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Welcome to the USAGOLD Gold Discussion Archives. Looking to buy gold coins and bullion? The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets. To join the debate request a discussion password here.

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ARCHIVED DISCUSSION FROM 11/17/2002
All times are U.S. Mountain Time

(Yesterday's Discussion.)

USAGOLD / Centennial Precious Metals, Inc. (11/17/02; 23:20:30MT - usagold.com msg#: 89811)
In bookstores for $14.95 (plus tax). Get it here for only $5.95
http://www.usagold.com/cpm/abcs.html

The ABCs of Gold Investing

ABCs of Gold by MK"Without waxing philosophical, a few words are helpful concerning the mind-set with which you pursue your interest in gold ownership. Some enter the gold market to make a profit, others to hedge disaster, some to accomplish both. No matter into which category you fit, make sure you understand why you are going into the gold market. Convey that understanding to the individual with whom you are structuring your gold portfolio. The whys have quite a bit to do with what you end up owning.

"Frequently investors will say that any kind of gold will do because after all gold is gold, isn't it? This type of attitude has helped a great many coin shop owners unload unwanted inventory they hadn't been able to get rid of for years. This is probably a good deal for the coin dealer, but it could spell disaster for you. In the same vein, I have talked to hundreds, probably thousands, of investors in nearly a quarter century in the business. Quite often, potential investors have no more reason for buying gold than 'everybody else is doing it.'

"In Chapter 16 on portfolio planning, you will find some details on this important subject. For now, consider the inscription over the entrance to the temple of the ancient Delphic Oracle: 'Know Thyself.' Study. Read. Learn what's going on around you. Call a few gold firms and ask questions. There's nothing like conversation to stimulate thinking. Take time to lay a little groundwork. Then make your move. The political and economic situation being what it is, there is no better time to start than now. Know thyself -- your goals and needs -- and you will be a more confident, happier gold investor." (more)

Please Remember: It is your purchase from USAGOLD - Centennial Precious Metals that nourishes these pages.



Black Blade (11/17/02; 22:59:00MT - usagold.com msg#: 89810)
Markets Down
http://quote.yahoo.com/m2?u

Asian markets are generally negative though Hang Seng is in positive territory. Japan could make another 20 year low soon though the BOJ will begin buying shares on the Nikkei from failed banks in a couple of weeks. Euro markets appear set to sart off negative as well. Looks like fun tonight.

- Black Blade

Black Blade (11/17/02; 22:39:27MT - usagold.com msg#: 89809)
United announces plans to cut 9,000 jobs as part of restructuring plan
http://www.boston.com/dailynews/321/economy/United_announces_plans_to_cut_:.shtml

Snippit:

CHICAGO (AP) The parent company of United Airlines said Sunday it would cut 9,000 jobs and reduce its flight schedule by another 6 percent as part of a restructuring plan tied to the carrier's effort to return to profitability. UAL Corp. faces a Dec. 2 deadline in its fight to avoid a bankruptcy filing. It hopes to receive a $1.8 billion loan guarantee by then.

Black Blade: The "Bone Pile" grows. It looks grim for the airline industry. UAL is just one that will likely go tits up if it does not receive a "special loan" from the government. The problem is that there are too many competitors and low cost carriers.



ElGordo (11/17/02; 22:00:46MT - usagold.com msg#: 89808)
Iraq says will strike Israel if attacked
http://news.independent.co.uk/world/politics/story.jsp?story=353280
Tariq Aziz, Iraq's Deputy Prime Minister, gave his clearest warning yet yesterday that Baghdad would launch strikes against Israel if it was attacked by Britain and America.

Mr Aziz's threat came as he repeated his government's denial that it was developing weapons of mass destruction and said full access would be given to UN weapons inspectors.

His remarks followed a prediction by Jack Straw, the Foreign Secretary, that Saddam Hussein would be "making the mistake of his life" if he failed to comply with the latest UN resolution on disarmament. Interviewed on ITV1's Jonathan Dimbleby programme, Mr Aziz said that any military action against Iraq would endanger not just Britain and America but also their allies such as Israel.

Asked what the Iraqi strategy might be if, as suspected, it is militarily weaker than it was in the 1991 Gulf War, Mr Aziz replied that his government was "capable of defending our nation". He added: "We are an old nation and we could survive. But I tell you, if the US and UK wage a war against Iraq, the consequences will be very bad to them and their friends in the region.

"If they don't care about their friends, then that gives you an idea about their real intentions. This is going to be devastating, not only to Iraq, but to them also. The aggressors will also suffer a great deal of losses."


a nation of one (11/17/02; 21:14:08MT - usagold.com msg#: 89807)
to: Cytek (11/17/02; 18:50:20MT - usagold.com msg#: 89804)

You say:

"The Commercials also increased their shorts from 106 thousand to 122 thousand, an increase of 16 thousand shorts. In other words, the Commercials are shorting the hell out of gold. Clearly, the Commercials are attempting to manage (or some call it "manipulate") the price of gold."

Here's how I think of this information. Desparate. They're desparate. They can't see the forest for the trees. They are influenced more by what they are in constant direct contact with, than by information about stronger forces presently at work in the world, which, in part because of their close involvement in their business, they do not give as much weight to. But, in fact, there is a lot more wieght to it. This is a common mistake which people make. The more they become familiar with one aspect of a thing, the less they consider some other factor. These people know the risk: If gold goes up, they lose. They feel they have little choice but to take the action they are taking. Yet they also know that the risk is worse if gold does go up, which it will. Therefore, they are making their own situation worse, and they are contributing to the forces which they seek to defray.

a nation of one (11/17/02; 20:42:56MT - usagold.com msg#: 89806)
correction
http://www.guardian.co.uk/Iraq/Story/0,2763,841232,00.html

Here is the link placed in the correct box.

a nation of one (11/17/02; 20:41:19MT - usagold.com msg#: 89805)
http://www.guardian.co.uk/Iraq/Story/0,2763,841232,00.html

snip:

You have always got to hope for minimum loss of life in any war, but Mr Rumsfeld's prognosis about the speed of an Iraqi army collapse is ideologically driven and strategically ill-informed.


Cytek (11/17/02; 18:50:20MT - usagold.com msg#: 89804)
Richard Russell is hot on the Gold Trail
http://www.gold-eagle.com/gold_digest_02/russell111802.html
Gold -- Silently, quietly -- there's a fierce battle going on to control the price of gold. I wrote yesterday about the large contingent which does NOT, for what ever reason, want gold to go higher. These are certain hedged mines, some gold accumulators, and obviously all gold shorts.

The shape of this huge battle can be seen in the so-called Commitment of Traders. For the latest week, the Commercials (gold banks, some mines, large brokers) decreased their long gold contracts from 49 thousand to 43 thousand. That's a drop of 6 thousand long contracts.

But the Commercials also increased their shorts from 106 thousand to 122 thousand, an increase of 16 thousand shorts. In other words, the Commercials are shorting the hell out of gold. Clearly, the Commercials are attempting to manage (or some call it "manipulate") the price of gold.

Aligned against the Commercials are the large traders or large speculators. For the latest week this group increased its long position from 38 thousand contracts to 57 thousand contracts. At the same time they increased their shorts slightly from 18 thousand contracts to 20 thousand contracts.

Which group will win? The powerful Commercials tend to win, but this is a bull market in gold and the Commercials now have the problem of trying to manipulate a bull market. They may be able to do it on a temporary basis, but in the end the primary trend will have its way. In fact, the longer a primary bull market is held back, the more powerful is the ultimate advance. Bull markets, like bear markets, ultimately must express themselves.

It's obvious that the Commercials do not want gold above 320, and it's even more obvious that they do not want gold above 325. So the battle lines are drawn and the gold war is on.

This is the problem for those who are speculating in gold vs. those who patiently hold gold on the basis of long-term fundamentals. And there is an advantage in holding physical gold over gold futures or even gold shares. When you hold physical gold (coins) you don't really give a damn what the short-term trend of gold is. You're holding real money, and the history of gold is that it has outlived every paper currency that has ever been invented. You just sit with your physical gold and wait.

But holding gold futures or gold options can be scary because you are heavily margined and you're fighting time. Holding gold shares fully paid for can be scary if a temporary drop of 15% or even 25% causes you to lose sleep. But holding gold shares in a gold bull market can be very rewarding, and it can be well worth the fight.

Can the Commercials be defeated? Occasionally, they can. But the odds usually favor the Commercials. Nevertheless, the current situation is fascinating in that the Commercials have taken such a strong position against the primary trend of gold.

On occasions when the Commercials have been defeated by a stronger market force, the move can be spectacular. In other words, if gold can climb above 325 and more importantly above 330 we could see a panic up-move as the Commercials are forced to cover.

The battle is on. For the gold bulls, the important thing is NOT TO BE LEVERAGED. If you hold your gold coins or gold shares for cash, you can't be knocked out of the picture, regardless of manipulation by the Commercials. And that is the crux of the situation. The primary trend of gold is bullish. The secondary trend of gold can at any time be bullish or bearish.

Of course, the ultimate question is -- why are certain interests so intent on holding back the price of gold? Some day the whole ugly story will be told. In the meantime, all I can do is try to put the story together to the best of my ability and with whatever market evidence I have at hand.

Cytek - I agree with Mr. Russell, you can't go wrong holding physical GOLD and the primary trend of GOLD is BULLISH.

Waverider (11/17/02; 17:48:29MT - usagold.com msg#: 89803)
10 trillion yen sought for extra budget
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nn20021118b2.htm
Snippit:
"Calls were made Sunday for an extra budget totaling at least 10 trillion yen for the current fiscal year to shore up the anemic economy. "The gap of supply and demand is reaching 20 trillion yen. We need to compile a budget to fill the gap. At least 10 trillion yen would be necessary for that," said Mitsuo Horiuchi, head of the decision-making General Council of the ruling Liberal Democratic Party, on a Fuji TV talk show."

Waverider: Anemic is an understatement, how abut exsanguinated? Meanwhile, the banks take another hit on the Nikkie tonight.

ElGordo (11/17/02; 16:11:51MT - usagold.com msg#: 89802)
Puplava update : Cra$hmaker
http://www.financialsense.com/stormwatch/update.htm
The stage is set and all of the props are in place for another crash. The fact that we are told it cannot occur should give an alert person reason to pause. The regularity in which financial crises keep reappearing with increasing frequency is proof enough in itself. The fact that the markets have become more leveraged with each new crisis is troubling.

The intervention of central banks as lender of last resort reinforces risk taking and emboldens the reckless. Add to this the detachment of investment professionals from the consequences of their decisions which makes them even bolder in their risk taking. It is other people's money and not their own that is used in this speculator's game. In this high risk environment, risk has been defined as volatility. Leverage and margin of safety are excluded.

They are considered shibboleths and anachronisms of a bygone era. Today's investment professional hides behind the safety of his models or the infallible belief in mechanistic black boxes. To them, all risk lies under the bell shape of the curve.

The tail end is excluded or has been marginalized by the firm belief in the sanctity of hedges. They are asleep and unaware of the risks that surround them. There are multiple candidates. It is these risks, and their whereabouts, that will be the subject of Part 2 of CRA$HMAKER: Ten-Sigma ~ JP


Black Blade (11/17/02; 15:57:12MT - usagold.com msg#: 89801)
Gold's Midas touch leaves banks cold
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1035873370123&p=1012571727207

Snippit:

Against a backdrop of corporate scandals and plunging stock markets, the price of gold has climbed by about 20 per cent in the past 18 months. Mining companies' profit margins have grown and anyone with a nest egg of bullion bars is feeling a little safer. Not everyone in the market is smiling, however. Business has never been tougher for the bullion banks and, while investors have a new-found enthusiasm for gold, the serious money has bypassed the metal itself, pouring instead into mining shares. Meanwhile, the bullion banks, which do business with the mining groups and central banks, have seen their profits dwindle. That is largely because of the fall in hedging business. When the outlook for gold prices is uncertain, mining companies might choose to manage the risk by locking in a future price for their gold. Bullion banks help make these forward sales possible, providing derivative products such as forwards and options.

Black Blade: The bullion banks will never recover most of their leased gold (at least that no longer in their possession). Now with gold production set to decline while demand rises, the leasing game is dead.



Black Blade (11/17/02; 15:33:33MT - usagold.com msg#: 89800)
Al-Jazeera: Al Qaeda issues new threat
http://europe.cnn.com/2002/WORLD/meast/11/16/alqaeda.threat/index.html

Snippit:

LONDON, England (CNN) -- A new statement purported to be from the terrorist network al Qaeda warns the United States to "stop your support for Israel against the Palestinians, for Russians against the Chechens and leave us alone, or expect us in Washington and New York."

"Do not force us to ship you in coffins," it says.

Chechnya, Kashmir, the Philippines and the Iraqi government are also issues raised in the letter, Fouda said, which ends with a call for the American people to convert to Islam.


Black Blade: Convert to Islam? (I assume the author is referring to Wahabbism). I think I'll pass, although the 72 virgins in paradise does raise an eyebrow or two.



Old Yeller (11/17/02; 15:14:41MT - usagold.com msg#: 89799)
Sentence in last quote should read
"Whether through a gold based financial system or through
fiat,we lend and borrow the real wealth,we contract real wealth for sale at predetermined prices
and we contract to buy it a pre-determined prices."

Important distinction that is.It seems to me that
there's something in the Constitution about that one.

Old Yeller (11/17/02; 15:04:32MT - usagold.com msg#: 89798)
Aristotle,reflections on credit and monetary crimes by the state


"The USA initiated the idea of'Forced liquidation
of contracts'in 1971,when they defrauded the world of it's
gold.Theirs was also a 'sole ation of law' that forced
gold owners the world over to become US fiat owners.
Further,this was done as it kept it's gold ownership
illegal for US citizens.So much for a republic that
plays a tune to the world of how a money system
should run?To the Europeans'credit,the destruction
of this current breed of American gold tender will
at least offer a new currency that recognizes
the asset value of gold and encourages it's
ownership by the masses."

FOA.

"Again,dollar holdings by foreign CB' are
worhless anyway,when the nation issuing them does
and must,run a constant trade deficit.The money
can never go home,it only builds further on
digital account."

FOA

"Like FOA,I think every dollar on foreign CB books
is considered by them to be a pure write-off,with
no hope of recovery due the expectation of the US
eventually inflating all of it away into
worthlessness."

ORO

"The bottom line is that the US government official
gold reserves have been mobilized through swap and loan
arrangements to suppress the gold price,particularily
in the aftermath of the WA,which triggered a violent
short squeeze.These arrangements,in turn,have been
papered over and covered up in a succession of changes
in financial statement nomenclature,accounting artifices
and document destruction reminiscent of Watergate or
the most elbrate financial frauds yet known."

John Hathaway


"Credit is not bad.Government credits are.Fiat money
is a government creature from top to bottom.Credit
is a creation of humanity,the result of it looking
towards the future.Lending and borrowing of real
goods is essential to our wellbeing,both here and
abroad.Whether through a gold based finacial system
or through fiat(very inefficiently) we lend and
borrow the real wealth,we contract the real wealth
for sale at predetermined prices(no matter what the
denominating unit is).We do so because we have to,
we do it because we want to.We do so because it
is crucial for our wellbeing."

ORO


slingshot (11/17/02; 14:34:08MT - usagold.com msg#: 89797)
GratefulforGold
Msg# 89762 Spectacular Attacks
I enjoy your posts. Just want to comment on our government lack of responsibility in a most direct way.

Should there be any attack of NBC WARFARE, the pecking order is as follows.

Insure the survivability of the Government, First
Insure the survivability of the Military, Second
Insure the survivability of the Populace, Third
Basicly you are on your own. The same with Gold as to survive the Financial Storm.

Members of Congress were taking anti-biotics for anthrax long before the military and the populace was on a need to have basis. Don't fool yourself.
Slingshot-------------<>

Liberty Head (11/17/02; 14:24:58MT - usagold.com msg#: 89796)
Ten Bears
I appreciate your comments and agree with what your saying.
Perhaps, I wasn't explaining clearly.
I didn't mean to imply that collectives make decisions. Individuals make decisions and the responsibility for those decisions reside with the individuals who made them.
Thank you for the opportunity to clear that up. It is an important distinction.

Cheers

Gold N Rule (11/17/02; 13:57:21MT - usagold.com msg#: 89795)
Golden Bear#89789
Good article with a good forecast for us goldbugs!!

Thanks,
J.R.


Ten Bears (11/17/02; 13:46:08MT - usagold.com msg#: 89794)
Liberty Head
"Nothing happens in politics by accident"___Roosevelt
Economics is a subset of politics, previously and more accurately referred to as the "political economy".
IMHO the current system of financial engineering responsible for the systematic exportation of the US manufacturing base, the huge US trade deficit, the downloading of risk via IRA's and 401K's to clueless individuals, the abolishment of defined benefit pensions, and the open borders immigration policy have very little to do with "collective decision making". The entrenched financial corporations in collusion with the central bankers are responsible for the current conditions.
Now the same voices that correctly predicted the bursting of the Nasdaq bubble are forecasting the collapse of the US dollar. This, too, is no accident; and certainly not the results of "collective decision making".
Apologies in advance, if I have misinterpreted in any way, your post.
Respectfully,
Ten Bears

Yellow Metal (11/17/02; 13:00:52MT - usagold.com msg#: 89793)
Energy crunch or Recession ?
http://seattlepi.nwsource.com/local/95981_power16.shtml
It's getting cold in Snohomish and people can't pay their Utility bills.

"From January through October, electricity for 13,633 customers of the Snohomish County Public Utility District was shut off for lack of payment. That's a 43 percent increase over the same time last year.

...

more than 70 percent of the people who applied to the county for energy assistance last year had never visited the office before"

What can I possibly say about this ?
Any comment would be superfluous.

These people are my neighbours to the South.
Perhaps I should mention I live in B.C. and our provincial hydro facility was being investigated for collusion with Enron. To my knowledge they were cleared of wrongdoing.

Of interest also is that the provincial government here seems to be at the top of the slippery deregulation slope.
Without media persuasion, most here would rather leave our hydro in the hands of the people.

Liberty Head (11/17/02; 12:16:06MT - usagold.com msg#: 89792)
The Heart of the Matter
World politics and the global economy are such a mess. It appears to be the result of a "crash by design" style of engineering. In other words, as a collective, our decision making process is the culprit. Many key decisions are heavily influenced by emotional and/or egocentric impulses.
This, in turn, implicates our "Values". It seems we only value truth, as long as it doesn't make us feel uncomfortable. Ironically, this is the path to greater discomfort.

I am thankful for, those of us who place the highest value on discovering the truth and USA Gold, for providing us with this forum.


Belgian (11/17/02; 08:19:21MT - usagold.com msg#: 89791)
TOO MUCH FREE CONFETTI FOR TOO LONG !
The situation is not simplier than that and there's no need to pseudo-intellectualise, this ordinary given.
The rulers take it for granted that confetti-tides can be managed, ad infinitum. But, we confetti-tsunamis were/are created, that will wash/flush away, entire costlines plus hinterlands. Kind of panning Gold.

Consumers will never stop consuming, speculators will never stop speculating...but entrepreneurs stop producing if profitability evaporates. It are all those debtbergs that are increasingly in everyones way. Futile to add more and more confetti-water to dilute/melt the debtbergs, proportionate to real, genuine growth.

This picture is applicable from the simpliest individual up to the biggest multinational company. Check this out in your own surrounding. Pay close attention to the changing relation between debt > profit > growth and put a "quality" quote on expansion as to extrapolate how much time w've left before it cracks for good. The little up and down cycles (oscillations) are taken out and we are on an enormous, long, stretched, down-cycle = Kondratieff winter.

FOA MSG # 76 : Just as in 1971, when that real Gold demand, SUDDENLY, expands its boundaries to include "ordinary" Gold investors...the, supply-rules, will be changed again. Fortunately for us Physical Gold Advocates, the next rule-change, will evolve from a "reserve-system" that has no threat from a rising dollar-gold-price (BIS/ECB).

B : Japanese housewifes made a start > dollars/yen for bullion !

FOA msg#73 : FED / BIS / ECB / CHINA-HONGKONG :
Following the euro-system lead, China/HK, could affort to let their dollar-reserves burn as long as they had even 15% of that value in Gold, prior to full "EURO_ROLL_IN".

B : No Sherlock will ever find, black on white, evidence for the euro-architects having made some deals with China or ME (even Russia) on monetary confluence/conspiracy. It is only the euro-system (concept) that is "inspiring" others who were for so long in that dollar-ship...and prepare to jump from it. I have some satisfactory confirmation that euro-inspiration (monetary-concept) is being propagated in Russia with good follow up on a serious level (state-debts-positioning). The only brake for the time being is the timing of the dollar/euro-exchange rate, run.
Note that China has chosen another leader and is breaking with its (political) past, step by step, faster and faster.
FOA : Our euro-creation spawned this new high world oil price from currency competition ($/€) and that's beginning to bite the weekest financial structure (USA).

B : When one knows that the US$ exchange rate is going to crash...less and less, US$ long term bonds, should be brought into circulation ? Is this happening already ?

FOA MSG# 72 / The future, a Gold advocate, seeks, is not found in euro, dollars or just Gold. Rather it is found in understanding the euro's impact on the dollar's value and how that will change the gold-markets...forever !
The *political-motivation* in all of this, is the show of the century and worthy our respected attention. Even now, the oil-card we have discussed for so long is challenging our dollar way of life and quickening its fall. Was this connected to the "planning" for Gold and euro ?

B : Check how fast the euro recouped its losses against the dollar and parity was reached in no time. Is this enough evidence for the above FOA thought ?



Old Yeller (11/17/02; 02:30:03MT - usagold.com msg#: 89790)
Belgian

"What's wrong with the Japanese people,nothing."

There's a lot wrong with the Japanese people,
to have tolerated this monetary madness is
inexcusable.

For the life of me,I cannot understand even
letting these architects of doom exist on
the same small islands,let alone let them continue
to loot people's savings through monetary
debasement and publically funded graft on
an immense scale.

Aside from that,I love your posts,always
exceptionally interesting and insightful.
Thanks for all your time and effort.

Golden Bear (11/17/02; 01:21:59MT - usagold.com msg#: 89789)
Money Management 101: What really matters... by Bill Fleckenstein
http://moneycentral.msn.com/content/p33229.asp
"...In any case, our consultant then goes on to talk about the subject of being fully invested: "Being long-only (fully invested at all times) is akin to wearing shorts and a T-shirt all year round. There is a time when your choice will look wise and a time when your choice will look very, very foolish. The sad part is, when the leaves started to fall off the trees, when the sky turned dark and cloudy, when a general chill came over the market and it became very apparent we were headed into the dead of winter, too many people ignored the weather. Now they're standing around, huddling together for protection, making excuses for their lack of knowledge, for their ignorance and arrogance, and for a methodology that is clearly flawed."

Finally, he offers his solution: "What this industry needs is people who are willing to manage money with an eye on absolute return. Without a doubt, stocks are risky. Few people who manage money for a living go without a few bad years where returns are negative. However, consecutive negative years, coupled with total indifference from those who so graciously and inexplicably lost that money, is unacceptable. I would implore investors to cast aside their proxies and vote with their feet, but there is no place for them to go. Unlike accredited investors, retail investors have no refuge from mediocrity. We've been shanghaied, and we're stuck with crestfallen charlatans who are plagued by egregious greed and ignorance. Still. When will it change?"

and

Finally, in terms of current asset allocation, I would have a minimum exposure to equities. As for fixed income, I would keep the maturity short, because I think the absolute rate of return being offered is not very appealing in longer-dated Treasurys. Also, I think we have dollar risk, which is why I continually advocate having an insurance policy in gold. People can have a core position in gold, and then trade around it if they want. But to repeat, I think having a defensive gold position will be very important going forward...."
------------------------------------------------------
GB:Common sense advice from one of the best in the business.

Belgian (11/17/02; 01:04:41MT - usagold.com msg#: 89788)
@ Cavan Man
Japan has already gone much further in its attempts to resuccitate the contracting economy.
In the recent past, they have been "distributing", *GRATIS* consumption-vouchers as to lure the consumer out of his/her savings bastion !?
May I call this "extreme measures", without any result ?
May I remind you that immediately after the 9/11 atrocity, politicians, urged the general public to go out and CONSUME ! In what kind of absurd world are we living ?
Big Brother, destroying all common sense left into the individual. I refuse to be part of this.



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