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ARCHIVED DISCUSSION FROM 5/23/2000 All times are U.S. Mountain Time (Yesterday's Discussion.) Journeyman (5/23/2000; 23:48:21MT - usagold.com msg#: 31136) Predictions are unavoidable @BTD, Elevator Guy, TC, ALL Predictions of some sort are unavoidable. Either you expect the dollar to be OK and that you can make money, even after the tax take (if you are still volunteering to pay a business excise tax) in some dollar denominated vehicle, or else you expect some version of a significant dollar drop.The dollar CAN drop quickly, by the way Elevator guy:- The dollar at its low was down 11 yen, at 120.3 yen perdollar from 132 yen per dollar yesterday. This is betterthan an 8% drop in the dollar, the bulk of this happening inabout three minutes in the middle of the night. This is an"astounding drop" in the world's largest currency. -MSNBCetc., 7 October, 1998 -"This is the biggest one day dollardrop in 25 years." -Kathy Jones, Prudential Securities, 7October, 1998<BR>Good post on the dangers of prediction, BTD. Kudos!!!Regards,Journeyman TownCrier (5/23/2000; 23:13:14MT - usagold.com msg#: 31135) Sirs Goldhunter, BTD, and Henri Goldhunter, true enough, the short life expectancy on the T-bills mentioned certainly mitigates the potential for experiencing a loss of principle, though it is not beyond possibility, given herd mentality in a greed/fear driven market that has given way to fear. Most objective appraisals of risk and reward, however, would deem the T-bills to be better than a non-interest bearing margin account. Certainly. Yet, that does not change the fundamental risk I was attempting to point out with my post. On another note, I am pleased to find we are in agreement that "physical is (usually) priced from futures"...a drum I have been beating here for some time, and continued to use as my primary point throughout today. That being the case, a person might make a grave error were he to expect the futures prices to broadcast a breaking point being reached with the physical market. The most favorabe acquistion opportunity will be past before anyone can react.On the Henri and BTD debate on the value of gold:BTD said to Henri "What is the use value of your physical gold holdings? Unless you are making jewelry or pounding out gold leaf, its ultimate use is to buy things. However, barring a complete collapse of the currency, your gold must be converted into currency in order to buy things. I doubt that you will condemn yourself when you finally make that conversion in order to purchase something, yet you question me for doing it now."Certainly we should all recognize that the purpose of any form of savings, whether it be gold or currency, is to spend it when in need. I think the reason Henri might be wringing his hands is the reason given for BTD's gold savings spending spree, that being, in BTD's words, "I traded them for cash, then traded the cash for something of equal "worth" – 3 Comex futures contracts."It really comes down to each person's individual faith in the performance of contracts or managed currencies. While his faith has led BTD to comfortably swap the tangible wealth of gold for government securities that act as the coverage for three tickets in a highly organized wagering system on the future price of gold, Henri is clearly bemoaning the situation that, in Henri's eyes, good ol' BTD has been systematically and ceremoniously duped by the dubious siren song of real wealth growing out of paper substitutes for the original wealth.As they say in the investment business: "The house made money. The broker made money. Hey, two out of three's not bad." elevator guy (5/23/2000; 23:12:20MT - usagold.com msg#: 31134) @all I see there are many great thinking posts, that have appeared on the screen since I started mine. (I was interrupted by a phone call)Lets let my 2 bits sit for tonight unitl I can think about Town Criers' points of reason. A great post like that, and the others, deserves consideration before reply or disscussion can be fairly made. Good night. elevator guy (5/23/2000; 22:56:14MT - usagold.com msg#: 31133) What is my motivation? Honestly, when I came into the Forum about last August, my only motivation was profit. And it still is, for the most part. And whats wrong with that? Are we here to save the world, or preach the evils of paper? I dont think the "lost" souls of dot.com hang out in here to listen. (But if the FRN, bond market, and stock markets tank, they might)Now it seems that to be on the side of gold, one must shun all paper interests, or at least according to some highly respected poster(s) of the Forum's inner circle. To be in paper investments, and physical gold simultaneously, is tatamount to being internally corrupt, devoid of integrity in heart and deed. Well, isn't that special! Why are we here? Just waiting for the dam to break? Dont hold your breath.If the dollar doesn't go through a major and sudden paradigm shift, and gold is allowed to reach an equilibrium price, one could profit tremendously from paper investments. It would seem likely that a shift away from the FRN as a viable reserve currency will take some time, seeing as it is interwoven into the economies of the European Common Market nations, (among others) and with whom there is billions of dollars worth of trade. For the dollar to sink, the Euro, (main rival to the FRN, and contender for the crown of world domination), will have to sink with it, at least temporarily. And this wont happen in a flash, so dont worry about blinking, you wont miss it.Are not the above timeframes for a paradigm shift in the FRN just as possible as theory of a sudden drop? The current that will wash away all dollar based securities and investments will have to start with a trikle, before it can rush into a torrent. You cant stop the world from turning in an instant. Trains take a half a mile to stop. And a reserve currency like the FRN will not take a sudden dump like the baht, ruble, peso, or Weimar Republic d-mark. Those are "sattelite" currencies to the dollar, and more easily affected by outside forces. And dont forget that those evil gold shorts and the cabal are still quite adept at maintaining the status quo. Just look at how easy it is for them to hold the paper POG at $275. They're not even breaking a sweat. Yet. Hey, that rhymes!IF the dollar isn't rapidly devaluing, and gold is appreciating against the dollar, then the profit leverage of futures and options is unequalled against the relative profit one would make from just holding physical. Now lest some wish to break my sword over their knee, rip the medals off my chest, and banish me to walking aimless in the desert, I will address the flip side.There is the possibility that TPTB dont want to pay out, and close trading to protect their short buddies. But the default of a US market seems like a long bet. Not something I would want to bet on. Note that this post is not a value judgement about the relative worth of holding physical, because as we all know, there is no better place to store hard-earned value. Come hell or high water, come sleet, snow, and driving rain, you cant beat real, physical gold. It is really worth something, no matter what happens in the world.Having said that, I must also say that the theoretical scenario of making more value by the multipication of paper leverage, (given certain market conditions) is no less likely a theory than maintaining relative worth by holding physical when all hell breaks loose. (Also given certain market conditions)But now I have no satisfaction, for paper is not working, nor is the POG going up. Sigh! BTD (5/23/2000; 22:49:19MT - usagold.com msg#: 31132) TownCrier, Solomon Weaver, and PH in LA Thank you TownCrier, Solomon Weaver, and PH in LA for your reasoned responses. You and many others here are very persuasive. I will think on the views you expressed. But there is a danger in listening too much to one side of the argument: everyone reinforces each other and it is easy to come to the conclusion that this is the only possible scenerio. I made this mistake with Y2K. I read only those who documented the dangers (with extensive facts and figures) and completely dismissed the "pollyannas" who said it would not be a problem. I did not see how it could possibly be anything but a crisis. (Let me repeat for Elwood's sake that that was MY STUPID MISTAKE).PH in LA, you are 100% correct in this statement: "Nevertheless, if you had followed his advice and bought physical gold at the prices you mention, you would still be ahead. And even with lower prices, you would still not lose until you sell at such a lower price...with no time constraints to worry about in the meantime..." But it is the nature of trading that one makes mistakes and takes losses. I could go on and on with "if onlys". Hopefully I'm learning as I go - and I'm learning from you guys even if I don't agree completely. Boy, I kind of stirred up a hornets' nest today, huh? I hope everyone enjoyed the excitement. I'm going to bed...goodnight. TownCrier (5/23/2000; 22:32:55MT - usagold.com msg#: 31131) Sir Solomon Weaver, I forgot to mention the most important part... I envy you your cold running water to be enjoyed under the conditions you've describes.Ahhhhhhh... TownCrier (5/23/2000; 22:18:23MT - usagold.com msg#: 31130) Sir Solomon Weaver, and poor man's gold You suggested "a small country like Thailand or Viet Nam or Phillipines could easily consider minting a silver coinage which would give their people a form of money which was not open to international currency speculators."What you've described could certainly happen...a shift in the "foundational paradigm" as Sir BTD might call it. One might first ask if such an action would be deemed as likely given the current economic and political backdrop, or is there an evolution of developments underway that would cast such an event into likely development? It is possible, certainly, but...I know this has been touched on before at the forum, but where would the line be drawn for ever poorer folks? Gold for us, silver for them, copper for you guys over there, iron for ones in mud huts, etc.I guess at the end of the day, what is important is whether a poor man is better off taking the value of his very few excess/investment dollars and exchanging it for a current equavlent value in gold, or doing the exchange for the current equivalent value in silver. Which metal, as a whole world of probable events play out, will provide the superior wealth value in exchange for other assets (or currency) in the future?In my book, the market's failure to recognize gold's current role/importance in the monetary world provides the prime opportunity to benefit when perceptions receive their overdue reality check. Having said that, I have no doubt that silver owners will see a handsome dollar profit, but will silver possibly gain as gold would in its relative value against other real goods? Money/currency has a unique ability to take on "additional value" due to its role. Just look at the value found in Federal Reserve Notes. Were they not to find use as currency, their value would plummet.For that reason, I would place my weight behind gold over silver, because as you have nicely shown, gold already has its foot firmly in the monetary door...or should I say it is fully inside the bank and is taking a nap on the couch? BTD (5/23/2000; 22:16:37MT - usagold.com msg#: 31129) A response to Elwood msg# 31120, and thanks to goldhunter and Rod A response to Elwood msg# 31120, and thanks to goldhunter and RodFirst, thanks to goldhunter and Rod for you supportive posts in response to my posts today. I felt that there were sure to be others lurking here that feel as I do and it was for your benefit that I posted. A contrary opinion has been known to be shouted down here sometimes, so I thought I'd wade into the fray.**********************Elwood, you asked me, "Does your home pay interest? Of course it doesn't, yet, many choose to purchase a home. Why? Because it has a use value greater than the alternative uses of the currency with which it was purchased." What is the use value of your physical gold holdings? Unless you are making jewelry or pounding out gold leaf, its ultimate use is to buy things. However, barring a complete collapse of the currency, your gold must be converted into currency in order to buy things. I doubt that you will condemn yourself when you finally make that conversion in order to purchase something, yet you question me for doing it now. Perhaps you just object to my timing? Or are you telling me that under no circumstance will you ever convert your gold into currency? What if it comes to the point that you have no other asset with which to feed your family? Will you insist on paying in gold Krugerrands (or whatever form you hold)? If you accept change it will likely be in some sort of currency and you will then be guilty of the same "sin" as I am.You quoted my statement, "When we stop thinking for ourselves, we may as well stop thinking." Then you followed it with the following observation: "It is you, sir, who has depended on the thinking of others to tell you where you should place your savings. You stated as much in your original post." I guess you missed what I said in that original post, after I described all the times I let others do my thinking for me. Since you missed it the first time, I'll quote myself: "I bear full responsibility for all these decisions. There was a lot of stupidity on my part in these events, so you don't really need to point that out. I acknowledge it." Thanks for pointing it out anyway. I listed my stupid mistakes in hopes of helping others avoid similar errors. I have recognized and acknowledged my stupid mistakes, so you don't really need to tell me that I made stupid mistakes.You closed with the statement: "I thank you for allowing your Krugerrands to find a home where their true worth is recognized." At the time I sold them, they were "worth" exactly what I could get for them. You and I both feel they will be "worth" more in the not-to-distant future. But basic economics tells us they are currently only "worth" what someone will pay me for them (whether in dollars, euros, pesos, sheep, cattle, guns, ammunition, silver, grain, or anything else). I traded them for cash, then traded the cash for something of equal "worth" – 3 Comex futures contracts. I agree with you that the gold price probably cannot be held down forever – I'm placing some heavy bets on that. But until the gold price moves, no one will pay more for Krugerrands, because they are not "worth" more. PH in LA (5/23/2000; 22:08:18MT - usagold.com msg#: 31128) To: Henri and BDT Henri:Thanks for commenting on my post to FOA. Your clarification on Deutsche Bank is appreciated. Especially interesting; your observation that Deutsche is a hybrid entity with ties to both sides. Actually, I was picking up on Reg Howe's remark that the Bundesbank must be at the very least, looking the other way while Deutsche and Dresdener do whatever they are doing. Which Reg Howe agrees cannot be perfectly ascertained without more detailed data. I still would like to hear FOA's comments if he has knowledge of such details.BDT:Reservations such as yours about FOA/Trail Guide seem to appear here on a regular basis. But they almost always have the exact opposite effect as intended, and end up revealing more about the person voicing their feelings, than they do about FOA/Another's line of reasoning. In face, FOA, himself is always the first to encourage each reader's own thought processes. And since his identity is so secret, he would have little reason to cultivate the kind of faith you profess to see reflected here. Your comment that no one knows the future is well taken but deserves further thought. Yes, the future is unknowable. Yet, we humans make assumptions about it every moment of our existence. Just getting out of bed implies assumptions about the future, doesn't it? In fact; we constantly make our best effort to divine the future...and our success rate is often determined by the quality of our reasoning. The fact is, as you mention, FOA supplies a very generous helping of reason in his commentary. This is why we look forward to and follow his posts so closely. The predictive element is always based on reasoned argument and each one of us must draw our own conclusions and act upon them, ourselves.Nevertheless, if you had followed his advice and bought physical gold at the prices you mention, you would still be ahead. And even with lower prices, you would still not lose until you sell at such a lower price...with no time constraints to worry about in the meantime... Enjoyed your posts! Solomon Weaver (5/23/2000; 21:50:41MT - usagold.com msg#: 31127) BTD's LIFEBOAT BTDWith 400+ Kruggerands I would say that you have a very decent "lifeboat". I would also agree that with your "structure" you will have more "dollars" early in the game (meaning when that "real" gold bull get's here) than someone holding only gold metal.FOA makes an interesting point (which I am still not sure how much I believe, but keep in the back of my mind) that there is a "possibility" that in a major "dislocation" which causes a lock up in the paper markets, and a serious collapse of the dollar, it may become so difficult or impossible to liquidate yourself out of "contract investments" at a price (gain) which you could have had without headache had you simply held metal.Absurd??? Simple example....in the middle of a gold banking crisis, POG looking like the 1999 NASDAQ (even better) when everyone wants a piece of the action (or sees that only gold is holding value against anything) will a buyer be willing to pay more for a one ounce Krugerrand or for a piece of paper which is "title" to the same Krugerrand?If there is $100 billion dollars worth of gold default hitting the futures market, who do you think will get their in the money contracts paid out first, Morgan Stanley or your broker? The amount of liquid wealth in the world today can be compared to the amount of water in a hand held water balloon...in a systemic crisis which destroys a lot of savings and capital, the amount of wealth remaining is like the amount of water which remains in your hand when the balloon pops...The danger I see (and I believe FOA would agree) is that as a wealth asset today, gold is rather insignificant. So, the chances are low that a suddenly rising gold price would lead the world into default...the chances are much higher that the world experiences dramatic currency volatility, and capital reallocations, causing a systemic crisis where much is defaulted, and in the act of "rebuilding" from the storm (or like getting hit with an asteroid), the world recognizes that gold must lead (i.e. the multi-thousand dollar POG)....by then your futures contracts could be worthless as well as your T-bills.Don't give up your "lifeboat" and keep having fun with your paper...hope it works in your favor.Poor old Solomon Solomon Weaver (5/23/2000; 21:49:42MT - usagold.com msg#: 31126) (No Subject) BTDWith 400+ Kruggerands I would say that you have a very decent "lifeboat". I would also agree that with your "structure" you will have more "dollars" early in the game (meaning when that "real" gold bull get's here) than someone holding only gold metal.FOA makes an interesting point (which I am still not sure how much I believe, but keep in the back of my mind) that there is a "possibility" that in a major "dislocation" which causes a lock up in the paper markets, and a serious collapse of the dollar, it may become so difficult or impossible to liquidate yourself out of "contract investments" at a price (gain) which you could have had without headache had you simply held metal.Absurd??? Simple example....in the middle of a gold banking crisis, POG looking like the 1999 NASDAQ (even better) when everyone wants a piece of the action (or sees that only gold is holding value against anything) will a buyer be willing to pay more for a one ounce Krugerrand or for a piece of paper which is "title" to the same Krugerrand?If there is $100 billion dollars worth of gold default hitting the futures market, who do you think will get their in the money contracts paid out first, Morgan Stanley or your broker? The amount of liquid wealth in the world today can be compared to the amount of water in a hand held water balloon...in a systemic crisis which destroys a lot of savings and capital, the amount of wealth remaining is like the amount of water which remains in your hand when the balloon pops...The danger I see (and I believe FOA would agree) is that as a wealth asset today, gold is rather insignificant. So, the chances are low that a suddenly rising gold price would lead the world into default...the chances are much higher that the world experiences dramatic currency volatility, and capital reallocations, causing a systemic crisis where much is defaulted, and in the act of "rebuilding" from the storm (or like getting hit with an asteroid), the world recognizes that gold must lead (i.e. the multi-thousand dollar POG)....by then your futures contracts could be worthless as well as your T-bills.Don't give up your "lifeboat" and keep having fun with your paper...hope it works in your favor.Poor old Solomon Solomon Weaver (5/23/2000; 21:49:13MT - usagold.com msg#: 31125) (No Subject) BTDWith 400+ Kruggerands I would say that you have a very decent "lifeboat". I would also agree that with your "structure" you will have more "dollars" early in the game (meaning when that "real" gold bull get's here) than someone holding only gold metal.FOA makes an interesting point (which I am still not sure how much I believe, but keep in the back of my mind) that there is a "possibility" that in a major "dislocation" which causes a lock up in the paper markets, and a serious collapse of the dollar, it may become so difficult or impossible to liquidate yourself out of "contract investments" at a price (gain) which you could have had without headache had you simply held metal.Absurd??? Simple example....in the middle of a gold banking crisis, POG looking like the 1999 NASDAQ (even better) when everyone wants a piece of the action (or sees that only gold is holding value against anything) will a buyer be willing to pay more for a one ounce Krugerrand or for a piece of paper which is "title" to the same Krugerrand?If there is $100 billion dollars worth of gold default hitting the futures market, who do you think will get their in the money contracts paid out first, Morgan Stanley or your broker? The amount of liquid wealth in the world today can be compared to the amount of water in a hand held water balloon...in a systemic crisis which destroys a lot of savings and capital, the amount of wealth remaining is like the amount of water which remains in your hand when the balloon pops...The danger I see (and I believe FOA would agree) is that as a wealth asset today, gold is rather insignificant. So, the chances are low that a suddenly rising gold price would lead the world into default...the chances are much higher that the world experiences dramatic currency volatility, and capital reallocations, causing a systemic crisis where much is defaulted, and in the act of "rebuilding" from the storm (or like getting hit with an asteroid), the world recognizes that gold must lead (i.e. the multi-thousand dollar POG)....by then your futures contracts could be worthless as well as your T-bills.Don't give up your "lifeboat" and keep having fun with your paper...hope it works in your favor.Poor old Solomon TownCrier (5/23/2000; 21:43:47MT - usagold.com msg#: 31124) Excellent reply BTD, and thanks again for providing a balanced view You have done us all a service with your words, "When we stop thinking for ourselves, we may as well stop thinking."It is in that interest that I implore no-one to accept my own offerings at face value, but rather to subject them to a fair litmus test of logic and credibility in the light of current and past events and market news. Please don't get the impression that I am attacking or failing to approve (like you would care, want, or need MY approval) of your strategy. I am just talking through the scenarios out loud so that we all might see where benefits and where pitfalls both may be found.I am glad you concur that your strategy may be held in different regard from the perspective of many currencies that are not currently enjoying what the dollar has going for it at this time. Similarly, I see the attractive aspect of your sitution, as you've described: "I am earning interest on my treasuries, I am also using those treasuries as margin in order to hold a significant long position in gold futures. So I am earning the interest AND benefiting from the move in the gold price."However, my cautionary note remains intact...that your T-bills are at risk to rising interest rates (reflected as falling T-bill prices), and your "gold" is at the same risk against receiving delivery when you want it in a fashion similar to that as described earlier today with regard to silver warehouse receipts. (And admittedly, such a scenario would reflect a changed "foundational paradigm" as you've called it...but more on that shortly.) Further, while you've suggested that you might tap further into the leverage potential to "double down" on further declines in the contract price, should these declines continue, you will have thrown away your original 300 K-rand position in margin calls simply due to the nature of these financial derivatives having expiration dates.You expressed a good caution, "I have spent my whole life betting on changes of foundational paradigms, and I have been wrong every time. If I have learned anything in my trading experience, it is to always bet with the odds, not against them."You see, based on that comment, we are truly on the same page...or at least I feel I am on your page, if you would prefer not to be viewed as being on mine. As I explained in my prior post to you, to bet that the gold futures will turn around and command higher prices is to be betting AGAINST the odds. My personal expectation is that the futures will be sold lower and lower, even as past events could not meaningfully bring about a "foundational paradigm shift" to sustained higher prices that you are once again betting on...yes?A fair question many have asked before is: Where is the gold coming from to feed the world's voracious and record appetite during this times? They want to know where the gold is coming from even at these lower prices. Well, dear BTD, you have provided yourself to be the perfect case study. Thanks to your efforts and method of moving into a "paper gold" position, the physical market has been fed with 300 real ounces. Your contentment in the paper form being a reasonable substitute or equivalent for the metal is exactly what has helped this phenomenon continue for as long as it has. As soon as metal fails to reach the hands of those who want it, the physical price and market will have to adjust accordingly, no matter what prices are being paid for COMEX gold futures. More on this later, as you address it in your conclusion also.In response to my question about the potential for losses in your brokerage margin account from a general market selloff in Treasuries (yes, even the short-term T-bills) that would be the expected outcome of expectations of inflation and higher interest rates, you said:"If the U.S. currency falls significantly, I'll profit from my long gold and silver futures. I won't take a net capital loss on falling bond prices, because my treasuries are 6-month maturities that I will hold to maturity. And climbing price inflation would certainly erode the value of the dollar interest I receive, but that will be compensated for by the increase in the value of my long metal futures contracts."That sounds well reasoned. It also all is founded on the premise that gold futures will somehow be bid higher where they haven't before. (The post Washington Agreement price explosion last Sept.-Oct. was just a panicky knee-jerk reaction. As soon as the principle players looked around and evaluated that there was no fundamental change where COMEX type futures markets were concerned, they promptly resumed "business as usual"...leapfrog selling of the nearby price-discovery futures immune to delivery. This was done and continues to be done today even in the face of the post-WA environment of tightening physical availability. So again, we thank you for your generous contribution of 300 real ounces into the physical market. <grin>Certainly, as you say, IF (a big if) futures paper trades higher, you will perhaps come out on top as you have planned, but will you receive a cash settlement at such a time, or will you be able to reclaim your gold? To reclaim you gold would be to ask for delivery during expiration of you contracts, and that would entail the selling of your Treasuries to meet the contract price. Thus, you would not be able to hold them until maturity, and may in fact take a bit of a cash loss on the deal.A worse case scenario involves the futures contract prices continuing to move with my expectations (lower), against your expectations (higher). In such a scenario, aggrevated if you have "doubled down" you contract postions, you will get margin calls, and will thereby be forced into selling your T-bill prior to maturity...possibly into lower prices. As such, you would have losses on top of your contract losses. An effective way to turn your original 300 ounces of gold into vapor...all because you gave up on the luxury of having TIME on YOUR side. By buying into time-dependent instruments, you put others in the drivers seat, or at least, you take yourself out of it.Certainly, the risk/reward is yours to evaluate...a personal decision.You wrote:"I agree that the futures markets are being sold lower in the face of bullish fundamentals, and that eventually the laws of supply and demand will win out. But you see the price of physical eventually breaking loose and increasing dramatically while futures continue to be sold lower. I, in contrast, see the price of physical eventually breaking loose and increasing dramatically and dragging the futures up kicking and screaming with it. This has been the historical nature of the beast. If physical gold breaks up and the shorts try to continue selling futures lower, the arbitrageurs will slaughter them."On your view that given such a price separation as I have warned against, you suggest that in the end the physical price will necessarily be dragging the futures higher. Well, ok, isn't that enough there to show that the leadership position will be the physical, and those in paper will be playing catch up? But no, I don't see that as guaranteed. Even as you suggest, as have others, that the arbitrageurs will guarantee higher futures prices, I have already weighed in on the issue many days ago (I may be dead wrong) that in a battle as such, the victory will go to the determined shorts. Why? Because the arbitrageurs don't care which direction the price moves, so long as the two ends meet within mathematical acceptibility. And there is no end to the volume of contract shorts that can be written if the purpose is to keep the futures postions from running away. The mentality of the primary shorting participants is to protect their total book value against market losses, preferring instead to take their chances in settlement when the thing has crashed and the rules are changed during arbitration or whatever.As I see it, long paper serves little noble purpose, and accordingly, the markets were not devised for them to have their day. The markets are currently behaving as they were crafted to. It is a short sellers paradise until it comes to its predictable end on an unpredictable timeline. That is why I personally continue to acquire gold regularly, not waiting all in cash until the price reaches my preferred target which may not come in a deliverable market environment. When it breaks, there will likely be no organized physical market for some time, until the price is appropriately established beyond any of our expectations.It's like this...maybe. You are apparently comfortable with a personal postion in 700 ounces, otherwise you would have more or less, accordingly. You physically have 400 still, but your 300 ounces as a long contract is technically a fiction. And just think of the thousands of people that have their own comfort level of gold based upon paper fictions. In a busted market, not only would you continue to have the existing physical demand, but those who previously sought comfort in paper forms of gold will also be competing for the real stuff. And as your case demonstrates, the supply made available by the exchange of metal gold for paper gold will dry up, further aggrevating the balance.In repeating your doubts that such a diversion of futures contracts and the actual good could realistically occur, you asked, "Can you give an example of a futures market where the futures and the physical diverged in the manner you are predicting?"Sure. How about the ultimate case of termination...in the spring of 1993, for example, the London International Financial Futures Exchange ceased trading futures contracts altogether in U.S. Treasury bonds due to lack of interest in them. How hard is it to imagine no interest in buying long gold paper?In conclusion, I simply shall reiterate that given ALL that we have seen, it is the expectation of sustained higher prices on futures contracts that seems to be the unlikely paradigm shift. A continued selloff until the market locks seems to be the odds on favorite. In any event, with physical gold, time is on your side, and however it all plays out, you will own the winning horse.Thanks again for giving me an opportunity to explore these various nooks and crannies. Although you said you expected disagreement, please rest easy on that account. This whole thing in no different than you saying, "I plan on having a hot pastrami sandwich for lunch, and chips, too, are in my sight." How can I, or anyone, possibly dare to "disagree"? These are safe halls, my friend. Rod (5/23/2000; 21:26:48MT - usagold.com msg#: 31123) BTD make that message #31098 your message about no one being able to predict the future.Thanks again, Rod Rod (5/23/2000; 21:17:10MT - usagold.com msg#: 31122) BTD message # 31114 Thank you, thank you, for a most refreshing post. You mirrored my feelings exactly. I've been lurking for years and this is my first post to this forum, so you know that what you have said was important. Also, thanks to all the other posters for giving me the much needed food for thought.Regards to all, Rod Solomon Weaver (5/23/2000; 21:10:26MT - usagold.com msg#: 31121) Town Crier - hope you didn't get silver on your boots. TownCrier (5/23/2000; 1:58:27MT - usagold.com msg#: 31060)Sir Solomon Weaver, if I may, let's kick the tires on Mr. Butler's investment vehicle..................................Hey TC....great tire kicking job....to tell you the truth, I too tend to see the value in things as what they are worth to me...not simply as investments...Simple example, last year I spent about $500 of hardware and a solid day of my own labor to install an oldfashioned long handled well pump on an old well at the back of our lawn..it was basically a y2k fallback. But now, when out strolling our land, I always enjoy the few minutes it takes to draw up a good charge of water and take a nice cool sweet swig of clean water....ahhhhhhh.Anyway, all of my silver is in solid form. It's really funny when you buy a $1000 face value box of junk coins and it comes in the mail...the postman is bound to ask "what the heck is in there?" My pat answer is "buckshot - save when you buy it in bulk".But Ted Butler does allude to an important aspect of being a silver investor...suppose...just suppose....that you are rather wealthy and want to put $1 million into silver...you really do have a problem considering how you will store 7 tons of silver.The way I see it, of all the "paper" options available in silver, the COMEX certificate is the most solid....and for someone with a lot of money who simply wants to make quick capital gains in silver (even in a defaulting silver market), that route should be the best...................Concerning both gold and silver there are three aspects:1.Industrial and utility demand (including jewelry, etc.)2.Investment demand (private gold hoards in coins and bars)3.Monetary demand (bank reserves).In the gold world, the bears would have us believe that demand 1 is moderate...demand 2 is feeble...and demand 3 is a barbaric relic...the truth of course is that all 3 are strong with demand 3 being hidden behind the mask of "central banks selling their gold" (to eachother).In the case of silver it is obvious that demand 1 is very strong but 2 and 3 are very weak. The practical and psychological demonitization of silver is much stronger than for gold. Who "invests" in silver anymore...and what nation would even consider putting it in a coin or using it as a reserve asset? So, "if" either of these demands were to increase, we could see significant silver shortages/ price rises.Think of this....almost every kid between the ages of 7 and 13 in the USA has "convinced" their parents (or used their allowance money) to buy "at least" $10 worth of Pokemon cards (some cards are now "worth" over $50!!!!). Would it be so far fetched in such a nation to see 50 million families "jumping into" the silver craze????It is probably a reasonable guesstimate to say that more than $2 trillion worth of the worlds fiat money exists in the form of coin and bills (remainder digital). In a "chronic" currency crisis (and in one where the anchor dollar is shifting dramatically) what would happen if a few smaller countries came to the realization that they could "stabilize" their currency some by minting silver coins (or silver alloy)...even trying to replace a simple 1% of fiat bill face value circulation with a silver coinage would put a $20 billion dollar demand on silver (at today's prices only about 4 billion ounces (remember estimated reserves are in the range of 200-500 million ounces). America would never do this, but in the same way that FOA claims that gold backing is strengthening the Euro (in due time), a small country like Thailand or Viet Nam or Phillipines could easily consider minting a silver coinage which would give their people a form of money which was not open to international currency speculators. Even an "announcement" that "any country" was seriously planning to "remonitize silver" could drive the silver market bonkers.More so than gold, silver was the money in the hands of all people...the poor man's gold as I like to say....if gold returns to being money, then silver will not stand on the sidelines!!!!Poor old Solomon Elwood (5/23/2000; 21:10:07MT - usagold.com msg#: 31120) BTD (5/23/2000; 19:48:58MT - usagold.com msg#: 31114) BTD,Does your home pay interest? Of course it doesn't, yet, many choose to purchase a home. Why? Because it has a use value greater than the alternative uses of the currency with which it was purchased. If the dollar fell to zero value, would you sell your home to realize your "gain"? In another sense, why have you not sold your home and placed the proceeds in REITs that will earn you income?The Krugerrands you sold are the same today as the day they were minted. They will be the same 1,000 years from now. Yet a dealer presumably offered you less currency than you paid for them. You were told that they "depreciated," yet how could that be when they haven't changed? Their use value is the same today as it was 1,000 years ago and as they will be in the hands of my children's grandchildren many years from now. It makes no difference if the dollar is hyper-inflated or not. It makes no difference if TG/FOA/Another is right or not. The use value of the gold is the same in exactly the same way that the roof over your head will be the same whether or not the dollar goes to nothing. You state: "When we stop thinking for ourselves, we may as well stop thinking." It is you, sir, who has depended on the thinking of others to tell you where you should place your savings. You stated as much in your original post.Once again, I thank you for allowing your Krugerrands to find a home where their true worth is recognized, and I wish you the best of luck trading with the proceeds you received from their sale.Elwood Cavan Man (5/23/2000; 21:07:43MT - usagold.com msg#: 31119) Welcome BTD Excellent thoughts! Please post more often. I admire your trading savvy but pour moi, that type of strategy would make me quite nervous given the very different nature of the current gold market. To each his own eh?Regarding TG, can you be certain his ideas are jsut theories? Also, IMHO, TG is not making predictions but rather, he is writing from a frame of reference unkown to most with the singular objective of encouraging others to view the world through his particular type of looking glass.Post on Sir BTD! Cavan Man (5/23/2000; 20:46:21MT - usagold.com msg#: 31118) Nikkei Tokyo index looks poised to take out 16K. Henri (5/23/2000; 20:16:00MT - usagold.com msg#: 31117) PH in LA Msg.# 31082 and Trail Guide PH in LA you wrote:SNIP"...Can we agree that now "it has stopped"? That the POG is once again being effectively "managed" for the "good of all"? (Especially the bullion banks with their overhanging short positions?) Do Central Banks once more "stand ready to lease gold into the market to forestall any price rise" as Greenspan so famously stated way back when?Should we conclude that the provision that we thought would severely restrict Central Bank leasing is either: (a) not having the desired effect, (b) being undermined by German Central Bank derivitive activity as alledged by Reg Howe? Or is there some other explanation?What exactly was the Washington Agreement statement on leasing that caused so much excitement? Was it not something about an agreement not to "increase" leasing activity? Which might just as well been stated to the effect that "current levels of leasing will not be curtailed"? If by that it is meant that "current levels of leasing necessary to "manage" the POG downward will be allowed just as long as the rate of decline is not increased", we might not realistically expect to see much change in the current status quo until central banks stop "standing ready to lease gold into the market to forestall any price rise".So just where are we "on the trail"? Has "it" stopped? Are we lost in a semantic wilderness? Is Reg Howe correct, that the Germans really are pursueing a very different policy than what we thought was meant in the Washington Agreement? ..."UNSNIP__________________________________________________________The german banks being accused of running foul of the WA are not the "Central bank" of Germany (which is Bundesbank) I believe, they are Deutsche Bank mostly and Dresner Bank to a lesser extent.Deutsch Bank as you recall bought out the Federal Reserve Bank member "Bankers Trust" and is now fully infected with their henchmen which were all paid a hefty sign-on bonus (Hush Money?). I'm thinking in Europe they are still taking credit for being a Fed Reserve Bank as "Bankers Trust" (and as such may still be able to trade Federal reserve gold certificates out the back door for the Clinton machine thereby circumventing the US gold window closure of 1971...but as a foreign agent they are forbidden to act as agents of the US govt...oops I forgot, duh, the Fed is not a US govt agency) and in America they are taking credit for being a foreign bank with no reporting responsibility whatsoever. It may be that they (Deutsche Bank) are acting directly as agent for the secretive Exchange Stabilization Fund (ESF) run directly by the President and the Secretary of the Treasury with no accountability to Congress. So far I do not see any evidence that they are "Selling or Leasing any gold or writing any new leases which was what the WA was about...their activity is in the realm of gold derivatives...not exactly the same thing. It is not clear if the wholesale dealing in gold futures options is against the Washington Agreement or not...my guess is its a loophole. Got Gold? Get More! Chris Powell (5/23/2000; 20:15:09MT - usagold.com msg#: 31116) PPT, gold manipulators running out of gas http://www.egroups.com/message/gata/465? Latest from GATA's Bill Murphy.http://www.egroups.com/message/gata/465?To subscribe to GATA's dispatches by emailand get them immediately so you don't haveto go look for them, send an email to:gata-subscribe@eGroups.com goldhunter (5/23/2000; 20:09:38MT - usagold.com msg#: 31115) TownCrier #31105 http://www.usagold.com Sir, your position may be in error, as the TBill in question that holds margin for underlying futures is short term instrument that yields positive real rate of interest...Given this instrument (short term by definition) equity will always increase faster than inflation erodes purchasing power, and the holder is therefore better off.As for your assumption that futures and physical trading opposite directions...up to today, futures at various exchanges domestically and world-wide are prime price-discovery instruments for all MAJOR world wide traded contracts(commodities)...cash and futures trade (almost exactly) together day and week in and out...Will it or can it change? Possibly...But futures seem to lead up and down...physical is (usually0 priced from futures...I thought he had a good plan that "should" reward him, and I told him so...Over time, his Tbill income could really add up, over time his gold could REALLY ADD UP too. BTD (5/23/2000; 19:48:58MT - usagold.com msg#: 31114) TownCrier msg#: 31105 Before I address your post, TownCrier, let me thank you and the others who have responded to my post (goldhunter, RossL, Al Fulchino, and Elwood, HI-HAT, aunuggets).TownCrier, please don't think that my post was a criticism of you or Trail Guide. I may not agree 100%, but I enjoy the insight of both of you - that is why I have been a daily reader of this forum since last summer. My main objection is that so many in this forum seem to have put Trail Guide on a pedestal and have accepted his predictions as inevitable. I guess it is none of my business if people want to do that; it's just that I have placed different market gurus on the pedestal many times (as I documented in my prior post) and I have paid some heavy penalties for doing so. When we stop thinking for ourselves, we may as well stop thinking.You point out, via the link to the chart, the danger of a depreciating currency and the benefit of owning gold in that circumstance. You asked me, "would you be willing to admit that there are gold owners in the world that are not what we might exactly call "overly concerned" about their foregone interest earnings on retained currency?" Absolutely! But don't forget that though I am earning interest on my treasuries, I am also using those treasuries as margin in order to hold a significant long position in gold futures. So I am earning the interest AND benefiting from the move in the gold price. And if I leverage some, I can benefit even more from a move in the gold price than if I held the physical. I am not in any way denigrating the benefits of holding gold in an inflationary or chaotic economic environment. It's just that you see it as an either/or proposition: either earn interest on your money, or hold gold. I'm trying to point out to people that it is possible to do both (even if RossL says I don't have my cake). The risk is that the futures market will stop functioning properly – and I feel that the odds are heavily against such an occurrence. Such an occurrence would be a change in a "foundational paradigm" as I stated in my prior post. I have spent my whole life betting on changes of foundational paradigms, and I have been wrong every time. If I have learned anything in my trading experience, it is to always bet with the odds, not against them.You asked me, "Is it possible that you are, like those many others before you, currently embarking upon a prediction of the future that may not play out as expected?" The nature of any investing requires one to try to predict the future. So, yes, of course I am trying to predict the future in my trading. But I am making my own predictions of the future, not relying on someone else's. I will profit or pay for my predictions – but I will not give advice to anyone else, lest I have to pay for my predictions twice when they prove wrong and I am blamed. Another rule I have in my trading is to make the trade with the highest odds, then plan for it to go against me. That way I either hedge myself or get out quickly. I rarely "expect" a trade to play out as expected. You continued your query with, "That is to say, is it possible that you are attempting to ‘see’ into the future through eyes that are influenced by a distinctly dollar-based and dangerously temporal perspective?" I'm not sure I understand what you are asking. I am influenced by my experiences and my studies of history, of course. I think you're asking if I think the dollar will continue as the strong medium it currently is. I do not. I think it will fall, and fall hard. That is why I am long 300 ounces of gold via futures, 400+ ounces of gold via Krugerrands, 50,000 ounces of silver via futures, as well as $11,000 of retirement funds in gold mutual funds. But do I see the Comex collapsing? Probably not, but that's why I am still hold some Krugerrands, just in case.You asked, "What is to say the U.S. currency won't also fall into a pattern similar to these many others? What isn't to say that even as you are earning interest on your treasuries, you are also taking a net capital loss at the same time through falling bond prices? And meanwhile, climbing price inflation on real goods would erode the value of the dollar interest you eventually receive if you hold to maturity." If the U.S. currency falls significantly, I'll profit from my long gold and silver futures. I won't take a net capital loss on falling bond prices, because my treasuries are 6-month maturities that I will hold to maturity. And climbing price inflation would certainly erode the value of the dollar interest I receive, but that will be compensated for by the increase in the value of my long metal futures contracts.You wrote, "In the simplest example, we see the price-setting futures markets to continue to be sold ever lower, even in the face of fundamental reasons for real gold to be priced ever higher. To fail to recognize the nature of the beast for what it is to blindly (and futilely) expect a future change in behavior that the qualified and undeniable past could not bring." I think I differ with you on this point. I agree that the futures markets are being sold lower in the face of bullish fundamentals, and that eventually the laws of supply and demand will win out. But you see the price of physical eventually breaking loose and increasing dramatically while futures continue to be sold lower. I, in contrast, see the price of physical eventually breaking loose and increasing dramatically and dragging the futures up kicking and screaming with it. This has been the historical nature of the beast. If physical gold breaks up and the shorts try to continue selling futures lower, the arbitrageurs will slaughter them. The Comex may freeze up if prices get too high (ala the Hunt brothers and silver in 1980 or the Tocom palladium contract recently), but I think it is unrealistic to think that the two will diverge as you propose. That would truly be a change in behavior of the beast that is without historical precedent, as far as I know. Can you give an example of a futures market where the futures and the physical diverged in the manner you are predicting?You asked, "Do you find it that inconceivable that under present conditions, the gold futures contracts could continue to be sold lower until that specific marketplace folds from discredit?" I won't say it is impossible, but I really can't conceive it happening in this fashion. You continued, "So you see, we must all remain vigilant...not only do economic conditions change, but marketplace rules and regulations can change (or terminate) also." I agree that changes happen and we must be vigilant, but I still maintain that betting on an unlikely, once-in-a-lifetime "foundational paradigm" change, against heavy odds is not the wisest bet.Your post did not dampen my enthusiasm. I knew I was voicing an opinion that flowed against the current of thought of this forum, so I expected disagreement. Canuck (5/23/2000; 19:22:32MT - usagold.com msg#: 31113) CRB Page snapshot Tue 23 May 2000 21:17 ET Description Last Change Percent Change Bridge CRB 225.2 +0.4 +0.18 % --------------------------------------Oil over $29/bbl.The CRB was below 210 just a few weeks ago.@ Stranger,Excellent 'inflation' post today. Elwood (5/23/2000; 18:57:42MT - usagold.com msg#: 31112) beesting (5/23/2000; 11:35:23MT - usagold.com msg#: 31084) Yes, it's a pretty good bet that the BOE gold is coming out of the Fed.I think that "today's" buyers are yesterday's sellers. This stuff is headed to Arabia, you can just about bet your last dollar on that.Just got the word on March outflows from the Fed: 44 tonnes. HI - HAT (5/23/2000; 18:55:09MT - usagold.com msg#: 31111) Holtzman........................The Robe Please Might you not don your Machiavellian Robe, and treat us to more of the Shark - Dolphin type axiom. :- ) . TownCrier (5/23/2000; 18:38:19MT - usagold.com msg#: 31110) Sirs Netking and Holtzman, and beesting Netking, thanks for passing along the encouraging personal insights into the quality of the sets. It's gonna be a looooong three-and-a-half years.Holtzman, thanks for the pat on the back regarding the assembly of the German 20 Marks page. I trust you discovered the link to your full commentary and attendant personal disclaimer.On Legolas and ears...yes, I made the same silent observation ("Gads, they've sharpened their ears!" I thought to myself.) And then I wondered if, in fact, the character in question was in the role of Legolas at all, and not perhaps just an odd camera angle producing pointy ears upon the likes of Eomer. The blond hair was my hitch. I carry a distinct impression that Legolas had black hair, whereas blond (GOLD) hair would only be found principly upon the heads of Finarfin's decendants, Galadriel herself being among them. Can you confirm whether Legolas indeed had hair of gold to match his heart? The scene in question was surely Helm's Deep, wouldn't you say?Beesting, I'm pleased you found merit in my post this morning. You might find my most recent offering to BTD to be nearly a sequel along a similar theme, but touching on much wider elements. SHIFTY (5/23/2000; 18:30:21MT - usagold.com msg#: 31109) N.Y. Ponzi Nasdaq 3,164.55 + Dow 10,422.27 = 13,586.82 divide by 2 = 6,793.41 PONZIDown 159.97 It's an all time Ponzi low!! I think they are getting the hang of it.How low can they go? $hifty HI - HAT (5/23/2000; 18:22:50MT - usagold.com msg#: 31108) BTD msg.#31086 Blood Sport The "Foundational" paradigm HAS collapsed.A Deer shot in the heart continues to run, because it does not know, it's supposed to be dead. aunuggets (5/23/2000; 18:19:04MT - usagold.com msg#: 31107) BTD - "BRAVO"...well, sort of: Have you ever noticed how the true wisdom of many posts is contained in the very last sentence or paragraph, or even very shortly thereafter ? (grin)Other considerations......falling AU prices, margin calls, the default of future contract writers, government default or devaluation, inflation above and beyond the received interest rates, ad nauseum.It's all paper.....It's all debt. Anything you do not control is beyond your control. Short of the remaining 400 Krugerrands, which portion(s) of your stated investments do you retain 100% control over ?Nick Guarino was obviously right, but his timing stunk !Y2K ? I guess we of the skeptical crowd (and experienced with Gary North fortune telling ala the 1970s-80s) still believe the Y2K "catastrophy" was nothing more than another scare monger ploy to bilk many more millions (billions ?) from the sheeple of the world ready and willing to absorb more bad news. Or was it a simple multi-decade "plan" of the computer elite from the beginning ?Fortune Tellers (Technical Analysts ?).....your observations I totally concede.But perhaps RossL said it best......"You don't have your cake". HI - HAT (5/23/2000; 18:03:16MT - usagold.com msg#: 31106) Voyager msg.#31086 No Subject The dominant theme of our time is UNREALITY. TownCrier (5/23/2000; 17:55:56MT - usagold.com msg#: 31105) Greetings, Sir BTD, thanks for offering your useful and balanced post http://www.usagold.com/goldenchalkboard/gc_turkey.html The point of the link I have provided is not for the commentary that you will find there, but for the instructive price graph located at the top. This is offered simply as an objective counterpoint to your observation of the appealing nature of your described investment strategy:"I earn interest on my treasuries, while the holder of physical "loses" the interest he could have earned."The chart I have offered is only one specific example of a great many similar charts for a great many national currencies...the euro included.From the chart, and those similar, would you be willing to admit that there are gold owners in the world that are not what we might exactly call "overly concerned" about their foregone interest earnings on retained currency. Take euroland. The "performance" of this "sterile asset" known as gold has far outpaced the sub-five percent rates you would earn on interest bearing notes. (But for that matter, you could certainly entrust your sterile krugerrands from the safe deposit box into the hands of a bullion bank through which you could have hope of earning real metal as the interest you surely desire, and also hope to ever claim your deposit again when you want it.) <smile> (Not to be taken as a recommendation.)Is it possible that you are, like those many others before you, currently embarking upon a prediction of the future that may not play out as expected? That is to say, is it possible that you are attempting to "see" into the future through eyes that are influenced by a distinctly dollar-based and dangerously temporal perspective?What is to say the U.S. currency won't also fall into a pattern similar to these many others? What isn't to say that even as you are earning interest on your treasuries, you are also taking a net capital loss at the same time through falling bond prices? And meanwhile, climbing price inflation on real goods would erode the value of the dollar interest you eventually receive if you hold to maturity.What I have tried to do--and it might be fair to say that Trail Guide fits this category also--is not to attempt "predicting the future" per se, but rather offering commentary and analysis to explain the market forces which have largely been responsible for our past and present conditions. Then, by monitoring the steady or evolutionary nature of these forces, we may all draw natural and reasonable conclusions for the most likely course of the road ahead.In the simplest example, we see the price-setting futures markets to continue to be sold ever lower, even in the face of fundamental reasons for real gold to be priced ever higher. To fail to recognize the nature of the beast for what it is is to blindly (and futilely) expect a future change in behaviour that the qualified and undeniable past could not bring. Do you find it that inconceivable that under present conditions, the gold futures contracts could continue to be sold lower until that specific marketplace folds from discredit? So you see, we must all remain vigilent...not only do economic conditions change, but marketplace rules and regulations can change (or terminate) also.Good luck in your efforts, and don't please don't let this "counterpoint" dampen your enthusiasm toward sharing your additional thoughts and perceptions. Elwood (5/23/2000; 17:42:42MT - usagold.com msg#: 31104) BTD (5/23/2000; 16:01:57MT - usagold.com msg#: 31098) http://www.mises.org BTD, I think I was the one who bought your Krugerrands. Thanks. If I might suggest something...you may have been reading the wrong people. Try some von Mises at the above link. Elwood Al Fulchino (5/23/2000; 17:03:11MT - usagold.com msg#: 31103) BTD (5/23/2000; 16:01:57MT - usagold.com msg#: 31098 BTD, Often I wonder when I write if any of it is worthwhile to read. So in turn I write to thank you for sharing your post with me and others. Your thoughts and actions are interesting and thought provoking. Thanks again for sharing. RossL (5/23/2000; 16:38:48MT - usagold.com msg#: 31102) BTD - "I just sold my Krugerrands" BTD said: (I have my cake and I'm eating it too)You don't have the cake! goldhunter (5/23/2000; 16:31:11MT - usagold.com msg#: 31101) BTD, Good Going... http://www.usagold.com BTD, you have done a great job...you have come up with a trading plan, and you have put it into force...Your plan is a very good one, with limited risk of dollar-loss...if futures stay the same, you simply roll forward, and you earn a T-bill return while you are waiting...I see this as safe, wise, and PROFITABLE when the "gap-up" arrives(eventually)...I offer that your return on invested capital will be exactly the same as your 300 coins seed money in any rally...and you can add/subtract easily...GOOD JOB! Developing and putting your plan into action is more than most will do for themselves.Good luck, and get ready...The evidence seems to be getting more bullish.I wish more of my clients traded like you are trading... beesting (5/23/2000; 16:11:57MT - usagold.com msg#: 31100) Correct Spelling "opposes" http://www.house.gov/paul/press/press2000/pr052300.htm Sheeeessse....Sorry. beesting (5/23/2000; 16:06:45MT - usagold.com msg#: 31099) Congressman Paul apposes NEW China trade bill. http://www.house.gov/paul/press2000/pr052300.htm FOR RELEASE:May 23, 2000 Paul Sees Last Minute Changes to China Bill, Announces Opposition New Government Commission/Managed Trade Principles Included in Rule Washington, D.C. - Reacting to a proposed House rule allowing the so-called Bereuterlanguage, and other changes, to the bill on normal trade relations with China, Congressman Ron Paultoday announced he would vote against the legislation if the substance of the rule's changes wereincluded in a vote on final passage. Paul said, "I have consistently voted year-in and year-out for normal trade relations withChina, but now we have a situation where the House leadership has decided to cave-in to the liberalDemocrat demand for more and more government. I cannot support that." For months, Paul has said he would support permanent normal trade relations with China.Last week, a version of the bill (HR 4444) was put forward by Phil Crane, a Congressman who,like Paul, strongly advocates free markets and free trade. However, when the President was unableto convince his own party to support him, he and the House leadership cut a back room deal aimedat securing the votes of liberal Democrats. "This Congress has been repeatedly criticized by the very people who elected us," said Paul."Time and time again, I have heard it said that we are not doing the job we have been elected to do.Time and time again, we have given in to President Clinton and the liberal minority in the House.Enough is enough. These last minute changes have created a PNTR bill that introduces a newgovernment commission and put our taxpayers on the line for millions in so-called 'technical aid' toCommunist China. Apparently, the administration believed that left-wing members of Congresscould be convinced to vote for freer trade and freer markets just so long as we will give moreforeign aid to our Communist Chinese adversaries." Paul concluded by stating that managed trade features of the legislation now being discussedalso disappointed him. Paul said, "It is tiresome to continue hearing about free trade from the very people who aretrying to cut off free trade. For example, this last minute language included so-called 'anti-surgeprotections'. How in the world can any serious person suggest that is free trade? The changes madeto appease the liberals made this bill the very opposite of what it claimed to be trying to accomplish. "As so often happens with large bills in Washington, PNTR became a vehicle for biggovernment, managed trade, foreign aid giveaways and the creation of new governmentcommissions. I could have supported a clean bill that simply meant lower tariffs. But this bill, and themeans by which these changes were brought about, cried out for rejection of the legislation and theentire process." Press Releases Complete Archive Project FREEDOM Home Page BTD (5/23/2000; 16:01:57MT - usagold.com msg#: 31098) I just sold my Krugerrands and bought futures contracts Two weeks ago I sold 300 Krugerrands and transferred the funds into my commodity trading account and bought 3 gold futures contracts. This is my preferred way to hold gold. In my trading account, I invested the margin funds in 6-month treasuries (earning 6.05% interest), and used these treasuries as margin to buy 3 gold contracts (unleveraged). In this way, I earn interest on my money, yet still retain full exposure to movement in the gold price (I have my cake and I'm eating it too). Barring a collapse of the Comex or the world as we know it, this is a very low risk investment. In fact, in some ways, one can consider this as lower risk than holding physical gold: futures contracts require a low commission (with the right broker) while physical purchases and sales cost a high premium charged by the dealer; I earn interest on my treasuries, while the holder of physical "loses" the interest he could have earned. If I wish, I can add more long gold positions if I'm willing to use leverage. If the price of gold makes a nice dip, I'll probably double my position and still only be leveraged 50%, which is still a rather low-risk trade considering the current low price of gold. Yet, even though I'm fully invested in both treasuries and gold, I can still trade other commodities with the bulk of the funds in the account. I'm also currently long 10 July silver contracts hedged with 10 July silver 500 puts.The reason I'm telling you all this is to provide an alternative perspective to the bulk of the posters on this forum. I enjoy this forum and all the theories posited here, but I thought a variant opinion might be useful. I anticipate I'll be condemned as a "trader" (Farfel doesn't like traders), and many will probably assure me that the world is coming to an end (per FOA/Trail Guide) and that paper gold will be driven into the ground while physical gold skyrockets. Well, I AM a trader, and I don't believe FOA/Trail Guide can foretell the future any more that the $5.00/minute psychics on late night TV. Trail Guide is a very articulate and thoughtful commentator, but his ideas are just theories like everyone else's.The reason I'm making these comments about Trail Guide is not to criticize him, but to point out the danger of assuming that anyone can predict the future. Here are some of my experiences:1. I grew up in a church that predicted the world was going to end within "the next 5 or 10 years". It didn't happen. I still believe it will, some day, but the church leaders could not predict when. I made a lot of bad decisions over the years based on their predictions and I'm paying the penalties for those decisions now.2. I thought Nick Guarino, who publishes The Wall Street Underground newsletter, was right when he said the stock market was extremely overvalued and due for an imminent collapse. His logic was compelling and he warned us to sell our stocks immediately. I did so and got out of the market in December of 1994, just as the stock market began the most incredible bull market ever. Oh, and where did this sage suggest putting the money? Into German marks, because the dollar was going to keep falling for the foreseeable future. Well, apparently the future was not so foreseeable, because the mark shortly began falling and I lost 25% of my money.3. Gary North, Jim Lore, et al, presented overwhelming evidence that the year 2000 computer bug was going to be a huge problem. They had numbers, facts, statistics and they "knew" what the future held. I had begun to wise up by this time, however, so I did not sell everything I own and move to backwoods Arkansas like North advised. I decided to take precautions, but in such a way that if nothing happened, I would not have burned my bridges. So, though I now have 200 pounds of beans and grains, these are things I eat regularly anyway. I just bought some extra groceries in advance (from a co-op for a very reasonable price – under $200, all organic). I feel sorry for the people that have $3000 worth of freeze-dried food that will constipate them if they try to eat it for more than 2 days in a row. But the year 2000 computer fear did cost me dearly in my investments. I was long 10 gold contracts with an average price of $255. I got 5 at $257 and 5 at $253 (the very bottom). I was perfectly positioned and rode the price spike all the way up last September. But I believed the future-tellers when they told me that the nation's economy and infrastructure, including the currency, were going to collapse come year 2000. Gold was all that would retain its value, they assured me. The sky was the limit, the move in September was just the beginning, I reasoned. So instead of selling at the top and taking my profits in cash, I held on and rode it all the way back down. Actually, I added to my position at the top and ended up taking a substantial loss on the whole thing. Because I believed these men could predict the future.4. On my bookshelf I have a book entitled "Silver Profits in the Eighties" by Jerome F. Smith, copyright 1982. This author had previously accurately predicted the huge jump in silver prices of 1979-1980. In this book he predicted, "There will be another, more fervent, scramble beginning in 1982 that will carry the silver price to the $100 to $200 range by 1985." He presented chapter after chapter full of demand and supply statistics that presented a seemingly inarguable case to support his prediction. The only problem is that he was completely wrong. There were no "silver profits in the eighties". Silver did pop up to the mid-teens briefly in 1983, but then it plunged to the $5.00 range and stayed there for the succeeding 17 years. A far cry from the "$100 to $200 range by 1985".5. In December of 1999, Harry Schultz, "the highest-paid investment advisor in the world", predicted crude oil would go to $50/barrel by early 2000 due to the Y2K bug. Because I believed the future-tellers about the coming Y2K computer crisis, I also decided to believe that Mr. Schultz could foretell the future. After all, he was "the highest-paid investment advisor in the world". I accordingly bought $2000 worth of out-of-the-money crude call options, which proceeded to expire worthless when it turned out that Mr. Schultz could not foresee the future better that anyone else.I bear full responsibility for all these decisions. There was a lot of stupidity on my part in these events, so you don't really need to point that out. I acknowledge it. However, let me reiterate the lesson I've learned: NO ON CAN PREDICT THE FUTURE! There is a chance that Trail Guide's scenario will come true, but he does not know the future any more than I know whether a coin I flip will come up heads or tails. The tenor of this forum often seems to assume that his scenario is pre-determined fact. My hard experience has taught me that no event is determined until it happens, and no matter how learned and documented a hypothesis is, it can still prove wrong as easily as it can prove right. This is why economics is an art and not a science – and why economists can look at the same data and come up with opposite conclusions.The other lesson I want to share is that if you bet on a collapse of the foundational paradigm, you are almost certain to lose. Paradigms do change, but so infrequently that you may as well play the lottery as bet on it. I don't consider gold coming back into favor as the collapse of a foundational paradigm. I would consider the following to be the collapse of foundational paradigms:1. America collapsing into social chaos and martial law being imposed.2. A banking collapse where all the banks close and depositors lose all their money.3. The US federal government defaulting on its debt.4. All the computers in the world crashing due to a computer date problem.5. The return of Jesus Christ.6. A 1929-1932-style stock market crash.7. A 1930s-style great depression.8. President Clinton canceling the elections and staying in office after his term expires.9. Silver going to $100 to $200 per ounce.10. Gold futures contracts being sold into the ground while the price of physical skyrockets.11. The US currency completely collapsing like the German mark did in the 1920s.Any of these events could happen, and many probably will at some point, but I propose that trying to bet on the timing is a losing proposition. All the numbers on a roulette wheel eventually come up, but the odds are 37 to 1 against you. Now to placate the physical fanatics among us, let me close by saying that in my safe deposit box I have retained another 400+ Krugerrands that have not bowed their knees to Baal. Strad Master (5/23/2000; 15:02:40MT - usagold.com msg#: 31097) Farfel Small-time Tech players I read with GREAT interest your predictions. As a corollary to what you've been writing, I want to add that I was listening to Bob Brinker's "Money Talk" show whilst driving around this weekend and heard several glum-sounding small investors call in to ask WHEN will the tech sector turn around? There are a lot of people out there who invested in some worthless tech stock without doing any due dilligence whatsoever, instead doing so just on the recommendation of their bartender, pool cleaner, or gardener. (Shades of 1929!) Now, they are grimly clinging to the hope that these worthless techs will bounce back, magically enabling them to exit with a minimum of financial damage. To his credit, the guest host (I forget his name) did not give them much in the way of solace, preferring to imply that it is going to be a long, hard haul in the short run for anyone invested in ANY sector of the stock market right now. It was really pathetic to hear the caller's desparation. It is far worse when one stops to consider the huge margins that now exist coupled with the staggering debt people have incurred just to be in the stock markets at all. If your scenario comes to pass, it won't be pretty when the chickens come home to roost. Today's selloff was just another nail in the coffin. I'm glad I have a little gold and no stocks. Fond regards to you and Mrs. Farfel from all the Strads. Farfel (5/23/2000; 14:21:06MT - usagold.com msg#: 31096) Watching the tech funds flows Nasdaq still performing as I predicted, the bottom is still nowhere in sight.However, I would not be surprised to see a strong jump tomorrow that might even sustain through Friday, after which another collapse is in the works. If we do not get a jump tomorrow, these financial markets are in grave danger of a very early panic sell.Here are the key dates where we might see great Nasdaq devastation caused by new expirations of lockups with the concomittant sale of millions of dollars in stock: May 29June 5-7The Nasdaq will settle well below 3000, I believe its short term bottom is somewhere between 2400-2500, unless things get completely out of hand, in which case I will not say where I think it can go.Meanwhile gold is poised to rocket as more resources are directed to stemming the mounting panic in the Nasdaq, that will ultimately contaminate the Dow and the bond markets, culminating in a huge dump in the US Dollar, which will trigger the gold price explosion. Essentially the Fisher Team assigned to protect the markets cannot act effectively in several markets at one time.With respect to gold stocks, I think the coming gold rocket will save several companies already written off by long suffering investors, in much the same way that certain Nasdaq stocks long believed to be invincible will be in bankruptcy court soon.ThanksF* Beowulf (5/23/2000; 14:06:20MT - usagold.com msg#: 31095) TheStranger In regards to your inflation post. How can inflation be higher when the price of Gold is falling?Heh, Heh, I think we know that answer. :) Al Fulchino (5/23/2000; 14:05:34MT - usagold.com msg#: 31094) (No Subject) Leland (5/23/2000; 11:53:41MT - usagold.com msg#: 31085)@Al Fulchino"A device <very reasonably priced>", was very interesting.Could I have the maker's name, or the trade name of thedevice? I'd like to do some research. Thanks!Leland, Just bought two for myself, and saw it arrive today, email me at fulchinos@prodigy.net and I will let you know if it works dependably, and worth the purchase. Also this is not an ad for a product that could in any way compete with USA GOLD <smile> Cavan Man (5/23/2000; 14:00:41MT - usagold.com msg#: 31093) Cavan Man 31072 Please accept my apology for the "Berraism". Should read:NATURAL LAWS ARE IMMUTABLE.Yogi's from these parts. It must be something in the Budweiser. CM Cavan Man (5/23/2000; 13:57:51MT - usagold.com msg#: 31092) Holtzman 31087 and Trail Guide..... Why should China accept USD for their oil? Why not accept the Euro.TG: Is this potentially the epiphany of your initial "basket settlement" concept? Thanks...CM TownCrier (5/23/2000; 13:32:33MT - usagold.com msg#: 31091) Not exactly a freefall, but that wide-brimmed hat ain't slowing it down much... http://finance.yahoo.com/q?s=^IXIC&d=1y With two-month losses taking approximately 37% away from the Nasdaq Composite highs seen in March, how many still believe the bull market is intact, or even that this is "just a correction?" Netking (5/23/2000; 13:17:23MT - usagold.com msg#: 31090) @Holtzman/Town Crier (As an 'Golden aside') Re your:"my thanks for the tip-off to the new Lord of the Rings movies in production" H/TC - I've seen sneaks of this & the backdrop/landscape is just as awesome on film as it is in real life(but then I would say that!)...will be worth the wait for the big screen, Peter Jackson's bringing it together well.Regards Netking Journeyman (5/23/2000; 13:14:49MT - usagold.com msg#: 31089) Seidman on inflation @Stranger, ALL -Caller: ~"What's wrong with an economy growing at 10%. So what if there's a little inflation?" ~"A little bit of inflation is no longer possible. We know from experience that once it starts, it's very difficult to stop. It goes like the wild-fires in New Mexico. If inflation gets out of control, that's the end." -CNBC Chief Commentator Bill Seidman, 18-May-00, 11:25:54 AMSeidman is the guy who administered the "Resolution Trust Corporation," which more or less cleaned up the savings-and-loan debacle.Regards, J. Netking (5/23/2000; 13:10:19MT - usagold.com msg#: 31088) @Galearis - 31081 Mr Galearis - Thanks for your reply - much appreciated Sir.regardsNetking Holtzman (5/23/2000; 12:28:58MT - usagold.com msg#: 31087) EU/China concord involves OIL http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3APOIPF8C&live=true&tagid=ZZZC19QUA0C&subheading=asia%20pacific Holtzman here,I tried transmitting this last Friday but somehow it failed to arrive at your end of things.--------------EU/China concord involves OIL--------------Have a glance at this ridiculously complex but eye-opening URL [above].And I quote... "The main concession won by the EU was a promise to end its monopolistic system for oil imports. An EU official said that non-state Chinese traders will be eligible to buy up to 20 per cent of China's oil imports after Beijing joins the World Trade Organisation (WTO). The percentage is set to change with time."This would seem to confirm some of what FOA/Trail Guide has been anticipating.If the goal is to transform China from a totalitarian danger into a safe neighbour, it first necessitates our acting as safe neighbours ourselves. The only thing Americans have to fear right now is that their elected leaders may unwisely choose not to extend the hand of commerce.To-day's world of 200+ independent nations is in many ways akin to to-day's market of many-yet-tiny gold mining companies. Consolidation, both in nations and in mining concerns, seems quite likely going forward. As I've said previously, I expect the world will gradually come to comprise about half a dozen continentally-focused superstates plus "Other." That world can either be a place where the superstates distrust one another, or it can be a place where the superstates themselves are loosely associated by friendly trade across the oceans and mountain ranges. I prefer the latter. And so, evidently, do the current leaders of both the EU and China.--------------Americans in Europe--------------To Perplexed regarding (5/9/2000; 8:59:23MT - usagold.com msg#: 30173), please be assured, I do appreciate American selflessness (both U.S. and Canadian) in rescuing Europe from three nightmares in the twentieth century. Rome left harsh monuments warning of its military might wherever its armies had alighted. Americans left a very different sort of monument all across Europe: fields of white headstones as far as the eye can see, evidence not of military menace but rather of individual fathers and sons who were willing to lose their lives in order to put the world to rights. One cannot help but be moved by such sacrifices.Even today, we react differently to the sight of uniformed Americans as opposed to uniformed Europeans. Perhaps it's the difference between the constabulary and the fire brigade. An approaching constable may well be intent on assisting you, but then again he may be intent on making your life unpleasant. By contrast, an approaching fire-fighter has no intent apart from saving your life.Your U.S. Army uniform gave you the same grace that an imperial passport (later a commonwealth passport) gave us. One could travel round the world from one British possession to another, and at each port of call simply display the passport and be properly welcomed. Were one to cross into non-British possessions, of course, one would quickly encounter the sort of distrustful presumption of guilt you were often witness to. No doubt your experiences would have been different had you travelled within the Russian sphere of influence whilst wearing your same uniform.--------------Marks to Market--------------TownCrier, I'm impressed by the presentation regarding the German 20 Marks, and I'm pleased with the way you've incorporated my words. Oh, and by the way, my thanks for the tip-off to the new Lord of the Rings movies in production. The only part that bothers me is the pointed ears on Legolas. He's an elf, not a Vulcan. Ah, well. It's more than compensated for by the vision of 15,000+ soldiers of the New Zealand army serving as extras during the Battle on the Pelennor Fields. My Stars, I'd love to be onsite the day they film that! Haradrim, Rohirrim, Orcs, oh my!Yours,I.V. Holtzman Voyager (5/23/2000; 12:14:19MT - usagold.com msg#: 31086) (No Subject) --------------------------------------------------------------------------------SIGHTINGS--------------------------------------------------------------------------------It's Amazing What One Has To Believe...To Believe In Gun ControlBy Michael Z. Williamson <daggers@indy.net>c. 1999, 2000 That the more helpless you are, the safer you are from criminals. That you should give a mugger your wallet, because he doesn't really want to shoot you and he'll let you go, but that you should give him your wallet, because he'll shoot you if you don't. That Washington DC's low murder rate of 69 per 100,000 is due to gun control, and Indianapolis' high murder rate of 9 per 100,000 is attributable to the lack of gun control. That "NYPD Blue" and "Miami Vice" are documentaries. That an intruder will be incapacitated by tear gas or oven spray, but if shot with a .44 Magnum will get angry and kill you. That firearms in the hands of private citizens are the gravest threat to world peace, and China, Pakistan and Korea can be trusted with nuclear weapons. That Charlton Heston as president of the NRA is a shill who should be ignored, but Michael Douglas as a representative of Handgun Control, Inc. is an ambassador for peace who is entitled to an audience at the UN arms control summit. That ordinary people, in the presence of guns, turn into slaughtering butchers, and revert to normal when the weapon is removed. That the New England Journal of Medicine is filled with expert advice about guns, just like Guns and Ammo has some excellent treatises on heart surgery. That one should consult an automotive engineer for safer seat belts, a civil engineer for a better bridge, a surgeon for spinal paralysis, a computer programmer for Y2K problems, and Sarah Brady for firearms expertise. That the "right of the people peaceably to assemble," the "right of the people to be secure in their homes," "enumerations herein of certain rights shall not be construed to disparage others retained by the people," "The powers not delegated herein are reserved to the states respectively, and to the people," refer to individuals, but "the right of the people to keep and bear arms" refers to the states. That the 2nd Amendment, ratified in 1787, allows the states to have a National Guard, created by act of Congress in 1917. That the National Guard, paid by the federal government, occupying property leased to the federal government, using weapons owned by the federal government, punishing trespassers under federal law, is a state agency. That private citizens can't have handguns, because they serve no militia purpose, even though the military has hundreds of thousands of them, and private citizens can't have assault rifles, because they are military weapons. That it is reasonable for California to have a minimum 2 year sentence for possessing but not using an assault rifle, and reasonable for California to have a 6 month minimum sentence for raping a female police officer. That it is reasonable to jail people for carrying but not using guns, but outrageous to jail people for possessing marijuana. That minimum sentences violate civil rights, unless it's for possessing a gun. That door-to-door searches for drugs are a gross violation of civil rights and a sign of fascism, but door-to-door searches for guns are a reasonable solution to the "gun problem." That the first amendment absolutely allows child pornography and threats to kill cops, but doesn't apply to manuals on gun repair. That a woman in a microskirt, perfume, and a Wonderbra, without underwear, is a helpless victim, but someone getting paid $6 an hour to deliver the cash from a fast food place to the bank at the same time every night is, "asking for it." And you won't allow either of them to carry a gun. That Illinois' law that allows any government official from Governor to dogcatcher to carry a gun is reasonable, and the law that prohibits any private citizen, even one with 50 death threats on file and a million dollar jewelry business, is reasonable. And it isn't a sign of police statism. That free speech entitles one to own newspapers, transmitters, computers, and typewriters, but self defense only justifies bare hands. That with the above, a 90 lb woman attacked by a 300 lb rapist and his 300 lb buddy, has the "right" to kill them in self defense, provided she uses her bare hands. That gun safety courses in school only encourage kids to commit violence, but sex education in school doesn't encourage kids to have sex. That the ready availability of guns today, with only a few government forms, waiting periods, checks, infringements, ID, and fingerprinting, is responsible for all the school shootings, compared to the lack of school shootings in the 1950's and 1960's, which was caused by the awkward availability of guns at any hardware store, gas station, and by mail order. That we must get rid of guns because a deranged lunatic may go on a shooting spree at any time, and anyone who owns a gun out of fear of such a lunatic is paranoid. That there is too much explicit violence featuring guns on TV, and that cities can sue gun manufacturers because people aren't aware of the dangers involved with guns. That the gun lobby's attempt to run a "don't touch" campaign about kids handling guns is propaganda, and the anti-gun lobby's attempt to run a "don't touch" campaign is responsible social activity. That the crime rate in America is decreasing because of gun control, and the increase in crime requires more gun control. That 100 years after its founding, the NRA got into the politics of guns from purely selfish motives, and 100 years after the Emancipation Proclamation, the black civil rights movement was founded from purely noble motives. That statistics showing high murder rates justify gun control, and statistics that show increasing murder rates after gun control are "just statistics." That we don't need guns against an oppressive government, because the Constitution has internal safeguards, and we should ban and seize all guns, therefore violating the 2nd, 4th, and 5th Amendments of that Constitution, thereby becoming an oppressive government. That guns are an ineffective means of self defense for rational adults, but in the hands of an ignorant criminal become a threat to the fabric of society. That guns are so complex to use that special training is necessary to use them properly, and so simple to use that they make murder easy. That guns cause crime, which is why there are so many mass slayings at gun shows. That guns aren't necessary to national defense, which is why the army only has 3 million of them. That banning guns works, which is why New York, DC, and Chicago cops need guns. That the Constitution protects us, so we don't need guns, and can confiscate them, thereby violating the 5th amendment of that constitution. That women are just as intelligent and capable as men, yet a woman with a gun is "an accident waiting to happen." That women are just as intelligent and capable as men, and gunmakers' advertisements aimed at women are "preying on their fears." That a handgun, with up to 4 controls, is far too complex for the typical adult to learn to use, as opposed to an automobile that only has 20. That a majority of the population supports gun control, just like a majority of the population used to support owning slaves. That one should ignore as idiots politicians who confuse Wicca with Satanism and exaggerate the gay community as a threat to society, but listen sagely to politicians who can refer to a self- loading small arm as a "weapon of mass destruction" and an "assault weapon." That Massachusetts is safer with bans on guns, which is why Teddy Kennedy has machinegun toting guards. That most people can't be trusted, so we should have laws against guns, which most people will abide by, because they can be trusted. That a woman raped and strangled with her panties is morally superior to a woman with a smoking gun and a dead rapist at her feet. That guns should be banned because of the danger involved, and live reporting from the battlefield, which can keep the enemy informed of troop deployments, getting thousands of troops killed and perhaps losing a war, is a protected act that CANNOT be compromised on. That the right of online child pornographers to exist cannot be questioned because it is a constitutionally protected extension of the Bill of Rights, and the claim that handguns are for self defense is merely an excuse, and not really protected by the Bill of Rights. That the ACLU is good because it uncompromisingly defends certain parts of the Constitution, and the NRA is bad, because it defends other parts of the Constitution. That a house with a gun is three times as likely to have a murder, just like a house with insulin is three times as likely to have a diabetic. That police operate in groups with backup, which is why they need larger capacity magazines than civilians, who must face criminals alone, and therefore need less ammunition. That we should ban "Saturday Night Specials" and other inexpensive guns because it's not fair that poor people have access to guns too. That guns have no legitimate use, but alcohol does, which is why we issue cops beer instead of guns. That police and soldiers are the dregs of society who were unfit to get any real job, which perfectly qualifies them with the high moral standards and keen intellects to handle these complicated tools and be our guardians. _____ Copyright 1999, 2000 by Michael Z. Williamson. Permission is granted to copy in part or in total for non-profit purposes, provided due credit is given. SIGHTINGS HOMEPAGEhttp://www.sightings.comThis Site Served by TheHostPros Leland (5/23/2000; 11:53:41MT - usagold.com msg#: 31085) @Al Fulchino "A device <very reasonably priced>", was very interesting.Could I have the maker's name, or the trade name of thedevice? I'd like to do some research. Thanks! beesting (5/23/2000; 11:35:23MT - usagold.com msg#: 31084) Comments on 2 Great Posts! First one:TownCrier # 31060 5/23/2000 01:58 MT(KICKING THE TIRES)Sir, Great educational post on the inner workings of the PAPER markets.To show my agreement all I can say is:RIGHT ON BROTHER!!! Second one:SteveH # 31067 5/23/2000 05:34MTExcerpts:<Payments must be made in dollars to BOE account at the Federal Reserve Bank of New York><H M Treasury announced that the BOE on behalf of H M Treasury is to sell 150 tonnes of Gold from the Exchange Equalization Account>>Am I jumping to conclusions,or is the BOE Gold being sold actually held at an account in New York U.S.A.???And if so how would these Gold sales show up on U.S. export balance sheets? Elwood are you out there?It would also be nice if we could ever find out who todays BOE Gold buyers are.....beesting. Al Fulchino (5/23/2000; 11:34:09MT - usagold.com msg#: 31083) Counterfeit $$$ Leland (5/23/2000; 10:29:05MT - usagold.com msg#: 31078)Some new Headaches for ATM's, Bill ChangersDid you know that their is metal in some of the ink in our money? aside from the usual ways to check for funny money, ie the threads, watermark, the text band running through the bill and using the marker to check the bills, a device <very reasonably priced> is available that when you place the bill over the unit, will light up if the metal ink is present in the appropriate places. Just thought someone might like to know. PH in LA (5/23/2000; 11:18:53MT - usagold.com msg#: 31082) HAS "IT" STOPPED? FOA (9/30/99; 7:05:31MDT - Msg ID:14963)CommentWhy did it stop?It didn't! Part of the process of buying "real gold" is in the waiting for allocation. Be it actual delivery of metal, receipt of certificates for "real vault deposit" or just clearing out the cash settlement of trades gone bad. This all takes time, especially when such a large segment of the market has just been "cleaned out" financially. On the surface, new traders continue to put up their $2,000 or so of margin money and trade the Comex for some paper cash. Underneath it all, a mad scramble is going on to find gold to meet all the failed commitments. For many of the major trade houses (and BBs), they now must use their own capital to carry the dead positions of others. Most of them will (or already have) covered their financial (read that cash) positions in the paper markets. However, they must still process the real nature of the trade, "find new real gold to replace what was lent". Like this: "We sold the gold and lent the money to a fund to trade with. If that fund cannot put up more capital to back the loan (because the price of gold has gone so far against him), and pay the higher rental rate (now in effect) when his 1 to 6 month loan comes due; We will attach his assets and sell them off to buy the gold back ourselves."This whole cat and mouse game can take a while as everyone sweats the outcome. Right now, many of those funds are so far under water on their "financial trades" (example: short Yen at 125), that a sell off of their "book" leaves little. SO, the bank has to borrow gold against it's own capital and pay the new "lease rate" as it "fully allocates" (returns) the gold position to the lender (mostly private entities). The gold owner (and lender) cannot and will not just sit there and watch the collateral (the trading book of the hedge fund) for the loan go up in smoke. Especially if the lease rate is skyrocketing from an "obvious major world shortage of gold"! Even if the bank is successful in borrowing gold, they still must one day buy in the open market to refund the second gold loan. They can go round and round, borrowing gold to replace the "last" deal. All the while driving the lending rate higher and higher as more and more lenders back out at any lease rate offered......All of this takes time as it slowly unwinds (fails). Without major official gold supplies, this gold market is going to grind to a complete halt. The day traders (that currently run in and out) will one day find the entire system "force major" and their margins frozen. Of course, they will be settled in cash, but only after the "street gold" price runs into the many thousands. FOA/Trail Guide:Please consider your post above, written shortly after the Washington Agreement was announced.Can we agree that now "it has stopped"? That the POG is once again being effectively "managed" for the "good of all"? (Especially the bullion banks with their overhanging short positions?) Do Central Banks once more "stand ready to lease gold into the market to forestall any price rise" as Greenspan so famously stated way back when?Should we conclude that the provision that we thought would severely restrict Central Bank leasing is either: (a) not having the desired effect, (b) being undermined by German Central Bank derivitive activity as alledged by Reg Howe? Or is there some other explanation?What exactly was the Washington Agreement statement on leasing that caused so much excitement? Was it not something about an agreement not to "increase" leasing activity? Which might just as well been stated to the effect that "current levels of leasing will not be curtailed"? If by that it is meant that "current levels of leasing necessary to "manage" the POG downward will be allowed just as long as the rate of decline is not increased", we might not realistically expect to see much change in the current status quo until central banks stop "standing ready to lease gold into the market to forestall any price rise".So just where are we "on the trail"? Has "it" stopped? Are we lost in a semantic wilderness? Is Reg Howe correct, that the Germans really are pursueing a very different policy than what we thought was meant in the Washington Agreement? Galearis (5/23/2000; 11:04:21MT - usagold.com msg#: 31081) @Netking re silver You said:Based on current PHYSICAL consumption (lets foreget the other 98% right!) how long would it take for current stock piles to be used up? ***************A difficult question to answer given several unknowns and purosefully misleading data from ostensibly pro-pms sites. Another factor is the status of Buffett's silver purchase - some of which at least seems to have been transported back to COMEX as registered stocks. Ted Butler seems to think that "they" are controlling the price with physical leasing from the Buffett hoard. (But why would he do this at 600 year low POS for a measly 3-4% physical interest when a bull market would net him many multiples of this? In other words, which side is he on now?)At present a loose number for above ground stockpiles is 150 million oz. Of this (perhaps?) 24 million of it consists of unregistered bullion held at COMEX. One problem with this latter number is that an unknown percentage of this is likely impure silver (sterling). The numbers are also subject to change as COMEX consistantly moves in supplies in order to give the appearance of ample silver on hand - COMEX figures are keenly scruitinized. Where they get this from is always a mystery. (Buffett?)So to answer your question exactly is very difficult. But present consumption of silver runs at 12 to 15 million ounces per month. Divide into the total above ground supplies and one would have a rough estimate for a TOCOM move at COMEX and the maximum probable time for the silver market to explode. Maybe.I hope this helps a little. JCTex (5/23/2000; 10:54:02MT - usagold.com msg#: 31080) elevator guy These wives are merciless. Mine asks the same kind of questions. Embarrasing, isn't it. Of course, they [manipulators] are good at it; they do not have to obey the same laws that we do. Bill Murphy and GATA seem to be only ones out there with the balls to step up to the plate and take a whack at it. TheStranger (5/23/2000; 10:49:29MT - usagold.com msg#: 31079) Inflation Update Abridged from today's WSJ:May 23, 2000 Economists Boost 2000 Inflation Estimate ________________________________ New Survey Projects 3.1% As Doubts Rise on Fed Keeping Prices Down _________________ By YOCHI J. DREAZEN Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- Growing numbers of economists are boostinginflation estimates for the year, suggesting widespread skepticismabout the success of the Federal Reserve's campaign to restrain priceincreases. Analysts surveyed by the Federal Reserve Bank of Philadelphia now expect inflation of 3.1% this year and 2.7% in 2001, as measured by the consumer price index. In February, analysts expected inflation of just 2.5% for the remainder of this year and 2.6% in 2001. The new numbers, contained in a quarterly report released Monday, are in line with an array of inflation forecasts that have been revised steadily upward in recent months. .... the increasingly pessimistic forecasts underscorethe fears of many economists that factors that have long helped to restraininflation have all but disappeared. "It's becoming much riskier to bet thatinflation will abate significantly in the months to come," said Diane Swonk,president of the association. "The surer bet is that inflation willstabilize or continue to accelerate." But in recent months, import prices have risen as theglobal economy continues to recover, and many companies report that wageand benefit expenses are increasing more rapidly as they struggle torecruit and retain workers. Also, many managed-care companies have raisedpremiums, hurting companies' bottom lines and increasing pressureto raise prices. The inflation forecasts highlight doubts about whetherthe Fed's campaign to cool the pace of economic growth and keep a lid oninflation is working. The central bank has raised interest rates six timessince June, including an aggressive half-percentage point move last week. Fedofficials hint that further increases lie ahead. "We're in a period where inflation risks are very real,"Fed Vice Chairman Roger Ferguson said Monday after an appearance before theIndependent Community Banks of America. "It's important for us, as wecontinue to focus on long-term price stability, to do what we'resupposed to do -- to try to keep those risks from becoming reality." While the interest-rate sensitive housing sector hasshown some indications of beginning to slow in the face of the Fed moves, thereare few other signs that the economy's torrid pace is cooling. The Philly Fedsurvey, in fact, found that many analysts boosted estimates ofinflation-adjusted growth in gross domestic product for the year to 4.9% this monthfrom 3.8% in February.TheStranger's note: We goldbugs sometimes expect great turmoil in the economy and the markets. But economists tend to go the other way. Nobody wants to be out on a limb in making predictions for fear of looking like a fool if they are wrong. Furthermore, very few seem to be catching on yet to the mechanics which underlie this return to long dormant inflation. For these reasons, forecasts will require more upward revisions as the year goes on. 5% or higher is already in the bag.All of this implies, of course, that the bond market has not bottomed, rates have not peaked, high PE stocks have further declines ahead, mortgage rates are headed higher, etc. As for gold, take a look at the chart of Newmont Mining. Newmont is known by institutional investors to be the one unhedged (or slightly hedged) miner with a float large enough to accommodate big traders. This stock was up 40% last year and is up about 5% already this year. This comes amidst a stock bear market and a decline in bullion prices.No, this is not an ad for Newmont Mining. What it is is a reminder that there is evolving a nascent ground swell of interest in gold which is already many months old. Before this is over, I believe it will spread to the metal itself as well as to the rest of the gold mining industry.Aside to Jon - I saw your Saturday morning post, which mentioned me in a complimentary way. This is not your first vote of confidence in my commentaries. I thank you for that. Leland (5/23/2000; 10:29:05MT - usagold.com msg#: 31078) Some new Headaches for ATM's, Bill Changers.... New-look $5 and $10 bills ready for release Tuesday, May 23, 2000 By DAVID VOREACOS Staff Writer Like Andrew Jackson, Ulysses S. Grant, and Benjamin Franklin before them, Abraham Lincoln and Alexander Hamilton are getting face lifts. As part of the federal government's battle against Computer Age counterfeiters, the Federal Reserve will begin shipping redesigned currency Wednesday with larger portraits of Lincoln on the $5 bills and Hamilton on the $10 bills. The bigger portraits and other security features embedded in the bills represent the final retooling of the $535 billion in U.S. currency, and are similar to earlier steps taken to overhaul the twenties, fifties, and hundreds. Don't worry: Those $5 and $10 bills now in your billfold, mattress, or pocket still will be honored. And George Washington's visage on the almighty dollar will remain the same: "It's not counterfeited," said Bob McCarthy, public affairs manager for the Federal Reserve Bank of Philadelphia. As with the larger denominations, the U.S. Bureau of Engraving and Printing in Washington, D.C., the agency that prints the nation's paper money, has made changes both dramatic and subtle to the new greenbacks. The image of Lincoln, the nation's 16th president, looks out more directly from the new $5 bill, while the sawbuck's Hamilton, the first U.S. Treasury secretary, has a more pronounced set of curls. No longer will they be in the center of the bills, their place since 1929. Rather, the images are set slightly to the side, like Andrew Jackson's on the new $20 bill, Ulysses Grant's on the $50, and Benjamin Franklin's on the C-note. The shift allows room for distinctive watermarks of each man's face -- another device to foil counterfeiters. The new dough also includes embedded nylon threads with the words "USA FIVE" or "USA TEN," and tiny lettering visible only with a magnifying glass. This will not show up when a bill is reproduced on a color copier. The view of the U.S. Treasury building on the back of the $10 bill will be from the front, rather than the side, while the Lincoln Memorial on the flip side of the $5 bill will be more pronounced. New $100 bills released in March 1996 were the first to feature new portraits, but the government had begun incorporating anti-counterfeiting devices several years earlier. These represented the start of its push to stay a step ahead of the technology of counterfeiters. Using laser printers, color copiers, and ink-jet systems, the creators of funny money were making strides in the United States. But the worst damage was being done overseas, where foreign governments such as those of Syria, Russia, and North Korea were suspected of flooding Europe and Asia with billions of dollars in bogus $100 bills. Because two-thirds of the $535 billion in U.S. currency is overseas, the Federal Reserve feared for the integrity of its money. And with $100 bills making up two-thirds of the cash supply, the threat from overseas governments was real, officials said. Government officials claim the new currency has done its job. They estimate that only 3/100ths of 1 percent of existing money is bogus. "The new bills have proved effective, but nothing is counterfeit-proof," said Jan H. Gilhooly, special agent in charge of the U.S. Secret Service office in Morristown. "I'd venture to say that within a week, we'll see people counterfeiting [the new $5 and $10 bills]." Gilhooly said that his office, which covers New Jersey's 14 northern counties, seized $1.4 million in fake money last year. Nearly half of that came from Colombia, he said. Like their already redesigned counterparts, the new bills may not glide smoothly at first through vending machines or turnstiles at train stations, officials say. In fact, existing ticket machines at the PATH stations in New Jersey and Manhattan will reject the new bills, said Steve Coleman, a spokesman for the Port Authority of New York and New Jersey. Coleman said the authority, which runs the PATH train system, has ordered new scanning equipment for the turnstiles and expects to install it in the fall. Meanwhile, he said, "We'll put up notices to alert people so they don't put in the new bills." For several months, the Bureau of Engraving and Printing has been preparing manufacturers of coin changers and vending machines for the switch. Representatives from the bureau met in December with industry officials and gave them 1,000 bills of the new currency so that they could make changes in sensors driven by computer software. "We're not anticipating any problems," said William P. Donahue of Magner Corp. in Durham, Conn., which makes coin and currency counting devices. "The Federal Reserve system has made more of an effort to work with the manufacturers over the past few years."Thanks to the BERGEN RECORD, Fair Use For Educational/Research Purposes Only) Leigh (5/23/2000; 9:55:37MT - usagold.com msg#: 31077) Another Gem from Golds Revenge Posted on Kitco this morning:Golds Revenge (God's Revenge is Gold's Revenge) ID#249267Gold's Revenge is God's RevengeI received anInvitation toFly to EnglandAndBid for goldThey tempted meWith fantasies of buyingGoldFor a priceThat would be a stealBut I would not flyAcross the ocean andJoin those menThose robbers of goldBecause one thing I've Learned in this life of mine isThat no man really ever robsGoldInsteadGold robs men of their verySouls USAGOLD (5/23/2000; 9:34:50MT - usagold.com msg#: 31076) Looks My Link Didn't Work: Please Click Below for an Info Packet Which Includes "GOLD ALMANAC 2000" http://www.usagold.com/Order_Form.html Thank you. USAGOLD (5/23/2000; 9:32:51MT - usagold.com msg#: 31075) Today's Gold Report: Aurophobia Afflicts Press, Wall Street CLICK HERE TO RECEIVE AN INFO PACKET ON GOLD 5/23/00 Indications Current Change Gold June Comex 274.70 1.50 Silver July Comex 5.04 nc 30 Yr TBond June CBOT 93~24 -0~07 Dollar Index June NYBOT 110.70 -0.28 Market Report (5/23/00): Gold was down in the early going with the Bank of England auction results being described as "neutral" by Reuters, and having "attracted reasonable prices" by FWN. Today's action reinforces the view we've had for quite some time that these auctions have declined in importance and the gold price is looking beyond -- to external factors. We should be as well. These sales will continue to have an effect and the anti-gold press will continue to trump them up in order to do their part in keeping gold checked, but the effect is waning and the public is becoming more inured both to the sales and the anti-gold rhetoric. Note that yesterday's gold price run-up completely ignored the fact that the BOE auction was in the works the next day. That speaks volumes. Gold instead became one of two primary beneficiaries to the weak stock markets -- the other being bonds. We may get to the point that bonds lose their luster along with stocks in this interest rate laden market leaving only gold standing. Note also today that the dollar continues to weaken. The euro registered a strong performance yesterday and is doing well today in the early going. The yen is also in an uptrend against the dollar as rumors circulated that the Japanese central bank appears to be laying the psychological groundwork for an interest rate increase. It is also interesting to note as the BOE loaded the gold on the pallets to be shipped to parts unknown, the British pound was taking a hit in forex markets. FWN quotes a gold broker saying, "The auction seems to have passed without much incident, so gold prices could rebound after slipping last week as the auction approached." He said that the fact shorts are heavily dominant on COMEX could trigger a sharp short-covering rally if the price does start to rise." That view pretty much aligns itself with ours (doubly so with the stock market weak again today at the open) and we are going to end on that note. Have a good day, fellow goldmeisters. See you back here tomorrow. Hill Billy Mitchell (5/23/2000; 9:18:48MT - usagold.com msg#: 31074) Official release http://www.bog.frb.us/releases/H15/update/ Official: Federal Reserve Statistical Release Release Date: May 22 2000 Rates For Friday, May 19, 2000Federal funds 6.51Treasury constant maturities: 3-month 5.8910-year 6.5120-year 6.6430-year 6.22upside-down spread FF vs long bond = (.29%) Hill Billy Mitchell (5/23/2000; 9:15:56MT - usagold.com msg#: 31073) Official release http://www.bog.frb.us/releases/H15/update/ Hill Billy Mitchell (05/18/00; 15:28:01MT - usagold.com msg#: 30791)Official releasehttp://www.bog.frb.us/releases/H15/update/Official: Federal Reserve Statistical Release Release Date: May 22 2000 Rates For Thursday, May 18, 2000Federal funds 6.49Treasury constant maturities: 3-month 5.9210-year 6.5620-year 6.6630-year 6.24upside-down spread FF vs long bond = (.25%) Cavan Man (5/23/2000; 8:48:59MT - usagold.com msg#: 31072) elevator guy By Jove! I think you've got it!That's the game we play; a waiting game. Too bad investors in PM must seemingly hope for disaster in order to realize "returns" on their investments. I really believe that very few of us are "disaster mongers" and paranoid gold bugs. We are simply people who believe in and enjoy having and holding hard assets. The investment world around us is quite different. Too bad the investment universe lacks any degree of balance. Why must we continually court disaster? It is part and parcel of the human condition to be, irrationally exuberant!The POG always finds a way to rise. NATURAL LAWS ARE NOT IMMUTABLE. Good day to all.....CM elevator guy (5/23/2000; 8:23:58MT - usagold.com msg#: 31071) @Sancho, Henri, JavaMan, Journeyman Thank you for your responses. At this time, I have nothing further to add to what was said.Nice to know that some will respond on this board. elevator guy (5/23/2000; 8:21:42MT - usagold.com msg#: 31070) @Any forum member with an answer! After relating the whole gold carry trade and paper gold price suppression to my wife, she stumped me with the following statement-"What could make the game stop, since they have been playing it so well, so long?"Me- The Washington agreement, which capped gold sales, remember the big breakout last year?Her- And where is the price of gold now?Me- Uh, well, um, about $275.Her- So if they can play the market like a fiddle even after the Washington agreement, even with the gazillion ounces of gold loans outstanding, whats to stop them from doing so indefinitely?Me- Saying nothing, but thinking of putting on some tights and a cape, with a big GATA emblem accross the chest...Well, it seems to me, (first I read Farfel, then I think of it), that the US dollar, the bond market, and the stock market will all have to go down together, before gold really gets it legs.Assuming what I heard is right, the only missing piece of the scenario is a weak US Dollar. IF the paper gold market is used to show the dollar strong, then something must happen to the paper gold market, before gold will soar.Which makes GATAs efforts right on target.Unless, of course, we want things to continue as they are.Wow, it really is scary, these time we are in. Feels like something big is just around the corner.Or maybe not? SHIFTY (5/23/2000; 6:52:57MT - usagold.com msg#: 31069) Topaz Yes I need to learn to cut and paste. Sounds like a pre-school assignment. I need to spend some time reading my computer manual. When I right click it's never an option. Sorry for all the posts. Lets hope the roof repair I have to do today works out better! LOL $hifty Black Blade (5/23/2000; 6:29:38MT - usagold.com msg#: 31068) Morning Wakeup Call! One more UK auction down. Source: Bridge News Asia Precious Metals Review: Gold stable after overnight gainsBy Hiroyuki Fujiwara, BridgeNewsTokyo--May 23--Spot gold was stable on Tuesday in Asia after making overnight gains in the U.S. market. Prices recovered to the key level of U.S. $275 per ounce, after hovering yesterday at about U.S. $274, but dealers said players were hesitant to boost prices ahead of the U.K. Treasury's gold auction later Tuesday. Meanwhile, profit-taking capped platinum after overnight gains in the late U.S. market, they said. Short-covering--buying from players who had sold--underpinned spot gold after prices dipped from the overnight rally, the dealers said. However, the absence of fresh buying kept prices in a narrow range ahead of the U.K. auction, they said, adding that the U.S. dollar's sluggish activity did little to fluctuate gold prices. Some expect further short-covering might boost prices if better results come out at the auction. Black Blade: Slow ahead of the UK auction, not much improvement after either. Yawn. BTW, the UK peso is still lower since the Au auctions began and will eventually approach parity with the US dollar.SWISS GOLD: SNB gold reserves down by 9 tons May 10-19 Zurich--May 22--The Swiss National Bank Monday published its balance sheet indicating 136.6 million Swiss francs' worth of its gold reserves, or roughly 9 tonnes at current market prices, were disposed of between May 10 and May 19. The SNB refused to confirm the figures, stating as before that it will not provide precise information as to the amount of gold sold. Market watchers warn that the gold may have only been lent to the markets and not actually sold.(Story.13976)Black Blade: Shhhhh……, don't tell anyone, but they're selling gold! It's a secret ya know. SteveH (5/23/2000; 5:34:26MT - usagold.com msg#: 31067) Auction www.kitco.com Date: Tue May 23 2000 07:31Frustrated (H M Government Gold Auction Result: 23 May 2000 ) ID#341290:Copyright © 2000 Frustrated/Kitco Inc. All rights reservedThe Bank of England announces that the gold on offer ( approximately 25 tonnes or 803,600 ounces ) has been allotted in full at a price of $275.25 per ounce. Details of the result are as follows: Amount of gold on offer ( approx. ) 803,600 oz Amount applied for 2,134,400 oz Times covered 2.7 times Amount allotted to bidders 803,600 oz Allotment price $275.25 Scaling factor at allotment price 73.7000% All accepted bids which were made at prices above the allotment price have been allotted in full at the allotment price. Valid bids made at the allotment price have been allotted an amount of gold equal to the amount bid for multiplied by the above scaling factor and rounded up to the nearest 400 ounces. By close of business in London today, applicants whose bids have been successful in whole or in part will be notified by the Bank of England of the exact weight of the gold bars allotted to them and the amount payable in respect of their purchase. Payment must be made in US dollars to the Bank of England's account at the Federal Reserve Bank of New York, no later than 12 noon New York time on 25 May 2000. Notes for Editors On 3 March 2000, HM Treasury announced that, the Bank of England, on behalf of HM Treasury, is to sell approximately 150 tonnes of gold from the Exchange Equalisation Account in a programme of six auctions of around 25 tonnes each in the financial year 2000/2001 on the terms and conditions set out in an Information Memorandum which was published on 3 March 2000. This is the first auction in the programme of six. It is intended that the next two auctions will be held on Wednesday 12 July and on Tuesday 19 September 2000. The remaining auctions will be held on dates to be announced in November 2000, and in January and March 2001. Canuck (5/23/2000; 4:56:07MT - usagold.com msg#: 31066) @ Solomon Weaver @Town Crier Solomon,Thanks again for your words of wisdom. A 'side' to your sidenote; co-incidentally I'm about 50% cash and 50% precious metal invested. (about 50/50 physical/stock)T.C.,Also from Butlers article,"If you decide, or have decided, to invest in silver (the actual metal, on a cash basis), what's the best way? Yes, I'm implying there can be only one best way. For a total investment of, arbitrarily say $10 to $20 thousand, or less, the choices are many. Rounds, bars, bullion and junk coins are available for personal possession"---------------------------------------------I think Butler is a proponent of physical. I have 300 oz. of silver ($1,500 US) and already it is becoming cumbersome.My wife asked recently if I 'opening a mine'. What is the best way to invest in silver over $10 - $20 thousand? Switch to gold!!! Ha, Ha!!! Hipplebeck (5/23/2000; 4:34:16MT - usagold.com msg#: 31065) debt Whenever I get doubtful about my perceptions of the economy, I remind myself of the US government debt, the fake surplus that is barely chipping away at it, and the looming obligations of social security. There is only one way out of this dilemma, and that is to inflate their way out. They must make 5 trillion dollars seem like a small amount. Netking (5/23/2000; 4:08:01MT - usagold.com msg#: 31064) @Solomon Weaver(31023/4) Solomon Great links on Silver. Based on current PHYSICAL consumption (lets foreget the other 98% right!) how long would it take for current stock piles to be used up? ShalomNetking Netking (5/23/2000; 3:55:57MT - usagold.com msg#: 31063) The 'Key' Driver The pending gold rally is likely to be driven primarily by U.S. dollarweakness rather than by general strength in commodities. ShalomNetking Leland (5/23/2000; 3:15:10MT - usagold.com msg#: 31062) Is a Comparison to 1969 Appropriate? I Think it is. Here's a Fine Article... by Levi Folk Investment.com Friday, May 19, 2000 You probably don't remember what the US Federal Reserve Bank was up to back then or how the Dow Jones Industrial Average performed but lets just say that the narrow group of investors in 1969 had another name for the Summer of Love. Most similar to today's investment climate, 1969 was a bad trip for investors. That year saw inflation creep up from a low of 1.3% in December of 1968 to a high of 3.7%--exactly where US inflation is today-- in August of 1968. Of course, the Fed proved a real downer for equity markets by hiking rates to stave off inflation much the same as they are doing today. The Fed hiked rates from around 6% in late 1968 to a high of 9% by late 1969. Most interestingly, the first few rate hikes by the Fed were rather benign much like today's rate hikes because inflation was already on the rise. What really matters to the economy, and to the Fed, is the inflation-adjusted interest rate because that reveals the true value of money. For instance, over the past six months, the Fed has hiked interest rates by a whole percent to 6.5%. However, inflation has also gone up by more than a percent over this six-month horizon, so the real cost of borrowing has fallen. More formally, monetary policy is looser now than six months ago--not tighter. A nearly similar story unfolded in 1969. As mentioned, the Fed hiked rates even more throughout that year to bring the inflation-adjusted interest rate up in order to choke off inflation. And boy did equities get crushed: the Dow went from a high of 952 in October of 1969 to a paltry 744 in January of 1970. In case you missed this lesson the first time in favour of, say, "breakfast in bed for 500,000" at Woodstock, lets learn from history especially if its destined to repeat itself. (Thanks to INVESTMENT.COM, and Fair Use For Educational/Research Purposes Only.) TownCrier (5/23/2000; 3:04:45MT - usagold.com msg#: 31061) Yawn...the stars look crisp, but the air up here is definately crisper Speaking of crisp, here is quite a little comment offered by Bloomberg (without any context) in their "ECB Roundup"ECB President Wim Duisenberg said yesterday (5/22): "Cooperation between competent authorities needs to be further stepped up in order to ensure the effective supervision and preservation of financial stability."Ouch. I wonder what the context was, and which national official may have been in mind as failing to pass muster as a "competent authority"...In light of the ever-swelling U.S. trade deficit, we wonder if euroland is somewhat incredulous that the U.S. (as embodied in SecTreas Summers and FedChair Greenspan) seems somewhat willing to let market discipline deliver the harsh lesson of a lifetime...or is it euroland with that attitude? At any rate, it seems that all players are watching the teetering vase in slow motion, each one preparing to say "I didn't bump it" even as the pieces are still scattering upon the floor.The topic being currencies, not stocks, you see. TownCrier (5/23/2000; 1:58:27MT - usagold.com msg#: 31060) Sir Solomon Weaver, if I may, let's kick the tires on Mr. Butler's investment vehicle... http://www.gold-eagle.com/gold_digest_00/butler050800.html These comments are offered on the commentary found in this link you provided in your message "Solomon Weaver (5/22/2000; 22:14:21MT - usagold.com msg#: 31051)"Upon reading the link you provided, I was struck by a few things...which in itself is remarkable, seeing that this Tower-top location affords good security against almost all things but lightning. :-D<That is supposed to be a big smile with teeth.>First of all, I am not well-versed in the true supply-demand market forces exerted upon silver by the real economy. I therefore gladly bow in deference to the opinions held by the likes of you and Mr. Butler in that regard.Next, it must be said that I do not operate with a trading mentality, nor do I employ a trading strategy in regard to my own real wealth...I simply acquire my various assets for the anticipated perfection with which they may serve their purpose. While it may be seen that others buy and sell their houses or cars principly for the cash-profit motive (and they are certainly free to do so,) my purchases of such items would be influence by motives of reliable shelter and transportation. As such, my gold (no silver, sorry) is held for its enduring and worldwide liquidity and acceptance in payment (directly or via currency swap) for goods and services.Due to his principle focus on silver, I am not well-versed in Mr. Butler's "lore", nor am I in tune with his personal investment philosopies. No matter, as my purpose here is not to pass judgement or to offer advice. I am only going to kick the tires, so to speak, and chat about the weather until my time here is up.With that in mind, the first thing that struck me is that although his philosophy appeared to be that of a physical metal advocate at the outset of his commentary, my perception changed when I arrived at this portion of the commentary:<<<<"By owning the warehouse receipt, and having established a commodity futures account, other possibilities come into play. For instance, just like happened in NYMEX April Platinum a few weeks ago, if a spike in the delivery month occurs in silver in the future (a good bet in my opinion), you could switch out at the higher spot price and into a new futures contract, and start the process all over. (I'm not talking of considering doing this for pennies per ounce, but dollars per ounce. This is not a recommendation, just an observation - the risk, of course, is you may never get your certificate back. The point is to highlight the possibilities.)">>>>>Again, that is just an observation, as I hold no opinion toward the virtue or vices of individuals who place their bets on the paper-chases of futures trading. However, it is an important observation in light of the whole picture, and whether a true "physical advocate" would want to trust to such an investment vehicle as these COMEX warehouse receipts to deliver their wealth safely into the future.Let's now move to another tire...Mr. Butler makes no bones about the necessary entrance requirements...saying, "How do you go about securing these receipts? ... The first thing you need to do is establish a commodity futures trading account. ... By opening the commodities futures account, you are not required to trade commodities wildly, but you must first purchase a COMEX silver futures contract, in order to get delivery of a warehouse receipt."Sure, that's all fine...just hold onto the position until the arrival of the contract month (and with it the delivery window) in which you can engage in an exchange of futures positions for physical--the warehouse receipt. At this point, Mr. Butler advises "You may leave the certificates on deposit with your broker. You must keep the commodity account open, in order to sell someday."So, just to review the condition of the tires our toes have visited thus far, in order to obtain the "best silver investment vehicle in the world" (as touted by Mr. Butler,) we must begin by taking a "long" position (covered by our full payment in cash, of course) in a COMEX silver futures contract. In time, based on the contract you've taken in open interest, you will receive your warehouse receipt...a piece of paper that is "good as gol_ ...er, silver." To be sure, Mr. Butler describes them like this:<<<<"COMEX silver warehouse receipts are at the center of the silver universe. They are the core upon which all worldwide silver trading is based. They are the antithesis to derivatives, yet they are what all silver derivatives emanate from. They are the real deal. No other certificate can make that claim. ... COMEX silver receipts are bonded warehouse certificates covering 5,000 try ounces of .999 silver, give or take 10% weight variance. They cover five 1000 oz bars of silver, with the serial numbers separately recorded.">>>>In fact, so strongly does he believe in the superiority of these certificates that earlier in his commentary he suggests in regard to all big-league ($25,000+) silver investors that for them "not to switch to COMEX silver receipts immediately, could amount to financial heartache later." Let's just see about that.On to the next tire...Mr. Butler is certainly more knowledgeable than most, and correctly recognizes an important market phenomenon/reality. ..but first, this prologue. In deference to Mr. Butler's long and patient studies, I shall accept that a silver shortage is on the horizon as he says one is. He further says that "when the shortage of silver becomes obvious to all, the shortage will revolve around COMEX warehouse receipts," which he regards (rightly or wrongly) as solid proxies for metal in hand. (To which I immediately wonder aloud what the policy is during a general COMEX default lock-down...similar to the fate of deposits when a bank fails? I simply do not know.) Nevertheless, Mr. Butler has the astute understanding of a very important market reality, that awareness being that even when the metal shortage becomes obvious, in his correct words, "there will be no shortage of futures contracts, option contracts or any other piece of silver paper. How could there be a shortage of paper contracts? There will be a shortage of the real deal..." (which he again intimates is the warehouse receipts, being in greatest demand owing to their shortest supply.) He continues, "Paper contracts can be created at will, COMEX warehouse receipts can only be created by bringing in real metal."Now, WITH THAT IMPORTANT MARKET FACT IN MIND that the number of futures contracts can be created at will, let's visit the next tire and figure out how to "capitalize" (garner a cash profit) from our savvy position in COMEX silver warehouse receipts...Mr. Butler seems to punctuate the manipulative and price-depressive reality of the unlimited potential of short contract postions driving the market by saying: "the mirror image of the best silver investment in the world, COMEX receipts, is the worst silver investment in the world, a short physical position." So how does he reveal that we are to eventually cash out of our warehouse receipt? You guessed it...with the "feel good" prospect of joining these cursed short sellers (fully covered, of course, by our own warehouse receipt). In his own words, "The sale is the opposite of the buying transaction, you sell a futures contract and then make delivery."Let's get the itty-bitty spare tire out of the trunk, and kick that one too...just a little...In light of the information that new futures contracts can be created without limit even in the face of real metal shortages, how promising does that exit strategy appear to you all...that you exit by selling right along with the paper pushers? In such an environment, any hopeful long certainly won't want to risk his wealth on the crapshoot that he is the lucky one-in-a-thousand that may get a contract capable of delivery. No, more likely the value of these paper futures postions offered for sale will be discounted by the market even further. And if/when COMEX is locked up, what settlement arrangements will be made, and what price will you receive for your warehouse receipt that was last represented by your sell contract having a bid price of exactly zero?As I see it, being simply a wonderful industrial metal, there is no fundamental reason for silver to be manipulated lower as we have surely seen (and as Mr. Butler will agree has been done); except for ONE reason. Based on its past monetary associations with gold, it would simply NOT be credibly possible to manipulate the gold prices lower as we have seen within any environment in which silver was throwing up red flags in a race to higher ground. Clearly, on the international monetary scene, gold IS the big prize, and silver is simply the victim of collateral damage during this precarious time. I do not doubt that the day will soon arrive that PHYSICAL silver (not paper receipts that must await adjudication) will be priced much much higher, but on such a day, physical gold will properly reflect the great wealth of the ages.And that's the view from here in our outpost Tower, having kicked some tires as we while away the time until the UK auction to be held in a few hours. Just some casual conversation to help you see all possible sides of the issues... I should also add that the views from The Tower here on the edge of the wilderness do not necessary reveal the same perspective as those available from Michael's chair through his own high window in "The Castle" -- as I like to refer to the CPM offices. Usul (5/23/2000; 1:49:48MT - usagold.com msg#: 31059) Another one bites the dust! http://news.bbc.co.uk/low/english/business/newsid_759000/759504.stm * Second UK net firm collapses *The beleaguered technology sector has suffered another blow with the collapse of internet company Net Imperative. The news follows hot on the heels of the fall of e-tailer, boo.com, which ceased trading last week after running out of money. - BBC News Online: Business Monday, 22 May, 2000, 18:02 GMT 19:02 UK Another one bites the dust Another one bites the dust And another one gone and another one gone Another one bites the dust Hey I'm gonna get you too Another one bites the dust- Queen (The Game album, 1980, Elektra) Topaz (5/23/2000; 1:32:35MT - usagold.com msg#: 31058) SHIFTY: G'day Shifty,Try following the instructions re COPY/PASTE below the message box- (works for me) and saves trying to remember all the gory details--------- enjoy your efforts! Voyager (5/23/2000; 1:17:07MT - usagold.com msg#: 31057) Chris Powell I really enjoy reading your posts by Bill Murohy & GATA. Please continue posting them. Mr. Murphy certainly is a man to be respected for his courage & determination. ViewYesterday's Discussion.
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