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Welcome to the USAGOLD Gold Discussion Archives. 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...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

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ARCHIVED DISCUSSION FROM 12/10/2005
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Voyager (12/10/05; 23:23:56MT - usagold.com msg#: 139074)
test
test

Goldilox (12/10/05; 22:56:28MT - usagold.com msg#: 139073)
Cheerleaders
Oh, and of course, the cheerleaders will pat themselves on the back as Bubble-Vision parades them in front of the anesthetized Boob-tube audience.

"See", they will say, "how resilient this economy is"!

Goldilox (12/10/05; 22:52:31MT - usagold.com msg#: 139072)
SM in the "inflation illusion"
I think it's very likely that we'll see the SM continue to plod along just above the "official" inflation, given no catastrophic impetus. That way, the brokers continue to siphon money by shuffling their clients from one "hot" sector to another, and the clients see LT gains 2-3 % above the official inflation rate, which in reality means they're being slowly expunged of their assets.

All the while, the working class will bear more and more of the invisible tax (inflation) burden of Benny the Blade's "Inflation Target."

PRITCHO (12/10/05; 21:10:39MT - usagold.com msg#: 139071)
GOLDBERG not Goldgerg ----
Sorry Martin :)

PRITCHO (12/10/05; 21:08:48MT - usagold.com msg#: 139070)
Cheerleading at its finest -- - -- - (Financial Sense Article)
Marin Goldgerg in the article refrred to was "taking the piss" or to put it another way was ridiculing the army of cheerleaders for the US Markets always going up.

zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

mikal (12/10/05; 20:31:52MT - usagold.com msg#: 139069)
Xtreme economy headline highlights
Fed walks fine line in changing policy statement - Reuters[Don't let the $ CAT out of the bag!]
Housing slowdown to cost finance, construction jobs - CNN/Money[Is that all?]
Bubble, Bubble -- Then Trouble - BusinessWeek[BW dares to profile some local yocals about some real estate 'issues']
Gold shines as alternative to leading currencies - FT["Maybe we should start using some of those serious, adult words now..."]
U.S. debt expands at fastest clip in 18 years - AFX[Debt = Growth! Go USA...and Europe and Japan and...]
Huntsman Sr. fears traders manipulating natural gas - DesertNews[Up or down?]
U.S. Foreign Money Addiction Means Trouble - AP[Get thee to a clinic, gamblers anonymous or gold]
Buyback Fever Still Raging - CFO.com['Buyback fever'
PEAKING!]
Hedge fund worry grows - Houston Chronicle[Nothing another dose of derivatives can't cure ;)]
Housing softening in hot markets - BW['Softening' or evaporating?]
Should Hedge Funds Be Exempt From an Exemption? - NY Times Sellers chop asking prices as housing market slows - Boston Globe
Study: More housing markets called overvalued - USAToday Calif. home affordability holds near record low - Reuters[You mean it was worse?]
Intel forecast disappoints - N.Y. Post
Gamers outsourcing early rounds to China - NY Times
GMAC Auction Won't Be Simple - WSJ[Alas, just as we were getting pampered by "Reality TV"]
Merck Study on Vioxx Understated Risk, Journal Says - Bloomberg["Understated risk"? How about 'stated at a measured pace'?]
Mortgage Industry Job Losses May Rise With Interest Rates-
LA Times["May Rise?" Why stick your neck out?]
Satellite radio firms use low prices as lure - Arizona
Republic[Those dastardly hucksters and their alternative radio!]
Japan revises third-quarter GDP downward - FT['bout time they chill out ;)]
Iraq Set to Pump Less Oil Than Last Year - AP[Oil? What about standard of living?]
China's Trade Surplus Narrowed as Exports Cooled - Bloomberg[OOPS, exports to U.S. still GROW!]
Kuwait to pump 44 billion dollars into oil - AFP[Juicy equipment contracts for something obsolete in a few years?]

R Powell (12/10/05; 19:55:03MT - usagold.com msg#: 139068)
Ski
Nice to see that you are hear. I, for one, would greatly like to hear more of your views on silver, especially where this year's deficit might come from, assuming that new supply has not caught up with demand which I doubt has happened. But anything that you are now thinking of concerning silver would be appreciated.

Also, I posted in 139065 some thoughts. I did this before reading your 139043 post of yesterday. Basically, my post probably just restated your thoughts and I thought I should acknowledge this.

Currently I believe that the POS is heading and will continue to head higher. No one knows for how long or how high. Imho technical chart readings and indicators of all kinds will NOT be any more reliable now in silver than they were when silver moved from 401 to above 850. I'm hoping to get some insight into whether this current move is really demand driven or more speculative in nature ....always both but which is the stronger OR how strong is physical need? But, if you've no thoughts here, I'm always hungry for whatever a long time silver market watcher like yourself has to say.
happy weekend....
rich

mikal (12/10/05; 19:43:34MT - usagold.com msg#: 139067)
Global media relents, money milemarkers given coverage
http://biz.yahoo.com/ap/051210/wall_main.html?.v=2
U.S. Foreign Money Addiction Means Trouble - AP - 12/10/05
All this belated tallying of rat race results.

Flatliner (12/10/05; 18:24:31MT - usagold.com msg#: 139066)
Cheerleading at its finest
http://www.financialsense.com/Market/daily/thursday.htm
Stumbled upon this Thursday. I have many Gold fearing friends that tow the line delivered in this article. I have to admit that this guy sounds as crazy as … me. You be the judge. Below, I've included the opening paragraph and followed by some of the finer points.

"We're in the golden age of corporate America, and you simply must have your share of it. You must take advantage of the buying opportunity of a lifetime. Stocks are cheap and you should buy ‘em. Corporate profits have never been better, dividends never higher, balance sheets never cleaner, and as an added bonus, the corporate indiscretions of the bubble era have been totally purged from the system. CEO's now sign off on company's financial statements. The system is clean and neat and not only has corporate profit never been better, the prospects for the future has never been better either. The only way to benefit from the good fortune of the best-of-breed corporations is to own the stocks of these well run companies. The bear market is finally over and you should buy stocks. This economy is great!"

"With social security in trouble, you can't afford not to buy stocks now!"

"The US consumer has not failed us so far, and therefore he never will. The pessimists just don't get it."

I paragraph made me laugh a little.

"Those negative worrying pessimists are chirping about high energy prices again, but as usual they just don't get it. In the face of rising oil, corporate profit growth didn't take it on the chin yet. "This economy" has shown resilience time and time again. So by now, it is apparent that there is no relationship between energy prices and corporate profits. It's the productivity that these people don't understand. This is sustainable, and there is no reason why rising oil and gas should hurt corporate profits. And falling energy prices will boost corporate profits and even rally the market. And job growth will not be hurt either. In fact, I hear Kudlow suggesting that job growth will not be impacted either. That I like! There is no risk in this pretty picture and as a result, you should buy stocks now. Bou-ya, ski Daddy. Buy ‘em now!"

"Can it be clearer? The NYSE index is in a solid uptrend. It's time to buy!"

---

In a way, I believe Martin Goldberg might be seeing things, as they will be. Yet, I tend to disagree with his reasoning. "There is no risk" is never the case. "This economy is great!" is a relative observation that seems to be as skewed as - the sky is falling.

In an inflationary environment, prices go up. Sometimes, they can go up sharply. With ever-increasing amounts of money in circulation, people will chase stocks and houses with it. That, undoubtedly, will drive up prices. If the fed needs to print more money to make it happen, I'm sure they will. I'll even line up to get my share!

But, the real question is, will the value of these assets increase?

R Powell (12/10/05; 18:01:29MT - usagold.com msg#: 139065)
Galearis
We know that there is a relatively small amount of physical silver held in Comex storage, and that, of that, only about half is "for sale". Much of this changes ownership without leaving storage. If more (larger amount) is now doing so, I believe the fact is worthy of note but this should not be confused with Comex longs standing for delivery AND taking the physical metal out of storage (presumably for private possession or immediate use). Please keep a eye on that "total storage number" for us.

I had not thought of those wanting both physical possession + storage years ago when I called Comex stores "the silver of last resort". I was thinking of end-users needing physical. But, it is not surprising that some investors many have the foresight to buy + store in Comex. I would guess if they leave it there that they are inves tors looking for paper profits only but maybe this is how it begins, after all, the POS hasn't even reached $20.00 yet. (g)
rich

R Powell (12/10/05; 17:50:38MT - usagold.com msg#: 139064)
Belgian
When speaking of the distinctions between money and wealth you wrote............

"Gold is in the process of telling us that money is NOT wealth !!!"


Many still want to equate gold and money, or even restrict the monetary supply by the amount of gold backing it. I don't believe this is possible and I'll certainly agree that money is not wealth. Further, imho, gold is not money, although I once thought so and won a gold coin in a contest once wherein I stated, "simply put, gold is money".

I loosely define financial wealth as a possession that has a likelihood of being able to hold its monetary purchasing power over time. Paper money does not/ can not do this. Whether or not this is a flaw in the paper money is debateable. I don't believe it is as I don't think money must hold purchasing power over a long time period in order to fulfill a monetary function. I view money as a means of transaction over the time frame that most use when trading monies earned for food, rent, etc. That timeperiod for most is certainly less that one month, and, for many, weekly.

Certainly money can not depreciate in purchasing power as quickly as it did in the German meltdown in the early 1920s but paper money works just fine to complete most of mankind's normal transactions.

You also stated.....

"Holding a goldmetal unit (ounce or gram) and seeing to depreciate its exchange/barter value for tangibles is NOT the definition for gold-wealth. This corresponds with the depreciating purchasing power of fiat internally and externally.
Holding a goldmetal unit and see its purchasing power for tangibles remain the same over time...is simply forgetting the loss of purchasing power that gold had to suffer during the past SEVEN DECADES !!!"


I believe I understand what you are saying but, if so, my thoughts immediately bring up a question. Gold is brokered the world over in both paper and physical form. If we accept your above thoughts, then how does one determine the monetary exchange value (may I state a sale price as such) at any ONE day. Physical metal is bought and sold in monetary units daily. If it is done so with a numerical monetary exchange ...paper for dollars...doesn't that transaction validify...if only for that transaction time...a monetary value for gold. Whether or not the buyer or seller got a "good" deal is NOT the question. The question is, how else can gold change hands except on a monetary basis (without reverting back to barter)...and while this system remains (as it has for centuries), whether the paper deflates in value or not, does not the transaction involving money imply a relationship between the two?

If at any second one ounce of gold equals one good man's suit (to use the old standby) both of which equal X dollars, And given that one ounce CAN be purchased at that time for X dollars, then is it unreasonable to say that, again at that point in time, that one ounce of gold is valued at X dollars?

Does not this relationship exist that there is a monetary value for physical gold? By the fact that physical is exchanged daily for this fluxuating, appreciating or depreciating price (not value but price), does not this prove (at least imply) that a monetary value exists every day.

Also, does not the transaction price imply any value (not price but value as validation) as to gold's monetary worth every day and did not this also occur every day during the past seven decades that you refered to. Maybe today, last year's price seems like a bargin. Maybe the POG will trade down and today's price will seem overvalued.....maybe the price in monetary terms is, by that definition, priced in a fluxuating, depreciating currency but it is so priced, no? Why then, was that price not valid? ....OR, might you agree with my thoughts and I have I misunderstood what your post was trying to state..?
happy weekend
rich











The Invisible Hand (12/10/05; 17:34:21MT - usagold.com msg#: 139063)
Or has Kuwait?
http://news.independent.co.uk/business/news/article332114.ece
SNIP
Earlier this week, Gordon Brown [Britain's Chancellor of the Exchequer, or Minister of Finance] unveiled plans to take more than £2bn a year from the oil industry by doubling the "windfall" tax on North Sea profits. BP is expected to see its tax bill increase by £400m.

The Invisible Hand (12/10/05; 17:21:29MT - usagold.com msg#: 139062)
Kuwait has bearish view of oil
http://business.timesonline.co.uk/article/0,,16849-1918546,00.html
Oil shares hit by Kuwait's £1bn BP sell-off
SNIP
Some analysts dismissed the speculation that the move was inspired by a bearish view of oil, suggesting instead that BP's aggressive purchase of its own stock was forcing the Kuwaiti fund to trim its holding to maintain its weighting.

Topaz (12/10/05; 17:03:20MT - usagold.com msg#: 139061)
alt Gold.
http://www.futuresource.com/charts/charts.jsp?s=GC&o=100/DX&a=M&z=610x300&d=medium&b=LINE&st=
They at Futuresource have found it necessary to re-jig the scalings on our LT alt-Gold Chart ...the point being that PoG and Currencies are now SO disjointed as to be virtually irrelevant to one Another.
Good timing too in that 'ol Buck AND Gold look set to explode to the high heavens with the deflationary tsunami brewing anew.

USAGOLD / Centennial Precious Metals, Inc. (12/10/05; 13:55:04MT - usagold.com msg#: 139060)
USAGOLD puts a world of gold at your fingertips...
http://www.usagold.com/buy-gold-coins.html





ski (12/10/05; 12:56:04MT - usagold.com msg#: 139059)
@Galearis
Thanks so much for your added insights. This "student" looks forward to your periodic updates.

Cavan Man (12/10/05; 12:41:50MT - usagold.com msg#: 139058)
MK: Dizzards's OPINION
Was NOT arrived at without more than a modicum of research and conversation with some who inhabit that one square mile of "London" towne. That one square mile is quiet and takes a back seat to Broad and Wall but....the oldest and largest amounts of (mercantile and plundered) money reside there. Excellent points--agree!!

Galearis (12/10/05; 12:15:26MT - usagold.com msg#: 139057)
@ MK re your 139052
Well said!

And it may not be entirely a coincidence that there are perhaps some anomalous delivery events going on in the COMEX gold side too:

Gold had 284 contracts stand for delivery (28,400 oz) to bring December's total to 1,781,200 oz.

COMEX has about 3 Moz in the registered category in its stockpile.

Could it be that some entities are in the know about the direction for the USD starting in January 2006 – or some other looming derivative calamity?

For all the high spirits that are lately directed at the events going on with the POG (and POS), there is also a foundation of worry, a solid one underneath it all.
Gold, the canary of the monetary systems is telling us something important. But at least this canary can save ones bacon.

Canaries; get you some!

Best regards,

G




MK (12/10/05; 11:43:28MT - usagold.com msg#: 139056)
Merrill Lynch's gold forecast
Well, you've got to hand it to Merrill Lynch. They really know how to put themselves out there -- in the forefront, always ready to make the tough call in behalf of its clientele:

"The broker [Merrill Lynch] has upgraded forecast average gold prices from US$455/oz to US$485/oz in Q4 2005, from US$441/oz to US$525/oz in calendar 2006, from US$425/oz to US$500/oz in 2007 and from US$400/oz to US$475/oz in 2008. (Mind the gradual decline post 2006)."

I can see the Merrill Lynch follow-up report now:

"On December 9, 2005 gold hit the $530 mark. On that same day, Merrill Lynch analysts taking note of what was going on in the gold market, courageously predicted the price would UPGRADE to "$485/oz in Q4 2005" proving once and for all that Merrill Lynch's analytical team cannot make an error on the gold price no matter how hard they try."

Galearis (12/10/05; 11:17:33MT - usagold.com msg#: 139055)
re last post
apologies for the typos. Forgot to spell check,

G.

Galearis (12/10/05; 11:12:32MT - usagold.com msg#: 139054)
@ Ski re Ag deliveries
Hi,
I've been typing continuously for 2 hours and my fingers (and head) are getting tired. So I will try pasting some of my brother (rhody's) words from MIDAS. Both he and I are one on the subject:

Meanwhile over on COMEX there were 8 contracts delivered in silver and 7 contracts delivered in gold. None of this is leaving COMEX stockpiles. Some of these deliveries may be related to black box buying to cover futures sold naked short. This would drive up the spot price, but the metal might not leave the warehouse (yet). The other possibility is that the metal is left at COMEX under changed ownership in order to not spook the exchange or goose the spot price too much. There is nothing more bullish looking than imploding COMEX precious metal stockpiles. So this could all be a stealth run on COMEX stocks.

http://www.nymex.com/media/delivery.pdf
AND:

The only thing I recall about "normal" silver deliveries is that they tend to be about 1.5Moz during a delivery month. This is under the COMEX limit that can hold deliveries to 1500 contracts, or 7.5 Moz. Through all of this year, the deliveries on COMEX has been well over this 7.5 Moz limit, but the metal has stayed in the stockpile and only the ownership has changed.

Rhody

******
I hope that helps. Keep in mind that this has gone on since September inclusive including the non-delivery months inbetween. GIven this, then one could perhaps assume that ALL the registered stockpile has changed hands during the last two delivery months; the totals certainly reflect this. If one considers that this is the same event,,,that it is a continuum thingy going to some goal, then it certainly looks like a positioning of those intimate with the silver market to take ownership (before) for what would otherwise be a huge short squeeze. There will be a squeeze still, but I surmise that what we are seeing is a grab on the metal to at least perpetuate the paper market for a bit longer and relieve some of the actual physcial metal demand pressure. It is the only thing left for them to do considering what is ahead. Hmmm,,what is ahead?

Assume thru all this that the POS will continue to rise (correction(s) will also be expected) and if (as I continue to surmise) that the commercial side are the majority of new owners, then they are simply positioning themselves for when these registered stockpiles do indeed become the stockpile of last resort. One could continue to surmise that this next (spec) run (this next time) will also be interesting in light of what has already been said about silver lately. Silver should start to go balistic!

But the naked shorting may well be a thing of the past. Leasing silver may also be a thing of the past or in serious decline. So the two things needed for the manipulation are going to be in,,,,,'short supply (grin): unrestrained naked shorting involving rediculous tonnage of paper silver to depress the price with "supply of silver" , and leased metal metal dumped on the market to make up the deficit of real metal. These two factors having altered should see silver fly. Welcome to a freer market!

Or if you read mainstream press, silver should correct back to $6 or so. Which interpretation does one believe? This one on USAGOLD or some commodities staff writer for X Magazine? Heck, maybe they (just) aren't watching deliveries either. (Smile)

The truth is always in the details. Two bad there are always not enough supply of these too!
Best regards, and FWIW.

G.

mikal (12/10/05; 10:43:03MT - usagold.com msg#: 139053)
@MK, Goldilox
@MK - Nice post. Quite a noticeable change at FT (and elsewhere), yes?
Now it will be interesting to watch FT and other mainstream media's evolving viewpoint. Our major local newspaper is beginning to carry an occasional article on gold (for a change), but like FT, still with some reservations and omissions.

@Goldilox- Re: Warren Buffet, dollar position and "This must be looked at in the context of his silver position and his acquisition of natgas pipelines.
Like the BOJ buying "some" gold, he can't put all his eggs into one basket without tipping the cart too much."
I would like to know if he still has some sizable bets against the U.S. $index. These could pay off here soon.
Also, whether rumors about his leasing out his silver have any substance.
Could be know one really knows how much silver (or gold) guys like Bill Gates, George Soros, Warren Buffet, Charlie Munk), John Templeton, Alan Greenspan, et al control.

MK (12/10/05; 09:42:29MT - usagold.com msg#: 139052)
Financial Times signals changes in London town gold thinking -- A speculation
In the past two days, the Financial Times -- the paper read by major policy- and market-makers in London and beyond -- has run five articles on the gold market. When taken as a whole, these articles do not deliver much in the way of "the new" for members of this illustrious table. More important for us is FT's confirmation of the bull market elements posted here months, even years, ago. We were right and the message is now being delivered in the world of "influence." This in itself is a cause for cheer among gold owners and enthusiasts, because it alludes to the long-term nature of the change in the gold market. FT's coming out on gold represents a major shift in financial establishment thinking.

Why is this happening?

Let's first elaborate on the fact that many of the key ingredients to the gold bull market discussed here with regularity are now being delivered on a plate to the Financial Times readership -- central bank demand, investor demand in Asia and the MidEast, currency flight, etc. This in itself represents a major break with the past when the mainstream press expended its gold allotment on running down the prospects for the metal. Opinion and commentary was controlled by the gold bears housed in the major bullion trading houses in London and New York.

The fact that John Dizard's opinion piece ("Lustrous gold outshines the big currencies" referenced here yesterday by Towncrier), appeared not in its regular space, but on the opinion page sends an unmistakable signal to the pink page readership -- gold is now an acceptable subject for discussion. Better yet, it might signal that gold "needs" to be discussed because, despite the best efforts of its detractors, it refuses to go away.

The last paragraph in that Dizzard piece sums up that signal:

"The gold price in major currencies may soon correct from the rapid rise of the past two weeks. After that, though, it will continue a fitful, but dramatic increase over the next several years."

One of the more direct and simplified explanations for the surprise reinstatement of gold could be that the trading houses now recognize that any money to be made will be made on the brokerage side of the gold business -- getting gold to its customers -- than on the trading side. (The article in FT's Markets section sums up the sentiment: Gold the clear winner in a lacklustre field.) I alluded to this possibility back when N.M. Rothschild exited the London AM/PM price fixing group. I raised the possibility then that Rothschild's primary interest might be to find physical metal for its clientele -- including mine companies short the metal -- and that leaving the group relieved them of any potential conflict of interest.

Now, we can entertain the notion that there could be a big business for the London trading houses servicing gold demand emanating from the Gulf, Asia, Russia, the United States, et al.

Reports circulating this weekend about the flow of Gulf money into London are a case in point. Because of Sarbanes-Oxley and the war on terrorism, Gulf money is now gushing into London as a safe-haven. Gulf investors are sidestepping New York fearing that the U.S. government in a fit of rectitude or rightful reaction could seize Arab assets. Much of that money is going into U.S. Treasuries (UK holdings have jumped 80% to more than $180 billion during the first nine months of 2005), but knowing the Gulf's proclivity to own gold, we can guess with some confidence that much petrocash is being funnelled into the yellow metal as well -- at least as much as the physical market can accomodate.

Gold has been in a steady rise since mid-July and one is inclined to believe that the demand for actual, physical metal is behind it. Paper traders take paper profits and we haven't seen much in the way of corrections since mid-July. Such price action carries with it the unmistakable mark of physical interest -- someone buying because they believe the metal itself is a better holding than any of its paper antecedents. It also tells us that someone is buying because they believe gold is a better holding than of the major currencies, as Dizard explains in his editorial, and we have discussed at length at this forum.

One of the characteristics of the strong gold market price action over the past few months, as mentioned above, is the lack of a major selloff in any of the primary markets across the globe. Prices have been upheld around the clock. As soon as one market closes the price not only holds in the next opening, it often goes higher -- London, New York, Australia, Tokyo, Hong Kong, Dubai, Switzerland, then back to London. As rising and sustained oil price fuels global inflation, global investors, including oil producers like the Gulf States and Russia, latch onto gold -- an irony with nearly perfect symmetry.

I found this observation by John Dizard (rightly highlighted by TC) particularly insightful ("inciteful" if you are an investor):

"The truth is that all the major currency areas are burdened by debt and fiscal commitments that cannot be met out of their income. Some of these commitments will be paid. Some, such as US housing and consumer loans or European pension promises, will be defaulted on and some will be inflated away. The gold market has been anticipating the inflation component of this adjustment.

Furthermore, the chronic developing world debt crisis has now been turned on its head. No one seems to have told Bono, but the real debt problem is the developing world's growing holdings of shaky rich world debt. The developed currencies need to be collectively devalued relative to those of the rising powers. During the coming years of the gold bull market, the world monetary system will be reconfigured with a much larger role for emerging market currencies and a much more frugal life, relatively speaking, for people in developed countries."

And, I might add a much larger role for gold. The Dizard reference hearkens back to my "political post" of several weeks back mentioned by Rook last night. You never know who might be reading these pages.

Goldilox (12/10/05; 08:52:46MT - usagold.com msg#: 139051)
Buffett and his dollar short
@ Sundeck,

"Makes me wonder why Buffett went short the dollar by choosing five other currencies rather than housing or aluminium or gold or coal or other businesses at home or abroad... "

This must be looked at in the context of his silver position and his acquisition of natgas pipelines.

Like the BOJ buying "some" gold, he can't put all his eggs into one basket without tipping the cart too much.

-G

Belgian (12/10/05; 06:04:05MT - usagold.com msg#: 139050)
GOLD : Keep it simple, please.
Hoi Pritcho : RR is right to leave gold and the infla "story" for what it is (rather isn't). He made one little mousestep forward...but still in the complete dark (imvho opinion, of course).

Let's simplify gold's evolving future in easy wordings : Today, the barter value of "one" ounce gold equals "one" bicycle. Gold, under (rather in) the $-IMS regime, wishes that same "one" ounce of bullion to decline in barter value equal a doughnut.
Another, competing regime, wishes to see the barter value of that "one" ounce gold unit evolve equal a car...a house.

One regime wants, gold-the MONEY, depreciate permanently and the other regime wants, gold-the WEALTH, to appreciate.
Here we have "money" versus "wealth". Who fabricates the money and who fabricates/holds the wealth, on this planet ?

Holding a goldmetal unit (ounce or gram) and seeing to depreciate its exchange/barter value for tangibles is NOT the definition for gold-wealth. This corresponds with the depreciating purchasing power of fiat internally and externally.
Holding a goldmetal unit and see its purchasing power for tangibles remain the same over time...is simply forgetting the loss of purchasing power that gold had to suffer during the past SEVEN DECADES !!!

>>> Today, the dollar derivatized world, wants to revalue gold up until it has reached the correct purchasing power that it should have had, without the 7 decades of dollar-regime, that permanently depreciated gold's purchasing power by locking it into the ($)money context.

Gold is in the process of telling us that money is NOT wealth !!!
Soros 1987 (crash year-18 years ago) : Financial assets (money) continue to accumulate at a pace which outstrips the creation of real wealth ...and this disparity (already existing-observed by Soros, 18 years ago) is one of those excesses (there are much more of these) that needs to be corrected.

At that time, Soros didn't yet realized that gold was to evolve as a wealth (barter)reserve as to provide the cushion for the coming shocks ... that the systemic expansion (!!!) of imbalances exposes the global financial system to (yet) unknown risks.

The entire planet embarked on a process to find out what the real wealth-barter worth of a gold unit is worth. That's why goldmetal as a reserve will function perfectly to absorp internal/external shocks...for the states' CBs and individuals as well. Repeat > Gold as an appreciating wealth tangible and not as a depreciating money !

It is for this reason that we already have more than enough goldmetal above ground !!!

Gold, evolving to a wealth barter and reserve, must happen with as least shocks as possible. There is no room for sudden detoriating confidence in financial markets and economies, whilst the Gold-wealth transition is taking place.

I sincerely hope having put some more light on the GOLD = WEALTH notion.



ge (12/10/05; 05:04:56MT - usagold.com msg#: 139049)
GOLD/CRB Chart
http://tinyurl.com/dlffd
At the 10 year neckline, again.

Sundeck (12/10/05; 04:29:06MT - usagold.com msg#: 139048)
Dollar weakness and Japanese buying gold
Why are Japanese buying gold? Here is most of the answer:

http://fx.sauder.ubc.ca/cgi/fxplot?b=XAU&c=JPY&rd=365&fd=1&fm=1&fy=2004&ld=31&lm=12&ly=2005&y=daily&q=volume&f=png&a=lin&m=0&x=

The Yen is declining rapidly against gold, so Japanese people are swapping their yen for gold...most of which is first acquired via the BOJ.

The cause is the effect and the effect is the cause.

.......

Dollar weakness.

The US dollar may have shown "strength" against other currencies for the last year or so, but it is continuing to show ever increasing weakness against real things like oil and copper and gold and houses and other "things".

Japan is happy to have a yen that is weakening against the dollar...makes them more competitive versus the US and China. Japanese hedge losses from their weakening currency by selling it and buying higher interest-bearing dollar-assets and gold.

The US dollar can stay forever "strong" while-ever it is compared with other countries fiat currencies...it's all a race to the bottom. Few countries are going to stand up and nobley allow their currencies to appreciate substantially against the dollar...we have global inflation...a sea of dollars and a sea of dollar-derivatives (other countrys' paper). The greater the dollar tsunami, the greater all the derivative tsunamies (pounds, yen, francs, euros, etc)...it's easy!

"What ever you can do, I can do betterrrr...

I can do anything betterrr than you!"

...while the pundits get lost in the infinite cycle:

"No you can't!"

"Yes I can!"

"No you can't!"

Yes I can!"

etc, etc, ad infinitum...

The dollar index stays constant while-ever countries expand their monetary bases at the same rate...


Meanwhile....people buy gold...


Makes me wonder why Buffett went short the dollar by choosing five other currencies rather than housing or aluminium or gold or coal or other businesses at home or abroad... Perhaps when he took out the position he was worried about the threat of deflation, where currencies actually gain value. What he is going to get back from his present position is likely to be seriously devalued (foreign) paper which he will have to exchange for seriously devalued (US) paper. He may make a profit in dollar terms, but I suspect he is going to lose in substance (gold, housing, copper, steel, businesses, etc).


FWIW

:-)

PRITCHO (12/10/05; 01:29:43MT - usagold.com msg#: 139047)
From Richard Russells Latest Remarks - - - -
http://ww2.dowtheoryletters.com/DTLOL.nsf
Snip: (From Beginning)
December 9, 2005 -- Dec. 9 (Bloomberg) --

Iraq, which is dragging down President George W. Bush's public standing, is also creating a dilemma for Democrats torn between riding the wave of opposition to the war and fear of looking soft on national security. Russell Comment -- Republicans, the party of fools. They started a war, and now the war is eating them alive. Democrats, the party of cowards. They went along with the war, and now they're totally clueless as to what to do about the war -- or anything else, for that matter.
..........................................
The Investment Company Institute reports that U.S. mutual fund investors sank $9.39 billion into foreign markets but pulled $2.93 billion out of American stock mutual funds in October.

Russell Comment -- the word is getting out; foreign markets along with foreign competition is placing increasing pressure on the US. India in particular is where the action is. In 1990, 33% of all diamonds were cut and polished in India. Last year 90% of all diamonds were cut and polished in India.

This from yesterday's Financial Times -- Microsoft 's workforce will expand more rapidly in India than in any other country in the world over the next three to four years according to Bill Gates, the software makers chairman. The US company will hire 4,000 people in India over this period, taking its head-count in this country to 7,000. "India is the absolute leader in IT services offered on the world market," said Gates. It's accelerating, the learning curve just gets better and better."

The COMEX has raised margin requirements for gold contracts to 50 percent. I've seen such action kill other commodities. So far, it does not seem to have affected gold. That could be that a lot of the gold buying goes directly into bullion coins or into CEF or GLD. Of course, gold is very international and buyers on the gold exchanges in Dubai or China don't give a damn what the Comex does. When an item wants to go up, it's going to go up regardless of a regulator's actions.
..........................................................................
I want to talk a bit about gold. I read the newspapers and the various comments about gold every day, and most are talking about gold rising on the basis of inflation. Few are talking about the real reason for gold's rise -- a move (not yet a flight) out of fiat junk currencies. You see, that's the thesis that nobody wants to deal with -- the fact that fiat paper money is "garbage money," money that can't and won't hold its purchasing power.

So gold isn't rising on the basis of inflation. If the markets were worried about inflation, bonds would be caving in -- and they're not. No, sophisticated investors see the massive amounts of US debt, and they know that ultimately that debt will be monetized. They know that the purchasing power of the dollar is heading into the basement, which is why sophisticated investors are opting for tangible wealth -- gold.

The chart below shows that gold is severely overbought. The extended rising trendline has morphed into a much steeper rising trendline. Those already in gold are wondering how long this overbought advance can continue, and they are wondering when the inevitable correction arrives, how severe it will be. Those who are not in gold are either bad-mouthing it or waiting for the correction to buy, assuming they will buy at all.

In the meantime, gold acts as though it's in a world of its own, ignoring its overbought RSI, ignoring MACD, ignoring the acute angle of its ascent, ignoring everything but the fact that investors all over the world want gold in their portfolios.

The red arrows below tell the overbought story. So should you buy gold or more gold here? Not according to technical analysis. But there are times when technical analysis doesn't work. This may be one of those times.
--------------------------------------------

And - - Snip:
A bit more on gold -- If the dollar turns weak, how will the world know? Easy, the dollar will turn weak against other currencies, mainly the euro and the yen, and we probably should include the pound sterling and the Canadian dollar along with the Aussie dollar.

But right now ALL the currencies are weak against the standard -- gold. So it's ironic, if all paper sinks against real money, the only place it will show is in rising gold. Which is what is happening now. Actually, this morning the dollar was down .07 and the euro was up .13, But both were weak against gold.

The public doesn't see it that way. The public hears that the dollar was down very slightly today -- translation, the dollar was down only slightly against other currencies. But against real money, the dollar got whacked.


contrarian (12/10/05; 01:06:34MT - usagold.com msg#: 139046)
rook--japanese buying gold
Like you said, it's obvious Fed is giving permission to Japs to buy tons of gold. Perhaps as a reward for kowtowing to the party line? The Fed knows the run up that will happen to gold, and while it can, is giving its friends a heads up and the proverbial "wink" that they'll look the other way while the Japs do their best to hedge against a dollar disaster; otherwise, Japs could just take huge hit and sell off all those Treasury bills, and bring the dollar crashing down.

That's the only thing I can think of, but it seems to make some sense. You let them feel good while you can, like you're doing them a favor, especially when the gold hasn't hit the stratosphere yet, and you still can swallow your lumps.

You, the Fed, will then be better positioned to call your cards in later, when the going gets really rough, and things really matter (when the dollar implodes). After all, you can't screw your friends all the time.

PRITCHO (12/10/05; 00:39:23MT - usagold.com msg#: 139045)
@Rook - -Re 139041 (iffins)
"If it is possible to elect a guy in there next who sees the shot we have at doing a equitable global thing, and if all factors needed line up, some global money rain communism laced with capitalism might be best for people as a whole."
----------------------------------------------------------
Don't know why you think that the USA should be doing the Global "thing" -- even with another crew of idiots in charge. It should be obvious that there is a big enough mess to clean up in your own back yard without pissing off the rest of the World. No need to spell it all out but enough to say that the money saved would go a long way to give everyone there a better lifestyle.

Just pay for the oil - - - - -



Liberty Head (12/10/05; 00:16:19MT - usagold.com msg#: 139044)
@Rook
Rook
"maybe good could come out of the reserve currency guys drive for power and control."


Liberty Head
There isn't enough lipstick in the universe for that pig.


Rook
"some global money rain communism laced with capitalism might be best for people as a whole."

Liberty Head,
You presume to know what's best for me, without consulting me either. Shame on you sir.
Get thee to a nunery.

Best Wishes





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