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ARCHIVED DISCUSSION FROM 8/26/2001 All times are U.S. Mountain Time (Yesterday's Discussion.) Black Blade (08/26/01; 23:50:09MT - usagold.com msg#: 60317) U.S. Interested in Obtaining Natural Gas from Mexico http://hoovnews.hoovers.com/fp.asp?layout=displaynews&doc_id=NR200108261180.3_49c1000bd660c237 Snippit:Aug. 24--EDINBURG, Texas--The United States soon will need to import natural gas, and Mexico is the most logical source, a Dallas energy executive said Thursday at the U.S.-Mexico Border Summit here. Meanwhile, U.S. demand for natural gas will rise 50 percent in the next10 to 15 years for use by industry, for electricity generation and for residential use. Just replacing what we have, we can't do, Smith said. But Mexico is a net importer of natural gas, mainly from the United States. Smith explained that's because of the lack of pipelines in Mexico and inadequate budget by the government-owned energy monopoly, Petroleos Mexicanos, for natural gas drilling. Gandalf the White (08/26/01; 23:44:45MT - usagold.com msg#: 60316) Sir Powell -- Do you have a Crystal Ball also ? R Powell (08/26/01; 18:45:03MT - usagold.com msg#: 60301)USAGOLDWith an average of 25,000 page hits per day times 365 days per year (open every day including holidays, thanks), we arrive at 9,125,000 visits. Even if we subtract the 325,000 hits/year from Gandalf and myself, that's still 8,800,000. Congratulations.---I also congratulate the work of MK and his assistants !<;-) Netking (08/26/01; 23:28:13MT - usagold.com msg#: 60315) President Bush expresses concern about economy http://dailynews.yahoo.com/h/ap/20010826/ts/bush_71.html Snippit:President Bushadmitted Sunday that he is worried about the economy's "paltry" growth and, without making promises, assured steel company executives and workers that protecting domestic steel is a national security priority. . . But I must confess I'm worried about the fact that our manufacturing sector in our economy is a lot slower than I would hope. ... I worry about our citizens who work.'' He bemoaned the "paltry 1 percent" growth in the economy over the last 12 months and said his tax cuts were just part of a remedy that also includes debt repayment to ease interest rates and "a trade policy that's going to have a level playing field as its component." Leo Gerard, president of the United Steelworkers of America labor union that worked last year to defeat Bush's election, welcomed him Sunday as the first U.S. president in 30 years to visit a steel mill. Gerard also thanked Bush for launching an investigation of foreign steel imports, something the industry did not get from the Clinton administration . . . " BR549 (08/26/01; 22:03:40MT - usagold.com msg#: 60314) The Internet and the failure of dot.com's Black Blade (msg#: 60313)-FWIW-The failure of dot.com's has to do with Duck and NYSE's and not to do with small business. Our art commercial site has been growing via word of mouth every month since it was invented in the mid-90's. If these dot.com's who rip their equity investor's off via CNBC public offerings roll over, so what?The internet is great for specialists. I was looking for a radiator, since a deer committed suicide in front of my vintage Mercedes the other day. I found one for a savings of over a $100.00 from a mom and pop who didn't have to rent retail space.Let big business dot.com's go belly up and rock on small business! Black Blade (08/26/01; 21:51:49MT - usagold.com msg#: 60313) Wave of High-Tech Failures Could Become Deluge http://dailynews.yahoo.com/h/nm/20010824/tc/tech_survivors_dc_1.html Snippit:PALO ALTO, Calif. (Reuters) - The dot-com storm isn't over. Even after waves of dot-com failures have washed ashore in recent months, many other struggling companies are heading toward the rocks. Think it was a rough summer in the technology industry? Just wait until the fall. `There are going to be a lot more companies failing,'' said Greg Roston, deputy director of the Institute for Economic Policy Research at Stanford University. ``There are a lot of money-losing companies that had said they were fully funded for a year, and now that year is coming to a close.'' While the bust that began in the dot-com sector more than a year ago continues to strike consumer Internet companies, it is also spreading to other areas of technology from software to telecom.The demise of these companies tends to follow a pretty standard script. Their losses mount as they discover they had mistakenly counted on a robust economy and lavish consumer spending continuing forever. David Tice, a portfolio manager who has for years been forecasting a long and deep recession, sees a high-tech industry that is swimming in excess capacity. In just one dire sign he offers, Tice estimates that only about 390 million of the 650 million to 700 million cell phone handsets on the market this year will sell. ``There's much worse to come,'' said Tice. ``It starts to build on itself as more people get laid off, and it goes into a downward spiral.''Black Blade: It will get worse. As a side note: I saw a report a few months ago that calculated the valuation of the cell phone industry. The valuations were based on sales that required that every man, woman, and child would own at least two cell phones. In a world where the cost of a cell phone could represent the annual income for many, that projection is a very tough call. In light of all this, gold looks bright and shiny. Black Blade (08/26/01; 21:23:52MT - usagold.com msg#: 60312) US oil producers avoid hedges despite soft economy http://biz.yahoo.com/rf/010824/n24320724.html Snippit:NEW YORK, Aug 24 (Reuters) - U.S. oil and gas producers are gambling that a global economic slowdown will not hurt their market too much, and are steering clear from locking in today's robust prices for future production, analysts said on Friday. Energy companies believe they are better off riding along with market swings rather than expose themselves to the wrath of shareholders if their forward sales turn out to have been at too low a value, analysts said. ``Oil companies have lost money hedging in the past and Wall Street has punished them for it,'' said Jay Saunders, analyst at Deutsche Banc Alex. Brown. Black Blade: Not much of a gamble really. Prices are likely to be volatile and with OPEC as the "Wild Card." No need for hedging in the petroleum industry. Many of these companies are vertically integrated and do well no matter the price. Gold mining companies have much to learn as they are nothing more than "Rank Amateurs." Very few mining companies have figured this out and forward gold sales will come back to haunt them. Any wonder that companies like Barrick are scared to death of a rising POG and work to kill any rally? BR549 (08/26/01; 21:09:13MT - usagold.com msg#: 60311) BR549 -POG Netking (msg#: 60308)—By the way I somehow neglected you as also one of the best of the Link Laureates (instead of Poet Laureates, get it?) who post that I always read and follow the link. Sorry, about that.I agree that the true POG is probably valued at much, much more.The POG figure that I calculated takes the Gold cert's, SDRs, and other paper Assets and offsets them against paper liabilities. In other words, it takes the outstanding FRN balance from all of the 12 Regions and simply divides the outstanding inventory of gold oz's that the Fed Reports to have and computes a value-based currency amount equivalent in FRN's. It is nice to know that some other calculations are in the same general value ballpark.True accounting standards will pick holes in this theory. But since the Treasury doesn't use generally accepted accounting standards, I don't either.Thanks for the feedback.BR Black Blade (08/26/01; 21:09:11MT - usagold.com msg#: 60310) Oil prices rise on U.S. refining, supply concerns http://biz.yahoo.com/rf/010824/l24428938_4.html Snippit:LONDON, Aug 24 (Reuters) - Oil prices climbed on Friday as refinery problems and lean inventories in the United States outweighed concerns over the impact of the global economic slowdown on petroleum demand. Benchmark Brent Blend crude oil futures for October delivery jumped 38 cents to $25.98 per barrel while U.S. light crude gained 32 cents to $26.95 per barrel in New York. Operator Citgo, a subsidiary of Venezuela's state oil company, said repairs to its refinery in Lemont, Illinois will take up to six months after a fire last week. Anglo-Dutch giant Shell also revealed on Friday that a crippled gasoline-producing unit at its Deer Park, Texas refinery will stay shut unexpectedly for another two weeks.Black Blade: This will get more "interesting" as refineries are about to switch over to boutique fuels and the usual scheduled maintenance prior to the switch over. Add to this a few refinery closures and accidents due to some refineries not keeping up maintenance schedules and the OPEC oil production cuts starting next week and the costs of energy are about to surge higher again. These higher costs will be felt by US industry and the consumer. The Recession looks to get worse. Black Blade (08/26/01; 20:54:36MT - usagold.com msg#: 60309) Could Weaker Dollar Save Greenspan? http://biz.yahoo.com/rb/010826/business_column_stocks_week_dc_2.html Snippit:NEW YORK (Reuters) - Is there any way to solve the U.S. economic problems? Could Federal Reserve Chairman Alan Greenspan and U.S. Treasury Secretary Paul O'Neill do lunch and hash out a dollar deal? What's happening is that the strong dollar, which few people were complaining about during the boom days, is now slaughtering the big U.S. multinational companies' export sales and working against the economy's rebound. Eight months into one of the most aggressive rate-cutting campaigns in history, Greenspan is still dealing with an economy that has almost stopped growing and a stock market still in the dog house, despite seven interest-rate cuts.Black Blade: It's too late to reverse the trend. Time to gather up some PM insurance. Netking (08/26/01; 20:54:08MT - usagold.com msg#: 60308) BR549 -POG BR549 . . . that POG figure compares quite well with independent assessments placing it at $2,500. However the pendulum swings both ways yes, so we'll also see figures in the days ahead much greater than this. Also with the POG:POS ratio tracking at the below ground(deep storage!)inventories levels at 1:10 we'll place the POS at $250 for starters, we don't wanna be guilty of any "irrational exuberance" or anything over old relics. uponroof (08/26/01; 20:44:38MT - usagold.com msg#: 60307) sector INCOMING!! I think that is the shortest post you've ever made....but maybe the one of the most interesting. Blowing them out of their 6 year, catacombed, rathole bunkers is quite a task. If we've been lobbing mortars at them till now, can't wait to see what heavy artillery does. Remember, these guys have gummint issued armour.....hope your using armour piercing shells. Can't wait my friend.Speaking of gummints.....they made another terrible mistake last night. More stupidity from the inept buffoons that have turned gambling into a national pastime. They got the powerball numbers all wrong!....is anybody surprised!?... and I gave them a hundred chances to get it right. Tisk Tisk! Black Blade (08/26/01; 20:43:47MT - usagold.com msg#: 60306) Bankruptcy Boom Can Be Bust for Biz Docs http://biz.yahoo.com/rb/010826/business_column_mergers_dc.html Snippit:NEW YORK (Reuters) - From department store chain Montgomery Ward to online grocer Webvan, companies are going belly up in record numbers these days, jarring seasoned restructuring specialists who thought they'd seen it all. Never before have so many large companies filed for bankruptcy protection, listing billions of dollars in assets, studies show. And reorganization experts say they've never seen so many sell out at a fraction of their former market value or simply liquidate because of a lack of buyers. The year 2001 already is a big year for bankruptcy filings. Companies with assets of $112 billion have landed in bankruptcy court in the first six months of 2001, 19 percent more than the whole of 2000, says Boston-based consultancy New Generation Research. That easily tops the 1991 recession-inspired then-record of $93.6 billion. And companies that fail are getting larger: The average amount of assets of companies that filed in the first six months reached a record $884 million, 64 percent more than the $539 million in average assets in the whole of last year, the group said.Black Blade: A sign of the times (Recession). I look to see this to continue for the foreseeable future. It's the Recession ya know - preceded by rising oil and energy costs. BR549 (08/26/01; 20:28:27MT - usagold.com msg#: 60305) A few billion here....... slingshot (msg#: 60300)-The Pentagon lost a billion that they can't account for. I am sure the other agencies have lost more. Dick and GW cleaning up the wild party of the 90's. Kind'a reminds you a little of old Ev's famous quote. BR549 (08/26/01; 20:18:58MT - usagold.com msg#: 60304) Cornfield Index-Today's Real POG $2,209.29/oz http://federalreserve.gov/releases/H41/Current/ Cornfield County Reserve calculates the real price of gold today at $2,209.29/oz.CONSOLIDATED STATEMENT OF CONDITION OF ALL FEDERAL RESERVE BANKS Release Date: August 23, 2001 in MM=Millions of DollarsTotal Assets- $632,216MMLess Total Liabilities- $617,359MM Less Total CAPITAL ACCOUNTS- $14,857MMValue of FRN's- $577,729MM True Current Value Gold (261.5MM oz divided into $577,729MM) $2,209.29/oz.*(OR) 261.5MM oz. of gold on hand x $2,209.29 real value of gold = $577,729.33MM is value-based currency of FRN's today(OR) the dollar would be valued at 1 / 2,209 .oz of Gold*Assumes current Fed numbers without taking into account some current liabilities and some current assets. Assumes if current FRN's were to be frozen and liquidated for Gold today. Does not account for the printing of additional dollars which will dilute the price per oz.*Assumes current Fed numbers without taking into account some current liabilities and some current assets. Assumes if current FRN's were to be frozen and liquidated for Gold today. Does not account for the printing of additional dollars which will dilute the price per oz.If gold had not been manipulated, then it MARKET VALUE IN FRN'S should be worth $2,200/oz. FRN today.Comments Welcomed!Regards from The Bank of Cornfield County Black Blade (08/26/01; 20:07:30MT - usagold.com msg#: 60303) Insider Buying Falls to Eight-Year Low http://biz.yahoo.com/rb/010826/business_markets_stocks_insiders_dc.html Snippit:NEW YORK (Reuters) - Buying of shares by company executives in their own companies has dropped to the lowest level in almost eight years, according to Lancer Analytics.Black Blade: Those in the know from the inside know that this economy is in Recession and they're not buying. This could be just a sign of things to come. Kodak (08/26/01; 19:22:59MT - usagold.com msg#: 60302) Greetings from Canada Hi, everyone; After lurking at this sight for over 2 years I thought it was time I said hello, and thank Michael for this great forum and express my gratitude to all the posters who have educated me these many months. I live in the interior of British Columbia and i can tell you the new tarif that has been introduced on canadian lumber is having a huge effect. Several mills in my town have closed already,and job loss for B.C. is estimated to reach 20,000 by the end if this month. ouch!!!!! It looks like the slowdown that started last year in the U.S.A. is going to cause extreme slowdown in canada. Once again thanks to all especially Another/FOA/Trailguide I am your biggest fan. Believe it. Ha! Ha! Ha! (big smile). R Powell (08/26/01; 18:45:03MT - usagold.com msg#: 60301) USAGOLD With an average of 25,000 page hits per day times 365 days per year (open every day including holidays, thanks), we arrive at 9,125,000 visits. Even if we subtract the 325,000 hits/year from Gandalf and myself, that's still 8,800,000. Congratulations. I think you have hit the nail on the head with "the experts are in a state of confusion on the economy". Uncertainty will continue along with interesting times. Rich slingshot (08/26/01; 18:00:15MT - usagold.com msg#: 60300) Surplus Money? George Bush sitting at his desk in the White House taps the intercomn and says, Dick, do you have a minute? A short time later Vice President comes into the room.George comes right to the point. Dick, What happen to all that surplus we are supposed to have around here? The V.P. quickly replies,I don't know but it was here last night. Well I am pokeing fun at the President and Vice President. With all this talk about surplus money. If it could happen to them, It could really happen to me. Got Gold?Slingshot USAGOLD (08/26/01; 16:57:57MT - usagold.com msg#: 60299) Reflections on Reading the Sunday New York Times I had quite a bit of e-mail the last time we did this. It seems that our readers liked this ramble through world events -- economic and political. Some recalled similar Sunday sessions with their fathers and grandfathers. I can't hope to replace those treasured moments, nor the yearning for them. The stimulation falls on the front doorstep these cool August mornings, and I can't help but react. It's nice to have readers who actually like these occasional jaunts through contemporary events. Perhaps it spurs a thought or two,or cements an opinion; or even changes one. . . . So here we go. . .Page 1. . . .Exploration of World Wide Web Tilts from Eclectic to Mundane: Routine visits are replacing cyberspace surfing . . . by Amy Harmon". . .in a shift mirrored by many other internet users, Mr. Dudley's interest in the web is no longer driven by eclectic imagination. When he logs on now, he knows what he wants and he mostly knows where to get it. . . That America's infatuation with the Web as a haven for cybersurfing adventures has morphed into a more mundane fondness for a useful information tool is in many ways a testament to how quickly it has become a part of everyday life for so many."MK Note: A New York University professor (Mark Crispin) reflects toward the end of the article that "A medium can't do any more than its users want or think to do with it. The emergence of every new major medium over the last century or so has invariably been accompanied by a lot of utopian expectations. All our major media have come at us as if God himself to redeem us from the restrictions of time and space." So the web becomes just another tool in the search for knowledge and understanding -- albeit a more handy and efficient tool than running down to the library, or sending off for a catalog or brochure and then waiting patiently days even weeks for its arrival. What we've tried to do at USAGOLD is create a useful daily experience where the seeker can find important information on an on-going basis and DAILY. . .We actually believed all the hoopla about the information highway early on and to be truthful about it, almost passed on the internet because I had a difficult time grasping what it was all about. A visit by a European technician -- Dutch, I believe -- brought it all into perspective one day. He said something that made me move forward. I asked him to summarize for me in as few words as possible what an internet connection actually was. Mind you this was in the mid-1990s. He said, "Simple. It is a phone number. A phone number where the caller can receive all sorts of visual information instantaneously. It can be read, printed, stored on the computer. It's a place where you can store and release company information at the viewer's command. " Now, after reading two books on the subject, talking with several "providers" and jumping through most of the available hoops, these words came through loud and clear. I now had an understanding. I never strayed from that advice and then Randy Strauss came along with the same understandings and we went from there. That's the long and short of it. Now this month, we have had an average of 25,000 page hits a day with a high of 31,595 on August 9. For August through last night we have had 633,000 page hits thus far ---- and that's during the summer doldrums, our slow time. It appears that USAGOLD has become one of those privileged stopping places, and for this, we are grateful to our readers, our posters here at the forum, as well as our esteemed contributors at the Gilded Opinion page.From that same article:"The web is a democracy of opportunity, but not necessarily of outcome. At the beginning it was a beautiful, fertile ground where all sorts of organizations could theoretically survive, but the selection process has been incredibly fast." Bernardo Hoberman, Hewlett-Packard, and author of "Laws of the Web."----------------------Page 1 . . . . .Still Working, Boomers 'Retire' to Resorts . . . . by Andrew Jacobs". . .the Davises chose the kind of move that holds increasing appeal for members of the baby boom generation, who began hitting 55 this year. They decided on a tract of sandy pine scrub in central New Jersey that is being carved into a residential resort that caters to every whim of the moneyed, leisure-seeking boomer."MK Note: The press' preoccupation with the boomers continues unabated even as the demographic juggernaut moves to retirement age. But, you know what, this latest self-absorption by the boomers could contribute to what may be the key to avoiding a full blown recession -- a booming real estate market. So perhaps before groaning, we should all think about the possibilities this might offer to the society as a whole. The once and future hippies, then yuppies and now refugees to the gated community (replete, as NYT describes it, with swimming pools, golf courses and second homes with enough bedrooms for the kids and grandkids) may be just what the economy ordered. What's more the article says these refugees probably won't retire in the traditional sense -- but continue to be involved in their businesses and occupations though from a more leisurely perspective, mind you. The article also says that the boomers want to be close enough to the urban action to visit it when they want. So what are the economic implications of this latest boomer obsession? Elsewhere in this morning's Times, a columnist complains that available money isn't being borrowed on people's houses so that it can go into the stock market -- that consumers are borrowed up. That may be a true to a degree, but I think there's more to it than that. Earning's are horrible. The market is way overvalued. People have been burnt by the stock market and bad. The attitude is changing. Who wants to throw good money after bad? Every generation has their love affair and break up with the stock market. The boomers are now going through theirs. Could it be that consumers/investors have stopped borrowing not because they're in a box but because they simply don't want to? Home equity is still available to some extent. Property values in many parts of the country are booming. Love or hate them, one thing is certain: The boomers have been the ultimate consumers that have driven this economy and ALL have benefited. Will they do it again? This time by buying second and third homes? We all know that home purchases drive an array of market sectors. Warren Buffett was quoted the other day as saying that this recession will last eight years. I agree with him, but the recession he alludes to is the one in the stock market, not the overall economy. . . .This new social movement covered in this morning's Times may be the antidote. (A similar article appeared in the Denver Post this morning on mountain real estate.)"People are just clamoring for this product. We just can't build them fast enough." MichaelVillane, president of a real estate development firm which has nine age-restricted communities under construction in New Jersey-------------------------Page 3. . . . . . Argentina's Stopgap Cash Gets Some Funny Looks. . . . .by Larry Rohter"It looks like money, fits into a wallet like money, and the local government certainly hopes it will be accepted as money. But Angel Diaz, a policeman here,had his doubts after being paid this week not with pesos, but with a new emergency currency called the "patacon," printed by the provincial government.MK Note: The government in Argentina is flat broke -- out of money. It can't pay its employees in pesos because the peso is tied to the dollar and all of those are being used up to pay down international debt. So the province of Buenos Aires has decided to print its own currency for local use and to pay its employees. Of course, the problem is no one wants to hold the provincial currency -- so the "patacone" is likely to go from hand to hand faster than you can say "hot potato." Demonstrators were chanting "give me pesos" outside the provincial governor's palace this past week and carrying placards that said, "Pay the foreign debt in patacones." Of course, the international bankers largely responsible for Argentina's woes wouldn't sanction that, nor would the IMF which loaned Argentina $8 billion last week -- $8 billion that no doubt touched down in Argentina only long enough to be re-routed to New York at the speed of light. Argentina will continue to suffer. Default is in the air, as is the strongest argument for individual gold ownership we have seen since the Asian contagion. The Argentine citizen with a 30% gold reserve is not suffering the same anxiety as the individual who has stuck with the peso which now teeters precariously over the devaluation abyss. There is no question about that. The bankers and the IMF won't be crying for Argentina, they will squeeze everything they can out of it before cutting rope. . . . .Will the next stop for Argentina be the same as Indonesia's -- stringent economic controls, a police state and a society with one purpose -- to repay the international debt?? During the presidential campaign, President Bush hinted that something had to be done about the IMF and these policies. This would be a good time to make good on that promise. It's about time the Keynesian Bretton Woods system were chucked. It's outlived its usefulness and become a symbol of western exploitation and neo-colonialism.-------------------------------Page 6 (Money & Business) . . . . . . It's Time to Look Beyond Conventional Wisdom on the Dollar. . . . .by Jonathan Fuerbringer"In the 27 years since the dollar was allowed to float freely in foreign exchange markets, the Morgan Stanley Capital International index of developed stock markets outside the United States and Canada has outperformed the S&P 500 in 13 of them. In 8 of those 13, a declining dollar was adding to American returns. 'In the world of statistics, that is a pretty strong pattern,' said James Paulson. . .at Wells Capital Management in Minneapolis. . . .For example . . .the local currency gain of 25.4% in 1985 jumped to 53% after the dollar decline was factored in."MK Note: I have said from time to time that the best way to put the dollar in reverse would be to create a real rate of return on the euro forcing capital out of the dollar. This, in turn, would promote the borrowing of dollars to invest in euro based equities taking advantage of what the quote above suggests -- only with the added spice of leverage. This is what I mean by the dollar carry trade. That would leverage the euro higher and the dollar lower -- a goal which seems to be mutually preferable at the moment. That said, the EU is talking "fighting the recession" and lowering interest rates now -- a different tune than what it was signaling two weeks ago. If the ECB follows the Fed and lowers interest rates, then we'll know the policy is to inflate in tandem. Either scenario favors gold, though in the latter the dollar would deflect some of the interest in gold, and in the former we might have speculators drive gold into the stratosphere in short order.- - - - - - - - - - ------------Page 1 (Week in Review). . . . ..Is That a Bounce or a Thud We Just Heard?. . . .by Louis Uchetelle"This time. . .banks are healthy and consumers have barely flagged in their spending. Teh slowdown that started in last year's third quarter came mainly as a result of a rapid cutback in business investment in machinery, computers, software, buildings and other tools used to produce goods and services. . . The private sector -- households and businesses -- is overloaded with debt. Worried consumers are gradually buying fewer autos and other big ticket items, despite the rate cuts, according to the University of Michigan's latest consumer confidence surveys. And profits keep shrinking, hardly an incentive to revive capital spending. 'We could be in for a long period of weak growth,' says Mr. [Edward] McElvey (Goldman Sachs & Co). "Not necessarily contraction, but a weak economy that bounces along the bottom."MK Note: As the title to the article implies, the experts are in a state of confusion on this economy.That's it for now, my friends. More reflections some other time. slingshot (08/26/01; 16:36:00MT - usagold.com msg#: 60298) Editorials Two worth reading on Gold-Eagle site. What Christmas will bring. The Gold(real money) Market. Guess who going to get the short end of the stick?Slingshot John Doe (08/26/01; 16:19:56MT - usagold.com msg#: 60297) see also http://www.ex.ac.uk/~RDavies/arian/amser/chrono3.html A Comparative Chronology of Money from Ancient Times to the Present Day 500 - 1099 (extract):806-821, Reign of Emperor Hien Tsung and the development of paper money, In China a severe shortage of copper for making coins causes the emperor to issue paper money notes. 910, Another state issue of paper money in China.c. 960, Issues of Chinese paper money start to become regular.c. 1020, Quantity of Chinese paper money reaches an excessive level, The total amount is nominally worth 2,830,000 ounces of silver. Vast amounts of cash are used to buy off potential invaders from the north and to pay for imports causing a cash famine. As a result the authorities increase the note issues thus fuelling inflation. John Doe (08/26/01; 16:01:35MT - usagold.com msg#: 60296) (No Subject) NB, the U.S. 1862 reference is Lincoln's Greenback. John Doe (08/26/01; 15:59:08MT - usagold.com msg#: 60295) For the benfit of the producers of HC's "Gold!" http://www.labyrinth.net.au/~saul/history/money.html 806-821 A.D., Reign of Emperor Hien Tsung and the development of paper money In China a severe shortage of copper for making coins causes the emperor to issue paper money notes.1166 A.D., Hyperinflation in China The nominal value of the official paper note issues reaches 43,600,000 ounces of silver. In addition there are various local note issues. 1275-1292 A.D., Marco Polo lives in China From his subsequent account of his Travels, Europe learns of paper money. c. 1455 A.D., China abandons paper money There are no known references to paper money being in circulation after this date. Thus after well over 500 years of experience with paper currencies, during which there have been repeated episodes of inflation and currency reform, China ceases to use paper money.1862 A.D., in U.S., paper money. sector (08/26/01; 14:51:38MT - usagold.com msg#: 60294) @uponroof Get Ready for Some Heavy Artillery There will be some heavy artillery deployed in the coming days against the cabal. slingshot (08/26/01; 14:38:59MT - usagold.com msg#: 60293) Sign of the Times The signature of a depression will change from an apple for 5 cents, to a hotdog on a bun for a $1.00. With all the extras of course.Slingshot Usul (08/26/01; 14:37:48MT - usagold.com msg#: 60292) Explosion rips through Canadian gas storage plant http://biz.yahoo.com/rf/010826/n26212955.html Mr Gresham (8/26/01; 13:42:15MT - usagold.com msg#: 60291) Michael Yes, recovery to a former bull market/mania peak, 15 years has happened before, 25 years in the 1929-54 case, and sounds more than right going forward from here. Especially in inflation-adjusted terms. They're jamming the stock scam for all it's worth this time.People just can't admit they missed the boat at the bottom, can they?"Note: Many investors in today's stock market do not know the meaning of the words "bear market." "Gold owners are certainly "ahead" of their countrymen in that sad knowledge of a long bear and its bottoming. May we all make wise use of it now... slingshot (8/26/01; 13:17:24MT - usagold.com msg#: 60290) Golden Steeplechase FELLOW GOLDBUGS, LOOK AT THAT! BIG FLOAT has come on the track and is catching up to the pack! Just goes to show that in this game anything goes.Did I hear CONSUMER CONFIDENCE in the stall.Slingshot USAGOLD (8/26/01; 13:09:16MT - usagold.com msg#: 60289) Mr. Gresham. . . . http://www.the-privateer.com/starter.html No. You read that right, Mr. Gresham. Bear markets are marked in years not months. This is from our friend the Privateer, Bill Buckler:"Until mid-1954, the all time high for the Dow was 381.17, set on Tuesday, September 3, 1929. That's right, the 1929 high was not breached for 24 years. By 1966, however, the Dow had left that 1929 high far behind it. In February 1966, the index reached a high of 995. That was the Dow's first trip to the 1000 level.The Dow made many more trips to that 1000 level. It reached it in late 1968, and it actually broke through it (barely) in early 1973, mid 1976, and mid 1981. But the Dow did not decisively breach that 1000 level until the beginning of 1983. For seventeen years (1966-1982) the 1000 level on the dow remained a formidable resistance point."Note: Many investors in today's stock market do not know the meaning of the words "bear market."Thanks to Bill Buckler, "The Privateer". His newsletter is highly recommended and available at the link above. The above is part of an excellent history of gold titled "Money -- An Essay." R Powell (8/26/01; 13:01:17MT - usagold.com msg#: 60288) Sunday reading http://www.itds.treas.gov/prec_metals.htm Thanks to Lincoln from the neighboring castle for this link. Slingshot, is it too late to enter "Bigfloat" in the race? He's a mighty steed and has been preparing for this event for many years! If he doesn't win, I'll bet that he's at least in the money. That's lots of fiat and he's bringing it all back home. Rich Usul (8/26/01; 12:48:24MT - usagold.com msg#: 60287) Dollar's Strength Creates Dilemma http://dailynews.yahoo.com/h/ap/20010826/bs/dollar_dilemma_1.html "Blame the high-flying dollar for the prolonged economic slump that has cost 800,000 manufacturing jobs in the past year, company chiefs say...``The dollar is overvalued by a huge amount and it is hurting American manufacturers and farmers. But you have to be very careful in how you deal with the problem,'' said Larry Chimerine, head of Radnor Economic Consulting in Radnor, Pa."Fortunately, Centennial Precious Metals, Inc. / USAGOLD [no connection except that I post here] can supply the age-old bulwark against currency vaporization... Gold Usul (8/26/01; 12:43:24MT - usagold.com msg#: 60286) Could Weaker Dollar Save Greenspan? http://dailynews.yahoo.com/h/nm/20010825/bs/column_stocks_week_dc_1.html "Because foreign money is financing a huge chunk of American companies' debt, the companies could be susceptible to a nasty shock if the dollar takes a dive" Usul (8/26/01; 12:38:10MT - usagold.com msg#: 60285) Japan standing by to prop up dollar http://biz.yahoo.com/rf/010824/tau025285.html "Japanese currency authorities, including Kuroda, have kept markets wary of possible intervention to cap export-crippling yen strength"Yen strength, or dollar weakness? slingshot (8/26/01; 12:35:30MT - usagold.com msg#: 60284) Golden Steeplechase Step right up and place your bets. This is the First Running of the Golden Steeplechase. The horses names are as follows. 1 Trade Deficet 2 Unemployment 3 Bankruptcy 4 SDR 5 Middle East Conflict 6 China 7 Euro 8 U.S. Dollar 9 Price of OIL10 Stock MarketThe Goldbugs have filled the Stands having placed their bet by the odds they think will affect the price of Gold. The Track has been long in the making over many years. It may be years in its length to the Finish Line. Do you have the winning ticket? Gold! AND THEIR OFF!Slingshot Usul (8/26/01; 12:30:55MT - usagold.com msg#: 60283) Bruised dollar dances to the tune of euro and pound http://www.gulf-news.com/Articles/news.asp?ArticleID=25171 "The euro and pound tested five-month highs as they celebrated the dollar's gloom""In the past, such [Fed] rate cuts were virtually guaranteed to give Wall Street a boost, but with this year's corporate profits forecast to show the worst fall in a decade, investors were not cheered by the Fed's latest monetary easing"Hmmm... perhaps it should dance to the tune of gold. R Powell (8/26/01; 12:30:13MT - usagold.com msg#: 60282) GATA and others including members of the mainstream press and the president's mom. She has the ears of the present president along with thoses of the former Bush. I wonder if she'll listen to Bill Murphy and what she'll think of what he has to say. I believe she'll understand most everything said. I wonder if any of it will surprise her? New Orleans Investment Conference http://www.neworleansconference.com/index.htm The conference will be held November 28 - December 2 at the Sheraton New Orleans Hotel in New Orleans, Louisiana. The speaker list is most impressive and includes: A Special Presentation by Barbara Bush. First Lady, First Mother and America's most respected woman, Barbara Bush will give you behind-the-scenes insights into the Bush administration. CNBC's popular firebrand Chris Matthews, host of HARDBALL, ought to be most entertaining. Nobel Laureate MILTON FRIEDMAN, one of the world's most acclaimed economists, is one not to miss. Additionally: James Turk, Frank Veneroso, and Bill Murphy will be presenting the latest information on Gold! R Powell (8/26/01; 12:09:00MT - usagold.com msg#: 60281) World Silver Survey continued Earlier this year rumors of Chinese silver sales were bandied about as a possible source of supply and a reason for the low POS. The survey agrees entirely and lists 58 million ounces of silver from China as part of the 74.7 million of "Net Official Sector Sales". To the 58 we can add the 13 million that the Defense Dept. forwarded to the mints for coins (beautiful Silver Eagles). This accounts for almost all in this category. Scrap is listed at 180.3 million and mine production at 589.4 million. Concerning sales from China the survey states that "the most significant story in terms of bullion stocks in the 1999-2000 period has been the emergence of China as a large net seller." Their opinion is that the market price has been supply driven and that China's entry as a supplier has turned investor sentiment negative. The 102 million ounces of disinvestment is attributed to this sentiment. Speaking of Chinese supply and negative sentiment, the survey says, "As a result, some of those (but still not it would seem Mr. Buffett) who had built up long positions in anticipation of higher silver prices have exited the market. This is reflected in the higher number for implied disinvestment last year of 102 Moz." It is this opinion that David Morgan disagrees with, stating that investors don't tend to sell when prices are low. I wonder as I think of how many holders of tech and dot com stocks were smart enough to sell before the duck's fall and how many will sell sometime in the future, at the bottom? I also believe that the shortfall between supply and demand of 102 Moz HAD to filled with disinvestment for whatever reason the holders of silver stocks decided to sell. When viewing supply, the survey offers no surprises. They claim that production increased 7% during year 2000 and that mine production is not expected to increase from here due to the low POS. "A number of silver mines are nearing the end of their reserves and, with the deferral of some projects due to the weak price environment, no large increase in production is expected this year." My own thoughts on production are that, with 75% of production coming as a by-product of mining for lead, copper, zinc and gold, whatever slowdown we encounter in demand from a slowing economy will be offset from lower production of these metals. The primary silver producers will certainly not increase production at these low prices and will probably shut down marginal production as Hecla did with the "Lucky Friday" mine. Interesting that all this information views silver as an industrial commodity and, having read the survey, I can say that the survey makes no mention of silver as money or wealth. More later as Sunday chores need doing. Rich Henri (8/26/01; 12:01:55MT - usagold.com msg#: 60280) Mr. Gresham Msg 60277 Yes two oceans help. Short of war what is left? Economic sanctions? Gee I guess our Northern and Southern partners would be isolated too. You mean we would all have to go to work to actually PRODUCE something other than DEBT???Sounds like job creation to me. This is BAD? Black Blade (8/26/01; 11:43:48MT - usagold.com msg#: 60279) Older Workers Saw Retirement Assets Fall http://biz.yahoo.com/rb/010826/business_financial_fund_retirement_dc_2.html Snippit:NEW YORK (Reuters) - The 401(k) retirement plans of U.S. workers were flat last year, but older participants suffered a significant erosion of their accounts during the stock market slump, a new study released on Monday showed.Black Blade: What are these old "Bones" to do? Reenter the work force? - Not in a Recession. Hmmm… Mr Gresham (08/26/01; 11:29:18MT - usagold.com msg#: 60278) Good morning, Michael "Bear markets on average in the past have lasted from 12 to 15 years." That's months, not years, right? or is is "different" this time? Mr Gresham (08/26/01; 11:27:06MT - usagold.com msg#: 60277) Oh Henri http://www.northerntrust.com/library/econ_research/weekly/us/010824.html There you go, thinking of the big picture again! o;)I'm gonna have to read yours over a couple more times, because it's packed with -- likely -- resolution to a lot of our questions. Basically, debtors (USofA, Inc.) just declaring themselves a "Jubilee Year/Decade" of debt forgiveness. Walking away just like Dads on child support. (That's what those two big oceans around us are for -- we can get away with ANYTHING.)Good to find you here this morning... Centennial Precious Metals, Inc. / USAGOLD (08/26/01; 11:21:47MT - usagold.com msg#: 60276) An Invitation to Join Us Regularly at the Commentary & Review Page http://www.usagold.com/Order_Form.html Ed. Note: Here we offer a reproduction of MK's 8/22/01 Commentary & Review to give new readers an idea of what goes on at our client-only page. The full Commentary & Review normally appears only at the restricted-access page established for Centennial's clientele, however, access is also available to prospective clients free of charge on a trial basis. Entry requires an easy one-time registration at the link above.8/22/01In Brief: Gold jumped sharply higher in Europe overnight as traders reacted to the latest rate cut and a weaker dollar. The euro moved to five month highs against the dollar on good results from the latest survey of business confidence in Germany. UBSWarburg reports short covering and fresh buying as driving the market overnight. The Australian Financial Review is buoyant on gold's prospects emphasizing gold's strong showings in the past when the dollar has gone into a period of decline:The real beneficiary of the weaker US dollar was the gold market. On Friday it snapped up through $US280 an oz for the first time in three months, before closing around $US279.50 an oz. Gold and the US dollar have a close relationship. As the US dollar falls, gold rallies. As gold is traded in US dollars this inverse relationship should exist, if all else is excluded. But other factors, like central bank gold sales, interest rates and gold lease rates, do affect the gold price. Back in 1985 the US dollar triggered gold into a wild bull market. A number of traders are now hoping that 1985 will repeat itself. Then the US dollar collapsed and gold rose from $US300 an oz to $US500 an oz.We have seen a dramatic increase in the number of inquiries at Centennial Precious Metals/USAGOLD over the past several days. Most of the callers note that they are ready to move funds out of the stock market and into gold. Stocks continue to suffer from poor earnings results, the faltering dollar and weakened economic prospects in the United States -- not to speak of the fact that the air is being let out of the greatest equities bubble in history. A growing coterie of analysts -- especially those detached from the Wall Street equity firms and banks -- are beginning to call this a primary bear market. Yesterday's one quarter point cut failed to even slow-down the building negative sentiment in the stock market. Bear markets on average in the past have lasted from 12 to 15 years. Gold during equities bear markets has been a contra cyclical alternative where the investor could safely park funds for the interim -- a salve for the badly wounded portfolio. That understanding has carried over to this bear market. Many mention that their interest is fueled by gold being so undervalued.That's it for now. See you back here in a few days. MK- - - - - - - -'Tis the SeasonI have written intermittently about the summer gold doldrums and the chart below generously provided by Spectrum Commodities (please see link below) clearly shows the seasonality of gold demand. September usually marks the New Year for gold and this year promises to be a good one. There are several factors contributing to the optimism building in the gold market. First, traditional Indian demand is forecasted to be strong this year due to a good harvest. India consumes roughly one-third of the annual mine gold production. Second, mainland China will launch a free market in gold based in Shanghai this year. Chinese demand has been forecasted to be the equal to Indian demand. Third, the Dubai gold market in the Persian Gulf has had a very strong year with Mid-East demand scheduled to remain high as the year progresses. Fourth, U.S. demand could continue to grow due to the weaker dollar and faltering equity markets. Fifth, European demand could edge higher as the new currency is introduced for circulation and citizens within the community exercise their perogative to go at least partially to gold as a hedge against the euro. Sixth, the gold carry trade -- the greatest drag to higher gold prices -- continues to unwind as the process of dehedging continues in the mining sector and bullion banks continue to reduce their loan positions. This could be the year that all these factors come to a head. So let me be the first to wish all the goldmeisters a Happy New Year.Spectrum Commodities: "(High: Jan//Low: Jul or Sep) Demand is usually weakest in Northern Hemisphere summer, especially August when European jewelry manufacturers are essentially shut down. Demand is greatest going into fourth quarter, during which consumption is highest as gift-giving peaks beginning with Indian harvest and wedding festivals in autumn and carrying through US religious holidays and Chinese new year."Our thanks to Spectrum Commodities. Reprinted with permission. No further reproduction without permission.- - - - - - - - -I would like to invite anyone who has an interest in gold to click the link below and register for an information packet. That way you will be sure to receive our upcoming issue of News & Views: A Quarterly Review of Forcasts, Commentary and Analsysis on the Economy and Precious Metals along with access to our client only Commentary & Review page.Request Information Henri (08/26/01; 11:03:34MT - usagold.com msg#: 60275) Time to call my Doctor...my medication dosage needs adjusting again. OK, here we are on the apparently non-reversable path to the removal of the dollar as THE world reserve currency.We have the crystal ball and we see what is coming. Dollar value plummeting on the global markets...bond values falling/interest rates rising instep with Fed cuts so that net change is to higher interest rates. Fed down to 0% rates like the Japanese yet bonds still falling as credibility in the dollar declines. Western financial markets collapse and the long planned movement of US gold out of the US and into European/Middle eastern hands begins with claims on outstanding SDR certs.What if we just say no?Dollar value plummeting on the global markets...bond values falling/interest rates rising instep with Fed cuts so that net change is to higher interest rates. Fed down to 0% rates like the Japanese yet bonds still falling as credibility in the dollar declines. Western financial markets collapse.So what they were going to anyway.We could print more fiat and buy back our bonds and other foreign obligations at $0.10/dollar and wipe out the outstanding dollar debt. Does anyone really care if Goldman Sachs and Merrill Lynch go bankrupt in the process??? We are talking about a new playing field here.Let's just take our chips (gold) and go home. We lost, Oh yeah, the bankers will have to be killed by the other players for taking paper IOU's for our gold instead of the real thing. Now there's the problem with all these dollars appearing. What better way to make them disappear then to pay folks to use them. Yeah that's it. Stop the presses, use the money/credit/debt that currently exists and allow it to slowly "burn. Just "Loan" $1,000,000 and only ask for $500,000 back. The shortage of dollars created by such a "burn" would in twenty years deflate the value of the dollar so its market value would return to its good ole value again.As for the loans, No bankers, hedge funds nor foreigners need apply. Only individuals. The excess dollars that were created are gone and slowly , over twenty years go back to)% interest rates instead of -50% rates.Then we will be good to start credit expansion again.OR, just start over with the 8000 tonnes of gold we don't pay out and follow the "Euro" model with a new fiat currency.What of the old dollar? It is worthless when it is no longer supported by those who use it. Everyone starts from where they are. If you own your house (no mortgage), you keep it. If the bank owns your house it liquidates it for fresh credit in "New" dollars. If your bank goes belly up???? Knallgold (08/26/01; 10:36:28MT - usagold.com msg#: 60274) "USA:fear of electricity glut" That was a headline in a swiss newspaper,the journalist thinks the energy crisis in the US is solved.Lots of power plants are being built and are already on the net,gas exploration has increased,alternative energy booming,people save more energy etc.--- leading to an overproduction,"crash after the boom",energy glut and collapsing prices.I have this journalist on record as a Gore fan'so its no surprise he's then firing in the commentary a shot at Bush and his oil friends.Do I hear BlackBlade laughing? tedw (08/26/01; 10:08:35MT - usagold.com msg#: 60273) Gold Series http://www.usagold.com I saw the 4 part gold series on Direct TV last night. Gold certainly has been a major element in the history of man. As the scripture states, "the love of money is the root of all evil" and you could see this in the series. Human nature hasnt changed in 5000 years (except in a few rare individual cases) and one can expect the love of money and therfore gold to play a role in future historical events. To believe that Gold will not be signifcant is to believe that human nature has changed, and that is not the case. R Powell (08/26/01; 08:24:49MT - usagold.com msg#: 60272) World Silver Survey information The survey was prepared for The Silver Institute by Gold Fields Mineral Services Ltd. It contains both statistics and opinions which may or may not be entirely accurate but has often been sited as the source of numbers analysed by others. It's opinions have likewise been the subject of discussion by silver analysts such as Ted Butler and David Morgan. Chapter 1 lists total supply and demand from 1991-2000, with demand for year 2000 at 946.3 million ounces. This includes 25.4 million listed as producer hedging. Producer hedging was listed as zero (nadda) under the supply side. I found this interesting but the report was not clear as to whether this 25.4 million was silver bought by producers last year or whether that amount of previously sold (hedged) had been offset during the year. The report warns of the difficulty in obtaining (and thus assessing) reliable numbers. " A note of caution is warrented about these numbers: unlike gold, the silver market has not benefited from greater transparency and a more regular information flow about producer hedging activity, and reliable, comprehensive statistics are virtually impossible to come by. Part of the reason for this is that a substantial part of silver hedging is generated by producers of other metals." The report also mentions different disclosure laws in various countries and gives the opinion that new mine operations are not happening due to the low POS and this has removed the need for hedging as the means of generating capital for expansion of mining operations. Raising capital is often mentioned as the reason for producer hedging, so much so that the survey directly links the downturn in operations (due to low POS) to a no hedging. Not only is hedging absent as a supply component but 25.4 million ounces are listed under demand. Interesting also that the report states that low lease rates are the result of plenty of available silver for lease (lots of liquidity) or the lack of demand for leased silver due to the absense of producer hedging. Back to the numbers. From the 946.3 million ounces of demand, the survey subtracted the supply from mine production, official sales and reclaimed scrap. The total fell 102.0 million ounces short so, this implied that 102.0 million ounces was supplied from "Implied Net Disinvestment". More later, Rich R Powell (08/26/01; 07:46:33MT - usagold.com msg#: 60271) Gold series again on the History channel this afternoon. All four parts will be aired starting at 3:00 EST. Many of us early risers can now view the episodes we missed and not suffer from sleep deprivation the following day. Rich Cavan Man (8/26/01; 06:51:50MT - usagold.com msg#: 60270) The growing housing market bubble http://www.bloomberg.com/feature/feature998687862.htm No mention of fannies and freddies though. Good commentary Black Blade (8/26/01; 02:48:54MT - usagold.com msg#: 60269) The Growing "Bone Pile" Why "Bone Pile?" Many years ago I was working my way through college at a medical device company. All their discontinued and obsolete inventory was placed in an area of the warehouse designated the "Bone Yard." In the "Bone Yard" were several "Bone Piles." Occasionally an order would come in for something in the "Bone Yard." But these items were considered undesirable and no longer needed. In fact they just took up space. In my years working with mining corporations all the Mines had "Bone Yards" with old rusting undesirable obsolete equipment placed into several "Bone Piles."Recently I posted on the unemployment situation where recent college graduates who were promised jobs as MBA's and others in the Tech and Dot.Com industries were suddenly receiving letters informing them that those jobs were no longer available. In other words they were already "Redundant," "obsolete," and "undesirable" before even having one day on the job. In short they were tossed upon the "Bone Pile" to "take up space and rust." Many "undesirable" and "redundant" employed people will soon be added to the unemployment "Bone Pile" in coming weeks as this Recession gains momentum. The unemployment situation is just a symptom of the worsening economy. Meanwhile we watch as the "Bone Pile" grows larger day by day. Black Blade (8/26/01; 02:30:33MT - usagold.com msg#: 60268) Japanese electronics groups eyeing major job cuts http://biz.yahoo.com/rf/010826/sp134627.html Snippit:TOKYO, Aug 26 (Reuters) - Two of Japan's largest electronics groups, Hitachi Ltd and Toshiba Corp , are each looking at cutting 20,000 jobs because of the global tech downturn and Japan's worsening economic slump, media reported. The cuts come after competitors NEC Corp and Fujitsu Ltd said they would axe jobs as Japan's lumbering electronics giants face their second round of massive retrenchments in less than three years.Black Blade: That's 40,000 Japanese "Bones" added to the "Bone Pile." Japan has traditionally been very reluctant to layoff workers in a country where one is defined by their job. A job in Japan was considered not only a right - but a job for life where even offspring were almost guaranteed a job. Times have changed. All this comes on the heels of the NEC and Fujitsu layoff announcements. Rumors persist that a couple of major Japanese banks are "on the ropes" and may soon announce either mergers or bankruptcies. Another rumor is that the Japanese government has quietly been in the stock market buying shares on the Nikkei. However, the Nikkei Index has performed so poorly that this rumor may be just a rumor, or else the effort is not working out. Netking (8/26/01; 02:09:38MT - usagold.com msg#: 60267) Sunday times recommends gold http://www.sunday-times.co.uk/news/pages/sti/2001/08/26/stibusagn03001.html? Snippit:"DON'T throw your gold trinkets away just yet. As an investment, the metal may have been horribly out of fashion for the past decade, but with world economies continuing to slide, gold could be about to stage a revival. There are already signs that sentiment may be changing. The big gold miners, Barrick, Newmont and AngloGold, have this year been among the better performing stocks on the New York Stock Exchange. So far this re-rating has not fed through to the physical price of gold, which remains stubbornly stuck in a $255 to $285 per ounce (£177 to £198) trading range. But some metals analysts believe it could soon break through the $300 barrier and climb to $350 . . ." Netking (8/26/01; 01:02:31MT - usagold.com msg#: 60266) Toshiba 'to axe 20,000 jobs' http://news.bbc.co.uk/hi/english/business/newsid_1509000/1509020.stm Snippit:Toshiba Corp, Japan's top manufacturer of electronic chips, is planning to cut 20,000 jobs worldwide, according to Japanese media reports. Toshiba's move, which is expected to be announced next week, comes amid a global slump in demand for technology which is hitting Japan's hi-tech firms. On 20 August, the chip and PC giant Fujitsu unveiled a restructuring plan which will see 16,400 jobs go, NEC Corp has announced 4,000 redundancies, and there are also reports that Hitachi is ready to lay off thousands of workers . . . when the official unemployment figure, due to be announced on Tuesday, is expected to show an all-time high . . . " BR549 (8/26/01; 00:54:39MT - usagold.com msg#: 60265) FIAT vs. Value-Based Currency The arguments of whether the bureaucrats in the Treasury that issued Greenbacks or the bankster's Federal Reserve System that issues Federal Reserve Notes is superior, IMHO is a waste of time. The battle rages elsewhere.Both of the above, any way you define them, along with the Euro are FIAT. The real question today is how can the U.S. implement value-based currencies to complete with the Russians, the Egyptians, and the trend in the rest of the world. The surest way is to issue gold coins pegged at a certain real FRN value (or better yet a weighted basket of goods and services similar to the PPP) or return to the gold standard with value-based gold currencies. Will both real gold and value-based currencies be manipulated for the TPTB/banksters benefit? You betcha! But at least with value-based currencies the hoarding that will take place by the citizens that will remove a certain amount of currency from circulation, will distribute the gold to the people, and away from the banksters/government. According to the HC, the U$ had 22,000 tonnes of gold at the end of WWII. We are down to an estimated 8,167 physical tonnes now, a great deal of which the paper title may have been traded away to other nations. Will the Fed voluntarily head in the direction of value-based currency on its own? No, but maybe if we can adequately educate the next generation, it will happen then. Let's hope so at least. Meanwhile, as the football coach said to his team--Let's fight 'em to hell freezes over and then skate after ‘em on the ice." ViewYesterday's Discussion.
Ed. Note: Here we offer a reproduction of MK's 8/22/01 Commentary & Review to give new readers an idea of what goes on at our client-only page. The full Commentary & Review normally appears only at the restricted-access page established for Centennial's clientele, however, access is also available to prospective clients free of charge on a trial basis. Entry requires an easy one-time registration at the link above.
8/22/01
In Brief: Gold jumped sharply higher in Europe overnight as traders reacted to the latest rate cut and a weaker dollar. The euro moved to five month highs against the dollar on good results from the latest survey of business confidence in Germany. UBSWarburg reports short covering and fresh buying as driving the market overnight. The Australian Financial Review is buoyant on gold's prospects emphasizing gold's strong showings in the past when the dollar has gone into a period of decline:
The real beneficiary of the weaker US dollar was the gold market. On Friday it snapped up through $US280 an oz for the first time in three months, before closing around $US279.50 an oz. Gold and the US dollar have a close relationship. As the US dollar falls, gold rallies. As gold is traded in US dollars this inverse relationship should exist, if all else is excluded. But other factors, like central bank gold sales, interest rates and gold lease rates, do affect the gold price. Back in 1985 the US dollar triggered gold into a wild bull market. A number of traders are now hoping that 1985 will repeat itself. Then the US dollar collapsed and gold rose from $US300 an oz to $US500 an oz.
We have seen a dramatic increase in the number of inquiries at Centennial Precious Metals/USAGOLD over the past several days. Most of the callers note that they are ready to move funds out of the stock market and into gold. Stocks continue to suffer from poor earnings results, the faltering dollar and weakened economic prospects in the United States -- not to speak of the fact that the air is being let out of the greatest equities bubble in history. A growing coterie of analysts -- especially those detached from the Wall Street equity firms and banks -- are beginning to call this a primary bear market. Yesterday's one quarter point cut failed to even slow-down the building negative sentiment in the stock market. Bear markets on average in the past have lasted from 12 to 15 years. Gold during equities bear markets has been a contra cyclical alternative where the investor could safely park funds for the interim -- a salve for the badly wounded portfolio. That understanding has carried over to this bear market. Many mention that their interest is fueled by gold being so undervalued.
That's it for now. See you back here in a few days. MK
- - - - - - - -
'Tis the Season
I have written intermittently about the summer gold doldrums and the chart below generously provided by Spectrum Commodities (please see link below) clearly shows the seasonality of gold demand. September usually marks the New Year for gold and this year promises to be a good one. There are several factors contributing to the optimism building in the gold market. First, traditional Indian demand is forecasted to be strong this year due to a good harvest. India consumes roughly one-third of the annual mine gold production. Second, mainland China will launch a free market in gold based in Shanghai this year. Chinese demand has been forecasted to be the equal to Indian demand. Third, the Dubai gold market in the Persian Gulf has had a very strong year with Mid-East demand scheduled to remain high as the year progresses. Fourth, U.S. demand could continue to grow due to the weaker dollar and faltering equity markets. Fifth, European demand could edge higher as the new currency is introduced for circulation and citizens within the community exercise their perogative to go at least partially to gold as a hedge against the euro. Sixth, the gold carry trade -- the greatest drag to higher gold prices -- continues to unwind as the process of dehedging continues in the mining sector and bullion banks continue to reduce their loan positions. This could be the year that all these factors come to a head. So let me be the first to wish all the goldmeisters a Happy New Year.
Spectrum Commodities: "(High: Jan//Low: Jul or Sep) Demand is usually weakest in Northern Hemisphere summer, especially August when European jewelry manufacturers are essentially shut down. Demand is greatest going into fourth quarter, during which consumption is highest as gift-giving peaks beginning with Indian harvest and wedding festivals in autumn and carrying through US religious holidays and Chinese new year."
Our thanks to Spectrum Commodities. Reprinted with permission. No further reproduction without permission.
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