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ARCHIVED DISCUSSION FROM 2/22/2001 All times are U.S. Mountain Time (Yesterday's Discussion.) Mr Gresham (02/22/01; 23:34:39MT - usagold.com msg#: 48777) Lease rates backwardizing? (Thanks Galearis&Rhody) Time to WAg the POG!(sorry, been working too hard)(only 1 Clink today) Clink! (there it is) SHIFTY (02/22/01; 23:22:31MT - usagold.com msg#: 48776) Farfel Your post is on Kitco.:-)$hifty WW Oracle (02/22/01; 22:45:52MT - usagold.com msg#: 48775) @ORO: Fannie Mae http://www.state.gov/www/about_state/history/vol_viii/1_15.html It is reported that the net flow of capital is out of Europe -- that's why the Euro is dropping. Acquisitions excepted, I can't see any of these funds going into the stock market, and decreasing amounts into Treasuries. Is European capital flowing into GSE securities instead? More importantly, are such capital flows being disguised (temporarily?) through the good offices of the ESF? For those who have trouble believing the ESF/GSE/Gold plan of the 1960's, I've provided the link to the relevant page of declassified monetary history at the State Department's website. (Economists in the mid-60's wrote about the "remarkable improvement in the United States' trade balance" -- no doubt a testament to the scheme's effectiveness.) Farfel (02/22/01; 22:43:11MT - usagold.com msg#: 48774) The Goldsell Auction Begins NOW! I have been in recent correspondence with Mr. Goldsell of Anglogold and the exchange has been "heated" and blunt tosay the least.Attached to Mr. Goldsell's Emails have been "confidentiality warnings" in which action is threatened for exposure ofthe contents.Well, fuck him, and fuck his confidentiality warnings. Nobody warned me or other gold investors about the nefarious gold carry trade BEFORE we invested in gold.Nobody warned me or other gold investors about the various gold producers who aligned themselves with the bullionbanks to drive the gold price into the toilet and their own share prices BEFORE we invested in their companies.So to hell with his warnings, the letters are headed for the public domain.THUS, the Goldsell Dutch Auction begins, I will publish the Emails on the internet, upon receiving the LOWESTPOSSIBLE BID for the correspondence. The auction opens now and will close by midnight, Wednesday night, the lastday of February 2001. NO bids will be accepted after that date.What do I mean by LOWEST POSSIBLE BID?I mean that I am creating a public auction whereby any interested participant from either USAGOLD, KITCO, orGOLD-EAGLE may compete with other posters to provide (as a form of "payment") the BEST essay describing in nouncertain terms the rotten treatment they have received at the hands of the gold industry. The essay should containexplicit references to how the bullion banks or the gold producers or any other person/entity associated with the goldindustry harmed the gold investor in question.By the closing date of the auction, I will announce the winner of the LOWEST POSSIBLE BID, reproduce thatposter's work, then climax the entire matter with the publication of the Goldsell correspondence.As I do not have posting rights at either KITCO or GOLD-EAGLE, I would appreciate the conveyance of this auctioninfo to those sites by any interested posters.Let the auction begin now.ThanksF* Farfel (02/22/01; 22:34:47MT - usagold.com msg#: 48773) The Goldsell Auction begins NOW! I have been in recent correspondence with Mr. Goldsell of Anglogold and the exchange has been "heated" and blunt to say the least.Attached to Mr. Goldsell's Emails have been "confidentiality warnings" in which action is threatened for exposure of the contents.Well, fuck him, and fuck his confidentiality warnings. Nobody warned me or other gold investors about the nefarious gold carry trade BEFORE we invested in gold.Nobody warned me or other gold investors about the various gold producers who aligned themselves with the bullion banks to drive the gold price into the toilet and their own share prices BEFORE we invested in their companies.So to hell with his warnings, the letters are headed for the public domain.THUS, the Goldsell Dutch Auction begins, I will publish the Emails on the internet, upon receiving the LOWEST POSSIBLE BID for the correspondence. The auction opens now and will close by midnight, Wednesday night, the last day of February 2001. NO bids will be accepted after that date.What do I mean by LOWEST POSSIBLE BID?I mean that I am creating a public auction whereby any interested participant from either USAGOLD, KITCO, or GOLD-EAGLE may compete with other posters to provide (as a form of "payment") the BEST essay describing in no uncertain terms the rotten treatment they have received at the hands of the gold industry. The essay should contain explicit references to how the bullion banks or the gold producers or any other person/entity associated with the gold industry harmed the gold investor in question.By the closing date of the auction, I will announce the winner of the LOWEST POSSIBLE BID, reproduce that poster's work, then climax the entire matter with the publication of the Goldsell correspondence.As I do not have posting rights at either KITCO or GOLD-EAGLE, I would appreciate the conveyance of this auction info to those sites by any interested posters. Let the auction begin now.ThanksF* Topaz (02/22/01; 22:31:41MT - usagold.com msg#: 48772) Randy, Zenidea. The Turkish dilemma smacks of "Numb-n-Number" yup! <wink> and just to really scramble the Chicken, this morning, on my way to work, (1/2 odd hour to trade in NY) the Dow is down 100, snp down 16, Naz down 60 odd. "lookin grim" I think to myself., Then this arvo, coming home, I hear Dow finished flat etc etc, all Eastern hemisphere markets trading up - so the last half-hour in NY set the scene for a Global rally. Who's kidding whom? Galearis (02/22/01; 22:03:30MT - usagold.com msg#: 48771) @ R. Powell from RHODY lease rates.... I seem to be a USAGOLD postman! (smile)Perhaps A.G could be convinced to drop interest rates a little more and we'll see a microscopic pipe for the carry trade. This seems to be entrenched in the relms academic now (perhaps) anyway - with today's news(?)At any rate....snip**************splat Yup, I just saw this [lease rate chart] when I got home. There is now only .018% spread between one month and one year rates. Murph calls this an aberration, but it is called backwardation, and it has happened before, most notably just before the WA. It's constriction in the pipe, and it has been much worse than this. What is interesting this time is the slow build up, and the easing of one year leases down to just above one month rates. It's the drying up of one year rates as mines close hedges that marks the difference here. I tried to post this stuff on USAGOLD yesterday, but made a typo in my password, and then lost the post I took 15 minutes to type up. [Censored] I notice that all the action was in the lease rates today, and spot moved little at all. Typical. Paper still covers rocks. I wonder who is getting out the scissors. unsnip**********[no pun intended][smile]I told Rhody to use a word processor and the magic of cut and paste from now on. Perhaps he will favour me by using this device too. (big smile)And regards,G. ORO (02/22/01; 21:16:50MT - usagold.com msg#: 48770) WW Oracle - history repeats This past year, Fannie Mae started selling Euro securities in Europe. Bloomie reported $30 billion.Yes, these are still classified as investments in the National Accounts, as would be treasuries when held by someone other than a foreign central bank.It should be noted that the ECB itself is not supposed to buy government securities off the market, only commercial ones. The member CBs, however, can do so as long as they do not overdraw their accounts with the ECB as a result. Chris Powell (02/22/01; 21:10:41MT - usagold.com msg#: 48769) World Gold Council acknowledges shortage of gold http://groups.yahoo.com/group/gata/message/674 Latest from GATA Chairman Bill Murphy tohis subscribers at www.LeMetropoleCafe.com.To subscribe to GATA's dispatches by email and get them immediately so you don't have to go look for them, send an email to:gata-subscribe@yahoogroups.com WW Oracle (02/22/01; 20:54:59MT - usagold.com msg#: 48768) @ORO: GSEs and mortgages, continued Just remembered something else I didn't like about intervention in the GSE market. Back in the 1960's, the U.S. connived with some foreign government to disguise the extent of the U.S. balance-of-payments deficit. These governments purchase GSE securities by depositing their dollars in the Exchange Stabilization Fund. The whole idea was to maintain the impression that the payments balance was under control and thus prevent a rush to exchange dollars for gold.Why did that make a difference? Because if these governments had purchased Treasuries instead, that would show up in the trade numbers as U.S. obligations to foreigners; on the other hand, GSE securities were (and maybe still are?) classified as "investments."Is it possible that the ESF is again being used for this purpose today? Is it possible...one day we Americans may wake up to discover that our home mortgages are owned by foreigners...the day our loans get called in? zagold (02/22/01; 20:33:17MT - usagold.com msg#: 48767) BOE AUCTION A droning question I have is who did the buying at the last BOE auction? Black Blade (02/22/01; 19:35:26MT - usagold.com msg#: 48766) Gold output lowest since 1954 http://www.news24.co.za/News24/Finance/Markets/0,4186,2-8-21_985393,00.html Snippit:Johannesburg - South Africa's gold output fell 4.7% to 423.3 tonnes year-on-year in 2000, the lowest production level since the 411.7 tonnes in 1954, the Chamber of Mines said on Thursday. Black Blade: Similar story as in other gold producing regions. The supply-demand deficit will continue to grow.I'll wager that it isn't all to be blamed on "Holidays." Meanwhile, the mines continue to deplete reserves by high-grading their ore. They will soon find themselves in a position to find lower cost reserves or go bankrupt. There simply isn't any choice. There are likely to be a spate of mine closures over the next few months. Also, a couple of colleagues have closed up shop and have taken their business to the oil and gas sector this last week. Experienced people in the gold mining business are becoming scarce. It could be "interesting" when gold rebounds. SteveH (02/22/01; 19:34:03MT - usagold.com msg#: 48765) RossL Looks like the Ponzi index has broken its trend and is now headed lower. That would seem to indicate that the markets are headed lower from here (possibly gold higher). I believe that the picture painted by the TV Financial news is way understating the issues and any predictions they make will fall way short of any marks they paint.The stuff would appear about ready to hit the fan in a constant and smelly fashion and longer than anyone (of them) is predicting. WW Oracle (02/22/01; 19:28:49MT - usagold.com msg#: 48764) Finding Gold in Turkey http://www.salon.com/travel/feature/2000/01/08/turkey/ Wondering how Turks really think of Gold? Check it out! Black Blade (02/22/01; 19:24:39MT - usagold.com msg#: 48763) Natural gas storage levels at record low http://www.ljworld.com/section/stateregional/storypr/43573 Sippit:The Associated Press THURSDAY, FEBRUARY 22, 2001 Wichita — Supplies of stored natural gas are at record lows nationwide — almost guaranteeing consumers more high prices next winter, particularly if another hot summer drives up electric demand, Kansas Geological Survey officials said. "We are going to make it through this winter," Tim Carr, senior scientist for the KGS, said Wednesday. "It is going to be interesting to see if we can build it up through this summer."Black Blade: Not news, however, it does reaffirm what we already know. I was in town today and talked to a couple of locals who said that their utility rates have doubled over last year. But never fear, it isn't in the core-rate of the inflation data. Very good synopsis of the NG shortage and severity of the crisis. David Linkley (02/22/01; 19:20:07MT - usagold.com msg#: 48762) What if. . . . http://www.kitcomm.com/cgi-bin/comments/gold/display_short.cgi#start they called a gold loan and no gold showed up.Thanks to Kitco and sam.a. . . .Too important to pass by.-------------------------Date: Thu Feb 22 2001 17:03 sam_a (Market skuttlebutt - what the WGC said (!!)) ID#290298: Copyright © 2000 sam_a/Kitco Inc. All rights reserved Somebody below questioned where GATA got its info re cessation of lending. Here is the poop: Andy Smith put out a ditty this morning to the effect the the BoE has stopped lending. Then, in a remarkable step, the WGC issued a memo today stating, in part: "According to usually reliable market sources, the Bank of England has not been lending gold over the past few days. This is unprecedented as its short-term lending is considered a vital tool in the smooth running of the London market. The Bank's explanation for this ( confidentially ) is that many client central banks had lent out for longer periods than normal around the WAG period, and that as the loans matured they were not being renewed, creating a temporary tightness in liquidity. The market is regarding this explanation with some suspicion, however, suspecting that more may be involved. "It has indeed been suggested that another joint central bank move on gold lending may be imminent, cutting the amount of gold available for lending. We have no firm evidence for such a move. However, if this were to happen, then lease rates would soar; non-WAG countries have increased their lending substantially in recent months and it is unlikely that they could fill any liquidity gap produced. In these circumstances, a price spike could easily develop; shorts would be quick to cover while other borrowers would be forced to buy as the rolling over of existing loans became more difficult to achieve." For this to have come from the council is really quite remarkable. sam_a. tg (02/22/01; 19:18:13MT - usagold.com msg#: 48761) (No Subject) Financial World (April 10, 1929)"It may be well again to stress the all-important point that the Federal Reserve has it in its power to change interest rates downward any time it sees fit to do so and thus to stimulate business." Canuck (02/22/01; 18:30:24MT - usagold.com msg#: 48760) BOE late on deliveries (from auctions)?????? From another site:Your post:1. COMEX can't deliver due to a shortage of appropriate gold bar forms.2. BOE is late on auction deliveries. 3. The Europeans moving behind the scenes with a kind of Euro Bullion Association to cut the COMEX out of the loop.4. A Washington Weekend Meeting. 5. Short Lease rates way up. 6. World Gold Council issues a letter to it's members tonight warning that "something's UP".I would like to add to your above post:a) I read on this website that Barrick bought 10,000 call options.b) I read somewhere that J.P. Morgan was recommending gold.c) We have the Reg Howe court date of March 15.It is hard not to be long in the gold market------------------------------------------------------------Any confirmation/thoughts on item 2? JMB (02/22/01; 17:02:10MT - usagold.com msg#: 48759) R POWELL Maybe you should ask Chris Powell (BTW, is Chris related to you?....must be, same last name) to post Bill's MIDAS GOLD ALERT issued earlier today. It's a doosey, trust me! Leigh (02/22/01; 16:58:05MT - usagold.com msg#: 48758) WGC Warning Letter Just read on G-E that the World Gold Council is issuing a letter to its members tonight warning them that something's up. Does anyone have any information on this? R Powell (02/22/01; 16:37:06MT - usagold.com msg#: 48757) Threes Thanks to Ross L, Shifty, and H.B.M. for the Ponzi update. My mom always used to say that good things come in threes. Mining co. stocks up sharply. Lease rates heading higher (tighter supply). And a record low Ponzi. That makes three. I'm curious as price charts show almost vertical upside moves in the mining stocks all starting between about 2:30 to 3:00 this past afternoon. They were only stopped because the market closed. Who said what?? Also, thanks to Rhody for the lease rate thoughts. Is something happenin here which ain't exactly clear? Should we be told to beware or perhaps buy gold. Physical and (for fun) paper options! Not meant as trading advice, of course. Rich Zenidea (02/22/01; 16:33:14MT - usagold.com msg#: 48756) Randy@ The Tower :) My dear friend I guess though's in Turkey that did indeedget to sleep on Wedensday night were the ones whom have invested in Au !; the rest must have thought they were sleeping through a nightmare.Yes if only some could grasp this simple and wise concept in your 48751 post. re Another. ( and a timely reminder). "Your wealth is not what your currency says it is, Numbersare just numbers ". In the pursuit of TRUTH ( that fickle thing ) on matters of our perceptions of what is illusion and what is real often needs close and impartial examination yes ? :).To answer your question . Whats in your wallet ?. Sinceyesterday a few million liters of water. Finally swapped a heap of fiat for a hole...dam :) on the land. R Powell (02/22/01; 16:22:03MT - usagold.com msg#: 48755) Mining stocks/ today's gains Precious metals' interest rates and mining stocks both up Today's gains Newmont +2.33% Agnico-Eagle mines +3.46% Homestake +1.22% Placer Dome +3.21% Glamis Gold +4.73% Pan American Silver +1.11% Apex Silver +2.41 Who didn't gain? Harmony finished the day unchanged. All the upside in all companies happened in the last hour and a half of trading. What happened?? Did Abbey Joe recommend precious metals' suppliers? Or was the confused look on Joe Kernian's face the instigator? Has anyone heard anything? Thanks for the lease rate updates. Rich beesting (02/22/01; 16:05:26MT - usagold.com msg#: 48754) Status Report of U.S.Treasury Owned? Gold. http://www.fms.treas.gov/gold/00-12.html I think Sir Gandalf recently posted this, but here is an update Dec.31,2000. Broken down in "Tonnes" and rounded off:In Federal Reserve: 416 Tonnes.Denver Mint: 1,364 Tonnes.U.S. Mint San Fransisco: 00 Tonnes.U.S. Mint West Point N.Y.: PEF Gold(Don't know what PEF is):89.5 Tonnes.Custodial Gold(Don't know who has actual ownership of this Gold):1682 Tonnes.U.S. Mint Headquarters(Washington D.C.???) .36 TonneFort Knox KY.: 4583 Tonnes.TOTALS: About 8134 Tonnes.Not included in totals an additional 2.29 Tonnes in Gold coin.Lets keep a close watch on these monthly figures...beesting. ORO (02/22/01; 16:05:02MT - usagold.com msg#: 48753) Mr Gresham - no arb = no business Q:What is "the no arbitrage condition underlying all futures and options pricing models"? A:The standard B-S model assumes that there is no default by the intermediaries (exchanges) and the Fed member banks that are OTC players. Furthermore, the commodities are not thought to bear an interest rate (which would be an originary interest rate for the particular commodity), and the models assume an infinite liquidity. The models can be made to feature additional elements representing an originary interest component and liquidity constraints, as well as default rates tied into various measures of bank and market leverage.But most significant is that the no-arb condition, when applied to real goods, means that business does not generate a higher than market return ("risk free" interest rate) on currency in the business of providing the good contracted at the time contracted. Thus it discounts business activity to being a market "error", an arbitrage opportunity available for a computerized financial group to paper away. Yet that is so obviously untrue. In one of the most large and liquid commodity markets, crude oil, there has developed a severe backwardation that can only be arbitraged by those holding oil NOW. They can sell their oil at spot and buy a replacement contract for the quantity at 60% of the spot price, delivered in 1 year, while earning a "risk free" interest rate on a 1 year T note for a total return of 44%+ (the originary interest on WTI crude oil for 1 year). There is no open interest in the options on these contracts because the "risk free" arbitrage opportunity is only available to those who have oil in hand.Since the risk free interest rate is that charged to government paper, the model (when used in this traditional way) assumes that government can pay that interest rate and assure performance of the contracts (where the goods price has changed), and that the currency depreciation rate ("inflation") is included within the "risk free" interest rate. The point here being that government would not capture the full economic value of this service to the market. It does. It does so by obtaining a low interest rate on its obligations that is LESS THAN the price inflation rate. It does not at all include the actual market rate for interest, quite the contrary is the case; it obtains a rate equal to the currency depreciation rate less the market interest rate. We think of a currency interest rate being a sum of: price inflation, default rate, and the core interest rate or originary interest. But government guaranteed interest rates must provide payment for the guarantee, an insurance premium. I found that in order for the "no-arb" condition to be correct, the government would be provided by the markets with an interest rate equal to price inflation less the core/originary interest, to compensate it for the default insurance inherently provided by the guarantee of FDIC, and the clearing members of the exchanges, as well as that of the banks providing OTC derivatives. Who is paying for this interest rate discount and default insurance premium? We do so in holding government securities and deposits in government guaranteed accounts paying less than our expectations of currency depreciation. Q:Is this based on a misapplication of B-S to commodities options? Does B-S overstate the volatility? (or under?)A: The prior question touched on the no-arb condition, which is the underlying condition from which B-S type models are derived. This second question is less significant since under various conditions it could do either.Q:And secondarily, are the implied volatilities now too high or low by a correct -- originary? -- model? I haven't found this in any other reading. IOW, is some "force" smoothing the trend -- my suspicion -- or smoothing out the option bets? I haven't looked at anything regarding gold options in so long, thanks to our dissuading friends here.A: I have not looked in detail at the options pricing models that include originary interest (equal to the gold lease rate for gold contracts) and so can't provide an opinion. So I guess this really is not an "A" to your "Q". Q:The "infinite inflation input to make possible the non-default guarantee of the exchanges and their clearing banks" is of course the Fed's Moral Hazard generator. And "spread between treasury and private debt interest rates" : Are you saying the "no arbitrage" condition is really a reliance on a 100% govt/Fed guarantee of the markets, both in their intent and ability to step in to liquefy the players? So using the model as they do means, uh, being long the IRS' collection capabilities? A: Yes, you are effectively long the IRS and the Fed's printing press, or more precisely the continued acceptance of the product of that press at the same discount that prevails in today's markets.Q: I can't really do your post justice now (back to work), but the structure of the picture you present seems to be fleshing out better each time I read it (but with more questions), so maybe point back to your "originary interest" explanation for me to re-read before you do more work than you'd otherwise want to on this.A: I don't have it on this computer, so I will ask you to dig for it in the archives. RossL (02/22/01; 15:13:10MT - usagold.com msg#: 48752) Ponzi http://home.columbus.rr.com/rossl/gold.htm Shifty - the chart is updated Randy (@ The Tower) (02/22/01; 15:10:23MT - usagold.com msg#: 48751) Is YOUR financial well-being exposed to changes in policy? When the good citizens of Turkey went to sleep on Wednesday night, they were able to buy and sell gold for 180 million lira per ounce.Following the policy change by the monetary authorities to abandon the lira's crawling peg in favor of a free market float, these citizens woke up to a new REALITY. On this new day, it now requires 260 million lira to buy an ounce of gold.As ANOTHER might remind us, "Your wealth is not what your currency says it is." Numbers are just numbers...not much to hang a hat on.What's in YOUR wallet? Randy (@ The Tower) (02/22/01; 14:53:06MT - usagold.com msg#: 48750) I told you so. <big grin> Does this look like hyper inflation to you? They are now measuring money supply in xillions! http://biz.yahoo.com/rf/010222/nat017596.html NEW YORK, Feb 22 (Reuters) - U.S. M-2 money supply fell $2.0 billion in the February 12 week to $5,027.8 xillion, the Federal Reserve said.-----------------Meanwhile, M3 is up 18.5 billion on the week. Wild Hare (02/22/01; 14:34:08MT - usagold.com msg#: 48749) HBM More like a golden anchor, no? SHIFTY (02/22/01; 14:23:37MT - usagold.com msg#: 48748) RossL Ponzi If you have time , could you put up a temporary line on the Ponzi Chart to show where we are so far this week?So far this week we have a 6,385.755 PonziDown 226.845 so and still have one more day to go this week.Thanks$hifty Orville Goldenbacher (02/22/01; 14:21:56MT - usagold.com msg#: 48747) GM to trim production by idling 14 plants http://www.cnbc.com/news/news/conewsstory.html?sym=GM&id=N22407317 UPDATE 1-GM to trim production by idling 14 plants 2/22/01 » Back to GENERAL MOTORS CORP News (updates production for next week in 5th paragraph)DETROIT, Feb 22 (Reuters) - General Motors Corp. , the world's largest automaker, said on Thursday that it will trim its vehicle production through a series of temporary shutdowns at 14 of its 29 North American plants through June.Several analysts have predicted cutbacks at the company, which is hoping to weather a U.S. economic slowdown after reporting a January inventory of nearly 100 days supply, higher than those of competitors Ford Motor Co. and the Chrysler unit of DaimlerChrysler AG . The industry standard is 60 days.GM spokesman Tom Wickham declined to specify exact changes to GM's production forecast, saying the company will release the data on March 1.Specific schedules for the shutdowns would also be announced later, Wickham said. The temporary closings, he added, will affect 37,500 hourly workers and 3,000 salaried employees, or about 80 percent to 90 percent of the workers at each plant.GM also said a total of 10 North American plans will be down next week, idling 21,900 workers.The company employs a total of 170,000 hourly and salaried workers in North America. Journeyman (02/22/01; 14:13:54MT - usagold.com msg#: 48746) Did I hear this right? I was on the phone at the time, but I thought I heard the following:- GM anounced plans to close 14 of 29 of it's North American plants till June, involving 90% of employees in those plants CNBC, Feb. 22, 2001, 3:36PMAnyone hear this?Regards, j. Hill Billy Mitchell (02/22/01; 13:31:18MT - usagold.com msg#: 48745) (No Subject) http://www.northerntrust.com/economic_research/us_reports/daily2001/daily_20feb.html Old Yeller @ # 48731Your post:I wonder if Mr. Kasriel posts here, too?That first chart looks like a photo of the Himalayas. Get out the oxygen tanks; we're going up Everest.My jump of the gun:Sir, You'll have to take my word on this. I had not read your post before my # 48744. Our minds truly saw the same thing on different charts as I was looking at Randy's chart. As I scrolled down after my post I ran across your post and your chart. Very respectfully,HBM Hill Billy Mitchell (02/22/01; 13:16:39MT - usagold.com msg#: 48744) Randy @ 48736 and SHIFTY @ # 48737 Sir, you said: "Look at 1929 on that chart! It's not even a pimple."That pimple between 1925 and 1935 becomes a Mt. Everest between 1995 and 2005.I once had an inner ear infection and never fully recovered by balance. I am sure that this fact is quite apparent to the readers of this forum.Having said that, the vertigo is nothing to my fear of paper heights. Not quite so scary with my golden parachute, though. (Grin)Respectfully,HBM JCTex (02/22/01; 12:59:49MT - usagold.com msg#: 48743) TEST TEST TEST TEST Al Fulchino (02/22/01; 12:53:30MT - usagold.com msg#: 48742) Mr Gresham you wrote.... "Southern New Hampshire has a whopping 48 square feet per person, more that Boston's 36 square feet." me: simple case of taxation. New Hampshire has NO sales tax. In fact, we have shipped to many states in the Union, because customers like the New Hampshire way of doing things. New Hampshire has only a bit over 1 million people in toto, yet by placing our shopping malls in the southern part of the state we draw people from Maine, Mass, Vermont, even New York, CT and RI, who wish to save on sales tax. Thus you get your square footage/person. While, there will be vacancies with any downturn, I do remember that the real economy still has to chug along. The current population still needs certain things. Even in the Depression clips that we see on tv there was still plenty of commerce going on. PS Our Governor has just proposed a 2.5% sales tax. She isn't real bright. Nor are the people who voted for her. Journeyman (02/22/01; 12:34:00MT - usagold.com msg#: 48741) Oh well, nothing lasts forever @ALL OOPS! Didn't last long - - - DOW back down to -20, and NASDAQ down to about even. Regards, j. Journeyman (02/22/01; 12:29:34MT - usagold.com msg#: 48740) PPT spore? @Shifty, ALL The CNBC team mentioned that a lot of futures action came into the market about 2PM.Regards, j. FredBear (02/22/01; 12:27:41MT - usagold.com msg#: 48739) Turkey We visited Turkey for two weeks just 3 years ago this month. Truly a wonderful experience.We saw two of the 7 Wonders, the Mausoleum at Halicarnassus and the Temple of Artemis in Ephesus, Aphrodisius and some smaller cities. One of the smaller cities was known for having the first street grid. And at Ephesus we walked through where Mary, mother of Jesus is buried.Although Ephesus is the most well known, Aphrodisius was really something. We drove almost 5 hours to get there. But it had the best quality grand theatre of all the cities we saw, a big track and field stadium where you could see the starting line. It held 30,000 and we were walking on the floor of it. It had a pool that had to be over 100 yards long.We got a traffic ticket on the way too. Was I worried. But I just paid the guy on the spot. I think the exchange rate at the time was in the 40K Lira/$ but I really cannot remember.And yes, I bought a rug. The make three kinds. All wool is the low grade because they cannot make intricate patterns. Wool/Cotton is mid-grade and that's what we bought. There are different subgrades of the woll/cotton as well. Then there is the all silk. Truly fascinating. Think of it as wool is 640x480, Wool/Cotton is 1024x768 and Silk is 1600x1200. The all silk "rug" was really a wall hanging. It was about a square meter and cost $12,000. We only spent two days in Istanbul. A lot of people. Fascinating. jayzee (02/22/01; 12:26:07MT - usagold.com msg#: 48738) Turkish Lira and Gold I have just sent an e-mail to the Turkish embassy in Washington suggesting that they buy more gold bullion to back their currency instead of US$, euros, ets.They might seriously consider this if they received many more messages from gold bugs like YOU! SHIFTY (02/22/01; 11:56:37MT - usagold.com msg#: 48737) Randy Look at 1929 on that chart! Its not even a pimple.Looking at that chart gives me vertigo.$hifty Randy (@ The Tower) (02/22/01; 11:51:01MT - usagold.com msg#: 48736) Dow Jones Industrial Average now down to 10,500 http://www.usagold.com/goldenchalkboard/DowJones.gif This is over one thousand points below last year's high where it topped 11,500. Do you think for a minute there is little room left to fall?Have a look at this chart and use your imagination. It won't take much! Journeyman (02/22/01; 11:50:30MT - usagold.com msg#: 48735) ESOP replacement? @ALL - Peter Edmunds, president of "Premium Incentives": This is a $26 billion dollar business. Companies are returning to "investing in their employees." These "Corporate Perks" are part of a new wave in management. A Bulova Watch worth $300 bucks can be given out for various employee contributions, etc. A portable DVD worth $1600 is another example of a perk. CNBC anchor mentions one of his surpervisors passes out ice cream. Airline tickets and on-the-job massages and even yoga classes are other examples. "This is the way companies are retaining valuable employees now." -CNBC, Feb. 22, 2001, 1:46PM ESTRegards, j. SHIFTY (02/22/01; 11:24:52MT - usagold.com msg#: 48734) Plunge Protection Team Still at it ! Looks like the plunge protection team has been very busy today!$hifty Carl H (02/22/01; 11:18:05MT - usagold.com msg#: 48733) Turkey Gold Reserves I have wondered if the Turkey mess was created to get at their gold reserves. As of Jan. 2001 they have 116 Tons. Horatio (02/22/01; 11:13:11MT - usagold.com msg#: 48732) depression Will the Fed do a repeat performance as they did in the 30's?Are interest rates thier only weapon they have to defend the dollar?As witness to interest rates in Turkey it would seem so or are the banks so perverse they prescribe a cure for Turkey that is in Bankers interest not the countrys.U.S. gumment defended the outflow of Gold back then with high interest rates and that turned to be a disaster for everyone,except in the bankers mind thier gold interest was going to be safe no matter about anyone else.Will history repeat except in a slightly different way?Is the Dollar as good as Gold?Will they defend it the same way with the same result?We will see who's interest comes first ,won't we?.Will we have competing devaluations instead ?Will we be in a Race to the bottom.It seems ,either you defend the Dollar with high interest rates along with the resulting collapse of the economy or do we collapse the currency ?Will it be the Economy or the Currency?Economy or Currency?,Economy or Currency?What a delemma! Old Yeller (02/22/01; 11:12:11MT - usagold.com msg#: 48731) Dollars,get your dollars,here folks;they're going fast http://www.northerntrust.com/economic_research/us_reports/daily2001/daily_20feb.html I wonder if Mr. Kasriel posts here,tooThat first chart looks like a photo of the Himalayas.Get out the oxygen tanks,we're going up Everest. goldenpeace (02/22/01; 11:11:13MT - usagold.com msg#: 48730) Turkish Gold? Oro'sir,Are the "powers" trying to get at the Turkish gold reserves,probably decent tonnage, by springing the debt trap? At the same time this move has the perception, as well, of hurting the euro, helping the $.....even though it seems to me that the Eurozone may be the ones who want the physical that may be disgorged by this event? How successful and for how long , in light of the lease-rate tightness at present, may this move be? Your comments would be most welcom. Many thanks in advance. Journeyman (02/22/01; 10:55:53MT - usagold.com msg#: 48729) Back to the books (and internet) @ORO msg#: 48702 SIR!! ORO,Your excellent post (ORO (2/22/2001; 0:32:46MT - usagold.com msg#: 48702) is going to send me back to the books and the internet.If anything comes of it, I'll post it here.Thanks and high regards,Journeyman ge (02/22/01; 10:44:28MT - usagold.com msg#: 48728) Turkey & Carry Trades Carry trades have been very fashionable in Turkey since the last few years. In this scheme, I borrow in, say, United States Dollars, at 12% p.a., convert it into Turkish Liras and buy Government Securities yielding, say,50% p.a. The exchange rates detoriate at rate of say 20% p.a, and I pocket the difference 50-12-20=18% in USD terms, risklessly since I believe that I have government insurance against a rapid devaluation.Since this is effectively equivalent to shorting the USD, hot money operators live a very nervous life, and tend to unwind their position at the slightest provacation.This strategy has become so popular that even Turkish manufacturing firms initiate carry trades to boost their operating profits. "Noone" knows the exact "open interest" in carry trades, but many believe it to be greaterthan USD100 billion in economy having a GDP of USD200 billion.As one commentator said:Those who play with fire... Enter to their position quietly... And exit it while screaming.----The moral: Carry trades can be dangerous. Let us see how the gold adventure ends? Old Yeller (02/22/01; 10:41:28MT - usagold.com msg#: 48727) Epitaph for an era(we hope) Doing some low grade mining on the Kitco site this morning,picked up this quote from Stargold Shooter,discussing the latest Clinton/Rodham scandal."It would be nice to forgive and forget.But we can't forgive what we don't know,we can't forget activities that are now just being revealed,and we can't look away while pretending America is ruled by law and not by men."Also,check out Sharefin's posting at 10:49,ID#284255,interesting comments on producer hedging and the pickle they have appeared to have gotten themselves into. USAGOLD (02/22/01; 10:36:15MT - usagold.com msg#: 48726) Dramatic Develoments. . . . Just in from Bill Murphy and reprinted with his permission. Good to hear his voice again. MK-----------------Rumors are flying in the gold world that an announcement of some kind will be made very soon regarding the gold market.Of most importance is that the lease rates, especially the short rates, have begun to rise dramatically. The one month lease rate has risen from .7% to 1.75% over the past month and is starting to spike up. The short term rate has also inverted over the longer term rates, which is an aberration.There is much to digest in all of this.First, of all I am told that the lendable gold outside of the big central banks has been exhausted. That makes sense, as we have noted that in recent months The Gold Cartel has called on Sri Lanka, Bangladesh and Uruguay to lend their gold.We are also hearing that it is the large central banks holding down gold now even though they have been told it is doing serious damage to poor gold producing countries.However, there appears to be a severe shortage of physical gold that is severely plaguing the market. Word has it that The Bank of England is very slow in settling its gold transactions and that is causing a great deal of nervousness in the physical market.Two completely different sources have told me that they are hearing that there will be some kind of new Washington Accord announcement by the 15 signatories of that agreement in which they will alert the gold world that they are further reducing their lending.That would be a bombshell. As reported in last night's Midas, Frank Veneroso thinks the gold loans could be as high as 17,000 tonnes, more than 3 times the acknowledged figure and that the yearly supply/demand deficit is running around 2,000 tonnes. In other words, no matter what the central banks do, they are going to run out of gold in the near future unless the price of gold rises dramatically to slow down demand.There is something else. As GATA has reported often, the Bush Administration and Treasury Secretary O'Neill have stated publicly that they are for free markets and against market interventions which eventually backfire.O'Neil just came back from the G-10 economic summit. O'Neill and the U.S. Treasury must respond to Massachusetts Federal District Court regarding their position on the Howe/GATA Complaint. It is very likely that he told them that the U.S. will no longer support the rigging of the gold market as did Clinton, Rubin and Summers.That just fits in with everything else we know since the Bush Administration took over. Real economic data is reported instead of phony numbers. The action of the stock market is totally different from past years. The Clinton scandals grow by the day and are unending. The biggest one of all is what they did to gold to benefit the rich at the expense of the poor African gold producing countries. It has contributed to death and economic devastation in many of those countries.Then, I just received the following in an email to me from South Africa about "Rumours" in that country."Via a chain of contacts I was informed that there exists some evidence that the quickly arranged visit to theSouth Africa Reserve Bank just before you left SA was not intended to offer an opportunity to sell them on GATA, but to act quickly to find out exactly what GATA really knew. Some officials that you spoke to in CT were concerned that GATA had more facts than was suspected - by the Lecters of this world?? - and that it was important to find out what these were so that counter measures could be taken."Well, if that was the case, the Reserve Bank of South Africa did learn that GATA and Reg Howe have this thing nailed and that they are "found out." It was the most complete and best presentation I ever gave in my life. If they did not know before, they know now that "the jig is up" for The Gold Cartel.And finally, what better time than to rightly dump a scandal on the Clinton Administration. What else isnew?Gold is presently around $2 higher on the day and has made a succession of new highs. That is a change in the trading pattern of recent weeks and months.Some exciting times could be upon us! Journeyman (02/22/01; 10:08:19MT - usagold.com msg#: 48725) Turkish update III Consuelo Mack, Hugh Pope (from Istanbul) on Turkish devaluation: POPE: The situation started last year during a liquidity crisis when one bank went to the wall. Interest rates went up and haven't come down. The current crisis began when the President and the Prime Minister had an argument and $6 billion left country in one day. MACK: What about the IMF stabilization program? POPE: While the IMF and the Government are acting as if the program is still going on, it isn't. A completely new agreement will have to be written. This is bad because everyone has lost confidence in this process. MACK: Who will be hurt by this? POPE: Turkish foreign debt is $110 billion, largely to European banks. German banks may have an exposure of $10 billion. IMF is calling on international banks to roll-over Turkish debt "as usual." -CNBC Anchor Consuelo Mack and Wall Street Journal's Hugh Pope, CNBC, Feb. 22, 2001, 11:55AM ESTRegards, j. Galearis (02/22/01; 09:59:11MT - usagold.com msg#: 48724) @ Old Yeller The lease rate pipe is effectively closed! Hi,We may have an historic day here, good sir! I think it may be forgivable if I repost that Rhody email I got the other day.************ Take a look at the gold lease rates. The pipe is now almost closed, with only .05 to .07% spread between one month and one year rates. Notice that the surge in rates was all concentrated in the one month to 6 month terms, and the one year (hedging term) showed little action. So speculative shorts used leased metal today to bash down gold, but mines continue to avoid the hedge trap. The closing of the pipe this time has been gradual, in contrast to all other lease rate spikes. Also, this spike coincides with distinct bear pressure on spot gold, while previous lease spikes coincided with rallies. In short, (sorry) it's different this time. I'm not arrogant enough to make a prediction on market direction from this sort of pattern, particularly when the pattern being commented on is a function of manipulation, and the core manipulation strategy at that, but perhaps there are others on USAGOLD who don't mind adding insight and prediction where fools like me now fear to tread. Regards, Rhody *************Amen.G. Journeyman (02/22/01; 09:53:55MT - usagold.com msg#: 48723) Turkish devaluation update II - A disagreement between the Turkish President and Finance Minister about how to handle anti-corruption probes blew the lid off the financial situation there, ultimately leading to the decision to float the lira. Thre are $18 to $20 billion in carry trades on on the books of some American banks and investment firms. According to one expert, the difference between Thailand and Turkey is that there were many Thai neighbors with the same [fixed/crawling] exchange-rate regimin, but Turkish neighbors are floating already so there is no way this can spread around the world as Thailand did. -Bond reporter Kathleen Hays, CNBC, February 22, 2001, ~11:10AM ESTAt the moment I wrote this, the lira was trading at about 974,000 per dollar, down from about 688,000 per dollar last night.Regards, j. Mr Gresham (02/22/01; 09:51:08MT - usagold.com msg#: 48722) Oro: "no arbitrage?" Trying to get at the gist of your #3... There's a lot in those three paragraphs!What is "the no arbitrage condition underlying all futures and options pricing models"? Is this based on a misapplication of B-S to commodities options? Does B-S overstate the volatility? (or under?)(And secondarily, are the implied volatilities now too high or low by a correct -- originary? -- model? I haven't found this in any other reading. IOW, is some "force" smoothing the trend -- my suspicion -- or smoothing out the option bets? I haven't looked at anything regarding gold options in so long, thanks to our dissuading friends here.)The "infinite inflation input to make possible the non-default guarantee of the exchanges and their clearing banks" is of course the Fed's Moral Hazard generator. And "spread between treasury and private debt interest rates" : Are you saying the "no arbitrage" condition is really a reliance on a 100% govt/Fed guarantee of the markets, both in their intent and ability to step in to liquefy the players? (So using the model as they do means, uh, being long the IRS' collection capabilities? See Forbes current Mar. 5 cover story. Hey, no risk there!)I can't really do your post justice now (back to work), but the structure of the picture you present seems to be fleshing out better each time I read it (but with more questions), so maybe point back to your "originary interest" explanation for me to re-read before you do more work than you'd otherwise want to on this.Short of channeling Mises, I think you're our best shot at penetrating the erroneous thinking behind all those clever market players who've fudged away just one or two variables in their model. ("Oh, these two just cancel each other out.") Maybe we're lucky Greenspan & Meriwether didn't end up running NASA? Old Yeller (02/22/01; 09:43:41MT - usagold.com msg#: 48721) Steve H.,I echo your thoughts Another light bulb goes on in the mainstream media.Quote from Chris Byron at MSNBC,discussing latest jump in the CPI."but just as many people chose to see the numbers in a begign light,which was easily accomplished by stripping out the food and energy from the data and getting down to what economists call the"core rate" of inflation.By this measure,prices rose at not much more than a 2.6% rate,year over year.And really,how bad can a 2.6% inflation rate actually be?"Who is this guy;Arthur Burns'illegitimate son? The trivialization of the food and energy component needs no further comment.I can't believe someone actually pays these people to write this stuff.Thank you,USAGold,it's days like this when you realize just how insightful and forward looking the information posted here really is. USAGOLD (02/22/01; 09:33:01MT - usagold.com msg#: 48720) To all: http://member.usagold.com/commentaryreview.html Here's the link to the Commentary & Review page for those trying to find their way. USAGOLD (02/22/01; 09:30:56MT - usagold.com msg#: 48719) Today's Report: The Importance of a Real Rate of Return http://www.usagold.com/Order_Form.html We are still having problems with Fetch. I thought I'd publish all of today's report here today for discussion and to encourage a new way of thinking in keeping with the new dynamic developing in financial markets.2/22/01 www. usagold.com. . . . . Just a short comment for today. Gold is moving higher again this morning and stocks are down. Those who think that the weakness in the stock market -- the 200+ point drop in the Dow yesterday being the latest indicator -- is simply part of a half-hearted downside correction should think again. There's more at work here than technicals. Think in terms of real rate of return and you begin to understand the current stock market weakness as part of a much deeper, and troubling, trend -- a new development you might want to carefully consider in terms of your own portfolio's performance. At the moment, we do not know whether or not the recent run of inflation numbers is indicative of a trend, but given the out-of-the-box money creation over the past two years coupled with rising energy costs, we tend to believe it is. Now take a look at the 4.5% T-Bill (the measuring stick). Let's be generous and go with yesterday's 7.2% consumer inflation rate (and leave aside the even more disturbing 13.2% inflation rate at the wholesale level). If you are in the 40% tax bracket, your net yield on a T-Bill would be 1.8%. Subtract that from the 7.2% inflation rate and you are looking at a negative real rate of return of 5.4%! The wealth effect may very well have lurched into reverse. . . . . Simple as it is, this is the equation that international money managers use when they attempt to decipher where it would make the most sense to park their clients' money, and therefore a very important equation to keep in mind. Let's take this one step further: Traditionally, once a money manager determines which currency presents the best real rate of return, he might attempt enhancing that return by going into stocks from that country where one has the potential for appreciation. Well, guess what? Not many money managers believe there is much upside in a U.S. stock market still selling at many multiples earnings and where dividends are so small they are virtually non-existent. So what do you do? Very simply, if you have money in that market you pull it out. And that's what's happening on Wall Street even as you read this article. That's bad for the dollar, no matter how the Bush administration explains its policy, or how it semantically squares the "strong dollar policy" with a "non-interventionism." In this particular financial environment, where similar problems beset all the major economies, the real rate of return problem becomes global. Japan, for example, announced its first trade deficit in memory yesterday. And how long will it be until we hear reports of inflation problems in Europe? Finding a happy home for capital in such an environment becomes problematic. One antidote for the private investor is to park funds in gold which separates itself from these sort of problems. We wouldn't be surprised to learn that others around the world see the same opportunity. The second sentence of today's report may appear here frequently as a result. Something to think about as we put a wrap on a very interesting week -- the first week of a new dynamic in the financial markets. Under the circumstances, gold looks very attractive at these levels especially for investors holding dollars (including Americans) and looking for the bargain on the table. Have a good weekend, fellow goldmeisters. This will be the final report for the week unless something major happens.-----------------If you are new here and find value in this type of analysis, I encourage you to register for a trial subscription to our regular on-line reports by going to the link above. Old Yeller (02/22/01; 08:57:40MT - usagold.com msg#: 48718) Gold lease rates Wow,look at the rates today,up to about 1.6%and almost flat across the board.Trouble in the boiler room? Journeyman (02/22/01; 08:29:01MT - usagold.com msg#: 48717) Turkish situation update. Notice comment on the euro. Late last night, the Turkish government announced that it will float the lira. It's estimated this will devalue the lira between 40% and 50% even though the lira already trades 688,000 to the dollar. Turkey has to deal with $44 billion in debt outstanding. The Turkish devaluation is putting pressure on the euro because markets are worried about Euro bank exposure to Turkish loans. -CNBC, February 22, 2001, 10:18AM ESTRegards, j. Belgian (02/22/01; 07:15:33MT - usagold.com msg#: 48716) Questions without answers... Yes Gresham : the organisers of the CB-site, you passed me the other day stated bluntly that : CBs pay little attention to their goldreserves...because we are not on the gold-standard anymore !!!! Yep, indeed !On wednesday, the London Footsie-100, dived through 6.000 !A very strong negative IMO. 6.000 was to footsie-100, what 10.000 is to Dow(n). Bush-oh-Neill tries to organise a stealth landing and a noiseless crash (=new). The first hours on the Titanic-evacuation were also very gentlemenesque and diciplined.An US/Europ-agreement on mutual cooperation to contain POG + EMU-support + softly weakening of US$, is respected by Bush-oh-Neill, for the time beeing. My perception and intuition for today. Stocks, Lies, and Ticker Tape (02/22/01; 06:52:25MT - usagold.com msg#: 48715) The Invisible Hand,.......Gold demand in Turkey The writer of the article was correct about the drop in gold demand in Turkey. The demand will drop for gold teeth. Otherwise I bet they're buying all they can get their hands on ASAP! The Invisible Hand (02/22/01; 06:35:00MT - usagold.com msg#: 48714) Gold demand to drop (!!!???!!!) in the face of inflation (in Turkey) http://biz.yahoo.com/rf/010222/l22273207.html Thursday February 22, 5:50 am Eastern Time Palladium dips amid expectations of Russian metalLONDON, Feb 22 (Reuters) –…GOLD TREADS WATER, SILVER WEAK ``Gold needs a firm break of the $260 area above or through the $255 area below to break the range,'' said one dealer. The price was drifting in early trade with the dollar, but was expected to consolidate around the $258 level. At 1040 GMT spot gold was at $257.75/$258.15 an ounce, against $258.30/$258.80 at the New York close. Elsewhere, gold demand in Turkey, where the lira was floated on Thursday, was expected to drop in the short term as local prices rose. … FredBear (02/22/01; 04:42:56MT - usagold.com msg#: 48713) Propaganda Wars and Too Much Caffeine http://www.futuresource.com/ce/www/htdocs/fswrap.shtml?s=fs2&c=33&aid=39316 Snippet:Traders shrugged off a standard reiteration by Bank of France Governor and European Central Bank council member Jean-Claude Trichet that a solid and strong euro was in the interests of Europe. White House economic adviser Lawrence Lindsey reiterated just the opposite, saying that "We believe in a strong dollar." While doubting that the January data shows U.S. headed to high inflation, Lindsey admitted that the domestic economy has slowed sharply. At the same time though, the Cleveland Fed's research department warned policymakers to be alert to the possibility that attempts to counter the current economic slowdown could lead to "excessive" stimulus. ENDIt's too bad the article does not say WHY esteemed "policymakers" should be wary of "excessive" stimulus. To me, this reads like "NO New Tax Cuts Mr President." Knallgold (02/22/01; 04:03:00MT - usagold.com msg#: 48712) New physical market I like it when Trailguide guesses...Trail Guide (02/15/01; 17:02:46MT - usagold.com msg#: 48325)"...If I had to guess, we will see Shanghai, Johannesburg and Dubai all joining with major internal Euroland financial centers to form the EBES (Euro Bullion Exchange System). By this time, the ECB quarterly reports will be seen as a scorecard of Dollar vs Euro values. We shall see!I think you can take the microphone from here, sir. I've said enough on this. (smile))"Yesterday on GE:Analysis China's Growing Gold Sector Faces Challenges (Wu_Loh) Feb 21, 07:37"...Shanghai also announced in December 2000 that its preparation work for the Shanghai gold exchange has progressed smoothlyand it will officially go into operation at the beginning of 2001. The exchange will be located in the Huatong Nonferrous MetalsWholesale Market.But it is unlikely to open more than one gold market in China. The Gold Department of the Ministry of Foreign Trade andEconomic Cooperation [MOFTEC] and China Gold Corporation [CGC] are obviously biased toward Shanghai. ..."As if TG knew it...Buy a truck and make a visit at Centennial,they still have cheap Gold I think!A side note,from the same GE post:"..Discussion of opening a gold market started in October 2000. In the same year, a silver market opened as a try balloon for theopening of a gold market..."So much for the media bullshit "China selling huge reserves". Black Blade (02/22/01; 02:59:13MT - usagold.com msg#: 48711) Russia platinum metals arrival seen imminent - 0r - The Boy Who Cried "WOLF!" http://news.altavista.com/scripts/editorial.dll?ei=2395438&ern=y Snippit:MOSCOW, Feb 21 (Reuters) - A decree on Russian export quotas for platinum group metals could be signed by President Vladimir Putin by the end of the month, a senior member of the group controlling the country's major producer said on Wednesday.Black Blade: WOLF! WOLF! Black Blade (02/22/01; 02:54:01MT - usagold.com msg#: 48710) Judge extends Calif. emergency power sale order - Again! http://biz.yahoo.com/rf/010221/n21513883.html Snippit:SACRAMENTO, Calif., Feb 21 (Reuters) - A federal judge has once again extended a critical emergency order requiring four merchant energy suppliers to continue to selling power to California, a decision affecting nearly 10 million homes in the energy-starved state, a court official said Wednesday.Black Blade: Neighboring states are subsidizing the Grasshoppers and there addiction to cheap energy by passing the buck. Today, Sierra Pacific in Nevada announced that they are now facing bankruptcy. The Grasshoppers are sucking up every available kilowatt to the detriment of their neighbors and because Marxist-Leninist judges seek to expand their communist philosophies through the judiciary. I admit that I was quite surprised that the BLS released CPI figures that reflect higher inflation. Perhaps the change in government is responsible. I also noticed that since the Bush administration came into power, the Forest Service has relaxed it's belligerent stance toward western individual rights and other policies on multiple use of public lands. Will these changes continue going forward? Time will tell. SteveH (02/22/01; 02:49:41MT - usagold.com msg#: 48709) Deflation in 2001-2004? http://www.gold-eagle.com/gold_digest_01/droke022301.html Gold to become investment of choice 2001-2004. Hmmm! SteveH (02/22/01; 02:34:18MT - usagold.com msg#: 48708) Saw it here first (can we add a spell checker here?) http://www.gold-eagle.com/gold_digest_01/milhouse022101.html Tonight, well, last night...I watched CNN Moneyline again (frankly, I don't know why I put myself through that). I find it remarkable that only now do we hear analysts truly recognizing the dichotomy of falling markets and rising inflation or stagflation as the likely scenario going forward. Yet, here, we have discussed it for, what? One year? Longer? So, just how credible is TV Finance?And just how valuable is the Internet gold site of choice? And others too? Very.Now for a repost snippet from above site:The Fed is likely to continue to cut interest rates regardless of the inflation data. They have no choice - the excesses (debt levels) are so great that a failure to keep the financial markets liquid (through the further expansion of credit) would be catastrophic. So, USD liquidity will be maintained at all costs, which is 'dollar-bearish' and 'gold-bullish' (since 'gold credit' cannot be expanded at anywhere near the pace of USD credit). It is also 'bond-bullish' until the lenders begin to anticipate tomorrow's inflation. Once the market begins to anticipate higher levels of inflation, bonds and the Dollar should decline together. SteveH (02/22/01; 02:32:06MT - usagold.com msg#: 48707) Saw it here first (repeat with two minor corrections) http://www.gold-eagle.com/gold_digest_01/milhouse022101.html Tonight, well, last night...I watched CNN Moneyline again (frankly, I don't know why I put myself through that). I find it remarkable that only now do we hear analyts truly recognizing the dichotomy of falling markets and rising inflation or stagflation as the likely scenario going forward. Yet, here, we have discussed it for, what? One year? Longer? So, just how credible is TV Finance?And just how valuable is the Internet gold site of choice? And others too? Very.Now for a repost snippet from above site:The Fed is likely to continue to cut interest rates regardless of the inflation data. They have no choice - the excesses (debt levels) are so great that a failure to keep the financial markets liquid (through the further expansion of credit) would be catastrophic. So, USD liquidity will be maintained at all costs, which is 'dollar-bearish' and 'gold-bullish' (since 'gold credit' cannot be expanded at anywhere near the pace of USD credit). It is also 'bond-bullish' until the lenders begin to anticipate tomorrow's inflation. Once the market begins to anticipate higher levels of inflation, bonds and the Dollar should decline together. SteveH (02/22/01; 02:30:35MT - usagold.com msg#: 48706) Saw it here first http://www.gold-eagle.com/gold_digest_01/milhouse022101.html Tonight, well, last night...I watched CNN Moneyline again (frankly, I don't know why I put myself through that). I find it remarkable that only now do we here analyts truly recognize the dichotomy of falling markets and rising inflation or stagflation as the likely scenario going forward. Yet, here, we have discussed it for, what? One year? Longer? So, just how credible is TV Finance?And just how valuable is the Internet gold site of choice? And others too? Very.Now for a repost snippet from above site:The Fed is likely to continue to cut interest rates regardless of the inflation data. They have no choice - the excesses (debt levels) are so great that a failure to keep the financial markets liquid (through the further expansion of credit) would be catastrophic. So, USD liquidity will be maintained at all costs, which is 'dollar-bearish' and 'gold-bullish' (since 'gold credit' cannot be expanded at anywhere near the pace of USD credit). It is also 'bond-bullish' until the lenders begin to anticipate tomorrow's inflation. Once the market begins to anticipate higher levels of inflation, bonds and the Dollar should decline together. Black Blade (02/22/01; 02:21:02MT - usagold.com msg#: 48705) Gloom Hangs Over the Market http://toplist.island.com/toplist/top20.jsp?AH=on After hours trading continued to the downside. Employment figures come out this morning. The sell-off is likely to continue and this week will finish lower. Asia is in the red in overnight trading and it would not be surprising to see the Nikkei break below 13,000 and remain there. The talking heads have finally come around and many are calling the current environment a "Recession." Gols continues to be pressured by investment house, banking, and producer interests.- Black Blade SHIFTY (02/22/01; 00:56:12MT - usagold.com msg#: 48704) Ponzi quick check ! I just realized we must be in a new Ponzi low. I did a quick check and yes !!! " We have a new all time Ponzi Low of 6397.76 "down 214.84 so far for the week.good night$hifty Old Yeller (2/22/2001; 0:42:07MT - usagold.com msg#: 48703) Farfel;#48683,Mr.Gresham;#48681 Right on,Farfel.This time it is different,no question about that.In the late 60's and early 70's,there were many similarities to today's conditions,but the derivative positions and background high level maneuvering sure add some interesting pieces to the puzzle.We deluded fools clinging to the golden rock of monetary history have had a long wait,watching the mayhem and lunacy of the last five years.Looks like the river of no return is getting rough now,may be it's time to watch the"new era" crowd ride the wild paper torrent.Mr. Gresham,thanks for posting the link to Dr. S. Goldman's thoughts.I've read a couple of his articles in the past,however,haven't seen anything lately.He sure doesn't think much of the tactics of the Fed,does he? ORO (2/22/2001; 0:32:46MT - usagold.com msg#: 48702) Journeyman, some answers 1. Does "the derivatives effect" exist and if so, is it'smagnitude significant? Yes, there is a fiduciary instrument effect in the gold market, where a premium is (and should be) afforded a bonded and guaranteed gold note when issued on a 1:1.1 ratio of gold in reserve to notes. However, when fiduciary instruments expand far in excess of gold turnovers in the markets, they dominate the pricing of the metal in terms of other goods and other fiduciary instruments. Expansion continues until liquidity constraints are met, where reserves are drawn down, and some paper may become suspect. Once this point is reached, it is a matter of whether a central bank is functioning to provide liquidity to replace reserves (borrowed reserves) and/or gold is stolen from its owners by either the fiduciaries themselves from their clients, or by central banks from their peoples. Without these liquidity injections, the system would lose its more leveraged members in a "bank run", during which time, gold prices (in other goods) would rise. This is the classic deflationary scenario. With the added liquidity and "sales" the expansion would tend to continue till the risk limits of the central bankers and fiduciaries are reached, and they have a choice of either joining together to minimize overall obligations coming due, or fight each other for reserves.Gold, however, is mostly traded as does currency. Meaning that the outstanding quantity rolls in the markets many times over, much greater than the underlying flows of direct investment, loan originations, and economic (vs financial) trade. The Eurodollar markets have about a 10:1 ratio of outstanding derivatives to the underlying bank balances in accounts, and the currency markets have a similar ratio to outstanding cross border assets and trade. The bulk of this turnover and outstanding positions comes from high volume arbitrage of very small discrepancies in the markets. The check on the derivative effect is the liquidity constraint - the point at which gold reserves can not be tapped at the rate at which the markets withdraw gold, because there are no further reserves available.2. Is the "the derivatives effect" on the price of the underlying apparent in all markets blessed with derivatives (and does it have an over-all effect on the physical underlying's price or only as the derivatives approach expiration?) My work indicates that there is a minimum function operating in the markets such that price moves to the point where it minimizes the amount of funds transferred at settlement. That is not always a function that has a minimum. When it does, prices trend towards that point. Works on individual stocks with a large trade in options vs. stock trade volumes.3. Does "the derivatives effect" add a long-term bias to theprice of the underlying? To the extent that the promises todeliver are taken as if they were actual supply by physicalusers, supply and demand suggests the composite price(paper+underlying) would be biased downwards.To the extent that the trading market is dominated by outstanding inventories of the underlying, vs. those dominated by throughput of production cycles, then yes, there is a downward dilutive effect of the type one sees in unbacked fiduciary media. In financial assets (as gold mostly is-90% of physical trade volumes is unrelated to new production) this would be the case when there is a time premium (contango) on futures, and the Black-Scholes options pricing model predicts higher volatilities than implied volatilities in the market (underpriced options). That is not the case when the options are mostly overpriced; in which case the bias would be upwards rather than downwards (overpriced options). Finally, it bears mentioning that the no arbitrage condition underlying all futures and options pricing models, particularly as it relates to commodities (excepting to some extent the PMs) is plain wrong, because it assumes that commodities and goods in general do not obtain a time discount for future delivery vs. spot. The basis of all economics comes down to the study of pricing over time and geography. The Misesian (Bohm Bawerk actually) originary interest is the foundation for economic thinking about time. The no arbitrage condition can only be right if it is combined with an originary interest term on the underlying item (if it is a real item), or if there is an infinite inflation input to make possible the non-default guarantee of the exchanges and their clearing banks. Analysis of the economic implications of the no-arbitrage condition being correct results in the transfer of originary interest into the spread between treasury and private debt interest rates when the latter have default risk excised. At all points, however, the government and the Fed are liable for printing up the funds needed to settle large scale errors of both speculators and banks. The second point of the originary interest consideration is that by simply going into the futures market data and measuring the difference between the no arbitrage price of commodity contracts and the actual price one can discover the originary interest contribution from each component (it may be a negative contribution). Combining these rates into a weighted average (according to relative market values of trade in them throughout the economy) would reveal the actual originary interest rate for raw goods, and would provide information on the market's time preference. The result is a useful substitute for overall originary interest (though it is derived from only a rather thin slice of the market), from which the market's true expectation of the currency's purchasing power decline can be found. That is by adding the originary rate values to the treasury rate. If this number seems high, just remember the money supply and debt growth rate data, and it would all fall into place.4.If as Mr. van Eeden suggests, physical gold is unusual in thatonly 2% of what's traded in the gold markets is physical, what'sthe ratio in other markets like pork bellies, oil, natural gas,and even electricity? It seems logical that the effect would beproportional to the ratio of underlying to paper that's traded. Is there somewhere these ratios (or the raw materials to producethem) are available?I've already mentioned that gold is also different from other material goods in that the bulk of gold available to the market in the future is the same gold that is available today. There is no large oil storage, for example, that is worth a decade's production. Second, titles to actual gold trade at some 10% (and up to 20%) not 2%, of the market. New production, being a minor 2% of the gold stock every year, must consequently be 0.2% of overall gold trade, but this amount may change hands many times before the gold is produced, and then change over many times between the point of entry into the financial gold market and its exit.5. Does anyone (ORO?) know where I can find any work that hasalready been done on this?Unfortunately, little is available, and nothing very useful. Mr Gresham (02/22/01; 00:08:44MT - usagold.com msg#: 48701) Here's a stat I've never seen before: Retail Floor Space http://216.46.231.211/economic.htm From PruBear's midweek report:"It strikes us that in the face of significant economic uncertainty the major retailers continue to aggressively add new stores. Home Depot alone will be adding 22.5 million square feet of retail space in 2001, according to Merrill Lynch estimates."Between 1964 and 1997 (most recent available data from the US Census Bureau), the amount of total retail space per person in the U.S. has jumped almost 300% to 19 square feet per person. Now, several research firms put the number at over 20 square feet. By the way, Europe has about one and a half square feet per person. On regional level, here in Dallas market experts claim 34 square feet of retail space per person; Chicago has 25 square feet, up from 20 square feet in 1990. Southern New Hampshire has a whopping 48 square feet per person, more that Boston's 36 square feet."Get ready for lots of indoor fleamarkets at dead malls, like in 70's.Yeah, 1964. I remember -- that was a really depressed shopping year, wasn't it? (NOT) Randy (@ The Tower) (02/22/01; 00:08:36MT - usagold.com msg#: 48700) Turkey: Then and now... http://www.usagold.com/goldenchalkboard/gc_turkey.html An revealing assemblege of old and new material that paints a wide and vivid picture as to why you must consider a proper role for gold in your overall life...particularly the economic side--your portfolio of accumulated wealth. Randy (@ The Tower) (02/22/01; 00:01:55MT - usagold.com msg#: 48699) HEADLINE: Turkish Lira Likely to Drop 30 - 40 percent http://biz.yahoo.com/rf/010221/sp262279_2.html ----SINGAPORE, Feb 22 (Reuters) - The Turkish government's decision to float the lira will likely result in a 30 to 40 percent depreciation of the currency, analysts in Asia's main financial centres said.----And how is this for lightning in the night?----At the end of a 12-hour emergency meeting Economy Minister Recep Onal told reporters as he left Prime Minister Bulent Ecevit's offices that the float would begin when Turkish markets opened at 0800 GMT on Thursday."The currency is going to be allowed to float in accordance with the economic circumstances that have arisen recently," a statement issued after the meeting said. ...[And another analyst said,] "Bankruptcies will clearly follow as they did in Asia."-----Also, ---"Some banks will definitely go under, but it's still the best thing Turkey can do," said one analyst at a European bank in Singapore.----Now let's see.... what could a Turkish citizen have done to prevent not only the walking lira devaluation losses over time but also this overnight loss of purchasing power that will hit their bank accounts (assuming a failed back doesn't wipe them out completely)?got gold? 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