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ARCHIVED DISCUSSION FROM 9/10/2000 All times are U.S. Mountain Time (Yesterday's Discussion.) TownCrier (9/10/2000; 23:55:23MT - usagold.com msg#: 36419) Hear ye! Hear ye! An update to the Gilded Opinion on OPEC http://www.usagold.com/gildedopinion/VanEckOPEC.html From the pen of Fed Watcher Adrian Van Eck, we are pleased to bring you some of his recent commentary on implications surrounding the first meeting of the OPEC heads of state since 1975, organized by the new president of OPEC co-founder, Venezuela. A sample follows:"...we believe events have already started in motion that will drive the price of crude oil in America up to $40 a barrel. It could happen sooner rather than later. And unlike 1990, when a big oil price-spike was caused by a military invasion of Kuwait that America was able to reverse out, this time the price gains will happen for reasons that we will not be able to do anything about, in the short run. And they will likely stick."$40 Oil Is Not An Unrealistic Fantasy. It Happened Before -- 20 Years Ago!"...Today Oil is coming off a tripling once more, this time from $10 to $30. And in a moment we will discuss with you the evidence. . . now spread across the public record but ignored by an America in Denial. . . that OPEC has the power to more than double the price again." SHIFTY (9/10/2000; 23:51:09MT - usagold.com msg#: 36418) Black Blade/ Topaz Black Blade: Baby Ray is doing great. Topaz: ThanksIm off to bed.Good night all.:)$hifty Topaz (9/10/2000; 23:40:54MT - usagold.com msg#: 36417) Simply Me re: Palestine Hi S-M,Arafat has decided to forego the decision on Jerusalem for 2 Mth's. Topaz (9/10/2000; 23:34:54MT - usagold.com msg#: 36416) Shifty - All re: Hamilton http://www.gold-eagle.com/gold_digest_00/hamilton091100.html Yup - Ag-------Get you some! Black Blade (9/10/2000; 23:28:55MT - usagold.com msg#: 36415) Good Evening All! Almost caught up on last weeks posts. SHIFTY: Good evening to ya. What's the word on baby Ray? I think I'll check out Zelotes editorial on Ag. I was gone a few days with clients and some snakes (lawyers), but then, they're our snakes ;-)Stranger: Welcome back, the round table certainly noticed your absence. It seems only a short time ago when you caused quite a stir, and now we all await your posts. Am I to understand that you were in Sturgis? If so, you're more a wild man than I thought. Simply Me: I have not heard anything new on the Euro for oil deal lately. I'm just not sure if that was just some Saudi official making buzzing noises like an annoying Gnat. We certainly get enough falsehoods and rumors out of that country for some reason. However, Euros for Oil would seem plausible. Black Blade (9/10/2000; 23:16:22MT - usagold.com msg#: 36414) My Take on Today's OPEC Announcement A short-term drop, then bounce back to higher energy prices. C. J. Campbell of Petroconsultants is but one of many industry geologists and oil specialists who have made several important observations and have engaged in several detailed studies of the looming oil crisis. Some of the following only highlight some of these concerns.Some interesting facts that should be considered when discussing the quantity of oil go far beyond what are considered resources (economic and uneconomic petroleum), and reserves (economic petroleum). But first, The reality is that discovery peaked in the 1960s, despite all the technology, a worldwide search and a deliberate effort to find the largest remaining fields. The world now finds one barrel of conventional oil for every four it consumes, and there is no evidence that the downward trend can be reversed. Few would dispute that oil has to be found before it can be produced, or that peak discovery has to be followed by peak production. The authors ignore the critical evidence of discovery trends, which in turn point to a global peak of production in the next few years. About half the yet-to-produce (reserves plus yet-to-find) lies in just five Middle East countries whose share of world supply is inexorably rising, as the International Energy Agency confirms. The market, with its derivatives component, does indeed set price on the marginal barrel based on sentiment and very short-term pressures, making no charge for depletion. A free oil market has always over-reacted and has a minimal impact on overall supply because most oil comes from the large old low-cost fields. It is not a good way to deal with a depleting resource as important as oil. Some measure of external control has always been required, whether exercised by Rockefeller, the Texas Railroad Commission, the major companies or OPEC. Many people seem to think that that oil supply is controlled by politics not geology. Oil and politics are indeed never far apart, and politics can affect the rate of extraction to a degree. In Britain, Mrs. Thatcher created an environment of hyper-activity during which most of the country's oil was found. But if they brought her back, there is nothing even she could do to arrest the pending consequential steep decline in production imposed by Nature and the immutable physics of the reservoir.Many even claim that America has ample supplies in the Western Hemisphere and Atlantic Basin to meet its future needs. It is not specific as to where this oil is, and fails to point out some important limitations. Mexico this year reduced its reserves from the previously exaggerated number of 44 Gb to 28 Gb following an external audit. Of Venezuela's 73 Gb reported reserves only about 29 are conventional oil: the rest being Heavy and Extra-Heavy oil, which is expensive and, above all, slow to produce. Some promising deepwater finds have indeed been made off Brasil and in the Gulf of Mexico, together offering promise of some 30-40 Gb, but the economics of deepwater operations demand high flow rates and rapid depletion. Nor can America rely on North Sea supply because production is at it's peak. Norway is currently the world's second largest exporter but its oil production is set to decline at about 6% a year as its old giant fields come off their designed production plateau, despite heroic technological efforts. Besides, the other inhabitants of the Western Hemisphere have their demands on oil too. Most countries in Latin America are already net importers. The late M. K. Hubbert, developed a mathematical model of depletion rates for regional oil production. He was right on the mark with the 1969-oil production peak in the US. The production peak for world oil is projected at between 2002 and 2010. The model has had very good success for individual fields as well. The "Giants" have all been found. A few large fields and several small fields are left to be found, and would likely fall in the "unconventional oil" category. The cost of retrieving oil from these "unconventional" sources is much greater than the "cheap oil" from the "Giants". One should also consider the quality of the oil involved. The Light Sweet Crude carries a premium since it is most easily converted into gasoline and other distillates. The oil produced from the ME is a combination of grades, but lean heavily toward the Heavy and Sour Crudes that require much more effort (and therefore cost) to convert into gasoline and other distillates. I have also previously discussed the "razor-thin" margins that refiners get for their product, the risk of volatile pricing, and inventory taxes. OPEC will likely have to do a "Texas-Two-Step" in triple time to convince refiners to purchase and store this "excess oil" under this scenario. More likely is that any excess oil will be stored by the ME countries themselves, sold to countries that have different regulatory and tax structures, or what has happened in the recent past, and that is talk up extra production, but simply don't deliver. Simply Me (9/10/2000; 23:06:28MT - usagold.com msg#: 36413) Waiting for September 13th. Hmmm...First it was US military assistance to Jordan in exchange for a large hunk of "lending" gold. Now it's US military assistance for oil. Are the ME powers getting tired of trading for dollars?Also, are we re-inforcing our allies on the Middle-Eastern war chessboard in preparation for coming conflict?...or simply "showing the instruments of torture" (first step to obtaining a confession during the Spanish Inquisition)to the Palestinians in hopes of softening their position on Jerusalem. It's always a puzzle to me, that some Arab countries can be strategically on the US side and religiously on the Palestinian side of the Jerusalem debate. Could the longer term strategy be to end alliance with the US once dependence on the US dollar is gone? Or is our military protection to become the new "hold", once the dollar is done? And Jerusalem is the key, isn't it?Many questions. I'm awaiting September 13th for another clue.Could be quite interesting!This dollar/euro/gold/oil love quadrangle is better than any soap-opera.simply mesimply me SHIFTY (9/10/2000; 23:04:24MT - usagold.com msg#: 36412) megatron I will try that. ThanksGood evening Black Blade. :)$hifty Black Blade (9/10/2000; 22:40:48MT - usagold.com msg#: 36411) Myth of Spare Capacity C.J.Campbell, Petroplan Inc.from the Oil and Gas Journal, March 20, 2000 --------------------------------------------------------------------------------The fundamental driver of the 20th Century's economic prosperity has been an abundant supply of cheap oil. At first, it came largely from the United States as it opened up its great territories with dynamic capitalism and technological prowess. But its discovery peaked around 1930, and inevitably led to a corresponding peak in production some forty years later. The focus of supply shifted to the Middle East, as its vast resources were tapped by the international companies. They however soon lost their control in a series of expropriations as the host governments sought a greater share of the proceeds. In 1973, some Middle East governments used their control of oil as a weapon in their conflict with Israel, giving rise to the First Oil Shock that rocked the world. The international companies had however largely anticipated these pressures, and before the shock had successfully diversified their supply from new productive provinces in Alaska, the North Sea, Africa and elsewhere. These deposits were more difficult and costly to exploit, but production was rapidly stepped up when control of the traditional sources was lost. In part that was made possible by great technological advances in everything from seismic surveys to drilling. Geochemistry and better geological understanding made it possible to identify the productive trends, once the essential data had been gathered. The industry found and produced the expensive and difficult oil from the new provinces at the maximum rate possible, leaving the control of the abundant, cheap and easy oil in the hands of the Middle East OPEC countries. The latter were accordingly forced into a swing role, making up the difference between world demand and what the other countries could produce. It should surprise no one that such an arrangement led to price volatility. But these new provinces faced the same depletion pattern as had already been demonstrated in the United States. The larger fields, which are found and exploited first, gave a natural discovery peak. Advances in technology and operating efficiency also reduced the time-lag from discovery to the corresponding production peaks. Whereas it took the United States forty years, the North Sea, which is now at peak, did it in only twenty-six. As discovery in accessible areas dwindled to about one-quarter of consumption, the industry, which fully appreciated this obvious link between discovery and production, turned its attention to the last remaining frontier, namely the deepwater. It is also subject to depletion with an even shorter time-lag between the peaks of discovery and production. Although much of the ocean is deep, only a few areas have the essential geology, giving a potential of not more than about 85 Gb (billion barrels) - enough to supply the world for less than four years. It is no panacea. A combination of circumstances led to a dramatic fall in the price of oil in 1998. They included unseasonably warm weather; an Asian recession that reduced the demand for swing Middle East production; the collapse of the ruble, encouraging exports; and further turns in the UN-Iraq imbroglio. The market itself, which now included hedge funds and derivative merchants, had no alternative but to over-react because of its transparent short-term nature. The major companies, plainly seeing that exploration could not underpin their future, took the opportunity of the price crisis to merge, successfully concealing their real predicament from the stockmarket. Budgets were slashed, and a climate of uncertainty led to an improvident draw on stocks. Everyone hung on the pronouncements of OPEC, imagining that it held the key. Norway and Mexico offered to cut production to help support price. The OPEC countries themselves did everything possible to foster the notion that they could flood the world with cheap oil at the flick of a switch. It was a strategy aimed to inhibit investments in gas, non-conventional oil, renewable energy or energy saving that they feared might undermine the market for their oil, on which they utterly depend. But it was a short-lived crisis, and before long the underlying resource and depletion pressures manifested themselves. Now, prices have rebounded with a staggering 300% increase in twelve months. Many of the famous oil analysts, who were predicting that oil prices would stay low forever, are changing their chameleon skins, as they watch prices soar through $30/b and break the chartists' barriers. With baited breath, they hang on the next word from OPEC. The US Secretary of Energy travels the world speaking of diversity of supply as he talks in vain to countries with little to offer in the face of depletion. Norway's role as the world's second largest exporter is critical, but it transpires that not a single well was closed by government edict. It is easy for the Norwegians to support price as they watch their old giant fields fall off plateau despite every heroic effort. Mexico has now confessed to the previous exaggeration of its reserves, which in 1999 fell, following an external audit, from 49 Gb to a more realistic 28 Gb,. Meanwhile it is forced to undertake a mammoth nitrogen injection scheme to try to pump up the ageing Cantarell Field. It does not sound as if the Mexicans have much option but to watch their production fall. The Middle East fields too are getting old, and in some cases, very old. Development drilling has continued unabated despite the fall in production. Venezuela's new production comes largely from infill drilling in old heavy oil fields, which is dependent on the amount of effort and investment. It does not sound as if it has many shut-in wells either. Its oilmen now speak of reduced capacity. Logic suggests a future something like this: OPEC makes some conciliatory noises about raising quotas in response to US pressure, wishing to maintain the illusion that its members can meet demand at will. Norway and Mexico continue to support OPEC within the framework of such conciliatory words, making a virtue of necessity. The market takes the hint and marks down the price of oil in an action that feeds on itself as the new flavour of the month permeates the ranks of speculators, hedge funds and derivative specialists searching for a quick buck. Refiners hold back from filling their tanks. Prices collapse to the low $20's, even perhaps plummeting briefly into the 'teens. People relax in the belief that the wolf has headed back into the forests. The famous flat-earth economists again cheer that market forces reign supreme. But then a few weeks later, people begin to notice that fewer tankers are arriving. Norway says that storms have had an impact; Venezuela speaks of floods; Mexico claims restructuring; Saddam says he needs a spare part ; King Fahd leads a delegation of puzzled Senators into the desert to show that all the wells are fully open. The penny finally drops that there is no instant spare capacity in the sense of shut-in wells. The men at their screens start marking up prices. A new upward momentum drives prices through the $40 barrier. When Air Force One makes a new panic tour to Norway, Mexico and the Middle East, it meets ashen faced oilmen saying that they have been working night and day to meet their quotas, but were unable to do so. The world, including OPEC, gradually appreciates that it faces a losing battle in trying to offset the depletion of the large, old, low-cost fields. Of course, the Middle East can raise its production, since its depletion rate is so low, but it will be a long haul to bring in the ever smaller fields, which are all that remain, and exploit small extensions and secondary reservoirs in known fields. It is not a matter of simply opening a valve. Middle East share of the world's supply of conventional oil was 38% in 1973 at the time of the First Oil Shock, but had fallen to 18% by 1985 as the new provinces flooded the world with flush production from giant fields. It is now about 30%. Unlike in the 1970s, this time it is set to continue to rise as, there are no new major provinces in sight. Share will likely reach 35% by 2002 and 50% by 2009. By then, the Middle East too will be close to its depletion midpoint, and unable to sustain production much longer irrespective of investment or desire. It will be a hot summer. Strident politicians will accuse the oil companies or the Muslims of gouging the consumer, their minds having been further concentrated by a related collapse of an already grossly overheated stockmarket. No doubt, there will be calls to send in the Marines. But it is an election year, and the Presidential candidates will relish the agony of the dying days of the old administration. Democratic politicians cannot in practice plan for the future, but they can certainly win votes by reacting to crises. So, the hope is that the new President will look reality in the face and tell the people what he saw. If he does so, he will explain that we are not about to run out of oil, but that conventional oil will peak around 2005 and all oil, five years later. Once the people realise that they are not being gouged by anyone, they will face up to their predicament with courage and fortitude. They will be surprised at the number of solutions, some improving the quality of life, but finding oil that is not there to be found will not be one of them. Black Blade: Though the saudis have made the commitment to raise production to 800,000 bbl. It should be remembered that they said that they would raise production to 700,000 bbl when the price of Brent North Sea reached $28.00 bbl for 20 consecutive trading days. They haven't yet, so what is really new with this latest news except that they added 100,000 bbl to the previous commitment? Spare capacity is dubious at best. I hope to delve into this in greater detail when time permits. I have a lot of data to filter through, however, in short, many of the claims dealing with spare capacity are political in nature and were inflated to gain concessions in previous years quotas. There is also the debate of producible oil vs. in situ oil (conventional vs. unconventional debate). meanwhile, as full production capacity is approached, demand continues to rise and will surpass the ability to produce oil at what are considered "cheap prices". Simply put - The energy crunch is coming like it or not, and inflation is inevitable irregardless. megatron (9/10/2000; 22:40:08MT - usagold.com msg#: 36410) shifty sorry. i think he goes under the name zelotes? it's from today, anyway. Peter Asher (9/10/2000; 22:12:17MT - usagold.com msg#: 36409) Cavan Man msg#: 36402 "When there's a will, there's a way." You say >>> Why has the ECB stood on the sidelines all this time and not intervened in the Forex markets to support the Euro? Good question.<<<<First of all, I have come to believe that the Euro, the Dollar, The Stock Market and gold are exactly where these fellows want them to be. There may be a factor of free market out there for the BIG players, but it's them versus the various governments. The money puts the politicians in place but then it's Et Tu Allen or Wim or Bill or Tony. Brings to mind the scene in the movie "Nixon" Where Hopkins and Hagmen Play President vs. Billionaire Face-off.I think it's simply that a lower Euro is what it takes for the EU to sell the quantities of goods they need to support themselves in international trade. Selling at a discount if you will in order to create the desired flows. This is a normal business activity on a multi-national scale. A larger quantify of export at a lower price may be what it takes to keep their industry at full capacity. Higher export prices may in their view lower their export amount to a degree that they are then worse off with some activities making more (International) money but other activities being unemployed. This theory fits with Chancellor Gerhard Schröder, saying just now that the weak euro "should be more a reason for satisfaction than concern." SHIFTY (9/10/2000; 21:49:47MT - usagold.com msg#: 36408) megatron I dont see it. Can you post a link?$hifty megatron (9/10/2000; 21:37:03MT - usagold.com msg#: 36407) silver/adam hamilton If anybody is still on here, check out Hamilton's take on silver prices on gold-eagle. Every time I read it I go nuts!! This is gonna be SO juicy watchin those scumbags Greenspan and Clinton get it right in the yap! I can't wait to hear the whining and lying from their ugly facist faces.I CANT WAIT!!!! I'm jumping up and down with excitement! SHIFTY (9/10/2000; 21:15:46MT - usagold.com msg#: 36406) Journeyman OK $hifty Journeyman (9/10/2000; 21:09:02MT - usagold.com msg#: 36405) You're not late @Shifty Took a breather -- doing a re-write of a couple sections. Should post the next installment tomorrow or Tuesday.Thanks for asking!Regards, j. THX-1138 (9/10/2000; 21:03:28MT - usagold.com msg#: 36404) AMERICAN ALLY IN MIDEAST SEEKS $2.7 BILLION MILITARY AID PACKAGE ***Anyone seen this yet? Looks like US pays for oil with military aid again. Reuters reported: "Saudi Arabia has requested $2.7 billion in U.S. arms and support to help modernise its National Guard and for ongoing maintenance of F-15 fighter jets bought from the United States, the Pentagon said on Friday. One of the three packages requested by the Gulf kingdom would include $416 million in light-armoured vehicles, anti-armour missiles and advanced communications equipment built by General Motors Corp. and Raytheon Corp., the Pentagon said. A second deal valued at $690 million would involve contractor maintenance and training, spare and repair parts and modification facilities for the large Saudi fleet of F-15 jets built by Boeing Co., the Pentagon said." Leigh (9/10/2000; 19:53:09MT - usagold.com msg#: 36403) $600 POG Hi, Cavan Man! I believe Mr. Mundell said gold would be $6,000 in ten years, and the news reports edited his words.Thanks to all for the kind get-well wishes. Being on crutches is very hard when you have kids to chase all day! I try to use my "wheelchair" (computer chair) as much as possible. Al Fulchino, thank you for the sweet story. Cavan Man (9/10/2000; 19:37:53MT - usagold.com msg#: 36402) Love These Box Seats or The Euro; "Ugly Duckling" Have a sense of literature? Admittedly, since its inception, the decline of the Euro has been spectacular. However, the old Euro is now officially declared DOA while the making of history in the context of the "new Euro" awaits the consideration of international markets.Since the birth of the euro, many different types of people,investors, non-investors, economists, goldbugs, politicians, central bankers etc., have formed a gauntlet of international criticism, rightly so and often on the mark, through which the Euro has been and is passing. During this time period, the value of the Euro in forex markets has declined precipitously. Why has the ECB stood on the sidelines all this time and not intervened in the forex markets to support the Euro? Good question.The ECB's obvious disdain for, "business as usual" when it comes to the means and method of supporting this relatively new, fiat currency should be a clarion call to those who can think clearly. Their (ECB's) lack of intervention is the clearest signal that, Bretton Woods is becoming increasingly dysfunctional and, that a new international monetary order is in the offing. The Duisenberg speech reinforces this notion. Further, the Euro strategy intends to be non-confrontational as regards the $USD. The Euro has been designed to safeguard not only the monetary welfare of EU members. Of additional importnce and significance, the Euro has the capacity to serve as a safety net for global finance if needs be without directly challenging the dollar and creating political enmity. Economic prosperity and peace; YES INDEED!To me, the Europeans take a much longer view of things; much like their Asian counterparts. It seems only here in America that, "immediate gratification" is not only expected but, encouraged as a sound, individual and collective strategy. This special aspect of the American spirit has helped this country become the great nation that it is and will undoubtedly continue to be. In Europe and many other parts of the world, strategies are more calculated, more practical and more pragmatic; they are allowed more time to play themselves out into the various stages of tactical implementation.I believe the main thrust of the FOA/Another monologue is behind the Euro, another fiat currency and NOT gold. However, gold and the POG will be a beneficiary of the events surrounding the use of the Euro in global finance. Do you recall the comment by Robert Mundell when asked about the POG? He said, in his opinion, the POG would be $600 in ten years. He did not say anything about the interim period. Perhaps the rise of POG will be spectacualr only to settle at what today is presumed to be the projected "clearing price"?When the Euro is allowed to settle oil in Europe, look out below (USD) and look out above (POG) This event will likely be quite sudden. There is no gold standard in our immediate future, only the continued use of fiat paper--by necessity. However, the rise in POG is directly ahead.May God Bless the USA. SHIFTY (9/10/2000; 19:37:40MT - usagold.com msg#: 36401) Journeyman Did I miss your next segment or am I early?$hifty SHIFTY (9/10/2000; 19:12:13MT - usagold.com msg#: 36400) PPU Periodic Ponzi Update Nasdaq 3,978.41 + Dow 11,220.65 = 15,199.06 divide by 2 = 7,599.53 PonziDown 137.02 New York Ponzi Points.$hifty :) ET (9/10/2000; 18:15:26MT - usagold.com msg#: 36399) Doug Noland http://216.46.231.211/credit.htm From the article;"Interestingly, we see that JP Morgan increased its credit derivative position by $70 billion during the quarter to $245 billion (160% annualized growth rate). This is consistent with a surge in credit insurance. The proliferation of credit derivatives and credit insurance corresponds directly with Wall Street's increasing use of "funding corps" and other sophisticated financing instruments and vehicles. Such strategies are, by the way, increasingly necessary as the marketplace begins to recognize festering systemic credit problems. Credit derivatives and insurance, however, will not prove the answer after years of reckless lending and the consequential financial and economic imbalances and distortions. Indeed, derivatives are not the solution but the problem. "Meanwhile, financial and economic distortions are becoming more conspicuous and alarming by the day. This week, near chaos erupted in global energy markets as recognition grows that the world is in the midst of not only higher oil prices, but also a full-fledged energy crisis. The economic disruption and political risk associated with this week's protests in France are but a first warning shot. This week also witnessed a significant escalation in global financial tumult, with dislocated trading in the euro and other key currencies now impacting both the European corporate bond and equity markets globally. Some European companies were said to have delayed bond issues as corporate spreads widened and liquidity waned. This is particularly troublesome for telecommunications companies in Europe and across the globe. Europe's telecom companies have plans to issue between $30 and $40 billion of debt before year-end, with tens of billions more from American and global issuers. We don't see the market cooperating." TownCrier (9/10/2000; 16:47:20MT - usagold.com msg#: 36398) HEADLINE: Brown shares belief euro is undervalued http://uk.news.yahoo.com/000910/80/airhn.html Following a meeting of European Union finance ministers, Gordon Brown said, "The euro does not reflect the fundamentals of the economy and I agree with the statement from last night (Friday)."ECB president Wim Duisenberg commented when the ero reached new lows last week that the weakness was threatening price stability -- something the reporter suggested was "a red alert to financial markets that the currency's woes were begging a policy response from the bank" while pointing out that the ECB would not likely intervene through forex markets without the cooperation of the U.S. and Japan.It leads us to ponder here in The Tower...The failing dollar system received international support in past decades to avoid a complete global economic catastrophe both when the gold-exchange standard was stretched thin and also after it ultimately snapped. If the euro-based system was mindfully constructed to offer an international fresh start, at what point will the U.S. be compelled to play ball and return the old favor in the interest of long-term global stability? TownCrier (9/10/2000; 15:58:40MT - usagold.com msg#: 36397) HEADLINE: Bull market shows some weariness after 10-year run http://www.ardemgaz.com/today/biz/G01bwearybull10.html "The problem isn't fundamentals...investors, after five years of paying ever higher valuations for those wonderful fundamentals, don't want to pay any more."Jeremy Siegel, finance professor at the University of Pennsylvania's Wharton School says, "A run as great as we had was an extraordinarily unusual and unique event. To expect it to continue would be out of the realms of all probability."And a final sobering thought from the article:"Leuthold Group, a research firm, calculated that over the past century, once a bull market peaks and a bear market begins, it typically took eight years for investors to make back their losses and see post-peak average returns rise to 10 percent again." Chris Powell (9/10/2000; 14:51:25MT - usagold.com msg#: 36396) GATA chairman rebuts gold council analyst http://www.egroups.com/message/gata/525 Jessica Cross and the World GoldCouncil don't know what they aretalking about.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@eGroups.com Camel (9/10/2000; 14:30:37MT - usagold.com msg#: 36395) Excess Oil Capasity This ought to settle the question of excess oil capasity once and for all. Bloomberg EnergySun, 10 Sep 2000, 4:22pm EDTVienna, Sept. 10 (Bloomberg) -- As the Organization of Petroleum Exporting Countries readies its third output increase in just six months, members had to negotiate the tricky issue of which nations will produce the additional oil. OPEC's 11 countries can pump another 3 million barrels daily, said Ali al-Naimi, oil minister for Saudi Arabia, on top of August output estimated at 28.8 million barrels. About two-thirds of the idle capacity lies under Saudi control, and most of the rest sits in the United Arab Emirates and Kuwait, meaning other nations will lose money as prices drop. ``You have an 11-member group where three members have some spare capacity and eight members don't,'' said Tim Evans, senior energy analyst at IFR Pegasus in New York. ``The argument isn't over whether there's enough capacity. It's over market share.'' The countries in OPEC are the only ones to restrain output -- in their bid to lift prices from the $10 seen in December 1998 -- though have spent the past year increasing quotas as prices tripled. The market's sag in 1998 hurt investment and limited growth in capacity. Almost all OPEC oil ministers agree that crude prices now around $33 a barrel are too high. The group at a meeting in Vienna today agreed to increase output quotas by 800,000 barrels a day, or 3.1 percent of the current ceiling. Other members, including OPEC's second-largest producer, Iran, and the third-largest, Venezuela, had indicated a will to cap an increase at 500,000 barrels a day. Strains Iran, Nigeria and Indonesia last month produced less than their official OPEC targets at a time when prices were rising toward a 10-year high, reflecting an inability to pump more oil. Venezuela is at or near its estimated peak of 3.05 million barrels daily after a lack of investment during the last two years cut its potential by more than 10 percent, analysts said. Indonesia admitted it would struggle to keep up. ``We still have a couple of weeks'' before the new oil is ordered, said Purnomo Yusgiantoro, Indonesia's minister of mines and energy. ``We'll try'' to make the target. OPEC allocated an equal percentage of the additional barrels to its members, though analysts speculate Saudi Arabia will plug any gaps. That way, OPEC nations without spare capacity now could increase as new wells come on stream. ``Everyone is talking about production increases by OPEC countries, but which states have the capacity to lift production?'' asked Kuwaiti Oil Minister Sheikh Saud Nasser al- Sabah, the official KUNA news agency reported. ``It's well known that a handful of OPEC states have the capacity to produce more than their current levels of output.'' A Bloomberg update of OPEC capacity found sustainable output of some 32 million barrels daily, down about 100,000 from the spring. That leaves about 3.3 million barrels a day unused, almost all in the Middle East. Sixty percent lies in Saudi Arabia, with another 520,000 barrels daily in Kuwait and the United Arab Emirates. OPEC has about 11 percent of its capacity available to meet rising demand or compensate for any disruption to supply, down from more than 14 percent early this year, according to analysts. The oil industry considers about 12 percent enough of a ``comfort zone,'' and significant new oil supplies are mostly two or three years away, they said. More Oil ``We have to keep an eye on the fact that there's been limited investment by the OPEC nations,'' said Roger Plank, chief financial officer at Apache Corp., a Houston-based oil and natural- gas exploration company. ``So we are getting to a point where we really have to get some more oil out of OPEC or prices could be disrupted.'' Al-Naimi said additional capacity may be a matter of months away, not years, saying his nation had the plants, terminals, pipelines, storage and other related equipment to pump 14 million barrels a day. Additional oil could flow from new wells drilled on known fields. ``That could be achieved rather quickly,'' al-Naimi said. Most OPEC nations are rushing to build capacity. Iraq is pumping about 3 million barrels daily and plans to raise output by 400,000 barrels a day by the end of the year, said Oil Minister Amer Mohammed Rasheed. Kuwait's target is years away. The country this month may select a group of foreign oil companies to expand five fields in the north as part of a plan to boost capacity by about 40 percent to 3 million barrels a day by 2005. Western Help Iran, too, is seeking outside help from Total Fina Elf SA of France, Eni SpA of Italy and others to lift its output ceiling by about 15 percent to 4.5 million barrels a day by 2005. The oil minister today said it could pump more than 4 million barrels a day, though private analysts put the total closer to 3.85 million. Algeria has targeted a 1.5 million-barrel daily limit by 2005, up more than 50 percent from now. Libya wants to reach 2 million barrels, a third more than today, though that too is years away. Venezuela, which analysts estimate has seen daily capacity in the last two years decline from around 3.5 million to a little more than 3 million, has created plan to increase that total to 5.8 million barrels by 2009. Non-OPEC nations are also investing for the future. Norway, the world's second-largest oil exporter, expects to produce 3.2 million barrels a day this year, its maximum, and plans to reach as much as 3.6 million in the next few years, the oil ministry has said. In Mexico, by 2005 state oil company Petroleos Mexicanos will have spent about $10.5 billion over eight years to boost its output capacity by more than 1 million barrels to between 3.5 million and 4 million barrels a day. -------------------------------------------------------------------------------- © Copyright 2000, Bloomberg L.P. All Rights Reserved. Journeyman (9/10/2000; 13:27:09MT - usagold.com msg#: 36394) Thanx for the ammo @ET (09/09/00; 21:39:36MT - usagold.com msg#: 36334) Hey ET,Thanks for the article! It's amazing to me how clear it is what's going on with things once you get the underlying picture.Thanx again for the article; it's archived and I'll probably excerpt it for later use!!Regards,Journeyman Journeyman (9/10/2000; 13:21:37MT - usagold.com msg#: 36393) Re: Dependency & Independence @Bonedaddy (9/9/2000; 8:08:10MT - usagold.com msg#: 36301) http://www.webleyweb.com/tle/le960409.html Thanks for your contribution to the Free Trade thingy -- and a good one too!!You might find the short letter to the editor, entitled "Missing Tool" and pointed to by the above link, relevant, interesting, and perhaps even useful in relation to your observations.Regards,Journeyman lamprey_65 (9/10/2000; 12:53:04MT - usagold.com msg#: 36392) Reginald Howe vs. Jessica Cross...who's right? http://www.goldensextant.com/commentary14.html#anchor27297 I've posted the link for Reginald Howe's rebuttal to Jessica Cross's WGC report.Folk's, either Howe is right or Cross is right - I don't see any middle ground here, although I must admit that I am no expert on deritives and am groping to find the truth in this matter.This derivitives debate seems to me to be a key part of our understanding concerning current gold price activity and pricing...guess I just need to find the time to study the issue -- it's just TOO IMPORTANT to rely completely on the analysis of others.One thing I will say...the idea that a strong dollar can explain away the low POG is ridiculous. Go look at the strength of the dollar during the 80's and the concurrent high (compared to today's) gold price.Lamprey Usul (9/10/2000; 12:28:49MT - usagold.com msg#: 36391) A "Cross" of Gold??? http://www.monetary.org/hughdowns.htm Shakespeare, The Merchant of Venice, 1597, Act II, Scene VII:PRINCE OF MOROCCO. O hell! what have we here? A carrion Death, within whose empty eye There is a written scroll! I'll read the writing. 'All that glisters is not gold, Often have you heard that told; Many a man his life hath sold But my outside to behold. Gilded tombs do worms infold. Had you been as wise as bold, Young in limbs, in judgment old, Your answer had not been inscroll'd. Fare you well, your suit is cold.'July 8th or 9th (sources disagree), 1896: William Jennings Bryan delivers a speech speech denouncing supporters of the gold standard at the Democratic National Convention in Chicago:"You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind on a cross of gold." Bascom Toadvine (9/10/2000; 12:10:50MT - usagold.com msg#: 36390) Hi All It's me "Henri". Just thought I'd let you know. I found myself suddenly transported to Rochester, NY with only my portable and sans "Henri"'s password! Sorry Michael but I had to cop a new handle with my Yahoo e-mail address.Leigh, hope your foot heels quickly.Greetings to all my friends at the Round Table. You will know I have returned home when "Henri" re-appears.Thanks for your kind indulgenceHenri Golden Hook (9/10/2000; 12:10:39MT - usagold.com msg#: 36389) Sirs: ANOTHER AND FOA: In my previous message 36388 I sounded like my great joy had come to pass. I am not really looking forward to such an event since choas may change our prayers. only making a comment. Being rich in gold is one thing. Being able to spend your wealth in peace and unhampered is another thing.Thank you, I enjoy your trail blazing. G. Golden Hook (9/10/2000; 11:59:42MT - usagold.com msg#: 36388) Sirs: FOA and ANOTHER> When William F. Duiesenberg declared war on curriences, particular the Dollar, Is not this the start of a new world war on all currencies for all the world to hear?I believe this announcement was more important than the Washington Agreement. I believe now all is left is for ME to make their announcement. Thank you. I will now go back to lurking and watching, and await your reply, and watch my hard assets serve me for awhile. Its been a long time in the making. G USAGOLD (9/10/2000; 11:43:08MT - usagold.com msg#: 36387) Goldfly, Canuck, OldGold, Cavan Man, All. . . Note: Below is page two of the November, 1999 News & Views. Comments noted came after the Washington Agreement was announced and gold had sprinted to the $330 level in a matter of a few days. Some of you might remember this. The Andy Smith quote was even more telling than Jessica Cross. My Question of the Day had to do with an individual who heads up a gold firm in distress about the gold price going up $40 in a single day. I did not recall feeling "unhappy" at the time. Please excuse any typos or text errors you might find. This is off my home computer and the version prior to our eagle eyed editor, George Cooper, having a look at it.Usul: Thanks for the links which redeem some of Dr. Cross' sagging popularity. We continue to adhere to the market solution for gold as the only real and lasting solution. It will come in time. Patience, my friends. I would disagree with Dr. Cross in one important sense: With what is going on both in Europe and around the world (go to today's London Telegraph to see what I mean), we may not have to wait 18 months to feel their effect in the gold market. Something could happen suddenly in the gold market. We seem to be at a confluence of events that deserves close monitoring.Peter: You gotta love the Iron Lady. Talk about Profiles in Courage. Too bad we don't have anyone even close to her calibre in this country. At least not at the moment. Quite an opening salvo in the upcoming Battle for the Pound. Blair, Brown and Co. might go down on this. How old is Mrs. Thatcher? Could she become prime minister again? Not sure how the British system works in that regard. I see it as a good thing that Britain is going to have this discussion. It will be interesting to watch and see what the British people decide. Old Gold, Cavan Man: Read the Shicht article today. I see where he's going and I agree that a breakdown in the dollar would kick off a gold bull market -- as he describes it. But I see that as one scenario, not the only scenario. Dollar depreciation against the yen or the euro is not a prerequisite for a gold rally. You could have the dollar and gold go up simultaneously if the politicians in Europe and Japan continue with their cheap currency policies, and in the process stimulate gold buying among private investors. Note, that oil did not need a dollar breakdown to rise. Gold might indeed rise against goods, as currencies continue to depreciate against goods led by oil. The Shroeder discussion this morning is telling in that regard along with reports of the split between the ECB and various governments. He is now backing off his statements that there's nothing wrong with a weak euro, but one wonders if the statements reveals what the man really believes. He is after all a staunch leftist as are the leaders of most European countries -- and this is what the ECB is dealing with.------------ From the November, 1999 News & Views:The Bears Howl in Pain "This is now a disorderly market. Gold is still a reserve asset. If you had conditions like this in the bond or foreign exchange markets, it would not be allowed to continue....Over the last three days gold has been trading like a commodity, not like money. Volatility has shot up; the cost of options has shot up; the cost of borrowing has shot up. The situation is untenable." ---- Andy Smith, noted London gold bear frequently quoted by the mainstream financial press, upon watching the gold price soar by $40 on the London market in a single session"We are going to see some casualties....This is really one of the most unhappy times for the market I have ever seen." --- Jessica Cross, noted London gold bear frequently quoted by the mainstream financial press upon realizing the extent of damage following the Washington declaration"Covering this (short position) has, we understand, gutted several very big funds. It also savaged a number of bullion banks. One well-known bullion bank is thought to have lost between $30 million and $50 million between its worldwide book and its option writing." --- Ted Arnold, noted London gold bear frequently quoted by the mainstream financial press upon watching the gold price advance toward the $350 level"This week's sharp price move in gold triggered a scramble among hedge funds and other financial players to reverse their bearish positions, gold-market specialists say. On Tuesday, as gold prices at mid afternoon spiked higher to $326 from $304 within minutes, rumors swirled about "massive buying" by a New York dealer on behalf of a client who apparently was unwinding a $4 billion bearish bet on gold. Talk among traders is that many significant players were caught short in the gold rally, including hedge fund Tiger, commodities-trading adviser John W. Henry, owner of the Florida Marlins baseball team, and J.P. Morgan. A Tiger spokesman said the firm never discusses its positions. But someone familiar with the firm's investments said Tiger had no short position in gold. Mr. Henry and J.P. Morgan declined to comment." --Wall Street Journal, Heard on the Street, 10/3/99"Gold will take no prisoners." --Bank for International Settlements offical earlier this year. canamami (9/10/2000; 11:39:54MT - usagold.com msg#: 36386) GATA's current approach OK I agree that this is not the time for GATA to launch a lawsuit - they simply don't possess adequate resources at present for what such an approach would entail. Moreover, as I posted ages ago, I suspect there isn't a legally viable civil suit (on whose behalf, what measure of damages, standing issues, etc.), though an administrative law action against a governmental entity would be a viable option, provided the evidence were there. (Two caveats: (1) apparently a private party was permitted to initiate an anti-trust suit against Microsoft, but I don't know the details and I believe that was the first time it was ever done, and (2) there are some old "slander to trade"-type torts that are seldom used here in Canada, but GATA would also face standing problems in that connection).In short, GATA should just keep trucking along, generating buzz, digging up and safely storing info, using freedom of information requests, approaching politicians, etc., as an interim strategy and perhaps as an alternative to a lawsuit. TownCrier (9/10/2000; 11:38:26MT - usagold.com msg#: 36385) Sir auspec's question... Q: "I am somewhat intrigued in regards to the price at which a mining co. can sell their product via futures|hedging. It is my understanding that a hedge POG can be considerably higher than the spot POG, say even $100 or more per oz. Is this correct? The question follows- why exactly would a bullion bank pay $375 for an entity that he could get on Comex for $275?"A: The hedge position for $375 represents an buy/sell obligation between two parties that was established through a contract at a previous time (several years ago) when the current price of gold was in fact near $375. (But today, anyone establishing hedges for the future would essentially be locking themselves into an obligation to buy/sell based on today's price level of $275.) As this time passed and the price was driven lower, the seller looked smart, while the buyer looked dumb, no? More on that in my concluding remark.Either way, if the price moves significantly during the interim, there is always a risk that the adversely affected counterparty will not be able to meet his contracted obligation.You also asked, "What have I missed or misenterpreted? Why else would a future's sale be executed at such a high premium? Should we be keeping a close eye on the EXORBITANT PREMIUM in the "hedged" POG as a legitimate indicator of gold's true value?"From my original answer, you now know how it arrived that older hedge contracts may provide for higher prices than are currently being quoted through COMEX, but we can also take a stab at revealing the mindset of the counterparty that is "stuck" with the buy side even as the price continues to fall. ANOTHER put this into good perspective long ago when he offered this comment: "Think now, if you are a person of "great worth" is it not better to acquire gold over years, at better prices?" And the conclusion follows quite naturally: "If you are one of "small worth", can you not follow in the footsteps of giants? I tell you, it is an easy path to follow!" Golden Hook (9/10/2000; 11:38:12MT - usagold.com msg#: 36384) test test haha TownCrier (9/10/2000; 10:59:13MT - usagold.com msg#: 36383) Thanks Sir Usul...these two comments go hand-in-hand with each other 1) "...[Jessica] Cross, director of Crosswords Research and Consulting and a self-acknowledged gold bear..."2) She said, "...if central banks could now move off center stage and operate on the management of their gold more like fund managers, then the hedge managers of the U.S. funds themselves could 'read' the market much better. And then, beyond the millennium, a much healthier, more stable gold market will emerge."The institutional "gold bears" almost always press for and support the continuation of bullion banking and its attendant gold leasing operations...a necessary paradox. Gold is obviously a vital element in bullion banking, yet gold must be bearishly downplayed in public to preserve this same bullion banking sector. Think about it, folks. CoBra(too) (9/10/2000; 10:48:20MT - usagold.com msg#: 36382) OPEC - will raise output 800.000 bpd - higher than the expected 700.000, though lower than the minimum 1 million bpd. Doesn't bode well for lower POO -as some might have hoped - meanwhile it seems French gov. made some heavy concessions to transport, fisheries and farming. Looks like some things are falling into place re: WGC funded mostly by the hedgers, no wonder some important reserves as PDG holds seem to come into play. Get your reserves cheaply now hedgers and make sure you'll live up toyour contracts to the BB's. regards - cb2 Journeyman (9/10/2000; 10:21:39MT - usagold.com msg#: 36381) More on where high fuel costs REALLY come from @Black Blade, ALL ... in countries belonging to the Organization for Economic Cooperation and Development, taxes represent an average of 60 percent of the price consumers pay for gasoline, while the cost of crude oil accounts for just 12 percent of the total retail price. -Ali Rodriguez, Venezurla's oil minister, Dateline OSLO, Norway, (AP), Tuesday, September 5, 2000.That is, for OECD countries (US, Canada, Europe, Turkey, Greece, Scandinavia and a few others), 60% of the price of fuel is a rip-off that goes to governments compared to the 12% that goes for crude oil. That is, governments costs folks FIVE TIMES as much as OPEC does for fuel.Regards, J. Chris Powell (9/10/2000; 10:11:42MT - usagold.com msg#: 36380) Ted is not a bad guy Ted, I'm sorry if my last post seemed to suggest that you're a bad guy or that you had said GATA is doingwhat it does for the money.Your question was a good one and has been asked by othersand deserves a complete answer. Any lawsuit brought before there is money to sustainit will be knocked out of court during proceduralwrangling and will discredit the cause. Just gettingpast procedural issues so that the merits of our casemight be addressed probably would cost hundreds ofthousands of dollars. The other side, with all themoney in the world, will throw up as much obstructionas possible. We have to be prepared for it.God certainly has raised up many friends for GATA. I am always amazed by this and by their caliber. We just haven't raised enough money yet to get into court without taking a risk that could destroy us. We're still working on it.CHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc. Boxman (9/10/2000; 9:45:28MT - usagold.com msg#: 36379) Lawyers Why do lawyers wear neckties?To keep their foreskins from coming up through their collars. auspec (9/10/2000; 7:50:07MT - usagold.com msg#: 36378) Multiple Prices of Gold I am somewhat intrigued in regards to the price at which a mining co. can sell their product via futures|hedging. It is my understanding that a hedge POG can be considerably higher than the spot POG, say even $100 or more per oz. Is this correct?The question follows- why exactly would a bullion bank pay $375 for an entity that he could get on Comex for $275? I understand the time & risk factors involved as well as the purposes of a legitimate hedge, but this premium is well in excess of these variables. Clearly there is not access to sufficient gold on Comex for all purposes. The BBs are in essence saying [like Wimpy] "I'll pay you $375 Tuesday for an ounce of gold today".Should we not follow the POG via hedging as closely as we follow the spot market? Which method does larger volumn?A couple comments,& then hope to be directed by the "pros" w deeper answers and/or directions to previous commentary. The BBs want funds in order to utilize their lucrative "carry" trade as well as make the potential profits they have been assured of by their influential friends/politicos. So they are willing to pay up to have this access. They would rather make an agreement with Buttocks Gold than bid in a "free" market & drive up the price. This process only works when everyone, CBs, BBs, Politicos, $ mining cos. all gain something from this deal. Control is at issue & a lower POG on COMEX, which is on everyone's radar screen, certainly helps the Dollar, confidence, etc.The mining cos. are getting sweetheart deals that can look great at the time, but they risk their souls in the process and sell out their shareholders. In essence they are now "owned" by these masters who may desperately need them in the future & will not hesitate to call in some chips.The oil for gold premise could help explain the higher POG w hedging as these recipients of gold are quite content, apparently, to buy gold at a premium. What have I missed or misenterpreted? Why else would a future's sale be executed at such a high premium? Should we be keeping a close eye on the EXORBITANT PREMIUM in the "hedged" POG as a legitimate indicator of gold's true value? Thanks in advance.Auspec auspec (9/10/2000; 7:47:02MT - usagold.com msg#: 36377) Multiple Prices of Gold I am somewhat intrigued in regards to the price at which a mining co. can sell their product via futures|hedging. It is my understanding that a hedge POG can be considerably higher than the spot POG, say even $100 or more per oz. Is this correct?The question follows- why exactly would a bullion bank pay $375 for an entity that he could get on Comex for $275? I understand the time & risk factors involved as well as the purposes of a legitimate hedge, but this premium is well in excess of these variables. Clearly there is not access to sufficient gold on Comex for all purposes. The BBs are in essence saying [like Wimpy] "I'll pay you $375 Tuesday for an ounce of gold today".Should we not follow the POG via hedging as closrly as we follow the spot market? Which method does larger volumn?A couple comments,& then hope to be directed by the "pros" w deeper answers and/or directions to previous commentary. The BBs want funds in order to utilize their lucrative "carry" trade as well as make the potential profits they have been assured of by their influential friends/politicos. So they are willing to pay up to have this access. They would rather make an agreement with Buttocks Gold than bid in a "free" market & drive up the price. This process only works when everyone, CBs, BBs, Politicos, $ mining cos. all gain something from this deal. Control is at issue & a lower POG on COMEX, which is on everyone's radar screen, certainly helps the Dollar, confidence, etc.The mining cos. are getting sweetheart deals that can look great at the time, but they risk their souls in the process and sell out their shareholders. In essence thew are now "owned" by these masters who may desperately need them in the future & will not hesitate to call in some chips.The oil for gold premise could help explain the higher POG w hedging as these recipients of gold are quite content, apparently, to buy gold at a premium. What have I missed or Misenterpreted? Why else would a future's sale be executed at such a high premium? Should we be keeping a close eye on the EXORBITANT PREMIUM in the "hedged" POG as a legitimate indicator of gold's true value? Usul (9/10/2000; 6:51:57MT - usagold.com msg#: 36376) Jessica Cross http://www.expressindia.com/fe/daily/19980626/17755634.html The Indian Express, Friday, June 26, 1998 "...Cross, director of Crosswords Research and Consulting and a self-acknowledged gold bear..." Usul (9/10/2000; 6:49:11MT - usagold.com msg#: 36375) Jessica Cross http://www.thebullandbear.com/resource/RI-archive/1508-watershed.html A Watershed in Central Banks' Role in the Gold Market? by Timothy Green"...After the FT's Barcelona Conference, I asked Dr. Jessica Cross, Director of Crosswords Research and Consulting, who chaired the second day, if she detected a new, more encouraging mood about central bank participation. "I believe the hump of central bank sales is over," she said. "And if central banks could now move off center stage and operate on the management of their gold more like fund managers, then the hedge managers of the U.S. funds themselves could `read' the market much better. And then, beyond the millennium, a much healthier, more stable gold market will emerge." " Usul (9/10/2000; 6:47:11MT - usagold.com msg#: 36374) Jessica Cross http://www.btimes.co.za/98/0628/news/news9.htm '98 06/28: "JESSICA Cross, a highly respected voice in the global gold market, chaired the last session of the Financial Times 21st World Gold Conference...""A South African, Cross runs her own consultancies, Crosswords Research and Consulting and the Internet-based Virtual Gold commentary and database...""Despite Cross's exhortations, none of the central bankers among the delegates rebutted the accusations..." Black Blade (9/10/2000; 6:34:15MT - usagold.com msg#: 36373) Other Reasons Higher Petroleum Prices are on the Horizon Omnibus energy bill Also in September, the Senate is unlikely to pass an omnibus energy bill drafted by Senate Republicans. The goal of the legislation is to decrease US dependence on oil imports from 56% now to 50% by the year 2010. The bill would allow leasing on the coastal plain of the Arctic National Wildlife Refuge in northeast Alaska and let states assume the regulation of federal oil and gas leases. The bill permits producers a tax credit of up to $3/bbl or 50 cents/Mcf to prevent low prices from causing marginal wells to be shut in. And it would let producers expense their geological and geophysical costs for wells, and expense delay rental payments when they defer drilling. Senate Majority Leader Trent Lott (R-Miss.) said he would bring the bill to the Senate floor in September. Black Blade: Delays the inevitable.ANWR monument This fall President Bill Clinton could designate the Arctic National Wildlife Refuge coastal plain as a national monument. Rep. Don Young (R-Alas.) has asked Clinton to confirm or deny those rumors. Young is chairman of the House Resources Committee, which has jurisdiction over federal lands. Clinton reportedly is considering using his powers under the 1906 Antiquities Act to declare a monument on ANWR's coastal plain, preventing any future development. The coastal plain east of Prudhoe Bay field is believed to contain large oil reserves but cannot be leased unless authorized by Congress. Young said the Alaska National Interest Lands Conservation Act mandates that only Congress can designate monuments, wilderness areas, and refuges on federal lands in Alaska. Black Blade: Billy Clinton denied to Utah officials and congressmen that the barren desert "Escalante Staircase Monument" was to be created until the day he did it. He won't even be as considerate to Alaskan officials or congressmen either. Who needs states rights anyway - right? That pesky 10th amendment won't get in the way of legacies or dictatorial decrees.Heating oil reserve By October, the US Energy Department will establish a temporary 2 million bbl northeastern US home heating oil reserve. President Bill Clinton ordered the action, and also asked Congress to create a permanent heating oil stockpile and set terms for its use. DOE has accepted bids for the tankage and supply of the 2 million bbl reserve. Winning bidders will be paid in crude oil from the Strategic Petroleum Reserve site at West Hackberry, La. Meanwhile, Energy Sec. Bill Richardson has assured New England heating oil distributors the reserve will only be used for emergency purposes and not price manipulation. Black Blade: Too little, Too late.Hydraulic fracturing This fall, the US Environmental Protection Agency will be drafting a study on the environmental risks of using hydraulic fracturing to produce methane gas from coal beds. The 11th Circuit Court of Appeals has ruled that EPA must regulate coal bed fracturing in Alabama as part of the Safe Drinking Water Drinking Act's underground injection provisions. EPA said it has received complaints from environmental groups that coalbed methane wells have contaminated drinking water supplies elsewhere. Although the EPA study will focus on coalbed fracturing, it also will accept comments about fracturing associated with other types of gas production. Black Blade: Another delay and the NG situation becomes more critical hour by hour. The risks are practically non-existent, but what the hell. Why not.Wilderness roads In the fall the U.S. Forest Service will be reviewing public comments regarding its proposed a ban on road construction in nearly a quarter of the 192-million-acre National Forest system. The proposal covers more than 54 million acres of inventoried roadless areas. It would allow forest managers to propose additional protection for the inventoried areas and other smaller roadless areas through local forest planning processes. The Independent Petroleum Association of America said, "The nation needs more access, not less, to areas of this country where oil and gas may be found." House and Senate committees have held hearings critical of the proposal. Black Blade: This ban will eventually be overturned as millions of US Americans are forced to pay higher gasoline prices, are shivering in the dark in coming winters, and demand the "Government do Something".Smog/soot appeal This fall the US Supreme Court is due to hear arguments in a case challenging the Environmental Protection Agency's 1997 smog/soot rule. The court has broadened the case to consider whether the agency should have considered the economic costs of the regulation. The court previously had agreed to consider whether EPA exceeded its legal authority in drafting the regulation to reduce ozone and particulates emissions. The rule affects refineries as well as other oil industry operations. In a case brought by the American Trucking Association and supported by oil groups, the District of Columbia Court of Appeals ruled last year that EPA had failed to show that public health protection considerations justified the tougher rules. Black Blade: Precedent setting maybe?Diesel sulfur By December, the Environmental Protection Agency plans to issue a final rule to cut the sulfur content in diesel fuel 97% from the current 500 ppm to 15 ppm. It said diesel must be significantly cleaner-burning to ensure that truck and bus pollution control technology is effective. The American Petroleum Institute warned EPA that the rule will cause shortages. It said, "The refining industry is unable to produce sufficient 15 ppm sulfur diesel, nor can our distribution system supply it across the country."Black Blade: Truckers already are protesting higher diesel prices. Where are the Teamsters and AFL-CIO on this? No where to be seen as they are kissing up to the beautiful people in Hollywood and Washington.FTC investigation Late this year, the US Federal Trade Commission expects to conclude its investigation into last June's Midwest gas price increases. In an interim report to Congress, FTC said possible causes of the spikes included higher crude oil prices, the introduction of Environmental Protection Agency rules for summer-blend reformulated gasoline, and pipeline delivery problems. It said, "Although it is likely that each of these supply factors contributed to the dramatic recent price spikes in the Midwest, no single factor appears from staff's preliminary investigation to be likely to provide a full explanation, and staff does not yet have sufficient information to assess the impact of these factors in combination." FTC said it is also looking for possible illegal "collusion or tacit coordination." Black Blade: Yep, the Big Bad Oil Companies did it. I'm sure that some politically correct excuse will come about, or that maybe this will quietly be swept under the rug. The higher petroleum prices earlier this year were just a "warning shot". France to make oil industry pay for high fuel prices Paris has found a way to make France's oil industry, in effect, pay for the high fuel prices that are wreaking havoc in the country. Suffering from strikes by truckers and farmers hit by high diesel oil prices, not to mention general consumer discontent, the government is asking the oil industry to contribute to the 2001 national budget in order to make up for a 30% tax cut it has decided to grant on domestic fuel oil. The government's offer of a tax cut, plus other measures, has been rejected by truckers and farmers as insufficient, however. Taxes on oil products in France range from 68% of fuel prices for diesel to around 75% for premium gasoline. The striking laborers have blockaded some 50 fuel depots and refineries in the country in protest over high diesel prices and high taxes on oil products. If the strikes continue, they could have serious consequences on fuel supplies in many areas of France. The 3.5 billion francs that France's oil industry must contribute to the 2001 budget to make up for the 30% fuel oil tax cut was described by Finance, Economy, and Industry Minister Laurent Fabius as "an exceptional contribution." Industry is wary of such terms, however, as the last windfall profits tax levied on it -- also described as "exceptional" -- lasted from 1982 to 1999. Industry is bitter about the new contribution, which is being levied in a particularly roundabout and technical way. Both the oil field depletion allowance and the price increase allowance on accounting profits linked to variations in stock prices are affected -- the former to be fully scrapped and the latter to be diminished by 20%. Black Blade: More brilliant ideas brought to the people from the government.Meanwhile, OPEC says OK to 500,000 to 750,000 bbl increase per day. Ho Hum. Oh well, only about 200,000 bbl capacity left, and demand is still rising.bbbb WAC (Wide Awake Club) (9/10/2000; 6:04:59MT - usagold.com msg#: 36372) @Leigh - Artificial Fuel Shortages This would be an opportune time to introduce €/barrel as opposed to $/barrel. Why should the europeans continue to chase $s in order to secure their oil. I think you have a good point. The Invisible Hand (9/10/2000; 5:48:10MT - usagold.com msg#: 36371) FAZ - Schroeder - FOA --- wild speculation by the Invisible Hand on Schroeder's currency gaffe http://www.sunday-times.co.uk/news/pages/Sunday-Times/frontpage.html?999 On this slow Sunday evening (for me) allow me to speculate that Schroeder made his gaffe in order to take full advantage of the two first FAZ articles for the first stage of the A/FOA scenario (oil for euro) to unfold today in Vienna.This is again from (the business section's "Euro Watch" article) of today's London Sunday Times) Currency gaffe by careless Schröder CARELESS words can be costly, particularly when they come from Germany's leader. Remarks by Chancellor Gerhard Schröder, who said the weak euro "should be more a reason for satisfaction than concern", helped plunge the currency to a new low of 86 cents. Analysts said his remarks underlined growing tension between some European politicians and the European Central Bank, which has raised interest rates steadily - the latest being the August 31 rise from 4.25% to 4.5% - to head off the inflationary effects of the euro's fall. Tony Norfield, head of foreign-exchange research at ABN-Amro, said Schröder's comments were inexplicable. "Doesn't he realise further euro weakness will mean higher interest rates?" he said. "Is he advocating a weak currency to offset the impact of the recent rate hike? The ramshackle credibility of the euro is left even worse off." WAC (Wide Awake Club) (9/10/2000; 5:43:13MT - usagold.com msg#: 36370) Ecuador switches to US dollar http://news.bbc.co.uk/hi/english/world/americas/newsid_917000/917775.stm Ecuador is saying goodbye to its currency, the sucre, which is being replaced by the United States dollar. Long queues have been forming outside banks as people exchange their sucres before Saturday night when the dollar will become the sole currency. President Noboa: Policies have brought semblance of stability The currency change was introduced to try to control Ecuador's economic crisis - the International Monetary Fund (IMF) has warned that inflation this year could reach 100%. Since the dollar began to be introduced in April, some confidence has returned to the country's financial institutions and the government says this shows that its strategy is working. Central bank president Jose Luis Ycaza said on Friday the change would usher in an era of "stability, confidence and economic recovery". Central bank president Jose Luis Ycaza said on Friday the change would usher in an era of "stability, confidence and economic recovery". Most notes in circulation are already dollar bills and the government is importing new coins which have the same weight and value as US cents but an Ecuadorian design. But some people still regard dollarisation as an affront to national sovereignty. A wave of protests over the move contributed to the overthrow of President Jamil Mahuad's government last January. False remedy A short-lived civilian military junta was taken over by senior military officers who quickly installed vice president Gustavo Noboa, a 63-year old law professor, as president. Mr Noboa, Ecuador's fifth president in three years, vowed to maintain his predecessor's policies. Correspondents say he has succeeded in bringing a semblance of stability to the nation. Advocates of the changeover to dollars say it can put developing economies on a fast track toward stability and economic growth. Some US economists believe other Latin American countries should follow Ecuador's example. On Thursday, the IMF praised the changeover, saying: "Dollarisation ... has proceeded rapidly (and) has calmed the financial markets." Detractors, however, say that it is a false remedy that attacks the symptoms, but not the root of economic problems. The new currency is just one of many sectors where reforms have been ushered in. Under a $2bn, three-year agreement with the IMF, Ecuador drastically cut petrol subsidies earlier this year. The IMF said however that the government in Quito needs to impose a tight fiscal policy "for the foreseeable future," to reduce the public sector deficit, which stood at 7% of gross domestic product in 1999. Canuck (9/10/2000; 5:40:15MT - usagold.com msg#: 36369) @ Goldfly, All http://www.virtual-gold.com/ Direct to 'Virtual Gold'. Membership for one year is 1,440 pounds.Was looking for 'Jessica Cross' articles; she has a couple new posts on their 'Good Delivery Bar & Cafe' forum; although no access to opinion. Cannot access Jessica Cross by name (using their search engine) after 1998??'What's New' appears interesting; again no access.Maybe you or someone else can dig up some more info. Canuck (9/10/2000; 5:26:40MT - usagold.com msg#: 36368) @ Goldfly, All http://www.g9999.com/english/home/virtualgold.asp Goldfly,Thanks for the message, very interesting!!Went back the day and the day before; could not find what M.K. was referring to. Any way that you could dig up the article?This 'link' takes you to an intro. to Virtual Metals, click on 'more' to access Virtual Metals.T.I.A.Canuck Topaz (9/10/2000; 4:07:53MT - usagold.com msg#: 36367) More Grist for the Mill - courtesy SlangKing @ Kitco This summer, while motorists in America howled in protest at the cost of petrol, the Saudis were protesting that they could not find buyers for their cargoes. Shortage? they said. What shortage? What was not said was that the Saudi oil was flowing the other way. The Saudis sell a heavier and dirtier crude that is ill-suited for refineries producing petrol for US motor cars. It is true that Saudi Arabia is the biggest producer of crude oil, speaking for more than 10 per cent of world demand. But contrary to popular belief, its natural market is not Europe and the US but the Far East, where the heavier crude is used in power stations and factories. As Leo Drollas, of the Centre for Global Energy Studies, puts it: "There is no global shortage of oil. There is a shortage of the right kind of oil product in the right place." Rockgrabber (9/10/2000; 1:54:50MT - usagold.com msg#: 36366) (No Subject) Its an early Saturday night for me.. I hate these nights. Why are the markets not open I feel like trading. Rockgrabber (9/10/2000; 1:52:32MT - usagold.com msg#: 36365) (No Subject) There seems to be no doubt, that there is a fine line, as to how high to make oil prices,(For Opec) before they make them so high, that they really curb demand for there product. So much so, so high of a price, that they actually accelerate, to much so, the demand for alternate fuel supplies becomes to much sought after. (I cant even figure what I was saying there myself) I guess in otherwords you dont want to push prices so high that you push yourself out of business. How high of a price is that at current? Dont even try to anser that cause right now we dont know.(Unless you know please anser)..(( hahhahaha, actually mayber you do though)). But man, I sure hope we are going to find out. And OPEC better not wait to long before the world knows how important its oil is. Actually its not OPEC that made the demand so high, its its buyers. Its the payers for the oil that make the price high, not the producers. If the payers dont like the price dont buy it, if the producers dont like the price they are getting dont sell it. That is simple I suppose... Thats supply and demand. Oil is worth more then they get, only if the dollars they get cant buy this much gold. Does that make sense? But as long as they can trade this few dolllars for this much gold... Why heck, keep this ball rolling. You hear me OPEC?? That is it I am going to go E-Mail them. They cant stop now they have to easy of a way to get them GOLD. Does this sound funny? I hope it does. Black Blade (9/10/2000; 1:07:13MT - usagold.com msg#: 36364) Peter, I hope to take on the subject in greater detail in the future, but....... Normally I would agree. However, oil unlike gold can only be stored in a limited number of locations. Refineries don't want the liability of an asset that could decline in value, so they will not likely store excess oil in their tank farms. Not to mention paying the inventory taxes on stored oil. At some point, the "excess oil" has to back up somewhere. I suspect that that somewhere is on Saudi (and other OPEC) shores. The resulting stagnant and even declining API inventory numbers will likely push prices higher again. Another aside, there has not been a new refinery built in the US since the 1970's because of EPA regulations and political opposition. The "on-stream" petroleum supplies will simply get tighter as demand continues to grow. I hope to tackle the M. K. Hubbert curve peak and the continuing demand curves at some point in the future, but like you, it has been a long day (week) and I must get a few hours sleep. The Invisible Hand (9/10/2000; 0:54:33MT - usagold.com msg#: 36363) more oil links http://www.sunday-times.co.uk/news/pages/Sunday-Times/frontpage.html?999 Peter,If you click on the first page of today's London Sunday Times on the second article in the oil column 'Opec will open taps to curb oil price' you will fi'd all these linksopec.org - Organisation of the Petroleum Exporting Countries website includes speculation on the cause of oil market volatilityoilcrisis.com - Website devoted to 'The Coming Oil Crisis'. Includes an interview with Saudi Arabia's Sheikh Ahmed Zaki Yamani who argues that OPEC is accelerating the end of the oil eraiea.org - International Energy Agency. Features highlights from the oil market report in PDF format (dated August 9, 2000)www.oecd.org//sge/au/highlight17.html - OECD report on Energy in the 21st century: The return of geopolitics? www.sky.com/news/background/story18.htm - Petrol pricing - key quesions and answers Peter Asher (9/10/2000; 0:44:30MT - usagold.com msg#: 36362) Black Blade Now that we're back on subject, I'm turning in. Even though it's "Casual Saturday Night", I'm working a daylight schedule. See you tommorow. Peter Asher (9/10/2000; 0:39:21MT - usagold.com msg#: 36361) Typos again It should matter because, like Gold, Oil prices are influenced by the paper futures market. the factthat refinery supplies can rely on the supply line not running dry will hold the price downsomewhat.Gasoline and Heating Oil will be effected the most by tapped out storage and refining facilities.But again, to some degree mollified by the added certainty of future supply. Peter Asher (9/10/2000; 0:36:36MT - usagold.com msg#: 36360) Black Blade (9/10/2000; 0:29:45MT - usagold.com msg#: 36357) It shoul matter because, like Gold, Oil prices are influenced by the paper futures market. the fact that refinary supplies can rely on the supply line not running dry will hold the price down somewhat.gasoline and Heating Oil will be effected the most by tapped out storage and reining facilities. But again, to some degree molified by the added certainty of future supply.IMO, of course. Black Blade (9/10/2000; 0:33:38MT - usagold.com msg#: 36359) Alright, looks like we started something here. Q: What's the difference between a dead lawyer lying in the road, and a dead skunk lying in the road?A: There are skid marks in front of the skunk.Q: Why won't a shark attack a lawyer?A: Professional courtesy. Peter Asher (9/10/2000; 0:31:40MT - usagold.com msg#: 36358) The Invisible Hand (9/10/2000; 0:22:18MT - usagold.com msg#: 36355) Good find! Arcives by topic are greatly welcome. Black Blade (9/10/2000; 0:29:45MT - usagold.com msg#: 36357) Oil and Inflation http://www.gold-eagle.com/editorials_00/blanchard091100.html Decent short and concise article on oil and NG. OPEC can pump more oil all they wish, at least up to the 5% exces capacity that is in Saudi's oil fields. Then the question is: Where are they going to store it? What refinery is going to load up on oil if there is a risk that the price will drop? With the lack of refinery capacity, what does it matter if more oil is produced when the same amount of end-product reaches the market? Anyway, the article found at the "other" site is worth a read. Peter Asher (9/10/2000; 0:27:28MT - usagold.com msg#: 36356) Typo's Add the word needed, a comma and a period and it's readable---There was a small town in frontier days that needed legal services. To entice an attorney to set up a practice they advertised a free home and office. After 6 months the lawyer says "Even with thefree homestead there is not enough business in this town for me even purchase food, lamp oil andfirewood. I have to return back east." The locals have a long town meeting discussing thedilemma and finally come to a solution. They run another ad and hire a second lawyer!, The Invisible Hand (9/10/2000; 0:22:18MT - usagold.com msg#: 36355) The Coming Global Oil Crisis Homepage The Coming Global Oil Crisis Homepage The Coming Global Oil Crisis Homepage http://www.oilcrisis.com/ Haven't seen this posted. Peter Asher (9/10/2000; 0:21:51MT - usagold.com msg#: 36354) OK Black blade one more time (I'll take a cue from that JMB fellow and say I get compulsive joke telling syndrome on Saturday night.)These are actually from a post back in NovemberLawyer has a plumber in to fix pipes, plumber charges him $120/hr. Lawyer howls "I only make $90 and I'm a lawyer", Plumber says "That's all I made when I was a lawyer!There was a small town in frontier days that legal services. To entice an attorney to set up a practice they advertised a free home and office. After 6 months the lawyer says "Even with the free homestead there is not enough business in this town for me even purchase food lamp oil and firewood I have to return back east." The locals have a long town meeting discussing the dilemma and finally come to a solution. They run another ad and hire a second lawyer! tedw (9/10/2000; 0:05:00MT - usagold.com msg#: 36353) GATA http://www.usagold.com Re Chris Powells post:I didnt say that GATA was a bad group. I didnt say that it was in it for the money.Chris, if money is the problem, isnt it just as good aplan to sue and then have fund raising?Especailly since GATA has a law firm on retainer. Certainly the initial pleadings are not the major expense.During the American revolution there were many who said we couldnt fight the British because they were too strong and we were too weak. Patrick Henry answered them quite well by saying that God would raise up friends, and that the battle is not only to the strong.Perhaps if GATA had the faith to act, God would raise up friends?Now, if this post makes me a bad guy, I guess im a bad guy. The Invisible Hand (9/10/2000; 0:02:58MT - usagold.com msg#: 36352) (No Subject) My apologies for the quadruple posting ViewYesterday's Discussion.
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