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

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ARCHIVED DISCUSSION FROM 8/31/2001
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Netking (08/31/01; 23:28:23MT - usagold.com msg#: 60636)
Silver bugs - US Mint's potential purchase
I heard elsewhere from a respected source that in the WSJ(Washington Wire section):

The US Mint is procrastinating whether to produce ANOTHER 500,000 Buffalo-head silver dollars, since the first batch blew out the door.

What was Not mentioned is the fact that the US Mint will be out of silver, VERY soon, and will fear the day, when that comes around (wouldn't you?) . . .

You gotta pity these govt. officials, tossing & turning in their beds in a cold sweat after reading Sir's Ted Butler & Dave Morgan's analysis & PM articles, they'll be thinking about how much they need to buy over the next two years.

Apparantly these are the coins that sold for $30+ per ounce, so you'd think they'd be pumping them out like crude oil, faster than than they can print new money yes?

It might be suggested that the US Mints needs are small compared with the overall silver market demand & Supply? No Sir!, it won't take much to turn this market, even a 1% purchase of total physical annual supply could be enough to start a chain reaction, the market is tight . . . if the US Mint doesn't buy 'em now, well how much do they want to pay, next year or the year after?


Black Blade (08/31/01; 23:19:09MT - usagold.com msg#: 60635)
RE: BR549 - Jackson Hole or Cody?

You might be thinking of Jackson Hole, WY. You can see the Tetons from there. Yellowstone is just north as you go past the Elk Refuge and past Jenny Lake. Cody is at the east of Yellowstone and you see the mountains of Shoshone Nat. Forest to the west. Both places are rather "Touristy" for the flatlanders though. Easy to confuse them. Generally the people in the western states are quite friendly and stop to give a helping hand. Quite different from the East and Left coasts. Refreshing to see that - heck, even I tend to stop and help out stranded motorists - that's something almost unheard of elsewhere. Maybe you can visit this part of the country again sometime. Cody has the Buffalo Bill Museum (?) with the display and artifacts of the Plains Indians (Indigenous Peoples for the politically correct), and a summer long Rodeo if you like that kind of thing. Jackson has a nice saloon called the Silver Dollar. The bar is inlaid with Morgan Silver dollars and the bar stools are saddles. Cheers!

- Black Blade

Note: What would be interesting is to have several regional USAGOLD forum poster "get togethers" and link pictures in an archive from different parts of the USAGOLD universe. Just a thought anyway.


Sierra Madre (08/31/01; 23:13:18MT - usagold.com msg#: 60634)
A video that would be a treasure for years to come....

Would give us two hours of viewing recordings of the principal gurus and analysts pushing the stock junk, back in late '99 and through 2000, that was going to sink the American investor who listened in awed respect to their advice and sank his life's earnings into the trap set for him.

Now THAT would be worth seeing on the History Channel! It would be precious indeed!

But, of course, we will never see it. No way!

Sierra



Chris Powell (08/31/01; 23:06:46MT - usagold.com msg#: 60633)
Where is gold's Patton? Bill Murphy answers Mining Web's Tim Wood
http://groups.yahoo.com/group/gata/message/877
Where is gold's Patton? GATA's Bill Murphy
replies to Tim Wood's question at
www.TheMiningWeb.com.

http://groups.yahoo.com/group/gata/message/877


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BR549 (08/31/01; 22:43:54MT - usagold.com msg#: 60632)
On vacation with BB
This doesn't have anything to do with GOLD but since we are all on vacation. I was in Cody, WY in a brand new Motor Coach pulling a tow vehicle when I noticed I had a flat. We pulled into the local tire store and expected a "hosing" and a wasted day. Not only did those people fix our tire by replacing it, they got us an adjustment and put us on the road again in record time. What a great place. And what a view of the Grand Titon Mountains in the background.

My Rottweiler who travels as a security protection alarm does not like the buffalos grazing in Yellowstone NP for some reason.

The only thing better than when the mantra was "Buy The Dips!" is "dollar cost averaging" now that we are in a bear market. You don't hear much of that anymore either.

OK, buy physical Gold instead of Dollar cost averaging even if you are on vacation.






Black Blade (08/31/01; 22:21:48MT - usagold.com msg#: 60631)
RE: CB2 and BR549,

Just rolled into Lake Village in Yellowstone NP. Cheers from Yellowstone! Came through the Big Horn Mtns. (Yellowstone East). Had I known that I was going to have some time on my hands I would have tried to contact Sir Pheonix for a tall cold "Golden" one as I went through Cody, WY. If he's reading this maybe we can still do that on Monday afternoon (La Comida, Irma's, or The Gardens perhaps?). Looks like we have a lot to reflect on as we await the market action in Asia and on Tuesday in NY. As I have said, there is just absolutely no positive news whatsoever in the Global economy, and that "Leaked" draft IMF report calling for a devastating "Global Recession" just put another nail in the coffin. I am hearing from several sources that there simply isn't any good news or any reason to get into the market at all. Some people say that they are "on the sidelines" until there's a reason to jump in. Not a one says that they are going bargain hunting. What a change from past days when the mantra was "Buy The Dips!" Gold and Silver looks to be the smart move now along with some defensive plays for portfolio protection (preservation of wealth) while we await the real "fallout" as this Recession deepens. In a word, this Global Economy looks "Grim." Cheers!

- Black Blade


BR549 (08/31/01; 21:41:59MT - usagold.com msg#: 60630)
So is this inflation or deflation?

-the hoarding of currencies by citizens fearing the worst

-sustained decline in the aggregate level of prices

-retail stores report diminished sales except for some discounters

-prolonged erosion of economic activity reflected in lower earnings

-existing supplies exceeds aggregate demand

-inventories building to record levels

-market prices do not cover expenses and corporate profits are falling

-significant erosion of productivity in manufacturing

-reduction in the long-term pace of capital investment

-decline in technological development

-high unemployment changes in the composition and age of the labor force

-shift away from manufacturing activities to service industries

-rapid proliferation of government regulations

-diversion of capital investment into nonproductive uses

-growing scarcity of certain raw materials

-social and political developments that have reduced work incentives

-various economic shocks such as international monetary and trade problems

-large oil price increases

-manipulation by government in free market price of gold

-no demand for money at zero interest rates as the BOJ has proven exists

-the fear of inflation used as a tool to combat the real problem of deflation

-the escalating exchange of FRN's & other valued assets for physical gold and silver

So which is it?

You conceptual types do not recognize any form of deflation for two reasons-
1. fiat can never be deflated by definition
2. you do not understand what deflation is

Am I wrong?


BR549 (08/31/01; 20:35:25MT - usagold.com msg#: 60629)
In reference to my expert in the theory of Austrian Economics.

Money supply increasing is a sign of inflation, decreasing the opposite. Deflation is really what is going on. You have gotten me interested in this and I am still investigating. My leanings to date have been towards the Milton Friedman School but my mind is open.

Sorry, my friend, "my bad". I did misinterpret your wise thoughts earlier. I am still one of your biggest fans and I pay attention to each of your posts. You integrity has never been in question.

Blame it on a "bad day" in the neighborhood. Now that Mr. Rodgers is gone, it will be tougher and tougher on all of us.

Warmest regards,

BR549


Chris Powell (08/31/01; 20:34:01MT - usagold.com msg#: 60628)
Where is gold's Patton
http://groups.yahoo.com/group/gata/message/876
The Mining Web asks: Where is gold's Patton?

http://groups.yahoo.com/group/gata/message/876


To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@yahoogroups.com


BR549 (08/31/01; 20:14:37MT - usagold.com msg#: 60627)
Just north of Alan Greenspan in Jackson, WY
Black Blade (msg#: 60623)—
"Speaking of holiday weekend, I am gone to Yellowstone NP (just north of Alan Greenspan in Jackson, WY) for some hiking, fishing and beer consumption with family and will check in occasionally."

BB-How in the heck are we supposed to find out what is going on in the "real world" without you. Did you get this time off approved by us here at the forum? I love Yellowstone NP and Jackson Hole, both are some of my favorites.

No kidding, I join my friend c2b in applauding your links. Have a great time. If you run into AG out there on the trail, you know the questions to ask him. And drink a tall one for us here slaving over a hot keyboard while you are gone.

Randy—
I think that you are taking entirely too long in making that sandwich for lunch. No hurry, I am just curious as to what I misunderstood earlier. I have doing a little research on the Fed that I will probably be ready to go with tomorrow or after the Holiday.



Regards,

BR


Centennial Precious Metals, Inc. / USAGOLD (08/31/01; 18:05:00MT - usagold.com msg#: 60626)
Last chance/notice on these Swedish gold kronors... to be replaced tomorrow with a new offer!
http://www.usagold.com/onlinestore/special.html

Swedish gold

Swedish Gold

10 & 20 Kronor Coins

Uncommonly good prices on these uncommon coins.

Each month, watch your portfolio grow!



CoBra(too) (08/31/01; 17:51:31MT - usagold.com msg#: 60625)
- BB - you're a gem ... thank you -
and as the London City expects another 140K lay-offs, due to the soft economy - can you say recession, or - good Lord - depression - Shroders just fired its CEO, blaming him for a 68% contraction of earnings in the first half of 01, getting them out of investment banking. -

The former Shroder's CEO should instead get a merit ...
though, again the messenger is going to be dis-inherited for the sin of parlaying his masters SPIN!
Chin-chin - cb2


Gold Trail Update (08/31/01; 16:03:52MDT - Msg ID:60624)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

Black Blade (08/31/01; 15:18:06MT - usagold.com msg#: 60623)
Wall Street's summer: Profits evaporate, job cuts surge
http://biz.yahoo.com/rf/010831/n31206725_2.html

Snippit:

NEW YORK, Aug 31 (Reuters) - It was a rough summer for Wall Street's investment banks: Quarterly earnings are expected to drop by as much as 48 percent and prospects for a late-year recovery grow dimmer by the day. Wall Street firms, including Morgan Stanley (NYSE:MWD) and Goldman Sachs Group Inc. (NYSE:GS), are cutting staff and costs to cope with evaporating profits in a stock market that is close to hitting the 2-year lows carved out in April. The financial industry is reeling from a sharp decline in merger activity and new stock offerings, two of the securities industry's two biggest money makers.

Black Blade: This is not good news for the bankers and investment houses as it relates to the drag on Wall Street on the heels of brokers tossed upon the "Bone Pile" and corporate earnings that now seem to have gone to "Money Heaven." There was very little action on Wall Street today and with that note, one has to wonder if the Working Groups in Financial Markets were slugging it out with sellers for miniscule positive gains ahead of the holiday weekend. Speaking of holiday weekend, I am gone to Yellowstone NP (just north of Alan Greenspan in Jackson, WY) for some hiking, fishing and beer consumption with family and will check in occasionally. Thanks to all here who have kept the "Golden Light} glowing bright. Have a good "Golden" weekend all.


Late breaking news - LAM Research (LRCX) is laying off 10% of their workforce - piling up more "Bones" on the ever growing "Bone Pile."


auspec (08/31/01; 15:12:42MT - usagold.com msg#: 60622)
Tribute
Just a moment of grattitude for the many posters, present as well as past, who have given countless hours and/or years to the pages of this Forum. For various reasons, many have moved on, some with ease and some with difficulty. This is truly a dynamic place. Enough said. Thanks to the many!
0091D37807


Sierra Madre (08/31/01; 14:51:53MT - usagold.com msg#: 60621)
Citibank arrives in Mexico with axe in hand....
Rumor has it that Citibank is to chop 9,000 employees and executives from the payroll of Banamex, Mexico's premier bank, now the property of Citibank.

These are highly paid people with cushy jobs, la créme de la créme - and they will shortly be out on the street looking for non-existent job openings. Who will hire an ex-banker?

"globalization"= "Americanization". These up to now, complacent ex-Banamex people are finally going to realize what dollarization and US takeover means. It doesn't mean "business as usual, only using Dollars". Capital arrives with its owners and they lay down the rules. No more three hour lunches paid by the Bank. In fact, no more lunches, period.

Mexico will have to get used to US customs, it appears. And, later on, US methods of taxation.

Monterrey, Mexico's leading industrial city, is in mourning, its main industries on the verge of bankruptcy, what with the "strong peso" (at least for the time being) and disappearing markets in the US, while the owners fly about the world in $45 million Dollar jets entertaining friends and customers. "Let them eat cake", is what they are thinking, I guess.

No one has a clue as to what to do, except find who to blame.

Sierra


Netking (08/31/01; 14:43:40MT - usagold.com msg#: 60620)
Japan II . . . heading to "Skid Row?"
Goldbugs, we have only seen a small preview of what will really happen there & elsewhere yes. . . for those without gold & real hope things will ger very grim - Netking

Snippit:
" . . . bad debts built up on risky property and share speculation in the high-spending 1980s - estimates go as high as 200,000bn yen($169bn) - are crippling corporate Japan . . . so there is little prospect that new jobs will appear in a hurry - not least, says Mr Takeshita, because Japanese companies have yet to face up to the role their own structures have played in exacerbating the situation."

"This hollowing-out is happening at a rapid pace... We will strive to ensure a stronger safety net, but it's possible that if domestic companies slim down too fast, it may be insufficient" - Masajuro Shiokawa, Japanese finance minister.


CoBra(too) (08/31/01; 14:43:24MT - usagold.com msg#: 60619)
I'm Impressed -
Just before the last real summer (Labor Day) Weekend the BLS has come out with some marginal positive statitics - not that they won't get revised at a later date, though, that's beside the point - No, I'm impressed with the resilience of the bear, only allowing a marginal (up)beat tone. Insinuating these clowns are really beat - hopefully not around the Mulbery B. - and they couldn't even start to change the drone of worsening ecomic news around the globe.

Still, all have a great holiday weekend, as next week the beat will go on in sincerity - best to all of you
cb2



Tam (08/31/01; 14:30:53MT - usagold.com msg#: 60618)
Easy to read COTs gold open interest and commercial shorts down 12,000 contracts
http://www.321gold.com/cot_gold.html
It's a pretty big drop in open interest and commercial shorts for such a small move in gold. Remember, we are moving into the highest potential for gold and silver from a seasonal time. Now, this week and next is about the best time of the year to be buying physical gold.

Netking (08/31/01; 14:28:55MT - usagold.com msg#: 60617)
Hitachi cuts 14,700 jobs
http://news.bbc.co.uk/hi/english/business/newsid_1518000/1518222.stm
Hitachi, just the latest in what will be a long list we're all sure has said they'll cut 14,700 jobs. The company also warned that it expected to make a 140bn yen($1.2bn) loss for the full year to March, rather than the 90bn yen profit it had previously predicted.

Netking however is more interested in those Japanese banks for the moment . . .


site steward (8/31/01; 13:50:16MT - usagold.com msg#: 60616)
Is your portfolio capable of weathering a long Labor Day Weekend?
Because you never know what "tomorrow" may bring, call Centennial today!

My advice to you.

R.


site steward (8/31/01; 11:48:33MT - usagold.com msg#: 60615)
Thanks, BR549
"...it seems as though some interpret this attempt to get at the truth as an endorsement of Fed activities and goals."

Ha Ha! If true, that's quite amazing, isn't it? Does my 93% gold diversification sound like the position of "true paper believer"?

The only thing I endorse is man's humanity to his fellow man in conjunction with the pursuit of life, liberty, and happiness/property. I advocate physical gold ownership as a key component in the grand scheme of our interdependent lives on earth.

As for the rest, I find it helps to understand how the various components of the world function, particularly the important elements of money, banking and economics. I would sure hope that the larger portion of the population is like you -- able to recognize the merits of a dispassionate examination and presentation of such fundamental items as we attempt to discuss here (banking, money, investments, etc).

I see that you had a list of additional points of inquiry. I'll try to get to those in a bit, but first things first. I haven't had anything to eat yet today.

Away.... in quest of a sandwich.

R.


USAGOLD (8/31/01; 11:37:48MT - usagold.com msg#: 60614)
Corrections and Dreams of Happy Euros Dancing in Their Heads. . . .
My headline got scramblied somehow. Supposed to read:

Today's Commentary Includes a Quick Look at the BIS/ Panizutti Comments

-----------

Also, the euro is now trading down .77¢ -- a significant turnaround from yesterday's up move. This may be the result of the point I made yesterday about lowering euro rates being the "wrong move at the wrong time." A strong euro will not occur in a vacuum. Europe has to want it; and they have to do something to make it happen. I've taken golf shots with a lacksadaisical attitude hoping that fate will smile nobly on me -- dreams of a great shot dancing through my head. It never works. My ball promptly visits the water or makes friends with a nearby tree. . . . . .So maybe the euro needs a golf lesson -- or is that "gold lesson?" Did they lower rates yesterday hoping forex would overlook the fact the policy looked like the "same old-same old." As I said yesterday, if its going to be inflation in tandem, then neither currency is hedge against the other. Only gold will get the job done for the investor.


site steward (8/31/01; 11:29:09MT - usagold.com msg#: 60613)
Through open market operations the Fed adds $4.5 billion more reserves
Through five-day repurchase agreements the Fed provided $4.5 billion in additional temporary reserves to the nation's banking system. (please see my prior post today for additional info on these operations)

Today's action looked justified in support of policy this morning -- the market in overnight funds was trading tighter (3.688%) than the FOMC target.

R.


BR549 (8/31/01; 11:28:55MT - usagold.com msg#: 60612)
Permanent Reserves and other definitions
Randy,

My thanks for your assistance in helping me to define in real terms what the Federal Reserve does via adding to permanent reserves, how they account for it on their balance sheets and financial statements, what it does to fractional reserves for member banks in expanding the money supply, what this does to inflation/deflation, etc. and your great work at providing this current financial information to this site on a timely basis.

However, it seems as though some interpret this attempt to get at the truth as an endorsement of Fed activities and goals. I would suggest that those of differing economic persuasions at least take the time a go back through all of the threads that you and I directed at each other in reference to the above topic and attempt to understand it for themselves. Once having accomplished that, then those others may then be able to understand the "real world" and then put forth their own Conceptual eClownomics as a result.

I am getting a little thin skinned I guess.

Thanks again for your efforts in my behalf.

Regards,

BR549



USAGOLD (8/31/01; 11:25:13MT - usagold.com msg#: 60611)
Today's Commentary Includes a Quick Look BIS/t the Panizutti Comments
http://www.usagold.com/Order_Form.html
Note: My (almost)daily, on-line Commentary and Review is
available to prospective clients on a trial basis by registering at the link above. US-based registrants will also receive a hard copy of our 32 page News & Views: A Quarterly Review of Forecasts, Commentary & Analysis on the Economy and Precious Metals. The Quarterly Review will also be available for download here in the near future.

8/31/01

In Brief: Gold was down in New
York this morning with trading
still centering around ECB
interest rate cut and now a
weaker euro. (I will leave up
yesterday's report on the euro
rate cut and currency
introduction for your weekend
review.)

In an interesting and unexpected
twist, the Bank for International
Settlements, in the person of
Giacomo Panizutti (Head of
Foreign Exchange and Gold) came
out unofficially sanctioning a
5200 tonne total gold loan
figure. Some private sector
analysts put the figure much
higher -- in the 15,000 to 25,000
tonne range. Panizutti's comments
are the first I can recall from a
central bank official on the
overall gold lending pool. A
Financial Times summary of the
report which appears in an
upcoming Alchemist, the quarterly
London Bullion Marketing
Association's flagship
publication, contains the
puzzling caveat that Mr.
Panizutti is speaking for himself
and not the BIS. This may have to
do with the fact that much of the
lending that goes through the
bullion banks is by private
contract and not subject to
public scrutiny. As I pointed out
in a recent article posted at the
USAGOLD forum (reprinted in its
entirety below - - - "Some
Saturday Night Reading. . ."),
the lower figure probably does
not include the fractional
reserve lending of gold. The
shaky nature of the claim is made
even more wobbly by the fact that
Mr. Panizutti appears to estimate
(guesstimate?) the level of
lending outside the fifteen
central banks that signed the
Washington Agreement.

This morning's gold trading was
characterized as quiet going into
the long Labor Day weekend in the
United States. Gold seems to want
to go higher and the euro lower.
(See following article.) Gold
demand at Centennial Precious
Metals/ USAGOLD has been very
strong the past few days with
investors citing as primary
incentives the flagging stock
market (now under the benchmark
10,000 figure) and general unease
over the economic situation.
September and October usually end
up the worst months for equities
globally and the best months for
international gold demand. That
combination could lead to some
interesting market action in the
weeks and months ahead.

That's it for today. We'll see
you back here on Tuesday. Have a
Good Weekend.



Old Yeller (8/31/01; 11:20:45MT - usagold.com msg#: 60610)
The writer uses the word interesting'several times
http://www.prudentbear.com/boards/user/non-frames/message.asp?forumid=4&messageid=67044&threadid=67033

I would concur with that assessment.


Gandalf the White (8/31/01; 10:39:18MT - usagold.com msg#: 60609)
WOWSERS Black Blade !!!
You are "on-a-roll" !!! Keep those gems coming !!!
The Hobbits thank you for all your efforts.
<;-)


John Doe (8/31/01; 10:32:32MT - usagold.com msg#: 60608)
Canuck
I guess the short answer to your questions posed yesterday is that the system, net, is always running inflation in money supply terms, especially since the full global fiat regime was put into play in 1971. People and machines produce goods and services, but the money masters are always two steps ahead in siphoning off their share. If the system ever even begins to approach monetary contraction, the Fed et al will monetize everything in sight and the .gov will ramp up the deficits.

What modern analysts describe as "deflation" is actually a slowing in the prior rapid growth of the money supply and/or a decrease in the prior high rate of money velocity. This may well seem "like deflation" and can even produce deflation-like (falling) effects on prices. But the prices mainly affected will be among those items that were artificially pumped due to the prior excessive money growth. Unfortunately, anything that was already collared during the expansion phase to prevent price signals, e.g., certain commodities, may well continue to display falling or stagnant prices if the collars are not lifted. I hope gold and silver are not among these.

In any event, due to it's so-called structure, the system must inflate forever or else commerce grinds to a stop, but only the destruction of much of the past debt will clear the system. Yet, the destruction of so much unproductive debt will destroy finance. This is the final quandary of an irrational, floating unit of monetary measure. No fundamental constants in finance means no science of money, no predictability, and certainly no economic justice. Economics degenerates into a mere religion or propaganda organ. There is a vestige of a system at play here, but it falls into the category of chaos dynamics and managing those effects.

Mankind can do (and has done) better than this. The banks and .gov want to have our cake and eat it too, but ultimately, they will end up with mostly pie on their collectivist, anti-free-market faces.


Chris Powell (08/31/01; 08:46:21MT - usagold.com msg#: 60605)
BIS official's comments seen as responding to GATA
http://groups.yahoo.com/group/gata/message/875
Conspiracy theorists, yes -- but conspiracy
theorists who made the Financial Times today!


http://groups.yahoo.com/group/gata/message/875

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uponroof (08/31/01; 08:27:21MT - usagold.com msg#: 60601)
Cavan Man
Yes, fractional gold banking, gold carry trade is the folcrum of our battle. Your point is well taken. However, I am very pleased with the approach Ms Roberts took on this story. It may not be zeroing in on our bread and butter issues but it sure raises some questions about previously unquestioned institutional practices.

This paragraph in particular rings of questioning authority:

"..His comments come at a time when the 15 European central banks who signed the 1999 Washington Agreement on gold are under mounting pressure to publicise their lending levels, and some analysts think the interview might have been an unobtrusive way of doing this..."

"An unobtrusive way of doing this"....in other words a calculated pre-emptive disclosure designed to minimize further prying questions from the likes of GATA. Very clever on Ms. Roberts part to point this out. One would almost detect that the BIS is on the defensive from the tone of this report.



ge (08/31/01; 08:27:18MT - usagold.com msg#: 60600)
uponroof (08/31/01; 07:31:19MT - usagold.com msg#: 60596)
http://www.bis.org/publ/r_qt0106d.pdf
Quoting Howe;
http://www.goldensextant.com/commentary12.html#anchor134137

May 26, 2000. Gold: Can't Bank with It; Can't Bank without It!

"At the end of 1999, the BIS put the total notional amount of gold derivatives at US$243 billion, up from $189 billion at the end of June. Converting the year-end notional amount to tonnes at the year-end gold price ($290/oz.) gives just over 26,000 tonnes."

See page 7 of the BIS link for the latest numbers.

Again quoting Howe:

"What does this number mean? How should it be interpreted? Is it really as large as it looks? Analysts are unlikely to agree. I look at it this way. If the net short physical position is 10,000 tonnes, and if that position has been fully hedged (far from certain), the total notional value of all that business should be around 20,000 tonnes. In that event, using 26,000 tonnes as the total notional amount for all gold derivatives, the net short gold derivatives position -- over and above the net short physical position -- is about 6000 tonnes, and the bullion banks have undertaken to deliver this amount in addition to what they must deliver to cover the net short physical position of 10,000 tonnes."

In other words, if the net short physical is 5,000 tonnes, as some suggest, we are looking at a naked short of 16,000 tonnes (26,000-2*5,000).


Cavan Man (08/31/01; 07:48:26MT - usagold.com msg#: 60598)
uponroof
The focus needs to be on fractional gold banking and the gold carry trade etc. A multiple of three would take that number to Veneroso's. Do we expect the BIS, even "off the record" to admit more gold has been "fractionally" lent vis a vis esoteric paper instruments than exists in the Euro system. THE PROBLEM IS THE PAPER.

uponroof (08/31/01; 07:31:19MT - usagold.com msg#: 60596)
BIS Banker Speaks on Gold.....
http://globalarchive.ft.com/globalarchive/article.html?id=010831001548&query=Giacomo+Panizzutti
Last night's MIDAS included a breif Bloomberg report on Giacomo Panizutti, a BIS BIG MAHOFF asserting amounts of gold lent over the past 2 years. Well this morning's FT has picked this up and with great detail. Note the slant on GATA and Mr Panizutti's convenient timing, of his (dis) information in relation to the Boston trial date.

Hey folks, a few short months ago GATA's position would have carried absolutely no credibility within this world class media outlet. Today it gets at least a fair shake...and perhaps even more credibility than the BIG MAHOFF at BIS! Nice work Ms. Adrienne Roberts



Cavan Man (08/31/01; 06:47:29MT - usagold.com msg#: 60595)
Black Blade
Yeoman's work Sir!

uponroof (08/31/01; 06:28:12MT - usagold.com msg#: 60594)
Black Blade......IMF Warning
Thanks for that very important article. The IMF carrys some hefty weight in determining economic outlook. Recall what happened to the dollar after they proclaimed it overvalued and dangerous.

Should be an interesting day in the markets.

Also, from the article: "...The point is also made by some US economists, who contend the US should focus for now on additional measures to revive growth - rather than on shoring up its shrinking federal budget surplus..."

Note this second to last paragraph in the article (above) about focusing on growth not dwindling budget surpluses. A good idea but something that will never happen. The dwindling budget surplus is being demigogged by the democrats daily. The latest being Senator Hillary Clinton who suggested passing measures to retract whatever's left of Bush's tax refund package. The democrats will be relentless in their pounding away at the loss of the surplus (which hubby Bill worked so hard to create-PUKE!). This approaching economic mess will become a political mud fight with nothing of real substance to stave off the inevitable.....very similar to the late 70's and early 80's.

Thanks again.

Have a great day!




Black Blade (08/31/01; 06:18:09MT - usagold.com msg#: 60593)
Priming the Pump?
http://www.mrci.com/qpnight.asp

There appears to have been a concerted effort to push futures higher in positive territory in the last hour. Could be the Working Groups in Financial Markets trying to "Prime the Pump" when many are taking off for the long holiday weekend. Failure today could be crushing come Tuesday.


Black Blade (08/31/01; 06:08:32MT - usagold.com msg#: 60592)
Be Afraid - Be Very Afraid
http://www.capitalinsight.co.uk/pdf/300801gdp.pdf

Interesting commentary.


Black Blade (08/31/01; 06:01:14MT - usagold.com msg#: 60591)
Nikkei Could Soon Breach 10,000
http://biz.yahoo.com/rb/010831/business_markets_japan_stocks_nikkei_dc.html

Snippit:

TOKYO (Reuters) - Tokyo's once-mighty Nikkei 225 average could soon breach the key 10,000 level for the first time in 17 years, analysts say, slapped down by economic weakness and slow-moving structural reforms. ``I want to believe the market won't dip under 10,000, but it's a struggle staying positive right now,'' said Yoshinobu Muraoka, fund manager at DLIBJ Asset Management, which oversees 402.65 billion yen ($3.37 billion) of investment trusts. ``We know the Japanese economy is bad, but a pretty bearish scenario forms when you throw in dwindling confidence in policy and heightening risk of a global recession.''

Black Blade: Global Recession? - yes!


Cavan Man (08/31/01; 06:00:25MT - usagold.com msg#: 60590)
Our favorite Austrians.....
are prominently mentioned in the 8-20 edition of Forbes. Sorry to say no mention of CB (too). However, for myself, CB (too) follows right behind Mises and Hayek. Keep up the good stuff Cobra!

Black Blade (08/31/01; 05:50:22MT - usagold.com msg#: 60589)
Global Market Action - Grim
http://quote.yahoo.com/m2?u

Asian Markets got skaughtered last night and European Markets look "Grim" as well. We live in "Interesting Times."


Black Blade (08/31/01; 05:41:53MT - usagold.com msg#: 60588)
IMPORTANT! - LEAKED IMF REPORT!
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3BOSJX0RC&live=true&tagid=IXLYK5HZ8CC


As I posted last night, this "leaked" IMF draft of next month's report warns of very "Grim" Global Recession similar to the early 1980's! I say much worse, we shall see. There could be some reaction to this info. Time to definitely consider adding PMs as portfolio insurance as we know what happened in the early 1980's. Cheers!

- Black Blade


LeSin (08/31/01; 05:15:30MT - usagold.com msg#: 60587)
Sir Singlion From the Eagle Castle - "Interesting Statements - Indeed"
Japan under pressure as $ systems under threat. 
(singlion) Aug 31, 04:55

"The Worldwide scramble to appropriate wealth through "financial manipulation" is the driving force behind this crisis. It is also the source of economic turmoil and social devastation. In the words of renowned currency speculator and billionaire George Soros (who made 1.6 billion dollars of speculative gains in the dramatic crash of the British pound in 1992) "extending the market mechanism to all domains has the potential of destroying society".4 This manipulation of market forces by powerful actors constitutes a form of financial and economic warfare."

Snapshots from 1997:
                    "In Japan-where the yen has tumbled to new lows-"the Korean scenario" is viewed (according to economist Michael Hudson), as a "dress rehearsal" for the take over of Japan's financial sector by a handful of Western investment banks. The big players are Goldman Sachs, Morgan Stanley, Deutsche Morgan Gruenfell among others who are buying up Japan's bad bank loans at less than ten percent of their face value. In recent months both US Secretary of the Treasury Robert Rubin and Secretary of State Madeleine K. Albright have exerted political pressure on Tokyo insisting "on nothing less than an immediate disposal of Japan's bad bank loans-preferably to US and other foreign "vulture investors" at distress prices. To achieve their objectives they are even pressuring Japan to rewrite its constitution, restructure its political system and cabinet and redesign its financial system... Once foreign investors gain control of Japanese banks, these banks will move to take over Japanese industry..."

We are now facing a strengthening yen as Japanese funds are repatriated and the real pressure are on the $ faction but IMF ASKS JAPAN TO AGREE TO FINANCIAL SYSTEM ASSESSMENT:
           The International Monetary Fund has asked Japan to agree to a special assessment of its financial system.Such an assessment would involve IMF and World Bank staff, officials from financial supervisory authorities and central banks.
A Japanese government official said that accepting an IMF team would be difficult but added that Tokyo is opened to the IMF giving opinions about the economy.The official added that the IMF has also pressed for stepped-up action on Japan's bad loan problem.

We must watch this situation very carefully



lamprey_65 (08/31/01; 05:03:43MT - usagold.com msg#: 60586)
Caught in a feedback loop?
http://biz.yahoo.com/rf/010831/t125873.html
"A stronger yen resulting from a Wall Street slide weighed on major exporters such as consumer electronics giant Sony Corp , which fell for a third day to close down 5.37 percent at 5,290, the lowest close since March 1999.

A stronger yen erodes overseas revenues of exporters when repatriated to the Japanese currency."

I noticed yesterday that the dollar began to tank AFTER the DOW began its descent...Japanese and other foreigners repatriating monies and cashing out, thereby causing the dollar to drop as they convert to their native currencies? (Which bolsters the Yen, adding to problems for Japanese exporters --- not to mention the banking problems).

Not a pretty picture, folks.





BR549 (8/31/01; 02:45:00MT - usagold.com msg#: 60585)
So the Fed buys Treasury Securities from its member banks?
This expands member banks abilities to make loans via fractional reserves.

The Fed compensates the former owners of securities (not the treasury) with FRN's?

The transaction is carried on the Fed balance sheet as an asset? (And also as a receivable?)

The transaction is also carried on the liability side of the Fed balance sheet? (As a payable?)

Former owners accounts at member banks are carried as credits to depositor's accounts?

Result, the money supply is expanded via fractional banking without having to print money?

If goods and services remain constant, then inflation results?

Fed target rates are judgment calls that may cause the Fed to buy or sell Treasury securities regardless of other factors?

Even if the FOMC overnight rate dictates an above condition, sometimes these inflationary moves take place anyhow?

Repurchases put a time limit on the manipulations of above.

The reason that the Fed does this is to put liquidity into the Bankster system so more fractional reserves can be created?

Is that about it? If not, please let me know.

Thanks, I think I am getting there.

BR549



Belgian (8/31/01; 01:48:24MT - usagold.com msg#: 60584)
@ Sir Randy
# 60568. Much more than * courageous * ! And, please do know that I'm appreciating (100%), what you do and who you are .

Thank you fine Sir.


Spartacus (8/31/01; 01:37:03MT - usagold.com msg#: 60583)
They are getting nervous....
The Euro/U.S. Dollar
Shore Up Euro to Fight Slump, Japan Official Warns Europe (International Herald Tribune)
Friday August 31, 2.001. 8.00AM GMT.

"Undervalued against both the yen and the dollar, the weak euro is creating huge problems for the global economy," Mr. Kuroda said. "Japan and the U.S. simply cannot compete with euro exporters."



site steward (8/31/01; 00:18:55MT - usagold.com msg#: 60582)
Comments on reserves and the Fed's open market operations for BR549 (msg#: 60569)
Great questions! And you're right, I've provided various elaborations through posts over time, but the dynamic flow of visitors passing through necessitates periodic recapitulation. My only hope is that my explanations become more clear and concise with practice.

Q: "Aside from retiring debt, does Adding Permanent Reserves mean a contraction of the money supply to reduce inflation?"

A: Actually, these operations do nothing to retire the debt. What happens is that the ownership of the particular debt securities change -- from various private accounts to the Fed's account. You are probably thinking of a "buy back" program of the Treasury Department which would, in fact, result in the retirement of debt.

Now to address the second part of your question about the affect on money supply.

When the Fed adds permanent reserves to the banking system through the outright purchase of these Treasury securities, it takes ownership of the security as an asset on its balance sheet and compensates the former owner with payment in dollars. These dollars are truly "created out of thin air", and they offset the security (asset) by being recorded on the liability side of the Fed's balance sheet.

The intent of the operation is that these newly created dollars are immediately deposited in the bond sellers’ accounts with commercial banks, thus bolstering the reserves of the nation's banking system as a whole. So you can see, this process not only adds reserves, but it adds directly to the money supply, too. And assuming that willing borrowers may be found, the commercial banking system may utilize surplus reserves to further expand the money supply through the "miracle" of (fractional reserve) banking. Quite to the contrary of your initial supposition, the overall effect of these reserve additions tends toward inflation (meaning, an expanded money supply).

And I'll throw this in, too, just to cover the bases. In those special cases where the Treasury Department is buying back (retiring) its debt, contrary to conventional wisdom, even that kind of activity is not necessarily indicative of a contraction in the money supply. It may, in fact, cause no change whatsoever to either the level of banking reserves or the level of the money supply. This is possible because the Treasury Department keeps a goodly share of its funds in Tax and Loan accounts held by commercial banks. If it buys back debt securities from private holders (rather than buying back securities held by the Fed), the net result is simply a transfer of dollars (commercial bank reserves) from the Treasury account to the accounts of the former bond holders; meaning, no net effect on the level of either money supply or bank reserves.

Q: "What is the significance?"

A: Outright purchases by the Fed may be inspired by a number of factors. Most obvious (and most innocent) is in the course of supporting monetary policy vis-a-vis the FOMC target rate, if the System Account manager acting in NY on behalf of the Federal Reserve deems that there is a persistent need for additional liquidity as signaled by fed funds trading above the FOMC target, then an outright purchase to provide "permanent" reserves may be in order to provide banks with the reserves that would seemingly be in short supply. That said, what has been most remarkable over the course of many recent months is the fact that the Fed has conducted a great many of these outright purchases even at times when the overnight market for fed funds (dollars) among financial institutions has been at or below the FOMC target -- reflecting ample reserves for their immediate banking needs.

Again, short of busting a brain cell, I cannot right now conceive of an outright purchase (permanent add) by the Fed that does not tend toward inflating the supply of money, either directly or indirectly. I'd say that's the primary significance for Centennial's clientele to bear in mind.

Q: "What is the difference for repurchase agreements?"

A: Any given repurchase agreement bolsters reserves (and all that that implies for the money supply via the miracle of banking) just like the outright purchases described above. The difference is that the effect is temporary, as the transaction is due to be reversed within the timeframe prescribed by the agreement.

Q: "Where does this Add Res's type of transaction appear on Fed financial statements, under U.S. government securities bought outright as an asset or other?"

A: The Statement of Condition of the Federal Reserve Banks represents the consolidate balance sheet of our illustrious "central" bank. Securities held as assets on the balance sheet are distinguished as those bought outright and those held under repurchase agreement.

Q: "What is the significance of adding to, rather than subtracting from reserves? i.e., what is the purpose and what does it mean to us?"

A: This should now be evident from answers previously given.

If you (or anyone else following along, for that matter) have found this information helpful or of beneficial educational/economic use, then I urge you to show your due appreciation for Michael's efforts to arrange for and bring you these services. Please choose Centennial when fulfilling all of your precious metals investment requirements.

Thanks for your consideration and participation!

Randy

PS.
Solomon Weaver says to me in regard to my revelation yesterday of 93% net worth stored as gold, "I would put at least 25% of your net worth in being the steward of the site...thanks.... The other factor is what do you NOT have yourself in that many others do???"

Ha HA! Deprivation is not my style, but I definitely do continue to choose (and always have) to live comfortably within my means. And I see what you're saying with regard to the site. Thank you. You see, for me, this is essentially a break-even dabbling... a labor of love. I truly enjoy the various historical and philosophical elements of economics, and in particular I've been as happy as a pig in mud ever since "monetary policy" moved to center stage of the economic theater of political thought at large. And now it should be becoming ever clearer to growing numbers of even casual observers that, thanks to the brilliant minds of some clever thinkers who have a deeper understanding than most who have walked before them, gold is officially poised to shine in value as never before. I'm just here ("at" USAGOLD) happily doing time in the "orchestra pit" because the front row seats were already filled!




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