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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 6/21/2001
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Black Blade (6/21/01; 23:42:20MT - usagold.com msg#: 56619)
As Electricity Bills Rise, Output and Economy Falter
http://www.bloomberg.com/fgcgi.cgi?ptitle=Economies&s1=blk&tp=ad_topright_econ&T=markets_bfgcgi_content99.ht&s2=ad_right1_economies&bt=ad_position1_economies&middle=ad_frame2_economies&s=AOypQ.BXOQXMgRWxl

Snippits:

Chicago, June 15 (Bloomberg) -- Rising electricity bills in the western U.S. threaten to damp consumer spending and corporate profits, just as the Federal Reserve and the Bush administration are trying to revive the U.S. economy. The administration and many economists say the rise in western power prices is the best way to prevent blackouts and to stimulate needed conservation efforts by consumers as well as investment in new plants by businesses. Still, the drain on consumer spending is just what the economy doesn't need right now.

Astaris LLC, the phosphorous making joint venture of FMC Corp. and Solutia Inc., will fire 203 of 428 workers at its 50- year-old Pocatello, Idaho, plant because it can't afford to pay for electricity there. The facility, one of just two phosphorous plants left in the U.S., uses ``huge'' amounts of electricity to melt phosphoric shale and remove elemental phosphorous, which is then used in thousands of products from automatic dishwashing detergents to soda pop.

Phoenix-based Phelps Dodge, the nation's biggest copper producer, has cut 80 jobs and may cut another 1,065 because of high energy costs and low copper prices.

``Four companies that I follow for research -- Phelps Dodge Corp., Newmont Mining Corp., Barrick Gold Corp. and Allegheny Technologies Inc. -- are building their own power plants at their factories in the West,'' Tumazos said.

Black Blade: Actually I agree with the Democrats on this point. Prices for energy should be high (much higher) to encourage energy conservation (as per Al Gore in his book - Earth in the Balance) and save the environment. I say go for it! Looks like socialist Democrats like "Red" Davis and new Democrats like Al Gore don't agree though. All I really can say at this point is - "Interesting Times."


Black Blade (6/21/01; 23:19:38MT - usagold.com msg#: 56618)
Energy Shortage Impacts Company Move
http://hoovnews.hoovers.com/fp.asp?layout=displaynews&doc_id=NR20010621140.6_30120001a877b2ef

Snippit:

OKLAHOMA CITY (AP) A California company is relocating to Norman partly because Oklahoma does not have rolling blackouts, a company executive said. California's electrical utility costs and rolling blackouts had an impact on the company's decision.

Black Blade: Another firm joins the exodus to more reliable regions of the US. They may be pleasantly surprised as their state taxes will be much lower as well. Economic outlook in California is grim, a bit of gold and silver as portfolio insurance could go a long way.


ET (6/21/01; 23:10:40MT - usagold.com msg#: 56617)
Adam Hamilton
http://www.gold-eagle.com/gold_digest_01/hamilton061501.html

From the article;

"Second, in addition to the Greenspan effect on short-term Treasury
yields, with the physical gold market very tight and daily volatility and
gold lease rates ballooning dramatically in recent months, there is an
ever-rising probability that gold's twenty plus year bear trend is
embarking on or nearing a major reversal. While the gold carry trade was
profitable when gold prices were falling, it is utterly suicidal while gold
prices are rising. If bullion banks begin to detect an imminent gold rally,
they will not want to borrow gold with a ten-foot pole.

"For example, if a bullion bank borrows gold today at $275, but one year
from now it expects gold to be $350 or higher, the loss from borrowing
gold due to the rise in the gold price will DWARF any conceivable
arbitrage carry spread. It will be forced to buy expensive gold in the
open market to pay back its cheap gold loan. If expectations of a rising
gold price take hold, even the anti-gold bullion banks will avoid the
central banks hocking gold loans on the street corners like the plague.

"Remember, unless you are an unfortunate capitalist forced by
Democratic socialists to sell power below market prices in California,
there are two consenting parties to every mutually beneficial free-market
transaction. Central banks can offer all the gold they have left to lend,
but if no one wants to borrow the gold due to the ever-increasing
potential for a major gold rally, then nothing happens. The Japanese
government has created an environment offering capital at almost zero
percent interest for many years, yet it didn't do a bit of good because no
one wanted to borrow. Credit is meaningless without a willing borrower."


Camel (6/21/01; 23:01:42MT - usagold.com msg#: 56616)
Scumbag Democrats
I remember when I first posted on this forum six or eight months ago, Oreo pulled the same stunt as he recently did with FOA, and which he has done with several other posters, to wit,

" NO,NO,NO,NO,NO, What you say actually HAS NOTHING TO DO WITH the subject at hand," then procedes to spew out his Libertarian ideology as if it meant anything to anyone but a tiny handful of idealogues. The Liberterians got what? less than 1/2 of one percent of the vote. The Greens even got more votes this time.

As far as I am concearned the kind of laissez faire free enterprise that he supports was discredited several hundred years ago with laws that were enacted to prevent slavery, indentured servitude,child labor, and the like. Do you really think that the American people want to give up Social Security and Medicare? Not likely. These are probably the two biggest socialist programs that have been enacted in this country. I'm sure there are others some successful some not. Undoubtably there have been abuses, but on balence our system works fairly well.. So in his twisted world what does that make me. A scumbag Democrat.

On top of that the Libertarians inevitably support the big business interests . When has anyone ever heard any Libertarian support an environmental issue.When has anyone ever heard any Libertarian stand up to any of the big corporations.On the contrary they provide the polemics and the moral justification for groups such as the tobacco industry that have addicted, maimed and killed tens of millions.And that is just in this country. World wide , before it is all over they will have killed more than all the wars and persecutions of the entire 20th century . Yet it goes on and on .


It seems to me Oreo has changed the subject and wants to put European socialism on trial, hence his complaints about "FOA the justifer of dubious political actions". Thats fine and I'm sure everyone would benifit from such a discussion but before the main subject has been the Euro and all its implications. And as far as"FOA, the perciever of evil in nature" my goodness , surely that is a subject that resonable people can disagree over. Even with my limited knowledge of history I think I could constuct a fairly convincing argument that there has been some evil afoot in the world. All of history has been interpreted in many ways by many people , but isn't Oreo actually saying that the we all must bend to his interpretation of history even though it represents only tiny minority of what respected intellects all over the world might agree with

I think Oreo was right in his first post.He ought to just tone it down. And try not to use so many paragraphs.


Black Blade (6/21/01; 23:01:31MT - usagold.com msg#: 56615)
Davis insists on energy refunds
http://www.sacbee.com/news/special/power/062101demand.html

Snippit:

WASHINGTON -- Gov. Gray Davis demanded Wednesday that power generators refund California nearly $9 billion in electricity charges.

Black Blade: Sounds like a plan - that will give power generators incentive to do business in California. I think that "Red" Davis should pursue this line ;-)


Black Blade (6/21/01; 22:55:22MT - usagold.com msg#: 56614)
Energy Prices Rise Again in California ( Weather an early test for fee caps)
http://www.sacbee.com/news/special/power/062001test.html

Any severe jump in prices will likely be curbed, experts say

Snippit:

California electricity prices have shot back up recently, potentially posing an early test of a new federal price-control plan that takes effect today. Warm weather has sent wholesale prices doubling this week, partially reversing a dramatic slide that had some state officials believing they'd tamed the wildly unpredictable California electricity market.

Black Blade: When the temporary surplus of hydroelectric power from the rapid snowpack runoff declines as the summer progresses, we will see energy supply come under additional pressure (especially if temperatures are high). The result is that this winter the Northwest will take it on the chin unless there are early rains to replenish and keep water levels high on the Columbia River so that the NW hydro dam system can provide sufficient power for the region.


Black Blade (6/21/01; 22:39:49MT - usagold.com msg#: 56613)
US economy: situation grim and getting worse
http://www.newaus.com.au/econ252us.html

Snippit:

Some Fed officials are not just puzzled — they're paralysed. Nothing seems to be working. There has been a fairly rapid succession of rate cuts accompanied by massive monetary expansion and yet manufacturing continues to sink while unemployment creeps upwards, profits shrink, sales drop and productivity falls. And the glassy-eyed Greenspan is still trying to convince the country that he knows what he's doing. The man doesn't even know what's happening, let alone what he's doing.

Danger could arise if the Democrats successfully blame Bush for the ‘90s excesses and the social and economic consequences. Readers should note that for some mysterious reason greed and excesses only occur during Republican administrations, as do depressions. Should the Democratic Party, whose hardcore basically consists of half-witted socialists, take control the urge to use the depression as an excuse to impose more regulations and higher taxes on the economy might prove irresistible.

Black Blade: Good Aussie commentary! As I have been saying for some time here. Cheetah (AG) continues to monkey around with the economy and it will all end badly. I have accumulated quite a nice stash of PMs (will continue to accumulate more once I am settled in). He also talks of Democrats as "half-witted socialists," I would like to know what he has to say about the Aussie leaders. I have said for a long time (since George Dubya was nominated as GOP presidential candidate), that George Dudya would likely become known as the Herbert Hoover of our generation.

News Flash - Now I know we are in trouble - American icon Archie Bunker (Carrol O’Conner) died today of a heart attack.


Black Blade (6/21/01; 22:23:57MT - usagold.com msg#: 56612)
GASP! ANALYST OWNS UP TO BAD TECH TIP
http://nypostonline.com/business/32973.htm

Snippit:

Jeffrey Camp, No. 1-ranked internet analyst for Morgan Stanley Dean Witter admitted he was wrong and apologized for touting a tech stock that plunged 94 percent in one year. Apologies are rare on Wall Street and even rarer from research analysts, who are under scrutiny by Congress and regulators.

Black Blade: Before you feel sorry for this scumbag, let it be known that he also missed the mark on many other Dot-Gones as well. He did not apologize for those blown calls. His cohort - analyst Mary Meeker never apologized - in fact she still touts the Dot-Bombs (soon to be Dot-Gones). Ever notice how very rare it is that they give a sell recommendation? Analysts are usually late to the party and always looking in the "Rear View Mirror" for the next recommendation. It is also called laziness.


auspec (6/21/01; 21:48:38MT - usagold.com msg#: 56611)
Leigh
A little boredom is many galaxies away from starting any form of war. Consider it naught.

Stocks, Lies, and Ticker Tape (6/21/01; 21:27:31MT - usagold.com msg#: 56610)
Leigh
Oh BTW, was the last word of your post meant as a double entendre? (I am so BAD!) BUY GOLD!

Cavan Man (6/21/01; 21:26:16MT - usagold.com msg#: 56609)
Leigh, ORO, Randy et al etcetera
Why is it that Americans insist upon taking umbrage with those who live another culture, another philosophy (no puns at all I am serious here), another political system another life far away from these shores? Why must we foist americanism upon the rest of humanity? What gives us the right to sit in judgment? Were five children murdered by their mother in Finland yesterday, Iraq, N. Korea? Perhaps Drudge missed it. Why are we compelled to suffocate the globe with our values and our culture and our systems and processes? Yes, we have the best economic/political system but, are we alone without sin eh? What say ye fair and noble knights and ladies? Truth, yes, let's have truth and freedom too.

Why can't we strive (each of us) to subdue emotions and reflect intellectually and objectively; yea, even abstractly upon the issues which affect our lives for, there's not a whole heckuva lot we can do about it. The forum; she suffers.

What is it about he EU that so many loathe? Leigh, with all due respect, it is attitudes like yours that march young men to early graves. Yes my friend, it is true.

Remember, the sword of freedom cuts in both directions always; it is like a knight's broadsword with two edges rather than a sabre, rapier or scimitar. One direction in your favor and one, not so. Me too gone for awhile.....God Bless all here. I've learned a lot......CM


Stocks, Lies, and Ticker Tape (6/21/01; 21:21:53MT - usagold.com msg#: 56608)
Leigh
On gun control his stick hit a bigger hornets nest than he thought! (IMHO) Good to hear the "family tree" information was absorbed! Ribbing aside, I would welcome him back.

auspec (6/21/01; 21:15:04MT - usagold.com msg#: 56607)
Leigh
I showed this picture to cb2 and he said I was quite autistic, so this is my first showing. Thanks for asking.

Leigh (6/21/01; 21:09:25MT - usagold.com msg#: 56606)
auspec
THAT'S what CB2 looks like? How do you know, auspec? Have you guys met?

Golden Truth (6/21/01; 21:08:50MT - usagold.com msg#: 56605)
SOMEBODY PAID THEIR "ENERGY BILL" IN GOLD!!!!!
Has anybody been wondering why lease rates are dropping?

Have you noticed the that "Energy Costs" are going down?

Gasoline hit a six month low today,,,right before the summer driving season and with all the GAS GUZZLING" Motor homes filling up their tanks?

OIL and Natural Gas also down? Even as air conditioning demand increases?

There never was an Energy shortage only a "GOLD SHORTAGE"

If I'am right watch as Oil and Natural Gas and Electricity costs start to fall!

The "Energy crises" is OVER!!! at least until the GOLD runs out again!

I wonder where all that Gold came from...Fort Knox?? Hmmm

Good Luck To All, We Are Going to Need It!

G.T





auspec (6/21/01; 21:05:01MT - usagold.com msg#: 56604)
'Art ' Test

\\/
~ ~
o o
.U. )
***
.|.
-|----<Gold, Silver, Shares??
.|.
.|.
/ \_

Get the real thing.....Got GATA!!!

Has anyone else ever seen cb2 previously?





Leigh (6/21/01; 21:01:51MT - usagold.com msg#: 56603)
SLATT 'n' Panda
SLATT, let's not get carried away here. Do you really want to listen to another go-round on gun control? Panda has probably moved along to another forum and is very happy there. Why don't we just let sleeping raccoon relatives lie?

Journeyman (6/21/01; 21:00:25MT - usagold.com msg#: 56602)
Advice to ORO, P.S.

P.S ORO!

Perhaps a few direct questions, like "If gold is a failure, how do you account for the period from x to y?" etc.

I'm sure you could come up with a better selection of such questions than nearly anyone in the world.

And under the current "engaged discussion" between the two of you, he'd probably feel obliged to answer.

Just a thought,
J-man




Journeyman (6/21/01; 20:52:58MT - usagold.com msg#: 56601)
Advice to ORO

Hi ORO!

It is a very rare circumstance when I find myself in a position to offer you advice, and perhaps I'm speaking out of turn here.

This has absolutely nothing to do with my hallucination (previous post (below)).

It's just that whoever attacks first usually loses the battle of public opinion. This is a lesson I learned the hard way several decades ago. Further, the attacker is somehow often subliminally perceived to have the weaker intellectual position, perhaps because he had to resort to force in lieu of a reasoned argument (and I'm certainly not suggesting that in your case.)

Randy & FOA are right about a lot of things, and this is one of them.

FOA is master of the posting equivalent of Mohamed Ali's "rop-a-dope." No matter how many times you hit him, he never seems effected (lately at least) and never loses his cool.

It turns out that failing to acknowledge another agressive male's display is the most powerful response to said display in the primate family.

Either the affronted displayer must attack or completely backdown. His most ferocious threats ignored? What to do. Are others watching.

Not sure this applies directly, but I can tell you, being a recipient, I understand your reactions to TG's "rope-a-dope."

You can see I caught myself a few days ago.

Especially in the internet forum context, direct personal attack is almost a sure loser.

However, it might be interesting to figure out just what TG's hidden agendas might be, should there be any, etc.

High regards and keep cool,
J-man




Journeyman (6/21/01; 20:52:54MT - usagold.com msg#: 56600)
Advice to ORO

Hi ORO!

It is a very rare circumstance when I find myself in a position to offer you advice, and perhaps I'm speaking out of turn here.

This has absolutely nothing to do with my hallucination (previous post (below)).

It's just that whoever attacks first usually loses the battle of public opinion. This is a lesson I learned the hard way several decades ago. Further, the attacker is somehow often subliminally perceived to have the weaker intellectual position, perhaps because he had to resort to force in lieu of a reasoned argument (and I'm certainly not suggesting that in your case.)

Randy & FOA are right about a lot of things, and this is one of them.

FOA is master of the posting equivalent of Mohamed Ali's "rop-a-dope." No matter how many times you hit him, he never seems effected (lately at least) and never loses his cool.

It turns out that failing to acknowledge another agressive male's display is the most powerful response to said display in the primate family.

Either the affronted displayer must attack or completely backdown. His most ferocious threats ignored? What to do. Are others watching.

Not sure this applies directly, but I can tell you, being a recipient, I understand your reactions to TG's "rope-a-dope."

You can see I caught myself a few days ago.

Especially in the internet forum context, direct personal attack is almost a sure loser.

However, it might be interesting to figure out just what TG's hidden agendas might be, should there be any, etc.

High regards and keep cool,
J-man




Netking (6/21/01; 20:39:58MT - usagold.com msg#: 56599)
Moore Welcomes China-EU Agreement on Chinese Accession to WTO / Solomon / Leigh
http://english.peopledaily.com.cn/200106/22/eng20010622_73232.html
Snippit:
World Trade Organization (WTO) Director-General Mike Moore praised Chinese and EU negotiation for reaching agreement on unresolved bilateral issues concerning China 's accession to the WTO.

In a statement released Thursday in Geneva, Moore congratulated Chinese Trade Minister Shi Guangsheng, EU Trade Commissioner Pascal Lamy and their respective negotiating teams for bringing China a significant step closer to membership in the WTO.

"The EU-China accord is another step towards China's membership in our organization. . . . I remain hopeful that a decision can be take on China's membership at our Ministerial Conference in Doha, Qatar this November," Moore said.

The director-general again urged all governments participating in the Working Party on China's accession to make every effort to resolve outstanding matters when they meet in Geneva from June 28 to July 4. . ."
------------------------------------------------------------
Solomon Weaver(56587)SURGE be the word.
Yes indeed. . . .they're primarily control freaks, we may see a drop downward in Au Solomon to take out the longs before they let things be taken upward(which they know cannot stop and is a race against time)Interesting days yes.
------------------------------------------------------------
Leigh(56589)Re:"Have you noticed that participation on the Forum seems to pick up when there's a little friction going on?"
NetKing>"Iron sharpens iron; so a man sharpens the countenance of his friend"(Pr27:17). It's good and "healthy" to be challenged, we need to know what viewpoint we hold to & why IMHO.


Stocks, Lies, and Ticker Tape (6/21/01; 20:39:47MT - usagold.com msg#: 56598)
Leigh
No apology necessary!
I've already done that! And I offer it again, NOW! Panda, I offer my sincere APOLOGY again. I am a kinder, gentler SLATT! COME BACK!

Journeyman (6/21/01; 20:20:24MT - usagold.com msg#: 56597)
Threat, promise - - - or was I hallucinating? @Randy (@ The Tower) (6/21/01; 19:31:57MT - usagold.com msg#: 56588

Sir Randy,

Please tell me I was hallucinating!

Were you threatening ORO with excommunication???

Regards,
Journeyman

P.S. I'm sure I was hallucinating - - - but ORO wouldn't leave alone.


Randy (@ The Tower) (6/21/01; 20:04:10MT - usagold.com msg#: 56596)
Leigh..."Gold is dull"???
http://www.usagold.com/gold/coins/liberty.html
Here's some shiny and beautiful all-American gold to lift your spirits during the dull periods you refer to.

But answer me this: What's so dull? Surely the trade report I posted earlier today is enough to raise an eyebrow of even the heaviest sleeper. Why, even Rip VanWinkle dropped by The Tower today with a request that I suppress this very loud and disturbing message.

Can you believe the net loss of gold from these United States???? The numbers are the real deal. How long before this coin's image is all we have left?

Exciting and troubling times all rolled into one, if you ask me!


goldfan (6/21/01; 20:02:06MT - usagold.com msg#: 56595)
Randy (@ The Tower) ( msg#: 56572)

Randy, thanks for your reply to me, here's my response:

>>>>Goldfan, I'm inclined to think that someone has not delved into the matter of money and banking deep enough or objectively enough if they haven't made the association so well expressed by FOA.<<<<

Thanks! I don't like FOA misrepresenting ORO and making declarations rather than arguments, and so I'm the bad guy for not thinking deeply enough??

>>>Think for a moment about private property. This, and all that it stands for, is precisely what FOA expresses for gold in the future. To be sure, this is how I see it.<<<

I am alarmed by ORO's analysis of the Euro crowd scheme, that seems to say my gold will not be worth what I hope for it as a savings vehicle, if the Euro scheme goes forward. Like Lady Leigh, (Leigh ( usagold.com msg#: 56576)) I am deeply distrustful of any Euro Government law-making that would take from me the right to do with my own gold whatever I wish, including borrow against it. I cannot understand how you or FOA should say you are all for private property, and at the same time be willing to endorse a scheme of the ECM to outlaw private citizens from borrowing against their gold, and arranging with their (socialist) brethren around the world to put a huge tax on the output of mines, to stop them profiting from the increase in the gold price, and wrecking the ECM schemes to dominate the world with Euros. Would you feel the same way, if the oil nations could form a cabal to control the price of oil to the same extent? Would you farm if you were not permitted by law to borrow to get through a bad year, or to store your crop for a better price in future? Why would you by law and the threat of force and violence deny gold miners fewer rights than farmers?

>>>>Think next about the banking system, particularly one that uses a hard money denominator like gold. Deposits of gold property are put into what is essentially a "community till" and are commonly shared through credit. And as history has shown, when the community has shared and redistributed this property far and wide, inevitably beyond the ability to repay, the "market force" has always changed the rules of the game, bringing about the loss of wealth for those who orignally held and shared their private property via the banking/money system.<<<<

My banking scheme, described by ORO, is one where the local bank has no central bank of last resort to bail it out of its frauds or mistakes. So the citizens keep their banker in line, and insist on a local accounting of all banking decisions. In my town, small as it is, there are no dishonest men running service stations. They need repeat customers to survive, and local people won't go back to a place they where they have been cheated, though they will be loyal for years, and even pay slightly higher prices, to someone who serves them well. It is my understanding of history, that only under the aegis of central banking, did we get the threat of these enormous country wide failures of banks, and currencies, and the debacle we are about to witness stemming from the greedy misuse of central banks gold reserves, for the private gain of their friends. My understanding is that nothing we are about to experience can demonstrate that private banking is a proven failure, even private gold banking.

>>>Hold fast with private property, and leave the socialists with nothing but paper with which to work their magic. Fair enough?<<<<

Fair enough indeed! And the Europeans are socialists and do not have our private personal good in mind, and as I read ORO, he is saying their schemes may well wreck my private scheme to protect myself by saving in gold. I confess I don't really understand why he says this, but I'm working on it. And I think everyone on this Forum would be well advised to study ORO, and seek clarifications of this, in case he is right...

FWIW
Goldfan


Stocks, Lies, and Ticker Tape (6/21/01; 20:01:53MT - usagold.com msg#: 56594)
Randy @ the Tower
Was there ever an election for the "Gold Trail"?
Or was it by decree?

Leigh (6/21/01; 19:56:28MT - usagold.com msg#: 56593)
elevator guy
You haven't checked the price of gold in weeks? No prob, elevator guy, you haven't missed much.

Speaking of sparks, where's Panda? (sorry SLATT) Where's Farfel?


Randy (@ The Tower) (6/21/01; 19:55:21MT - usagold.com msg#: 56592)
Stocks, Lies, and Petitions...
A belated Thank You for the recommendation. I have been tracking the e-mails and their "yea" or "nay" commentary as received here at The Tower. Market forces are incredible things, you know. One side has a seemingly insurmountable lead over the other regarding pro vs con. Without saying any more, time will tell...

elevator guy (6/21/01; 19:49:05MT - usagold.com msg#: 56591)
Hello, everybody!
I've been busy managing our family business, and so I haven't had a moment to drop in and see what is going on. Why I haven't even checked the price of gold in weeks!

Nothings changed much, huh?

Sorry to see FOA and ORO at odds. Such grand old trees, framing the halls of honor in the forest.


Randy (@ The Tower) (6/21/01; 19:45:01MT - usagold.com msg#: 56590)
barnacle bill's post on Greenspan:
---"He [Greenspan] has one gift most dangerous to a speculator, a vast command of a kind of language, grave and majestic, but of vague and uncertain import."---

Thanks for sharing that observation. Here's some food for thought.

It occurs to me that the wiser the man, the less he speaks with absolutes and certainties.

Because he knows better.

Hence the many qualifications and seemingly equivocal answers to what would otherwise seem to onlookers as straightforward and simple questions. Truth?

If absolutes and certainties were indeed out there for the finding, surely we would all be in agreement by now with respect to all things golden.


Leigh (6/21/01; 19:39:31MT - usagold.com msg#: 56589)
Randy
Have you noticed that participation on the Forum seems to pick up when there's a little friction going on? I've noticed it many times here. It's like a lightening storm cleansing the air. Gold is so...dull these days. We need to have a few sparks flying around!


Randy (@ The Tower) (6/21/01; 19:31:57MT - usagold.com msg#: 56588)
OK, ORO, here's what I'm hearing (and this is not a case unique to the two of you here)
From your elaboration, I'm hearing that you like neither the "quality" of FOA's analysis of history and economics, nor do you like him as any such person who would deliver content that stands in oposition to your personal views and understandings. And most of all, it seems you are saying you are troubled because your particular messages are not making inroads -- he is responding to points that are not your own.

This is certainly not an isolated phenomenon. I've seen similar discontent flare up in dialog between other pairs of posters. As a reminder, there is nothing that compels any one person to even be aware of this website, less that compels them to read the writings of another poster, much less to dedicate themself to offer consistent response or feedback. My recommended two approaches whenever two posters somehow fall into disharmonious relations is this: 1) kill the other guy with kindness as you deliver your counterpoints to his views, and 2) ignore those you feel to be hopeless idiots. Noticeably, FOA hasn't opted for option #2, I would think with good reason.

Consider this also. If you deem there to be philosophical differences between you two, then surely FOA is wearing the other shoe of this matched pair, and is also feeling the pinch of its poor fit. To his credit, he has withheld any similar "threat" to yours of posting "rough words" that would as you've said, "come off as a personal attack, which perhaps they would be."

Now to the heart of the matter: off and on in the history of the forum we've seen several posters come and go who were not fully balanced, to put it tactfully. Yet you didn't come forward at those times suggesting that you stood poised to be blunt with your infallible knowledge of their personal shortcomings (at least so far as you see them). And with good reason. As we all know, this forum is provided to explore the role of personal gold ownership in portfolio diversification. Naturally, this involves an exploration into expectations of economic trends and pertinent developments in domestic and international monetary policy. There is no need or purpose served in offering personal assessments of individual posters because their commentaries often speak for themselves on these accounts. And to that end, having come from unbiased origins, it is my professional judgement that the conclusions drawn by FOA are in fact well founded in both logic AND historical evidence.

I surely speak to everyone when I say this: For the welfare of the forum and the spirit it engenders for civil discourse, I suggest you continue to focus on the content of your personal gold-related messages and viewpoints. Your disapproval or dissatisfaction with another poster's participation and personal shorcomings as you personally perceive them are quite unique to you and irrelevant to the wider world.

As I've said before, none of us as individuals have significant impact on market forces as they carve their channel through time. To perceive any of this as personal is to have let your ego get the best of you. Being human, I expect it to happen to me, and I try not to let it disrupt the flow of the forum as we endeavor to show our visitors that holding gold is in their best interests.

It looks easy enough to provide for such a civil forum for gold discussion, but strangely, it is not.

Now back to the business at hand. Gold: love it...or leave it?


Solomon Weaver (6/21/01; 19:31:31MT - usagold.com msg#: 56587)
SURGE be the word Netking
Watching the market this week we can say, the Au/Ag plunge protection team aint dead yet yes.
----------------------------
Gold must be protected from surging.

Poor old Solomon


Stocks, Lies, and Ticker Tape (6/21/01; 19:29:18MT - usagold.com msg#: 56586)
Randy @ the Tower
It has been nearly 200 posts ago that the PETITION (#56391)was presented!
Yet no word from the Tower? Even after the majority of the posts since have been in response to the call for opinions from the forum participants? Hello! Anyone in there? We await an answer based upon merit of the position and the Tower's solicitation of input from the forum! Surely the Tower is worldly and cosmopolitan in their attitude toward golden ideas not homegrown?

Netking (6/21/01; 19:11:29MT - usagold.com msg#: 56585)
megatron
Megatron(56569)
No, sorry I cannot find you a URL for this info. However this has come from two sources in the industry "usually reliable" and believed to be so on this occasion.

Watching the market this week we can say, the Au/Ag plunge protection team aint dead yet yes.


miner49er (6/21/01; 19:10:39MT - usagold.com msg#: 56584)
Tail Wags Dog... (and a digression or two)
(first, I've not read any of the past few days' posts, but see that the subject matter today hits some of my offering, so I apologize for any redundancy - the post is not in response to anyone, and is meant as "standalone"...)

Plausible scenario? Market gets hint that AG may "only" cut by 25 bp, which is all but assured, but market players really want 50, so the usual suspects embark on running the tape with the usual tricks, spinning the usual on the financial love-channels, and rumoring on the wires that AG is hinting perhaps at a "deeper cut."

What's a poor FRB guy to do? The markets go meteoric on this premise, and then he turns around and "disappoints" with only 25, and risks it all tanking?

Meanwhile, our structural predicaments remain the same. Trapped. US is forced to an eternally stronger dollar under the contradictory paradigm of providing for such by making them cheaper and more available. The giant sucking sound is really the vortex of this out- of-control US financial black-hole consuming and smashing into annihilation every alternative financial instrument and system around.

Our exporting industries will eventually become utterly decimated, but we can't weaken the dollar as this would be the signal to our foreign holders to dump. On the other hand, our vital import - oil - will eventually be priced to reflect the increasingly worthless paper exchanged for it. But we can't afford to strengthen the dollar the old-fashioned way (by making them scarcer and more reflective of national output in real terms), as this would destroy liquidity, and cause the likewise out-of-control derivatives structures to dissemble and the entire system to instantly seize.

So we have to continue cheapening the dollar, to keep the financial beast viable, while conning/coercing dollar-holders to keep holding and even accumulate more of them.

If you've ever known someone who has had to undertake the "living" of a lie, it is interesting to note the real and poisonous distortions that take place to the individual's character. Our controlling authorities know they are lying. I do believe however, that they believe, by and large, that they have to do this. Some are genuinely held hostage to financial interests in a TBTF dilemma. Others recognize the dilemma, but seek to maintain it because they know/believe that failure of the system would indeed be so terrifyingly catastrophic, as to forbid it at all costs. Hence, all the counterparties to this bet, who must suffer to keep things going, are indeed expendable.

So again... what's an FRB head, Sec'y of Treasury, or US President to do? Really? Indeed, this constant lie, while justified in their minds by the foregoing, still is poisoning their souls and conscience, as well as all those who affirm it. And the nation suffers by these distortions in its leadership.

It seems that Willem and Co. are not as they are painted by US media, i.e., caught in a strait betwixt two; but are patiently waiting for the US dynamic to run its course. Both sides are somewhat in a waiting game, but here I feel the Euro Zone has the upper hand. They wait on the inevitable, we wait on the exceptional.

Euro Zone inflation is at this juncture fueled largely by increasing oil costs. We often look at the monolithic socialist structures in place on the continent as the reason for their relatively stagnant economies. Certainly a lot can be improved upon, but is it reasonable to say that:

a) This kind of political structure has been in place there for decades now, and though exacerbated by the additional layer(s) added by the Brussels crowd, nothing terribly new is going on under their sun. One might say, socialism is already discounted by the system.

b) We too have some horrific socialism here, and many businesses buckle under the mountain of inane regulations, high taxes, and threats/realities of legal shake-downs (in the name of resolving social inequities). We have prospered more than they because of a number of diverse reasons historically, and may still be reaping the harvest of a more prudently sown past. But in this time, it seems more our unique position of having world reserve currency (WRC) status that perpetuates the good times. Among other things, WRC status has allowed us the luxury of excessively lowering the cost of capital which does offset tax/regulation costs. This cancelling out effect masks the effects of our socialism vs. theirs. It also lets us export the effects of this excessive monetary creation to virtually everyone else.

Could perhaps ECBs and other powerful interests have been encouraging socialist politicians and politics all along for reasons other than simply to dominate and enslave humanity? After all, socialist systems provide the means to help offset this "imported" inflation by siphoning excess currency out of the hands of their citizenry through the regulatory/taxation structures inherent in them. Since this process cannot be perfectly fine-tuned, fiat as it is, growth will suffer, and government will grow to monstrous size. Yet, it was (in an entirely fiat world) believed perhaps the only mechanism to control the local economic effects of irresponsible behavior on the part of WRC (USD) authorities.

Formerly, in the world of Bretton Woods, gold was the tool to accomplish this. The US pegged to gold, the rest (i.e., the other Bretton Woods signatories) pegged to the US dollar. If we became too expansive, "the rest", which end up holding the excess dollars, could check this by buying gold with the dollars when they believe the expansion to be excessive. Their reserves remain net the same, but the US reserve position relative to gold is shown to be what it is on the US's own turf - excessive. The upshot being that the problems brought on by over-expansion encourage action to be taken to contract.

Likewise, a restrictive monetary policy (ha-ha), would cause the reserve positions of "the rest" to contract, as dollars became more scarce. To fend off this deflationary situation, "the rest" could sell gold for dollars, and increase their currency reserves, without changing their overall net reserves. This would increase US gold holdings, and again alter the US currency position relative to it, this time restrictive . This restrictiveness of the US reserve position on their home turf would cause deflationary symptoms to be felt locally, and provide incentive to take expansionary action.

So goes the theory. Well, between the Viet Nam war, and Johnson's profligate socialist agenda, we kept inflating even as all our gold began to go out the door in truckloads, and the rest is history. So, now that there is no mechanism to check the WRC owners, another means must be found to check them when their expansions/contractions show their symptoms in the local economies. An outright return to a gold standard was perceived to be so deflationary, that it was ruled out, and no other fiat currency could hold its own, so what to do...?

This is what some believe is the main purpose of the Euro, indeed FOA writes on this extensively. To wit, to provide a deep and broad enough alternative reserve currency to allow "the rest" to wean themselves from the unaccountable (since 1971), and now reckless policies of the USD authorities. Since this does not happen overnight, how can the world economies best mitigate the negative effects of irresponsible USD policy in the meantime?

In the Bretton Woods system, it was understood that the US would maintain dollar/gold parity, and "the rest" would maintain the prescribed rates between their currencies and the US dollar. Today such parities no longer exist, but the USD is the WRC, and as such, those who use it are subject to the effects of its policies, and must have some tool to keep the effects of these policies in check. I'm not going to go down the path of SDRs, and the development of the current gold markets, gold derivatives, leasing, etc., here. Many others have already done so at great length, and far, far better than I ever could.

Instead, I want to offer another perspective on why socialism became so entrenched in Europe from a pragmatic financial viewpoint. Since the breakdown of BW, floating exchange rates eventually evolved. Yet, truly free-market floating did not. Otherwise, basket-case economies would veritably go belly-up, and bring down too much else with them. The west could not afford a weak, but major, economy to fall apart utterly, as Moscow was always waiting in the wings to move in. Simple national security interests were motivation enough to employ forex manipulation. As I'm not an authority here, I will only say that my level of analysis seems to suggest that currencies were allowed to float, but there were "understood" boundaries that were abided, and these boundaries shifted from time-to-time as conditions warranted.

So with the USD as the WRC, and former BW signatories effectively "fixed-floating" within an implied range (as well as other impacted/impacting currencies), we have the remnants of BW, the skeleton without the guts and flesh. And while vast differences exist regarding asymmetry/symmetry in these relationships, one thing remains the same, that the controlling authorities must have the clout to influence monetary conditions on their behalf.

Socialism was perceived to provide this clout by demonstrating to other financial authorities that through taxation/regulation, a country may (however inefficiently) put a throttle on growth, and channel more currency into government coffers where the authorities can control what's done with it. This makes the controlling authority out to be wielding one big sledgehammer instead of countless jewellery hammers tapping and pinging at random.

So the financial masters found good and lusty comfort sharing their bed with socialist power-mongers as well as the idealogues, all nominally aiming for the same goal: Socialism. Yet each having different reasons and different conceptions of what that meant. Could this mean a major sea change when Socialism used as a tool is no longer needed? Are we headed for a super powerful mega-corporatist European state?

It seems that as far as fiat goes, if Europe stays the course, and does not blink, and can somehow influence oil prices to not rise precipitously (also in the US best interests), they will still win the showdown, and global opinion will shift perhaps very suddenly to the Euro as THE reserve currency. I am not a fan of the World According to Brussels, but as a dispassionate observer, I see it as inevitable, and the Euro knocking down dominoes one-by-one, and starting in the UK. Oil will not rise prohibitively until this time. If it did, it could kill off both Euro and USD zone economies, and then there are not enough buyers for the oil.

(down the home stretch now...)

If the US sucks it in, and vigorously pursues alternatives on a major scale to wean from foreign oil, and can somehow buy-off, pay-off, intimidate, or seduce oil producers to keep it cheap enough to not cripple their economy, but expensive enough to keep the inflationary fires to the Euro Zone's feet, for just a few more years (and barring catastrophic exogenous events), maybe, just maybe, they can let go of the reigns of WRC status. Until that time, such a transition will cause untold misery.

Indeed they wait on the inevitable, we wait on the exceptional.

Am beginning to ramble without being able to develop these points, so will stop here... If you read it all, thanks for your time...

miner


Tree in the Forest (6/21/01; 19:10:12MT - usagold.com msg#: 56583)
Leigh
Thank you Leigh. I'm glad you're at this roundtable.

Stocks, Lies, and Ticker Tape (6/21/01; 19:07:04MT - usagold.com msg#: 56582)
goldfan
Good points! The last time Europe was united was in the effort to rid the continent of Napoleon.

Stocks, Lies, and Ticker Tape (6/21/01; 18:52:13MT - usagold.com msg#: 56581)
Leigh
Well said! BTW: You are not dull! POSTING HERE PROVES THAT!

barnacle bill (6/21/01; 18:39:11MT - usagold.com msg#: 56580)
Greenspan
I was looking through a book of quotations and I noticed one about W. E. Gladstone which made me think of Greenspan:

"He has one gift most dangerous to a speculator, a vast command of a kind of language, grave and majestic, but of vague and uncertain import."

MacAulay, Essays: Gladstone on
Church and State


goldfan (6/21/01; 18:37:07MT - usagold.com msg#: 56579)
Euro/gold debates
Distillations:

Pondering what FOA and ORO and others have been saying re Euro, gold, currency and wealth, trying to make sense of this welter of claims, counter-claims, data and thoughts, I decided to set out what I believe. (Note that a large part of what I believe, has been formed from my life experience, allied to what I have been taught here to look at, by ORO, but also by FOA/Another and others, ie. Journeyman, Peter Asher, and many else).


What I have come to believe:

1. Every economic exchange is fundamentally barter, and "money" and all the apparatus of "finance" are merely systems put in place to facilitate the exchange.
2. Wealth is what I feel good about having.
3. Saving is a way of protecting my "barter power", or of storing the actual goods or productive assets I need, for survival and for enjoyment of my "wealth".

Right now, people can easily buy and save gold as a wealth or savings asset, just as they have always been able to do. Most people in the Western world, and many in the East, don't acquire gold for other than its use as jewelry, or display of wealth status. This is because for whatever reason they have adopted fiat currencies, in particular the US$ as vehicles for this purpose. And most particularly in the West, they have adopted their real estate, their homes, for this purpose.

About the Euro. No large scale world religion has survived without an army to back it up. Or without the protection of an army in the country where it is being practiced. Same with any currency aspiring to be the reserve currency for the world. The US$ got that status by the power of the US Army in two world wars, the Korean War, the Vietnam and the Gulf Wars and a lot of other skirmishes along the way. When it became necessary for people to borrow, they borrowed from the US, effectively at the point of a gun. And thus had to compete with each other to earn US$ to repay the loans. So US citizens got to enjoy tribute from the rest of the world, only having to print the money to keep the stuff flowing in. It's not likely the Euro is going to mean much to the rest of the world, unless they have to buy weapons or protection or oil with the Euro's they earn. They won't get oil as long as the Middle East needs US weapons for stability. Which looks like being a long time indeed.

It is likely that gold is vastly undervalued in US$ terms. This is the same as saying that the US$ is vastly overvalued in its purchasing power of real goods and services needed for survival, for commerce. It's likely that gold is valued about right in Indian Rupee or Turkish Lira terms. Maybe I'm a bit off in this statement. But you see the point I'm trying to make. We in the West have gotten used to living too well, far beyond what our work and ideas are worth, in world terms. In much of the rest of the world, people can and do use gold as a "survival of last resort" asset. So even today's gold prices must be about right for their standard of living.

When the US$ crashes, the asset market bubbles collapse, maybe people in the West will start to use gold again as a saving and wealth vehicle. Maybe they will be so disgusted, so impoverished and dismayed, by the greed and incompetence of their governments, that enforced this fraudulent fiat currency on them, they will repudiate all forms of fiat. And return to using only gold as currency. I hope so.

If any government where I live tries to enforce a law saying I may own gold but not use it as collateral, not borrow against it, then I will move my gold elsewhere. If I have to dip into my gold reserves, I want it to be by way of a loan, not a forced sale advertising to all that I am in trouble and would have to accept a lowball price.

Right now as a form of savings, gold is more valuable to me than would be a Modigliani. First because it is far more "liquid', more easily converted to cash anywhere. Second, and more importantly, because I can borrow against it, which I cannot easily do with the painting. This would be true for me, whether or not the US$ collapses. When it does, my little gold still may not buy a Modigliani, but in the turmoil, the gold will be worth a lot more to me than would the art.

FWIW

Goldfan





CoBra(too) (6/21/01; 18:35:15MT - usagold.com msg#: 56578)
... And to Whom it may Concern ....
... All sorts of things may be jamming the European door, though certainly not monsters - well, dam'it, close the door don't slam it ... luv ya too - cb2



megatron (6/21/01; 18:26:23MT - usagold.com msg#: 56577)
Leigh
I certainly wouldn't catagorize anyone who dislikes 'European style' socialism as 'dull'. ;)

Leigh (6/21/01; 18:17:03MT - usagold.com msg#: 56576)
FOA
I am probably the least qualified on this Forum to weigh in on the FOA-ORO debate, but I do have a little something to say. It is that FOA's messages seem to be growing more and more political. He started out years ago talking about oil and hyperinflation, and I think most of us understood and appreciated his message. But now he seems to be touting the European Socialist agenda. One has only to look at the news each day to grow more suspicious of this arrogant bunch, who are unstoppable in their crazed pursuit of power.

FOA, you're a member of our Forum "family," and you know that you're loved for yourself. If you must associate with those European monsters from hell, please don't try to convince us that they have our best interests in mind. Even the dullest of us (like me) know better.


megatron (6/21/01; 18:08:38MT - usagold.com msg#: 56575)
NetKing
Of course these things get over-simplified, but apparently the guys at SI are saying that Pasminco has 'sold forward' 5 years of silver production, which for them is a by-product as they are not primarily silver miners. I am unclear as to whether they are the third largest silver miners or refiners? Still, there was total indifference from the market. Their shares were halted today and could declare bankrupcy. Can there be that much sloshing around the commodities market that this kind of event has no effect? 5 YEARS of production! Not to mention the contractual obligations, etc. Bizzare. Have to e-mail Butler and get his take.

Netking (6/21/01; 17:57:11MT - usagold.com msg#: 56574)
Fed's selling Gold
http://www.federalreserve.gov/releases/H41/
What are the boys up to now?

ORO (6/21/01; 17:47:48MT - usagold.com msg#: 56573)
Randy - claims of truth by association

The point of my critiques have nothing to do with FOA the "messenger".
The critiques have much to do with FOA the "economist" and FOA the "monetary historian". Also with FOA the "justifier" of dubious political actions, the perceiver of evil in nature, and the (apparent) believer in association over reason (which makes his posts more colorful and inviting). It has some to do with his not reading actual motives of his sources but instead posting what feel to me like party line messages as delivered to him.

It has most to do with what seems to be his not reading the contents of my posts but instead reacting to his personal associations arising from words and sentences that sound like something he heard before.

This is already too much.
I will post the commentary if FOA agrees to be exposed to it.
If not, I will try to take out what would come accross as a personal attack and try to sugar coat it some more. Somehow, it just does not come out any nicer when sweetened.




Randy (@ The Tower) (6/21/01; 17:42:12MT - usagold.com msg#: 56572)
Goldfan: property, banking, and socialism
Goldfan, I'm inclined to think that someone has not delved into the matter of money and banking deep enough or objectively enough if they haven't made the association so well expressed by FOA.

Think for a moment about private property. This, and all that it stands for, is precisely what FOA expresses for gold in the future. To be sure, this is how I see it. (Even in China! Can you believe it? <smile>)

Think next about the banking system, particularly one that uses a hard money denominator like gold. Deposits of gold property are put into what is essentially a "community till" and are commonly shared through credit. And as history has shown, when the community has shared and redistributed this property far and wide, inevitably beyond the ability to repay, the "market force" has always changed the rules of the game, bringing about the loss of wealth for those who orignally held and shared their private property via the banking/money system. To say "this isn't so" or "that isn't so" on the grounds that "the government intervened to make it happen", I say "What's your point?" All roads lead to Rome, my friend.

Hold fast with private property, and leave the socialists with nothing but paper with which to work their magic. Fair enough?


CoBra(too) (6/21/01; 17:39:53MT - usagold.com msg#: 56571)
EU - and the Backlash of Götheborg -
The Salzburg Summit of the WEF is in jeopardy - and it should be! Why would we want another circus of "Economic Summet-ry" as we can forsee it's going to be a riot re- hash of the last three ... World Economic Fora's ..id est ... It would be, not only costly, though disastrous to the tourist industry in our fair Salzburg.

Well, basically, there must be something wrong in the spree of WEF Meetings - since the greetings of these occasions have been met - at least since Seattle - with hatred!
... and don't battle the berated!

In the same (non-)sense, I would like to ask you, where do you see today an European, worth the description, as the treaty of Nice, was the last piece of garbage to divide (without rule) the miniscule adage of cohesion.

And how will a € ever work, a political beast,
withouth love, a home, a country, a concept and a consensus as to what it should be in the end to amend to a degree the totally differentiating (real)growth rates in GNP of the respective (dis-)membered country!?

As it seems to me, Europe has rarely been more apart as today ... and we'll still mend the unmending rifts by first aid tape and cry hooray - we've saved the day ... exactly for today ...

But then, we'll ballot for all our eastern neighbours to join the club, which is not only in disarray, though just may dissolve into the spray of history ...

Though, I can't laugh - the Irish vote was just as any member of a brotherhood - may pay another round of beer and the senseless discussions will re-appear, since the Eurocrats won't disappear ...

Tell me, where is the last EUROPEAN? - A species extinct before it even started to exist - together with(out), its funny money, the political crony can't abuse yet, you bet - as soon as its there (Hi, George die Taschen sind leer) it will be a chimera.

Born to be the confiscatory apology of the policy of statist's usury.

Be free - buy gold and hold the only true philosphy - in your best interest - cb2



Randy (@ The Tower) (6/21/01; 17:14:57MT - usagold.com msg#: 56570)
Musings inspired by Netking (msg#: 56547)
Netking said: ---"So much of what we do in human capital terms is trading. We put in time, money & effort based on our research into an endeavour & hope to get an expected return/result("profit") in return."---

Do all of us know or agree on what is meant by the term "profit"? Put differently, it is possible that one man (a primative) sees "magic" where another man sees plain ol' technology at work.

With "profit", some people form the notion that it is "something for nothing", or perhaps "two for the price of one". As implied by the term trade, the perspective of the market is that an even-value exchange has occured. Each party involved in the trade exchange deemed that they received fair compensation, and perhaps a position that will serve them with better advantage into the future. This is obvious in a direct barter swap. With money, it is fair to say that the money received for the good or service is not a magical profit of "something for nothing" or "two for the price of one". If your receipts for output exceed your cost of inputs, the difference is the market's best judgement of fair compensation to you for your total service or role in the affair at hand.

Sometimes life blows you a windfall of wealth (free apple?), in which case you do in fact "profit magically". If you seek the market's judgement, it will show a willingness to deliver payment in fair trade as though you were the average producer with the full cost of inputs. What's my point? The simple form of the lesson is that the road to riches is not often traveled on the back of windfall profits. It is taken one step at a time as wealth is built (and swapped for other forms of wealth) through a person's lifetime of personal effort.

Netking also said, ---"In trading the thing that speaks so clearly to me is this: So much human misery could be avoided if the implemtation of an effective 'stop-loss' was understood followed."---

Wise words!!! Let physical gold be your "stop-loss" as you create and trade your forms of wealth throughout your life.


megatron (6/21/01; 17:09:09MT - usagold.com msg#: 56569)
NetKing
Could you paste or post a link to PAS 'physical short' positions. Amounts, dates, etc. Thanx

Netking (6/21/01; 16:53:21MT - usagold.com msg#: 56568)
Tree in the Forest / Megatron - Somethin's Up . . .
Tree/Mega.
It was also interesting to note also that: When Pasminco (PAS) worlds third largest silver producer and also a holder of one of the largest physical short positions in the world went into suspension this week that . . . . silver was hammered on the 24hr graph. A shutdown or bankruptcy could throw the market into disarray.


goldfan (6/21/01; 16:52:07MT - usagold.com msg#: 56567)
FOA-ORO debates, Randy, and all
Concerning the FOA-ORO debates:

I eagerly read whatever ORO says, since I know it will repay my effort to understand it. But I have become disenchanted with FOA's writings. He too often attributes to ORO things ORO did not say, and clearly does not believe. At several points, he calls ORO a "hard money socialist". Anyone who can stretch the definition of "socialist" to include ORO is not to be trusted in anything he says, in English anyway. IMHO.

To me, reading FOA is like swimming in wet sand. Reading ORO, on the other hand, is like reading a fascinating detective novel, in a slightly foreign language. Surely ORO is a prophet. Maybe the person FOA is a prophet, but not to me. Despite all this, I am grateful to FOA, for having sparked a series of very useful, interesting, and educational writings from ORO.

As for ORO's upset over the way he is read and responded to by FOA (if that is his upset) then I would offer to ORO the thought that a good way to use this "upset energy" would be to keep on writing brilliant pieces like his 544. I am certain that there are many reading here who, like me,are delighted with this sort of analysis and deduction, every day hoping for more.

Goldfan


CoBra(too) (6/21/01; 16:29:19MT - usagold.com msg#: 56566)
Hindenburg - @ an old Viennese Literate's Cafe ...
... Qu. to Max Lieberman, a painter of portaits, famous in his time - Max would you paint a portrait of Hindenburg? ... "Paint?" ... " Hell, NO, I'd not even piss him in the snow!"

Sorry, for the analogy as it reminds me of the potential portrait of Greenie, the 'Genie', producing hard to abuse, refuse at the location, where Max has put the final destination of the portrait of Hindenburg. And it has nothing to do with the wisdom of Torberg, who may have said: "Any human, who looks a bit more sophisticated than an ape - is a real luxury!" ... Amen - got my spouse to delouse - cb2



Christian (06/21/01; 15:59:40MT - usagold.com msg#: 56565)
Free Trade
All a government has to do to increase its real income is print money and spend the proceeds on commodities like gold and silver. It costs 15 cents to print $1000 worth of paper $'s and that $1000 will buy 3.7 ounces of gold or 225 ounces of silver. The government with its printing paper scam can afford to sell it for less. In this way the government can divert resources from private use and utilize it for its own purpose. The resulting swindle represents revenue to the government, a means to manipulate the POG and promote fiat. Free trade = You trade your labor, goods or assets for our freshly printed dollars and we sell it for the purpose of revenue enhancement. The FED is backstopping its member banks gold ever growing gold short position. Our government is selling gold that is still in the ground. In the ground is as good of a storage place as anywhere else. It is safer then above ground storage. The U.S. $ is going to get stronger for the simple reason that masses of credit that is already created will require masses of payments plus interest cost that will force people to work and diverts resources from private use. It is an indirect way of doing what President F.D. Roosevelt proclaation did in 1933 when --"All safe deposit boxes in banks are to be sealed and may only be opened in the presence of an agent of the I.R.S. Who is the biggest seller of gold? (USA Government) How did they pay for it? (Paper $'s) Where did the gold go that was sold? (BIS- to settle the trade deficit)

Randy (@ The Tower) (06/21/01; 15:57:44MT - usagold.com msg#: 56564)
What's up, ORO? (msg#: 56545)
"I have quite a few comments I prepared..... They will come off as a personal attack, which perhaps they would be."
------------
I would think that you would know to as great an extent as anyone here that these issues being discussed on each side of the debate -- particularly at the level we are dealing -- have very little room for anything "personal".

As I have stressed many times, what we are seeing is MARKET FORCES at work. In all of human action, there is nothing that can stand long in the way of market forces. The existence and shape of governments themselves are an end result of market forces. That's a hard truth to anyone that doesn't like the "ruling regime" in its entirety, and I'm sure there is no single person out there who IS COMPLETELY satisfied with their current manifestation (infestation?) of government as dictated by the market force. But then again, that's what compromise through market force ("majority rule") is all about. You don't have to like it, but only a fool would make it "personal".

As much credit and respect as I have for FOA for his ability to see clearly, I will stop short of giving him full credit for personally implementing the process that is unfolding to your apparent dismay. I would think that is quite out of any one person's control.

What has changed in your mind that you deem it fit to make this personal? Do you hold Herb Morrison personally accountable for his observation of the Hindenberg disaster at Lakehurst? I should hope not. Again, I would think you would know better, and would be disappointed to learn anything confirming the contrary.

Perhaps there are several others here who could benefit from this perspective.


Centennial Precious Metals, Inc. / USAGOLD (06/21/01; 15:09:52MT - usagold.com msg#: 56563)
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Tree in the Forest (06/21/01; 14:46:31MT - usagold.com msg#: 56562)
megatron
Yessir! Down on no news means something's up!

R Powell (06/21/01; 14:42:52MT - usagold.com msg#: 56561)
One fer day
Lease rates were down again today with the Libor setting another consecutive YTD low. The mining stocks got hammered down today as well but POG managed to end up $0.20 at 273.6 for August. Although we know there is no specific relationship between them, lumber was up slightly with POG. Soybeans went down with the POS, down 2.2 cents to 432.3 for July.
Was today the summer solstice with eclipse long term low for gold? Many have mentioned such. I don't pretend to know but we'll all know in a few days.
BC BN
Rich


Tree in the Forest (06/21/01; 14:37:34MT - usagold.com msg#: 56560)
Comex half-default - Netking
In thinking some more about Netking's questions and the nature of a Comex default, I have come up with a Comex half-default scenario. If Comex fully defaulted and was obviously mispricing gold, they would IMHO become a laughing stock and would lose face as well as the confidence of investors. They might wish to avoid this. Trail Guide has said that they would just stand aside and let the gold price rise. Certainly up to this point, they have shown no inclination to do so. And there is the question of how they could deliver into their contracts, now standing at 118,500 total. This represents 12 million oz of gold, which they currently do not have. Yes and all of it might be stopped if as Bill Murphy says people are desperate for gold. However, if they had certain guarantees that much higher levels of gold would be made available at a much higher price, say $800/oz, they could then step aside and let gold rise to that price and be able to cover their contracts. Whether they would be able to cover their options also is open to question. And they might have to close the exchange to new contracts for a period of time, change margins etc. The scenario might look like this:

1)Existing contracts covered
2)Exchanged closed to new contracts for a period of time ie. liquidation only
3)After this, new contracts with much higher margins
4)Options settled in cash
5)No separation of physical and paper prices

Sort of a half default. Comex gets to save face and not quote erroneous gold prices. They get to stay in the game. And they get to cover existing contracts. They default on their goal of maintaining full liquidity. Option holders would be lucky to get their money back. Now before you run out and buy a Comex gold contract, keep this in mind. They may still spike the price downwards before letting her go. This would mean that a small margin wouldn't be enough. Your broker would wind up liquidating you. If the projected price target of $188 were reached, you would need almost 50% margin to stay in the game and no stops! So for putting up 12 grand with no stops (1 contract) you might make 80 big ones. Anyone out there with cajones big enough to risk this one? <grin> I thought so! <double grin>


megatron (06/21/01; 14:17:06MT - usagold.com msg#: 56559)
Attention short term traders!
I try to keep an eye on companies like Eldorado who are mucho hedged and are intimately involved(indebted) with bank NM Rothchild's. My personal opinion is these kinds of producers will get hit hard(up or down) by insiders BECAUSE of the Rothchild connection. Today they got hammered down with no news. Near term POG should drop. Same with FrancoNevada. They would never touch anyone like Normandy if they thought they would be burned, and unless they felt the hedges could be unwound in time. Again, short term flat to down. PlacerDome has also recently let go options on large potential projects with junior partners. All in all, I feel we may be in for a slow downward summer. Could there have been a large dump of gold from somewhere? Keep your eye on the TSE PM index. If it breaks below 4500 there will be no more 'love' for a while. :(

Randy (@ The Tower) (06/21/01; 12:53:29MT - usagold.com msg#: 56558)
Tower's Monthly Report : Gold and the U.S. International Trade in Goods and Services--April 2001
Today's release of revised trade data from the Department of Commerce revealed our March trade deficit climbed from the original estimate of $31.2 billion to $33.1 billion. Estimated figures for the latest month, April, reveal that our imports of goods and services declined by 2.2 percent (to $119.1 billion) while exports declined by 2.0 percent (to $86.9 billion). The resulting estimated trade deficit for April is $32.2 billion -- higher than the original estimate for March.

Annual revised data has also been released. While the original figures for year 2000 trade showed a deficit of $368.9 billion, the revised annual data knocked that up to $375.7 billion.

So far for the first four months of 2001, we are on an estimated pace for a new annual trade deficit of $381.6. Apparently our economic slowdown hasn't altered our willingness or ability to consume more than we create -- printing the difference and calling it even with our trade partners. Let the good times roll...

On the political side, President Bush continues to press for negotiating authority on trade agreements, but thus far Congress has been reluctant. Bush claims that free-trade agreements are necessary because Americans must compete in the global economy. Critics to free-trade do not want to subject American workers to what they call "unfair competition" from countries with low average wages and lower environmental regulations. The Bush administration labels these congressional critics as protectionists and isolationists. I agree. Let the markets prevail, and in the process provide benefit to ALL Americans through access to goods at the lowest prices. Otherwise, prices are higher to everyone as you protect the few workers found in any given industry given the protective cover of trade barriers. Now on to the GOLD...

GOLD'S CONTINUING FLIGHT FROM THE STATES

The rest of the world continues to avail itself of our collective national indifference toward holding gold.

We imported only $134 million in gold (near 16 tonnes) during the month of April.

By contrast, the rest of the world increased their gold levels sought from us, claiming $649 million (near 76 tonnes) exported from our mines and our mattresses (so to speak). Read on.

While figures for March revealed a net gold outflow of approximately 54 tonnes, these latest figures for April indicate a net monthly outflow of gold from the United States of approximately 60 tonnes.

(At this new monthly rate, our moving annual rate of net gold loss becomes 720 tonnes.)

Year-to-date figures reveal that our net gold outflow for the first four months of year 2001 has been
$1.7 billion. This is VERY small when compared with our net year-to-date trade shortfall of $127.2 billion which has been thus far satisfied with payment in dollars, only.

January through April, our net gold outflow has been approximately 195 tonnes, putting us on an annual pace for a net outflow of 586 tonnes by year's end.

Please recall that our annual production supply from domestic mining is only approximately 350 tonnes. The balance must come out of past accumulated production. Let's call it "savings". Instead of gathering more gold while it is cheap, as a nation we are effectively spending it as a tiny partial real export payment to offset our bloated imports.

Intuitively, would you expect this richest nation on Earth to be a net "User" or a net "Loser" of gold? And yet the facts speak for themselves. Clearly, the other nations are seizing this opportunity. It is likely that one day this gold will be made available to flow back to us, but only when the new owners feel it has risen to a more proper relative valuation.

Final thought on trade. If our April trade balance shortfall ($32.2 billion) were to have been fully funded with payment in gold at the going street price, in addition to the 76 tonnes that we actually exported that month, we would have had to export an additional 3,780 tonnes.

As you can see, at these prices, an equivalent of nearly half of the official gold holdings of the United States would be exhausted in an effort to balance our shortfall in international trade of goods and services -- for only ONE month!

How much longer will the world continue to accept (AND HOLD) our printable paper dollars in such abundance? Prepare yourself for the day they don't. Our dollar isn't as good as gold, and neither are our bonds....and there are a lot of them out there poised to come flooding back home.


Pragmatic (06/21/01; 12:46:30MT - usagold.com msg#: 56557)
Uponroof
Taking the next three days off to sail the gulf with a bevy of bikined A&M coeds.... well sans coeds. Be thinking of you and Moutaingold. Will be in Corpus, Rockport and Port Aransas (places in Texas Moutaingold:) BTW where is that duffer? Did he get lost on a golf course again?

I continue to believe gold is behaving well technically especially with firm $ and weak commodities. Whatever is happening is not happening in a vacuum. Something that is not entirely clear at this point but markets don't behave like this without a reason.
Cheers


justamereBear (06/21/01; 12:33:21MT - usagold.com msg#: 56556)
ET 56523 Perplexed Ironhead 56225

IronHead
Deflation is essentially a massive asset destruction, and you can bet that if the dollar collapses, (ie. the US goes bankrupt) there is going to be a lot of "asset destruction" going on. (have you ever witnessed the destruction that occurs when a largish commercial operation goes under? 5 cents on the dollar is good) So, tell me, When is the USD going to collapse? It will be pretty close to that time.

Perplexed
Thank you, my friend. High praise indeed.

ET
I will try to obtain a copy of Thomas Sowell, but you see, as I posted to Journeyman a few days ago, I am here for new ideas. One of my new ideas has hatched (it is about security, and therefore off topic.) and I am "all tied up" (16 hour days) with the care and feeding of it until it grows up a bit. This is why I have not been posting, I simply cannot afford the time to enter the debates, which I dearly love. I don't really know when I will get finished reading it. But slowly slowly, I will proceed. And very occassionally I will indulge my addiction, and post, but for now it is mostly fairly frequent lurking.

Thanks for the kind words.

j'Bear







justamereBear (06/21/01; 12:01:10MT - usagold.com msg#: 56555)
Parsifal --- SQAW

Old Old Squaw at Montreal. Old Squaw at Tokyo. Which you want?

j'Bear



Peter Asher (06/21/01; 11:30:57MT - usagold.com msg#: 56554)
@ Steve & IronHead

Steve <<< to protect the dollar and to squelch gold.>>> How about --- to protect gold by a high dollar.

The Eastern countries have gold in the hands of the people. Could the appreciation of that potential buying power threaten the dollar along with the gold shorts?

The more expensive gold is, the less is recieved at the other end of the gold/fiat/gold sequence.

I'm getting convoluted here, need more coffee. (:-)

IronHead -- <<< Goodwill Chits >>> Has a nice ring to it!




Galearis (06/21/01; 11:07:41MT - usagold.com msg#: 56553)
@ R. Powell, your #55354 of yesterday...
lease rates....
Hi Rich,

I watch the lease rates as a rough indication of the state of health of the carry trades. Dropping rates, and especially in the face of another Greenspan rate cut would seem to be a reflection of fear by the shorts to add to their potential damage. In other words, the carry trade is not a healthy or safe venu to free money these days and the word would seem to be out on this. We still see some indication of forward sales in the longer months, but it is surprising that there is so little activity in the shorter ones - the rates drop but there is no "green" in the numbers to show borrowing. The shorts do not even seem to be
rolling over their loans. The dropping rates would also seem to factor in a coming rate drop. Another point would be that the delta hedging ammunition would also be low and this is shrinking along with COMEX supplies.

One wonders if many of these parties have started to buy their exit tickets to some country without an extradition treaty. Probably a ticket that would impose no weight restrictions. (smile)

G


IronHead (06/21/01; 10:43:35MT - usagold.com msg#: 56552)
ORO - Deflation or Hyperinflation?
Perhaps you missed my question of last Friday 6-15, post #56205. {perhaps not?}

<abridged clip> <<Regarding a possible deflationary spiral which will catch us all looking for footholds of a tangible nature, I'm interested in your view of "if - when - how soon" and by what dynamic process, can we see the U.S. economy drastically catch up with Japan's enveloping downward vortex?>>

Today, watching the yen continually dropping, or 'being' dropped to the dollar, as they direly struggle to maintain the export blood of their economy, I wonder how much longer we can keep them afloat? If the U.S. drinks from the same water of contagion that Japan has been for many years, (dropping interest rates while printing goodwill chits), while re-infusing Japan with her own re-infected blood-money, does this not set up a senario of deflation for us to eventually have to deal with when we can no longer service the patient and her last will and testament demands full retribution of all chits previously lent out? Does this not possibly portend the return to hard real asset wealth at some time, or will the U.S. have restructured 'transactional' gold to some 'other' accounts, rendering "our" gold in a world other than the new credit gold?

Excuse if these questions are again, "not".

Thanks,
IronHead



Old Yeller (06/21/01; 09:15:06MT - usagold.com msg#: 56551)
Thanks for the great party...
http://www.bearforum.com/cgi-perl/bbs.pl?read=154093

Now,how are we,(world economy)going to pay for it.

Thoughts from William White,head of the monetary and economic department of the BIS;

"this raises an interesting question,if it get worse,who takes the hit?It isn't going to be just the Americans."


JMB (06/21/01; 08:15:39MT - usagold.com msg#: 56550)
Steve H
Did you catch SECTOR's recently expressed conclusion re the importance of the gold price as it impacts interest rates? In part, he points out that higher gold prices will lead to higher interest rates, which will precipitate a mass exodus from a very crowded trade in the bond market.

I really think SECTOR is right on the money. It's actually kinda scary when you realize how destructive the upcoming meltdown will be.

Better buy the physical first, imho.


SteveH (06/21/01; 07:47:48MT - usagold.com msg#: 56549)
Strong Dollar Policy
The US'strong dollar policy is really a weak gold policy. Yes, just like the answer 42 in the Hitchhiker's Guide to the Galaxy series book in which the answer can NOT exist in the same Universe with the question, the strong dollar can no longer exist in the world economy along with a strong gold price. Because of the gold short overhang in the world gold market, it seems the dollar is stuck between a rock and a hard spot. It would seem this overhang is so potent that our entire manufacturing sector is being hurt to protect the dollar and to squelch gold.

Today the ECU decided to not lower (or raise) short-term rates. When Alan lowers US rates next week that will further stress the dollar as it relates to gold and the Euro, but will help the banks (and me) pay the interest on loans. Just a matter of time, I would say, before things reverse, much like an ever winding spring whose contraint mechanism may be finally overpowered by the energy of the spring and its desire to unwind (with or without the strong dollar policy).

So, what was that question again? We know the answer was 42.


colourofmoney (06/21/01; 05:25:37MT - usagold.com msg#: 56548)
Mountain Gold
Think Moutain Gold would be in Zambia right now, keeping one eye on the solar eclipse and another on his gold portfolio.

Netking (06/21/01; 02:25:21MT - usagold.com msg#: 56547)
Tree in the Forest
Tree(56513) Thanks for your comment Sir, appreciated. It will certainly be interesting in the days ahead & we'll watch Comex with interest, some here more than others!

Trading I believe in it's self is neither good nor evil, a bit like money really. The human hearts motive is reflective in the actions thereof and in the hands & intent to which it moves.

So much of what we do in human capital terms is trading. We put in time, money & effort based on our research into an endeavour & hope to get an expected return/result("profit")in return.

I've had my highs & lows in trading over the years(like all yes)and have found knowledge and experience are great teachers (as are a good wife and the Lord!)

In trading the thing that speaks so clearly to me is this: So much human misery could be avoided if the implemtation of an effective 'stop-loss' was understood followed.
regards Netking


Netking (06/21/01; 01:43:10MT - usagold.com msg#: 56546)
Sir ORO
ORO Re you comment(56544): ". . . Silver, and Plat, Plad, and Rhodi, would be much more stable as they rise to match general price levels and would increasingly obtain a transfer of monetary premium from an inflated gold price and an over-printed currency. . . "
------------------------------------------------------------
Netking >>> Your assumption and inference herewith is that gold alone will reflect this overheated premium, initially.

I believe this may warrant another think, learned ORO. Silver as you know is at close to a 5,000 year inflation adjusted low price & has a unique market dynamics model, right now.

Silver has in place extreme market supression characteristics to an "extent" like no other market in ANY time frame we have evidenced or have record of.

The shortage of physical silver will be so fundamentally pronounced and acute in the days ahead that recovery to a "normal market" in terms of dynamics & pricing will not happen quickly.

Silver will be the one I suggest that will reflect a hyper-premium of the previously known historical pricing equilibrium.

When the silver leasing stops, and when the silver shorts unwind. . . . raw, aggressive and unrestrained power will be unleashed on the laws of demand supply . . . and this will be reflected to you and I by the price buyers are prepared for your's or my physical silver.
regards Netking


ORO (06/21/01; 00:52:37MT - usagold.com msg#: 56545)
FOA - rough words
I have quite a few comments I prepared, but am refraining from doing so because they would present both of us in a negative light since they are rather nasty in conclusions, argumentation, and manner. They will come off as a personal attack, which perhaps they would be.

I tried to tone things down and dress them more nicely, but that did not "do the job".

Therefore, I will refrain from posting these comments until you agree to be exposed to these rough words and criticisms.


ORO (06/21/01; 00:45:44MT - usagold.com msg#: 56544)
Clarifications - a gold bubble scenario
There are a few things I should clarify on the matter of the gold price, which depends on the political scenario. I'll start here with what I suspected FOA and Another were actually talking about, not what they hazilly philosophized about. Being an entirely political issue, one that seems within FOA and Another's grasp and knowledge, as opposed to economics and monetary history, I will put this one forward in more detail than I did before.


Among the speculations I put forward some time ago, I pointed out that FOA and Another implied at some point a gold based inflationary scheme for the euro:
Gold is purchased on the market for freshly minted euro, the euro provide cash to settle debt when debt creation (euro supply) does not match debt demand. The mark to market regime allows the ECB to book rises in the gold price caused by its purchases to cover losses on commercial debt it buys off the market at below market interest rates (they must be below market, otherwise the ECB would have been outbid by someone).

The EU, supposedly, will come to an arrangement with gold producing countries to tax the gold production at some 70%+ so as to restrain supply in response to the artificially high price.

This, of course, means that both mining companies and their workers would have the incentive to export covertly mined gold, which they would.

Where FOA, under this scenario, expects the gold collateral limitation to come in is in avoiding the requisite speculative response in the markets: own gold and borrow against it in euro, pocketing the artificial rise in price at the subsidized euro interest rates. This would inflate the euro (and other currencies). The limitation would, if enforceable - which it won't be, prevent that portion of the euro inflation, leaving the ECB with a monopoly on issuing euro for gold.

The consequences of this one are fairly easy to analyze since it has already occurred in both the Banc Royal episode and the Mississippi Company bubble, and in the First Bank of England and the South Seas Company – both schemes to extract governments from their debts. The gold will be borrowed against, the gold mines will operate "tax free" mining operations that bring the gold to market anyway. Gold producing countries will cheat on their "GoldPEC" (if it ever materializes) quotas in order to retain market share in the face of surreptitious gold mining operations around the world. The capital gain on the gold would bring, at some point, a sudden reversal in the markets as the leveraged gold owners and the holders seek to extract some of the capital gain, and the leveraged dump gold as their debt covenants would require posting margin.

The ECB would fight the decline in the gold price by buying more off the market in order to keep the capital gains humming and provide member central banks and their governments with income. The ECB would buy more and more gold, leaving us with less gold and the ECB with a somewhat greater chunk of world gold stock. But there is a problem as the euro is not convertible, it must trade at a discount to its gold holdings and people would have no incentive to hold euro against holding gold, and all the incentive to do some "unenforceable" contracts where they borrow euro (or other currencies) against gold, and against anything else for that matter. Since the classic borrowing arrangement with gold is that the security (gold) sits in the lender's vaults, contract enforcement is a non-issue.

Thus the plan would still require substantial euro inflation to work, and would most definitely increase volatility in the gold market as the euro-gold pumping would push general prices up and gold holders would prefer borrowing against gold rather than cashing out of gold (wouldn't you if the rise of gold in terms of euro were assured?) – and do so for re-investment elsewhere, where they are most attractive – which would probably not be Europe.

Booking the capital gain would be dangerous, as it might be reversed, but in order to feed governments in Europe with paper gains to pay off their debts and perhaps continue some of the social spending they would otherwise have to stop, it will be done.
The result would be a classic bubble economy, complete with a rise in imports and a bleed of euro into the international markets as the euro inflates within Europe, and abroad. Europe would become, structurally, an importing region and its industries would hollow out. If rigid labor markets and business regulations are maintained, then the only fields of expansion would be retail, speculative finance, and entertainment, perhaps with a little more expansion there than contraction in the rest of industry. The structural maladjustments would be worse than they are today, and worse than the US ever suffered.

While the artificially pumped gold market would collapse some point in the future (depending on how intense ECB buying is), taking the ECB's balance sheet with it and putting the EU trade settlement system in danger, most probably forcing the ECB to sell gold after the inflated bubble price is punctured. Up to that point, one would be right to expect a high "real" gold price equal to about $3000 of current purchasing power at its potential peak, about double the "real" price indicated by historical precedents. If the ECB and other CBs fail to restrain speculative leverage into gold positions, or worse yet actively participate in pushing the gold price up, then the potential peak price would be even higher. However, there will be a cost to this as the gold price would most certainly collapse after such a spike, because of artificial stimulation of both price and demand causing over-production, over investment in production, and in a hidden gold discovery process taking gold out of the proverbial "woodwork". The later "real price" of gold would be damaged for decades afterwards.

Silver, and Plat, Plad, and Rhodi, would be much more stable as they rise to match general price levels and would increasingly obtain a transfer of monetary premium from an inflated gold price and an over-printed currency. If, as I suspect is most likely in this scenario, people will hold gold in preference to euro, and leverage it, then at the time of the "grand exit" characteristic of such bubbles (see NASDAQ's Asian style belly flop down 2/3 at the April bottom), then it will be falling against non-bubble metals Silver and PGMs. Euro would fall in tandem. The bottom for gold would depend on whether contractual relationships were established effectively for the other metals, and whether they were established in use for transactions, along side gold. Under these circumstances of extreme volatility induced by the ECB and those cashing out of gold, the use of gold for contract and transactions would not likely be popular. The unmanipulated metals may be just the ticket.

If the ECB does this slowly and gradually, conserving the gold price potential they can safely use as a capital gains source, they would induce a market preference for transacting in gold and contracting in it because unlike euro, it would be a global monetary unit, and would be more stable than the euro for international contracting once it obtains the monetary premium from houses, and junk people use as a savings medium instead of currency accounts. The ECB would probably be taken aback by the phenomenon of gold use in transactional and contractual roles, as it would fill the role it hoped the euro will obtain. At this point it would have to decide whether to destroy the gold contracting environment by raising the gold price volatility in an attempt to keep gold from displacing euro from its intended international (and even domestic) role, or stay passive and let things go as they will. If the former, they would necessarily induce the transition to other metals, if the latter, it would simply be a slow transition towards a private gold monetary system as it was before the governments of Europe and then the US took over the monetary systems in their jurisdictions.

Trade effects:
Current EU trade surpluses are maintained by a tax system that puts a much larger (than the US, and most other places) burden of taxation on consumption in the form of a VAT, a tax on gross margins – which is pretty much like a sales tax. That tax is borne on imports as it is on local production, but is "refunded" on exports. Thus at 18% it produces a 40% price differential between products sold abroad and sold at home. It is a driver for exports. While the VAT on imports (on top of tariffs) produces a smaller take out of the consumer's expenditure for the maker of imports. Particular targets for taxation are energy, where overall the governments of Europe take 70-80% of the consumer's outlay, something that oil exporters to Europe should complain about loudly. It provides a price differential between consumer prices on energy and producer prices, thus favoring local production use over consumer use. The effect of this is to lower producer costs relative to what they would have been if producers competed with consumers for fuel. The goal obviously being to increase gross margins for employers so as to increase employment and decrease the cost disadvantage for EU sourced production vs. foreign competition.

On a PPP basis, Europe is the next most expensive place to buy among the large industrialized regions. Japan being the most expensive and the global title going to tiny Israel as the most expensive country on earth. The actual price advantaged countries are the "newly industrialized" countries – China, Indonesia, Thailand, Philippines, Korea, Taiwan, Malaysia, India (in part) etc.. Prices there range from 1/3 to 1/5 of prices in "industrialized" countries. The middle ground is in South America. Because of rapid industrial development, the less developed of these have rather expensive real-estate, though rather much of it is empty, awaiting nominal economic recovery. Export wise, these countries have an enormous production volume. They are ready for a consumer boom like the world seldom sees, just as soon as the last of the foreign debts are covered, and balances of foreign exchange accrue. It is to their immense credit that these economies have the capacity to produce as much as they do. As the dollar recedes in value, the domestic purchasing power of the people will increase, and with it the will come a buildout of domestic wholesale and retail infrastructure and a spreading of the "good life" from the cities outwards. The gold bubble, if indulged, would see the savings of these people lifted.

The increased domestic consumption of these countries will take some of their production off the world markets and raise its prices in dollars, euro and yen. If Europe chooses to inflate the euro with a gold bubble, they will also raise the value of gold savings and rather large hoards in these countries. Thereby, shifting purchasing power away from Europe, and towards the Asian developing economies, and if the dollar is hurt as it most likely would be if the gold market is purposely artificially blown up, then shifting manufacturing and international services towards the US. If the dollar manages to survive near present purchasing power (I don't quite see how) as an unfixable currency (right now it is a gold fixable currency rather than the traditional gold redeemable currency), then the US would simply reach balanced trade, assuming there no anti business backlash in the US that would endanger return on investment here (the combination of stock option compensation and capital gains taxes – targeted for reduction to 8%, - allow a much higher net return on investment for the foreign investor, as taxable corporate income is substantially below cash flow realizable to the shareholder, at about a total tax rate of 26%, going down to 20%), as opposed to 40% in Europe (though they are lowering theirs too).



To summarize the euro gold bubble scenario, there will be a net transfer of real resources and assets to correspond to gold holders’ liquidation during the bubble. The sellers of these real assets and goods would be the people within the countries that inflate currency and absorb the gold, who will lose assets but not necessarily lose much in the way of trade, i.e. would still be able to import so long as the gold absorption is not too intense. These would still lose assets or excess export in accord with the combined absorption of gold and export of currency Those that absorb other's inflating currency will do so by favoring net exports – a net loss. Those that absorb gold through export by backing domestic currency 1:1 with foreign exchange and gold, may run a naturally balanced trade and capital flow skewed only by inflationary and deflationary forces imposed by foreign governments through the gold and major currency markets. It is likely that either gold or the other PMs would come into use for transactional and contract purposes along with savings.

This scenario seems to fit nicely with FOA and Another's presentations, filling in all the points of importance. Since the gold price would be pumped purposely (artificially) by the ECB, it is likely to cause severe dislocations despite the equally artificial suppression of gold supply through taxation and market cartels they suggest are being worked out with governments of gold producing countries. Of course, the EU motives of inflating away their government debts and attempting to bring in imports of items not produced in the union without paying for them any more than the US had (notably oil) is in the tradition of Left of Reality Politics of the deepest statism (hey, quite apropos, the spellchecker offered "sadism" as a correct spelling).

In the past, bubbles such as the one suggested in this scenario were highly destructive of the economies in which they were operated as they lost productive capacity to competition outside the area and then proceeded to decline for long periods afterwards. Since appearance of gold capital gains funds in EU government's hands would create all the inflationary bubble mechanics but do so in the hands of the government proper, allowing no allocation of bubble capital to the development of local capacity to produce the services that bubblonians can only obtain locally (much less qualifies here than before since entertainment and most intellectual services can be provided from abroad), funding the demand first and capacity expansion later, must create higher price inflation locally and spreads it outside the bubble areas more quickly, particularly with the quick trade reactions we have today.


More scenarios perhaps later. Some of the scenarios were also analyzed some time ago in much shorter form and are available in the archives.





Old Yeller (06/21/01; 00:39:30MT - usagold.com msg#: 56543)
Black Blade
http://www.sacbee.com/news/calreport/calrep_story.cgi?story=N2001-06-19-1445-1.html

How's this for irony?The grasshoppers have grasshopper problems.


Netking (06/21/01; 00:18:09MT - usagold.com msg#: 56542)
Silver & the economy . . .
http://www.gloomdoom.com/06-18-01.html
Latest Ag link by William Rickenbacker & Cook.

Snippits:
"It is in the nature of silver to be the whitest of metals. There is no metal that has a higher or more lustrous reflectivity than silver. The metal is not only beautiful, but it is also easily worked: only gold is more easily hammered into leaf or drawn filament. It has been mined around the world, commonly enough to be useful and rarely enough to be seductive: necessary attributes of a monetary metal. Since the earliest times its qualities, like those of gold, have set it apart for purposes of coinage and art.

"But the technological revolution has swept silver away from such tame domains, leaving gold in solitary authority in matters of coinage and adornment. Silver has new work to do, the kind of work that could have been invented only after a technological revolution had gone through its paces for a century or so. Silver, we learned finally, has the highest electrical conductivity of any metal. Silver has the highest thermal conductivity of any metal. It is next to gold in its resistance to corrosion. In combination with other elements, silver forms sales and compounds that have enormous importance in photography, medicine, and chemistry. The metal of coins and wedding plate has become the metal of photography and rockets."
* * * * * * *
As previously reported: A major Australian zinc producer has seen its stock fall precipitously as its financial position deteriorates. In addition to being a major silver producer, it is said they hold one of the largest physical short positions in the world. A shutdown or bankruptcy could throw the market into disarray. Stay tuned & watch this space.




ViewYesterday's Discussion.


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