report, citing concern over inflation, currency values and the U.S. trade deficit.

HIGHER PRICES

Prices of the precious metal may climb to $600 this year, Marty McNeill, a trader at R.F. Lafferty & Co. in New York, said.

``It's a long-term thing,'' said McNeill, 63, who witnessed gold's last bull market as a trader, when the metal peaked at $873 in 1980.

Gold may rise as high as $850 an ounce within 18 months as a weakening dollar boosts the metal's appeal as an alternative investment to U.S. assets, Paul Walker, chief executive of London-based research group GFMS Ltd., said in an interview.

RESERVES

Buying by central banks could push gold up to as much as $560 this year, said Graham Birch, who helps manage $8.5 billion in mining assets for Merrill Lynch Investment Managers Ltd., the world's biggest investor in gold stocks.

``Countries with big trade surpluses, such as China and some in the Middle East, have too many dollars. They may think about gold as a reserve diversifier,'' he said.

Russia's central bank said in November it may double its gold reserves. Central banks in South Africa and Argentina have also said they may increase their gold holdings.

Central banks, mainly in the U.S. and Europe, hold almost 20 percent of the world's gold supply as a reserve asset.

^---(from url)---^

This Bloomberg article is good basic crash course for beginners -- enough to whet your appetite, a springboard to get in and begin to learn more about the why's and wherefor's.

R.

http://www.ecb.int/press/pr/wfs/2006/html/fs060104.en.htmlGold : 163881 million euros.
Forex : 163100 million euros.

So, for the moment, despite all the ECB-goldsale blabla, the ECB's gold position EXCEEDS their foreign exchange reserves position !!!!!

Does the forum has any thoughts on this historic event ?

@968,

They just can't sell IT fast enough to keep up? Kinda makes the "bugger-thy-neighbor's currency" game a little tougher on them.

Is, there a goal, precious... a target percentage? Are they trying for a certain ratio... or shooting for 100%?

And if the markets "overshoot"...and they have more of It than they "need"...will they sell more or...sss... print (or hold back) Euros to keep It at 100%?

S.

The "real" historical moment was a bit earlier...when the ECB started with the MTM-concept of the CB's gold-reserves ! But I do agree, that it is nice to see how one's gold-reserves are rising in price with the purpose of having all those accumulated gold-reserves completely "revalued" and finally express real "wealth", universally agreed upon. This in sharp contrast with another CB that prefers the helicopter concept...

Do you really think that the ECB is in the "making money" business with its gold-wealth-concept !? How is it possible that you keep projecting this attitude on an institution that has a whole new set of ambitions !? What facts are you still waiting for ? Are you going to take goldmetal into possession at a certain (much higher) price level that you have in mind ?

Doesen't look good for fiat euros,to put it cynically.Was that their goal?

Well,and I have more Gold than euros (or any other papercurrency) probably longer than them :-)

@ Belgian,

Don't assume I am waiting for anything. My gold decisions were implemented in 2003.

I was just making a facetious remark about the "historical" essence of their MTM being worth more than their currency reserves.

Must have gotten lost in the translation.

Just think where they'd be if they had kept their gold. Nominal fiat gains do not always translate to real gains.

Druid: While the subtlety of those numbers might not be understood at first glance, they strongly suggest that, a new paradigm is taking shape concerning how certain CB's are valuing their gold reserves by way of a free floating mark-to-market pricing mechanism as opposed to a fixed price decree of other CB's.

This is highly suggestive that a new monetary architecture is slowly being crafted in such a way that gold bullion will be allowed to do the heavy lifting as a CB's primary wealth reserve asset in lieu of all those bond and dollar reserves that seem to have no end. A reclassification of sorts.

"Just think where they'd be if they had kept their gold. Nominal fiat gains do not always translate to real gains."

Can you elaborate this please ? What is the gain for the US Treasury, who hasn't sold an ounce ?
If there aren't fiat gains, you have a monetary vacu�m (emptyness). Still no gains...

Ssir Belgian: "Do you really think that the ECB is in the "making money" business with its gold-wealth-concept !?"

We never ssaid they were making money, precious...sss... but they are not in the business for nothing, yess? All we wondered was if the euros in circulation are to be adjussted in any way with the MTM. But upon reflection we ssee that is not necessary. They may keep more of It than "sstrictly" needed.

"How is it possible that you keep projecting this attitude on an institution that has a whole new set of ambitions !?"

We doesn't know what they has in the deepest recesses of their mind, precious. All we sees is what they allow to be ssen. We do not trusst them. That is why we are here, to learn.

"What facts are you still waiting for?"

A timeline? A complete list of central banks that are pro/con/neutral the MTM concept? Anything... not that it will change much...we are merely very curious! (grin)

"Are you going to take goldmetal into possession at a certain (much higher) price level that you have in mind ?"

Going to? Sss...we don't trade paper, precious... we buy hard yellow as we can... and no, we've hardly been waiting for a higher price of It, either! (cackle) But as currencies fall away from It, and debt NOT associated with poor Smeagol is absorbed by It, It will soon become impossible for us, and a lot of others of modesst means, to buy. Then we musst do with what little we has.

S.

http://charts-d.quote.com:443/1002980432830?User=demo&Pswd=demo&DataType=GIF&Symbol=DX00Y∬erval=10&Ht=600&Wd=800&Display=2&Study=MA&Param1=13&Param2=0&Param3=&FontSize=10@ Gandalf,

The Web bot (and others) predictions of "running out of the dollar" are starting to materialize.

What's the 2006 score now? Down 2% in two days? Ouch!

http://www.usagold.com/gold/special/starter.html

http://news.ninemsn.com.au/article.aspx?id=79926Thursday Jan 5 -- The ruler of Dubai, United Arab Emirates Deputy President Sheikh Maktoum bin Rashed al-Maktoum, died on Wednesday on Queensland's Gold Coast.

The UAE's official WAM news agency confirmed his death in Australia.

He died on the Gold Coast at the Palazzo Versace resort from a suspected heart attack.

"The UAE has today lost a historical leader who dedicated his life to building the nation and doing good for its people," said a statement from the UAE's presidency.

Dubai's main stock market halted trading after the news. The UAE has declared 40 days of mourning and government institutions will be closed for a week.

"We recognise the cultural urgency in terms of getting his body back to his homeland for burial."

^---(from url)---^

From Dubai, the "City of Gold", to the Gold Coast, and back again. Certainly no-one is eager to pass on, but when your time comes, I think you could look back at that particular road and conclude that you must surely have lived a charmed life.

R.

http://www.startribune.com/535/story/161937.htmlSHANGHAI, China (AP) - China's currency strengthened Wednesday to its highest level against the dollar after the central bank began allowing banks a greater role in setting the yuan's value.

The People's Bank of China, the country's central bank, on Wednesday began a new policy of calculating the yuan's value against the dollar using a weighted average of the prices given by major banks.

Giving banks a role in setting the new daily benchmark, called the central parity rate, is seen as a sign the central bank is willing to allow market forces a greater role in daily trading.

Since its July 21 revaluation to 8.11 yuan to the dollar, the Chinese currency has gained about 0.5 percent against the dollar.

Throughout the morning, the yuan traded between 8.0681 and 8.0709 to the dollar. That's less than 0.1 percent, but a relatively broad range compared to its usual fluctuation. But according to rules announced at the July revaluation, China allows the yuan to trade only in a band of 0.3 percent above and below its opening level against the dollar and 3 percent versus other currencies.

^----(from url)---^

Relatively speaking, depending on how you look at it, is the yuan being allowed to float (like a hot air balloon), or rather is the dollar being cut loose and allowed to float (like a sandbag ballast)?

The days ahead call for gold.

R.

Just returned from a meeting where some significant (authoritive) gold-statements were analysed : It is very remarkable how many authorities, of all kinds and places, have been at a loss about gold, during the past 25 years ! Nobody, exactly knew WHAT to do with monetary gold. Since 1971, there was an orderly chaos in the entire global gold arena. Many recent statements and gold actions already happened in the period '71 > '90. Those random statements and actions gradually started to converge in an organized architecture since '90 > '95 and has taken a definite form, today ('99).

Today's market action in gold-oil-stockmarket and euro/dollar exchange rate, was a repetition of yesterday...fitting nicely in the architecture of gold's future. Today, gold is not existing in a vacuum anymore. A new "purpose" for gold has been outlined and is in application. Gold shall become "wealth" again...without much DRAMA (as little as possible)! That is exactly what is confusing the majority of stereotype observers. Something "different" is now definitely happening with gold and they can't guess what it possibly could be.

W're coming closer and closer to a point where "everything" can happen with gold. I mean the real change and not the usual (stereotype) kind of gold-drama that comes and goes, as it did in the past 2 decades since 1971.

Disclaimer : The Belgian shrimp still has 100% of his (modest) wealth savings in physical gold...and feel 100% comfortable with it, whilst remaining open minded for every argument that evidences that I have it wrong.

Gold's future (its VALUE) is very unlikely going to remain in the (standard) vacuum of the past decades. I do imitate the ECB's concept and have stopped to see/consider gold as an misleading (perceptive) "insurance". A new role for gold has been found. And a strengthening (rather silent) majority is going to make it happen. The idea and will, for it, have matured.
Only one man's personal opinion !!! DYOD.

Hi Belgian, I love trying to decipher your messages. It's like working a crossword puzzle � in a good way! There is always something exciting about the discovery that keeps me going.

So, in an effort to D my ODD, are you willing to share a little more about your first paragraph? Did you really just return from a meeting? From reading that text, it appears as if the meeting was 7 years ago. Also, would you be willing to share the gold-statements that were analyzed? It seems to me that anyone that understands the words of Another and FOA would have a point of view that would be considered very unique by main stream standards.

Also, in the second paragraph, can you point out the �actions� of the day that really stand out in your eyes? I mean, sure the price went up, but it's hard to find things like volume or physical sales volume on a daily basis. We also watched the value of the dollar drop almost 1.5%. At the same time, I totally understand the wealth angle � I mean, look at Google! Where is the intrinsic value there?

Going further, �everything� seems a little vague. You have much experience in the field of gold understanding, it would be nice to see you say something more then �everything�. Do you mean anything? As in, we could run out? New mines could come online flooding supply? I would like to understand.

And, don't get me wrong. I value your words *highly*. Really. Following your own words, I do not believe that you are a shrimp at all. Anyone that is 100% invested in gold is a true bulldog in hiding. (I hope bulldog doesn't hold any adverse meanings here. Those things are loyal, determined and downright huggable!)

Please note that I value your time and look forward to seeing anything that you post.

Following the holiday season, one would normally expect the Federal Reserve to be spending its time now mopping up the bulge in excess commercial banking reserves that it usually helps create at the end of the year as a consequence of the inordinate amount of cash swirling around in the hands of shoppers and holiday revelers.

But these time we seem to be living through a scenario far from ordinary.

Despite a market in fed funds that was trading in line with the FOMC directive target of 4.25, the Fed's trading desk began the morning with open market operations to temporarily pump an additional $7.75 billion fresh money into the coffers of the nation's banking system via two-day repurchase agreements.

Flexing its muscles more fully just a short moment later, the Fed bought U.S. Treasuries outright on the open market to the tune of $844 million, thereby 'permanently' injecting the money supply with fresh cash made instantantly in the process of the transaction.

When you see how easily money is made, you question the wisdom of various parties (especially foreigners and CBs) who have for so long been willing to hold onto it as though it were a reserve asset of particular merit.

To be sure, there was a time for it, but that time is now passing. The move is on to gold.

R.

Hi White Rose, It is interesting to see your unofficial contest here. What a great way to kick off the New Year. What I find interesting is that the contest only seems to cover the price of gold with regards to the high spot and closing spot. That is, if I understand the contest correctly.

Have you given any thought into conducting a non-spot contest? I seem to remember a poster by the alias of Holtzman, now found in the hall of fame, that talked about the separation of spot and physical with regards to pricing a Krugerrand in a pure physical market (See message 14297). Currently, derivative markets seem to drive the PoG based on paper liquidity. What if the paper becomes worthless and our current system no longer functions as it does today? I would think that the derivative price for paper gold may find its own price separate from the real physical price. Thus, we could end the year with a price of paper gold at zero � or find that the market is closed.

At that point, how will you determine the contest closing price or high price?

It is also interesting that you selected the PoG in dollars. Why not Euros? Rubles? I would think that any currency, with gold officially on reserve, may act differently then one that doesn't. The reason why I mention this is that if the markets close, for some unknown reason, in the US, how will they (you and I) find the true value of gold? How will we really know what a reasonable �world� market value is for our ounce?

I guess when it really comes down to the contest, what I would have found very interesting is a contest where we can challenge each other to come up with a date where the PoG breaks free from the paper gold driven spot price. If you really think about it, many that tune in here are looking for that information. When will gold break free? It would also be interesting to debate the reasons why someone selected their date. There are hundreds of reasons why systems fail, but foreseeing the sequence of events that may lead up to it may spark discussions for months to come!

Anyway, I appreciate your contest and look forward to praising the winner. May your year be golden.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

If you are considering investments in gold we invite you to request our freeintroductory information packet detailing the products and services offeredby USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and lookforward to working with you.

WEDNESDAY Market Excerpts

January 4 (from Reuters) -- U.S. gold futures rallied to a three-week high on Wednesday, as fund buying bolstered the precious metal amid positive sentiment and a weaker U.S. dollar this week, dealers and analysts said.

COMEX February gold contracts gained $3.10 to $535.60.

On a settlement basis, the close was the priciest for futures since January 1981, although on Dec. 12 the price reached a higher session peak, at $544.50.

Gold got a lift from commodities index-based buying more than anything else, said trading sources, as fund-type accounts continue to diversify away from underperforming assets such as equities, currencies and bonds.

Gold also drew support in its role as a currency alternative from a weaker dollar amid ideas that 1-1/2 years of U.S. interest rate increases may be near an end. The Federal Reserve's minutes from its mid-December meeting of policymakers hinted late on Tuesday that the rate rise campaign might be almost over.

Leonard Kaplan, president of Prospector Asset Management he was bullish on gold. "I would think we will get past resistance at $544.40, to perhaps $550, or $600. "The stock market is not doing well, real estate is off the boil and commodities are the flavor of the year," he said. "Last year, $25 billion to $50 billion went into commodities; this year, people are saying, it will be $50 billion to $60 billion."

---(see url for full news, 24-hr newswire, market quotes)---

OK, I was thinking of the value of the Krugerrands that I bought from our hosts. While I appreciate the 24 hour ability to get the gold price from places like Kitco, I know these prices are influenced by paper gold prices.
Since it is my contest, I will define the price as "the gold price coming from a recognized source for which it is possible to purchase Krugerrands for a reasonable $5-$20 dollar premium." If the listed gold price is $800, but Krugerrands cost minimum $1230, then the listing source is no longer valid. If it is impossible to buy Krugerrands for reasons of law, banking rules, nuclear war, bird flu, or martial law (or all of the above), then this contest is null and void and no winner will be declared, except to issue a special statement that all gold holders are winners.

http://www.freemarketnews.com/WorldNews.asp?nid=4765The linked article is supposedly about the possibility of an attack on Iran, but squeezes in some "background" about Iran maybe allowing payment for oil in gold. As a source, this site is sometimes wrong and sometimes first with what others don't have for a week.

No clue whether they have a source for the idea or are just guessing.

Caradoc

I do not foresee nuclear war, bird flu, martial law or �reasons of law� that would prohibit anyone from purchasing a fine round Krugerrand in the current year from our fine host. Also, I do not foresee uncontrollable hyper-inflation or gold confiscation. If I were a level headed individual, I would point to MK's entry in the contest and smile knowing that it is a reasonable and educated guess. In all reality, it could very well be the most probable.

But, today, standing out on a thin limb is how everything feels to me. Will this year be the year that gold hyper-inflates? Will the mother of all gold rushes hit the world in a yellow blizzard of hording? Will we even be able to buy a round 12 months from now? We� shall all see.

In light of the fact that I hold a round and I have protested here that �you may never want to sell your gold again�, it will take a lot to get me to part with, what Smeagol has said, is most preciousss! I would entertain circulating a round at a factor of 100 over today's prices, but figure many others would be happy with a factor of 10. Thus, if it is not too late, I will venture an insanely high guess, somewhere around $5000 with a close in the $3500 dollar range.

I will be looking forward to the following contest and the one after that. It may even take longer then that for the gold market to settle down into a predictable pattern that would make for easier guessing (constant world wide inflation rates). It will be most interesting to see if the value of gold, in the coming years, means anything more then buying the right to survive. I look forward to being around to see.

http://www.commonvoice.com/process.asp?type=h&id=23377January 4, 2006 �
If the United States invades Iran, or if Israel starts military actions by launches missiles at Iran's nuclear power facilities, which then opens the door for the United States to intervene, most Americans will believe that our military actions in Iran will be to defend freedom and liberty while spreading democracy, when the TRUTH is that we'll be fighting a war in Iran because of our nation's relationship with the Federal Reserve, a so-called bank that is not owned by the federal government, maintains no reserve, and isn't a bank at all, but a cartel.
UNSNIP

Alan G. retires later this month.
As I posted earlier:

http://news.bbc.co.uk/2/hi/business/4562488.stm
SNIP
� at the end of January, Mr Greenspan retires from the position of Fed chief. Although approaching 80, he is already planning his new career.
"He's going to write. He has many ideas about how economies work and free markets," his wife Andrea Mitchell, NBC's chief foreign affairs correspondent, told me.
UNSNIP

Maybe, he'll speak.

He said in his concluding remarks:

"In more than 800 years of fiat currency use there has never once been a successful fiat currency, whereas during that same time there has never been a currency based on the gold standard that failed -- until it was either corrupted or taken off the gold standard."



I'd say he's got it all topsy-turvy. It would have been more accurate and more instructive if he had said this instead:

In the past 800 years there has never once been a successful gold standard, whereas during that same time there has never been a fiat currency that failed -- until it was either corrupted or put on the gold standard.

In that form the statement is nearly perfect.

Unfortunately Mr. Karn doesn't yet understand it as he talks prematurely from his podium. God bless him... if he delves deep enough and thinks on it long enough he'll come up to speed (just like I, too, eventually did).

That, or else he (or any volunteer) will please endeavor to show me the error of my reckoning.

On with the discussion...

R.

...if the US-country began marking it's Gold-reserves to market?

sss... granted, the US reserves of It would make up a very tiny part of the total number of dollars floating around out there...but over time...

...will they be eventually be forced to do this anyways?
Can they?

S.

Before everyone rushes in to suggest that the hyperinflated mark of the Reichsbank represents a failure, as does so many hyperinflated old Latin American pesos, please give long patient thought to what actually occurred, i.e., in the respective transitions to Rentenmarks and to so many 'new' pesos... all with fewer zeros.

Thanks!

R.

TownCrier, Well said.

I have found that it's extremely hard for people to separate gold from currency and replace that association with currency and economy. I believe that this is in the cards for the world in the coming years. We will have governments that dictate currencies and print those currencies as they see fit. Gold, will stand out not as an alternative currency, but as a place to store wealth before getting back into a currency.

With that, people will have a choice, hold fiat currencies and be subjected to inflation (taxes), or hold gold. Governments can print all the currency that they want, but if they can not provide reasonable confidence that it will hold value over time, the PoG in that currency will climb to the moon and international trade with that country will falter.

This belief implies that we will forever have inflation! This belief also implies that we will always have boom and bust business cycles. But, countries with good political systems, where they are able to manage their currency well, will be rewarded by businesses that will be able to function! It will be in the interest of the governments of the world to find stability in order to support business that will improve the quality of life for all in it's boarders.

Exhale! You may thing that you stir the pot, but, there are many that see the words that you write and don't find it offensive � yet.

"I would entertain circulating a round at a factor of 100 over today's prices..." - Flatliner (msg#: 140081)

And it might even be entertaining, precious...

Ssss... flag that posst of yours, Ssir Flatliner, and recall it when the opportunity actually arises to exchange that precious Krugerrand at that price. Do you assume today's purchasing power...as many do...at that time?

Many have ssaid and prophesied that It would be priced in five, maybe six figures...in dollars of course, precious... but even after a once-in-a-lifetime MTM "gain", by then many other things may also be much more expensive than they are today.

It will indeed be very interessting, yess...and entertaining?...what people will think of It, and do with It, then. And that time is now one day closer...

S.

In the past 800 years, there has not been a successful monetary structure, because of poor achitecture, insufficient cooperation, and human nature.
Well, you did invite attempts at rewrites;-)

But today, I do not part with the precious round.

Part of the reason why I believe the outrageous 100 factor, can be found in my previous post. I believe that we will forever have inflation � not just US hyper-inflation that has been held of for nearly forever (and my never come), but inflation in every currency for the rest of our lives and the lives of our children, grandchildren and so on.

If you untie Gold from a particular government currency, you will never find the problem of having to get off �the gold standard.� But, unlock gold, let it trade free. Then, governments and their central banks can create money all they want. If they create too much, every business in that country will fail, there will be no long term capital investment gold will fly across the boarders and its price, in that currency, will skyrocket.

My belief is that this is what the coming financial system will look like. Gold will trade free and currencies will be measured against economies (not gold). The success of the economy will provide confidence to the people to enter the currency carry trade of that country thus, reducing the price of gold in that country.

But everywhere, we will have inflation. It is just part of the process. The best part is that as gold trades freely, it will find its natural worldly value. That value will transcend boarders and be redeemable anywhere and everywhere. But, still we will have inflation.

Sure, we might have a one time readjustment to the price in dollars, but, if you think about it, the fundamentals of inflation remain and will forever remain. Thus, don't look at the one time adjustment of MTM as the end game. You, my friend, will most likely be in this for life and your children for their lives and so on and on and � Well, you get the point. The PoG, in an inflationary environment will always go up. And by inflationary environment I mean as world wealth grows, so will the value of gold and so will the supply of currency.

So, laugh today because it would be ridiculous to imagine trying to sell a round a factor of 100 above today's prices. But, to the kids, when they sell, that is what they will get and laugh they will joyously.

Reading the ping-pong between opinions of currency failures, whether FIAT or backed, one thing becomes obvious to me.

Currencies don't fail, but management of them has failed regularly. Some are harder to manage, and some leave more room for abuse, but the failure itself always boils down to corruption and greed. One can comfortably say from the sidelines that a government that implements a 100 to 1 or some value trade-in didn't really fail. But those trying to live through that episode might suggest that in its ability to serve its populace, it certainly did fail, and it required complete replacement.

Like Larry the Cable guy says:

"Guns don't kill people. Husbands who come home early do!"

We're debating nothing but semantics on this issue.

"Thus, don't look at the one time adjustment of MTM as the end game." - Flatliner

We doesn't...

So, laugh today because it would be ridiculous to imagine trying to sell a round a factor of 100 above today's prices. But, to the kids, when they sell, that is what they will get and laugh they will joyously.

100, 1000, 1,000,000... there is no number that is ridiculous
...and we are not laughing, and rarely do... where It is concerned.

S.

Message 140083


It depends, obviously, on how one defines "successful". If one defines a successful fiat monetary system as a system which successfully fleeces, and over time impoverishes the majority and richly rewards those who have the monetary franchise, then your contention is correct.

If, on the other hand, success is defined as a sound-money system which does not allow the "hidden tax" associated with a continually depreciating monetary unit, and one which provides reasonable prosperity for the majority at the expense of power for the few , then Karn is correct.

Additionally, if one addresses the record of almost continual warfare associated with states using "debt" fiat currency, requiring continual monetary expansion, and a borrower of last resort (often military expenditures), then "success" associated with fiat currency looks even less desirable for the majority.

Or perhaps, like one favorite professor commented long ago, "Maybe everything I have learned over the last half-century about economics is wrong (just not up to speed)��But I doubt it."

@ Flat-liner,

I think your analysis is right on. We are progammed to think of "inflation" as a natural "linear" progression of money supply growth by insincere types like Bernanke, and the incredibly obtuse system of hedonic measurement has evolved to keep us in that thought pattern even as the inflatinary curve slope crosses over the point of unity. All hyperbolic curves approach a slope of zero in one direction and infinity in the other. That's the definition of hyperbolic.

Nothing is happening (or may even be available) to alter that curve, as no one has come up with a monetary theory that defies the hyperbolic trend.

Most people aren't even alarmed by the idea that the dollar has lost 96% of its value since 1933, as they say "it's just numbers in a ledger". But the bottom line is that, while this is true, the "controllers" use this obtuse calculation to run the pyramid scheme to its logical conclusion EVERY TIME. Unfortunately, that logical conclusion is greater and greater distortion of the distribution of wealth. Like any Monopoly game, the game must end and be restarted when the balance is completely lost.

Unfortunately, the repeated success of this system lies in something I recently read called "Cognitive Foreclosure", wherein the masses decide it's not worth standing up for rights or equality and prefer instead to just stay "under the RADAR" of the controllers.

Actually both statements are equally correct yet overly simplistic.
Each statement does reveal something about the perspective of the speaker.
Since any currency system will eventually fail once it is corrupted, perhaps it would be more instructive to ask what currency system would offer the most resistance to corruption?
Is the chosen currency system supported by the use of force, fraud and terror to maintain monopolistic control?
Are competing, alternative currencies readily available once corruption is found out?
Is the currency inflatable?

Best Wishes

We looks at paper-currencies as the sstock-certificates of corporation-governments...which people are forced to use rather than freely trade...at least within corporate government borders...and as the corporation goes, so goes it's sstock. And even with good management, corporations may sstill die.

S.

http://www.commondreams.org/views05/1017-28.htmFor those who want to read the Doug Soderstrom article where he presents his theory of "Cognitve Foreclosure", here is the URL.

It's too far afield topically to elucidate here, so go read it for yourself, if you care to.

Flatliner,i am new to this forum as you know.My posts come from a 55 year old sheetmetal worker who built all of those buildings where the white collar workers have their board meetings.Whiterose asked if anyone would be interested in taking a guess at end of year prices of gold period.Why does a simple little contest that is all in fun have to be dragged into the global market of rubles,paper,and whatever else is happening in the world.It's like signging up for a football pot at the work place.You just pay your money and pick your squares.This is whiterose's contest.If you do not want to enter no big deal.If you want to see a contest that includes what you discussed start your own contest.With all respects M.(p.s.i have posted 640 high and 640 end of year)

Very well said. I stand and applaud.

However... (did you see that coming?)

In the pursuit of rock-solid thinking on this matter, I want to challenge you further on one small thing... the conclusion you drew in the second paragraph where you said "...the PoG in that currency will climb to the moon and international trade with that country will falter."

Firstly, taking your introductory remarks, I fully agree that if indeed the Governments forsake reasonable management, then yes, absolutely, the PoG as expressed in that currency will 'climb to the moon'. So far, so good.

However, I think on the face of it you might be overly hasty in concluding "international trade with that country will falter".

Think about it like this. Based on the same rationale and understanding that you so excellently expressed in all other areas of your post, a clever fellow like you would not maintain much more than a superficial level of currency in your checking account. You'd select just enough from your income stream to meet your expected expenses, whereas any excess you had (the portion that you would earmark as savings) would prudently be exchanged for the security of tangible gold metal.

Not only would you do this, but so would all of the other equally clever people of the land! And in fact, if you travel to many places of the world where the government's management of the currency has a bad track record, you'll find a lot of people there are already on this sort of gold savings paradigm.

And that right there, my friend, is the essential BEAUTY of the system; because these folks shall be using gold as their savings, they will not be losing their international purchasing power -- even as the government is driving their currency into the floor!

The people of the nation will, just as before, be able to dip into their savings to buy foreign goods (imports).

Now take it a step further, and stand on the outside looking in. If that country's currency is going to the floor and yours isn't, that exports will certainly look very affordable, and foreign capital will certainly bid aggressively on their available goods (exports).

So you see, international trade need not suffer at all, and in fact, the paradigm will do great service in preserving, through time and all sorts of currency storms, a better continuity of balance between the imports and the exports.

Finally, picture yourself as a tourist to that fair but far distant land of the weak currency. In fact, say the country is so small, and its currency so unattractive and exotic that your hometown bank can't provide you with any of its folding money to have in you wallet upon you arrival at the airport.

Furthermore, being a land of gold savers, let's say they really have no need for your own pathetic currency, either, because you, too, are from a fair but far distant land with an equally weak and exotic currency.

No problem! Being a gold saver yourself, you pocket one of your many gold sovereigns that you've bought from USAGOLD-Centennial Precious Metals, and you hop on your airplane with dreams of a righteous sun tan.

You land in that fair land, find the local gold merchant (there shall be many of them on account of the locally active gold/currency exchange) and hand over the sovereign for enough cash to see you through your vacation -- paying for all of your locally rendered services (hotel, haircut, shoeshines, meals, etc) as well as the goods that you take back home as souvenirs.

now think about it the balance of trade upon your return. That country effectively IMPORTED one sovereign (0.2354 oz gold), the local economy was stimulated by your use of local services, and only the small balance of physical souvenirs that you took home registered as EXPORTS.

Meanwhile, perhaps your own country's government will be 'hip-hip-hurrahing' because you single-handedly contributed towards a net EXPORT of what had previously been domestic goods (your own gold) meanwhile IMPORTING less. And in the currently topsy-turvy world, isn't that what every government seems to be striving for -- a net EXPORT of goods... which they perversely call a trade SURPLUS?!

Naaaaaaaaaw!!

Thanks a mint for your participation in this critical discussion. It's the future as you'll soon enough know it by experience rather than just as a mental exercise. And the premise of a monetary system built upon a framework of floating MTM gold reserves is the critical ingredient to deliver it to our future doorsteps.

Now THAT's a cause for cheering. Hip-hip-hurrah.

Randy

@ TC and Flatliner,

One of my favorite reads in the last couple years was Jim Rogers' book "Investment Biker", the story of his trek around the world on an "Airhead" BMW. He describes his entry into each country as an adventure in checking out the health of their local economy via this route:

First he would go to the bank and exchange a small amount of US$ (1980-ish) for the local FIAT. Then he would seek out the local money changers in the street markets and compare the exchange rates. If they were similar, he ruled the local economy healthy, if not, he suspected that government controls were operating at a level that stifled commerce.

Not unlike your gold market analogy, with a more emperical basis.

Exactly.

And when we say the people fail, what we mean is their management is bad -- to the detriment of the currency's purchasing stability.

A gold standard currency will ALWAYS fail, thus giving over to a sudden disruptive dislocation of currency value (at the moment of suspension of convertibility) and subsequent transition to a less 'shocky' fiat currency regime, because even the 'almighty' gold standard is controlled (operated) by fallible human beings.

Technically, 'currency' is whatever your social structure (most frequently this means your government) says it is, as a portable unitized portion of that society's monetary system. 'Money', however, is the same wherever you go -- and you CAN'T quite put your finger on it... except in the form of its designated currency.

Amen.

R.

@ TC,

I totally agree that even gold backed currencies will finally fail, once the pyramid scheme runs its course.

A reasonable question, and probably not very easy to answer, is:

Does solid backing of a currency lend itself to less corruption and longer life?

Obviously not, if the controlling entity is completely rotten, but a hypothetical comparison of backed vs. unbacked currency life given similar conditions might be an worthwhile study.

"Does solid backing of a currency lend itself to less corruption and longer life?"

Revisiting square one, the premise was that a fiat currency NEVER fails, but a gold standard (currency) ALWAYS fails eventually.

So there's there answer to that. Also arguing against the gold standard currency is that when it DOES fail, there is usally a large dislocation among the users of the system who had so-called convertible accounts in the bank which one fateful day suddenly no longer are convertible.

A currency on a fixed gold standard leads to gold with a frozen price/value along with shocking devaluations; whereas a fiat currency with floating MTM gold reserves provides all the while solid and ever reliable gold values and easily-coped-with gradual currency devaluation.

R.

I read your comment about the "the record of almost continual warfare associated with states using 'debt' fiat currency".

This question is sure to put a smile on EVERYONE's face.

Please give me the name of ONE single war that was prevented by a monetary gold standard.



Ok, now in all deadly seriousness, consider that we were on an international gold standard AND YET the Great War (WWI) still managed to spring into being.

Now I'll grant you that many participants subsequently chose to suspend the gold standard, but please answer this: How exactly does a gold standard prevent a war when the standard is so easily suspended in accordance with the political will to do so?

Even good ol' Ferdi could never quite figure that one out, but bless him, he never let it stop him from stating that false claim anyway.

R.

It is often published that the intent to sell oil in Euros (e.g. Saddam Hussein 2000, Iran 2006) is deeply offensive to the World Oil Powers That Be, and that armed intervention will occur soon afterwards.

I simply cannot understand how pricing a commodity in a different currency can cause any such concerns - surely it is simply a matter of clicking a mouse on the unit of international transfer (be it USD, Euro, Yen, CHF or whatever).

It's not that oil will be priced any differently in Euros or whatever, as the price must take cognisance of the world market price.

Then again, maybe I am being simplistic. Can anyone on the forum enlighten me?

@ TC,

"Revisiting square one, the premise was that a fiat currency NEVER fails, but a gold standard (currency) ALWAYS fails eventually."

Ain't buying this one, for reasons I already proposed.

Your explanation of why FIAT never fails only work for the outside oberver, not for the participant.

Absolutes, while great for armchair quarterbacking, never take the hits dealt in a real game.

TC
"How exactly does a gold standard prevent a war when the standard is so easily suspended in accordance with the political will to do so?"

Liberty Head
TC, must you persist in asking duplicitous questions?
If a gold standard must first be suspended than it must be preventing something, right?
So the gold standard isn't the problem, it's something else.
Your question is like asking; How exactly does the Constitution prevent a war when it is so easily suspended in accordance with the political will to do so?
These questions lead to no useful understanding. They are camouflage.
A more useful question would be; How do we contain the gov't?

Best Wishes

@ Gold Standard,

"I simply cannot understand how pricing a commodity in a different currency can cause any such concerns - surely it is simply a matter of clicking a mouse on the unit of international transfer (be it USD, Euro, Yen, CHF or whatever)."

Ah, but you are forgetting who gets the benefit of those mouse clicks. Remember, 96% of the dollar inflation has been "absorbed" back by the creators as their "commission" for control and creation. Once the widespread use deteriorates, the built-in profit of the creditor is disrupted, and the game table is releveled. Worse yet, the debt might have be repaid, instead of inflated away.

One analogy is the "bank" in BlackJack, always owned by the house, vs. the "bank" in Bacccarat, which moves around the table, player-to-player. If one assumes that the "bank" has an advantage, the IMF-dollar system hardly wants to "share" that advantage with other currencies, as it is the very size and continued growth of the international debt that is keeping the US $ afloat.

Once the international debt stops growing, the pyramid scheme begins to unravel.

It must be the power they can excercise through these paper currencies.Like the pattern of the flag ruling was of utmost importance in the old times.Now we come nearer to the moral imperative questions TC likes to avoid.But I'll help him:who says the PTB can't be more moral?Who says the Goldstandard needs a fixed price,must be a "centrally governed" standard?Why not a personal Goldstandard?

Liberty Head hit the nail with that one: "since any currency system will eventually fail once it is corrupted, perhaps it would be more instructive to ask what currency system would offer the most resistance to corruption? "

Your forgetting our intermediate discussion.

Technically it isn't the currency, per se, which fails, but rather it's the management of the monetary officials which fails.

To be sure, the result of that management 'failure' is ultimately that the purchasing power of the currency unit falls to nearly zero, but other than that the currency as a utility is alive and kicking, same as it ever was.

Let's not miss my overarching point which is this. Money (supply), irrespective of the type of currency unit chosen by the sovereign, has a tendency to grow as the economy grows, and atop that feature the sovereign management has a Keynesian tendency to fight monetary contractions associated with downturns in the economy (� la the classic "business cycle"). The consequence is a ratcheting effect that, as Flatliner would readily agree, points to perpetual inflation (and depreciation of the currency unit) to one degree or another.

Hence the prudential motivation of industrious people to choose physical gold -- gold outside of the monetary system -- as their means of secure saving without fears of being taken down with the currency depreciation as would affect any such coinage that trades at par with the currency unit itself.

Is there a way for me to make this any clearer?

R.

I guess the next time I consider 'asking' a rhetorical question, I need to bear in mind that the written word does not convey the sentiment as clearly as the spoken word.

Despite your handling of the affair, you did at least arrive close to the intended target zone. Namely, it boils down to finding the mechanism by which one can deal with one's would-be controllers -- and if a suitable degree of outright control is unachieveable, then the next order of business is probably closer to finding a means to survive/thrive the best you can underground.

Gold is useful in either event.

R.

"To be sure, the result of that management 'failure' is ultimately that the purchasing power of the currency unit falls to nearly zero, but other than that the currency as a utility is alive and kicking, same as it ever was."

When my bottle of beer is empty, the bottle may retain its utility, but the beer is still gone.

Your currency of "near-zero value" may also retain its "utility" as a concept, but the value is still gone.

As a living being, the basic "utility" of that currency can be measured in its acceptability for goods. If that is "near-zero", it has lost its function as far as I'm concerned, if it no longer purchases what I need to sustain life.

http://www.opednews.com/articles/opedne_allen_l__060104_iran_is_cheney_s_nex.htmSNIP
It's the financial threat of Iran introducing a euro-based energy exchange.

http://www.raisethehammer.org/index.asp?id=133

SNIPS
Ironically, America originally invaded Iraq - a poor, defenseless country - partly to send a message to other oil producing countries not to rock the petrodollar system, but the real message for small countries is that they need to present a credible deterrent threat or risk being ignored and/or invaded.
+
Iran may, indeed, be attempting to acquire nuclear weapons. However, it also has a "legitimate" interest in developing nuclear power, since its own oil reserves are already post-peak and it aims to continue in its role as an energy exporter. Iran is a signatory in good standing to the Nuclear Non-Proliferation Treaty (NPT) and has openly informed the International Atomic Energy Agency of its intentions as requried by the Treaty.
However, Iran's presumed attempt to acquire nuclear weapons is only the politically acceptable excuse for America's threats.

Since you're apparently apt to agree that currency SYSTEMS are vulnerable to corruption, why can't we use that as an instructive premise to solve our problem at hand?

Nobody wants to risk losing their life savings.

Nobody wants their savings to be corrupted.

Nobody wants their savings to be even remotely vulnerable to corruption and loss.

That's why gold must exist outside and away from the controllable aspects of the currency and monetary system. That way it will not share in the vulnerability to corruption.

There's really not much we can do, personally, to control our monetary system or its controllers.

But we CAN take control of our savings, by making sure it is as secure as solid gold.

Fortunately, a coalition of deep thinking politicos and central bankers have apparently seen the light and are taking giant steps to take gold all of the way out of the dollar-IMF deep-freezer of official control so that it will finally be able to serve us all in the above-stated manner as the savings/reserve asset par excellence.

R.

Don't let a few zeros confound your thinking. A currency can lose half of its purchasing power, or even 99 percent, over and over again, an infinite number of times.

Usually the managers knock off a few zeros for convenience sake, and the system keeps on truckin'.

Imagine if we didn't have a numerical based pricing system for our currency, but used something like a spectrum of colors (like the cheap plastic poker chips you played with as a child). Then, there wouldn't be any of this 'zero' dilemma between us. We would quickly agree that, as the prices tended to get larger due to depreciation of the currency, the colors of the chips in primary circulation would tend to evolve along down the spectrum, always heading in the direction that represented an adequate degree of purchasing power.

Forgive me if that's too abstract. I don't know how else to put it.

And again, don't loose track of my primary point. Money depreciates, and there's nothing to be gained in whining about that fact of life except earning a degree in self-humiliation.

So the thing to do is preserve our energy, gather up our currencies, and use them to choose gold as our means of savings. There's really nothing else for it.

And with that, I relinquish the floor to the night shift. Tidings, good fellows!

R.

TC,

"Fortunately, a coalition of deep thinking politicos and central bankers have apparently seen the light and are taking giant steps to take gold all of the way out of the dollar-IMF deep-freezer of official control so that it will finally be able to serve us all in the above-stated manner as the savings/reserve asset par excellence."

You're obviously a lot more trusting of these "deep thinking politicos" than most of us are. Some remember how they used gold confiscation to bail their bankster butts out of sling in 1933, at the price of prolonging the depression by about ten years - and still needed to "cull" the world's workforce by another 50 million souls during the decade after that.

I've also been thinking about your example of WWI as a war under the gold standard. While the gold-standard was in effect, it was at the prodding of JP Morgan who bet on the wrong side that the US entered the war to bail him out of Britain's ultimate financial collapse. Without the massive debt engine, it might not have been a "world war" at all. So while the gold standard was ofiicially in place, the Keynesian principle of rule by overwhelming debt was already in play, and the destruction of the gold standard was more than likely the result.

Your quote, "Don't let a few zeros confound your thinking. A currency can lose half of its purchasing power, or even 99 percent, over and over again, an infinite number of times."

I care not for the number zeroes, but a person can only starve to death once. Are you really so "collective" oriented, that the survival of a paper system is more important than the survival of the species?

This is where we really differ. Your major concern seems to be that the currency retains some flicker of life after having the stuffing stomped out of it. I believe the real issue is that a relatively few money changers suck up all the stuffing, starve a major segment of the populace, completely hinder real technical progress to shelter their friends' "franchises", and spend more than half of the world's productivity for weapons to retain their yoke upon civilization . . . and for some reason we seem to be too "civilized" to guillotine then for doing it, so they repeat it generation after generation, and we call them "Royalty".

The best most people can muster is to "stay out of Massa's RADAR", caring naught for arresting the slide of civilization into the next "Rishi-style" bye-bye.

OK, I'm an idealist, but I've been called worse, especially in the last few days!

Starting as a financial novice here at USAGold,now after all these many years of studying the monetary concepts I think I'm coming very close to hit the G-Spot (pun intended) on the matter and formulating my own conclusions.But a complete change in the 5000year old monetary (Gold) history makes it necessary to pedantically think through the remaining grey areas/potential flaws-it will be something for a weekend post and I still need further read of "Geld,Gold und Gottspieler".But you touched already on it with the following:

"That's why gold must exist outside and away from the controllable aspects of the currency and monetary system. That way it will not share in the vulnerability to corruption."--TC

KG:do you see the contradiction here?Particularly with the next statement:

"There's really not much we can do, personally, to control our monetary system or its controllers."--TC

Next:

"But we CAN take control of our money, by making sure it is as secure as solid gold"--TC

KG:Admittedly I changed a small bit.

"Fortunately, a coalition of deep thinking politicos and central bankers have apparently seen the light.."--TC

KG:then,they could as easily operate something like a Goldstandard,no?

It all somehow boild down to corruption (morals) and the Gestalt (and value or not) of money'some things might be semantics and I try to sort this out from now on.

Randy,no need to answer now (guess you deserve a good sleep anyway) nor later,I posted this just that your knowledge about my thinking gets a more solid foundation and that you will understand my future posts.And frankly I have to more carefully read all the great posts from yesterday.

The non US-$ factions NEVER felt comfortable with the "evolving" $-gold-standard as fundamental of the $-IMS !

Idem dito for the parallel $-oil-standard as another fundamental of the $-IMS.

And it is not accidental that Russia has become very vocal about this "feeling uncomfortable" with these different forms of $ standardisation (Goldreserves-Gazprom !).

And herein lays the answer of Smeagol's question : The "new" producers and owners of wealth don't wish to be standardised with (by) the means of a $ unit of account (fiat money) as the expression of their (real) wealth !

Like it or not...but a fast growing and coherent coalition wants a regime change from the $ standard to a wealth standard.

Any IMS will have to adapt-restructure to this change or decline in -global- "use".

The reasoning is VERY simple : Stop plundering our wealth by the means of the $ standard (IMS)! The solution (change) is even simplier : Restore the notion of real wealth in a structured manner.

This globalizing world (the non US-$ factions) is definitely in the fast proceeding process of re-defining universal "WEALTH"...not the $ standardised mutant. No military power or killing is going to stop this evolution, anymore.

It is NOT at all a matter of "trust", Goldilox ! It is about the global owners and producers of REAL wealth ! GLOBAL ...not local !!! Forget the island view - tunnel vision. Don't generalise (globalise) the $ standardisation.
Politicos + central bankers have to and are "structuring" the needed and wanted transition...out of the fake wealth standard into the real one. This is NOT a matter of trust but bare nescessety.

The $-gold-standard(s) IS (are) as socialist/collectivist as can possibly be. Freegold IS (real) capitalism !!! And the global wealth giants are not intimidated if and when some factions are going to label it as "unfair".

Here's a question I pose for the forum. If someone offered you an oz. of gold or a share of Google stock, which would you choose? Why?

Consider that gold is $526 per oz. and Google is reaching a new high this week at $445 per share.

http://www.supremelaw.org/authors/vieira/vieira.htmWorth a look.

Invisible hand, feel free to leave comments like, the us invaded a -poor defenseless country iraq- on the link you provide and not on the forum.

snip:

[Huck Finn's Electricity Hut is regulated by the State. So Huck can only charge his customers a moderate fee for service. But one day, Godzilla comes to town, already in possession of a hundred similar operations. He offers a pile of money for Huck Finn's Electricity Hut, and now Godzillacorp has a hundred and one subsidiaries all over the USA. Clearly, Godzillacorp is an interstate entity, so it is not subject to the regulations that kept Huck's prices so low in the past. The laws that once prevented Godzilla from buying up large numbers of small independent utilities were largely repealed during the legislative bonanza that brought you Enron. The coup de grace was the repeal of the Depression-era Public Utility Holding Company Act last fall. And while the giant lizard is buying up all the small utility companies, the natural gas needed to generate electricity is running out. Scarcity will impose cuts in energy use, and whoever controls the generation and delivery system will be choosing where to cut. If the weather is harsh (perhaps because of a radically destabilized climate), access to energy is a matter of life and death. And if Godzilla is in charge, will Huck and his dirt-poor client base be around much longer? Deregulation + arbitrage = hypothermia.

And whom do we find at the heart of all this? Warren Buffett

-Goldilox

I have always maintained that Buffett's pennies-on-the-dollar public gas and pipeline purchases were of much greater import than his silver and dollar side bets. It looks like Michael Ruppert agrees.

Whether or not one agrees with Michael's conclusions, the questions themselves are important, and get little airtime anywhere.

Basically, if Peak oil [energy] is either a reality or perceived reality, how does that drive geopolitics, given hydrocarbon's already very political nature?

I think a similar question can be asked of Belgian and TC's "politicos are engineering freegold" statements. Do you mean the same good-natured "politicos" that are "engineering" gold and silver price suppression? Is this practice really "for the good of all", or just to line their own pockets during the "global transitions".

Watching the POG correction this morning brought up an interesting question. Are we seeing the $6 limit imposed on the downward side in this phase of the golden bull?

http://www.raisethehammer.org/index.asp?id=133Gold Standard--
please read link above for explanation of how important keeping oil traded for dollars is for maintaining dollar as international reserve currency.

I don't think *I* emptied enough bottles of beer to clearly see the analogy presented in a previous post.

Does the beer represent the �value� where as the bottle represents the �currency�? If so, I have to ask, how did the beer disappear?

What is very interesting here is that in these discussions the element of time is quite often overlooked. How long does it take for a currency to be devalued? How long does it take before the failures in the system cause confidence in the system to be reduced? How long does it take to count to infinity?

Let's take counting to infinity as a starter. Here, let's consider counting from 1 to zero by always cutting the number in half. Thus, the sequence starts: 1, 0.5, 0.25, 0.125, 0.0625, � Anyone that has explored this puzzle will find that there are an infinite number of entries between 1 and zero and, even though we may continue to try to solve the puzzle day in and day out, getting to the end is impossible and it will take an infinite amount of time. To speed up the process, if you can apply some calculus and determine that given that you've counted an infinite number of times, you will come to zero as your answer.

Calculus is great because it removes the element of time. Reality is a little different. We are stuck with time.

Now, let's look back to see what happened to that beer � over time. If, the owner of that beer drank it, well, they got to enjoy the full value of their beer. That would be like selling your car for 10k and turning around and buying new living room furniture. Very little time elapsed between the opening of the transaction and the completion of it. During that time, as with counting to infinity, only a few steps can be taken along the devaluing path and it may not even be perceived as having an affect during that time frame. But, what if the owner of the beer wanted to enjoy it over a long period of time? Well, here we've got problems. One problem is evaporation. Left in the bottle uncapped, evaporation is slow but rot steps in. Spread thin, evaporation comes into play. The amazing part here is that once the beer is opened, everyone knows that you either enjoy it *now* or it becomes worthless.

This same principles of rot and evaporation can be applied to currencies where time is the currency carry trade. Once you open a transaction thus acquiring currency, you have an open beer. If you use that currency right away, it trades at full value � it's a full beer. Everyone sees it as a full beer. Everyone will accept it as a full beer. But, if you hold that beer long, it will ether evaporate of rot. Thus, anyone that has studied beer knows that you don't buy beer and put it on the shelf in the garage with the intent of keeping it for a long period of time. It goes bad. Currencies are the same way. Either there is outright inflation (Evaporation of value) or the system of preservation is flawed allowing rot to consume it over time.

We could debate all day about which is worse � evaporation of value or rot in the system, but the reality is that it just goes bad over time. It's that simple. Don't buy and save beer. Buy it when you want it and use it before it before it goes bad. Keep the period of time where you're into your beer transaction at a minimum and find things that don't rot to use as your savings.

A currency is much more like a bottle of hard liquor that is in Dad's liquor cabinet.

The teenagers have a party, and drink half the liquor. Then they fill it up with water, so that anyone looking at it does not know it has been consumed.

Then there is another party, and the remainder is consumed. Still, the teenagers refill the bottle, which is now all water. But until dad checks the bottle, nothing happens.

I yield to Silverton3's awesome analogy!

Ah� I see. I like how dad is deceived in this example. Very nice.

It would still do dad good to buy his liquor closer to the time that he wants to use it. That way, when the kids open the cabinet to rob him, there is nothing there to steal. The problem here is still time. The longer dad holds the bottle, the higher the probability that the kids will party at his expense.

One alternative is that allowed by US law: Insert gold clauses of some sort in private contracts.

The entire monetary system is not based on gold, so there is no need and little incentive for the government "to go off the gold standard", or to outlaw the gold clauses. However, private parties who agree to use gold clauses as part of their contracts can do so. This permits a private party to a long-term contract to look to a gold clause to protect their interests (long-term asset value protection), perhaps in the context of a long-term commercial lease. The flipside probably would be to allow one party to walk away from the arrangement, if the other party triggered the gold option in the contract.

http://www.usagold.com/gold-coins.html

Harvest
Whatever it is that you may have sown,
we'll give you the power to reap GOLD.

1-800-869-5115
USAGOLD-Centennial has three decades of experience in the field

Dad's kids are more clever than Dad. They dilute the moonshine and finger the maid. They beat her up. Dad says with pride "That's my boys". Dad brings in more moonshine, finds another maid and the cycle repeats until the kids all drop dead with cirrhosis.
Anyone who tries to tell Dad the truth is accused of treason, anarchy and terrorism. If there is a trial at all, it will come after the sentence has been imposed.
Welcome to the USA.


Best Wishes

Arrrgh! (And by that I also mean, "Ooops!!")

"There's really not much we can do, personally, to control our monetary system or its controllers. But we CAN take control of our money, by making sure it is as secure as solid gold"--TC

I beg your many pardons for my confounding grammatical slip. I'm sure you'll have an easier time following my train of thought when I offer the corrected version below, which is what I MEANT to type.

"...But we CAN take control of our SAVINGS, by making sure it is as secure as solid gold"

R.

...because unlike the Google company, I know gold's fundamentals and I like them very much. I'm not saying Google doesn't have good fundies, but I don't know them or their management.

What I love about physical gold is that I know the manager intimately: it's ME! And I have great trust in myself.

On a wonkish note, Google's value depends on people being online. If energy costs soar, or anything else causes rolling blackouts...no computers, except for laptops rechargable by solar or hand-crank.

Happy New Year, all!

Or maybe, being smarter than the average Dad, he moves the good stuff to the garage filed under "automotive lubricants", and lets the kids keep acquiring more and more diluted booty from their illicit enterprise. He might even add some color to the liquid in the bottle (a little flat cola will do) to make them think they are still getting real hootch!

Now there's a Dad that understands "market spin".

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh69935_2006-01-05_15-46-42_n05196240_newsmlFollowing yesterday's outright purchase (monetization) of $844 million of government debt, the Federal Reserve was at it again today. [see yesterday msg#: 140076]

Today, depsite a tame fed funds market, the trading desk of the Federal Reserve bought another $448 million, upping the 'permanent' money supply in the process. This time the focus was upon TIPS across the spectrum, taking maturities from January 2007 to April 2032.

In additional open market operations today the Fed added temporary money through $11 billion in two-week repurchase agreements, and a further $5.75 billion via overnight repos.

When you see how easily money is made, you question the wisdom of various parties (especially foreigners and CBs) who have for so long been willing to hold onto it as though it were a reserve asset of particular merit.

To be sure, there was a time for it, but that time is now passing. The international move is onward to gold.

R.

Just now I was scrolling through the forum and ran across my original post... where I now see I hadn't actually misspoke. Turns out that your translated quote was out of kilter, and it was that translation that I subsequently responded to.

[The 'Copy&Paste' feature of the mouse is a very quick and handy tool to avoid that sort of thing.]

Regards,
R.

Chicago Board of trade raised margins on Gold and Silver Futures.

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

The following margin changes are effective with the closing of business January 5, 2006.

I. Changes to Margins on CBOT Futures

From Initial/Maintenance/Hedge
To Initial/Maintenance/Hedge

100 Oz. Gold $1,418/$1,050/$1,050
$1,823/$1,350/$1,350

Mini-Sized Gold $473/$350/$350
$608/$450/$450

5000 Oz Silver $1,620/$1,200/$1,200 $1,823/$1,350/$1,350
Mini-Sized Silver $324/$240/$240 $365/$270/$270

In setting margins levels, the Chicago Board of Trade Margin Review Group along with the CME Clearing House monitors current and historical price movements covering short-term, intermediate and longer-term data using statistical and parametric and non-parametric analysis. Futures maintenance margin levels are typically set to cover at least the maximum one-day price move on 95% to 99% of the days during these time periods.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

If you are considering investments in gold we invite you to request our freeintroductory information packet detailing the products and services offeredby USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and lookforward to working with you.

THURSDAY Market Excerpts

January 5 (from MarketWatch) -- Gold futures closed with a loss of over 1% Thursday after gaining more than $40 an ounce in the past eight sessions.

"Gold was overbought and the first quarter is a seasonally weak period for gold, so no surprise there's profit-taking," said Peter Grandich, editor of the Grandich Letter.

"But this powerful secular bull market in gold has a history of sharp but short corrections so any sustained weakness is not expected," he said.

The COMEX February contract has climbed $40.30 since its close at $495.30 on Dec. 21. On Wednesday, it traded at a three-week high on an intraday basis but closed at the highest level in almost 25 years.

The contract finished Thursday at $527.80, down $7.80 following a low of $524.

Indeed, "gold has [been] hit with a round of profit-taking as the dollar found some legs and crude is trading soft," said Charles Nedoss, an analyst at Peak Trading Group.

"Keep your seat belts buckled. It's going to a wild ride as volatility remains high," Nedoss warned.

---(see url for full news, 24-hr newswire, market quotes)---

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh62561_2006-01-05_11-23-01_pek63223_newsmlBEIJING, Jan 5 (Reuters) - China's foreign exchange regulator said on Thursday it would abolish foreign exchange quota limits for outbound investment as one of its key tasks in 2006.

It also said it planned to explore new ways of using China's foreign exchange reserves and broadening their investment scope. Most of the country's foreign exchange reserves, which hit $769 billion by end-September, are invested in U.S. Treasuries.

"We will abolish foreign exchange quota limits for outbound investment to give more support to companies investing overseas," the State Administration of Foreign Exchange said.

The move will offer a boon to domestic firms as they seek to strike out onto the world stage and help the country to offset a rapid accumulation of foreign exchange reserves.

...also reiterated the government's goal of reducing China's balance of payments surplus, saying it aimed to promote a balanced international payments position.

^---(from url)---^

Take a moment and try to understand what this signifies that China is going to let its companies SPEND their earned dollars in the first place -- rather than having the People's Bank continue to ABSORB the dollars in exchange for renminbi.

Secondly, try to reconcile to your own satisfaction how the other two goals can work in harmony; one being that China wants to "broaden the investment scope" of its vast dollar-dominated foreign exchange reserves, and the other being that China wants to promote a "balanced international payments position".

Choosing gold (technically an import) is a NATURAL way to achieve a balancing of the books while at the same time sacrificing nothing with respect to the size and strength of their reserve position. In fact, with an eye to future performance of dollars vs. gold, with MTM gold they emerge all the stronger.

The transition to freegold... slowly happening right before your eyes, folks.

R.

@TC,

Given how much China has invested in infrastructure, production, and resources in the last years, it's tough to tell if this release is a "continuation of a trend" or just an official announcement of something they've been doing for a while.

Huge purchases in Canadian and South American resource projects, large purchases of Boeing and John Deere equipment, and the offer for UnoCal are all indicative of them wanting to put some of those excess dollars to work. They may not be ready to stop propping up the US Treasury, but they sure aren't going to put all their eggs in that one basket.

First there is the conception of a goal.

Then there are stirrings in the shadows.

Then there is writing on the wall.

Then there are headlines.

Then there are newscasts.

Then you one day awake and marvel at how so much could have happened 'overnight'.

R.

PS. Flatliner, I liked your comments about TIME and the brew analogies that followed.

"International trade with that country will falter" � ah, yeah� That's what I wrote. Did I really mean that? Now that you've pointed it out, I'm not sure.

At the time I wrote that, I was thinking about long term business decisions. In an environment where the currency is unstable, business can't plan for the future with as much confidence as they can in a stable environment. In a stable environment, you can borrow currency at a known fixed rate and spend it over time knowing that it will depreciate at some small constant rate over the life of the loan. Likewise, and probably more important, the creditor can lend currency at a rate above inflation knowing that they will make a little profit. In an unstable environment, any money that you borrow, may not have the purchasing power in a few months that you'd planned your business around thus, driving you out of business. Or, credit just dries up because no one is willing lend - long.

Businesses usually need investment capital to grow, stay current and get more efficient. In a society where stability can not be found with the currency means that businesses will suffer. If business suffers, it's going to be really hard to actually manufacture something to export.

Also, everyone on the outside looking in is going to think twice before investing in a business in that type of environment. The risks are just too great. Sure, they will look for things to buy, but they will not invest.

So, in a Fiat system where the value of the currency is determined by the economy of that county, those in charge of printing the currency will want to think twice about how they manage it. If they print little, their currency will be strong for business attracting investment capital for long term decision making and fundamental business support. If they print a lot, they will undermine the ability for business to function in any long term fashion.

It seems that when it comes to exports and imports, it might be a matter of � does anyone want what they produce? If building the hottest car on the market will improve exports, then the country will have to have a monetary policy that will attract big business investment. Then, in time, exports will happen. (maybe�)

I'm glad you called me on that tidbit and I'm sure you'll call me on something that I've written here. Keep in mind that I am a student, at heart, and look forward to broadening my understanding though this change in this great forum.

Oh, two more things. I'm looking forward to the day when traveling with a gold coin is the norm and the compliments that I've seen lately in this forum. It has lightened the mood a little.

Yesterday, saw the Israeli PM afflicted with a severe stroke, leaving him gravely ill.

Last night and today saw about an $8 drop in the gold price and a leveling off of the dollar after a big fall. Coincidence? Probably. But with the U.S.'s hands full in Iraq, it's been rumored that Israel might be the designated Iran attacker. An attack, we are told, that would be prompted by nuclear activity -- in the headlines, and by the Euro-oil bourse, on the back page.

Now with Prime Minister Sharon down and Israeli politics in a state of uncertainty, could the gold market be dropping the odds on an attack taking place? I don't know -- but it's only about 9 weeks away to the opening of that market (early March, I believe.)

Some have opined that some of the gold run-up of late, may be attributed to nervousness over the Iranian issues now and in March. If an attack is less likely, I would expect continued weakness for the dollar going forward, and growing strength for the Euro as more demand is anticipated for that currency; and hopefully, steady to rising gold prices.

@ TC,

Ain't it the truth?

The Newshounds are nearly the last to know.

Supposing I met one of the knights or ladies from this round table and, after a bit of friendly banter, it was agreed that I should buy from them some item which we both valued.

It might be anything across the spectrum of human values, but we both agree that, whatever it be, it has value to each of us. Therefore the exchange involves an agreement within which I undertake to deliver to you (the knight or lady) something of comparable value as agreed between us.

I offer you four modes of settlement:

(1) an IOU written on a scrap of paper and signed by me,

(2) federal reserve notes totalling an agreed sum,

(3) a digital transfer to your bank account of agreed sum,

(4) pure gold of an agreed weight.


Which of these modes of settlement would you be most CONFIDENT in accepting?


(1) Personal IOU. Now, you don't know me from Adam.... and apart from my sparkling personality (capped by wit and an honest countenance) you have no way of knowing whether I would honour an IOU to be settled in the future. You, and most people, would consider this to be a very risky mode of settlement, but nonetheless one that may be chosen under certain circumstances. Still, nearly everyone would agree that this would be the riskiest of the four modes of settlement. One might say that your CONFIDENCE in the transaction would be low.

(2) Consider settlement with FRNs. If our chance encounter and our deal was conducted in the USA in present times, then most people would be comfortable accepting FRNs as settlement. Concerns that may arise include whether the notes were counterfeit; or that they may be the profits from the sale of stolen goods or illicit drug deals. There may be other concerns as well, but few people would worry (at least in present times) about the extra THIRD-PARTY RISK implicit in such a mode of settlement: that is, the risk of default by the backer of the notes - the Federal Treasury of the USA.

So trusted is this "legacy" arrangement, that I could offer you (a non-US National, say) US FRNs in many other countries (Costa Rica, Canada, Thailand, Mexico, Russia, to name several) and you may still be comfortable with the arrangement. Then, your additional concerns may include increased uncertainty about the authenticity of the notes, the inconvenience of being able to pass-on the notes in other personal transactions, or your ability to readily exchange them for local currency. Nonetheless, most people would consider this mode of settlement less risky than a simple paper IOU from me. Your CONFIDENCE would be higher than for a personal IOU, but in effect, whether you realised it or not, you would be accepting an IOU, not from unknown little-ol' me, but from the mighty Treasury of the USA. Not a difficult decision, you might think...

(3) Digital transfer. In this case, if you could witness the transfer and see that the balance of your account had altered accordingly, then you may be reasonably comfortable. You may have concerns about the authenticity of the details that you are viewing on the computer screen (from cyber-shysting of various kinds), but if you could overcome this, then your CONFIDENCE would be that which you have in your bank combined with that which you have in the US monetary system. In this case you are effectively refusing my paper IOU in prefernence for the IOU of the Federal Treasury as well as whatever guarantees are provided by your bank regarding digital transactions and accounts generally. Again, not a difficult decision, you might think...

(4) Gold in the hand. You would be rightly concerned that the "gold" I am giving you is pure and that the weight is correct. However, these are simple things to verify in this day and age...unlike hundreds of years ago. Upon my giving you the agreed weight, your CONFIDENCE would be that which you have in gold alone as a store of value. Perhaps there would still be concerns about theft or inadvertant loss (problems in common with FRNs or personal IOU), but there would be absolutely no second- or third-party risk associated with settlement. I could be eaten by a lion, your bank could fail, or the US Treasury could disappear into the sea and it would not affect the value of your transaction one iota.

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

Notice how I have emphasised CONFIDENCE in the above text...because it is confidence above everything else that underpins settlement; be it in the form of personal IOUs, government IOUs (FRNs), digital transfers of "nominal" FRNs, or gold itself.

It is largely because of this CONFIDENCE problem (that had to be overcome) that gold became the preferred means of settlement between traders... especially for trade with foreign lands. No problem with that...easy to understand.

What about the IOUs (the "currencies") of one country or another? These are inherently risky. Not only may their value be pushed and pulled by the enormous FX flows that course around the globe, but their value may also be altered arbitrarily by the custodians of the currencies involved - the national treasuries of the governments concerned.

Governments always act with their own interests in mind, so when you accept an IOU from another country you knowingly or unknowingly accept all of their idiosyncrasies. If they are loose or wiley in issueing you their debt, then you bear the risks...just as you would if you were dealing with me and one of my IOUs. And if they happen to carry a very large stick and have demonstrated a willingness to use it then you can whistle for settlement...just as you would have to do with Sundeck if he packed a pair of pearl-handle six-shooters and was a crack shot.

Sooo...in fact, the IOUs of a nation may well be MORE RISKY than the simple IOUs of an unknown soul that you meet in a bar somewhere...and there may come a time (if it is not already here) where lowly Sundeck's IOU is held with greater confidence than the IOUs of the Federal Treasury of the USA.

Let me say that again..."There may come a time (if it is not already here) where lowly Sundeck's IOU is held with greater confidence than the IOUs of the Federal Treasury of the USA."

Nearly everyone would scoff at this, but it is true. Sundeck is unencumbered by debt, his honesty can be verified from numerous referees and he does not have a punitive arsenal with which to fend off, intimidate or destroy those coming to claim upon his IOUs. Sundeck's IOUs never overstate his worth and his credit is good. Unfortunately the same may no longer be said of the USA.

In truth, CONFIDENCE in the USA and its monetary system is eroding rapidly. It is being talked about more and more...not only behind the scenes, but in the mainstream media. Since most other monetary systems have been strongly coupled to the US dollar for fifty years or more, loss of confidence in the US dollar will likely infect these other "derivative" currencies. Indeed, the custodians of these other currencies may be unable to stand against the flow away from the US dollar - even if they wanted to...they may just have to go along with it. Under these circumstances it is tangible "things" (goods, sound businesses, commodities) - amongst which gold is pre-eminent - that will be sought by small and large players alike in exchange for the IOUs of all countries alike, but especially the IOUs of the USA.

Nothing new under the Sun here...

:-)

Sundeck

Among the very finest.

(Usually it takes a contest to wrest such a gem from your desktop.)

If I ever owed you a compliment, it is now paid. Until the next time...

R.

The arrgh was not your fault as you found out-when I copied this line,I changed a little bit intentionally (and noted that in my comment afterwards),in the hope of being able to make a point subcutaneously.Hmm,not sure if I failed.

Sundeck, I also liked your post. Very succinct. Perhaps you should, however, add a fifth, theoretical, payment option, that is, a currency that is backed by gold that is "marked to market". I say theoretical, because I am unsure if there is such a currency presently, unlike your other four options, which already exist. Towncrier, correct me if I'm wrong, but would that not be "freegold"?

http://news.ft.com/cms/s/f39fa8e4-7e25-11da-8ef9-0000779e2340.html......and you miss something like this in the process. 'Tis akin to Nero's fiddling Mr. TC.

China signals reserves switch away from dollar
By Geoff Dyer in Shanghai and Andrew Balls in Washington
Published: January 5 2006 20:13 | Last updated: January 6 2006 02:43

China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds � a potential shift with significant implications for global financial and commodity markets.

Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves � currently accumulating at about $15bn (�12.4bn) a month � it could put heavy downward pressure on the greenback.

In a brief statement on its website, the government's foreign exchange regulator said one of its targets for 2006 was to "improve the operation and management of foreign exchange reserves and to actively explore more effective ways to utilise reserve assets".

It went on: "[The objective is] to improve the currency structure and asset structure of our foreign exchange reserves, and to continue to expand the investment area of reserves.

"We want to ensure that the use of foreign exchange reserves supports a national strategy, an open economy and the macro-economic adjustment."

The announcement came from the State Administration of Foreign Exchange (Safe). It gave no more details about whether this meant a big shift in the investment strategy for Chinese reserves, which according to local press reports reached nearly $800bn at the end of last year and are expected by economists to near $1,000bn this year.

The regulator also said it would end quotas on the amount of foreign currency Chinese companies can acquire to invest in overseas assets, a decision that removes a bureaucratic hurdle facing companies that plan to make international acquisitions.

The statement comes at a time of growing debate in China on how the reserves are invested. Some economists have called on Beijing to use the funds to finance infrastructure investment and clean up state-owned companies, or to invest in higher-yielding assets rather than financing US borrowing.

However, according to Stephen Green, economist for Standard Chartered in Shanghai, although the language was "vague", Thursday's statement was the first time Safe has publicly indicated a shift away from dollar assets.

"It is a subtle but clear signal that they are interested in moving away from the US dollar into other currencies, and are interested in setting up some kind of strategic commodity fund, maybe just for oil, but maybe for other commodities," he said.

The Group of Seven leading industrialised economies has repeatedly called for an adjustment in global trade imbalances, including a rise in the renminbi. The US has expressed frustration that China has not allowed its currency to rise significantly after last July's 2 per cent revaluation. That saw China move from a dollar peg to managing its currency against a basket of currencies, potentially allowing the renminbi to rise against the dollar.

John Snow, US Treasury secretary, speaking earlier on Thursday, repeated his call for China to allow the renminbi to rise against the dollar. "The trade deficit is influenced by lots of things, differential growth rates, differential savings rates and investment rates and so on. But clearly, getting the [Chinese currency] more appropriately valued will be helpful to the global adjustment process," he said.

However, some economists believe it would be a mistake for China to shift its reserves into domestic investment or other asset classes.

CONFIRMING THE FUTURE OF GOLD. NOW WE CAN ALSO CONFIRM THE STRATEGY BEHIND THE OVERBOARDING OF M3. GOOD LUCK LADS.....USAGOLD IS A GREAT SOURCE OF PHYSICAL GOLD.

you might have noticed that I posted this yesterday at 7:15pm...
---------------------
TownCrier (1/5/06; 19:15:59MT - usagold.com msg#: 140141)
China relaxing grip on dollar

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh62561_2006-01-05_11-23-01_pek63223_newsml

BEIJING, Jan 5 (Reuters) - China's foreign exchange regulator said on Thursday it would abolish foreign exchange quota limits for outbound investment as one of its key tasks in 2006.

It also said it planned to explore new ways of using China's foreign exchange reserves and broadening their investment scope. Most of the country's foreign exchange reserves, which hit $769 billion by end-September, are invested in U.S. Treasuries.

"We will abolish foreign exchange quota limits for outbound investment to give more support to companies investing overseas," the State Administration of Foreign Exchange said.

The move will offer a boon to domestic firms as they seek to strike out onto the world stage and help the country to offset a rapid accumulation of foreign exchange reserves.

...also reiterated the government's goal of reducing China's balance of payments surplus, saying it aimed to promote a balanced international payments position.
^---(from url)---^

Take a moment and try to understand what this signifies that China is going to let its companies SPEND their earned dollars in the first place -- rather than having the People's Bank continue to ABSORB the dollars in exchange for renminbi.

Secondly, try to reconcile to your own satisfaction how the other two goals can work in harmony; one being that China wants to "broaden the investment scope" of its vast dollar-dominated foreign exchange reserves, and the other being that China wants to promote a "balanced international payments position".

Choosing gold (technically an import) is a NATURAL way to achieve a balancing of the books while at the same time sacrificing nothing with respect to the size and strength of their reserve position. In fact, with an eye to future performance of dollars vs. gold, with MTM gold they emerge all the stronger.

The transition to freegold... slowly happening right before your eyes, folks.

R.
------------------

Sorry for making this repeat, but I figure that it's better that some folks might see this news twice rather than risk having someone not see it at all.

R.

http://news.cheapflights.co.uk/flights/2006/01/milehigh_gold_g.htmlJanuary 5, 2006 -- If flying wasn't already an exhilarating enough experience, passengers are now being offered a unique chance to win slabs of gold while in the air.

Under a new promotion, Cathay Pacific passengers have a five per cent chance of striking gold if they buy a box of chocolates during the flight.

A five-gram piece of the precious metal will be hidden in one in every twenty boxes of Goldkenn Goldbar chocolates, under the Hong Kong-based airline's new promotion.

...The airline, which will launch a Manchester to Hong Kong route in late March, says the promotion gels with its wider in-flight shopping drive.

The airline also recently launched a new pre-flight order website, allowing passengers to pick up their favourite duty free items during flights after ordering them online.

^---(from url)---^

Gold takes to the friendly skies.

Maybe nation-hopping with gold in hand shall become as commonplace as packing your passport and toothpaste?

R.

http://today.reuters.com/investing/financeArticle.aspx?type=governmentFilingsNews&storyID=URI:urn:newsml:reuters.com:20060104:MTFH50041_2006-01-04_21-50-38_N043931:1NEW YORK, Jan 4 (Reuters) - Two investors have sued prominent money manager Jim Rogers and his management firm over the transfer of "hundreds of millions of dollars" of assets to Refco Inc., the futures and commodities broker operating under bankruptcy protection.

They said the defendants improperly or negligently allowed the transfer of assets from regulated accounts to Refco's unregulated broker-dealer unit, Refco Capital Markets Ltd.

The plaintiffs are seeking to hold the defendants responsible for the loss of fund assets, or in the alternative for compensatory damages.

In October, the Rogers International Raw Materials Fund LP and Rogers Raw Materials Fund LP sued Refco for the immediate return of $362 million of assets.

Rogers was a co-founder of the Quantum Fund with another well-known investor, George Soros.

Refco filed for Chapter 11 protection from creditors last Oct. 17...

Refco has said it owes creditors $16.8 billion.

^---(from url)---^

Some of the continuing fallout from derivatives giant, Refco, going bust this past autumn.

It makes for a good cautionary tale regarding monies put into an investment account, which brings into play a degree of counterparty risk.

Should something go badly anywhere along the links of the chain, you might be waiting a long time in litigation to have use of your digits (money) again.

With personal holdings of physical gold, those particular worries are gone, and you'll always have ready access to your personal property which is both highly portable and highly liquid for nearly any currency anywhere on the world scene.

Choose gold.

R.

Seems awful quiet around here to be in the midst of such a
ruckus raising day at the Comex. Those shorts that yesterday thought they were so smart are getting blown up 24 hours later. It's not nice messing with Mr. Trend.

Maybe a few (dozen) of those newsletter top-callers would like to once again say mea culpa to their clients. Poor Gartman, his disdain for gold bugs spiel once again proves to be a signal to buy. There must be a big move imminent to be this quiet around the chat sites.

I am getting even more "exciteder".

@ TC and MK,

Maybe CPM could hide some chocolate in its gold orders as a "surprise"?

At 306.xx, the HUI has busted through 300 with a vengence. I suspected yesterday's gold attack wasn't very committed, when HUI reponded with only a slight loss.

If the web bots are on target, we have some very golden days ahead!

http://urbansurvival.com/week.htmsnip:

An alert reader picks up "New Tipster of the Day honors for catching the the story that China has had it with the US Dollar and is about to go elsewhere for a reserve currency. "Well George this headline caught my eye this morning. Is this retaliation for the Fed talk of slowing or stopping interest rate hikes? Or do they know they have us boxed in and just telling the world we're pullin the trigger?" Something like that, yeah. With all the corruption floating around DC these days, the arrival of Peak Oil, and such, the inscrutable folks are probably right in thinking that except for the 17 financially hip people who read this site, no one else is going to get it. Meantime, we watch gold (up) and dollars (down).

-Goldilox

See folks, TC is not the only one who thinks China's announcement is "good for gold". Lots of goodies at urbansurvival this morning. I think I'll post one more.

I'm a customer of this firm and I merely think you've gone a bit too far--my opinion based on reading and listening for a long time. All the best...CM

It's been two weeks since I came across this extraordinary website, this treasure trove. There's enough in the archives for a lifetime of study. As befits my humble status as a newcomer to gold, my first ever internet post is a question. Was Barrick set up primarily to supply the Arabs with gold? If we assume that is so, then everything about the company falls into place, I mean everything. Or has the forum exhausted this topic already?

http://urbansurvival.com/week.htmsnip:

As the Labor Department issued its latest report on unemployment (a tich better 4.9% in December) we have to recall that hundreds of thousands of out of work and under-employed are not counted thanks to handy-dandy "make it good" statistical techniques.
Total nonfarm payroll employment increased by 108,000 in December, and the unemployment rate was little changed at 4.9 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The December in- crease in payroll employment followed a gain of 305,000 in November (as re- vised). Several industries added jobs over the month, including food serv- ices, professional and business services, health care, and manufacturing.

Unemployment (Household Survey Data)

Both the unemployment rate, 4.9 percent, and the number of unemployed per- sons, 7.4 million, were little changed in December. The unemployment rate has ranged from 4.9 to 5.1 percent since March.

The unemployment rates for adult men (4.3 percent), adult women (4.5 per- cent), whites (4.3 percent), and Hispanics or Latinos (6.0 percent) showed little or no change in December. The jobless rates for teenagers (15.2 per- cent) and blacks (9.3 percent) declined over the month; the rate for black teenagers had an unusual large decline and fell to 24.4 percent.

Even our U-12 (Alternative Measures of Labor Under utilization) improved a tad. Why is this? Genuine improvement? Well, let's see, first we notice that the civilian labor force was reduced by 30-thousand....and a smaller denominator does what?

-Goldilox

Now you just need to be unemployed for more than 12 months to be considered "permanently off the labor rolls," as evidenced by the 30K reduction in labor force - or has the BLS let slip the "real number" of US Gulf Region workers that expired in September?"

It also keeps the public bulls-eye off of the serious employment issues around the nation, as foreign operating "no-bid contractors" suck up the gubmint "investment trough" for oil adventures, and foreign labor is imported to do sub-code reconstruction in the Gulf Region.

One [good/bad] thing about perp hunting in Washington. The Supremes should be well practiced from their complimentary participation in "Cheney's Hunting Junkets", though we'll see if their bird hunting experiences inspire a "shotgun" approach.

This, from a Doug Horning commentary at the neighboring castle. First time I've noticed the "free" word associated with gold outside our fine round table:

-snip-
David Vaughn, in his Gold Letter, caught the mood of the market yesterday when he wrote: "Well, for those worried about gold having reached a rally high & are now worried about a quick retreat south again � that ain't goin� to happen . . .What we are observing now is a �free� gold price acclimating itself to the true market forces of supply & demand."
-end snip-

A golden Friday to all.

- Survivor

Barrick was set up by Saudi billionaire oil and arms trader Adnan Khashoggi as part of a scheme to bankrupt the Soviet Union. When central banks sell gold, it raises the price of gold (less overhang on the market). When newly mined gold shows up, it lowers the price of gold (new supply). I think that Barrick has been a conduit to take borrowed central bank gold and sell it into the marketplace as if it was newly mined gold.

Yes, quite a bit of that gold probably went to the Saudis. Part of the "bankrupt the Soviet Union" plan is characterized as "convincing the Saudis to lower the price of oil for a few years". What better way than to offer the Saudis a new supply of gold real cheap.

It worked. The Soviet Union went bust.

Then the central banks needed their gold back. This is where Barrick started selling gold "in advance". They have been trying to avoid having cough up much real gold.

Yes, there has been some real mining going on.

But think about it. Why do they need the ex-prime minister of Canada and the ex-president of the USA and a raft of JP Morgan lawyers on the board if they are doing business the straight and narrow.

An excellet topic.

@ Goldnovice,

Welcome aboard. That's a pretty loaded first question. Do you know of any reference support for this theory?

As Smeagol might say, "We likes to read almost as much as we likes to talk."

The answer is definitely "YES", Sir, without any doubt !
And it is not only Barrick gold. The evidence remains well hidden within the echelons of the internationalist goldcartel web (synarchists).
A -novice-...asking such a question...humhum :)-(:

Yess, Ssir Goldilox! The amount of information we wantss...is limited only by our sspeed of taking it in.

We jusst wishes we had total RECALL! (cackle)

~>8-)
S.

@ goldilox, White Rose, Belgian

No. No support reference for the theory. Just thought of it myself after reading several oldish articles about Barrick's texas hedges, which only make sense in such a scenario (or something similar).

@ Goldnovice and White Rose,

"Ask and it shall be given."

And we all thought Barrick was common pond scum - from your info, it seems they are "official" pond scum.

One of the Governators' best. We wishes he would go back to his core business and leave the pond scumming to the professionals.

It seems that you may be new here, but it's obvious that you have some background that has helped you formulate this question with such precision. I have time. I'm sure many hear do also. I'm sure all would love to learn how you came to such a conclusion.

Please... share.

You still remain convinced that CBs are ignorant idiots and bullion banks are the enlightened ones. Soon you will find out that it is exactly the other way around.

As you well know, I'm not the host of this fine establishment, and therefore I'm not under any delusion that any amount of respect whatsoever in my direction is warranted. However, I would have hoped it was not too much to expect a basic courtesy, such as might be shown to the butler during your visit.

Nero? Nero???!

For the life of me I can't understand why you'd go out of your way to take a poke at me. Clearly I didn't miss the Chinese diversification news, as I have already demonstrated.

In fact, back on December 27th, prior to this announcement, I offered these following comments in association with a short news article reporting that the buildup of Chinese forex reserves had slowed sharply according to November's data. I commented...
------------------
TownCrier (12/27/05; 11:41:07MT - usagold.com msg#: 139747)
SHANGHAI, Dec 27 (Reuters) - China's foreign currency reserves rose at the slowest pace in 18 months in November, an official newspaper reported on Tuesday... Still, the $9.3 billion increase boosted the reserves, the world's biggest after Japan's, to a record $794.2 billion, the China Business News said, citing sources familiar with the data....

[Randy's comment following article>>>]...Consider this. When China absorbs dollars (and ultimately interest-bearing dollar-denominated bonds) as the concluding balance of payment for its international trade surplus, there follows political harping of tensions over perceptions of unfair currency exchange alignments and unfair competitive advantage as evidenced by the trade surplus. Or so the argument goes.

A tidy remedy exists to put an end to this petty sort of grousing over international monetary and trade issues. China need take only one additional step in the process. Rather than concluding its balance-of-payments dollar inflows with an absorption of U.S. bonds, China instead ought to use those same dollars to bid for gold. Imbalanced trade would thereby be concluded with a physical good, and thus would the technical spotlight upon trade flows be dimmed as China could validly argue that it has erased its trade surplus, and right along with it any further need to deal with political sensitivities over its forex handling of its monthly excess dollar inflows -- as these, too, would concurrently be eliminated.

R.
-------------------

So, Cavan Man, with those bases nicely covered, I don't know why you're faulting me for doing my part to stimulate a lively conversation. I'm merely doing my part helping to show people that, despite our new discussion guidelines that narrow the scope of discussion to gold-related matters, there remains an endless degree to which additional thought and discussion can be beneficial. Are you suggesting that the various participants in that discussion were wasting everyone's time and space, including their own? Are you speaking on behalf of all readers?

How can we expect anybody to decide upon and justify their own portfolio's satisfactory percentage of gold diversification if we don't allow ourselves to fully consider the very nature of money, the nature of savings, and how these concepts must accommodate the evolving nature of monetary, financial, and investment markets?

Sometimes I wonder why I even try.

R.

@ Flatliner
Okay, will try. It's been ten years since I moved from Australia to this gold-loving country of Vietnam - the perfect place to realize the importance of the metal. Heavens, even the houses are priced in gold (so with the rising POG, the property market is as dead as a dodo). My gold background is simple: about a year ago, I made a decision to learn about economics and finance, subjects that had been utterly outside my experience in 40 years of life. As I read article after article from the internet, making sure to consider opposing views, I am starting to make sense of the world and understand about gold, but it's hard going. Why did gold capture my fancy? I don't know but I'm happy that it has (and started buying six months ago). No, I'm no-one special who can enlighten the forum, just someone who can learn a great deal from it.

http://www.usagold.com/gold/special/starter.html

@ flatliner

1. The Arabs love gold, always have

2. From 1971, they can no longer get it for US$35 an ounce so they have to go into the (black) marketplace, hence the oil crisis

3. Less gold available so forward selling begins in earnest (if I have that right)

4. By the 1990s the situation is getting desperate, hence the formation of Barrick

"No, I'm no-one special who can enlighten the forum, just someone who can learn a great deal from it." - Goldnovice

We did not know houses in Vietnam were priced in It, until you enlightened us...it is good to have gold-information from all over the globe...in any form. Welcome!

S.

@ Smeagol et al

thanks for the kind reception

Goldnovice, I did read an article a while back about housing market in Vietnam and how the rising price of gold put a damper on home sales. The question that I had regarding gold for houses was how they structured the actual deal. Do you have experience with how these deals are structured? For instance, is a house simply valued at a particular number of ounces and to buy it, you deliver that weight of gold? Or, do people go in debt to acquire the house? If they do, how is that debt structured? Do they comment to deliver x ounces (where x equals the sale price of house in gold) over time? I guess I'm curious what the value of time is with that transaction. Do they deliver x+y gold over time? (Where y is interest paid in gold).

This question may seem obvious to some, but, if gold really does find a little respect from common people, I would expect that most all significant purchases will someone revolve around gold. Thus, I would like to understand how these deals are structured. Thanks in advance.

TC,

If I may be so bold as to stick my nose in other's business, it seems CM was more concerned with tone than context - though his was perhaps not flawless. Judging from recent interchanges with Cobra(too) and Rich P, discussions seem to have gotten more personal of late.

I'm not laying blame, just observing the trend.

A wise man recently reminded me that "Can I help you?" and "What the f' do you want" are two very different ways of asking the same question, as I often suffer from "foot in mouth, then shoot foot" disease.

Flatliner

This is mainly a cash economy in Vietnam, so the transactions are done in one go. Housing loans are very rare. If you buy a house, the seller will either choose gold itself or the cash equivalent, but either way it's usually done at a bank (gold accounts are common, though I would never use one since the banks sell much of the "deposited" gold to the jewelry trade - better to hide your gold somewhere safe). Anyway, the entire amount for the house is paid in one go, as we did when gold was near the bottom (very useful having a Vietnamese wife who understands all these things). I've never heard of an extended payment for a house in this part of the world.

Of course, if someone buys a house for, say, 500 taels of gold (one tael is roughly 1.2 troy oz.), they'll never want to sell it for less. That's why the property market is stagnant over here, and likely to stay that way as the POG keeps climbing.

Flatliner; Oh, and yes, the Vietnamese people feel a tremendous affinity with gold. There are jewelry shops everywhere, and the merchandise is nearly all yellow, and the women wear gold all the time, not just on special occasions - bracelete, earrings, necklaces.

I think you'll agree that the particular mindset of the reader governs a great deal of the "tone" that they derive from an otherwise flattish monotone of type-written words.

In the course of a discourse, what may have been delivered in a patiently cool and insistent emotional state by the typist may be received as the same by one reader, as a weak-kneed rebuttal by another, a condecending lecture by another, as unflagging aggression by another, as badgering by another, as boring pedantic blather by another, etc, etc...

Back to gold... setting a new 25-yr closing high today.

R.

Is it too much to expect another concerted effort to drive down the POG? After all, a fall to $450 would crush the vast majority of new gold investors, who would vow never to touch it again. I'd feel much happier about buying below $500 but will buy more anyway.

Belgian, perhaps both the central bankers and the bullion bankers know exactly what they are doing. It's usually easier to think by starting from this premise.

It will be most interesting to hear from you over the coming months as the value of gold goes up and to see how that relates to people's thinking in Vietnam. It seems that they have already leaned towards holding gold with expectations that the exchange, gold for houses, will be much less heavy in the near future.

As with regards to time, it would appear that trust is not an option in the deal. I would drive that right back to Sundeck's posting yesterday. It seems like the Vietnam people have a working situation where option 4 is the choice of preference.

Always an issue online. No blame intended. We just defused a similar customer miscommunication in my business this morning.

And yes, today's gold movement certainly sets the "tone" for the shortsters!

"Get off the tracks, the g-train is a'rollin'!"

Flatliner, the houses are valued in gold, but the physical metal does not make an appearance when a house vendor and a buyer do their transaction at a bank. The seller's gold account is simply credited with the amount. Of course, the seller can then withdraw the physical metal. There will always be enough in such circumstances. But if there was a run on gold "deposits" I'm sure most people would miss out as the gold is merely "unallocated" and hence part of the bank's reserve assets, as it is elsewhere in the world. As so many people keep saying, get physical!

Any more opinions on Barrick?

"There will always be enough in such circumstances." Ah ha ha ha ha ha ha�

Ah, my friends, you may never sell your gold again.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

If you are considering investments in gold we invite you to request our freeintroductory information packet detailing the products and services offeredby USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and lookforward to working with you.

FRIDAY Market Excerpts

Gold up $13.40 today, over $22 on week

January 6 (from MarketWatch) -- COMEX February contracts closed at $541.20 after touching an intraday high of $541.80. Prices haven't closed at a level this high since March 1981, though on an intraday basis, they touched $543 on Dec. 12 of last year.

The contract finished up $13.40 for the session and up $22.30, or 4.3%, for the week.

China said Thursday that it would diversify its foreign-exchange reserves away from U.S. dollars and government bonds.

"China's announcement of wanting to diversify their foreign-exchange reserves holdings is going to have a profound effect on financial markets worldwide," said Peter Grandich, editor of the Grandich Letter.

"It's the death blow to the U.S. dollar, which had enjoyed a temporary reprieve in 2005, and another bullish factor for gold going forward," he said.

Also, "disappointing U.S. employment numbers spooked the dollar, and in turn boosted gold prices on its traditional inverse relationship," said Matthew Parry, an economist at Economy.com.

The dollar fell to its lowest against the yen Friday since mid-October.

"Diversifying away from dollars has become desirable -- retail investors returned to the precious metals arena in droves this week," said Jon Nadler, an investment products analyst at bullion dealers Kitco. "Low yields on cash and negative real interest rates are adding fuel to this quest for adding gold and silver to one's portfolio," he said.

However, "it is still mostly the fundamental picture of sluggish supply and robust demand plus the prospects for weakness in the dollar that are the engines of this latest spike in prices."

---(see url for full news, 24-hr newswire, market quotes)---

Ok, fine.

I'll just hope that predictions of DOW=POG happen before the DOW falls on its sword!

I love how they have changed their "screen bug" to reflect the price change since the 1PM close of COMIX instead of the daily change.

Gold $540.6 DOWN 0.60

As the Mogambo would say, "HAHAHAHAHAHA!"

http://www.safehaven.com/article-4366.htmThe California style market: chock full o' fruits and nuts. Yes but the first five trading days arent' over til monday....

We wonders... we wonders... two massive POG peaks so close together...

"Is it too much to expect another concerted effort to drive down the POG?" Short answer: No.

Longer answer: those whose plan is to accquire a slightly bigger pile (and who already have a nice little pile) can afford to wait a few months after such suface waves; we're riding the big one already (the subsurface wave)

I agree, that the short selling bullion bankers do know for sure that they can count for 100% on a bail out in any case and circumstances. Their job was to BUY precious time. Not "that" smart imo, but they had no other choices left. The CBs that organized, ...paved the way...for freegold, are somewhat smarter.

Knocking the $-goldprice back to $450 would tell us that the old $ goldregime still has some power left and more importantly, is allowed to use it for buying some more time. But I suspect that Asia (China) wants to do something about the imbalances. In particular the $-reserves. The more so, now that the dollar expansion has all the green lights it could ever dream of. This morning, a CNBC-Europ anchor also said that everything is possible with gold...even a $ goldprice of $3,000/Oz (3 thousand).
But he was still reasoning with the "old" gold logics.

Today, we see > Dow + euro + gold and oilprices UP ! Is very strong evidence for helicopter dollars assisted with massive economic peptalk. I would be extremely surprised to see $-POG reach $450 ever again.

Can't help but revisit post 140189 from Goldnovice. I've selected a small section of the words while hoping to not change the context. "But if there was a run on gold "deposits" I'm sure most people would miss out as the gold is merely "unallocated" and hence part of the bank's reserve assets, as it is elsewhere in the world."

The "as it is elsewhere in the world" is part of what I've been searching to understand for a while. You see, I live in the USofA. To you, that might qualify as �elsewhere�. Here, banks do NOT hold gold on reserve! They don't want it and they don't value it in the slightest. If you go to the bank to try to get a secured loan using gold as collateral � you'll be laughed back out into the street. All they want to deal in is paper or better yet, digital �money�. Here, believe it or not, to most every citizen, the dollar is actually better then gold and more secure! It can actually be insured up to 100k in one account. The people here have bought that program to such a depth that even though we have one of the strongest currencies in the world, people just will not buy gold with it � they truly believe that there is no need to do so. Money in the bank is insured by the government up to 100k! What's better then that? Paper, in all its forms, is what banks here deal with.

Also, the "if there was a run" part is also interesting. Here, in my �great� country, reserves in banks are next to non-existent. A small bank with up to 56 million on loans needs virtually no reserves. As the bank grows larger, the reserve percentage goes up but, across the board, the percentage is small. Why? Because any run on the bank is just a digital transfer away. Believe it or not, part if the strength here is that there is no gold on reserve. About the closest thing we see towards bank runs can be seen with what happened to Refco a couple months ago. But, what's interesting here is that because there really wasn't anything tangible behind that run, anything lost could be covered with a cheap promise from a few banks or potential buyers.

"Deposits" is also quoted here. Does that mean that money in Vietnam is convertible? You know, like the old gold standard that people here wish for? Or, if you deposit gold in the bank you can get gold out and if you deposit currency in the bank you get currency out. Is that how it works? I am truly curious.

As a side note, gold gets so little respect in the USofA that when you spell out the advantages of owning gold to someone, they will always ask "where do you buy gold?" The concept is *so* lost, that people have even separated the concept of jewelry and gold! Going to the jeweler doesn't even come to mind. Then, when you finally tell them where it can be found for reasonable prices (like from our great host) they then get all nervous because they as so scared that they will lose dollars! Ah! Sometimes, I think The Great Mogambo is right, we're doomed.

Main thing to note here is that not all places treat gold the same way. Another thing is that the banking system in the US does not value gold.

One last thing before departing for a labor intensive weekend, it seems that the plan of a soft economic landing in the US just means to me that gold will get more expensive. If the fed is able to perform such an act, it will be like confiscating gold once again by making it harder to purchase. This time though, no one will object because they truly don't value it here. The only squeals of protest heard, will be from people complaining about globalization and how they now have to put the kids to work in order to make the mortgage payment. And, even when they do, they'll shrug and say "It's just the way things are now. By the way, did you see Dancing with the Stars last night? Oh man, don't you love those outfits?"

If you have all not noticed, I am completely sold on the idea of not letting the bank hold any reserve for me. If a Vietnamese citizen were prudent, I would guess that they would continue to wear their reserve.

Now, I think I'll try to find something really bad that happened to someone else so I won't feel so depressed.

Will we wake up to GOLD 550. A little slip in the dollar and we could be there. Overseas they will not be looking at the same dollar charts we are, so they may not have resistance selling at 543.

GOOD MORNING GOLD! Wish it was monday. Now I have to wait.

We will be listening in to James Puplava's Financial Sense Newshour this week, to hear whether or not he and Frank Barbera ate -- and in fact -- filled up on "Crow", over the long holidays.

Surprisingly, they were slammin' gold pretty hard (short term) on the show dated Dec. 17th., looking for gold to drop to 470 or lower by February; gold was 505.70 as of the show date, having dropped from the earlier December high. I don't believe that it went lower after their call to sell. Made me think at the time, that they had sold at the high, then wanted everyone else to sell behind them, bringing the market down to where they would want to buy again. (I know that's just suspicion and cynicism, but hey! stuff happens.)

That's not to say that we couldn't have the seasonal correction that we've seen in the past few years in the early months of the year (Smeagol, has written of it lately.) But right now, they've sure missed in the short term, on their "top" call.

Funny to go back and hear Frank say that the market had run-up to fast; he felt it necessary to sell and be on the sidelines until some of the "weaker hands" had been shaken out of the gold market. Ha! I guess they were Frank -- Yours and Jim's.

The COT or commercials are supposed to be infallible when it comes to trading because they "are the market." Everyone knows they are the "smart money." After watching them trade oil, the dollar and gold the past 2 years one has to wonder if they really aren't the dumb money. As MK has mentioned in the past maybe these huge losses sustained over the past several years are really the cost of doing business.

Anyway you look at it the table is set for commodity inflation not seen since the 70's. Helicoper Ben will try to get the Republicans through the mid-term elections by supporting the economy and the DOW with huge liquidity injections (reason #1 why M-3 reporting is gone), since Eastern central banks are buying gold along with the world smart money and the dim central bankers in the West are selling combined with falling production the price of gold is going much higher than people think.

One has to wonder if the covering of gold shorts is even possible. Cash settlements are really the only way out as even smaller investors are beginning to ask if they too should own some gold? The COT is out of luck and gold could spike at any time regardless how severe any correction may be. Don't wait, get it now while its still cheap.

We may disagree on this board about what is now occurring in the big picture world economic scene, but we all agree on the necessity of owning physical gold in your possession as the coming economic crisis hits.

http://www.321gold.com/charts/seasonal_gold.html Sss...if we do NOT ssee the typical seasonal pattern, precious...that will sspeak volumes!

S.

Nice PM move...suspect there may be more in the pipeline...



@TC #140148 Thanks... you're welcome.



@Lacklustre #140150 Mmmmm...a currency backed by MTM gold? "Backed" in the sense that it is redeemable for gold? Not sure what you would have there...

Call this hypothetical currency the "Bernankor" (B). Suppose initially that B100 are exchangeable for 1 oz of gold, then:

In a closed economy/financial system, if treasury expands B supply willy-nilly (too rapidly), people who hold gold and who wish to acquire Bs for "normal" commerce will see the B-value of their gold eroding and will demand more than B100 per ounce of gold. Simultaneously, people with surplus Bs will rush to exchange these inflated Bs for gold (or other "things") - like the French did with the US-dollar in the '60s. These two thrusts will drive up the POG in Bs (along with the price of just about everything else). Hence MTM gold will rise in price, as will many other things. The detailed trajectory of the POG will depend upon gold's relative importance (perception) in the mix of things that characterise the diverse economy over time, as well as upon the change in the gold supply.

I don't really understand what would happen in the full complexity of an open economy/financial-system where international pressures are involved. However, my feeling is that "backing" a currency with gold (in the strict redeemable sense) is not what is meant by "free gold" - better to let gold run its course separately and find its own level internationally. Gold then may play its role in an MTM reserve sense, as in the concept of the Euro.

Maintaining a rigid relationship, even a MTM one as you suggest, between a currency and gold introduces stresses within the fabrics of economies and financial systems that probably inevitably lead to failure.

Just my first quick thoughts...




@Goldnovice et al., Reference Vietnamese houses "priced" in gold.

Now, there seems to be something schizophrenic going on here...

If houses are quoted in gold ounces, then that would seem to me to be an attempt by Vietnam to couple the VALUES of houses and gold together...rather like "backing" a currency with gold.

Coupling houses and gold may not be a bad idea in a highly regulated environment, but in real systems things have a tendency to follow independent courses....as the supply an demand for houses and gold follow separate trajectories.

In the "west", house prices have increased 50-60 times since 1970 while gold in US dollars has increased only about 15 times. (What has been the situation in Vietnam?)

If the housing market is stagnating as the price of gold (in US Ddollars, and in Vietnamese Dong) is increasing,

http://www.infomine.com/investment/metalschart.asp?c=gold&u=oz&x=vnd&r=1y⊂mit1.x=41⊂mit1.y=7

does this mean that people are trading their gold for dong (or dollars) and spending on things other than houses?

Somewhat the opposite seems to have been happening in western countries (Australia, UK, US) where people have been spending their dollars and pounds on houses lickitty-split, forcing up the price of houses (inflation manifesting preferentially in housing)...then redrawing their "equity" and spending again (on houses and other retail items).

Without knowing anything about differences in "mercantile sentiment" between the US (say) and Vietnam, I suspect that there may be great differences in the way a "house" is perceived in the US (status symbol, etc) versus Vietnam??? But I am only guessing, and I am sorry that these thoughts are a bit garbled...

Cheers

Sundeck, There is another point in the post by Goldnovice that is radically different that what many are used to in the (wild) west. That is, these people do not go into debt to get their house. Thus, drawing out equity wouldn't seem like an option. It's a straight across value for value exchange that's a one time deal. I would think that if this were the case, these people would thing long and hard about the place they purchase, because if they can't sell it, they are out their gold. Their family could be stuck there for years.

Could you imagine someone in the US getting a house if they had to buy it with gold? � I don't think so! 99% of this country would be homeless *and* goldless at the same time.

Also, I think we both, at first glace, thought that the government might be involved with pricing houses in gold as if the monetary system were backed by houses. But, after reading it a few times, I believe that it is the people that value houses and gold together. If they make a bad investment, they will get less gold back when (if) they sell it. The problem is that if one of the two items changes in value, they will have to rethink the exchange. If one suddenly becomes more valuable, it may be that houses will start selling again when the original buyer realizes that 50 coins have the same value as 500. But, until that change can occur, no one is going to sell a house because those holding gold will not give it up at this point.

I think Belgian would like this value for value comparison for gold. No?

Thanks for reminding us what we all have in common here. Sometimes we get so locked up in our differences that we forget why we came here in the first place. I think if we were to acknowledge starting points and what drives us together, it could be summarized as follows: It is still the case that if you were to bring up gold in a crowded room, 95% would flee, 4% would be curious enough to ask a question or two, a 1% might ask who you use for a broker. That's in a time when gold investors have made incredible gains, when most of what we had prophesied has come to pass and those who have put their money in other markets have for the most part taken a merciless beating. My point is that we ought to count our blessings, give the other guy better than an even break (at least here at the Table Round), and perhaps consider that we should ourselves cultivate and preserve ( for our own use) whatever small piece of ground we have been able to garner. Friendships, even those internet based, are worth holding for the long term -- like gold itself.

Speaking of differences, I heard from a friend today that James Sinclair says that gold is going to $750 at the top this year. I beg to differ with the illustrious Mr. Sinclair, but I think it's going to $760. I wonder what you might have left out of the analysis that would have brought you to the right number.

And thanks, David Linkley. For reminding us all of our roots.

http://quotes.ino.com/chart/?s=NYBOT_DXGO YELLOW !
You can "size" this chart to the last "Five Trading Days" and see the "BIG SLIDE" --- OR just look at today's chart and see the FAB BEAUTIFUL WATERFALL !
<;-)

The "Wiz" sees the POG at $755 in his Crystal Ball !
<;-)

DEATH CHANTS, BREAKDOWNS, AND FORECASTS FOR 2006
by Bill Bonner

Mercy Otis Warren on the ratification of the Constitution in 1788:

"When fortune throw[s] her gifts into the lap of fools, let the sublimer characters, the philosophic lovers of freedom who have wept over her exit, retire to the calm shades of contemplation, there they may look down with pity on the inconsistency of human nature, the revolutions of states; the rise of kingdoms, and the fall of empires."

We warn our dear readers. What follows is more of a churlish lament than a real forecast. As we have confessed more than once, and proven more often, we get the news no sooner than anyone else. Still, we have two advantages over most forecasters: We know our limitations, and we don't watch television.

So, today, we begin by describing the world, not as it will be, but as we think it is. It is a world where individuals who mind their own business can live better than at any time in history. Painless dentistry, air-conditioning, automobiles, the Internet - we are humbled by the majesty of our own creations. Year after year there are more of them. Now we can eat pineapple in London in the wintertime. We can read books written by dead Chinese scholars in our native languages. We can chat with a friend on the other side of the globe, at almost no expense. And we can have an erection where and when we want one (so we are told), thanks to the wonders of modern biochemistry, rather than the mysteries of old-fashioned hoochie coochie. The thought of it is almost too much for us. We swoon, and ask the gods: what next?

While the progress of the world swells up before our eyes, we turn our eyes to the newspaper and wonder what has gone wrong, for there is the story of 100 dead in Iraq. Reading more carefully, we find that the news from Iraq could have been written 100 years ago, when the British Empire was fighting insurgents in the area. It could have been written nearly 1000 years ago, when Baghdad was under assault from the Great Khan. We also might have read it 2,000 years ago, when similar battles were fought with the Romans.

Has nothing changed? Why is our own Texas Tiberius repeating the errors made by virtually every empire that ever was: pushing beyond the limits of its resources, until it finally falls apart? And he does so at the very moment when life seems so sweet in so many ways. We Americans can barely brush our teeth often enough.

Alas, dear reader, while we enjoy real progress in matters of technology, in matters of psychology we remain the same as we always were: prone to panic, backsliding and humbug.

Which is why we expect little from 2006. Technology improves with the passage of time; psychology oscillates like the seasons. While we are sure that the year will bring marvelous new gadgets, we doubt that it will bring marvelous improvements in our mental state. We have enjoyed a long season of calm, comfort and conceit. Bitter weather must follow, as it always does.

Returning to the occupation of Iraq, what should we expect? More bad news is our guess. Psychologically, the nation is sliding down from the peak of "bring 'em on" optimism. It is becoming obvious that the war benefits only two groups: Osama bin Laden and his gang, who were happy to see the posse head off in another direction...and certain well-placed defense contractors. The former, bin Laden's bunch, are presumably holed up in a cave somewhere. But the latter are living it up in New York. The International Herald Tribune ratted out David Brooks, of DHB Industries, maker of bulletproof vests for the military. The vests are worn by the poor grunts sent on Mr. Bush's fool's errand. Mr. Brooks wears silk. The IHT describes a private party for the vest-maker's daughter, held at the Rainbow Room at Rockefeller Center:

"The bash was headlined by a list of performers that could easily have carried the Super Bowl halftime extravaganza. The superstar rapper 50 Cent and the front men from the rock group Aerosmith were among the night's many performers. According to the The Daily News in New York, the party [cost] $10 million..."

Brooks can afford it. Prior to the Bush administration's war to make the world safe for democracy, the man made $525,000 a year. In 2004, thanks to fat government contracts, he made $256 million, in compensation and stock sales.

Good for him. But we suspect that fewer Americans will want to sacrifice their sons and daughters in 2006 so that Mr. Brooks can get rich. In fact, we expect the average working stiff to go a little sour in the year ahead. He's been losing ground for the last three decades. His wife went to work to help pay the bills, and then he borrowed money to keep spending. But this is the year when the bills begin to pinch.

Home sales will be down 6% to 8% in 2006, says Fannie Mae. Wal-Mart just reported its smallest December sales gain in five years. Auto sales for the Big Three were all off in December. And even, "truck sales stumble in '05," says AFP.

It may be true that the new, globalized economy helps everyone get richer. The trouble is that the riches do not fall on all voters equally. The rich - those who own financial assets, and those whose labor is protected from Asian competition - are getting richer. The poor are getting poorer. When the poor finally realize it, they aren't going to like it, and 2006 may be the year they begin to wise up:

"Millions brace for credit card crunch," says a CBS headline.

But the lower and middle classes can do nothing about it. They are the ones who have borrowed too much - often taking out interest-only mortgages, with no income verification. They cannot work their way out of the hole; their wages are under constant pressure from Asia. They will have to suffer, along with those who hold their mortgages.

Technology inches forward, but changes in mass psychology can happen by leaps and bounds. That is why the financial markets are prone to panics. Of course, they do not happen frequently. That is why forecasters are usually right when they predict that next year will be like the last. Extraordinary events, like panics, happen rarely. Otherwise, they would be common events. And since they do not happen very often, people generally think they never happen. People build their houses on low ground...knowing that a flood is possible. But they rate the odds so low as not being worth worrying about. Likewise, who worries about a panic out of the dollar? Who worries about a stock market crash? Who tosses and turns at night, sweating the risk of a real estate collapse? After so many years of stability, investors come to think these things can't happen. They imagine that the monetary authorities have made some fundamental progress - like the progress in microcomputers or gene therapy - that makes these extraordinary events obsolete. They think they will never happen again.

Imagine what they would think...imagine what they would do if the dollar sinks by 5% every day for a week. Imagine how hysterical they would become if their neighbors house stays on the market, even after they cut the price by 50%. Imagine how panic-stricken they would be if interest rates shot up 2%...or 4%...or even to 18% as they were in 1981. All of these things are possible. All are likely, maybe not in 2006, but certainly before the end of time. All are human, psychological reactions...completely foreseeable and completely unpredictable at the same time.

We have no opinion on sectors, markets, or individual stocks. But our opinion of our fellow man is that he is given to fits of desperate sanity. And our instinct is that he is getting close to one now. He will look at his dollars and realize that they are nothing more than pieces of paper. He will look at his stocks and wonder why he ever thought they were worth 20 times earnings. He will look at his house and won't be able to believe that someone would have willingly paid him so much for it...and that he, damned fool, didn't take it!

All of that is in the future. How far in the future, we don't know, but we are happy to own gold while waiting for it. Gold, any broker or financial planner will tell you, is nothing but a "risky speculation." In our opinion, it is one of the few places you can put your money that is not a speculation. It is there when your neighbors are happy. It will still be there when they're sad. It's there when the empire is riding high. It is still there when it doth lie so low.

We hold onto it now, because we expect an extraordinary change...as the U.S. empire sinks, and your neighbors start to growl. Gold should not merely stay there, but go up.

Bill Bonner
The Daily Reckoning

@ MK,

I'd be interested to know what fundamentals you think Mr. Sinclair missed to explain your higher estimate of $760? LOL

Reading the web bots, which are not to be reproduced in violation of their proprietary nature, "fundamentals" are certainly in place for more of Gandy's dollar waterfalls, but we are seeing many of them here already.

For non-sunscribers, George Ure has permission to reprint some of the web bot findings at his urbansurvival.com site.

Flatliner, Sundeck
Have just caught up with the forum since leaving last night. Please excuse my poor explanations. I'm new to this game and nervous about posting.

Flatliner, the idea of borrowing against your home is alien to the Vietnamese people. I explained it to my Vietnamese wife, who is a foreign-trained economist, and she was appalled. Over here most everyone lives in a house owned outright by the family, a house that will probably stay in the family after the elders have died.

It's an entirely different culture - not too much of this moving from house to house, buying and selling as you go through life. They are not "stuck" in their house for years - they live in it. It's their home. Often they were born there. If the house gets too small and they have the money, it's common for the old place to come down and a three to six-storey residence go up in its place, even eight or nine floors. Putting a property on the market can be a sign of desperation.

Sundeck, it seems to me that depositing gold in a Vietnamese bank is similar to having unallocated gold in a Western bullion bank. Perhaps I should have added the word "bullion" when I mentioned banks in the rest of the world. Now from my understanding, unallocated gold in a bullion bank is part of that bank's reserves and can be sold if need be. The bullion banker OWES you that gold, which earns no interest and is not covered by federal insurance - a really bum deal.

Let me explain property prices again. The Vietnamese value property in terms of a QUANTITY of gold, and the unit they use is the tael (roughly 1.2 oz.) There's no regulation, it's a cultural thing and the government plays no part.

If they want to sell a house, the quote a price in gold taels, not in cash. Unless they are desperate to sell, the quantity will be that which they value the house in.

For example, during the urban property boom in Vietnam when gold was at its nadir several years ago, we were offered 2,000 taels of gold for a four-story house that we own in the heart of Saigon and let out to a retailer. We refused but that's neither here nor there. Now the POG has doubled but the building's value is still 2,000 taels (we wouldn't think of selling for less), hence double the cash it would have sold for before.

What will happen in the future as gold keeps climbing I don't know, but I think the property market will stay dormant unless there's an economic collapse and people are forced to sell their homes to survive.

Partly because of this gold link, property in Hanoi and Ho Chi Minh City is among the most expensive in the world. The house mentioned above measures 22x4 metres (it has four storeys) and, like most urban buildings in Vietnam, it takes up all the land.

Actually a homeowner holds the land-use rights to the land, which is owned by the state. Since these rights are perpetual and can be bought, sold, inherited or donated, the effect is the same as owning the land. Oh, and my name appears with my wife's on the title deeds to our properties only because she is Vietnamese. A foreigner cannot own land outright, or should I say "land-use rights".

One more thing about this place: silver and platinum are okay for some jewelry, but gold is THE precious metal. When I asked my wife about buying a small stash of silver, she responded "Where? How? Impossible!". Bullion over here means GOLD.

Well, that was all over the place. I've been living in a Vietnamese household for ten years (as is usual, we have relatives living with us) so communicating in English is sometimes a bit harder than it used to be. Most of the posters in this forum seem to be very erudite, and knowledgable.

Ref Goldnovice #140209

Thanks, Sir Goldnovice, that is a helpful description of the housing scene in Vietnam.

What I was wondering about in my earlier post #140202, although not stating very clearly, was the relative appreciation over time (in terms of dong) of housing and gold in Vietnam. You have largely answered my "wonderings" by the following passage from your #140209:

"For example, during the urban property boom in Vietnam when gold was at its nadir several years ago, we were offered 2,000 taels of gold for a four-story house that we own in the heart of Saigon..... Now the POG has doubled but the building's value is still 2,000 taels (we wouldn't think of selling for less), hence double the cash it would have sold for before."

On this (admitedly) small sample of one, it seems housing and gold retain an approximately fixed relationship to one another over time...that is, as prices change in terms of dong, both housing and gold track the changes in the currency at comparable rates. This is what one might expect of two "things" that retain their perceived "value" in a society. And from what you say, it seems clear that both gold and houses have been deeply treasured by the Vietnamese over long periods.

This is in contrast to the UK, US or Australia where housing prices have increased around 50-60 times since about 1970, while the price of gold has increased only about 15 times. If one were (foolishly) to equate "price" with "value" (as many people do), one might think that housing in the Western psyche has become significantly more valuable than gold...and perhaps that is the Western perception!! But I rather feel that housing prices in the West have a significant speculative component built into them, which is intertwined with the Western tradition of debt-financing, and the many years of easy money. I suspect we are seeing inflation manifesting in the housing sector and gold has not yet caught up.

In other words, lending ( = money creation) has favoured housing in the West and housing prices have outstripped other inflation indicators (gold, CPI). At face value, housing prices have to fall (anathema to debt-ridden Australians and Americans) or gold prices must rise...

As an aside, I remember Marc Faber commenting recently on this issue. He said something like: "Western investors should sell housing in places like Australia and the US and buy housing in SE Asia." This would tend to lower housing prices in the West (something Western Central Banks will fight tooth and nail) and raise housing prices in SE Asia.

Given what you say about gold and housing (in Vietnam, at least) being coupled together in fixed-value relationships over time, the corollary is that the price of gold must also rise...

Interesting information, Sir Goldnovice... Thank you for bringing it to The Table...

:-)

http://news.ft.com/cms/s/f39fa8e4-7e25-11da-8ef9-0000779e2340.htmlThis forum has previously addressed various possible "triggers" that could launch a major move in gold. If over the next few days gold breaks past resistance at $547/ $548, a quick look backwards will indicate that the trigger for the move was China's 5 Jan signal that it could switch its foreign exchange reserves away from the US dollar.

The link above was updated as of 6 January.

***snip***
Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves � currently accumulating at about $15bn (�12.4bn) a month � it could put heavy downward pressure on the greenback.
***end of snip***

Sticking with the trigger metaphor, the pistol was cocked by Iran's plan to begin selling oil in Euros two months from now.

Could be a good time to add a few ounces to your stash.

Caradoc

Read the alinea >>> It is a subtle but clear signal that...

Maybe China (PBoC) has already the 2,500 tonnes they suggested to accumulate !?
Simply because I find it very unusual that CBs (SA/Russia/China) announce/trumpet their intention to accumulate more gold-reserves. I want gold...means, less gold for more dollars (reserves).

If there is no goldmetal available anymore for redistribution...the value of physical gold can run away from its papergold pricing. We have CBs that are increasingly reluctant to let goldmetal go and CBs who want some more ! When there's no more goldmetal moving...the price of the metal can lift off. A goldprice decline means that metal is still moving.

Belgian bullion private uptake is up 25%.

Congratulations on increasing your stash by that huge percentage!

I'm up this week by only a few ounces, ~1/3 of the profit from selling January calls in one of my favorite miners. Another 1/3 went into slightly out-of-the-money calls for July and next January, and the final 1/3 I plan to squander on the luxury of a paved driveway.

I won't be surprised if/when the day comes that "all paper will burn" and, yes, options are only paper that gives the right to buy more paper, but in the meanwhile -- once your stash of physical gold in hand approaches comfort level -- the realm of paper is a strange place where you can gamble a few ounces worth of FRN greenies and maybe generate enough greenies to take possession of those ounces, roll the gamble forward, and have greenies left over for other purposes.

Regards,

Caradoc

Sundeck:

Quote: "it seems housing and gold retain an approximately fixed relationship to one another over time...that is, as prices change in terms of dong, both housing and gold track the changes in the currency at comparable rates. This is what one might expect of two "things" that retain their perceived "value" in a society. And from what you say, it seems clear that both gold and houses have been deeply treasured by the Vietnamese over long periods."

Precisely, but the concept was so different from the West that it took me nearly ten years to figure out (and we even bought two properties in that time!).

That was an interesting comment from Marc Faber - good idea to buy property in SE Asia (but hard to do). And yes, I agree that housing prices in the West have a high "inflation" component.

http://urbansurvival.com/week.htmsnip:

A number of readers have written in saying things like "Where's your Crash?" Damn good question. While I am not especially anxious to see it come, let's have a little reality check. First, we have to look back on Friday's news events and see what was happening to give the market such confidence:
The Chinese, as we reported, are diversifying out of US Mal-Bucks now and are looking for something better. Ticks off Treasury Secretary Snow, but he doesn't run China.
Democrats (reports the Drudge Report) are planning to ambush the Sam Alito nomination to the Supreme Court.
Not a hanging party for the DeLay folks in CONgress, but with Abramoff & friends about to rat out other members of CONgress, it doesn't seem to inspire much confidence in the political system.
George "Here, have some free lunch" Bush was speaking in Chicago about tax cuts.
The "deal" with the street is pretty simple: When George and/or Snow speak, the market rallies. Got it? The Fed turns on the easy money, and off we go on a tear. Of course, the observant reader will notice gold popped nearly $13, too.

So while no, "my crash" hasn't shown up yet, let's look at things in a comparative manner and see where the Dow should have gone if it had increased on Friday at the same rate as gold.

Gold opened Friday at around $526.20 and closed around $538.80 (at least by the Kitco.com chart above, and no, let's not quibble about the small differences between dealers and buy/sell spreads, for the sake of this discussion, OK? That's a 2.414% gain in one day.

Now, if we look at the Dow, we see it gained 0.71%. If the Dow had kept up with gold, it should have closed the week at 11,144.84 - a 262 point gain for the day. Instead we got this weakish 77.16 point gain - there's 185 points that didn't show up.

While I'm pleased to report "my crash" didn't show up this week, let's try to keep in mind that the Dow is underperforming gold (by a huge margin) over the past several years. I don't wish any ill toward my beloved country, but when we are living on OPM/CM (that's Other People's Money - China's money to be precise) the sober-as-a-judge call we have to make is that pump and hype aside, our Fed is between a rock and a hard place that looks to me to be moving more toward toward nuts in a vice than paradise.

http://www.jsmineset.com/snip:

The US dollar broke down below its second power uptrend and as Dan points out it is well below its 100 day moving average considered so important to traders.

I am always amused at the financial TV seers who are willing to make fools of themselves by telling you exactly what the Federal Reserve is going to do at each meeting. They were coming out of the woodwork today.

The dollar's decline was measured as the President lauded the creation of jobs in the past year in the face of national weather disasters (which means rebuilding or repairing homes) and increased fuel prices, most of which has found its way to credit card balances.

Who says the oil companies were stupid when they converted gas pumps to credit card machines? American consumption of gasoline was the highest rate in 16 years during December. The American public will spend money as fast as they can borrow it with no thought or concern for tomorrow or that eventual rainy day. It is probable that this is a product of the demise of almost all of those traumatized by the 1930s. The new bunch thinks that economies never turn down or if they do only a wee bit.

I once again ask you to see the movie "Enemy of the State" as it is almost PROPHETIC in terms of understanding the world we live in. A combination of "Wag the Dog," "Bulworth," and "Enemy of the State" will give you a better understanding of the factors underpinning the gold market than any gold site.

The old high of this gold bull market is clearly in the crosshairs of today's gold price. The move above $529 is still alive and well regardless of those who pronounce otherwise. The market is the only advisor and the use of trend lines for the general public is a good way to understand the language of markets. The more you listen to market and the less you listen to advisors, the better you will do.

-Goldilox

Sinclair's latest observations

http://www.financialsense.com/editorials/murphy/2006/0105.htmlsnip:

A melt down is on the near horizon, far exceeding that of Chernobyl Ukraine, but this time, will be intentionally done, probably by summer, and Gold will pop to over $1000/oz, virtually over night, and maybe to $1500/oz. With moderate-of-late Sharon out of the political picture with a stroke, it will be difficult for Perez to hold the middle ground in Israel's politics to secure a centrist political party victory supporting Palestinian statehood and unilateral withdraw and moderation, as the Likud party chief, and former Prime Minister, Benjamin Netanyahu resurfaces from the shadow's of the parting Sharon. It wont take long either after the March Israeli election.

Netanyahu wont mess around with Iran by begging for useless endless negotiations as are the EU-3 presently doing with Iran. Israel is relatively immune to Iran's threaten oil price increases, and will strike from the get go. Israel already has a massive stock pile of 2000 bunkerbusters and has a vast array of anti-missile batteries to counter the Salaam III 1500-mile range Iranian missiles. It wont matter what Iran says, truth or not, Israel will defend itself from being "wiped off the map". The Israeli knows that a vote for Deputy Prime Minister Ehud Olmer, Sharon's present 2nd, now tainted with the middle of the road tact, is too dangerous, in the presence of being threaten to be "wiped off the map", as the Iranian President has recently proposed. With Israel in fear of growing threats and extinction from Iran, Israelis will fall back on the old warrior, Netanyahu, as a necessary vote to defang Iran and preserve Israel.

Based on history, Netanyahu will act and act quickly, before summer. With multiple wars, oil supply uncertainty, vast fiat money printing, and global moves by central banks to buy gold in a supply deficit market, it is a no-brainer where gold will go this year. Gold will be in the four digits by July 4th, but initiated with a more impressive fire work show than that ever seen in a USA ballpark. The hard line Likud chief, Benjamin Netanyahune, will move as the bold man he is. Is there really any choice? Is there really any doubt?

-Goldilox

I know this is leaning toward over-policizing, but coming from leMetropoleCafe via FSO, this "one-man's opinion" is worth a look. When sabres rattle, paper markets get the jitters, and those seeking safety run for the cover of bullion.

http://www.financialsense.com/editorials/gammage/2005/0104.htmlsnip:

Jim and I were shocked to learn that Kennedy Gammage passed away yesterday. Our heart-felt condolences are sent to his family. Personally, we will miss his humor, his kindness, and his wonderful spirit. He was a gentleman at all times, an astute technician, a market scholar, and a fountain of wisdom. Truly, this was a life lived well. He will really be missed by many.
- Jim & Mary Puplava

Brief Bio and Editorial Archive
Financial Sense Newshour Broadcasts
11/01/2003 FSN Roundtable: Goldbugs & the 5 Bears with Kennedy Gammage, Robert Prechter, Peter Eliades, and Tim Wood
06/28/2003 FSN Roundtable: A Technical Perspective of the Markets & Gold with Kennedy Gammage, Richard Russell, Peter Eliades, and Tim Wood

-Goldilox

To honor the passing of Kennedy Gammage, Mary has posted links to some of his gold roundtable participations at the memorial URL.

http://www.financialsense.com/fsu/editorials/willie/2006/0106.htmlsnip:

When the December Federal Reserve Open Market Committee meeting minutes came out on Tuesday afternoon, it was akin to a starter gun shot at the beginning of a race. Debate will persist on interpretation. Regardless, the year 2006 has begun with a bang. The S&P500 loved it. The SPX rose 18 points, sensing an end to restrictive money. Gold loved it. The metal rose $15 per ounce. Crude oil loved it. The black tea rose almost $3 per barrel, surely aided by the Russian & Ukrainian skirmishes. The euro currency loved it. The EU "stock" rose almost 200 basis points in two days. Wow!!! The clowns on the financial networks cannot even properly interpret events. Did gold rise in sympathy to the Gazprom extortion maneuver on the energy front? Or did gold rise from expected lost pillar to the USDollar and the world monetary foundation? Did crude oil rise from rattling sabers in Eastern Europe? Or did oil rise from expected lost pillar to the USDollar and the world monetary foundation. These media harlots (perhaps only incompetent) attribute higher USDollar exchange rates to robust (they are exaggerated) economic growth, when support for the clownbuck owes primarily to bond arbitrage carry trades feeding off the higher US Treasury yields over Europe and Japan. The lost pillar of higher US interest rates will have a profound effect on the USDollar, gold, and crude oil in the new year 2006. Perhaps they should listen to Rick Santelli more often. He gets it. He has smelled something rotten from the inverted yield curve signal. But does not connect the dots to conclude a weak USEconomy and declare an invalid GDP statistic.

It is my opinion that the big stories this year will be

the end of the USFed tightening of interest rates
the slowing housing market, and drag on the economy
the worldwide scramble for energy, complete with raging violent conflicts
My full expectation is for a very tumultuous year. US economists will receive a wakeup call on how dependent the USEconomy actually is on the housing sector, and especially home equity loans. Fully 50% of domestic growth is tied to the housing boom (aka bubble). In the first week, we have been treated to a nice preview of the financial stir of its cauldron. Expect more pyrotechnics in the next few months.

Absurd talk continues of USEconomic robust strength. It is really robust philandering corruption distortion and deception in the calculation of all major economic statistics. A mere 12-yrold kid can unmask the lies on the statistics. Gee, wages will rise to catch up to strong productivity! Well, the benefits of this imported productivity are in Asia. Gee, robust performance with "full employment" is the mindless manipulated mantra. Well, such a boast requires not counting those who no longer receive jobless insurance benefits. Gee, low price inflation has returned to our shores. Well, let's stop driving, shipping, heating, and eating for that matter, and ignore asset bubbles.

-Goldilox

Never one to mince words, Jim Willie also predicts some major chaos upcoming.

http://www.financialsense.com/editorials/hodges/2006/0106.htmlsnip:

Inflation in my adult years increased average prices 1,000% or more:

a postage stamp in the 1950s cost 3 cents; today's cost is 39 cents - 1,300% inflation;

a gallon of full-service gasoline cost 18 cents before; today it is $2.28 for self-service - 1,267 % inflation;

a new house in 1959 averaged $14,900; today it's $282,300 - 1,795% inflation (+1,510% if quality-adjusted);

a dental crown used to cost $40; today it's $740 - 1,750% inflation;

an ice cream cone in 1950 cost 5 cents; today its $2.50 - 4,900% inflation;

monthly government Medicare insurance premiums paid by seniors was $5.30 in 1970; its now $88.50 - 1,664% inflation;

several generations ago a person worked 1.4 months per year to pay for government; he now works 5 months.

and in the past, one wage-earner families lived well and built savings with minimal debt, many paying off their home and college-educating children without loans. How about today?
Few citizens know that a few years ago government changed how they measure and report inflation, as if that would stop it - - but families know better when they pay their bills for food, medical costs, energy, property taxes, insurance and try to buy a house.

Is inflation a threat to society, beside the prices we pay and the fact fewer children have a full-time mother at home? Consider this famous quote:

"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Lord John Maynard Keynes (1883-1946), renowned British economist.

DEFINITION OF INFLATION:
Inflation is the loss of a constant purchasing value of the dollar,
caused by an increase out of 'thin air' of the supply of money and debt creation by the financial system.

-Goldilox

OK, "one more for the road'. Michael Hodges offers a scathing, if rather lengthy, analysis of "covert inflation" and its causes.

Goldnovice, Thank you for your time. To all others, I do hope this thread hasn't diminished the value of this forum.

I do hope to get back to the value concept discussed here at some future date. It seems to me that house prices in the west have even less value today then they did before this conversation took place. You see, if the price of a house falls in the west, the owner of the home only stands to lose his equity (the equivalent of very few gold coins) along with his good name (he gets a tarnished mark on this debt servicing record). Losing equity or getting a tarnished record really does not mean much to the owners here, for every time the economy turns south, many people simply walk away from their obligation. Could you imagine someone walking away from a gold coin? Yeah, right, I don't think that would happen.

(See previous post)snip:

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. The abandonment of the gold standard made it possible for welfare statists to use the banking system as a means to an unlimited expansion of credit (debt creation)" - Alan Greenspan (#8), 1966

"It was the case that the price level in 1929 was not much different, on net, from what it had been in 1800. But, in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, has allowed a persistent over issuance of money. As recently as a decade ago, central bankers, having witnessed more than a half-century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess." - Chairman Alan Greenspan Before the Economic Club of New York, December 19, 2002 "Issues for Monetary Policy"

-Goldilox,

I usually refrain from postin two quotes from a source, but these were too juicy to pass up!

@ Flatliner,

With the US becoming more and more a "credit-based" economy, and the institution of new bankruptcy laws, I submit that foreclosure brings more grief than just a "tarnished name", as cost of participation in the credit "merry-go-round" rises dramatically.

I don't think your intent was to minimize this, but your analogy of "just walking away" only applies to those well-heeled and perhaps "trust-protected" so they have a secure destination for their credit "walk-about".

Maybe I'm focusing on the opposite extreme?

Haven't seen or heard of this before but I was watching "Tout-TV" yesterday and the analyst who was asked about gold's stellar performance had a new angle.

He surmises that Asian countries who have never had their currencies and economies exposed to a severe bout of inflation are 'hedging their bets' and buying pallets of physical gold.

So not so much as a western demise, a western economic crisis or dollar deval. but more so a hedge against Asian ('eastern') inflation.

Interesting angle....bring it on!!

Have a golden weekend.

You bring up a good point and the future will educate people. In the past, people would just walk away and start over again. Sure, they got a tarnished name, but they could still live, even though it was a little harder.

But, times have changed haven't they? Do people really understand how the rules have changed? To you and I, we see that the laws have been changed so that if you have the ability to pay, you will. But, we haven't had a slowdown have we? Thus, do people understand that you just can't walk away? I would submit that the general public does not understand this new concept. People are acting today as if they could just walk away. They do not take seriously the responsibility that they have acquired with signing their name. In time, people will learn (what you already know).

But, I am still torn with regards to the pain that it will cause people. By today's standards (assuming that all things stay the same), acquiring a half million dollar debt for 30 years would surly mean 30 years of slavery. The puzzling part is that things are not staying the same. Particularly with the money supply! It may be that making a half million dollars a month may be something in our not-to-distant future. Thus, paying off that debt may be possible and even relatively easy. Thus, the pain of holding house debt may not be all that bad � in the short run. (But, I've glossed over all the other problems that this type of inflation would cause!)

Sorry for bringing so many more words into the forum.

http://www.infomine.com/investment/metalschart.asp?c=gold&u=oz&x=zwd&r=1y⊂mit1.x=44⊂mit1.y=7Thanks Sundeck for the pointer to infomine.com and their graphs. Anyone wonder what the PoG looks like in a hyper-inflationary environment? Graph gold against the Zimbabwe Dollar. Wow.

http://news.ft.com/cms/s/0c18ea82-7f22-11da-a6a2-0000779e2340.htmlLink is today's assessment of the Chinese angle from Financial Times.

Hey, Goldilox! Great series of posts today. We could be in for an interesting week.

Looking at both the posts on Asian housing priced in parallel with gold versus the US housing bubble prompts a few thoughts...

* Recent price growth for US housing is on top of the 70 or 80% increase resulting from FHA's 1973 decision that spouse's income should be considered in deciding how much debt a couple could swing. (Two incomes per couple competing for most everything on the market drove prices up so that by late 70s the typical single-income family had been priced out of the market.)

* With the end of cheap energy saying that food will be more expensive to grow and to ship and that the same applies to commuting and and home heating expenses, it's easy to figure that difficult-to-heat McMansions (large houses on small lots 50 miles away from work) will tumble in value.

* Big difference from the 1930s is that then most Americans rural roots to which they could return (the skills at least, if not Mom in her apron and Dad in his overalls expecting them.) Today, with most family farms having been bought up by agribusness, most people won't have a place to go. And even if you're lucky enough to have the family farm still in the family, you'd be more welcome if you could show up with a pickup and a rototiller than with an SUV and a Miata.

* Given what seems to lie ahead, any US housing that comes with a few acres and an independent water supply should be in for a healthy increase in value no matter whether nubucks are issued at ratio of 100:1 or 1000:1. It's no coincidence that the fellow who hosts the urbansurvival.com site that Goldilox occasionally visits has relocated from Los Angeles to east Texas.

Focusing in a bit on drinking water as a pending shortage and that shortage's investment implications, Jim Puplava's "Blue Gold" article from Nov 2004 is the quickest intro to the subject: http://www.financialsense.com/Market/archive/2004/1122.html

I've mentioned before that if you have a well, two solar panels and a 24-volt pump will let you retain flush plumbing and drip irrigation for as long as the sun shines. Not bad, but my hunch is that, instead of that approach, having an artesian spring with gravity flow downhill to the house will be good for an additional price delta that will exceed what could be raised by selling 2 or 3 McMansions.

Regards to all,

Caradoc

http://www.financialsense.com/Experts/2005/Simmons.htmlWell worth listening to. -Caradoc

http://www.usagold.com/buy-gold-coins.html

http://urbansurvival.com/week.htmsnip:

As we've warned before, expect economic pandemonium this spring and a transition from a meta data period of militancy to something far worse by mid-late summer. Go read our story earlier this week on the "war counsel" which we've heard this weekend from highly placed sources is uncomfortably accurate about where things are going.

As reports that the Iraq war alone could cost over $2-trillion show up, repudiation of the dollar externally becomes almost a foregone conclusion. Thus the market can rally on a paper basis but the gap between the Dow and gold is likely now to rapidly close.

-Goldilox

I'll keep the qoute on the economic side. Go to George's site for the detail . .

The thing memorable, that captured my eyes a couple of weeks ago while lost in the Queen Ann Hill area of Seattle, was not the little old houses spaced about two yards apart, nor the glitzy Audi's, Porches, Bimmers, and Mercedes lined along the curbs as though gathered for a Road and Track magazine photo shoot; No - it was the three houses I saw that had, "Accepting offers" signs on their front lawns.

Goldendome, assumed that this meant that the owner was willing to part with his prized dwelling...if the price was right. But that's the thing about real estate, how do you know what it's worth? Goldendome, by this time, had already had his big bofo business property on the market for FOUR years and had only now found the nearly correct pricing point. Yes, two - got that TWO, parties were actually wishing to relieve him of his burdens. But, at a price much, much lower than Goldendome had at first offered it unto the public, and lower still than his final asking price.

I thought to myself: Goldendome, here you've wasted all of these years, suffered all of this frustration, and why? Because you just weren't smart enough to put a sign out front that said, "Accepting offers". I could have had the money out years ago. I could have put it all into physical gold, like I remember now, that I was going to do then; and the way the gold market has gone - in retrospect - I'm sure that I would have done, 100%! --Oh, to have the courage in the present that we had in the past, or know that we will have in the future.--

So, now, it looks as though Goldendome will be getting some significant dollars out of the place, (not all at once, as I had thought a couple of weeks ago -- as the first accepted offer [that we had thought could not perform] had a right to perform and will). But still some significant dollars to a little pawn that lives out here in the middle of Podunk, Washington.

Now, will Goldendome have the courage and confidence to commit a large trove of $ into the gold market (as he had done over the years with smaller amounts), even though the price has moved up over a $100 or $200 an ounce above where he's certain in positive market movement retrospection, he would have made his commitment one, two, three, or four years ago? -- I think so! If anything, things are worse now than then. Goldendome, remembers a sentence that MK used here many weeks back. "Gold is where savings go to stay whole" he said. With the state of the on-going deficits and underfunded liabilities...city, state, and national; the prospects for paper dollars and currencies appear grim. Barring some unforeseen glitch, Goldendome's deal should close in early February. --Oh, to have the courage then.--

http://www.abcs-of-gold-investing.com/The following extracts from a Financial Times article headlined "Questions grow over China's forex strategy" with my comments appended. The China strategy no doubt figured largely in yesterday's gold market run-up.

_____________

Financial Times: "The spectre of Asia's central banks deciding to diversify away from their dollar holdings has long threatened a sharp drop in the value of the U.S. currency."

MK: A quote from The ABCs of Gold Investing: How to Protect and Build Your Wealth with Gold:

"Nowhere are the dangers to the world economy more implicit than in the United States� economic relationship with the two Asian exporting giants, China and Japan. It is estimated that east Asia holds approximately two-thirds of the world's foreign currency reserves. Japan and China alone hold an estimated $800 billion and $400 billion, respectively, in U.S. dollar reserves, about 17 percent of the total U.S. federal debt.

[Addition 1/7/06: China is likely to catch Japan in terms of dollar reserves soon, so the emphasis at the moment is quite naturally on China. At the same time we would be remiss to discount the dollar holdings of Japan and the oil exporting nations -- particularly the Gulf States and Russia.

U.S. economic policy in the past could focus principally on Japan (with respect to the dollar overhang. Now American policy-makers have a half dozen nations with which to contend. The United States is quite literally flooding the world with dollars. Needless to say this complicates matters significantly making it difficult for a coherent policy to emerge.

Discipline in the dollar-holding ranks could suddenly break setting off a deluge of bond redemptions which in turn could ignite a full blown financial crisis. In other words, we might be a gun shot away from a full stampede.

The implied threat imposes itself directly on the private investor who has no resources but his or her own should such a panic were to unfold. If you haven't diversified into gold, now is the time. If you have diversified but still need to add more gold to your holdings, it is better to get the job done now than wait for a price correction. As the past week exemplified, the downturns are shallow with a quick bounce back to the upside. Don't play games with your future as this dangerous situation gathers momentum. -End 1/7/06 addition-]

The ABCs: "Recently the Sydney Morning Herald openly questioned dollar policy and its potential impact on the Pacific region.

�Around Asian financial circles, there is growing, if still muted, talk of a looming 'dollar crisis' equivalent to the sterling crises of the 1960s � when London could no longer support the reserve role of the British pound�unless Washington mends its profligate ways and accepts higher interest rate and taxes. A default by the U.S. government is still unthinkable, but not so a unilateral change in the rules of international finance�akin to Richard Nixon's halt to the convertibility of dollars into gold in 1971, or Franklin D. Roosevelt's devaluation and repudiation of gold-denominated contracts.�

Under the circumstances, it is not difficult to understand why Japan and China might be interested in increasing their gold reserves. Even a small shift in the Japanese and/or Chinese reserve position toward gold would have major implications for both gold and the dollar.

[Addition 1/7/06: It is not just China and Japan that might be interested in increasing their gold reserves. Russia has announced a similar interest and so have several other nation states. It is a long-held belief in the gold market that wealthy Arab oil producers have been quietly building their gold reserves as oil revenues have poured in. I would contend at this juncture, that private attempts to acquire gold will be ,pre successful than the public, official sector type, though the official sector endeavors will have an important psychological effect on the market even if they meet with only limited success. I would not be surprised to find out down the road that in this period wealthy oil money was quietly going about the business of physical gold acquisition, and that this was the underlying current in the gold market that took it to 25 year highs. End 1/7/06 addition.]

Richard Duncan, former International Monetary Fund economist, speaks to what this might mean to the world economy of the future:

"By accident or by design, Japan is carrying out the most audacious endeavour to conjure wealth out of nothing since John Law sold shares in the Mississippi Company in 1720. So far, the results have been impressive. Japan's monetary alchemy has been the most important factor in allowing the U.S. government to finance a $700 billion deterioration in its budget over the past three years without pushing up U.S. interest rates to levels that would pop the wealth-creating property bubble there�These developments highlight a fundamental question that has been debated repeatedly over centuries: Can governments create money and make the population richer without setting in motion a chain of events that ultimately ends in monetary chaos?

We may be about to find out, as Japan tests the hypothesis on an unprecedented and global scale. If this experiment in unorthodox monetary policy succeeds, then we have arrived at a new international monetary paradigm. Governments will have discovered how to finance limitless deficits through the creation of paper money, and we all can look forward to an age of great prosperity. If it fails�as have all past attempts to create wealth from thin air�then the world may not be able to avoid a severe and protracted economic slump as the extraordinary imbalances in the global economy, caused by the explosion of fiat money in recent years, begin to unwind.

In mid-2003, economists at the U.S. Federal Reserve published apaper explaining why the Fed was not "out of bullets" despite having cut short-term interest rates to one percent. That paper stated that "the Fed could even implement what is essentially the classic textbook policy of dropping freshly printed money from a helicopter," if necessary, to stimulate the economy. Today, that helicopter is in the air. But, strangely, it is not the Stars and Stripes that is painted on its side, but rather the Rising Sun. That much is clear. What still is not quite discernible, however, is who is actually in the pilot's seat."

One of the unhappy consequences of the structural trade deficit is that the Greenback is being held hostage by foreign financial interests. Any of these interests can move against the Greenback at any time by simply selling off their bond holdings. Foreign-held dollar debt has become a weapon in the equivalent of an economic Cold War. Just as nuclear weapons were held for most of the twentieth century like a sword of Damocles over the nations of the world, so now are dollar reserves held over the head of U.S. financial markets. To say the least, this puts U.S. stock and bond investors in a precarious position, and makes gold, the stand-alone asset, a critical holding or those who understand the dangers this tenuous synergy implies."

-End ABCs quote-

Then,

Financial Times: ". . .market reaction yesterday to the announcement was limited. China watchers pointed out that the statement on Thursday evening did not come out of the blue, but followed comments by government officials and academics questioning the wisdom of China's reserves management strategy."

MK: The reaction in the gold market was not limited by any stretch. In my forecast for 2006 (Available at the Daily Market Report page), I commented on the dominant role central bank gold demand could play in the gold market. Beyond the immediate psychological effects, the real world implications will be felt for a long time in the physical market itself. The enormity of the implied central bank demand is likely to further upset the gold market's already delicate and tenuous balance .

Most mainstream commentators -- even those with some understanding of the gold market -- have yet to fully comprehend what is really going on in the gold market. Those who come to this website, however, are well aware of the breach between supply and demand already in place due to a combination of short covering and declining mine production. Now we must factor-in that central banks as a group have become net gold buyers instead of sellers -- altogether a potent brew that could catapult gold into the investment limelight and keep it there for a long time to come. Some of the early reports on Chinese interest in gold suggested a 1500 tonne addition to its reserves. What about Russia? South Africa? The Gulf? India? And don't forget -- European and American investors (perhaps as big a market if not bigger than the others mentioned). The gold market may not be ready for what is about to happen to it.

Financial Times: "Last month Yu Yongding, a prominent academic who sits on the central bank's monetary policy committee, warned that China's reserves could be seriously eroded if the US dollar weakened further, a comment interpreted in some circles as a warning against excessive investment in dollar assets. However, Thursday's statement did break new ground: it was a public statement by Safe, rather than comments by individuals."

MK: In China policy is often foreshadowed by articles written by key policy makers. China will likely act in its own best interest despite the ramifications to the world economy. Though China's approach is likely to be measured and the policy applied over a protracted period of time, the effects on the market will be immediate. We are talking about quantum changes in the way the world does business -- a shattering of the paradigm. All markets will be affected inlcuding gold. Please see more on this below.

Financial Times: "Foreign investors have continued to be willing to finance the US current account deficit at very low interest rates in spite of the foreign exchange losses they suffered during the dollar's decline from 2002-04. This has made it easy for the US to finance its current account deficit, which has risen above 6 per cent of gross domestic product and requires the US to import more than $2bn of capital from abroad every day.

But it would not need China to start dumping dollar assets for there to be pressure on the dollar. If China became less willing to continue adding to its holdings of US Treasuries, that itself could put downward pressure on the dollar and upward pressure on US interest rates � particularly if it encouraged other countries to follow suit.

Oil-exporting countries have become increasingly important sources of foreign capital, owing to the high oil price, becoming as important as developing Asian countries in financing the US deficit. "

MK: The implications to the American economy of those four small paragraphs are alarming. This past summer the world's financial pages were filled with discussion about Alan Greenspan's conundrum -- the fact that interest rates were dropping in the real economy even as the Fed attempted to drive them higher. When Ben Bernanke takes the reins of the Federal Reserve he might very well be confronted with a conundrum of his own.

If China indeed begins to diversify out of the dollar (by reducing its purchases of U.S. Treasuries) in any meaningful fashion, the dollar will be the victim and so will easy money in the United States. The Greenspan conundrum came from China and Japan undermining Fed policy by flooding the American economy with dollars from their reserve hoards. A Bernanke conundrum -- as described above (the opposite of the Greenspan conundrum) may cause an early launch of those money dropping helicopters we have all read so much about.

China, possibly without realizing it, could precipitate a stagflationary crisis every bit as dangerous as the one tsunamied the Asia economies in the late 1990s (Bernanke's worst nightmare if you've had the occasion to study his speeches and academic papers) -- only this time it will occur in the economy upon which all other economies depend. It is a dangerous business and dangerous times for the world's investors.

___________________

The ABCs of Gold Investing: How to Protect and Build Your Wealth with Gold by Michael J. Kosares can be ordered at the link above.

Here is the link to the Financial Times article featured above:

http://news.ft.com/cms/s/5413c5d6-7ee7-11da-a6a2-0000779e2340.html

Ref Belgian #140212

Yes Sir Belgian, it would seem odd that the PBoC would openly admit that it was seeking more physical gold prior to actually trying to acquire it. But then, other CBs have made similar comments...South Africa, Argentina and, I think, Vietnam. (Didn't some treasury official in Japan make a similar comment a year or so ago?) I doubt if they ALL have acquired the amounts to which they publically aspire...and I doubt if China has either.

Also, in a similar vein, Russia has openly admitted that it was intending to increase its reserve holdings of Euros (along with other CBs, I believe). True, the market for Euros is likely to be less "tight" than the market for gold, and so the impact upon the "price" of the Euro is likely to be less sensitive than the impact of such announcements by CBs upon the price of gold.

On the other hand, China literally may not give a damn about the People's Bank's statements regarding gold purchases and their impact upon price. Even if China were to start from scratch to acquire its 2500 tonnes of metal, at present prices the whole deal would be around $US43.4 Billion...almost a measely amount along-side China's enormous (and growing) US dollar reserves of around $700Billion. China probably knows very well where the price of the metal is headed, and that any purchases are going to reap a tidy profit whether it signals its intent or otherwise. (And, as TC pointed out recently, gold purchases by China may help quiet the yelping about trade imbalances with the USA...especially if China becomes a significant buyer of US gold production...and/or gold reserves!?!?!?)

Remember also the PBoC Chairman's comments a few years ago, openly encouraging China's people to invest in gold? (Can you imagine Greenspan or Bernanke saying something like this openly??) I suspect this encouragement by the PBoC is closely akin to the "culturally overt" and tacit encouragement by CBs and commercial banks in the West for their peoples to get into housing in a big way and stay there, as a means to save themselves from the inevitable devaluation of the US dollar and its "derivative currencies".

No, I suspect authorities in the populous part of the world (China, India) would be very happy to see the price of gold sky-rocket whereas the authorities in the "priviledged" part of the world (UK, US, Australia, etc) want to see housing maintain its present price-levels no-matter what. They do not want to see a major exodus, or diversion, of funds from housing into gold. However, they will no doubt be able to tolerate a "mini-exodus" into gold...since the housing market in the West is many, many times larger than the gold market; and would probably remain so even in the face of a significant "gold rush".

It is for this reason (the scale of the two markets in the West - gold versus housing) that Asian gold can have its way while Westerners can have their way with their houses...AS WELL AS reap the rewards of a rising gold price...if they see the writing on the wall and act upon their convictions.

Cheers, Sir Belgian...a Happy New Year to you.

:-)

Judging from the very obvious fundamentals in MK's message, and the support it is receiving from every corner of the financial pundit world, the bullion banks and CBs may need to "give" gold away to keep the price from reacting accordingly.

How likely is that? Giving away SUVs when gas prices are rising is not quite the same as gving IT away when all meaningful prices are rising.

Should be an exciting quarter.

Tripartate trending: Americas, Asia, Eurasia = currency zones

Goldilox (01/07/06; 09:55:21MT - usagold.com msg#: 140217)
When Smart Bombs Pop Over Tehran, Gold Will Pop to Over $1000/oz
http://www.financialsense.com/editorials/murphy/2006/0105.html


Now that's an ugly story.

Its the reason I keep a somewhat far-out ask on all my gold stocks. Let's say "Golden Arches" has a bid/ask on the go for $20/21, I will have a ask in the mix for $28. Just in case 'hell' breaks out.

Do you wanna be holding paper, even gold stock paper when 'nukes' are flying?

http://www.financialsense.com/fsu/editorials/2006/0106.htmlsnip:

An ETF is regulated by the laws of the land. Laws change. What you buy into today may be completely different from what you are owning tomorrow, basically depending on the financial stability of the Nation in question, and at the whim of the legislators or the President, who can change anything and have changed everything in times of great crisis.

But you bought that ETF claim, based on some kind of economy that was working when you bought in, a financial system that was working at the beginning, and later, a national currency crisis, banking crisis, market liquidity crisis, or another crisis changes everything, and now all the laws are subject to change, and the best outcome for the ETF would be probably payment in�. you guessed it� in dollars.

But you thought you owned a real asset, didn't you?

I have another basic objection to an ETF. It is a multi-layered paper/electronic claim. There are layers and layers you have to go through to get anything back. You have layers of laws between you and the asset you think you own. Let me tell you something. Having a claim on something, and actually getting it are two different things��

To me, there is no comparison whatsoever with a gold coin and a paper claim on it.

-Goldilox

Not gonna get much argument here!

http://www.bis.org/review/r041130e.pdfThis is part of China's planned Gold Coup...First allow & encourage (as they have done, and Asians need NO encouragement to own Gold and never have) the people to trade paper savings for physical Gold, then follow up with China's Central Bank exchanging some of the Trillions of US Bonds and Fiat for Gold...Hence the Yuan becomes a power and the peoples personal wealth of the Nation is protected from ANY Fiat's devaluations...Next liberalize China's mining laws, privatize mines and encourage westerners with modern expertise and highly trained people to come and explore for & mine Gold in China, thus vastly increasing Gold production. (this has also been put in motion and mines in China are currently being bought by western companies and much new exploration is taking place already)...Follow the first hints in this year old speech...

Zhou Xiaochuan: Gold market functions to hedge against risks

Speech by Mr Zhou Xiaochuan, Governor of the People's Bank of China, at the 2004 London Bullion Market Association Annual Precious Metals Conference, Shanghai, 6 September 2004.

http://www.bis.org/review/r041130e.pdf



How can we transform the gold market into a financial market from its present stage as a commodity market? The current situation presents individual investment in gold as a realistic answer to this question. Our total domestic household savings amount to as high as 12 trillion RMB, readily conditioned for investment in gold or rather turning the asset of the ordinary people from currency into gold. From the macro-economic perspective, it creates an additional channel to convert savings into investment balancing the demand and supply.

From the micro-economic perspective, allowing people to hold assets in gold can improve social welfare benefiting both the country and its people. Also, the dual characters of being an ordinary commodity and a currency allow gold to well hedge against risks.

Good one YGM...in China things don't just happen at random..."We have a plan!"...Aussie Sinogold (I think) was the first into the fray and there will be more to follow..

I get the feeling that I should be listening to a different selection of news media these days...unfortunately I don't comprehend any Asian languages and am therefore reliant upon "enlightened" English translations...being in the world with China today is a bit like what it must have been in the world in 1880 when the US was the "exploding" industrial nation...Oh well! Back to my Kipling stories! :-)

Cheers

EU, Russia, China, South Africa, and many other nations, have been making "political" statements on gold whilst having gold "policies".
Conclude, that all the gold action is an "official" one, rather than a private one.
First, the general public was pushed away from gold, through the gold-sales hysteria...and now the opposite is encouraged officially.

Bringing gold from the back stage to the front, means that the existing monetary regime is being challenged...in a gradual and orderly (disciplined) way as to not cause another gold-bubble in a vacuum ( cfr. 1971 > 1980). This means that the "new-gold" supporters do mean business, today !!! That's why all the other bubbles (housing-stock/bond/dollarmarket) will be deflated progressively.
This is the very nature of the "transition" that w've been talking about for so long now (5 yrs).
Soon, South America will join the "transition" idea.

@Belgian,

I remember Atgentina making a gold reserves statement early last year, so I heartily concur with your prediction. I think that with NeoCon RADAR already active in SoAmer, they are making sure they "outrun" Iran and Sorth Korea, to use the hunter/bear analogy.

None of them wants to be the next Iraq, so staying off the "most wanted" list is a prudent political calculation.

"So, Cavan Man, with those bases nicely covered, I don't know why you're faulting me for doing my part to stimulate a lively conversation"--TC

You were very successful,that was one of the most intense week of (Gold) discussion,I was so distracted to get my thoughts about FreeGold to a finalisation that I lost contact with my daily work sometimes :-( Thanks to you and all that participated.

Putting a few PR/monetary/political flaws aside,FreeGold is GREAT,anyone who does not think so is just not getting it (abstract to follow).

And no,China (and Russia) do NOT announce intentions to buy Gold.Just read "the art of list",with the 36 Chinese strategems described.This and their Konfuzian history forbids stupidities like Englands Gold sales.This is now the revaluation part!

Great week to all!

PS:the Kennedy murder is solved,a new documentary coming to cinemas by a german has some fine evidence/witness.It was Fidel Castro.

Since the acceptance of China into the WTO and it's Gov't 'White Paper' on new mining laws and reg's there are at last count over 20 major & junior western Gold mining co's currently active in China. FWIW

http://canadaeast.com/apps/pbcs.dll/article?AID=/20060105/TTMONEY09/601050476/-1/MONEYSnip with details of China's new pricing mechanism:

The People's Bank of China, the central bank, began a new policy Wednesday of calculating the yuan's value against the dollar using a weighted average of the prices given by major banks. The highest and lowest offers are excluded from the calculation, the central bank said in a statement issued Tuesday.

***end of snip"

Caradoc

If I were China-Russia-South America...I would invite as much foreign expert goldminers as possible to dig for the precious on my territory...and pay them with excess dollar-fiat-confetti (reserves) in exchange for the precious "metal" to be physically stored in the National CB vault, waiting for the freegold finale !

Hasn't arabian oil been doing exactly the same, for many decades !?

It is the non dollar block of the planet that wants to consolidate its vastly growing excess of dollar-paper into a universal tangible...not to be dominated by the dollar regime.

Why is it that South Africa joined the CB gold reserve hints and not Australia or Canada (dollar block) !?

The goldmining business is also involved in the transition of papergold to physical gold. Much more regulation and control will be the final outcome.

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

Why is it that South Africa joined the CB gold reserve hints and not Australia or Canada (dollar block) !?
------------------------------------------------

I wish someone could answer that for me! My letters to Can Minister of Finance and the Opposition Party Finance critic get no replys as do requests for answers as to who gave the Gov't the right to sell off all our Gold reserves in the first place.

http://www.latimes.com/business/la-fi-chinabubble8jan08,0,7585034.story?coll=la-home-headlines&track=morenewsThe attached article states that the housing market in Shanghai has popped, and this may threaten the Chinese economy.

Of course, when one can no longer count on real estate as a store of value, or as a place to put one's excess savings (either as a lender or an owner), gold is often next on the list as the secure asset of choice. Hence, we may see more Chinese money move into gold.

http://www.usagold.com/gildedopinion/RocketSchool/20060108.htmlThe latest 'Rocket School of Economics' commentary has been posted by Professor von Braun; this time he provides his views on the scramble for gold reserves among mining companies after years of shabby investment to support exploration and development initiatives.

Click URL above to access the current page and the 'Rocket School' archives.

R.

Another mark bites the dust. I hope we start seeing $550 by this time tommorrow.

$541 spot of Dec 12/2005 approx. 3:00am now history, I see spot at $543 presently.

Next on the list is the London PM fix. Next breach is through $539.50 set on March 26, 1981. Almost surpassed again on Dec. 12, 2005 when the PM fix saw $536.50.

Surely to be tested tomorrow.

Next stop is $570/575.

All aboard Gold Express III.....hey which is Misetich !

It appears that one of our major foreign UST bondholders(China) may be getting ready to call our hand. I hope that we at least have pocket jacks(some physical left in our treasury). Aces would be nice if its all there. I fear we are on a bluff and deep storage gold doesn't sound like too solid a hand.
Even the credible threat of the CBofC diversifying into PG may convince Japan(the largest foreign holder of our debt) to try to take their seat before the music stops.
What are we going to do? Enquiring minds want to know. Where is the gold price going. If best comes to best(pocket aces) it only reaches the moon(in USD). If worse comes to worse(bluff), may God help the US economy, it goes to the stars.
If foreign debtholders diversify or even just fail to participate in future purchases of our debt(both highly likely), where are they going to put those USDs. We shut them out when they expressed interest in an oil company. They can and will purchase gold. They can and will purchase euros(whoopee). At least the euro has that 15% physical gold component. A bigger plus is the fact that the Iranian oil bourse will be denominated in euros. If that bourse begins to trade 10%+ of oil in a short period of time(and there is no reason-other than war-to think that it won't), we WILL see monetary fireworks. And we're looking at a short period of time here folks. Months. March. So far the coal has just been loaded in the burner. Better get on the train before it leaves the station.
My take is that if (when) these debtholders bail, we will have to bring our (US) gold into play. If we hold aces, then a 15% backing seems reasonable. In past postings I have seen mention of a $ POG that would represent. Would somebody please remind me. If we hold jacks, we will try our best to play them but I fear they may not hold up. We will probably lose the hand but not get knocked out of the tournament. If we are on a bluff, who knows what will happen. People don't like to get ripped off. Probably WWIII. We currently are, in fact, the empire de jour of the world and we should expect nothing less from our illustrious and enlightened leaders.

Back to Bodog.

Noble1

PS: CB2. Please reconsider your decision to leave these halls. We have benefited greatly from your input. I have also been chastised and called names by some incredibly intelligent yet shallow minds within this forum.

http://www.tpmcafe.com/story/2006/1/5/11510/30624Snip :-
Nobel Laureate Joseph E. Stiglitz and Harvard budget expert Linda Bilmes plan to present this week a paper estimating the cost of the Iraq War at between $1-2 trillion. This is far higher than earlier estimates of $100-200 billion.

End snip.

The attached URL has quite a number of (polite) postings about the paper and some interesting comparisons in terms of magnitude of the various other "financial disasters" rolling down the pike towards us. For me (Engineer that I am) the most interesting was from a certain Dave Adams who penned :-

I was wondering what else could be done with $1 Trillion, so I just ran through a back-of-the-envelope calculation:

Current un-subsidized cost of photo-voltaic (i.e. "solar") power (i.e. the true cost): $9600 per Kilowatt

Number of Kilowatts capability that could be purchased with $1T:

1E12/9600 = 104,000,000 Kilowatts (KW)

Number of productive "solar" Kilowatt-hours per year:

8 hours/day X 365 = 2980

Quantity of Solar-Electric capacity per year that could be purchased for $1T (at today's prices)

104,000,000 X 2980 = 304 billion KW-Hours

The DOE estimates the total quantity of KW-Hours of electricity used by US homes at about 1.14 Trillion KW-Hours.

In other words, if its just $1T, then the cost of the Iraq War could have gone toward providing about 30% of the entire US home electricity requirements.

End snip.

Another poster compares this $2T estimate to the existing $10T U.S. government debt. And how was all that going to be paid for again ? Ah yes, Mr. B., I can already hear the whirring in the sky.

C!

A storey on why Canada gold was sold

http://www.financialsense.com/fsu/editorials/steer/2004/0915.html

@ Clink,

Your fairly conservative projection does not even consider how much generating efficiency might be regained by putting a sizeable portion of that money into the development lab, and how much price efficiency would be realized by true mass production and marketing.

Unfortunately, it always seems to take serious crises to open people's minds to cleaner and less politically dependent alternatives.

But that is probably why gold will overshoot any reasonable parity adjustments. The gold market's lack of smooth transitions will likely mirror similar behavior in the energy markets.

I especially enjoyed the analogy of "to the Moon" vs. "to the stars."

...when the world's populous finally realizes there is and always has been a one world currency and that currency is Gold? Will it take Gold trading freely at unrestrained and unmanipulated free market value in the thousands of dollars to have that realization hit home? Like Belgian wrote why do Australia and Canada's CB's ignore Gold after giving it up to the powers that be for a song and a few peices of IOU paper? Trying to wade thru the muddy waters, reading all, even reading between the lines of Mundell's papers, or the mass of speeches by heads of the world's CB'ers on the BIS website gives only clues and a headache. The only solution I hold dear to is "Own the Gold" and watch and wait, knowing full well whatever comes, owners of physical Gold in hand will be among a selct fortunate few in the money when the muddy waters become clear.

OZ,

If you use the Optional URL box supplied by TC's input script, it will allow readers to click directly to your link.

What a great post. I have been through Puplava's site a number of times and seemed to miss that one, or else my fading memory is not recognizing it. I'm glad you found it.

Canada's government is often enigmatic. Why would a government so intent on labeling it's homegrown inventor, John Hutchinson, an "eccentric crackpot," so often raid his lab and confiscate his surplus-sourced "toys", thus fueling public skepticism of their disdain for his very non-traditional work?

http://quotes.ino.com/chart/?s=NYBOT_DX&v=iIF the US$ breaks the 88.80 level ---
IF even the POO stays steady --
IF the GOLD GODS smile today ---
The POG shall be $555 in NY by the "COMIX" close!!
GOOD LUCK BANKSTERS, HA HA !!!
<;-)

http://www.lemetropolecafe.com/Pfv1.cfm?pfvID=2612&SearchParam=Shamrock%20SummitEd Steers Complete Essay on Canada Gold etc

http://gata.org/essays.htmlLots to pick and choose from here.

I have been reading PM commentaries for a number of years. After a while you begin to seperate the writers that are solid and credible (Where is BB?) from those that over-hype, over-reach and exaggerate the facts. One of the people that I have come to respect is James Turk. Although I don't personally know him, I usually agree with what he has to say. Along these lines, I was a pleasantly surprised by one of his very recent commentaries.

Snip:
The gold/silver ratio will not of course decline in a straight path, as is clear from the table immediately above. Silver is notoriously volatile, and understandably so. The competition for silver between its industrial demand and monetary demand can at times be intense, and volatility is often the result. But the point is, if I am right and the ratio falls, then perforce silver will outperform gold in the years ahead. That outperformance provides some reward to offset the risk from volatility one can expect from silver. end snip.

Thus, Mr. Turk now expects the gold-silver ratio to move in favor of silver as silver outperforms gold. So, yet another credible gold bull comes out on the side of silver.

*Sorry, no link given per forum guidelines.

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh24309_2006-01-08_21-11-30_n08309455_newsmlBUENOS AIRES, Argentina, Jan 8 (Reuters) - Argentina's Central Bank will begin buying euros in the foreign exchange market to help bolster its foreign reserves, which were sharply reduced to pay back the country's debt with the IMF, a Central Bank official said on Sunday.

...The government of President Nestor Kirchner slashed the bank's reserves last Tuesday to $18.5 billion from $28.05 billion previously, using the funds to pay its full $9.5 billion debt to the International Monetary Fund.

The Central Bank began diversifying its reserves several years ago to include euros, yens, sterling pounds and gold, as well as U.S. dollars. It now intends to continue that process.

^---(from url)---^

That's a riddance of $9.5 billion in dollar-reserves that it won't likely be rushing out to reacquire for its own sake.

Note also the growing prominence of gold appearing in reserve-related announcements such as this. And if you've been reading here for any length of time, you surely know why that is.

R.

YGM,

I've heard it said and there are days that I agree, Canada does not need gold. The theory goes that with the 2nd largest oil reserves in the world (after Saudi), bank reserves are indeed the oil reserves.

Canadian loonie backed by oil? Perhaps, check the strength of the CDN buck.

I would think that a Central Bank, of any stripe, must have reserves whether they be black or golden, yes?

Have a golden day Sir.

P.S. You are a Canuck yes? Have you heard this theory before?

Yep, I just knew that snip would catch your eye ! LOL !
C!

http://www.latimes.com/business/la-fi-chinabubble8jan08,0,7585034.story?coll=la-story-footer&track=morenewsafter a run-up fed by speculators, threatening a significant part of China's economy.

@ Ned,

"I've heard it said and there are days that I agree, Canada does not need gold."

One question. How many of those oil reserves actually "belong" to the Canadian CB?

Perhaps it's one thing for a CB to say "Our clients have reserves," and quite another to say "We have reserves."

I'd like to hear views on this from those who understand CB roles better than I do.

http://cgi.darwinawards.com/cgi/frames.pl?/main.htmlTotally off-topic, so I won't post any snips, but I know there are fans here, and the awards for 2005 are posted.

http://www.usagold.com/analysis/kosares-20060107.html"The implied threat imposes itself directly on the private investor who has no resources but his or her own were such a panic to unfold. If you haven't diversified into gold, now is the time. If you have diversified but still need to add more gold to your holdings, it is better to get the job done now than wait for a price correction. As the past week exemplified, the downturns are shallow with a quick bounce back to the upside. Don't play games with your future as this dangerous situation gathers momentum."...(see URL for more)

http://www.usagold.com/gold/special/dutch.html

January Buyers' Group

Special discount pricing on Dutch 10 Guilders

Shop online or phone for addtional savings.
Call today, save today!
1-800-869-5115

Let me take a very humble swing at your good questions....
Overview: Canada has about one-half the area of USA and (former) USSR, but only roughly ten per-cent of the population. Natural resources are abundant, running all the way from asbestos to zinc. People there are well-educated, energetic, and pretty much together. (Huge natural resources "owned" by a small population....think "rich".)

Energy resources are substantial, but much of that is reflected in tar sands. (Think oil shale, think BTU's in and BTU's out...) Then think of the abundant other minerals in that treasure chest--and we have a start on an answer to your question about oil-or-gold.

The function of their Central Bank, IMHO, should be to tweak the system of credit availability, interest rates, general governing policy, etc to see the temperature of the water is suitable for commerce and that lubrication is getting to the gear boxes.

Oil and other assets in the ground must be harvested in order to have tangible value. Profits are realized by selling all of those wonderful raw materials to a world parched for such stocks--or (better still) in the manufacture finished goods that sell for many times that markup.

Canada is doing both. Very well, IMO--and therein lies her greatest treasure of reserves. (Central Bank holdings are subject to being loaned, sold, etc (we all know the drill), and I am betting the true wealth of Canada will be reflected in the items I have mentioned. Much more can and should be said about this--a book, anyone?

Bottom line, because of these factors, I think the Loonie will appreciate about eight per-cent against the Dollar during 2006. We shall see. Good luck to our "cousins" up north!
Buongiorno!

I'm guessing. Reserves from an "access" point of view. Explain why Canada's currency is going up and is regarded as the "go to" currency of late while the greenback is a point of nervousness. Is lack of gold a function of this. Wondering out loud.

U.S. has "deep storage" gold?

Canada has "deep storage" oil?

http://www.mongabay.com/igapo/world_statistics_by_area.htmCanada is actually bigger than the USA by a wee bit. Canada has the second largest land mass in the world. FWIW

IS a resource & mineral productivity based Currency. This is always a deciding factor in the strength of our dollar, even w/o Gold reserves in the CB. The list of known in ground natural resources is second only to Russia and we all know the nightmare associated with doing business or extracting resources in Russia. Now Canada is fast becoming a world factor in the production Diamonds as well.

Just IOU's for future productivity. The (any) dollar is now only as good as what Joe Blow is going to produce next monday. IMHO

@ YGM--mia culpa! Mis read my Atlas. You are correct--
Buongiorno!

http://www.house.gov/paul/tst/tst2006/tst010906.htmSnip:-

When the federal government redistributes trillions of dollars from some Americans to others, countless special interests inevitably will fight for the money. The rise in corruption in Washington simply mirrors the rise in federal spending. The fundamental problem is not with campaigns or politicians primarily, but rather with popular support for the steady shift from a relatively limited, constitutional federal government to the huge leviathan of today.

We need to get money out of government. Only then will money not be important in politics.

End snip:-

Forgive me for sounding jaded, but how many politicians even have the political incentive, let alone the will, to even think of cutting more than token sums ? By Parkinson's Law, the engine of bureacracy can't be slowed - it keeps on going faster and faster till it runs out gas, at which point it stops altogether. The best we can hope for is that it doesn't fly off a curve before that happens.

http://isht.comdirect.de/html/detail/main.html?sTab=chart&hist=1d&sSym=GLD.FX1Note the now "classic" signature of the "COMIX" trading action.
Today the US$ was "pumped", or it would have hit $555 !
Sir Goldilox -- Please call me when the US$ breaks the 88.80 level and we shall celebrate !!
GO SPOT (Yellow that is !!)
<;-)

http://www.publicdebt.treas.gov/opd/opdpenny.htmFED - GUYNN: FEDERAL DEFICIT OUTLOOK 'VERY WORRISOME'

Official US Treasury funded debt soared by $US 237.6 Billion in the last quarter of calendar year 2005.

12/30/2005 $8,170
09/30/2005 $7,933
Net Increase 237

Annualized debt growth about 12% growth per year now compared to 3-4% GDP. Unsustainable.

Going to have to raise taxes on the rich soon and/or drastically cut xfer payments to the poor. Should be an exciting election year.

I'm still looking for a RICH MAN's panic similar to 1907, when they realize that ultimately, as US citizens they are the bagholders for this debt.

@ Federal_Reserves,

I think the growth in Caribbean banking and their "investment" in US T's is already indicative of that.

How many US contractors were in the CONgressional target sights for moving offshore to evade paying taxes to the trough they so willingly slop from?

http://sg.biz.yahoo.com/060109/15/3xr9z.htmlsnip:

LONDON (Dow Jones)--The world gold market is too small for China to achieve any meaningful diversification into the precious metal, leaving it likely the country will instead follow a more cautious, dollar-bound investment path, analysts said Monday.

Sentiment towards gold has been boosted since Friday, when it was reported that China may start to diversify its foreign exchange reserves away from the U.S. dollar and government bonds.

Hu Xiaolian, director OF China's State Administration of Foreign Exchange, said in a statement last week that the agency plans to "further improve the structure of currency assets in the foreign exchange reserve portfolio and continue to broaden foreign exchange reserves' investment channels."

Taken by many market participants to be a plan to move into gold, the precious metal jumped from an intraday low of $523.15/oz to around $540/oz as the possibility was widely welcomed by gold traders. The metal reached a fresh 25-year high of $544.40/oz Monday.

According to World Gold Council data, China has around 600 metric tons of gold in its holdings, about 1.1% of its total reserves. This ratio is tiny when compared with countries such as the Netherlands (722.4 tons or 51.3%) or the European Central Banks (719.9 tons or 20.6%), but closer to the gold reserves-holdings ratio of Japan (765.2 tons or 1.3%). But analysts remain skeptical over the likelihood of an aggressive move into gold.

"We view China's ability to raise gold holdings to a meaningful level for diversification as constrained, as the gold market is too small for this to happen without a serious price distortion," said Barclays Capital analyst Yingxi Yu.

"If it were to raise (its gold holdings from 1.1%) to 10%, it would absorb some 4,680 tons, or around two years of global mine production. Investing in other commodities like oil and base metals would be more possible, or the outcome could well be a combination of elements from different asset classes," she added.

To bring China in line with other international standards is unlikely, said HSBC analyst Alan Williamson.

"For China to raise its gold in reserves to the international average of 8.9% would require the purchase of an additional 3,613 tons," said Williamson. "For China to raise its gold in reserves to the ECB benchmark of 15% would require the purchase of an additional 6,501 tons," he added. By comparison, most European national banks have agreed to limit their total gold sales to 2,500 tons in the five-year Central Bank Gold Agreement, signed in 2004.

"The bulls in the market would argue that at a sharply higher gold price - an inevitability if China and/or Japan did begin to buy gold on the open market - the volumes required would be commensurately lower. Nevertheless, liquidity remains a key consideration," Williamson said, adding that his statistics are based on a gold price of $528/oz.

Williamson said it was more likely China would look at utilizing the gold reserves in a "more pro-active manner." "Rather than accumulating U.S. treasuries, for example, the Chinese government could use the reserves to secure energy and other commodity resources overseas."

But he pointed out that such a strategy isn't without its problems, as last year's attempted purchase of U.S. independent oil producer Unocal by Chinese oil company CNOOC proved. The $18 billion deal ran into significant political pressure in the U.S. and was abandoned last August, with Unocal subsequently purchased by Chevron in November, Williamson said.

A further problem comes from the fact that should China stop acquiring U.S. dollars with its reserves, the greenback would come under extreme pressure, something the Asian country has been keen to prevent in order to protect its export sector. For this reason, U.S. dollar-denominated treasuries and bonds look likely to remain the most desired assets for the Chinese, analysts believe.

Also, it's still uncertain whether or not increased volumes of gold changing hands at the gold fix in recent weeks are anything to do with Asian central banks buying gold.

"We have no way of knowing if this is true," said UBS analyst John Reade. "We have no evidence that central banks in the region are adding to gold reserves, but we noted a lot more interest in the metal than we have seen in recent years," Reade added.

Spot gold fixed in London Monday at $541.50/oz.

-Goldilox

Denial isn't just a river in Egypt.

Quite an nteresting thought:

Let me translate.

"China would like to add gold reserves, but it cannot because there is not enough supply."

There's a hidden message there - in that attempt to throw cold water on this rally - worth contemplating. The private investor, I am happy to say, is not caught in such a quandary, nor is he or she forced to hold dollars because the market cannot accomodate the demand.

Could Barclay's have argued more forcefully in favor of private gold ownership? We would be hard-pressed to come up with a more convincing argument than the one Barclays and Dow Jones makes while attempting raise the specter of the bear.

The message in the article is straightforward: China would like to get out of the dollar at some level, but it can't.

Now, what would you do if you were China? Commodities rising in an inflation induced price rally; shut out for the most part from acquiring commodity producing companies; and stuck with an ever-growing pile of fiat dollars to which history has consigned a dubious conclusion.

Let's just say that the whole gold rally doesn't come to a quick conclusion simply because an analyat at Barclay's with an accomodative last name proclaims that there's not enough gold available fro China to craft a dollar escape.

In fact, it persuasively argues the exact opposite.

Thanks for bringing the article forward.

For the scratches and reposts and then errors anyway. . .

Very busy here today.

Well i haven't posted for a while. But i was introduced to this site from a friend of mine back in 99'. Been reading it since faithfully. You guys still know what's really going on out there. THANKS for your continued input. I started buying physical at $280 and have been ever since. The best investment of a lifetime. Get it, it's still not too late to start.

cytek

@ MK,

Pretty weak, wasn't it.

I agree that the most telling part of the article was public recognition that China wants out of the dollar investment corner it is painted into.

The UnoCal offer was an interesting "test of the waters," but far be it from the largest country in the world to stop trying after that one political setback.

If they should replace the US and Canadian banks as the financier of choice for the miners, the HUI/XAU would probably achieve liftoff.

MK,

But what else is there, besides gold? If China buys other currencies, that action will drive those currencies up, affecting international trade and political relations. Moreover, other countries will become very leery if the Chinese bank/government tries to buy up national resources (commodities), or the companies which mine those resources. So, China has to put its trade surplus into something, and presumably some of that surplus will find its way to gold. Parking the money in gold is arguably safer politically and economically than in non-$US currencies, even if it drives up the gold price.

It may be that China will either have to import more, or export less, to put an end to accumulating dollars (and its trade surplus generally). India has developed without encountering the same problem, by keeping its international trade more in balance.

One other point: Chinese private demand. If the housing boom has popped, then private Chinese money will find its way to gold.

http://groups.yahoo.com/group/gata/message/3591The bad guys are whistling in the dark.


To subscribe to GATA's dispatches, send an e-mail to:

gata-subscribe@yahoogroups.com

Why, this market is too small concept is just silly. It's huge! Millions of ounces trade on the NYMEX all the time. Dang, last time gold got tight and Oil wanted to acquire gold, exchanges popped up everywhere with a major surplus of gold. Back then, the price dropped and, it seems, everyone that wanted gold got it.

Someone should inform that analyst that anyone can buy all the gold they want with a couple clicks of a mouse. Also, China would stand to make a little profit too. Just think, February contracts are really cheap and it doesn't take hardly any money to acquire them! I mean, really think about it, they could hedge the next trillion dollars of US deficit in all markets around the world for pennies on the dollar. Then, just sit back and let the gold roll in!

Hey, the Chinese even have their own gold markets. Someone should tell them to just go shopping and get out of the headlines! I mean really� we've got a booming economy to think about and no one in their right mind would question that. ;)

Ah ha ha ha ha ha ha ha� I hope everyone here has their own water rights.

Watch for China to move in directions unforeseen -- or perhaps foreshadowed by its actions in the past.

There is nothing to prevent China from contracting at the source. The pressure could come to the gold market from a different direction than the one anticipated.

Would China be desperately wounded by paying 125% of the current market price to buy gold?? 150%?? 200%??

Would China be desperately wounded by paying 125% of the current market price to buy gold?? 150%?? 200%??

Why, is that what they were offering you ?!! LOL !!

C!

http://www.forbes.com/markets/feeds/afx/2006/01/09/afx2435889.htmlsnip:

ING (AFX) - The Chinese yuan closed on the exchange-traded market at 8.0641 to the US dollar, ending the day at a post-revaluation high, according to traders.

The price rose from the close of 8.0668 on Friday, the previous trading day, as it strengthened against the dollar in the first day of its second week of trading under a new market-maker regime.

Today's central parity rate was set at 8.0665 to the dollar. The central bank allows a trading band of 0.3 pct on either side of the midpoint.

On Jan 4, China launched an over-the-counter system for the interbank foreign exchange market, allowing two market participants to make currency trades on credit without the intervention of a third party.

-Goldilox

Just some more FAT for the fire.

CNBC's Closing Bell Poll is:

Would you buy a car made in China?

Now see what we've done by shining a spotlight on all this China bruhaha!

Good point.

Can you please explain me how a papermarket, that has an UNLIMITED supply of paper, can fulfill delivery against a LIMITED amount of gold ?
For your information : once upon a time in '71 there was a UNLIMITED supply of paper that could no longer be mathematically converted against an LIMITED supply of gold...

http://www.usagold.com/gold/special/dutch.htmlThe Uncirculated King Willem coins have sold out. XF Kings and Unc Queen Wilhelmina still available in this discount allotment -- while supplies last.

R.

Smile! Hang on to your physical. Life will be good to you. And remember that once upon a time, the liquidity in the paper market drove the physical market price down.

It seems that China might be in a difficult position when it comes to finding gold. As MK points out, the easiest most private way to acquire might be to contract with the source. Another avenue is to go on vacation and go jewelry shopping! Let's see 155,000 tonnes exist, 30,000 tonnes locked up in central banks. That means that 80% of the gold in the world is free for them to buy. Don't you think the wife of the CB head in China would look nice in a 1 ounce 22k gold necklace from Tiffanys?

Time will be our guide.

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh42801_2006-01-09_16-35-28_n09159502_newsmlSAO PAULO, Brazil, Jan 9 (Reuters) - Brazil's central bank said on Monday it sold 8,800 currency swap contracts linked to short-term interest rates, canceling out about $417 million in debt instruments indexed to the dollar.

The auction marked the 31st time since November that the bank has offered such swaps...

^---(from url)----^

Like Argentina, the Brazillian central bank appears to have thrown out the old rulebook and looks poised, ready to play a new game for the days ahead. Any guesses how long before 'gold' is mentioned in association with Brazil, too?

R.

"SAO PAULO, Brazil, Jan 9 (Reuters) - Brazil's central bank said on Monday it sold 8,800 currency swap contracts linked to short-term interest rates, canceling out about $417 million in debt instruments indexed to the dollar."

TC,

Can you elaborate on this for the unititated? What is a "cuurenct swap", and how does it cancel out a debt?

Thanks,

-G

Sorry for the typos.

Procuring hard metal will enable China to pay for natural resources going forward which are denied to her today; e.g., Unocal. Having the gold enables the rules. If the price of gold is driven up to a relatively high (historical) level from Chinese buying and maintained there more/less, gold could be featured again and rightfully so in the forex showcase of sovereign nations. I am setting aside the Murphy/GATA argument as well as the freegold tautology.

If China buys metal at (relatively) reasonable prices indefinitely with USD-good. If Chinese buying (current) precipitates are paradigm shift in global monetary dynamics-good. Either scenario sees China playing the trump card.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

If you are considering investments in gold we invite you to request our freeintroductory information packet detailing the products and services offeredby USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and lookforward to working with you.

MONDAY Market Excerpts

January 9 (from Reuters) -- COMEX February gold contracts jumped$9.30 to $550.50, after trading between $536.50 and $551.40, the priciest for benchmark futures since March 1981.

Gold raced higher after a flurry of profit taking at the open, as bullish traders pushed the market up to retest highs from Asian and European trading. (Investors in Japan were absent due to a holiday but dealers and analysts noted fund buying from elsewhere in the region.)

"You saw fairly steady fund buying through most of the day, and you saw some dealer buying too," said Andy Montano, a director at ScotiaMocatta in Toronto. "It seemed to be more a sentiment move than anything else and there didn't seem to be any significant interest in selling, and so the buying just kept taking it upwards and upwards."

The day's rally in gold, an alternative to more traditional investments, was unusual in that it coincided with a strong stock market and with a firmer dollar in the afternoon. The Dow Jones Industrial average rose above 11,000 for the first time in 4-1/2 years.

"There seems to be some pretty good economic strength in the markets in general and that is giving rise, I would imagine, to some concerns over inflation," Montano added.

Market sentiment on gold is overwhelmingly bullish amid a positive supply/demand outlook for 2006 and as funds continue to diversify into commodities and away from currencies and the stock market to boost returns.

(from MarketWatch) -- The dollar has come under pressure in the past week from expectations that the Federal Reserve is approaching the end of its rate-raising cycle. At the same time, high energy prices have stoked inflation fears, bolstering demand for gold.

"We expect continuing record U.S. budget and trade deficits to weigh on the greenback," said P. Mark Smith, analyst with Dundee. "The greenback could weaken further and faster if Greenspan's replacement takes the chair and eliminates rate hikes or reduces rates."

Ben Bernanke is scheduled to take over as chairman of the Fed from Alan Greenspan at the end of January.

---(see url for full news, 24-hr newswire, market quotes)---

http://www.bahraintribune.com/ArticleDetail.asp?ArticleId=92864&CategoryId=5(Bahrain Tribune) January�10,�2006 -- ..."[Some] People have had for many years a very negative view of gold and that view is now changing.

"There is a lot of wealth creation in countries that have an affinity with gold," said Robin Edwards, president of UK-based Sabre Fund Management.

"People are allocating money to gold," he said.

^---(from url)---^

http://news.yahoo.com/s/nm/20060109/bs_nm/markets_precious_dc_4Ran into this Reuters report in my early evening reading. Though it worthwhile to pass along. Apologies if someone else has already posted it.
____________

There seems to be some pretty good economic strength in the markets in general and that is giving rise, I would imagine, to some concerns over inflation."

******At its peak, gold was up more than 5 percent from a week ago, 18 percent from some two months earlier and 30 percent from a year ago. The price has more than doubled in five years.******

Market talk that China and other central banks in Asia -- which jointly have $2.6 trillion in foreign currency assets -- might be looking to diversify some of their reserves into gold had underpinned sentiment since late last year.

China said on Thursday it planned to explore new ways of using the country's foreign exchange reserves and broadening their investment scope. It has 600 tonnes of gold in its reserves, accounting for only 1.2 percent of the total.

Dealers said worries about rising energy costs and general security concerns in the Middle East had prompted funds and investors to diversify away from equities, currencies and bonds.

"The market overall does look strong," said Frank Aburto, a broker at Rosenthal-Collins Group in New York. "I don't think it is going to collapse. Setbacks are an excuse to go into the market and go long, which is what the funds are doing at this point."

Analysts said speculative positions in the U.S. market were high but had been stable for the past four to five weeks and there was no pressure on market players to liquidate.

"Would China be desperately wounded by paying 125% of the current market price to buy gold?? 150%?? 200%??"

If China paid some multiple above the market price for gold, that would immediately BECOME the market price for gold.

http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=9495&sid=6178008&con_type=1&d_str=20060110Beijing gets key ally in Bolivia's Morales

Bolivian President-elect Evo Morales has declared China his ideological ally after inviting Beijing to help his country develop its vast gas reserves.

These deals were exclusive domain of US industry giants. Competition on this scale likely means great conflict ahead.

Anybody catch that one? China will buy resources with gold IMHO.

http://www.freemarketnews.com/Analysis/48/3393/2006-01-09.asp?wid=48∋d=3393Could there be a Head and Shoulders in the daily chart? Seems to look that way. The weekly and monthly charts seem to express that the dollar will get support for a couple more months before the big squeeze hits it. But, that seems to go against the emotion that's stirring the world.

All you paper pushers, keep in mind that it takes time to convert into physical. Figure out your timeline you may find that it's 2 or 3 weeks at the fastest.

Physical gold holders will be the only ones that will be able to afford to buy resources.

"If China paid some multiple above the market price for gold, that would immediately BECOME the market price for gold." - Hector

But how could that happen - IF they, and those private ones whom they purchase It from, agree to keep silence, precious? One has never had to pay market price for It...perhaps this is where the sseparation of It from the paper-market price begins? Or has begun?

S.

@ Flatliner,

Sort of amounts to an evolution from paper swaps to resource swaps.

The spinsters can call it what they will, but "backing" is in, even if it doesn't manifest itself as "currency backing".

Still hoping TC has the time and inclination to explain "debt swaps" to those of us (me, in particular) not familiar with that terminology.

http://earthquake.usgs.gov/recenteqsww/Somewhat tangential, but interesting that there is a large cluster of late in Alaska and the Andes, both resource rich regions. Not meant to propound any conspiracy theories, as resources do tend to surface in tectonically active regions.

If EQ activity is in a rising cycle, the mining industry may experience indications of it earlier than others.

http://www.truthout.org/docs_2006/010906I.shtmlSnip.


Monday 09 January 2006

The wires have been humming since before the New Year with reports that the Bush administration is planning an attack on Iran. "The Bush administration is preparing its NATO allies for a possible military strike against suspected nuclear sites in Iran in the New Year, according to German media reports, reinforcing similar earlier suggestions in the Turkish media," reported UPI on December 30th.

"The Berlin daily Der Tagesspiegel this week," continued UPI, "quoted 'NATO intelligence sources' who claimed that the NATO allies had been informed that the United States is currently investigating all possibilities of bringing the mullah-led regime into line, including military options. This 'all options are open' line has been President George W Bush's publicly stated policy throughout the past 18 months."

An examination of the ramifications of such an attack is desperately in order.

1. Blowback in Iraq

The recent elections in Iraq were dominated by an amalgam of religiously fundamentalist Shi'ite organizations, principally the Dawa Party and the Supreme Council for Islamic Revolution in Iraq (SCIRI). Both Dawa and SCIRI have umbilical connections to the fundamentalist Shi'ite leadership in Iran that go back decades. In essence, Iran now owns a significant portion of the Iraqi government.

Should the United States undertake military action against Iran, the ramifications in Iraq would be immediate and extreme.

In the first eight days of January, eighteen US troops have been killed in Iraq, compounded by another twelve deaths from a Black Hawk helicopter crash on Saturday. Much of the violence aimed at American forces is coming from disgruntled Sunni factions that have their own militias, believe the last elections were a sham, and hold little political power in the government.

If the US attacks Iran, it is probable that American forces - already taxed by attacks from Sunni factions - will also face reprisal attacks in Iraq from Shi'ite factions loyal to Iran. The result will be a dramatic escalation in US and civilian casualties, US forces will be required to bunker themselves further into their bases, and US forces will find themselves required to fight the very government they just finished helping into power. Iraq, already a seething cauldron, will sink further into chaos.

2. Iran's Armaments

Unlike Iraq, Iran has not spent the last fifteen years having its conventional forces worn down by grueling sanctions, repeated attacks, and two American-led wars. While Iran's conventional army is not what it was during the heyday of the Iran-Iraq war - their armaments have deteriorated and the veterans of that last war have retired - the nation enjoys substantial military strength nonetheless.

According to a report issued by the Center for Strategic and International Studies in December of 2004, Iran "has some 540,000 men under arms and over 350,000 reserves. They include 120,000 Iranian Revolutionary Guards trained for land and naval asymmetrical warfare. Iran's military also includes holdings of 1,613 main battle tanks, 21,600 other armored fighting vehicles, 3,200 artillery weapons, 306 combat aircraft, 60 attack helicopters, 3 submarines, 59 surface combatants, and 10 amphibious ships."

"Iran is now the only regional military power that poses a significant conventional military threat to Gulf stability," continued the CSIS report. "Iran has significant capabilities for asymmetric warfare, and poses the additional threat of proliferation. There is considerable evidence that it is developing both a long-range missile force and a range of weapons of mass destruction. It has never properly declared its holdings of chemical weapons, and the status of its biological weapons programs is unknown."

A MILNET brief issued in February 2005 reports, "Due to its position astride the Persian Gulf, Iran has constantly been a threat to the Gulf. The so called 'Tanker' wars in the late 1980s put Iran squarely in the bullseye of all nations seeking to transport oil out of the region. Even the small navy that Iran puts to sea is capable enough to harass shipping, and several cases of small boat operations against oil well heads in the Gulf during that period made it clear small asymmetrical tactics of the Iranian Navy could be quite effective."

"More concerning," continued the MILNET brief, "is the priority placed on expanding and modernizing its Navy. The CSIS report cites numerous areas where Iran has funded modernization including the most troublesome aspect, anti-shipping cruise missiles: 'Iran has obtained new anti-ship missiles and missile patrol craft from China, midget submarines from North Korea, submarines from Russia, and modern mines.'"

It is Iran's missile armaments that pose the greatest concern for American forces in the Gulf, especially for the US Navy. Iran's coast facing the Persian Gulf is a looming wall of mountains that look down upon any naval forces arrayed in those waters. The Gulf itself only has one exit, the Strait of Hormuz, which is also dominated by the mountainous Iranian coastline. In essence, Iran holds the high ground in the Gulf. Missile batteries arrayed in those mountains could raise bloody havoc with any fleet deployed below.

Of all the missiles in Iran's armament, the most dangerous is the Russian-made SS-N-22 Sunburn. These missiles are, simply, the fastest anti-ship weapons on the planet. The Sunburn can reach Mach 3 at high altitude. Its maximum low-altitude speed is Mach 2.2, some three times faster than the American-made Harpoon. The Sunburn takes two short minutes to cover its full range. The missile's manufacturers state that one or two missiles could cripple a destroyer, and five missiles could sink a 20,000 ton ship. The Sunburn is also superior to the Exocet missile. Recall that it was two Exocets that ripped the USS Stark to shreds in 1987, killing 37 sailors. The Stark could not see them to stop them.

The US aircraft carrier Theodore Roosevelt is currently deployed in the Persian Gulf, with some 7,000 souls aboard. Sailing with the Roosevelt is the Tarawa Expeditionary Strike Force, which includes the USS Tarawa, the USS Austin, and the USS Pearl Harbor. The USS Austin is likewise deployed in the Gulf. The Sunburn missile, with its incredible speed and ability to avoid radar detection, would do terrible damage these ships if Iran chooses to retaliate in the Gulf after an American attack within its borders.

Beyond the naval threat is the possibility of Iran throwing its military muscle into the ongoing struggle in Iraq. Currently, the US is facing an asymmetrical attack from groups wielding small arms, shoulder-fired grenades and roadside bombs. The vaunted American military has suffered 2,210 deaths and tens of thousands of wounded from this form of warfare. The occupation of Iraq has become a guerrilla war, a siege that has lasted more than a thousand days. If Iran decides to throw any or all of its 23,000 armored fighting vehicles, along with any or all of its nearly million-strong army, into the Iraq fray, the situation in the Middle East could become unspeakably dire.



Druid: March, shaping up to be one hell of a month.

@ Smeagol,

As we saw in Another's theories on the gold-oil trade in the ME, that depends very much on who they obtain it from and how public the sale information is.

I would not put it past TPTB to arrange for them to get more than announced, IAOF (if, and only if) they publicly sell some on the open market to keep the price in check.

Not a supportable hypothesis - pure speculation.

-G

Greetings Druid, The usagold forum no longer has open topics. Linking to commentary is probably ok.

http://www.financialsense.com/Market/wrapup.htmsnip:

For those of you who have not been paying attention, there has been a considerable amount written recently about the Fed's announcement to "abolish" the publication of M3 [money supply] data. Most of what is being written centers on the notion that M3 data is going to be withheld to mask visible statistical manifestations of INFLATION.

With the past couple of Mondays falling close on the heels of first Christmas � and then New Years � I've had the occasion to read up a little more on this topic than usual. To kick off the New Year, here are a few snippets of what I've been reading.

Just The Facts�Nothing But The Facts

Last week market pundit - Peter Grandich, gave us his take on a statement by China's foreign exchange regulator re: rebalancing reserves,

Put this statement somewhere and look back in a few years and you will have in your hands a part of history. What this statement says, IMHO, is that China's rapidly-growing foreign exchange reserve, of which an estimated 70 percent is invested in U.S. dollar assets, is going to move away from the U.S. dollar and government bonds and into other areas (one of which, I believe, is gold and why gold has been rallying so strongly).

I wholly concur with Mr. Grandich's sentiment about the significance of this �announcement� and I also share the view that most of the main stream media has been negligent in reporting its importance.

Inflation For The Nation�..And The Rest of the World Too!

Another notable and highly relevant piece that �caught my eye� was Robert McHugh's most recent offering, The Fed's Money Supply Armament is Underway. In this well timed, well researched effort McHugh gets at the heart of the soon to be discontinued M3 issue when he reveals,

M-3 has been launched into outer space, up another $56.3 billion last week, up $92.4 billion over the past two. This is some real horsepower. Over six weeks, the meaningless figure, ahem, is up $177.8 billion. These annualized growth rates are 28.7 percent, 23.6 percent, and 15.3 percent respectively. Those are the seasonally adjusted figures. The raw, non-seasonally adjusted, figure is up $293.3 billion over the past 12 weeks, on a pace to add 1.2 trillion in money to the economy. Wow. There must be a need for this. Maybe the master Planners see a coming need to monetize our debt? To support markets? They tell us the economy is good, so clearly they cannot be stimulating our way out of a recession. There's a lot of money flooding the economy and it has to go somewhere. Right now it is lifting markets.

That's right folks � soon to be discontinued money supply data ALREADY showing annualized growth rates in excess of 28% - and the Fed would have us all believe that this is a non event. McHugh opines that the "master Planners" perhaps see a coming need to further monetize [the] our debt?

In another brilliant piece of reporting, Jim Willie points out how "official" reported GDP figures and estimates are at odds with empirical realities in interest rates [inverted yield curve] and miss the mark by purposely �underreporting current inflation,�

�.All this blizzard of evidence must be placed against a backdrop of an inverted Treasury yield curve. The 5-yr TBill yield is still below both the 2-yr and the 10-yr TBill yield. The bond market has it right, and fully contradicts the corrupted manhandled falsified GDP economic growth statistic�.. It was mostly price inflation, not removed properly, then labeled as growth, aided by hedonic lifts to technology spending, compounded by chain weighting.

Slippery When Wet

I've already pointed out the coincidental timing of the cancellation of M3 data and the planned beginning of trade of Iran's new Petro-Euro Oil Bourse. Recent empirical observations include the following:

The stock market continues to rise - even in the face of tepid job growth numbers.

The price of oil has resumed it's upward climb.

The price of host of other commodities [including gold] has done the same.

Market pundits [like Peter Grandick] are pointing out that the U.S. dollar has now 'put in a technically significant double top.'

All Roads Lead To Rome?

With so much that I read and experience in the real world pointing to the likelihood of a pronounced bout with hyper-inflation in the near future � I thought it would be more than fitting to review an invaluable piece I came across recently, penned by Eric Englund - and titled, Surviving Hyperinflation.

If, and when a hyperinflationary scenario truly unfolds, this paper and related links should serve as perhaps a blueprint or at least a roadmap � providing �big picture guidance� to entrepreneurs, managers and individual investors alike since � in the New Year - we will all likely come �face to face� with the true WMD [Weapon of Mass Destruction]:

Goldilox

Rob ends the article with a picture of his proposed WMD. Well worth the click!

http://www.truthout.org/docs_2006/010906I.shtmlSnip..

Conclusion: Is Any of This Possible?

The question must be put as directly as possible: what manner of maniac would undertake a path so fraught with peril and potential economic catastrophe? It is difficult to imagine a justification for any action that could envelop the United States in a military and economic conflict with Iraq, Iran, Syria and China simultaneously.

Iran is suspected by many nations of working towards the development of nuclear weapons, but even this justification has been tossed into a cocked hat. Recently, Russian president Vladimir Putin bluntly stated that Iran is not developing its nuclear capability for any reasons beyond peaceful energy creation, and pledged to continue assisting Iran in this endeavor. Therefore, any attack upon Iran's nuclear facilities will bring Russia into the mess. Iran also stands accused of aiding terrorism across the globe. The dangers implicit in any attack upon that nation, however, seem to significantly offset whatever gains could be made in the so-called "War on Terror."

Unfortunately, all the dangers in the world are no match for the self-assurance of a bubble-encased zealot. What manner of maniac would undertake such a dangerous course? Look no further than 1600 Pennsylvania Avenue.

George W. Bush and his administration have consistently undertaken incredibly dangerous courses of action in order to garner political power on the home front. Recall the multiple terror threats lobbed out by the administration whenever damaging political news appeared in the media. More significantly, recall Iraq. Karl Rove, Bush's most senior advisor, notoriously told Republicans on the ballot during the 2002 midterms to "run on the war." The invasion of Iraq provided marvelous political cover for the GOP not only during those midterms, but during the 2004 Presidential election.

What kind of political cover would be gained from an attack on Iran, and from the diversion of attention to that attack? The answer lies in one now-familiar name: Jack Abramoff. The Abramoff scandal threatens to subsume all the hard-fought GOP gains in Congress, and the 2006 midterms are less than a year away.

Is any of this a probability? Logic says no, but logic seldom plays any part in modern American politics. All arguments that the Bush administration would be insane to attack Iran and risk a global conflagration for the sake of political cover run into one unavoidable truth.

They did it once already in Iraq.

Articfox, the forum rules have changed.
Link political commentary in your post, but the forum is no longer the place to post it.

http://www.rense.com/general69/dayone.htmThis article, which is credible to me, predicts that gold would go up $120 on the first day of a war on Iran. Thus a discussion about an attack on Iran is quite appropriate for this forum. The article is written by Douglas Herman.

@Arcticfox,

Not debating the article itself, it doesn't belong here without economic linkage. Better expressed as a linked reference with posted material focused on on economic effects of deeper war entanglement.

One source I have read (proprietarily non-postable) suggests that another "front" may cost the US as much as a 1/3 dumping of the US economy, perhaps not far off considering Rob Kirby's 28% M3 growth posted below, should major foreign sources stop absorbing US debt in response.

It is quite possible, given the M3 reporting halt, and other inflation obfuscation, that the paper engines of war finance are already pumping liquidity to fund the expectation of further entanglement. Diplomatic solutions might actually be rendered economically unacceptable at this point, because forcing that liquidity into other than "defense" resources would tend to have serious bubble-creating effects.

When the effects of that "paper deluge" are manifest, gold-in-hand will be pretty much a no-brainer.

As I've posted before I believe (at least I want to believe) that Iran's posturing about its nuclear program doesn't make sense unless they are creating a bargaining chip to gain leverage for other efforts such as denominating oil in Euros. After watching Afghanistan and Iraq invaded I cannot believe Iran's leaders would yank GWB's chain so hard with their provocative nuclear and oil programs. Iran has also alarmed "moderate" European leaders with their nuclear posturing and these are their major oil customers. It would make sense for them to abandon their nuclear weapons program, restore good relations with Europe and defuse US objections to Euro/oil markets.
Ultimately, oil is a stronger weapon (relative to the US and Europe) for Iran than nuclear will ever be.
Finally, if Iran were truly trying to develop nuclear weapons why in the world would they want to bluster about it?
Iran's oil for Euros will put another nail in the $ coffin and be far more effective than inviting worldwide nuclear angst and possible repraisal. Whichever way they go gold will benefit.

http://www.urbansurvival.com/week.htmsnip"

George, when will the fat lady sing? Soon. Too soon. It would be much preferable for the people of the world if the Federal Reserve and World Banks could continuously monetize all of the enormous debt, pension, and entitlement obligations that has been created by the historically anomalous continuous yearly positive GDP growth that has linearly occurred through debt expansion during the last fifty years- but that will and cannot not happen. As long as there is a significant private sector subject to the conditions of profit need, ongoing consumption of goods and services, employee wages, and their own pension obligations - self feedback macroeconomic corrections will inevitably occur.

GM is the prototype of of a formerly great private enterprise undergoing feedback collapse. Its debt burden and pension obligations are too great; its profit margins are collapsing as Asian engineers produce a better product, competitive even with the added cost of transoceanic shipping. The overproduced housing industry will soon follow as ongoing consumption of its widgets is being limited by the wages of entry level service workers who must pay annual property taxes on overvalued domiciles. Debt must be serviced and the co-conditions of the wages, cost of living, and debt load of bottom feeders who provide the pyramidal base support for the various speculative bubbles will effect the immutable feedback that rights the imbalances.

-Goldilox

Yes, "it IS the economy, stupid." When the tapped-out US consumer can no longer hold up the manufacturing base - never mind that their own job base has been gutted by globalism - the consumer of last resort is always the military. Besides, Hummers yield a much greater profit margin than Camaros, and their life expectancy makes the most planned-obsolesence advocate drool Pavlovian.

As the French President of Nissan told CNBC yesterday, when asked if the US automakers' trroubles were the reason he turned down offers to join them, "GM can and will be fixed".

Given the global economic quagmire, peace may not be an option for the "paper tigers."

Rick Santelli just reminded viewers to remember when looking at commodities, be they metallic, foodstuffs, or oil, that the commodities markets can be generally described as small markets with big players.

Sounds like a man who expects some major volatility ahead!

http://www.financialsense.com/editorials/fekete/2006/0109.htmlsnip:

Specter of the Gold Standard

A specter haunts executive mansions, chambers of legislatures, and halls of universities: the ghost of the gold standard. Governments and academia have utterly failed in discharging their sacred duty to provide a serene environment for the search for and dissemination of truth regarding economics in general and monetary science in particular.

This failure has to do, first and foremost, with the incestuous financing of scientific research ever since the Federal Reserve System was launched in the United States in 1913. The formula for distributing the profits and undivided surpluses of the Federal Reserve banks has made it possible for the United States Treasury to grab the lion's share (in spite of explicit prohibition of Treasury participation in the earnings of these banks by the Federal Reserve Act as amended), with far-reaching consequences. As a result the bond market has been reduced to a gambling casino where shills, in order to whip up gambling frenzy, conspicuously make obscene gains at the gaming tables.

Check-Kiting by Another Name

But unknown to the public, at the end of the day the shills (the Federal Reserve banks) are obliged to hand over their gains to the casino owner (the United States Treasury). There is nothing open about what is euphemistically called "open market operations" of the Federal Reserve. It is in fact a covert conspiratorial operation. It has come about through unlawful delegation of power without imposing countervailing responsibilities. It was never authorized by the Federal Reserve Act of 1913. It defies the principle of checks and balances. It is immoral. It is the most lucrative business second only to highway robbery. It is a formula to corrupt and ultimately to destroy the republic.

Even though later amendments to the Federal Reserve Act retroactively authorized it, the constitutionality of open market operation has never been put to the test. It is clear that such an examination would not be in the interest of the conspirators, and they would use every means at their disposal to prevent it. The folksy name for open market operations is check-kiting, whereby two conspiring parties issue obligations that neither one has the intention or the means to honor but, when they come up for payment, the phantom obligation of one party is covered with that of the other.

Incest in Financing Research

The side effect that concerns us here most is the fact that the junior partner in the conspiracy, the Federal Reserve, can only increase its share of the loot beyond the mandated limit of 6 percent per annum of subscribed capital if it increases its power in a way not measurable in dollars. It can readily do so by beefing up its "support" of research, namely, by spending pre-distribution dollars in making grants to anybody pretending to be able to write awe-inspiring, mathematically convoluted, nonetheless vacuous, papers on macroeconomics, or anything else of which the fraudulence and charlatanism is hard to detect.

As a result of this immoral way of financing research a veritable deluge of worthless papers has glutted the technical literature on money which has one common earmark: they all attempt to defend the indefensible. They try to defend the issuance of irredeemable promises to pay: the bonds issued by the Treasury and the Federal Reserve notes issued by the Federal Reserve banks. Thus, then, the basis for money creation is the flimsy check-kiting scheme whereby the Federal Reserve banks buy the bonds with the notes while the Treasury uses the notes to pay the bondholders at maturity. The bond is supposed to have value because it is �redeemable� in the note which, in turn, is supposed to have value because it is �backed� by the bond. In effect both instruments are irredeemable and both lack backing in the form of any verifiable wealth. At the heart of the money-creating process, however explained, analyzed or defended, is the stubborn fact that both the Treasury and the Federal Reserve banks are privileged to issue obligations that they have neither the intention nor the means to honor. For any other would-be check-kiters the running of such a scheme would constitute a crime dealt with by the Criminal Code.

This double standard of justice has, of course, an immensely demoralizing effect. But what concerns us here is that the grant departments of the Federal Reserve banks have effectively put themselves in charge of deciding what should and what should not be researched on the subject of money. While they control research on money directly, they control the appointment of heads of economics department and directors of research institutions and other think-tanks indirectly.

This incest in financing research stands without precedent in the entire history of science to the eternal shame of our "enlightened" age, regardless what yardstick we may choose to measure it, of which the dollar amounts of grant money is only the most conspicuous, but we should not ignore the more subtle yet more persuasive methods of arm-twisting: bribe and blackmail.

Crime of Omission

The hijacking of the agenda for economic research has resulted in a distortion of traditional values. The new values favor ephemeral knowledge, short-horizon planning, consumerism, debt-creation without seeing how it will be retired, instant gratification, marginalization of savings, scientific charlatanism, spreading half truths and even outright falsehoods, while discriminating against durable knowledge, time-honored scientific values, work-hard/save-hard ethics, long-horizon planning. It is no less a crime of omission than it is a crime of commission, as revealed by the following.

Support for research on the merit of metallic monetary standards as a political arrangement of placing the power to create and to extinguish money directly into the hands of the people, rather than into the hands of elected representatives or appointed agents, in conformity with the demands of the U.S. Constitution, is nil.

Support for research on the burning question of the "sudden death syndrome" as it affects irredeemable currencies with a deadly 100 percent efficiency, is zero.

Support for research on the question of legality of the open market operations by the Federal Reserve as it was surreptitiously and illegally introduced and retroactively authorized, is unavailable.

Support for research on the scientific foundation of accounting and on the necessity of taking great pains to make the sharpest possible distinction between an asset and a liability, capital and credit, debt owing and debt owning, is naught, in contrast with generous support for research purporting to justify the practice of shunting items in the balance sheet of governments from the liability to the asset column.

Support for research on the code of inspecting financial statements in order to prevent overstating assets and understating liabilities, even in the balance sheet of banks, is non-existent.

Support for the scientific examination of the curious tenet that it is possible to increase the volume of unpaid and unpayable debt in the world indefinitely, is denied.

Support for the examination of the question whether the issuance of promises to pay which the issuer has neither the intention nor the means to honor can have any justification, is not available.

Inflicting Irredeemable Currency on the People

The above short list already makes it abundantly clear that something is woefully amiss with the principle of granting unlimited power, not subject to advice and consent, still less to control, review or withdrawal by the public, empowering one particular agency not only to issue purchasing media but also to direct, permit or inhibit all scientific research pertaining to the question of its own activity of issuing the purchasing media.

It is a sad commentary on the corruption of the flow of funds in support of research that neither a single court of justice, nor a single accredited university in the entire world has found it possible to place the justification for a world-wide regime of irredeemable currency on its agenda, after thirty-five years of unprecedented economic and financial devastation, including the decimation of the purchasing power of all the currencies of the world, and the even more vicious decimation of the market value of all the bonds in the world, directly attributable to that regime.

It was this corruption of financing research that has disabled the immune system of society, that has made economics and monetary science open to the invasion of quackery and chicanery, ensuring that the success of the final assault on sound money would be a foregone conclusion. In the end the government of the United States could inflict irredeemable currency not only on its own subjects, but on the people of the rest of the world as well, without meeting any significant resistance.

Integrity of Financial Journalism

It speaks volumes about its integrity that financial journalism has failed to alert the public to the imminent danger of a credit collapse arising out of the universal use of irredeemable currency which the governments of the world have blithely embraced and foisted upon their subjects, without bothering to examine the scientific and juridical arguments against it. In previous instances of experiments with this type of currency sane and self-respecting governments have always resisted the temptation of siren song to join others living in financial backwater. Whenever weak governments came to their senses and wanted to return to the path of monetary rectitude, there was no lack of countries around on the gold standard to lend them a helping hand.

No such luck this time. The world is a rudderless ship on uncharted waters, and the storm is fast approaching. When it strikes, it will be "everybody for himself". No helping hand will assist survivors. All defenses against this type of disaster have been dismantled, and all life savers cast overboard, thanks to the diligence of the grants departments of the Federal Reserve banks.

Not only have financial journalists failed to alert the people of the dangers they are facing under the regime of irredeemable currency, they keep adding insult to injury. They lionize the Wonderful Wizard of US, King Alan who, unlike King Canute, has been able to order the tide of inflation back. Maybe after disaster has struck, it will be blamed on the �early� retirement of the Wizard.

-Goldilox

Not a pretty picture, especially as you progress further in the article.

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Peter Schiff of Euro Pacific Capital is telling CNBC that the Dollar's fate has been sealed. He reminds the viewers that in 2000, when the DOW first hit 11K, it represented 45 oz of gold, while today's 11k mark represents 20 oz of gold. In his view, gold isn't rallying, so much as the value of inflated paper trading vehicles continues to cave in.

DOW2006 (11k) = 45% of DOW2000 (11k)

Couldn't have said it better myself.

Sounds like a pretty smart guy, even if the CNC dodo kept reminding him that "Warren Buffett lost his shirt in dollar shorts last year."

Too small for having CBs accumulate enough goldmetal reserves...
Utterly nonsense, of course : The financial media cartels got the political message >>> If there is not enough goldmetal...let its price go up as to "revalue" the existing stashes !
That's why the goldprice decoupled from the - dollar exchange rate - !!! And that's why gold is heading for its - reserve - function !!!

And it is exactly because there is not enough goldmetal that gold is appropiate as universal reserve.

This is NOT another ***goldprice-rally*** but the start of gold's revaluation process.

It is because the market of fiat currencies is unlimited, that fiat units cannot function as a reserve.
Today, gold isn't functioning as an insurance, because the fiat markets are already heating up towards ignition temperature. The M3 thermometer must be removed so that pink pigs can fly.

This will become much clearer when POG goes beyond $600/Oz !

During the past 25 years, goldmetal has been redistributed and now the gold-owners want to revalue it.

Didn't our missing Trail Guide once state along while back that there were quiet Gold transactions that take place periodicly at prices far above the quoted spot price? I'm sure he did.

http://atimes.com/atimes/Central_Asia/HA11Ag01.html"In addition, there is an important angle of economic competition over Iranian resources and access to Iranian markets. Russia continues to believe that Western concerns about nuclear proliferation merely reflect commercial interests to drive Russia out of competitive markets. In September 2003, for instance, in his interview with Western journalists, Russian President Vladimir Putin stated: "According to our information, many Western European and American companies cooperate with Iran either directly or through intermediary organizations in the nuclear sphere."

To substantiate the Kremlin's claims about the commercial nature of Washington's pressures, some Russian analysts argued that, even in the absence of official contracts, US-Iranian trade turnover was about US$1 billion, which was higher than that of Russia, despite the Russia-Iran strategic partnership agreement. The analysts also pointed out that immediately before the Islamic revolution in Iran, Washington and Tehran had signed a contract worth $24 billion, which provided for US assistance in constructing eight nuclear power plants in Iran within 10 years."

Google search "Iranian News Papers":

http://www.onlinenewspapers.com/iran.htm - great list.
http://www.tehranglobe.com/ - Found snip above.

It is sometimes interesting to view the world from a different propaganda source. Here in the US, there doesn't seem to be anything but unfavorable news regarding Iran. Writing is everywhere stating what the intent is behind their movements. But, is it one sided? I don't know. But it is interesting to stand objectively aside for a few minutes every once in a while and put a search engine to work on the web.

How this all relates to gold? Well, it seems to me that the real reason behind what's going on is financial and unfortunately Iran seems to be caught in the crossfire.

Buy physical gold and guard it well. You may find your house worth billions of dollars in the near future but find it nearly impossible to drive to the store.

There is between five and ten times the amount of gold above ground,and most has been kept hidden.This has been aquired in the past three centuries in many ways.Because gold is real wealth,and has power it must be hidden from view and also from taxation.It is in a few hands and gives control over states and kings.When a few persons have so much control they become kings, but still hidden from the people with puppets installed to work from behinded the scenes.This is a vast subject of which gold is a small part, but will become more important in the next few years.Just a few lines from a newcomer,thanks.

CNBC just did a bit on the Coin show going on in Santa Clara. No mention of our gracious hosts, however.

But imagine Sue's "Wow" when the prices of some earlier US gold pieces were revealed.

Like, DUH!

http://www.usagold.com/GoldTrail/archives/ANOTHER1.htmlWhen I re-read this clip from Oct 1997, I can't help but wonder who HK was? Didn't the region of in South China return to Chinese rule on July 1st 1997? Isn't that southern region that of � Hong Kong? Could it be that in �97 they (HK) got an education with regards to how you acquire large quantities of gold without driving the price up? (I don't know, I'm just guessing) But, if HK is Hong Kong, I would be willing to bet that they have already acquired what they *needed*. This would also give support to what Belgian keeps saying with regards to us being in the re-valuing phase.

Now, it will be interesting to see how it's revalued. Could it be that enough mine supply just doesn't make it to the public market? That would be my guess, but we shall see. We've been told publicly that South Africa's production numbers are down. Could it really be that the public supply is down but the private supply isn't? (Is it possible to research something like this) When Russia says that it will acquire more, are they really saying that mine supply will not find its way into public markets?

Just coins for Thoughts�

SNIP:
Date: Sun Oct 12 1997 10:42
ANOTHER (THOUGHTS!) ID#60253:
How DO they do it?

It's more complicated than this but here is a close explanation. In the beginning the CBs didn't sell their own gold. They ( thru third party ) found someone else who had bullion. That "party" sold to a broker who sold forward for a mine or speculator or government ) . In the end the 3rd party had the backing from the broker that he had backing from the CB to supply physical if needed to put out a fire. The CB held a very private note from the broker as insurance and was paid a small fee. This process mobilized free standing bullion outside the government stockpiles. The world currency gold price was kept down as large existing physical stockpiles were replaced by notes of future delivery from the merchant banks ( and anyone else who wanted to play ) .

This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT IT'S MOVEMENT TO BE SEEN! Why not move a little closer to the action by offering cash directly to the broker/bank ( to be lent out ) in return for a future gold note that was indirectly backed by the CBs. That "paper gold" was just like gold in the bank. The CBs liked it because no one had to move gold and it took BIG buying power off the market that would have gunned the price! It also worked well as a vehicle to cycle oil wealth for gold as a complete paper deal.

Are you with me?

Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff. From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer.

This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history. Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover whats out there. To use the Queens English "it ain't gona happen dude"!

Everything is now upside down and reversed. The more the CBs sell outright the more the price will rise.

It's not a bearish sign anymore. They will now sell to keep the price rising slowly.

What of those T-bonds and the US$?

More later.

:END SNIP

Well, Murphy at the Cafe keeps on mentioning a large buyer called "Stalker" (and now a number of little "Stalkers" too) from Asia, so this might be one and the same entity. I'd take a small bet it's not Henry Kissinger, at any rate ....
C!

It speaks for itself that a substantial amount of goldmetal (tonnes) is often transfered for much more (indirect) "value" than the the dayprice of gold indicates. An example : During the period of sanctions against South Africa, a lot of goldmetal moved in exchange for much needed oil that couldn't reach SA. Those were the days that secrets were not "that" secret.

Oil and gas, also have many different prices ! Recent examples are found in Russian resources that flow to different parties at much different prices (Oekraine -etc).

That's why gold and oil are called "political" tangibles. Energy and gold are both "state-affairs" and the official market price we see, is a price indication for the general public, us the schrimps.

And if gold is shared amongst many states, through redistribution, to participate all together the gold-wealth-reserve concept...gold has been exchanged for much more future "value" than the present price is suggesting !

$600 and euro 480 per ounce, are the prices that are adjusted for "official" (!!!) price-inflation for the US and EU. All in line with the past 35 years of official goldprice management. Once the POG passes through $600/Oz (in '06) we have lift off for the gold=wealth reserve concept shared by those who whish to align with EMU.

Watch how the POO is (subtly) forcing the POG to go higher.
Watch how the goldmine prices definitely have lost their former (traditional) leverage to the POG. Good sign that the present goldprice is "managed" by other forces than was the case during the past 3 decades. Russia AND China have substantial amounts of underground gold. They do now what other gold states never did >>> Value their underground gold reserves before having mined/refined it.
It is not the 50 billion mining industry that has any importance, but gold the metal has when stored under another goldregime. Asians, nor Russians are holding goldmine shares. And if goldmining stops tomorrow, the goldmetal trade is not going to stop trading !

Bear in mind that the bulk of goldmines are already state controlled and have no grip at all on the price of their product.
It is the financial industry that continues to make the general public believe that the world's goldprice is a market fenomenon. IT IS NOT !!!

Amen.

http://today.reuters.com/news/newsArticleSearch.aspx?storyID=167044+10-Jan-2006+RTRS&srch=goldThere you have it folks. Atul Parkash is the person of the hour. We can all rest now knowing that there is no evidence that central banks are buying gold and that they just don't make decisions fast enough anyway.

Hey, this guy also seems to know exactly how much gold the US holds. Someone should get this guy on the horn and find out the actual numbers. :)

Full article included below. (Sorry about the length.)

---
By Atul Prakash
LONDON, Jan 10 (Reuters) - Central banks are unlikely to rush to diversify their reserves into gold in the foreseeable future because of their lengthy decision-making process and small size of the bullion market, analysts said.
The market has been abuzz with talk that some central banks might consider raising the gold holding in their reserves to reduce heavy dependence on currencies.
China's announcement last week that it planned to explore new ways of using the country's foreign exchange reserves and broadening their investment scope, boosted sentiment and lifted gold to its highest in 25 years at $550.75 an ounce on Monday.
But a senior central banker said on Tuesday China will not sell its current U.S. dollar assets as part of a move to diversify foreign reserves. [nPEK362492].
"If you are talking on the pure diversification argument, the numbers don't necessarily add up because the gold market is simply too small," said Jon Spall, director at Barclays Capital.
"If China were to accumulate gold at the same rate at which European central banks are divesting, then it will take them 8 years to achieve 10 percent of their reserves in gold, given the somewhat unlikely corollary that nothing else changes."
In March 2004, 15 European central bank renewed a 1999 pact to limit their sales over a five-year period to 2,500 tonnes, with annual sales limited to 500 tonnes.
Analysts say diversification into gold by a central bank would mean allocating five to 10 percent of its reserves. A rise of one or two percent is seen as minor adjustment.
"The gold market is not big enough really for that kind of purchase," said Mathew Turner, analyst at Virtual Metals.
Barclays said in a report that if China planned to raise its gold holdings to 10 percent, it would need some 4,680 tonnes or about two years of global mine production.
"Certainly gold has a role to play for central bank reserves but whether they actually add to their reserves or not is an unanswerable question," said John Reade, precious metals analyst at UBS Investment Bank.
"We have seen no evidence that central banks have been buying gold over the last 6-12 months. Until we actually see a reported increase in holdings from one of the big Asian central banks, that's always going to remain a possibility rather."
LENGTHY DECISION PROCESS
Analysts said central banks take a long time to decide about any change in their holdings and it appeared there was nothing on the table at the moment.
"We are definitely aware of some central banks that are showing more interest in gold but there is a long decision making process, so we are not expecting any major purchases soon," said Jill Leyland, economic adviser to the World Gold Council.
The general trend over the past 10 years or so has been for central banks to sell their gold, which gives little yield on deposits compared to foreign exchange reserves.
But unstable currency markets, high oil prices and concerns about rising trade barriers have prompted some central banks to start considering reducing their heavy dependence on the dollar.
"There were suggestions that Russia, South Africa and Argentina might increase their gold holdings and these all fanned the flames of enthusiasm," SG Corporate and Investment Banking said in a report.
"There has been little evidence to date of sustained central bank buying activity, but where the official sector is concerned perception is everything," it said.
World gold reserves total around 31,000 tonnes. China holds 600 tonnes and India 358 tonnes, but gold's share of their reserves is just 1.2 percent and 3.6 percent respectively.
In some European countries, gold accounts for 50 percent, while in the U.S., the world's biggest holder, bullion makes up 64 percent of reserves.

This Reuters-type of article is wonderful (indirect)evidence (again) that "they" know very well what is actually happening (for the past 5 yrs already).
How many different theories have already been served (by the financial media) to the general public as to explain (guide) the change in price behavior of oil and gold !?

When POG declines from $550 to $540...-they- scream that "profits" (???) are been taken !? Jesus !

Normally, all official gold-reserve holders (states) should enjoy the revaluation of their gold-reserves. One particular (old) block constantly seems to feel very unhappy with the gold revaluation. All the others remain rather silent (neutral) about the goldprice. They (most)probably feel very comfortable with the gold revaluation process. Do we hear the Asians, Russians, oil-owners scream that there is not enough gold !? On the contrary, they state that they want more of the precious metal. In sharp contrast with Alan's statement of >>> CBs stand ready to...

Today, my 13 yrs old daughter went to visit a bank with school : Guess what was showed and discussed >>> GOLD !!!

I, too, believe the indirect evidence. It seems interesting to find so much information to confirm the gold trail.

I do have one question for you. I seem to remember that you have taken the stand that the revaluation will be orderly in previous postings. Just before the end of the year the Japanese market got speculative and then the PoG got hammered. I'm still trying to understand why you think the process will be so orderly?

Also, you must not live in the USofA! Gold would not be discussed as having any value by a banker.

The transition plan (rather process) that has been architected over more than 2 decades, goes ordely. Certainly so, when it is in everybody's interest (opposing factions).
Example : First there was a decade of ECU and then EMU.

Watch the goldprice chart of the past 25 years : Do you see irrational exhuberance ? Do you see an oilprice going bezerk ? No, this is all happening relatively disciplined.

As soon as prices (exchange rates) are pushed by speculative forces...you see pricing regulation coming in, without breaking the long term desired trends. No drama for the time being.

Read how Asians are doing their best to avoid misunderstandings (mis-interpretations) of their statements on important monetary matters.

Those who whish to make speculative money on bull/bear-runs/rallies, are most probably very disappointed or should I say disoriented.

When the euro/dollar exchange rate rushed to 1,36...Trichet asked NOT to rush into the euro .

Political statements often function as market sentiment regulators, whilst the plans are proceeding.

Thanks Flatliner for your
msg # 140334.

Your repost of Another's:
Can someone go graphically
through his scenario? For
the life of me (and for
reason of 3 glasses red),
I seemed to get lost; who
is the third party? (Maybe
someone like HSBC who knows
the gold depositers in its
vaults?). Are the brokers &
merchant banks one and the
same (like Goldman Sachs &
Morgan Stanley)? Selling
forward for mines, specula-
tors or governments are not
of a kind; some gold is in
the ground, others above?

"Another" sounds like Belgian
when he forgets to put on
his French accent...or, did
our Belgian thru rereading
Another's Thoughts absorb by
osmosis his claimed English-
ness? Ha,ha, just joking.OvS

Although I am very
bullish on gold, I
will sell some of it.
I will acquire a very
nice looking and old
stone structure and
will remodel it with
old world taste into
something I always
wanted to own so I
could do the things
not possible in my
home.
Three of my seven
children attend private
colleges and soon the
remaining will follow.
By then my venture shall
be finished and perhaps
I'll shall invite the
forum for a celebration
there? We'll see...OvS
PS. And remember, Gold
and Silver is not every-
thing...joking, of course.

Hi Belgian,
Good posts to make one think about the NWO. I have no doubt that some parts of the world want higher gold prices to offset the huge creation of dollars which acts to discount their labors and or resources. Where I differ from you is that I see all of the West in the same boat. Poor demographics, too much debt, lack of fiscal restraint, poor leadership and degradation of the money. The ECU is just as guilty as the US when it comes to poor stewardship of their money and gold continues to flow from west to east.

At this point in time oil is very crucial to the gold currency relationship. However, a time will come when a strong movement towards energy independence will come and is achieveable over a multi-decade period. Gold will not benefit long-term countries who ignor economic realities and that includes the ECU. The end of American dominance is coming but it is much further off than most realize. For sure changes are occurring now which will force the US to accept others wishes more than in the past 50 years.

What the NWO will look like is still very much in the air. However it won't be the ECU leading the charge, they will be a player but look east in 40 to 50 years if you really want the anwser.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

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TUESDAY Market Excerpts

Gold rests on solid footing

January 10 (from MarketWatch) -- Gold futures closed Tuesday with a loss of almost $5 an ounce after tapping a quarter-century high in overnight trading, but many analysts considered the pull back only temporary.

"While gold is very overbought and profit-taking can be expected, this secular bull market has continuously punished the bears and market-top forecasters," said Peter Grandich, editor of the Grandich Letter.

"This time should be no different."

COMEX February gold contracts closed at $545.70, down $4.80. It touched a high of $553.10 in overnight trading between Monday and Tuesday, a level not seen since 1981.

Last weeks' announcement that China it will diversify its holdings of foreign reserves has put pressure on the dollar and provided support for gold, taking prices in overnight trading to a quarter-century high of $553.10 overnight.

"Asian interests are in the driver's seat," said Brien Lundin, editor of Gold Newsletter, "while Western speculators have been largely absent from the market, outside of short-covering.

"This new 'gold fever' has been helped by indications that China will diversify its foreign reserves away from the dollar, and rumors that the nation may begin increasing the gold component of its reserves," he said.

So "Asia is fueling this latest gold rally -- broadening and deepening the base of investment demand for what is a relatively small market," he said.

Overall, the gold market remains on "solid footing fundamentally and technically," added Jon Nadler, an investment products analyst at bullion dealers Kitco. Investors are looking at the longer-term picture, he said.

They "don't mind gold's short-term gyrations and are more scared of Iran, of U.S. domestic spying fallout, of [Ben] Bernanke taking the helm at the U.S. Federal Reserve, the statements of diversification away from the U.S. dollar coming out of China and of investing in other assets that are probably far more overpriced than gold really is."

---(see url for full news, 24-hr newswire, market quotes)---

From the Reuters article linked below:

"We are definitely aware of some central banks that are showing more interest in gold but there is a long decision making process, so we are not expecting any major purchases soon," said Jill Leyland, economic adviser to the World Gold Council.

___________

The World Gold Council knows better than most how the gap between supply and demand has been met over the past decade or more. It is met through central bank gold sales -- principally European central bank gold sales. That gap is roughly 500 tonnes.

Three things of importance have happened over the past six months.

First, European selling is in the process of drying up. (Germany, Switzerland, et al)

Second, a handful of nation states have announced either an interest in or a program for gold reserve acquisitions (China, Argentina, South Africa, Russia, et al).

Third, mining companies have continued their programs to reduce their hedge books through forward gold purchases of physical metal

The combination of the three has put extraordinary pressure on the supply-demand equation the likes of which we have never before seen in the gold market.

What if you now added a COMPLETELY NEW element to the gold market equation? What if the official sector over the next few years became net buyers of gold instead of net sellers? Where would those short the market obtain the metal needed to fill their short positions?

God forbid that the bullion bankers -- like Barclays and Virtual Metals -- would have to compete in the market with the likes of Russia and China to fill its clients' needs.

That is why the howl is so loud from certain quarters, Belgian. This is a major breach in the gold edifice -- a run around the Maginot Line -- and some are having a hard time dealing with it. When Russia first announced that it would make gold purchases for its official reserves in the open market, I likened its importance to the signing of the Washington Agreement. At the time a similar HOWL arose from the bullion banks very much like today's HOWL as described in the below linked Reuters article.

Can you all recall when this very same group would trot out the central bank gold sales mantra whenever gold got on a roll?

Now, for the very same reasons they wanted us all to believe that the central banks were net sellers, they want us all to believe now that the central banks will never become net buyers.

Methinks that some protesteth too much. . .

_________

I would like to address in particular Jill Leyland's opinion that "we (whoever we is) do not expect any major purchases soon." To see the bullion bankers register significantly on the pain meter, and so publicly in the press, we gold owners and advocates should ask ourselves why this whole thing requires such a prominent and vocal response. I return to the "GAP." Central banks need not purchase gold tomorrow or the day after. All they need do is THREATEN to purchase gold. Just as the THREAT of central bank gold sales was enough to kill price rallies in the past, so the THREAT of of central bank gold purchases will be enough to kill price corrections in the future.

That, my friends, is the reason for the BIG HOWL.

I seem to remember a poem that started with. . . .

"I saw the best minds of my generation. . ."

What was that?

Part I. From Allen Ginsberg. Howl and Other Poems. San Fancisco: City Lights Books, 1956.

For Carl Solomon

1

"I saw the best minds of my generation destroyed by madness, starving hysterical naked,

dragging themselves through the negro streets at dawn looking for an angry fix,

angelheaded hipsters burning for the ancient heavenly connection to the starry dynamo in the machinery of night,

who poverty and tatters and hollow-eyed and high sat up smoking in the supernatural darkness of cold-water flats floating across the tops of cities contemplating jazz,..."

and so on

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http://www.321gold.com/editorials/benson/benson010906.htmlTwo views for 2006.

"The expansion of the monetary base, that has been so choreographed, that has gotten every fiat currency in history in trouble, resembles the inverted pyramid. Less and less backing more and more credit expansion."

"The monetary expansion and velocity must continue, or the death of a fiat currency will be the end game."
"Your only safety net in such a scenario is gold, silver, and other things 'real'."


http://www.321gold.com/editorials/lechner/lechner011006.html


"Hyperinflations are caused by extremely rapid growth in the supply of "paper" money. They occur when the monetary and fiscal authorities of a nation regularly issue large quantities of money to pay for a large stream of government expenditures. In effect, inflation is a form of taxation where the government gains at the expense of those who hold money whose value is declining. Hyperinflations are, therefore, very large taxation schemes"

"The CPI underestimates actual inflation by 1.5 to 2 percent by excluding housing prices and using "hedonic price adjustment"

"For 2006 and beyond, I expect the inflationary war on savers will continue, and I just don't see how financial assets - stocks and bonds - will keep up. The preservation of real wealth at a time when the Federal Reserve will be dedicated to building debt, money and inflation, is not going to be an easy task"

Well, that's a bit darker than I remembered it. Over the top, I would say. And the poem doesn't really have much to do with the point I was trying to make. So my apologies to the Table for the misplaced reference. I hope it doesn't divert attention from my basic message as outlined in that post.

I do not know if i am understanding the whole senarieo here,but what i am reading in the forum is that everyone want's the stock market to perform badly in order to push the price of gold higher.I have just started investing in gold recentley as most of you know.I purchased the gold starter kit from CPM.I for one can't wish for the stock market to crash,because all of my wife's pension and profit sharing is tied into the market as is millions of other americans.She has worked her whole life towards her retirement.When you are in this situation,when you can't take money out to buy gold(except paper gold)then all you can do is buy it when you can afford it.Are we investing in gold to await for doomsday,or are we looking for both the market and gold to give us the future we have all worked for our entire lives.With all respect to the roundtable,M.

Smeagol, you are far too subtle and cunning for me. Of course, what you say would happen -- both parties to above-market sales would keep it secret, both in their own interests. But, if those sales became sizeable, methinks it would leak out.


"If China paid some multiple above the market price for gold, that would immediately BECOME the market price for gold." - Hector

But how could that happen - IF they, and those private ones whom they purchase It from, agree to keep silence, precious? One has never had to pay market price for It...perhaps this is where the sseparation of It from the paper-market price begins? Or has begun?

@ Mthirsty1,

I don't know that "everyone" wants the market to crash, or even if it will. The fundamentals do not look great, but as I pointed out earlier, this 11k DOW is not the same as Y2K's 11K DOW. Massive liquidity may carry it forward quite well, although the dollars it's being measured in are worth much less.

In gold terms, it is 55% lower at the same numerical value.

You may not have a lot of say about your retirement "investments", but there are market options, i.e. Bear funds, etc., that can appreciate your capital in a down draft, and usually don't get hit too hard in a rally, either. Many of them have at least some gold components in their portfolios.

Do your homework, as group advisors are often asleep at the switch!

http://www.fin24.co.za/articles/companies/display_article.asp?Nav=ns&lvl2=comp&ArticleID=1518-24_1860902Johannesburg - South Africa's largest gold miner AngloGold Ashanti (ANG) on Tuesday announced that three people died and two people were seriously injured in a rockfall at the company's TauTona mine...

"The fall was caused by a seismic event, with a 2.4 magnitude, which occurred some 3000m below surface," the company said.

^---(from url)---^

If losing your life for it nearly two miles below the earth's surface doesn't somehow inform you that that the pricing mechanism is currently out of kilter (market value is grossly too low), then I don't know what will provide that perspective for you.

Choose gold -- still a bargain and attainable with, relatively speaking, burger-flipping chump change.

R.

Goldilox,thank you for the reply and the info.M.

http://framehosting.dowjonesnews.com/sample/samplestory.asp?StoryID=2006011005380004&Take=1NEW YORK -(Dow Jones)- China has resolved to shift some of its foreign exchange reserves away from the U.S. dollar and into other world currencies, according to a high-level state economist who advises the nation's economic policymakers, The Washington Post reports in its Tuesday edition.

The new policy reflects China's fears that too much of its savings is tied up in the dollar, a currency widely expected to drop in value as the U.S. trade and fiscal deficits climb, the Post said. China's foreign exchange reserves are now in excess of $800 billion.

The comments of the Chinese senior economist were made on the condition of anonymity because the government disciplines those who speak to the press without express authorization...

^---(from url)---^

As the battle wages on between conflicting statements of intent, the litmus test to help you discern the most probable course of action is to sit back, take a deep breath, and, while considering the conjunction of all things, the version to buy into is the one that reflects the most intelligent choice.

Simply put, gold endures and prevails. And everybody knows it on one level or Another.

R.

http://www.time.com/time/asia/magazine/article/0,13673,501060116-1147217,00.htmlThe soaring price of the yellow stuff isn't stopping Indians from indulging an old obsession. Plus: you can't wear stocks and bonds

[Randy's note: Ha! That's a nice twist on an old theme in the article's subtitle; ususally some idiot likes to point out that you can't eat gold... which ultimately begs the question, what type of condiment are they using to choke down all of those edible(??) stocks and bonds?]

Society Section, Sunday, Jan. 08, 2006 -- ...All through India, Padmanaban says, famous temples are replacing the silver plating on their idols with gold, and smaller shrines are replacing copper deities with silver ones. "People in India have more money now," Padmanaban says, "and the result is that our temples are being covered in gold and silver."

The gilding of the nation's temples is an aspect of one of mankind's great investment obsessions: the Indian love of gold. The country buys at least one-fifth of the global gold supply each year, making it the world's largest consumer of the metal.

Experts believe that 15,000 to 20,000 tons of bars, ingots and jewelry is locked up in India's bank vaults and household safes. Indians are furiously adding to that horde. The World Gold Council estimates gold buying in India was up nearly 33% to 850 tons in 2005. The increase is all the more remarkable given the metal's surging price... it's clear that India's gold appetite has not been markedly diminished even by sharply higher prices.

In many ways, gold [demand] is a relic of weak investor rights and shaky financial systems, where people distrusted banks and the stock market and preferred to store their wealth in tangible assets, chiefly gold and property.

Although India's current economic boom has been criticized for unevenly benefiting the rich, new wealth is percolating down in many parts of the country to newly empowered members of the working class such as Padma Kondababu, a 40-year-old maid in Madras. The first woman in her family to work outside the home, Kondababu makes $85 a month, a good salary by Indian standards. Whatever she can save, she says, she uses to buy gold, sometimes even in $12 installments...

"It's a matter of pride for people like me to buy gold," she says. "Gold used to be a few hundred rupees for a sovereign [a measure of eight grams] in the time of our parents, and yet they couldn't dream of buying it. Now it's six thousand rupees for a sovereign, and still we have the money to buy gold."

It's no coincidence that consumption is highest in the south of India, which has in recent years seen some of the fastest economic growth and the most thorough dispersion of wealth to villages and small cities.

..."So many banks fail and close their doors, and ordinary people get hurt when that happens," says Jhansi Rani, a schoolteacher in Madras, pointing out the case of a close relative who had deposited his pension money in a private bank, only to see it close down suddenly and find that the funds had, apparently, disappeared.

^---(from url)---^

Read this, and strive to understand the essence of TRUE SAVINGS... property in hand (and all rights and privileges attendant with having sole access and control over that which you actually own).

R.

http://www.myrtlebeachonline.com/mld/myrtlebeachonline/13577280.htmJust for information...

You certainly aren't going to be surprised when I say that I totally don't agree with your 3 most important things that happened the last six months.

I've called the latest statements "political ones"...and you say it are "HOWLS". What's in a name ?
But,...what is " -BEHIND- " all this !? Something deeply fundamental or simply -goldmarket- minor anomalies ? You seem to suggest rather strongly, it is the latter ? In that case, we differ completely again on opinion.

http://www.fxstreet.com/nou/fxtrek/senseframescharts.aspTo see charts of the Chinese reminbi (yuan) go the fxstreet.com charts URL below.

Open the file menu, Click change symbol, then click �more� and then type in �USD/CNY�. The daily six-month chart of the number of yuan needed to purchase one US dollar will pop up.

As I write the rate is 8.0672. That is 2.6% lower than the old fixed rate of about 8.28.

The Chinese switched from the pegged rate to a so-called floating rate in late July. The 8.28 pegged rate had been set in 1994.

The quick glance at the daily six-month chart shows that the bands were initially narrow form late July to mid September when they widened. Presumably this was the widening from point one percent to point three percent, a shift that was widely mentioned in the press.

In early November the bands narrowed again, and have stayed tight since then. This has not been widely reported. It would appear that the Peoples Bank of China did not like the wider bands.

The finer scale of the daily three-month chart highlights the daily intra-day ranges. And to my eye, the rate of appreciation of the renminbi appears to have suddenly picked up in 2006. Could this be a PBC policy decision to let the yuan's appreciation accelerate?

If feels like there is a challenge of a dual, but, I do not see your three swords!

Belgian, MK's three-pointers
are more of a tactical nature,
yours are longer-ranging stra-
tegic.So you don't necessarily
disagree from that vantage-point.
There is also your disagreement
with silver-traders that intent
to convert their silver-profits
into golden ones. It's a matter
of tactics, and when done right,
lets them catch the coat-tails
of fatter cats up the ladder.
You want to gain more, you must
risk more. If prudence prevails,
that game has to decline percent-
age-wise the higher the goldprice
reaches.
Please keep honoring us with
your mantra--it keeps everyone on
their toes and probably will save
many a knight from foolish excess
gambling.
I bet your 13 yr old didn't learn
anything about gold she did not
know already, but she probably was
relieved to hear it confirmed by
an outside source. OvS

http://www.marketwatch.com/news/story.asp?siteid=bigcharts&dist=news&guid=%7B747CD4CC%2DA13A%2D4793%2D89EE%2D61DC9E357D01%7Dsnip:

NEW YORK (MarketWatch) -- Gold futures rose in late trade Wednesday, extending their gains above $544 an ounce as sentiment on the metal continued to be upbeat.

Gold for February delivery was recently up $3 at $548.70 an ounce, after trading as low as $543.70.

The contract lost almost $5 Tuesday after tapping a quarter-century high overnight, with most analysts viewing the move as a normal correction.

"Expectations for strong demand out of China and other major emerging economies, such as India, coupled with supply constraints and Middle East geopolitical concerns (Iran nuclear concerns and Israeli prime minister issue) has fed medium-term bullish sentiment," said Action Economics.

In the past week, gold has found support from a weaker dollar after China said it is considering diversifying its $800 billion of foreign reserves. Many analysts predict that China will switch part of its reserves into gold, not just into other currencies.

William Adams, metals analyst at BaseMetals.com, said funds are also keeping a floor under gold prices.

"The overall environment for the metals looks supportive, even though it remains vulnerable to a price correction," he said.

At Altavest Worldwide Trading, analyst Thomas Hartmann said the market will likely see bouts of profit taking and liquidiation in the near term.

However, "we're clearly in a bull market so there are not many aggressive sellers at this point," he said.

-Goldilox

Fortunately, our hosts are still selling for those who want to get in on the gold bull. Was that a "wall of worry" message?

It is not Belgian versus MK, but about the "supply-demand" aspect of gold AND the nature of the -evolving- market in which this takes place ! Repeat >>> evolving goldmarket.

And since the goldmarket is evolving "fast", we better forget about thinking and acting long term or running the risk of exclude ourselves from the gold revaluation.

Better NOT to follow the WGC trail and its -conventional- considerations about gold and its nearby future ! That is the "real" debate.

Can we ever know how the major goldmines arrange their books with their specific bankers...or...what facts do we exactly know on CBs' commitments ?
Is the goldmarket still that same place where we speculate/gamble (win/lose) or buy the perception to insure ourselves against fiat depreciation ? NO, things golden are definitely changing and it is against this idea that the most aversion is met. Had a long talk with a Belgian bullion dealer and understand WHY there is such an aversion towards gold-change. Does that mean we have to remain silent about it and ignore it completely ? Are there not enough arguments for suggesting that a Big gold change is happening ? I keep on watching the arguments piling up. Maybe I'm interpreting them all wrongly ?

Ok. I guess that I *really* have nothing to lose by watching, other then time.

Also, do you mean to write, "since this evolution is happening fast, you better get physical so you don't miss the boat?" Or, am I still not understanding?

I am also curious about the comment about depreciation. Do you mean to say that the folks that have thought of gold as *only* a hedge against inflation are starting to see gold as an investment? In other words, currency depreciation at x% doesn't match gold appreciation of x+y%? I think I fit in that x+y group.

@ Flatliner,

I think I fit into the group that recognizes:

DOW2006 (@11k) = 20 oz gold

DOW2000 (@11k) = 45 oz gold

That's some pretty nasty currency depreciation over 5 years.

If "you" conclude that there IS a -boat- (as I do), then you are 100% consequent in holding physical gold. If there is NO boat, keep on gambling/speculating with (or without) leverage. I don't see any serious argument for "playing" it the two ways (combination of paper + physical).

Holding the goldmetal in possession since 1971 is ONLY a hedge against the OFFICIAL price inflation !!! That means that $600 and 480 euro are the price inflation neutral targets for gold. These are the general consensus (hum) prices for gold in '06.

All the above has nothing to do with my personal (!) conclusion/opinion, that gold's valuation process is on its way to leave the conventional/official price inflation hedge towards the < gold=wealth reserve > concept, with absolutely no link anymore to the inflation hedge (mal)function. That is *my* reason for debate.

And to all those who still remain convinced that gold's sole function is price inflation hedge...I ask the following question : "WHY" was the goldprice knocked down to $250/Oz !? I already know the bulk of the classic answers and none of them makes any sense at all.

Goldilox, I would contend that you've defined x+y very well. If we look back a few months, where gold broke out with regards to all currencies, that is where I believe that we saw �y� grow larger then zero. For the last few months, we've seen people very excited about owning gold. I believe that there is a direct association between y (percentage) and this �emotion�.

If I'm also understanding Belgian, the �y� portion of this equation is the wealth aspect percentage, that, up until a couple months ago was zero. Also, Belgian believes that because the hedge function of gold is a dead concept, �x� is going to zero. Thus, the ending equation will be 0+y or just �y�. Thus, I would expect that over time we will see �y� outgrow �x� as the leading percentage factor. It would seem to be that this is what is referred to as the revaluation process.

http://www.usagold.com/gold/special/dutch.html

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WEDNESDAY Market Excerpts

January 11 (from MarketWatch) -- Gold futures closed higher Wednesday, extending their gains above $550 an ounce as sentiment on the metal continued to be upbeat amid strong physical and investment demand.

COMEX February contracts closed up $4.40 at $550.10, after trading as low as $543.70 and as high as $550.80.

"Expectations for strong demand out of China and other major emerging economies, such as India, coupled with supply constraints and Middle East geopolitical concerns (Iran nuclear concerns and Israeli prime minister issue) has fed medium-term bullish sentiment," said Action Economics.

In the past week, gold has found support from a weaker dollar after China said it is considering diversifying its $800 billion of foreign reserves.

Many analysts predict that China will switch part of its reserves into gold, not just into other currencies.

---(see url for full news, 24-hr newswire, market quotes)---

http://www.empireclubfoundation.com/details.asp?SpeechID=1112This is an excerpt from a speech given by Solon Low, then leader of the national Social Credit Party, to the Empire Club in Toronto in 1947. Low is basically forgotten today. Anyway, the oldtimers will find this excerpt fascinating (Shades of China today?):

"Now there are certain countries which for some years have been carrying on a very aggressive policy of foreign trade and investment. They have insisted upon favorable balances of exports over imports, and upon leaving these balances for investment in the countries to which they have sent their goods. By way of example, Canada has had difficulty in the past in balancing her payments with the U.S.A. whilst on the other hand we have had a surplus account with other nations. This has been mainly because the U.S.A. refuses to accept imports of Canadian goods sufficient to pay for her exports to Canada. This same policy the United States has insisted upon following with Britain, and some other parts of the Commonwealth. During recent years the United States has attempted to force upon all nations who would trade with her, a most-favored-nation-clause in her trade agreements. The strict application of this clause in her trade relations with Japan was unquestionably one of the important factors which goaded that country into preparing for and declaring war on the United States. The "most-favored-nation" clause is enemy number one of the British Commonwealth today.

Just why do I make that assertion? Let me illustrate the answer by quoting from Ludwell Denny's "America Conquers Britain", page 407:

"We were Britain's colony once. She will be our colony before she is done; not in name, but in fact . . . We shall not make Britain's mistake. Too wise to try to govern the world, we shall merely own it. Nothing can stop us. Nothing until our financial empire rots at its heart, as empires have a way of doing. If Britain is foolish enough to fight us, she will go down more quickly, that is all . . . Our weapons are money and machines. The other nations of the world want money and machines. Our materialism, though not power, is not matched by theirs. That is why our conquest is so easy, so inevitable."

There you have the point-of-view of the powerful interests who would destroy Britain and the Commonwealth by the force of trade weapons. How do they propose to do it? They have already gone far in their conquest. Nations of great productive potential, whose goods Britain and Canada and others need to keep up a standard of living, have refused to balance their trade with us by accepting our goods in payment for those they export to us. They have left their favorable balances in our countries for investment in industry and resources, with the result that a very substantial percentage of Canadian and British industry is owned and/or controlled by foreign interests, and consequently our economies among other disabilities, must bear the strain of all the evils of increasing debtor relationship. It is not beyond possibility that what Mr. Denny has forecast, the complete industrial conquest of Britain, will become reality unless world trade policies undergo immediate and radical change. "

http://quotes.ino.com/chart/?s=NYMEX_CL.G06&v=dmaxDoes anyone else see an exponential curve in this graph for Crude Oil? If that curve holds, one might expect 85-90 buck chuck in a few months.

The graph for Natural Gas (http://quotes.ino.com/chart/?s=NYMEX_NG.G06&v=dmax) looks like it's just come down to a more linear looking graph.

Don't commodities prices look like this during hyperinflationary times? Does anyone have graphs for things like coffee, sugar and other imports to the US?

I don't really follow the GATA story closely but I seem to recall that they see J P Morgan as one of the villians.

It is therefore interesting to see that J P Morgan Nomineees or J P Morgan Chase Company feature in the top 20 shareholder lists of many of the Australian gold producers and emerging gold companies.

To quote an example J P Morgan Chase has just raised its stake in a company in the State of Victoria to 8%.

To my simple mind this seems to indicate that Morgans anticipate a rise in the price of gold.

Any thoughts/comments?

@ Flatliner,

Why not? The dollar/debt curve is an almost textbook hyperbola. Just who's driving this bus?

The geniuses on CNBC today were remarking that any disruption in Iranian oil flow to Europe would result in a greater than $10 pop in Lt Sweet.

"No schweet, Sherock!" They made it sound astounding, when it's probably a very conservative estimate.

@ golden lionheart,

Astute observation, but if you'd been following a few more inside tracks, you'd find that the "bankster boyz" are all playing "pump and dump" with the gold miners.

Puplava discusses it ad nauseum. I often wonder why he plays gold stocks if it irritates him so much.

http://www.thesanitycheck.com/Looks like the bobosrevenge.blogspot.com site now points to the link above. If you're suspicious of the "pump and dump" comment, give this site a read regarding naked short selling. Enjoy. (Maybe, see also: http://www.bobosrevenge.blogspot.com/)

but with J P Morgan I mainly see buying and holding..............

@ Golden Lionheart,

If what you're watching is the retail trading scene, your observations may still be good news.

But to really track an investment banker's involvement, you need to know about the warrants held against loans, and the amount of float they received for client sales if they participated in the IPO, etc.

The daily volume is often just the tip of the iceberg, especially for companies that are getting additional financing with secondary offerings and such.

If they hold a lot of warrants, the trick is to run up the price, and then sell the warrants at a profit, all the while looking like an accumulator at Level II.

http://quotes.ino.com/chart/?s=NYBOT_DXWatch that 88.78 level !!!
The NEXT waterfall is going to be BEAUTIFUL for the YELLOW !
GO SPIKE, JUMP.
<;-)

You also have to know what their (Banks) loan involvement, advisory capacity is with the miners in question and the position the banker holds in Gold futures market. They hold leverage with loans (and are financial advisers) and can force or convince the miner to forward sell which is needed by the banker to depress Gold prices. ie; Goldman Sucks and Ashanti. Very muddy waters and very big conflicts of interest and VERY big money involved in these games played.

http://www.ecb.int/press/pr/wfs/2006/html/fs060110.en.htmlThe consolidated weekly financial statement shows that while the eurosystem reallocated 5.5 tonnes of gold (a scant EUR 77 million) during the past week, it dishoarded a disproportionately larger stake in foreign currency, reducing its net position by EUR 1.5 billion.

Among assets, eurosystem gold and gold receivables now stand at EUR 163.8 billion, whereas the net position in foreign currency as a proportion of the total has slipped yet further, to EUR 161.7 billion.

^---(stats from url)---^

How low can it go... stay tuned!

And to repeat, it remains my position that not only is the eurosystem gold juggling nothing to be alarmed about, but arguably it was the prerequisite action as necessary to jumpstart the gold-price liberalization era that began in 1999 and continues to this day and well beyond.

[If you have a hard time imagining the rationale behind this reallocation, I would point you to a crude financial parallel which might prove instructive. I would ask you to consider what the IMF did as as measures to get its Special Drawing Rights program of 1967-69 off the ground. To be sure, the IMF as an institution was convinced that these SDRs were as "good as gold", and yet despite that, instead of hoarding the SDRs all to itself, it did the "unthinkable" thing and allocated them amongst its collaborating nations, beginning in 1970.

Getting back to the modern situation with gold reserves, in the end, I think you will find it was a very small "sacrifice" for the eurosystem to reallocate one third of its metal position when the payback for such an deft strategy is the eventual revaluation of the remaining stockpile of reserves to many many multiples of its former value -- it having been forced into long stagnation under the outgoing dollar/IMF regime.

When you understand the trail ahead, you'll know that physical gold is THE place to be.

R.

Busy, so just quickly on this. The $-faction analysts keep putting forth the same tired arguments poo-poohing the various statements about gold accumulation by the Chinese, Russians, et al. One of the favorites that keeps coming up of late is that it is not possible to obtain that much metal, so as to meet their stated percentage targets.

Now while I gather the person of only average intelligence can see right through this, the various $-faction analysts want you to draw the conclusion that the above is true -- at current prices, or the level "experts" tell you gold will attain -- this is of course these various pull-it-out-of-thin-air numbers that have been tossed around for years now, so that they have become "authoritative" through repetition: $600, $800, $1000 (max!!).

Sure, at those prices do the math, and it will take years for such an accumulation to be successfully obtained.

So honestly, are the CBs so stupid that they can't do basic math, or do they have some other numbers in mind? I venture that the $-faction analysts being trumpeted to the media by the various $-houses and WGC, must necessarily be composed of a) entry level weenies that are too wet behind the ears to know anything but what they learned in school, which in this case is only the strategy of the last war; or b) veterans that know all too well what the problems are, but must keep spinning it like this because the fortunes of those that butter their bread are at stake.

For years TC, and more recently 968 have been providing us the links to the weekly ECB releases, and we have observed the slow and steady dishoarding of forex reserves from their coffers, and the slow and steady increase in the value of their gold, until just recently the two met for the first time. So think of it, if the ECBS can be a net-seller of gold over these past years, and still find their gold reserves decidedly increasing on a percentage basis (now over 50% of their foreign exchange reserves!), surely banks that publicly state their intent to add to their gold holdings can also find their much more modest percentage targets attainable.

And, are the CBs so stupid that they announce their intent to buy large quantities of gold publicly to the marketplace? Please. I think people only demonstrate their own naivete when they even consider such possibilities. These people are not stupid, once and for all! If they make these pronouncements, it is only because they are ready for the show to start. They already have a) satisfactory in-hand accumulation; b) promises that ARE worth their weight in gold -- not like the contracts the munchkins in the general public hold -- and most likely private deals that we don't know anything about; and c) gold in the ground on their own soil that will find its way to the state at favorable pricing. Any publicly traded contracts they have outstanding are not what they are putting their hopes in. These are the last venue of accumulation, and the public pronouncements only come after they have secured their contracts at current low prices, surely. Will these people fear standing in line when the public futures markets fail? No, they are not paeons/pee-ons like us; as FOA said about such, "they will get their ticket punched."

So, it seems to me a combination of ignorance and arrogance on the part of $-perspectived folks that cannot make sense of these foreign CB gold accumulation, dollar dishoarding statements. The world is evolving and the gold market as B keeps warning, IS evolving. The balance of financial power is shifting to a consortium of states that DO favor gold appreciation, and the comments they are making of late are not spurious or superficial. Pay attention.

The figures I see are listed on the ASX (Australian Stock Exchange)Form 604 Corporations Act 2001 Section 671B.
The form shows the date of purchase, price paid, quantity bought and the percentage held in that company. The form has the name of the JPMC officer who lodged the form.

The dealings are quite open for anyone to see and in the gold company that I mentioned JPMC hold exactly 8% of the ordinary shares. I will monitor this over the next few months on a regular basis.

This form is used for all shareholders who hold a substantial holding in any company in Australia

This super hedger (gold forward seller) seems to be rather confident about a goldprice rise (short/medium term).
So, at the time they were selling gold forward and colluded in knocking gold's price down ($253)...they sold/commited this *CHEAP* gold to certain parties ! And what goes down (POG)...must go up. To *-WHO-* are they (and other mining buddies) delivering goldmetal (their product) into the wonderful contracts !!!-???
Is the hedging (forward sales) of major goldmines an enterpreneurial "nescessity"...or...are major goldmines doing a BIG favor to privileged goldmetal clients (Giants)!?

Why is it that the Big ownership and transfers of goldmetal *MUST* remain in the dark ? What is so special about goldmetal...that the ownership of it must remain secret !?

Is this part of the tools to manage the existing gold-market ?
Why are Barrick and Placer Dome merging ...whilst the general consensus seems to agree on a goldprice rise for the nearby future ? What's the "real" purpose for the merger ? Can't these two miners make it alone ?

If there is not enough "underground" gold anymore...WHY aren't goldminers declining their output, drastically ?
Or...can't the goldminers decide about their own future ?

Isn't it a funny change that the rand doesn't want to detoriate any further since 2001 !? A low, permanent weak, rand as to plunder cheap gold out of the South African golden arch.
Why had the goldmine share holders to remain speculative bull/bear punters for the past 35 years ...whilst providing speculative capital to bring goldmetal to the accumulators' vaults ?

Same story for cheap oil(gas) plunder all over the globe. WHO has been accumulating all the wealth that oil (gas) wealth has been delivering, during the past 3 decades ?

We better think (and act) fast about these fundamental questions, now ...before we will be faced with the "REAL VALUE" of gold and energy !

http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-01-11T161443Z_01_ALL158659_RTRIDST_0_OZABS-MARKETS-PRECIOUS-20060111.XML&archived=Falsesnip:

LONDON (Reuters) - Gold consolidated on Wednesday after touching a 25-year high earlier in the week, but analysts and traders said it was building steam for another charge higher.

A rise in the dollar earlier had prompted some investors in Asia to drag down the metal, which surged 18 percent in 2005 and added another 5 percent in the past 10 days. It recovered some losses in European business.

"It's just a kind of consolidation phase but on a very, very high level. We always have to be prepared to see some sell offs but the overall direction is up," Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus, said.

Spot gold was quoted at $544.20/545.00 an ounce by 1557 GMT, slightly up from $543.80/544.60 late in the U.S. market on Tuesday. It spiked to $550.75 on Monday, the highest since January 1981.

Talk of China diversifying some of its dollar asset reserves was a major factor in driving gold higher earlier this week, although a senior central banker said media had wrongly interpreted a statement from the foreign exchange regulator.

Analysts said gold was set for further gains in 2006 and had the potential to breach $600 an ounce.

Australian investment bank Macquarie said it had raised its gold price forecast by an average of 19 percent in 2006 to $565, while Barclays Capital hiked its average price forecast for 2006 by 13 percent to $525 an ounce from $465 previously.

Physical demand for gold has also been affected due to such high price levels.

"We will be more comfortable with a positive view on the metal once physical demand has re-appeared again, although...we believe lower and more stable prices are required for physical buyers to re-emerge," John Reade of UBS Bank said in a note.

Reade noted gold had already broken above his $540 one-month forecast, but remained short of his 3-month objective of $555.

Dealers remained positive on gold, with investors diversifying into precious metals due to worries about the outlook for the dollar, global tensions and firm oil prices.

"I think they are going to try and push it higher towards this $550 level again, although I remain a bit wary of people taking profits," one dealer said.

The dollar lost ground against the euro and steadied versus the yen, as the market waited data that could offer clues about U.S. economic growth and the monetary policy.

Thursday's data is expected to show a narrowing of the U.S, trade deficit in November from a record shortfall the previous month.

-Goldilox

Not without the "obligatory statement" on China reallocation, but pretty bullish on gold. The trade deficit numbers will probably carry today's action, given no other geopolitical or geological drivers. Lower oil prices may help the trade deficit look like benign, but remember, oil has recently shot back up from the Santa Claus levels used to buoy retailers in December.

http://groups.yahoo.com/group/gata/message/3600Latest GATA dispatch.


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Historical Miner, thank you. I have been searching for a while in order to try to find an understanding to Another's comments of old that the price of gold is low because no one is selling. Then, your comment came along today "Sure, at those prices do the math, and it will take years for such an accumulation to be successfully obtained." � That, is very insightful.

Maybe I'm seeing things backwards, but Another always talked about "Big Trader" having cornered the market years ago. Basically, those that want to acquire large amounts of gold to represent the real wealth of the dollars that they hold � cannot. As everyone here knows, their simply isn't enough gold in the world. Any action to try to acquire large amounts of gold � in public � also, can not be done as "Big Trader" demonstrated years ago. The affect is that "Big Traders" of the world have been locked out of the public markets.

Miner49er's comment seems to support this by looking at the process by which a "Big Trader" must go through publicly to acquire gold. "it will take years" for such a big trader to fill a huge order in a public way!

Now, let's go back to Another's point of view that the price is low because no one is selling. From my point of view "You may never sell your gold again" puts me in that "no one is selling" group (and no, I'm not a Central Bank!). So, it seems interestingly backwards that because no one is selling physical in the paper markets "Big Traders" do not shop there. Thus, the price is low � Real demand does not go through the paper markets. Miner49er's comment sums it up really nice! If "Big Trader" had to go through the paper market, it would take them years (and years and years) to accumulate what they really want because the supply is not there.

Reflecting on Another's comment from �97 (ID#60253) "Fact: If the world bids up the price of gold, all deals will be off! It would be every nation for themselves.Oil would explode in price!"

What happens if the world bids up the PoG? It's simple, more sellers enter the market. If the price is bid up far enough, LOTS of sellers enter the market. At some point, "Big Trader" will find enough sellers in the market to fill his big order!

What about "the world" in Anothers comment? Well, look around you! "The world" seems to be interested in gold again! There is a �mood� about it that the gold market has not seen in many, many years. It seems, that "the world" is bidding up the price. "The world" is overwhelming the gold market's ability to supply physical. Unlike how they treated "Big Trader", �the world� CBs can not say to �the world� � stop! You are going to blow up the system!

It seems to me that the CB's of the world have been selling piddly little amounts into the public system in order to satisfy the OLD world's thinking. They had the ability and desire to maintain the system as long as people valued Dollars over gold.

Times have changed. "The world" is involved now, the end is near. You may never want to sell your gold again!

http://en.rian.ru/russia/20060112/42975245.htmlFollowing the ECB's lead, Russia shows how much stronger the balance sheet looks with appropriately priced gold reserves. Hark, is that a trend I see developing.....?

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh22487_2006-01-12_15-40-05_n12258235_newsmlNEW YORK, Jan 12 (Reuters) - The Federal Reserve said on Thursday that it was buying bills in the open market, adding permanent reserves to the banking system.

The Fed said it was buying bills with maturities ranging from February 23, 2006 to May 4, 2006.

The benchmark fed funds rate last traded at 4.25 percent, the Fed's current target for the overnight lending rate.

^---(from url)---^

The size of the operation was $1.249 billion. Given the targeted maturities, the 'permanence' of this reserve injection is mostly jargonistic; with respect to money supply this effectively translates into something more akin to a 1.5 - 4 month repo operation.

Speaking of which, the Fed today conducted two. Seven billion dollars was temporarily injected via overnight repos, and ten billion dollars was added through 14-day repurchase agreements.

R.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

If you are considering investments in gold we invite you to request our freeintroductory information packet detailing the products and services offeredby USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and lookforward to working with you.

THURSDAY Market Excerpts

January 12 (from DowJones) -- Gold futures recovered from early weakness to finish with only tiny losses in New York Thursday. Speculative buying returned after an early profit-taking pullback that was blamed largely on a stronger U.S. dollar.

February gold settled down 80 cents to $549.30 but well up from a low of $543.20.

"The original fall was in response to the trade numbers and the strong U.S. dollar," said Bernard Hunter, director of precious metals at Scotia Mocatta.

The U.S. currency was boosted by news that the country's trade deficit narrowed 5.8% to $64.21 billion in November, compared to a consensus forecast of $66.5 billion and a revised $68.13 billion in October.

Forex analysts said the dollar also got some help when the European Central Bank left interest rates unchanged.

"Underlying the market is still very, very good investment demand," said Hunter. "The overriding trend of the market remains positive."

A trader commented that a pattern seems to have developed in gold over the last week in which profit-taking pullbacks are met by renewed speculative buying. "There has been a lot of speculation going back and forth," he said.

"Somebody will be taking profits while somebody else gets in. Net, it really hasn't moved that much over the last week, although you've had some pretty big ranges each day."

---(see url for full news, 24-hr newswire, market quotes)---

http://en.rian.ru/russia/20060112/42975245.htmlRef Rimh #140388

I just love that "official" wording:

' The CBR said the change in its calculation method was due to "the need to bring published data in line with current market realities." '

As if some junior official in the CBR went to work one morning thinking: "I really must fix up that little, nagging oversight that has been around soooo long. I'll do it as part of my New Year's Resolutions!"


Perhaps (in regard to the suspension of M3 publication in March) the FED might have said something similar, like:

' The FED said the suspension of M3 publication was due to "the need to bring published data in line with current market realities." '

....cruel financial satire from the FED...

;-)

http://www.infomine.com/investment/metalschart.asp?c=gold&u=oz&x=zwd&r=1y⊂mit1.x=54⊂mit1.y=8Late last May, IF you were a Zimbabweian and had one ounce of Gold, YOU were a Zimbabweian MILLIONAIRE !
TODAY, IF you still have your one ounce of Gold, you are a forty-eight times over --- Zimbabweian MILLIONAIRE !!!!
The Question is: WHEN AND WHY, do you sell your one ounce of Gold ?
<;-)

http://news.ft.com/cms/s/165f8838-839c-11da-9017-0000779e2340,_i_rssPage=af37e996-cbfd-11d7-81c6-0820abe49a01.html(FT) January 12 2006 -- A few weeks ago an interesting experiment was undertaken at the Brussels food fair, a yearly affair where food lovers wander around among the many stalls stuffed with all imaginable delicacies.

A shop was put up selling boxes of Belgian chocolates. The first day the price was set at �9 for each box. Sales went well.

The next day the price was raised to �15 per box. Steeped in economic theory, you might think that demand now declined. Wrong. Demand doubled.

On the third day the price was lowered to �2 for each box. Demand for chocolates collapsed. What went wrong with the law of demand?

^---(from url)---^

If you can get your mind (and your mouth(?)) around Belgian chocolate, you will have a useful insight into the price-wranglings of the gold market. To wit, you will understand the utility of a 20-year gold-price decline (1980-1999) during the long deliberate build-up to euro launch, followed by a sudden turnaround that has the "Belgian chocolate phenomenon" among the assurances that even as the price goes higher, the market will gain fundamental support through a greater depth of participation.

In other, simpler, words... when it comes to gold in particular, there is no such thing as a price that is "too high". (That is, especially when viewed in isolation. Only when cross-currency prices are compared does a rational basis for RELATIVE price levels come into play. But even then, when viewed globally as a general price level in all currencies, we can still gain insight from the above-referenced �15 versus �2 price per box phenomenon.

R.

That QUESTION is a -- "NO PRIZE" -- Question !
(For educational purposes only !)
Sorry
<;-(

http://www.infomine.com/investment/metalschart.asp?c=silver&u=oz&x=zwd&r=1y⊂mit1.x=25⊂mit1.y=8"IF you were a Zimbabweian and had one ounce of Gold" you would have also bought a hand full of ounces of silver. Every once in a while, you sell an ounce of silver to live. Then, you remain a Zimbabweian MILLIONAIRE !!!!

I saw the experiment some weeks ago. The same trick doesn't work with products that aren't percepted as having "value". But the Belgian pralines are valued. We even have chocolat with finegold leaves on it.
I could have doubled the sales of the expensively priced boxes, simply by suggesting delicately that the interested person cannot afford these valuable delicacies.

The same, but opposite, psychology was used by the goldmanagers during the old old regime. But one day gold-observers are going to have tell the general public that gold-wealth is not affordable anymore for modest folks. Oooooh, la nature humaine...vanity, nothing but vanity.

...from #140390...

"...the country's trade deficit narrowed 5.8% to $64.21 billion in November..."


Man-o-man, now that's truly impressive...it "appears" we are not overspending quite as fast as we were in October!

Definitely worth a dollar-kneejerk...

Notice gold's blink was followed by a continuation of its concerted stare...

More a "wink" than a "blink"...

;-)

Let me tell you some simple present fact : Many organised burglers from the East-block come down to central Euroland and do steal systematically almost...ALMOST...everything...except "silver" (included old coins) !!! Sorry, mate.

Then a Zimbabweian would have not bought gold in the first place? ??? Knowing all along that "burglers from the East-block come down" to take everything but silver? I wonder if TC's chocolates are wrapped in something that will have value after they are consumed. Beer bottles just don't cut it. :(

Hopefully, the demise of the dollar will be slow and painless.

"The Question is: WHEN AND WHY, do you sell your one ounce of Gold ?" - Gandalf the White

WHEN? When sselling It is the only option left.
WHY? To get more options.

S.

TC, Belgian et al.,

Mmmm....careful...

That is an old grocers' trick as well...a wholesale consignment of tomatoes (say) is divided into two parcels and placed upon the shelves with different price-tags...$3 per kg and $4.50 per kg, say. The grocer finds that sales of the more expensive lot are comparable with (or may exceed) the less expensive lot.

This jiggery-pokery is not so simple though. There are limits to every trait that "the market" exhibits...gullibility being one such trait. Had the grocer placed the more expensive lot on sale for $25 per kg it is unlikely that he/she would have made any sales from that lot. In fact, the whole think may have backfired when customers see through the attempt to swindle them and leave the store en masse...

On the other hand, if some prominent person (say) is seen to be "conspicuously" buying the $25 tomatoes, a rush may ensue...cleaning out the store of every tomato in sight...even the squashed ones on the floor!

..."la nature humaine" indeed, Sir Belgian.



Lesson: Retail marketing of gold, like tomatoes, must be handled deftly...

:-)

Hi Belgian,
I just wanted your thoughts about why is the COT so heavily short gold. If gold is going up and countries are MTM their currencies to gold then why stand in front of a speeding train? On one hand you and TownCrier maintain that gold sales help raise the price but on the other hand you mention the need for an orderly rise. Is the COT gang shorting at the behest of the central banks or are they on their own?

I ask because $550 is being defended aggressively and I know several hundred thousand gold calls are in the money now not including calls on the gold stocks. Goldman Sachs is covering on COMEX but shorting aggressively on TOCOM.
What gives, any thoughts?

Fortunately, every single one of the many USAGOLD-Centennial Precious Metals clientele are blessed with superhuman attributes of being both wise enough and prosperous enough to load up their personal vaults and safes with gold coins and bullion. They know, almost as second nature, that "low value" can be held in paper form as reasonably as in any other (simply because there is little risk in having not much to lose), whereas "high value" (high net worth) demands the accumulation of gold metal because a paper representation of one's wealth is simply not good/reliable enough.

However, while this happy situation is certainly true of Centennial's clientele, unfortunately, it's sad to say, NOBODY ELSE can afford to have, and take action on, that same degree of wisdom/instinct.

R.

"The same trick doesn't work with products that aren't percepted as having 'value'."

As superficial as it may be, it nonetheless bears upon the case that no-one would think to impress anyone with a crate of tomatoes rotting a week hence, regardless of price paid.

R.

"Vanity - my favorite sin !"
Al Pacino as John Milton aka The Devil in The Devil's Advocate

A friend of mine remarked back in 2002 that Americans will dislike gold at $300 - $400 but will love it at $600 -$700 and higher. Many of my clients who thought I was nuts back then are beginning to ask questions now.

I read every word of yours
about gold and try to
absorb your very deep and
profound knowledge about
the metal and all those
political connections.

But you do not understand
silver. As far as I am con-
cerned it is not a monetary
metal; there is not enough
around and it is constantly
used-up...So how in the world
could it be a monetary metal
down the road? It's more in
the nature of palladium, or
platinum, or rhodium (which
traded for $5,200 dollars for
one ounze not so long ago,
and now is meandering around
$3,000). Enough of that.
If East European gangs don't
rob or steal silver and or
other old coins...well, they
just aren't so smart then.

The silver petition crown coin
of 1663 sold in 2003 for
138,000 pounds.
The 1796 no pole half cent
copper coin sold for $506,000.
A Thomas Jefferson Indian pence
'medal' went for $115,000 and
an 1804 Silver Dollar from the
Walter H.Childs collection for
$4,140,000. Yes, that's millions.

Back to gold and all those impli-
cations; it's immensely inter-
esting and like an international
thriller book a la Le Care.
Respectfully yours, OvS

http://www.financialsense.com/Market/wrapup.htmsnip:

A long-term chart ratio suggests that gold will outperform stocks in the next few years. Based on technical analysis, the odds favor stocks dropping with gold stable, gold rising with stocks stable, or gold rising with stocks falling. Since the beginning of the gold bull market, analysts have been pointing to the out-of-whack low gold to Dow ratio as a reason why gold should outperform stocks in the years ahead. This is fundamentally correct, and now it appears that there is a technical signal that suggests that the gold to Dow ratio should get back "in whack" sooner rather than later. "Sooner" means in the next 3 years or so.

The long-term monthly chart below depicts the Gold to Dow Jones Industrial Average (DJIA) ratio from 1990 to the present. After making a bottom in 1999, the ratio had a successful retest of the 1999 low in early 2001, before forging ahead until early 2003. If you had bought gold at the second bottom and shorted the Dow in early 2001, you would have made 100% on your money by early 2003. The ratio then formed a basing pattern until the end of 2005, and now appears to be breaking out to new multi-year highs. The two moving averages displayed on the chart (10 and 30 month) seem to suggest a bullish long-term pattern. The out-performance of gold compared to the Dow puts all the media excitement about Dow 11,000 in perspective. In terms of real money, the Dow has done nothing in recent years.

-Goldilox

I would add, the DOW has not only done nothing, in gold terms it has dropped 55% in five years.

DOW2000 (11k) = 45 0z gold
DOW2006 (11k) = 20 0z gold

Which one guards your future financial security?

Blunt answer : To hell with all gambling positions on the goldprice ! Shrimps (us) can never win (net-net) against the goldprice derivative bookmakers.
After having speculated full 25 years on goldmines, I "had" to conclude that gold IS in the process of changing and that all further goldprice speculation/gambling will end badly ...with great loses...opportunity losses, for the most succesful amongst us, who would succeed in break even.
David, I even don't look at any position anymore. I want the chocolat, the tomatoes, and the BULLION in my hand...NOW !

No stocks, no bonds, no derivatives ! I don't even bother to short all this stuff. Am definitely "out" of the arena and don't even watch the games anymore.

Most probably I do not understand silver !? And if one day, I meet those burglers...I'll ask them why they refuse to take the silver ! And they will definitely not get away with some blablabla explanation...

There are soooooo many precious (and rare) metals out there, OvS . I happen to live close to a metals refiner (Umicore). Many of those rare (essential) metals are being valued for ever more reasons. But Euroland banks stopped providing silver, long ago. Today, the banks still do deliver goldmetal...and will continue to do so.
My conclusion is simple : Silver's future is different from gold's future. Made my choice for gold on this argument. And shrimps better make the right choices as we cannot "diversify" and miss the best opportunity in our short and modest lives. There are good times to make money...and these are usually followed by times where one better "consolidates" one's savings in an appropiate tangible, sit back, relax and watch.
Am I getting old !?

You are funny. Thanks
for making me laugh out
loud. Good night. OvS

Again and again,...the financial experts try to correlate ad nauseum. As if the entire gold-buying world is constantly watching "the Dow" and suddenly realizes that paper is overvalued and gold undervalued.

Maybe the goldmanagers decide to let the Dow drop back to one thousand and have Dow/Gold=1...as to contain the goldprice ! Nonsense of course...complete nonsense.

The Big gold-change, happening now, is the process where the goldprice is ***delinking*** from everything they always wanted to link (correlate) it with !

A rising goldprice should be viewed as inflation hedge. But why should the Dow have to deflate when there is inflation (monetary + price) !? And if the goldprice is rising because of inflablabla...why aren't the IRs inflating ?

The financial industry is fooling the entire public with masses of inconsistancies, conveniently presented as "conondrums". They are telling us HOW we have to look at and percept, gold ! Their vision is enforced on the entire world with the one and only tool of goldprice-control (euh management). But a growing majority on this planet is NOT buying this old gold-regime anymore.

Manage all things paper-financial as you wish...but...stay away from goldpricce management. This message is subtly send (and shared by) to a coalition of gold=wealth advocates.

Sticking the goldprice evolution firmly to the Dow-index...means, that when paper is to be raised in price again...the goldprice should decline, again ! This time it is NOT going to work that way anymore. That's why the goldprice is rising against all currencies (confetti). And the goldprice is not going to stop when paper is pulled into a gold-standard (semi fixed goldprice) again. Gold is being revalued and not re-priced. Cfr. the Belgian chocolat (many) prices and (one) value. The "value" of all the gold shall represent all the value this planet has created (is creating). Gold-management shall not be abused anymore as to keep all the world's debt, credible ! That is the essential difference between gold-pricing and gold-valuation.

I thought that I had written something on this subject and posted it here before...sure enough...for those of a stalwart disposition...

http://www.usagold.com/cpmforum/archives/2620035/default.html

check out #103526...

Mmmm...I think I still think the same as I thought then...."Of all the things I ever lost, I miss my mind the most!"



;-)

$554.10 for gold, $9.10 for silver, and $1025 for Pt.

Something is going on. It is worth watching.

+$8 in half an hour. Tighten seat belts, and you may be needing those drop-down oxygen masks !
C!

http://www.marketwatch.com/news/newsfinder/pulseone.asp?&tool=1&guid={F2B9686D-9B80-4721-8FED-C0170C343B1C}&siteid=bigcharts&dist=bigchartssnip:

SAN FRANCISCO (MarketWatch) -- February gold climbed as high as $557.30 an ounce in New York, an intraday level not seen since March 1981. The contract was last at $556.90, up $7.70, or 1.4%. It's trading almost 3% above the week-ago close of $541.20 with metals trading on the exchange set to end by 12:10 p.m. Eastern ahead of Monday's Martin Luther King, Jr. holiday.

-Goldilox

Three percent a week sheds a new perspective on the "miracle of compounding".

Better than 10% since gasoline prices were held in check for the holiday shoppers.

The $6 daily limit is seems to be a "barbarous relic".

"The Question is: WHEN AND WHY, do you sell your one ounce of Gold ?" - Gandalf the White

This is a very interesting set of questions. When and why, ... truly! Smeagols answers, although true, left me less then satisfied. And, as Gandalf the White pointed out, it was for educational purposes only. So I do ponder...

... That last May a Zimbabweian millionaire had the foresight to convert some of his dollars into a ounce of gold. Last May, it cost (maybe) a million dollars and eight months later it would sell for 48 million (If he so choose to sell).

The first thing that pops out here is the timeline. May to January is � of a year. Looking at the link provided, we also see that the PoG more then doubled (seemingly) overnight on one fateful day in October after having already gone up by a factor of nearly 10. This Zimbabweian did not have to wait long for the markets to move around him. Hyperinflation happens very fast.

A second thing that is less obvious is that during this same time period, the price of wheat has remained relatively constant everywhere else in the world (http://data.hgca.com/graphs/graph.asp?045). The same holds for many other commodities that this millionaire may want to acquire. So, even though the PoG in the Zimbabweian dollar has gone up more then 48 times, it really means that the value of this dollar has gone down to 1/48th of it's original value.

Now, when does he sell his gold? That brings in another point that is discussed here by many. That is the fact that gold, even on this local level, is a political metal. As long as the government of Zimbabwe continues to print money in an out-of-control manor, that millionaire would be a fool to sell his gold for anything valued in Zimbabweian dollars.

With this in mind, he has two options, either wait for the government to get their act together and win back the confidence of the people in the country in order to stabilize the dollar, or, he converts the wealth that he holds in gold into items that can not be acquired with Zimbabweian dollars. If he is a noble millionaire, he may take his gold and purchase some wheat on the world markets. If he is ingenious, he would convert that into a finished product and sell it to his starving neighbors and then quickly convert the proceeds, once more, back into gold (if he can even find gold, but, that may be unlikely in this type of environment). If he is capitalistic, he may find that his wealth has elevated him into a profitable business that can help him acquire more gold.

I can logically conclude that it is misleading to believe that because the price goes up in one country by 48 times, that the purchasing power on an international scale also goes up.

The more interesting puzzle is to look at the inflation that is happening on a global scale. What if, on some fateful day in May or June, you wake up and find that the PoG in *your* currency is now 3 or 4 or 5 times higher? Are you suddenly richer? I would expect that you would immediately search for international comparisons in order to determine exactly what happened. Did the value of the currency deflate or did the value of gold get re-valued up? If it were me, as a simple check I would look to see if the PoG tripled in all currencies or just in my own currency. If it tripled in my currency -- welcome Zimbabweian type hyperinflation. But, if it tripled in all currencies -- welcome gold re-valuation, but with caution! It may be that the price of wheat also increased by multiples making the spread between gold and wheat diverge by only a few percent -- not 48 times.

We live in interesting times. It will take a group effort to see through the deception of global inflation. It may be that gold will buy things that currencies can not touch in the near future. I would hold my gold, today, so as to hopefully be able to buy those things at some day in the future.

http://urbansurvival.com/week.htmsnip:

You were wondering why the Federal Reserve is in such a hurry to lose the M-3 reports? Well, as I've been telling subscribers to our www.peoplenomics.com site for a couple of months, my outlook for 2006 is "inflation in the first half and deflation in the second." Today's Produce Price Index, up at an annual rate of 11.3% annualized rate is pretty much in keeping with our expectations.

-Goldilox

We seem to be forgeting the mantra:

There is NO inflation, There is NO inflation, There is NO inflation.

Sir Smeagol's and Sir Flatliner's responses were not the only that I have received, as a number came directly to me from the four corners of the WORLD !

One, from SE Asia was of the thinking, "When needed to SAVE your and family's lives !"

I have personally seen exactly this in action before ---
My former Secretary was from Vietnam, and her family's GOLD was used to "book" the only young child's transportation on a fishing ship to HK in the midst of the war.

ANOTHER Answer was:
When "everyone" that never was interested in buying Gold wants to "obtain some" at any price --- THAT is the time that you should be thinking about selling SOME of yours !

IF you were around in the USA during the 1979-1980 era, you have seen this in action also. (SAME with SILVER too.)

KEEP THINKING as the YELLOW has now smashed through the $555 level ! WHERE is Alice ?
<;-)

http://isht.comdirect.de/html/detail/main.html?sTab=chart&hist=1d&sSym=GLD.FX1GO YELLOW !

http://isht.comdirect.de/html/detail/main.html?sTab=chart&hist=1d&sSym=GLD.FX1Have you ever seen a more PERFECT "UP-FLAG" than this one in progress ?
Alice is not in KANSAS anymore !
<;-)

http://quotes.ino.com/chart/?s=NYBOT_DXTHERE goes the US$ !
Back to the 88.8 level !!
<;-)

Something interesting from the trenches. Small amounts of gold 1gm, 2 1/2 gm, 5 gm, 10 gm are selling at great premiums as fast as they are offered. The range of prices run over the 556.50 that gold closed for today. The equivalent of 930.00 per oz is common and even greater spreads are there depending on the form the gold comes in. It is all .9999 fine. The average guy is starting to buy gold in small amounts. As the supply gets smaller prices will go even higher. White Hills

http://www.usagold.com/gold/special/dutch.html

January Buyers' Group

Special discount pricing on Dutch 10 Guilders

Shop online or phone for addtional savings.
Call today, save today!
1-800-869-5115

Nice price step...around $10 in spot...

Looking at the historical gold charts for 1979 and 1980 (for example, at the K-castle)...there were a couple of $60-70 daily increases in Jan 1980 during the late blow-off phase of the gold price. Before that, quite a few in the $20-30 per day range. So a $10 daily move is "quite respectable".

Of course, it is probable that "we ain't seen nothin' yet"; considering the substantial devaluation of the dollar in the last 25 years, the state of the national finances and the parlous prospects for the dollar going forward.

...the Moon is still a long way off and Dorothy (don't you mean Dorothy, Sir Gandalf?...#140422) and Toto are only just leaving Kansas...on their way to rendezvousing with To-the-Moon Alice...


;-)

Those who have been wise enough to put some or all of their savings into gold during the last six years have obviously done well. As such, the question above, could be phrased differently:

"When do you sell your savings ?"

The simple answer to both questions is:

You don't ever "sell" your gold - you "spend" it (when the need arises).

According to Sinclair, gold has shot past the level needed to trigger some sort of derivative event. If all goes according to the predictions (as I understand them), various members of the gold cartel now will be jumping ship, making a fast move up in price.

Does anyone believe this? Or am I just an obnoxious kid saying "are we there yet?" over and over on a very long car ride?

Rather high !? Theory : Are the gold paperpricers pushing the goldprice up in anticipation of metal delivery from USTreasury as to keep the dollar ball in the game (oil invoicing + reserve status) ??? Thoughts anyone.

The following note came in today by e-mail:
_________________
"My son is working on a project... hoping you can help... the topic he wants to discuss is

'What would happen if all the gold in the U.S. was destroyed?'

Without getting into the 'how', he would like to study the effects of the loss of all the gold in the Federal Depository."
_________________

I figured, why not share the fun of this challenging scenario?

I'm sure many of you recall the specific motivations behind Goldfinger's desire to destroy the U.S. gold supply in the 1964 James Bond film, but you'll want to further take into account that we were on an international gold standard in 1964 (by which the dollar had a fixed redemption rate against gold) whereas that is no longer the case today. (Basically, Nixon did administratively on August 15, 1971 that which Goldfinger failed to accomplish in 1964).

With that, I'll turn it over to you all to help give this young man some talking points.

R.

dollar game? No, real fear developes when ALL parties panic.. US$ at 85.40....get out your leaf blowers...trash OUT!!

Belgian, what are "LBMA figures for december '05"? Also, thinking back to Another's comments that because no CB sold into the paper market, the price remains low. I'm just guessing here, but if the US Treasury offered gold for sale in the paper markets, the price would explode! Every "Big Trader" would call in some gold. ... But, I may be completely missing the intent of your posting. I will look for clarification.

In 2006 dollars, those 1979 -1980 moves would need to look like this for an apples<>apples comparison:

$10 move in 1980 = $23 move in 2006 dollars
$60 move in 1980 = $138 move in 2006 dollars

Only a matter of time until those are the kind of numbers we will witness.

- Survivor

From the original 28,000 tonnes of UST gold, 20,000 tonnes moved to Europ pre 1971. If the dollar ($-IMS) is already buying time with shipping goldmetal (from the 8,000 tonnes left over) to those who still support the $-reserve status and invoice oil in dollars...it is only a mater of time before the $-IMS must transition into another monetary system. No gold-reserves in the vaults means nothing to Mark To the Market as all the wealth reserves have gone.

This might explain why the goldprice rises without affecting the USDX !?

@Specie-man #140427

My humble compliments to you good sir. That is exactly the answer I have been trying to put into words for some days now. Brief, to the point, and spot on!

Cheers
- Survivor

If (!!!) the UST is already shipping/delivering goldmetal from its reserves...it will NOT go through LBMA, but directly to the privileged receivers. At LBMA, it are the gold-contract players who manage gold's price.
If one "has" to deliver goldmetal, one better delivers at the highest price possible. In sharp contrast with the strategic redistribution of euro-gold as attractive as possible, at the lowest "official" price...to be revalued at the appropiate time.

http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has beenupdated.

If you are considering investments in gold we invite you to request our freeintroductory information packet detailing the products and services offeredby USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and lookforward to working with you.

FRIDAY Market Excerpts

January 13 (from Reuters) -- Gold futures in New York reached a new 25-year high on Friday, as a weaker dollar and frenetic speculative buying before a holiday weekend rekindled a rally in precious metals, dealers said.

COMEX February gold futures jumped $7.7 to $557 after trading from $545.20 to $558.80.

Gold blasted higher as investors who are bullish on the market for 2006 increased their stakes before a long weekend. New York metals are closed on Monday for the Martin Luther King holiday.

With the strength of the buying, futures managed to break past initial chart resistance at $550.50 and surpass Tuesday's quarter-century peak, at $553.10.

"The funds are coming back to buy it to new highs on a weak dollar and strong euro," said James Quinn, a market commentator at AG Edwards & Sons, at the floor of the COMEX.

Money managers and investors have increased exposure to gold and commodities as they diversify away from currencies, equities and bonds in hopes of boosting returns. Concerns about the economy, geopolitics and a weaker dollar in 2006 also have attracted investors to the precious metal.

The dollar slipped Friday as traders questioned how much further the Federal Reserve will raise interest rates, after U.S. retail sales data came in weaker than expected and producer prices were higher than forecast.

Separately, Deutsche Bank raised its gold price forecast by 16 percent to $570 an ounce for 2006 and by 26 percent to $660 for 2007.

---(see url for full news, 24-hr newswire, market quotes)---

http://www.economist.com/opinion/displaystory.cfm?story_id=5385434...cover story on The Economist.

Greenspan passing the (explosive) baton.

Meanwhile, "The World"...where to from here?

Median housing prices in much of Australia have fallen about 10% over the last year. Suspect similar slump in UK and elsewhere. Equity draw-downs must be becoming less of an option for many...although perhaps the baby-boomers still have a lot of equity tied up in their houses??? Will they call upon it for the "good-life" in retirement and leave their kids nought? Or will they need it just to survive in place of pensions that are too lean for the task, leading to banks ending up owning most of the housing in "deceased baby-boomer estates"?

Damn it Janet...what we need is another good bubble somewhere!

Don't go to sleep and miss the Bernanke Chapter just over the page...

:-)

"Gold is forecast to average $618 a troy ounce in 2006 - with a high of $760 an ounce, and a low of $520.75 - according to UK-based consultancy TheBullionDesk.com." [Ross Norman]

"Looking at the charts the big numbers like $550 and $600 are really only psychological numbers - from the charts perspective, and they're important, there isn't very much between here and $800 actually, and that's the high we saw back in 1980. You tend to find a little bit of resistance at the big numbers, because people that want to sell choose the big numbers to leave those orders on - so they only provide a bit of a hurdle. But from a technical perspective there isn't too much resistance from here, and northwards all the way up to $800."

________

MK: These guys predicting $750 (ahem) and $755 (ahem) are missing something in the analysis. Ross Norman has it right at $760 (ahem). And I'm not saying that just because he agrees with me. We web site proprietors have to stick together. When we get to 2007, we can clink the champaigne glasses or cry in our beer. Both joy and misery love company. So welcome to $760, Mr. Norman. 'Tis a good number.

________________

Meanwhile back at the castle. . .

Gandalf, is this is a violation of contest rules? This Ross Norman thing.

Oh, we are not having a contest, you say?

But I thought we were.

What's that? We are but we aren't? A trip to the Treasury is not going to be required? By the saints, methinks you've hit on something, my wizardrous friend. Contests without prizes! This is one of your greatest innovations. You are truly a Great Wizard.

Oh, you think it only temporary, and an aberration. . . . By all that's holy, Wizard, I take exception to your use of the word "cheap." I'm not, I say. Thrifty would be the more elegant description.

Back to Ross Norman. What about outside guesses? Are they now acceptable?

You're thinking about that? Very good. We need an answer. What's more, as you always say, we need rules.

What's that? Speaking about rules, you're not sure if I can enter the contests?

True, it's never been done before. Ahem. . . .It IS difficult to award oneself a prize. This is truly a conundrum. . .

No, Wizard, I do not believe that the word "conundrum" is over-used. Sir Alan would never overuse a word. Remember the one about irrational exuberance. . . Whoa, what a furor over two words. . . .

(Voices fade down corridor, metal door clangs, echoes. It's time to sup and and greet a good weekend after a very good week)

http://english.chosun.com/w21data/html/news/200601/200601130023.htmlThe Chosun Ilbo, Seoul, South Korea
Friday, January 13, 2006

Government intervention in the currency market boosted the value of the U.S. dollar on Friday, when the greenback surged 13.80 won to 987.80 won. The exchange rate opened up W2.00 at W976.00 on an increase in the yen-dollar rate and continued to rise rapidly as government intervention fostered buying movement. Insiders say the currency authorities were at their most active so far this year by
buying $1 billion.

Meanwhile, Finance Minister Han Duk-soo defined the current
appreciation of won as abnormal. "The won-dollar rate is falling too much. I shared this opinion with Bank of Korea Governor Park Seung during a phone conversation today," he said at a forum on advancing Korea in Seoul.

http://english.chosun.com/w21data/html/news/200601/200601130018.htmlSingle Asian Currency Comes a Step Closer to Reality

The Chosun Ilbo, Seoul, South Korea
Friday, January 13, 2006

The Asian single currency, which so far exists only in the minds of economists and officials with international organizations, will take on more concrete reality soon.

The Asian Development Bank plans to publicize the Asian currency unit (ACU), a notional unit of exchange based on a "basket" or weighted average of currencies used in the 10 ASEAN member countries plus South Korea, China, and Japan, the Yomiuri Shimbun (Tokyo) and others reported Friday.

But that does not mean that any bills or coins will circulate any time soon. The ACU is only the first step toward the integration of Asian currencies, a "virtual currency" that takes into consideration gross domestic product and trade volume of each of the 13 nations and serves as a gauge for governments to implement foreign exchange policies. So far Japan and China have tried to make their own national currency into the Asian currency, but their jostling in effect canceled out the efforts of the other. That is why the ACU is gaining support on the road to a single currency.

Given that it took more than 30 years for Europe to launch its single currency, the euro, Asians also probably have a long road ahead until the ACU or its successor chinks in their pockets. However, it could take less time than in Europe, since internal trade volume in the region is increasing faster than external trade volume with the U.S. or Europe, according to Yun Deok-ryong, a researcher with the Korea Institute for International Economic Policy.

Still, many obstacles lie ahead. The U.S. above all is likely to worry that it will lose its influence over Asian economies and use the International Monetary Fund to block the introduction of the ACU.

The launch of the Asian Monetary Fund, which is to coordinate monetary policies in the region, faces objections from the U.S., which does not want to see an Asian single currency emerge as another key currency along with the dollar and euro in the global financial market, an official with the Ministry of Finance and Economy said.

http://metalsplace.com/metalsnews/?a=3575Platts News via MetalsPlace.com
Thursday, January 12, 2006

Copper is no longer behaving as an industrial raw material but as a financial instrument, Bloomsbury Minerals Economics said in a report on the impact of commodity index funds on metal prices Thursday.

"We think that it is pointless continuing to analyse copper prices as if they were simply prices of an industrial raw material. For now, copper is behaving essentially as a financial instrument," said BME analyst Peter Hollands, adding that Commodity Index Fund buying was raising copper prices above the level that would otherwise be seen.

"Demand for metals futures is compounding the effect of market deficits and low physical stocks. Copper price behaviour has made a transition from being primarily that of an industrial raw material to that of a financial instrument," said Hollands.

He said, however, that the index fund demand for metals drives up prices, which attracts money to the index funds, which drives up prices: "It is a bubble."

"Life has become very dangerous indeed to the physical copper industry," he warned.

Hollands also noted the breakouts of actual price from modeled physical-market fair value that have emerged in aluminium and zinc during 2005 and in lead and nickel this month.

"Commodity Index Fund investments have had an equally dramatic effect on gold by converting it from a currency and real-interest-rate driven financial instrument to a Commodity Index Fund-driven financial instrument, causing gold prices to correlate positively with base metals prices," he noted.

Hollands said Commodity Index Fund investments were expected to rise from around $80 billion now to $105-115 billion by the end of 2006 and $140-150 billion by the end of 2007, provided that a major bear market in commodities has not begun by then.

"Some of the newer funds are more metals-intensive. If Index Fund investments do grow like that, then index fund buying could add the equivalent of 350,000-525,000 metric tons of demand for aluminium futures, 180,000-270,000 metric tons of demand for copper futures, 100,000-150,000 metric tons demand for zinc futures, 70,000-105,000 metric tons of demand for lead futures and 100,000-150,000 metric tons of demand for nickel futures, in both 2006 and 2007," he said.

Hollands noted that the impact on price may well be most extreme in metals where there are also deficits in the physical market and very low stocks.

"The end of a fundamentally-driven bull market in commodities will most likely bring the inflow of investment money to a halt but may not prompt a great deal of disinvestment. The pensions industry seems to have accepted a long-term role for commodities holdings for the purposes of diversification, inflation hedge, offsetting weak developed world currencies, and gaining exposure to emerging market growth," said Hollands.

http://www.chinapage.com/newyear.html#animalIs that a rooster I hear crowing in the castle?

Sounds like: Cock-a-760-dollar-doo! Or something like that...difficult to discern amongst the echos...perhaps the hens are all laying golden eggs...

Could this crowing cock be signalling a new golden dawn?

Is China going to feature highly in the next golden day?

Next Chinese calendar year (commencing 29Jan06) is the Year of the Dog (doesn't sound too good for the Dow)...2007 will be the Year of the Boar...and then the Year of the Rat...

Coincidentally, 2005 was the Year of the Rooster - signalling a golden dawn indeed!!

Sir MK, I hope next year that you are still crowing (and not eating your crow instead!!!).

Regards

:-)

http://www.321gold.com/editorials/russell/russell011206.htmlWhile having to admit that TA can be extremely useful, I have difficulty in taking seriously any estimates that are based on the $850 peak in '81. Even the illustrious Richard Russell is talking about the 50% retracement level between $850 and $250 (see link). Well, that might be fine if he's talking about a 2-year chart but, unfortunately, that figure of $850 is rather misleading, as it is a number of 1981 dollars which, as Sir Survivor kindly informed us earlier today, is maybe worth 2.3 times that or $1955 in today's money. (Of course, it is a little difficult to calculate in real terms as so many points of reference in any inflation index have shifted in the intervening period) So it just goes to show that we have a l-o-n-g way to go before approaching the froth of '81.

C!

PS. Of course, I know that you didn't use any of this tomfoolery to arrive at your prediction, MK. You probably just borrowed the wizard's crystal ball for an afternoon.

Although I thought it not possible for a US President to outdo the damage Bush has done, Bush himself is raising the bar. The inflamed dialog with Iran has begun and the major powers have chosen sides. The question is will this President yet again sanction an attack on a sovereign nation on false premises? The real crime of Iran is to plan on opening an oil bourse in March of this year trading oil in Euros. This President seems intent on dividing, indebting and isolating the US. Make no mistake a new era in the US and world is now decending upon us. War and scarcity are in the air and their is no escaping. I pray that many of you are out of debt and hold physical gold. If the US participates or sanctions an attack I believe chaos will follow.

Gold will tell us just how much of a challege we have ahead of us. Throw out the gold charts, we are living in a time akin to 1939-1940, good luck.

"To make the banker's position clear, the business of banking is the marketing of debt. The denominator of the debt need not be on hand at all. When one opens a non-allocated gold account ( the normal type of gold account ) , then the bank is under no obligation to have any gold to back the account. The bank only needs the gold when the gold is requested for delivery in hand or into a fully allocated account.

Thus the banker will take your dollars deposited as a gold account, and use them to buy bonds or lend. If gold or Pt was deposited the bank will do one of the following:

1. If currency interest rates are higher than metal lease rates, it will sell the metal, buy the currency and invest it.

2. If the lease rate is the higher rate, the bank will lend the metal itself.

3. If reserves are low, and there is danger of a "bank run" ( depositors of metals asking for their metal ) then the bank will keep the metal for reserves, however, it will sell call options into the market in order to make a return on the reserves. Often, these calls would be delta hedged."

ORO

After watching "Treasure of the Sierra Madre" yesterday, I had a business idea.
With the pending implosion of the US dollar, I anticipate a big demand for dormitory style flophouses in the near future. Privately owned flophouses, like the Oso Negro, not gov't owned flophouses, like The Superdome.
Those of us who own gold now are well positioned to own a franchise in these new Oso Negros.
Movies like "Treasure of the Sierra Madre" will play in the lounge. Maybe have kids run around selling lottery tickets, too. Are you with me?

Remind the guests "this is a country where the nuggets of gold are just crying out for you to take them out of the ground and make'em shine in coins and on the fingers and necks of swell dames."

Then perhaps open a prospecting supply/donkey rental business with beans and ammo too, just around the corner from each Oso Negro.

The bonus of this plan is knowing the greedy ones will never make it back alive. On a large enough scale, this could thin the herd until there is nobody left to run for Congress or manage a Central Back or the Federal Reserve.

Only honest people and gold will be left.

Oh well! It's getting late. "I think I'll go to sleep and dream about piles of gold getting bigger and bigger and bigger."

Best Wishes

http://news.bbc.co.uk/1/hi/world/middle_east/4607492.stmObservation:
1/ EU does not have indigenous energy resources and must import energy.
2/ Currently, Russia is the main energy provider for EU.
3/ Recent Russia-Ukraine events have demonstrated that energy supply can be used as a political lever.

Assumption:
Iran is the only alternative for EU to gain energy independence from Russia & US. As a side note, EU has to secure both Iranian energy and it transportation route for energy independence from both US and Russia.

Observation:
EU joins US in condemning Iran.

Suspicions:
1/ EU has given up energy independence plans. May be there was a deal and EU received something else in return?
2/ Joint US-EU force is now planning for sanctions. Quoting from BBC:
"What kind of sanctions? They would be trade-orientated, aimed primarily at the one major industry that Iran has - its oil and gas."
3/ Sanctions would result in higher oil and gas prices.

http://www.guardian.co.uk/iran/story/0,12858,1677542,00.htmlDavid Linkley, your #140445 hypothesised that "The real crime of Iran is to plan on opening an oil bourse in March of this year trading oil in Euros."

The real crime? Are you seriously proposing that Iran's President has not recently given a strong indication that (a) Iran's nuclear ambitions go far beyond "peaceful" electricity generation, (b) that he desires Iran to have the same level of nuclear arsenal as Israel, and (c) that Israel should be wiped off the face of the earth?

Are these falsehoods that unfairly impugn the peaceful Iranian Government (whose only real crime is to seek to set up its own bourse) being unfairly reported by conservative media sources in the USA? Perhaps you should read what a fair and balanced journal like The Guardian says (see link).

It matters little whether oil is priced in Euros or $US, as it all comes down to electronic entries on computer screens anyway.

To project some sort of US hegemony where a gun-toting President Bush blows the crap out of any nation who has the temerity to even think about selling oil in Euros, to me simply indicates that it well past medication time.

WHY is it a problem for the US if Iran should obtain a nucleair weapon ? Can you elaborate this please ?

The main question is : Are both currencies allowed to compete ...ON ALL LEVELS !? Is it opportune for the global $-IMS, to have competition between two major currencies !?

Or, the question that is interesting us here in particular : Does "gold" play a role in the euro-dollar competition !?

Pakistan, an islamic fundamentalist state, with a military leaderschip, was allowed to acquire nuclear power as to balance with India's nuclear power. But Pakistan has no oil deterrent. Oil being of "global" strategic interest, through the oil for dollar reality.

In other words : No major oil-reserve state should have nuclear power ! Only oil consuming states have the right to have a nuclear deterrent.

Consumers that control the very fundamental (oil) of global economy and oil-owners who are excluded from this global prosperity.

This is of particular interest for Russia as an energy/resource rich state "with" nuclear power ! Watch how Russia and Germany are getting closer and closer !

@ Gold Standard,

It seems you are suggesting that those who stop taking their medicaton are "a threat"? Given that "homelessness" is now a "crime" in many US cities, there are obviously those in power who are "all too regular" in their medication regimen. Why is it that those with "itchy trigger fingers" always want those who express restraint to take ever stronger drugs?

More seriously, I'm not sure where else you've been lurking, but most here have agreed that war actions of late have had a strong financial component. The major topical disagreement has been the question of how much of one.

Notice that none of the other "Nuclear threats" are targeted for anything beyond occasional rhetoric, even those who are already "locked and loaded".

What makes Iran more "dangerous" than North Korea, Pakistan, etc.? The answer may lie in their oil-based financial independence, because the others are so poor that they must rely on outside "paper aid" to survive, having no serious natural resources to barter. Islamic gold Dinar? That one's been completely squelched.

If Iran falls, No Korea and Pakistan will not be the next targets, as they have nothing to offer in the way of "spoils of war." Venezuela, Bolivia, and Brazil, however, are looking a little too "socialist" to the admin. But wait, if socialism is the target, why are Great Britain, Canada, and the EU not on the list? Ya gotta get way past O'Reilly, Hannity, and Colmes for any of this to make sense.

"Resource wars" has been a strong topic even on right-of-center sites like Puplava, so maybe that's a good place for you to get up to speed on the subject.