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ARCHIVED DISCUSSION FROM 7/11/2001
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Solomon Weaver (07/11/01; 22:44:36MT - usagold.com msg#: 57937)
Just out today...Doug Noland's latest update...this guy is good.
http://www.prudentbear.com/Comm%20Archive/markcomm/070601.htm
"Global financial markets took a decided turn for the worst this week, with severe stress enveloping emerging markets from Latin America, to South Africa, to Eastern Europe. With a major crisis in Argentina seemingly coming to a head, related tumult in Brazil, Chile and throughout the region, and ongoing crisis in Turkey, there are myriad specific problems hampering the markets. The Brazilian real dropped 5% this week, the Polish zloty 4%, and the Turkish lira 3%. Derivative markets are now signaling a major devaluation in Argentina. Even the market for the Hungarian forint, a previously strong currency, this week faltered in illiquidity. This does increasingly have all the signs of a major systemic issue for the global financial system. The first casualties, as is typically the case, are the emerging markets. When the emerging market dislocation runs its course, we will then see how the marketplace deals with a fundamentally vulnerable U.S. dollar."

Solomon Weaver (07/11/01; 22:44:33MT - usagold.com msg#: 57936)
Just out today...Doug Noland's latest update...this guy is good.
http://www.prudentbear.com/Comm%20Archive/markcomm/070601.htm
"Global financial markets took a decided turn for the worst this week, with severe stress enveloping emerging markets from Latin America, to South Africa, to Eastern Europe. With a major crisis in Argentina seemingly coming to a head, related tumult in Brazil, Chile and throughout the region, and ongoing crisis in Turkey, there are myriad specific problems hampering the markets. The Brazilian real dropped 5% this week, the Polish zloty 4%, and the Turkish lira 3%. Derivative markets are now signaling a major devaluation in Argentina. Even the market for the Hungarian forint, a previously strong currency, this week faltered in illiquidity. This does increasingly have all the signs of a major systemic issue for the global financial system. The first casualties, as is typically the case, are the emerging markets. When the emerging market dislocation runs its course, we will then see how the marketplace deals with a fundamentally vulnerable U.S. dollar."

Turnaround (7/11/01; 22:10:09MT - usagold.com msg#: 57935)
Mr Gresham- still searching...


As you may have noticed, I still haven't located Strunk & White's *Elements of Style*.


This part of this sentence refers to the following, which is in turn predicated upon the preceeding part.
The subject of this depends on the predicate of that.
This sentence is just here to talk about itself.
This sentence is about the one just above it.
This sentence is here to make some sense of those sentences.
This sentence is a lie.
That sentence wasn't telling the truth about itself.
This sentence is a waste of your time; please don't read it.
This sentence is about many things and has to continue on a while to get them all across so please bear with it because after you've read it six or seven times it may make sense depending on this, that and the other, such as what else might be going on at the time, like are the kids home from school yet or what's for dinner and the price of gold (had to put that in since this is a gold forum) today, which reminds me: there seems to be a nice double bottom put in (if you follow TA and such) which might indicate a breakout sooner or later if the moon is in the right phase and everything else that's going on comes to some sort of resolution and that reminds me of my unkept new year's resolutions, but enough about me, let's talk about my new car.

A sentence fragment.

And another one.
'nother one over here.

And here.


And, or then but for?
Or, and for then, but.
For then, and or but.
But, or and, then for.
Then, but for and, or.




Mythical (7/11/01; 21:24:52MT - usagold.com msg#: 57934)
Tree in the Forest
Interesting! I'm not sure if there were many of these type of stores in the area where I grew up. Needless to say, thank you for the history lesson...gives me a little more comfort knowing that my family is fairly stocked with supplies and plenty of that shiny yellow stuff!

Respectfully,
Mythical

R Powell (7/11/01; 20:41:57MT - usagold.com msg#: 57933)
andrew the kiwi
I can't offer much on palladium and platinum other than they are very thinly traded markets and sometimes very volatile depending on whether Russia delivers or not.
Interesting that, as of a few minutes ago, the bid price for both metals was identical. The high of today for both was also exactly the same. Do you think one should be priced higher than the other? Which one and why?
Rich

Tree in the Forest (7/11/01; 20:38:11MT - usagold.com msg#: 57932)
Steve H
Re: your arguments about gold with third parties. In addition to the enormous quantities of documents and data that GATA has amassed, consider this; the classic method of prosecutimg criminal activity is demonstrating means, motive and opportunity. Governments have all three in regard to the manipulation of gold. That's at least half a conviction right there. Also, you might want to avoid these gold confrontations for a month or so. Then you can laugh right in their face. There's a reason why everyone's scrambling for gold behind the scenes: this baby's about to blow.

Tree in the Forest (7/11/01; 20:11:33MT - usagold.com msg#: 57931)
Mythical
In the 70's, many people felt the pinch of double digit inflation. Some of the supermarket chains responded by opening low cost supermarkets (and pharmacies) where they cut corners by not unpacking the corrugated boxes that the various foodstuffs and drygoods came in. A&P opened such a chain of stores called A-Plus. These stores sold foods at low prices but had a very cheap and tacky appearance inside with row after row of carboard boxes opened on one side so you could grab what you wanted. It saved the store on the labor of "packing out" as it's called. The effect was "third world", not what most consumers today would be used to at all in a supermarket. Of course today we have Big Box Stores where items are sold in bulk and sometimes from boxes. But I think that the average person would feel very impoverished shopping in the supermarket box stores of the 70's. There are still some of these ultra low cost stores around. Two or three people can run a small supermarket of this type. And the market only buys whatever they can get real cheap, so there sometimes isn't much in the way of choice. It also reduces the need for scanners at the check out. You pay extra for bags. Think cheap. I think these stores will do very well if we are served the hyperinflation.

ORO (7/11/01; 20:07:26MT - usagold.com msg#: 57930)
SteveH - Gold Manipulation
I discussed (and summarized) it many times before. The gold manipulation is quite routine in structure and has been done many times before in history. The core issue is the maintenance of an artificially low gold interest rate and injection of gold liquidity by a political institution having quantities of gold at its disposal, which induces a paper gold inflation which lowers gold prices so long as the paper retains confidence, and therefore trades at "par" with the metal. So long as gold is supplied in the contracted ammounts the paper retains its value and displaces gold from the financial markets. The withdrawal of the gold from the bullion banking system - the gold supply deficit is evidence of exactly this kind of manipulation.

Additional factors that come into play are the inducement of gold holders to write covered calls in order to generate an income to cover some of the (temporary) loss incurred as POG drops due to the excess supply of paper. Since the covered call is not in doubt as to its being "good", a gold investor intending to obtain gold in the future buys the call covering a the full quantity of the gold intended for purchase rather than a small portion of it in actual physical.

The bullion banking system - like the gold exchange system before it - expands the supply of gold credit substituting for physical gold holdings, thereby inducing higher future demand for physical gold on the part of the gold debtors, and inducing lower reserve ratios and lower gold quantities within the bullion banking system (which includes the EU central banks). It is a gold losing system that loses gold from financial institution's reserves while increasing the liabilities written against it.

It is the classic set-up for a gold credit deflation and its partner; the bank run.

Chris Powell (7/11/01; 19:59:59MT - usagold.com msg#: 57929)
Reply to Steve H, who says GATA quotes Greenspan out of context
http://groups.yahoo.com/group/gata/message/346
Steve H. writes that GATA has quoted Fed Chairman Alan Greenspan out of context in regard to his famous statement to Congress that central banks stand ready to lend gold should the price rise.

Not true. GATA always has quoted Greenspan completely in context. Indeed, a year and a half ago we posted and distributed his explanation of that comment, as provided in a letter to Sen. Joseph I. Lieberman in response to questions from GATA. A link to the text of Greenspan's letter is above.

In his letter to Senator Lieberman, Greenspan maintained that, in his famous remarks about gold to Congress, he had meant that OTHER central banks, not his, were working to keep the gold price down. But since his statement to Congress suggested that he had knowledge of the scheme of the other central banks to suppress the gold price, his
letter to Senator Lieberman qualified his position. He told Lieberman that what he knew of the scheme of the other central banks was a matter of their "observed willingness" to lend gold to keep the price down.

That is, Greenspan seems to have recognized that his statement to Congress put him and the Fed a little too close to the gold manipulation scheme for comfort. So he replaced his flat assertion of knowledge about that scheme with his "observation" of what other central banks were doing. He asserted that the Fed itself had nothing to do with the gold market.

GATA's recent disclosure of the minutes of the January 31, 1995, meeting of the Federal Open Market Committee, over which Greenspan presided, five years before he denied to Senator Lieberman any Fed involvement in the gold market, indicate just how deceitful the Fed chairman was being. For the minutes show that the FOMC discussed "gold swaps" that had been undertaken by the U.S. Exchange Stabilization Fund. Of course if the Fed had nothing to do with the gold
market, there would have been no need for discussion of "gold swaps."

GATA is pressing the Fed and the Treasury Department for explanation of these gold swaps -- their frequency, amount, and purpose. Answers have not been forthcoming.

GATA believes that Greenspan and the Fed know very well what is going on with gold and exactly how the U.S. government has been underwriting the gold leasing that has suppressed the price, while trying to keep the U.S. government's fingerprints off it and concealing it from Congress, the public, and particularly from the financial markets. We have documented and explained in detail every charge we have made. We continue to investigate on behalf of a free and transparent market in gold, and could use whatever help gold's partisans can give us. Gold's partisans in the United States should be writing to their congressmen asking, as GATA asks, for an explanation of the gold swaps and the reclassification of the huge amount of U.S. gold kept at the U.S. mint at West Point, N.Y.

The full text of Greenspan's letter to Senator Lieberman, as posted at GATA's archive, is below.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

FED CHAIRMAN GREENSPAN'S LETTER IN REPLY TO GATA

Board of Governors of the Federal Reserve System
Washington, D. C. 20551

January 19, 2000

The Honorable Joseph I. Lieberman
United States Senate
Washington, D.C. 20510

Dear Senator:

Thank you for your recent letter from your constituent, Chris Powell, concerning the open letter published in the Thursday, Dec. 9, 1999, edition of Roll Call.

The letter asserts that the Federal Reserve has been seeking to manipulate the price of gold by intervening in or otherwise interfering with the free market in gold. This is not true.

The Federal Reserve owns no gold and therefore could not sell or lease gold to influence its price. Likewise, the Federal Reserve does not engage in financial transactions related to gold, such as trading in gold options or other derivatives.

Most importantly, the Federal Reserve is in complete agreement with the proposition that any such transactions on our part, aimed at manipulating the price of gold or otherwise interfering in the free trade of gold, would be wholly inappropriate.

My testimony before the House Banking Committee and the Senate Agricultural Committee in July 1998 was concerned with the regulation of over-the-counter derivatives and included a phrase at the end of the statement below that has been wrongly interpreted.

The statement merely means that more than one central bank stands ready to lease gold. It does not say that all central banks do so, and, indeed, I presumed it would be understood that the statement was not referring to the Federal Reserve, whose public balance sheets indicate no ownership of gold.

I did not think it was necessary to indicate that the Federal Reserve was not part of the group of central banks who do lease gold since the Federal Reserve owns no gold.

"To be sure, there are a limited number of OTC derivative contracts that apply to nonfinancial underlying assets. There is a significant business in oil-based derivatives, for example. But unlike farm crops, especially near the end of a crop season, private counterparties in oil contracts have virtually no ability to restrict the worldwide supply of this commodity. Even OPEC has been less than successful over the years. Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where [ITALICS] central banks stand ready to lease gold in increasing quantities should the price rise." [END ITALICS]

The final clause of this statement, highlighted in italics above, was quoted in the Roll Call letter. In their original context these words obviously do not assert that the Federal Reserve itself participates in the gold market in any way. The observation simply describes the limited capacity of private parties to influence the gold market by restricting the supply of gold, given the observed willingness of some foreign central banks -- not the Federal Reserve -- to lease gold in response to price increases.

The answers to the 11 questions posed in the open letter are straightforward:

As for Question 1, the Federal Reserve does not, either on its own behalf or on behalf of others, including other government agencies, lend gold or silver, facilitate the lending of gold and silver, or trade in any securities, such as futures contracts and call and put options, involving gold and silver.

Thus, Questions 2 through 8 are inapplicable because they presuppose an affirmative answer to Question 1.

Question 9 asks whether the Federal Reserve ever owns or deals in derivatives that are connected with precious metals and whether any other agencies write call options against the Federal Reserve's gold holdings.

The answer to Question 9 is no; in particular, the Federal Reserve has no gold holdings, as noted above.

Question 10 is inapplicable because it presupposes an affirmative answer to Question 9.

Question 11 asks whether the Federal Reserve, either directly or through its management of foreign custody accounts, collaborated with the Bank for International Settlements, the Bank of England, or any other central bank with a view to managing, smoothing, or otherwise affecting the market price of gold.

The answer to Question 11 is no.

I hope this information is helpful. Please let me know if I can be of further assistance.

ALAN GREENSPAN
Chairman

-END-


Black Blade (7/11/01; 19:36:26MT - usagold.com msg#: 57928)
From Asia to Europe, Ripple Effect Is Felt in Low Growth Forecasts
http://www.iht.com/articles/25695.htm

Snippit:

Amid fresh reports of economic trouble from Singapore to Germany, analysts were debating whether the growing gloom could push the fragile global economy into a full-blown recession. The concerns mounted Tuesday as Singapore became the first Southeast Asian country to officially slip into recession. The government reported that the economy shrank at an annual rate of 10.1 percent in the second quarter from the first. That followed an 11 percent annual decline in the first quarter.

Some analysts expect other Southeast Asian nations to echo Singapore when they announce their second-quarter data in coming days. Thailand, Taiwan and the Philippines already have reported that their economies shrank in the first quarter. A recession is typically defined as two back-to-back quarters of a contraction in gross domestic product.

Germany added to the global woes on Tuesday when its growth forecast was slashed by a leading economic institute. The Berlin-based DIW research group cut its growth outlook for the largest European economy to 1 percent. The institute had predicted that Germany would expand by 2.1 percent this year. On Monday, the International Monetary Fund said that it expected the German economy to grow by 1.25 percent, down from its forecast of 1.9 percent.

Black Blade: I've nothing to add because I've been saying this for months. The US and most the rest of the global economy is in recession - has been and is now in recession. No one wants to admit defeat except perhaps Singapore. A little spin and statistical massage goes a long way. The pot is coming to a slow boil and a lot of frogs will get cooked. Go for the gold while it's still cheap.


goldfan (7/11/01; 19:27:53MT - usagold.com msg#: 57927)
Turnaround (\msg#: 57901)
Thank you for your extenssive reply to my post on economics and the natural law, I was wonderig if I could somehow brush up on my notions of the scientific method. Lo and behold, you responded! And I guess I'll finally have to study at the Austrian School. I'll have more later.
Chers

Goldfan

Black Blade (7/11/01; 19:26:06MT - usagold.com msg#: 57926)
Forbes Body Count
http://www.forbes.com/2001/01/30/layoffs.html
The body count keeps rising. Not a sign of a robust economy. The equities markets look like they are primed to fall flat as most stocks are grossly overvalued and even more so as earnings contract or become nonexistent. A "Golden Lifeboat" could be in order for the rough waters ahead.

- Black Blade

Black Blade (7/11/01; 19:20:13MT - usagold.com msg#: 57925)
The US economy is worse than it looks
http://www.newaus.com.au/econ257usrecess.html

Snippit:

No matter how often one challenges it, the idea that consumption drives economies is so well entrenched that its proponents seem completely oblivious to its contradictions and any alternative view. The state of American manufacturing does, in my opinion, highlight this situation. The latest data shows that manufacturing recently suffered further deep cuts in employment, causing US employment to fall by 114,000. And this is not the last of it, either. More layoffs are still planned as manufacturing finds that it needs to cutback further. The real state of unemployment is also concealed by short-time working, which amounts to "spreading the work" by cutting back on individual labour costs.

Black Blade: Good analysis - one perceptive Aussie. The US economy is on the ropes and the "Pied Pipers" continue to shout "all is well!" Many workers have simply given up looking for employment, graduating students are having job offers rescinded, and yet others are preparing for careers as Walmart Greeters or practicing those famous words "would you like fries with that?"

GOLD - Cheap Insurance - Proven Protection!


Mythical (7/11/01; 19:19:18MT - usagold.com msg#: 57924)
Tree in the Forest
"I can recall the 70's when "box stores" were popping up like dandelions. I assume everyone here is old enough to remember these. They all but disappeared in the 80's. Is everyone ready for the new "box stores"?"

...Sorry I was just a young lad in those days. Could you please elborate?
Regards,
Mythical



Turnaround (07/11/01; 19:06:26MT - usagold.com msg#: 57923)
ORO- your graciousness shines like gold



The 'dunderhead' line was thrown in as a counter to the notion of 'deride the affirmations, boost the detractions', a game theory that appears to be prone to backfiring.

And did I mention-
Your response to what you perceived as a personal attack and gross insult is a shining example of the golden rule.




GurnBlanston (07/11/01; 18:39:09MT - usagold.com msg#: 57922)
@Randy (@ The Tower) thanks for response
"Randy (@ The Tower) (07/11/01; 10:49:48MT - usagold.com msg#: 57891)
Gurn Blanston asks, on the NY Exchange, "Why don't the gold "bulls" bid up the price at the closing?"

Although I've posted many times on another forum (and this one occasionally), it still is nice when you get a (serious) response to a question. Thanks.

I agree that the "true gold bulls" don't buy much gold "paper" (futures and options). My comment related to those whom some call the "cabal," whose purpose is to keep/drive the gold (and silver) prices down. Especially at the close of the U.S. exchanges, so as to take potential profit away from those who buy and hold, awaiting a higher price to take a profit.

Hence, my question saying why don't (large portfolio) gold bulls counter those wanting a lower price by buying near/at the close? Especially in thin/pre-holiday markets.

There are a lot of us that do have physical AND buy calls. Obviously we get hurt when the price is artificially held down.

Again, thanks for your response.

Gurn


R Powell (07/11/01; 18:34:38MT - usagold.com msg#: 57921)
Steve H/ sailor
I just finished sailor's read at Kitco and thought of transfering it over here, but there is no need for you're one step ahead of me. Thanks, and thanks to Mr. sailor for paying attention during logic class!
Rich

SteveH (07/11/01; 18:21:53MT - usagold.com msg#: 57920)
On the matter of the great ORO/FOA debate
Oro,

Please address this issue. Is the price of gold being manipulated by the ESF, the BOE, the FED, the BIS?

I presume you will define the work manipulated. Perhaps we should say "controlled."

You know, when I breach the subject of gold with people for the first time, they react by almost always saying that gold is a commodity and has nothing to do with exchange rates.

Next, I tell them. "You know that gold is really what the basket of currencies are built around."

They say, "Your incorrect. Currencies are based around each other."

"No, I beg to differ. Gold is the basis of the oil trade. Gold has been the reason foreign oil has traded so low for so long. As long as oil sources demand gold with dollars for their oil, gold will and has been the basis of internation currency, but in a more hidden fashion since 1976."

About that time the conversation disintegrates because we have fallen into a position in which nothing is proveable and the conversation becomes one of those in which nobody can win.

"Oh, so you own gold? How much do you have? Where do you store it," they ask.

In the meantime, we have gone on now for several years when we first talked here and all that has changed is the frequency and intensity of the gold battles that entagle us all and that for some has burdened us with additional unplanned and unwanted "gold-loss" taxes in order to protect some interests who have created an impossible situation in which gold and dollars have a very hard time existing in that Douglas Adam's universe.

Chaos theory should aid you in helping us determine when in fact this tangled web of gold intrigue will break. It seems for now that the chaos is somewhat controllable -- a fact that actually amazes me in regard to all the attention it seems to be getting as of late. Alan does havve his job cut out for himself, doesn't he.

I will just bet you that those who manage this golden chaos must get a chuckle out of our little website here, don't you think? They see us all pontificate on the large short position and the "gold will go up any day now" talk that they read everyday, much like we chuckle at the CNBC talking heads who are trying to talk the market up as though it was there mission in life. Funny it is how all these pair of dimes can coexist in one Universe without causing 99 and Maxwell Smart to finally get the upper hand against their nemesis "chaos."

SteveH (07/11/01; 18:06:09MT - usagold.com msg#: 57919)
Repost
www.kitco.com
So, is gold manipulated by the Fed?

Date: Wed Jul 11 2001 19:53
sailor (OK this is long, I am just having some fun with "logic" don't read if you are manipulation hardcore) ID#14470:
Copyright © 2000 sailor/Kitco Inc. All rights reserved
Did anybody really read that testimony where that famous sentence, so frequently quoted, came from? "where central banks stand ready to lease gold in increasing quantities should the price rise"
Le'me see, let's take the whole sentence "Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

Now, let's keep going in expanding,
"Potential Application of the CEA to OTC Derivatives
The vast majority of privately negotiated OTC contracts are settled in cash rather than through delivery. Cash settlement typically is based on a rate or price in a highly liquid market with a very large or virtually unlimited deliverable supply, for example, LIBOR or the spot dollar-yen exchange rate. To be sure, there are a limited number of OTC derivative contracts that apply to nonfinancial underlying assets. There is a significant business in oil-based derivatives, for example. But unlike farm crops, especially near the end of a crop season, private counterparties in oil contracts have virtually no ability to restrict the worldwide supply of this commodity. ( Even OPEC has been less than successful over the years. ) Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

Now, lets's go to the beginning of that testimony ( without trying to paste the whole article", as you can read it at
http://www.federalreserve.gov/boarddocs/testimony/1998/19980730.htm

I am pleased to be here today to present the Federal Reserve Board's views on the regulation of over-the-counter ( OTC ) derivatives … The CEA and Its Objectives
The Commodity Exchange Act of 1936 and its predecessor the Grain Futures Act of 1922 were a response to the perceived problems of manipulation of grain markets that were particularly evident in the latter part of the nineteenth and early part of the twentieth centuries. … etc, etc.. go and read it if you really want to be "objective".

Now, what it has to do with logic?
OK. Let's have some fun. Most of the arguments on Kitco are "deductive arguments" Deductive arguments have three stages: premises, inference, and conclusion.

Proposition. A proposition is a statement which is either true or false. The proposition is the meaning of the statement, not the precise arrangement of words used to convey that meaning. In Kitco case, the proposition is "gold is manipulated".

Premises. A deductive argument always requires a number of core assumptions. These are called premises, and are the assumptions the argument is built on. The premises of an argument are often introduced with words such as "Assume...", "Since...", "Obviously..." The word "obviously" is also often viewed with suspicion. It occasionally gets used to persuade people to accept false statements, rather than admit that they don't understand why something is 'obvious'.
So in Kitco case, anytime somebody says "it's obvious that for manipulating gold you must supply additional gold to market when price would rise", it will raise the flag.

Inference. Once the premises have been agreed, the argument proceeds via a step-by-step process called inference. In inference, you start with one or more propositions which have been accepted; you then use those propositions to arrive at a new proposition.
So let's me see "central banks stand ready to lease gold in increasing quantities should the price rise". The new proposition is "fed manipulates gold". So far so good.

Conclusion. Hopefully we will arrive at a proposition which is the conclusion of the argument - the result we are trying to prove. OK, in this case it's simple "it's obvious that for manipulating gold you must supply additional gold to market when price would rise … central banks stand ready to lease gold in increasing quantities should the price rise ... therefore fed manipulates gold". Premise … inference … conclusion.

Now let's look at details in logic reasoning.
I am not gona bother you with all combinations.
I'll just give you one variation.
If premise is true ( for manipulating gold you must supply additional gold to market when price would rise ) , OK it's true.
AND the inference is true "central banks stand ready to lease gold in increasing quantities should the price rise"
Than the conclusion is true "fed manipulates gold"
That's a logic used by most folks that use this Greenspan's statement as a prove of manipulation.

OK, now lets look at the details of that statement that is based of inference. First, the statement was made in regards to derivative failure and attempts to corner the market. "Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise." Uhm, private counterparties … ready to corner the market.
When the price rise. What does that mean? POG at $300? POG at $500? POG at $700? POG having a spike from $265 to $295? You tell me!!!

That's where I have the problem with deductive logic coming to conclusion "feds are manipulating gold". Nope, for me, applying logic reasoning I am lost, as inference part of logic may be true or it may be false.

For that reason I try do disregard the reasoning based on a sentence pulled out of context … so frequently used by GATA and so frequently used by manipulation proponents. I am still on a sidelines, trying to apply logic reasoning.

BTW, when you start at the proposition, and use the proposition as a proof of your inference and where all proofs of your arguing are based on your original proposition, it's called a circular logic. E.g., gold is manipulated … feds are ready to lease the gold … feds are manipulating gold … where all arguments start with the proposition of "gold is manipulated"

I am just having some fun with "logic".

Now, I am sure if anybody was able to get though this, I'll see the post from Kapex saying "see JC them scam backs, tell them what you think" and JC responding "OK, it's in da manual" and Kapex replying "see I told you" ;- ) ) )

R Powell (07/11/01; 17:56:43MT - usagold.com msg#: 57918)
Randy/CPM/Buffalos??
I recently read about a new 90% silver coin with the old Buffalo nickel design. I believe the eagles are 100% and are one ounce coins and these are only 90%. Was the Buffalo coin information accurate and, if so, are these also one ounce coins??
I always liked the Buffalo nickel design and would like some coins with that design if they're one ouncers.
Thanks to all who recently offered silver information. I'm, as always, looking for more and will post anything I find.
My two biggest questions are (1) what is total above ground world supply? and (2) does Buffett still hold all 129 million ounces or has he leased some or all as some have speculated? I don't believe this "buy and hold" guy has sold yet. If he has it all intact, it could be a good percentage of the world's total.
If POS remains in a very tight, quiet trading range, then low volatility will lead to cheaper option prices. It's always calm before the storm.
Rich

Canuck (07/11/01; 17:36:50MT - usagold.com msg#: 57917)
@ Randy
Thank you very, very much for the message this am and duly noted regarding your closing comment.

Canuck.

auspec (07/11/01; 17:26:15MT - usagold.com msg#: 57916)
Some Guru Called Midas
Actually our main man, Bill Murphy:
"For many weeks I have informed you through Cafe sources that physical gold demand is on fire. What I mean by that is European, Mid East, Japanese and Chinese buyers are scurrying around the world lining up sources to supply them gold over a 12 month period. These "deals" are in the process of being consummated. As they are consummated, that supply {250 tonnes or more} will be withdrawn from the supply currently available...... The fact that the demand for gold at the auction was more than 20 to 25 tonnes greater than anticipated is indicative that the information you are receiving is correct and on target. My sources tell me that the communication process to secure these agreements has intensified the PAST WEEK." END

Comment: We are looking at a big grab for gold in-the- ground and 'unincumbered'! It is in quite limited supply, but not as limited as above-ground unincumbered gold. Gosh, I wonder what will happen next??!

Tree in the Forest (07/11/01; 17:22:13MT - usagold.com msg#: 57915)
Antal Fekete - Inflation vs Deflation
I recently emailed Antal Fekete regarding his essay, "Deflation or Runaway Inflation: The Denouement of the Gold-in-exile Saga". I commented, "My own opinion is that
depending on the severity of what is to come, we
may see both inflation and deflation. Inflation
in essentials such as food and oil (gold too) and
deflation in luxury items as people turn back to
basics." He opined, "I think you are right, we are going to [get] the worst of both worlds, inflation as well as deflation. The word "stagflation" will have to be updated to
"swineflation"."

In fact, we are seeing it already. Food, gasoline and energy are all up though they have eased a bit recently. Meanwhile, take a look at the cost of travel packages. I recently received a fax for a vacation offer consisting of 4 nights in Orlando, 2 nights in Ft. Lauderdale and 5 nights in Mexico. That's eleven nights for $99 per person. With the 2 person minimum it comes to $18/night for 2 people. Kids under 18 are free. Of course this is probably hotel only. There must be an awful lot of empty hotel rooms out there for them to give away rooms at this rate. This situation can only get worse as things deteriorate.

I can recall the 70's when "box stores" were popping up like dandelions. I assume everyone here is old enough to remember these. They all but disappeared in the 80's. Is everyone ready for the new "box stores"?

megatron (07/11/01; 17:01:14MT - usagold.com msg#: 57914)
Wanniski
When I read his book 'The way the world works' I got a good understanding of how a person who is obsessed by gov't control and has been on the payroll for most of their life
looks at gold and economics. It is a scientific quest for them to control the 'rabble' who 'don't know any better', and then he goes on to extole the vitues of democracy,and the common man, claiming the voter is always right. Please Jude Wanniski, if you can understand this: GO AWAY AND LEAVE INDIVIDUALS ALONE!

Saxulum^ (07/11/01; 16:56:46MT - usagold.com msg#: 57913)
Two dogs fighting over a bone...
Two dogs fighting over a bone... The third…. Yes, right, read: China!

Two fat dogs start fighting over the world reserve currency "bone".
Not realizing the bone has already weared out to an almost empty paper disposal.
The marrow (read: all production capacity and know how for almost all basic and many high tech goods)
has been "slingshotted" already to "THIRD" world countries.
The hard bone structure itself (read GOLD backing) has been replaced completely by plain paper, during a thirty (or better: seventy) year slow boiling proces.
Only western (US & EU) dogs still perceive this as the real bone.
Eastern (India, China) dogs know better. If at all, the Euro will only be an "Interim" with a short lifespan.
We like to think that the East needs at least another thirty or so years to get their infrastructure in place, before they could become a real thread to western hegemony.
Brain drain in our current global Web information era however, could now be a process of months rather than years. Especially if people suddenly start asking for the real bones, when the paper ones go up in flames.
During this upcoming revolution rather than evolution (Pacific & ME WW?), crucial powershifts will take place within a short time frame.

Machiavelli meets Confucius… That we may live in interesting times…

Just call Michael, OUR "central banker for real stability" and ask how REAL bones look like and how long you can keep them before they turn bad. Could be an I-opener…

And yes, I had a somewhat heavy diner tonight,… thank you for asking <g>


ORO (07/11/01; 15:48:37MT - usagold.com msg#: 57912)
Wanninsky - a central planner
Wanninsky actually said that the Soviet Union would have prevailed had it retained a gold money because of his belief in the superiority of "scientific" and "rational" central planning over "chaotic" markets.

The motivational arguments of the whole body of economics prior to mathematical economics from Fisher on, are completely ignored. The motive of all trade, from consumer to mega inernational corporations, is profit. Not having a profit motive in economic decision making under a central planning regime, the bureaucrat is devoid of motive to make the "central plan" work. He has no motive to find out what aspects a consumer of his product would prefer, and would suffer no substantial harm from not meeting the consumer's wants, and enjoy no substantial profit from meeting them.

Using the Hayek measure of disperse and inarticulate knowledge constituting the bulk of practical human knowledge, it becomes clear that the central planner will never have at his hands the slightest bit of economic information with which to make his decisions. His steel factory will produce low grade steel at much higher energy, ore, and labor inputs than a competitive steel market participant would in producing a high grade steel. Products made from the steel would be melted down and reformed in the black market industries to meet the actual needs of consumers.


The supply siders that follow Wanninsky believe in the medicine man's talismans and prayers more so than in his poultices and herbs. Kemp seems to believe that the credit money dollar can be "fixed" to gold by "targeting interest rates to maintain a fixed gold price". It is quite impossible since the market's knowledge of the "targeting" action would make gold contracts more attractive than dollar contracts, and physical gold in hand and in a gold pool more attractive than cash dollars since the risk of underperforming the dollar would be eliminated. With the advent of a volume of contracts, gold would be enmeshed into the network of trade with gold denominated commercial paper (and therefore gold money market funds) and bonds, gradually displacing the contractual role of currencies and reducing demand for them - while enhancing demand for physical gold.



andrew the kiwi (07/11/01; 15:27:39MT - usagold.com msg#: 57911)
platinum and palladium
It has been a while since I have posted, although I follow the running discussions with interest. I am interested in an outlook on the above metals, recent market action has been one of a downward direction, perhaps in response to a slowing global demand, a previous price run in excess of a sustainable rate of growth.

Supply is quite limited and geographically removed from the end users. Anyway, any thoughts, analysis and direction would be appreciated..



Randy (@ The Tower) (07/11/01; 15:08:42MT - usagold.com msg#: 57910)
Federal Reserve is again engaged in the outright buying of U.S. Treasuries
Sadly, the size of this transaction hasn't been revealed, but recent past operations to add PERMANENT reserves to the banking system have been anywhere from $500 million to $2.3 billion.

Although the market rate on fed funds was trading in line with the FOMC target, the Federal Reserve still felt the need to add temporary reserves on top of this permanent injection mentioned above.

The Fed added $4.75 billion to reserves with overnight repurchase agreements.

The Fed also added $2.75 billion through seven-day repos.

Randy (@ The Tower) (07/11/01; 14:44:07MT - usagold.com msg#: 57909)
Confidence and credit "[Argentine] Banks were shy to speak on a panicky day..."
http://biz.yahoo.com/rf/010711/n11145033.html
Depositors in Argentina are individually deciding two things: whether they still have faith in the banking system, and whether they still trust the peso.

Reuters reports:

---"But bankers speaking on condition of anonymity said that while demand for cash was slightly higher and the total of about $85 billion in Argentine bank deposits had been falling slowly since late last week, there were no panic withdrawals. They described the situation as "tense but stable" and said fixed-term deposits expiring on Wednesday were being swapped to dollars from pesos -- but were being renewed, not cashed in."----

New legislation will peg the peso to a 50-50 mix of the dollar and euro as soon as the euro reattains parity. Until that time arrives, the current Convertibility Law has since 1991 guaranteed that the Argentine central bank must hold one dollar for every peso in circulation.

As a result, the decision whether or not to convert a peso note for a dollar note comes down to the citizen's preferred confidence in the creditworthiness of his fellow citizens or the creditworthiness of Americans. And to be sure, the volume of circulating peso notes (backed one-to-one by dollar notes) are just a fraction of the total volume of peso-denominated credit sitting in bank accounts in the form of checking and savings deposits. If they have fear of their banks failing, they simply can't all flee into paper pesos; nor paper dollars either.

The safest choice -- and the only real option -- is to avoid this flight out of bank accounts from pesos into dollars ("out of the frying pan, into the fire") and to simply SPEND the pesos on tangible goods. There is no credit risk for a pantry full of food or a closet full of clothes. But when storage space or spoilage becomes an issue, and when you want to preserve international liquidity, the natural choice is to spend your accummulated accounts on the Universal Savings Asset... Gold. (U.S.A.GOLD)!

[Special note to a dear friend: Conrado T., I hope your winter is going well, that you're reading this, and that you're one step ahead of the rest! Cheers!]

Yukon (07/11/01; 14:20:39MT - usagold.com msg#: 57908)
FOA/Another...
Dear FOA/Another;
I was quite surprised to read today that you both are leaving this forum. After going back and reading all the posts since my last visit I can only say that your actions seem, IMHO, a bit drastic. We all are subject to things that rub us the wrong way. Some require action. Others thought. While I do agree with your trying to hold this forum to a certain level of professionalism and high standard, it cannot be lost the fact that people need to blow off steam, and may target you in doing so (especially since you are our esteemed guide on this journey we take and as such are more susceptable to attack, warranted or otherwise; In fact I thought you had recognized this and accepted it as part of your mission here). So much of what you have written carries with it a tone of happiness and good will that, quite frankly, I am surprised you let any single post or poster elicit such anger/dissapointment in you. When reading the details of why you are leaving and the post about sex and Nazism, I have to say that I actually laughed. Here we have just opinions. Tasteless? Perhaps, but posts like that I have found to be few and far between. Gold is freedom and I think you in your heart, like many others here, while not agreeing with what a person writes, must defend that persons right to say what he feels. Mr. Kosares makes the rules here and with that comes again the difference of opinion. What you may find offensive and totally off key may not necessarily be grounds to have a persons password yanked. It is just the nature of this forum.

There are numerous people here, myself included, who have gained such a better understanding of not only the gold market, but of the entire world economy and the political associations as a direct result of your works. I do not understand your decision to leave but I respect your position and if it means leaving, then I wish you all the best. I do hope that you decide to continue with posts on the gold trail or at least with MK. Your work is not in vein. Nor has your talent for making a complex subject lively and downright fun gone unnoticed. You will be missed by many. Good luck and God Bless.

Viva Libery!
Yukon

The Hoople (07/11/01; 14:13:31MT - usagold.com msg#: 57907)
Contrarian signals
It seems that when this sight starts getting testy and everybody seems to be at each others throats it is when gold is in the doldrums. Judging by what's transpired here in the last few days a monster gold move must be imminent! By the same token whenever this sight turns in to a love fest is when maybe I should scale back. At the risk of getting pasted by somebody I enjoy diverse opinions, I just don't feel the need to vehemently oppose one. It is allegedly with one common goal we arrive at this sight: free market gold and sound money. I would miss this sight tremendously and hope everybody takes a collective deep breath and thinks long and hard when considering inflammatory posting. I have sometimes learned much from even the bad teachers;they allow me to crystallize my rejection of there (il)logic. I think you need less than stellar writing to recognize the truly brilliant. Like my uncle used to say if it wasn't for everybody driving Buicks nobody would look at his Jaguar. I hope future posters to this sight won't be intimidated by the fear of not having anything relevant to say. MK has given us an opportunity, let's not waste it.

uponroof (07/11/01; 14:07:44MT - usagold.com msg#: 57906)
Randy....... St. Gaudens
Thanks for the offer. I was just checking KRY out and see it is now down to 1.80, but the high today was 2.00. I will hold on for now, the Gaudens will wait. btw-a friend of mine was discussing the 1933 Gaudens and it's 'illegal' classification. Just in case anyone's interested:

"...No coins of this date were ever allowed into circulation, at least not officially. A handful of 1933 Double Eagles exists today, but the Mint asserts that ownership is illegal because they were removed without authorization from the Mint. Thus, in the few instances when these have appeared on the open market, they have been subject to seizure by the U.S. government. The only "legitimate" examples are owned or held by the government. However, in 2001, the U.S. government reached an agreement with the owners of the "Farouk-Fenton" specimen of the 1933 Double Eagle which allowed the coin to be sold, thus making it the only example outside of government hands that is legal to own...."

(with thanks to coinfacts)

SHEEEZZ! Numismatic coins being confiscated. BTW-any idea where the missing 'handful' are?

Randy (@ The Tower) (07/11/01; 13:38:28MT - usagold.com msg#: 57905)
St Gaudens for uponroof (msg#: 57894)
http://www.usagold.com/gold/coins/buy.html
Congratulations on your investment's performance -- referring to your comment:

---"...Now I can swap this out for an almost 100% profit (to buy quite a few more Gaudens....if I can find them)."---

I also saw your post yesterday of excerpts from 'The American Advisor' where it was stated:

---"MS 64 or above (65,66) St Guadens gold becomming very, very scarce. At a recent coin show of 200+ dealers, NO (nada) MS 64,65,66 Guadens coins were found FOR SALE."---

Here's a friendly suggestion. Let MK or George at Centennial do the legwork for you on gathering those St. Gaudens. Give them a call for the best prices they can offer on all that you need. They have the resources and connections to get the job done for you.

SteveH (07/11/01; 13:36:54MT - usagold.com msg#: 57904)
Hope
In the world of gold and its alleged manipulation by the powers that be because they have locked themselves into a position. The below, although only indirectly related, shows that common sense does sometimes prevail in the "big" government arena.

Justice Department Reverses Gun Rights Position
WASHINGTON (Reuters) - Reversing a position it adopted
nearly 30 years ago, the Justice Department (news - web sites) is preparing a
formal legal opinion that individuals, not just groups, have a
constitutional right to own guns, a view advocated by Attorney
General John Ashcroft (news - web sites), department officials said on Wednesday.
They said the department's office of legal counsel was
drafting the opinion, which would be a shift from the position
it took in 1973 under Republican President Richard Nixon that
there was no personal constitutional right to own or use a gun.
The letter, denounced by gun-control groups, represented a
break from the government's prior position that the Second
Amendment only conferred a collective right to own guns through
militias, and not an individual right.
The opinion will incorporate the views Ashcroft first
expressed in a letter to the National Rifle Association in May.
The officials said Ashcroft, an NRA member, expressed official
Justice Department policy in the letter, not his personal
views.
In another move applauded by the NRA, Ashcroft last month
announced plans to slash the amount of time the government can
keep records of instant background checks for gun buyers.
One official said the Justice Department would continue to
defend existing gun laws in court, even after the opinion had
been completed.
In his letter, Ashcroft said the Second Amendment did not
prohibit Congress from enacting laws restricting firearms
ownership for ``compelling state interests.''
The issue of whether the Second Amendment applies to
individuals is before a federal appeals court based in New
Orleans, and the case could then be appealed to the U.S.
Supreme Court (news - web sites).
The Second Amendment says, ``A well-regulated militia, being
necessary to the security of a free state, the right of the
people to keep and bear arms shall not be infringed.''
Seth Waxman, solicitor general under Democratic President
Bill Clinton, said in a letter nearly a year ago that
successive Democratic and Republican administrations, the
Supreme Court in 1939 and eight U.S. appeals courts had
rejected arguments the Second Amendment extended firearms
rights to individuals.

megatron (07/11/01; 12:40:33MT - usagold.com msg#: 57903)
TurnAround
This is the problem I've always had with the theories of Wanniski and Kemp, is that it's just a variation on the old centralist control scheme, which they both seem to relish. They are wallowing in gov't control and talk like they are the worlds biggest libertarians. You can tell from reading about his admiration of the Laffer curve Wanniski is practically rubbing himself thinking about central control of the gold price. The only difference between him and Greenspan is Greenspan's doing it 'under the table' while Wanniski is a 'exhibitionist'

uponroof (07/11/01; 12:27:09MT - usagold.com msg#: 57902)
Megatron Thanks!
I was following that a while ago. I believe Placer Dome is on the other side of that third world 'David and Goliath' legal battle? btw- the story behind that mine is amazing. Right out of Indiana Jones and the Lost Temple. KRY gained mine rights through the widow of a pilot who's plane crashed near this deposit leading to the discovery of this very rich mine (working from rough memory so excuse the inacuracies please). Any more difinitive/accurate info would be appreciated. Thanks again! Going to check the details now.

Turnaround (07/11/01; 12:25:12MT - usagold.com msg#: 57901)
goldfan- there can be only one

goldfan (7/11/01; 07:02:15MT - usagold.com msg#: 57879)
Politics and Economics

"Does politics lead economics arund by the nose, or vice versa? How separate are these two separate really? How much influence does politics really have on economics?? Politics and the physical/chemical properties of substances like say, iron, are separate. Politicians have to take account of the properties of iron, but the properties of that metal are not at all subject to political direction or political will. What about economics? Are there immutable laws of human behavior governing the transactions and results we call economics? Are these laws superior to politics, meaning that "economics will out" no matter what the politician decrees? Can King Canute hold back the tide of economic affairs?"

Very deep questions, Sir Goldfan. How one replies to them depends on one's philosophical views.

My view is scientific, more or less objective, which is to say there is a really real reality out there somewhere. Every ogansism that possesses more than ~one neuron 'carries' with it some form of a 'model' of that objective reality. The 'model' is not static- it changes in response to external events. Ideally the changes to the mental model are in a direction that, over time, produces a more accurate representation of reality. We call this learning. It is what enables creatures with nervous systems, including human beings, to survive and thrive in the natural world.

If the model becomes less accurate with time, (it's really tempting to say "we call this politics"), the creature becomes less fit to survive. Think of how the stock market wealth effect turned into the poverty effect- a large number of people were using an unfit model of reality *during the ramp-up*. This did not and cannot change the underlying, objective reality- the laws of nature. Economics is a subset of those immutable laws.

If King Canute was addressing the masses in the legend; he was also speaking to all future would-be Kings.

"If there are immutable laws of economics, not subject to political desires, not many economists seem to know them, or at least to publish them."

The closest approach to a scientific theory of economics (that I have studied) is the Austrian School, notably von Mises. A scientific theory is a model of reality; a map of the terrain, not the terrain itself. To evaluate the fitness of any particular model we do not have to resort to quoting authorities: the model speaks for itself. These theories are ideally selected, refined or rejected by an evolutionary process. An economic theory that is less reliable is rejected in favor of one that is more reliable. The criteria are twofold: a scientific theory

a) describes the system it models, past and present (essentially the same thing), and

b) predicts future behaviors of the modeled system.

Keynesiam, Monetarism, Marxism, Supply-side and so on therefore have to be rejected: they do not have the predictive power of Austrian economics. The reasons these kinds of ersatz theories are still used and taught is psychological, a reflection of the irrationality of man.

There can be only one currently best scientific theory.

"Does the existence of a King, or any authority decreeing the laws of banking and commerce, make the course of economic history for that time entirely predictable?"

No, for several reasons. Passing miracles cannot change physics, as you noted above, Also, the future is indeterminate, no finite amount of knowledge about the present can fully predict the future.

"If economics is something as scientific as chemistry, then we need no laws or decrees to implement its requirements, any more than we need Congress or the Court, to tell us how to mix sodium, hydrogen, and oxygen, to get our daily salt. And if they did make such decrees in defiance of the nature of economics, they would have no ultimate effect.

"What is all the fuss about? How come we are still groping after the Periodic Table of Economics? "

The subject is obscurred simply to fulfill an irrational desire for power over others.





megatron (07/11/01; 12:22:49MT - usagold.com msg#: 57900)
KRYing all the way to the bank (of England)
If those 500k were bought by offshore interests you could be in the money, son. Gov't officials and especially judiciary in countries like Venezula and Canada are always the most corrupt and will tip their hand quickly. They a just smart enough not to do it in broad daylight, but the TA shows their machinations. To be safe you could enter a sell stop or take some off now and preserve.

megatron (07/11/01; 12:16:35MT - usagold.com msg#: 57899)
The KRYing game
Stockhouse has instituted a traders coverage of KRY, amid speculation they will win the rights to the huge Las Cristinas gold deposit in Venezula. Mining arithmetic indicates a much higher stock price if awarded this concession.

uponroof (07/11/01; 12:13:29MT - usagold.com msg#: 57898)
Megatron-----correct CRYSTALLEX INTL
Was over $8.00 in 1998. Today's volume 578+-K.

megatron (07/11/01; 12:03:34MT - usagold.com msg#: 57896)
KRy KRy KRy
Is that Crystallex?

uponroof (07/11/01; 12:01:26MT - usagold.com msg#: 57895)
What is up with KRY today?
I know this is a physical site, and I know folks here are sensitive about paper, so for now let's consider gold stocks as 'certificates for physical mineral rights'.
A stretch I know, but indulge me for a few minutes.

Bought KRY Dec of 2000 at about a buck. Son of a gun here it is July and it's 1.90! Now I can swap this out for an almost 100% profit (to buy quite a few more Gaudens....if I can find them).

Any news on what's up at KRY?

TIA.

uponroof (07/11/01; 11:41:46MT - usagold.com msg#: 57894)
The far reaching effects of the strong dollar.....where are you Bob Rubin?
http://news.ino.com/intraday/?storyid=DJN606198203
DJ Moody's Cites Strong Dollar For 2Q Credit Quality Drop

NEW YORK (Dow Jones)--The surprisingly resilient U.S dollar contributed to a sharp decline in U.S. corporate credit quality during the second quarter, Moody's Investors Service said Wednesday.

Moody's reported that downgrades outpaced upgrades by more than three to one in the second quarter of 2001.
Industrial companies were notably weak in the second quarter and Moody's singled out the strong dollar for some of the blame.

"A strong dollar has weighed on corporate America's ability to generate cash," John Lonski, chief economist at Moody's, wrote in a report issued Wednesday....."

"....Moody's says credit quality will remain under pressure as long as factors such as the strong dollar TARNISH performance...."



Old Yeller (07/11/01; 11:12:40MT - usagold.com msg#: 57893)
Comedy Break
http://www.prudentbear.com/boards/user/non-frames/message.asp?forumid=4&messageid=56564&threadid=56564

Eddie George should be made an honorary citizen of Bumkinville.He would appear to possess all the credentials.


Randy (@ The Tower) (07/11/01; 10:49:48MT - usagold.com msg#: 57891)
Gurn Blanston asks, on the NY Exchange, "Why don't the gold "bulls" bid up the price at the closing?"
http://www.usagold.com/ProductsPage.html

Perhaps because TRUE gold bulls don't buy the paper at all?????? Many gold owners know that contracts are no substitute for the metal for anyone trying to hedge against systemic risks and counterparty defaults. After all, a paper contract is only as good as the promise is under the expected stresses which inspired their steps for diversification into gold to begin with. Gold advocates take their gold today, and leave the contract game for others.

escapethematrix (07/11/01; 10:43:03MT - usagold.com msg#: 57890)
Hey, Paul.....Would a super-high, revalued physical gold price help??....
Excerpts from an AP article...


In that speech, O'Neill said ''we have no assets'' presently in the Social Security trust fund.

However, ''because the Social Security trust fund does not consist of real economic assets, we are left to rely on the federal government's future decisions to either raise taxes, reduce spending or increase borrowing from the public to finance fully Social Security's promised benefits,'' O'Neill said

O'Neill's stark description of a Social Security trust that has no ''real economic assets,'' gets to the heart of the politically charged debate over how to fix Social Security.

O'Neill and other critics of the current system say this entire process is a BOOKKEEPING FICTION (where have I heard that before ??) because the assets do not exist in any form the government can use to pay benefits.

Perhaps a revaluation of physical Gold might be discussed in Genoa??


Randy (@ The Tower) (07/11/01; 10:27:16MT - usagold.com msg#: 57889)
Here are your replies at last.... for Canuck (7/7/01; msg#: 57633)
http://www.usagold.com/onlinestore/special.html
#) "Your questions"

My answers.

1) "The ECB 'marks to market' gold reserves quarterly, yes?"

YES

2) "Is this information common public knowledge?"

Due to lack of common public interest, it is not common public knowledge; but it IS indeed openly available to all with an interest to investigate. These quarterly financial statements can be accessed at the website of the European Central Bank.

3) "Is there any other CB on the planet that does this?"

On a quarterly basis Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, and Spain represent the Euro System of Central Banks along with the ECB to follow this policy. This would extend to any other CB that joins the monetary union over time. (England, Sweden, and Denmark joined the EU, but have delayed joining the EMU. Standing in the wings as applicants for Union accession are Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovak Republic, Slovenia, and Turkey.)

For an example closer to home, it is my understanding that Canada marks its gold reserves to market values on a WEEKLY basis.

And giant in the gold world, Switzerland, now manages its gold reserves at market values (remarked on a quarterly basis) ever since the new Federal Constitution took effect January 2000 along with the subsequent change to the old Coinage Act in May 2000 did away with the official gold parity of Sfr 4,595 per kilo (i.e., about $80 per ounce. The U.S. still holds its own gold officially at $42 per ounce.)

4) "Does the ECB perform a regular (physical) audit?"

Don't know. Is tight security around a vault similar to a continuous audit from initial inventory time A to future time B?

5) "What tonnage(gold) is 128.512 billion euros?"

Nearly 12,560 tonnes.

6) "Is the increase a i) increase in tonnage ii) reflection of lower euro/US$ iii) combination of both?"

The quarterly increase represents the fact that the London AM fix for gold was $10 per ounce higher for this new quarter than it was for the previous quarter. And this increase was further increased on the euro books because the dollar/euro exchange dropped during this period from $0.88 per euro to $0.85 per euro, resulting in a gold price that was 24 euros per ounce higher than the previous quarter.

7) "I understand 15% of reserves are gold; I believe I heard the ECB holds 3% reserves against all outstanding 'money'. Is this approximately correct?"

When the EMU member central banks subscribed initial reserves to the European Central Bank, 15% of the value was in the form of gold, amounting to about 747 tonnes. However, the total 12,560 tonnes of gold reserves in the EuroSystem of Central Banks amounts to 32% of total EuroSystem gold and foreign reserve assets -- matching paper at 1:2 at current book values. On your second question, M1 for the euro area was nearly 2,100 billion euros at the start of this year, translating into 19% coverage by gold and foreign reserves against the narrow measure of circulating euro-denominated money outstanding within the EuroSystem.

8) "As monetary base increases does reserves increase incrementally?"

What are you calling the "monetary base"? Increases in bank liabilities must be matched by equivalent increases in bank assets -- this is true for commercial banks and for central banks.

9) "Can we/have we kept a 'log' of the quarterly ECB 'mark-to-market' statistics (ie:tonnage) to visualize a stable, or increasing/decreasing gold reserve?"

I'll see what I can put together beyond the scope of my quarterly reports posted at the forum. In the meanwhile, please consider showing your support/appreciation by placing your gold and silver orders with MK and his knowledgeable, friendly staff at Centennial. They serve precious metals investors throughout the United States, Canada, the European Union, and Australia.

uponroof (07/11/01; 10:25:56MT - usagold.com msg#: 57888)
DJ Chicago Fed/Mfg Index-2: Eighth Straight Monthly Decline
http://news.ino.com/intraday/?storyid=DJN606192000
Midwest manufacturing not enjoying the strong dollar.


uponroof (07/11/01; 09:44:36MT - usagold.com msg#: 57887)
Panic!? What PANIC!!!!?----Treasuries Orderly Despite "Rumors"
http://news.ino.com/intraday/?storyid=DJN606183101
"....Despite rumors regarding potential policy responses to problems in emerging markets circulating in the more salacious areas of the press, Treasurys were trading in an orderly manner.

"There is a small flight to quality trade in the Treasury market, but we are not seeing a panic situation developing," said Vincent Verterano, director of government trading at Nomura Securities in New York. "Trading activity is relatively calm," he said.

The bid tone for Treasurys that initially emerged during Tuesday's session was continued Wednesday by traders in Tokyo and London overnight and outweighed a weakening of the dollar versus major currencies.

Another factor boosting sentiment for the front end of the Treasury curve was trading activity in the futures pits of Chicago. The fed funds future contract for August was reflecting an 100% chance of a quarter-point rate cut when the Federal Reserve meets to discuss monetary policy Aug. 21. Earlier this week the August contract was reflecting a 50% chance of a rate cut at the meeting.

Thus, while equities and emerging markets currently grab the headlines, some analysts continue to warn that the weak outlook for the economy points the way to lower Treasury yields.

"Its not just about Argentina and stocks," wrote Peter McTeague, fixed income strategist at Greenwich Capital in a research note Wednesday. "Slowly and surely people are realizing that the Fed cycle isn't near done, and there are a few losing patience - again - with the `V'-shaped recovery," he said.

The only governor of the Federal Reserve board due to speak publicly Wednesday is Edward Gramlich. He will be addressing the Rochester Institute of Technology Board of Trustees in Washington this evening....."

**********


The next time someone calls you a crazy 'Goldbug' offer them this to the point comeback:

From 1979 to 1999, the AVERAGE ANNUAL LOW for the price of GOLD was $339.00 per ounce nearly 27% higher then it is today.


From 1979 to 1999, the AVERAGE ANNUAL MEDIUM for the price of Gold was $386.00 per ounce nearly 45% higher then it is today.


From 1979 to 1999, the AVERAGE ANNUAL HIGH for the price of Gold was $455.00 per ounce more than 71% higher then it is today.

In 15 out of the last 20 years, Gold exceeded $400.00 per ounce. Right now the price of Gold is trading at 1/3 of its all-time high.

Uncertainty in the stock market, fear of inflation, rising commodity prices, world tensions, the expanding US trade deficit, its growing debt and a decline in the dollar will tend to increase the price of Gold. This will indirectly boost investment demand for Gold.

(with thanks to jrinvestor)

uponroof-AMEN AND AMEN! btw- the dollar was down .71 last time I looked.

GurnBlanston (07/11/01; 09:29:19MT - usagold.com msg#: 57886)
@All re: closing bids on gold
I've watched as the gold "bears?" sell into the closing minutes on the NY exchange to keep/drive the price down.

Why don't the gold "bulls" bid up the price at the closing?

Is that too naive or ignorant a question?

Gurn Blanston

USAGOLD (07/11/01; 08:47:36MT - usagold.com msg#: 57885)
Today's Commentary. . . . .
Below is the opening to today's Commentary & Review available normally by private password only. You can gain free access to this (almost) daily report on the gold market (and all that affects) it as well as our widely read hard copy newsletter, News & Views: Forecasts, Commentary & Analysis on the Economy and Precious Metals by going to the link above or calling USAGOLD's offices -- 800-869-5115. Available to current and prospective clientele in the United States, Europe, Canada and Australia. If longevity and growing readership are the test, these may be the best reporting services on gold available anywhere. Thank you for your interest.

---------------


7/11/01
In Brief:

Today's Action: Gold surged in early New York trading on better than expected interest in the Bank of England auction and rumors that a South African mining company looking to balance its hedge book may have been a buyer. Yesterday we reported: "Even as we proceed through the dog days of July, the market is supported by good physical offtake, particularly in Asia, perhaps a portent of things to come. It seems that investors, not just in Asia but in the United States and Europe as well, are now applying the "buy-the-dips" strategy formerly employed in the stock market." That was very evident at today's auction where the offering was over-subscribed by four times and the BOE had it consented could have rid itself in one fell swoop of nearly all the gold it wishes to sell in order to reach its ultimate goal of disgorging half of the British people's gold reserve. That more or less tells us in a nutshell why many now say these auctions have become meaningless in terms of effect on the gold price. To add salt to the wound, the settlement price came in about $1 over the London afternoon fix, and the market shot up almost $3 immediately thereafter.

Press coverage of gold auction loses luster

An interesting aspect of the sale process was the press coverage running up to the sale. Nearly two weeks before the sale mainstream press reports began warning of the sale and how it would be a deterrent to rising prices until after it occurs. This, of course, has more to do with trying to keep the public out of the metal than honest concern for gold's plight. Even as late as this morning, just hours before the sale, Bridge News was throwing cold water on the gold market. "Analysts believe Wednesday's 13th Bank of England (BOE) gold auction will add to the growing downside pressure on the spot price," went the familiar mantra. "The over-subscription level at the auction is expected to be below three with analysts noting the previous auctions held when the COMEX net speculative position has been long, as it is now, have all produced worse-then-average subscription ratio." I am not picking on Bridge News here though they aren't particularly known for their balanced coverage of gold. What you just read is typical of a half-dozen or so reporting services. . . . . . . (MORE)

The Invisible Hand (7/11/01; 08:31:06MT - usagold.com msg#: 57884)
EU bureaucrats are making life impossible for telecom companies – Crash you said
http://europe.cnn.com/2001/WORLD/europe/07/11/mobile.raid/index.html
EU raids mobile phone giants
July 11, 2001 Posted: 1357 GMT
BRUSSELS, July 11 (Reuters) -- The European Commission said it raided nine mobile telephone companies in Britain and Germany on Wednesday to investigate possible price fixing on roaming charges.
… end of quote

As RossL put it this morning in msg#: 57882 one of the few government interventions that is necessary is the need for standard weights and measures would suffer. Ah, those telecom companies they want to come to standard roaming charges, the villains. But the government needs the authority to impose standard weights and measures. The market is indeed unable to develop its own weights and measures, to let them compete and then find out which one is the most useful. And then you wonder why Europe follows the US into depression.

Christian (7/11/01; 07:40:27MT - usagold.com msg#: 57883)
Request for information
What is a $? Greenspan defined it as a created symbol of credit for available purchasing power where the cost of interest is never printed into existence. Who owns the $'s? The dollar is owned by the Class A shareholders of the Federal Reserve. Who are the private shareholders of the Federal Reserve? I am asking for a name of persons not institutions....... A loan - property tax obligations or income tax due payable in $'s where the private bank cartel is the creation of such currency "out of nothing" but paper and ink is illegal under the Constitution. Under our Constitution usury is a factor which makes a contract illegal. What is the meaning of deep storage? Does it mean the gold is sold to settle the trade deficit at Bank of International Settlements? What is credit creation gold? Why is credit creation gold a bundle of commodities and housing represented by a small amount of physical gold in the metal index priced at 10 times commodity gold used as bank reserves for the backing of loans. This credit creation gold is made up of papered warehouse receipts commodities and bundled home mortgages called bonds. With housing, the metal index, farm commodities and fuels all backing the dollar I see a shift from paper assets to hard assets where our government like the government in Russia takes controll of physical assets. More and more this is a move by the government to dump paper assets on the people and seize by authority physical assets. Example of this is HR4541. Today a mortgaged house is proprty of the Federal Reserve. Gold is property of the Federal Reserve. Grains are property of the Federal Reserve if money is borrowed to bring that grain into production.

RossL (7/11/01; 07:35:03MT - usagold.com msg#: 57882)
Goldfan

I believe that if you mix sodium, hydrogen, and oxygen, you will make an ingredient for your daily SOAP. You might want to use sodium and chlorine for your daily salt. <grin>

In answer to your question, (What would be the effect of total absence of authority and laws?) , the need for standard weights and measures would suffer. One of the few government interventions that I believe is necessary.


Randy (@ The Tower) (7/11/01; 07:16:52MT - usagold.com msg#: 57881)
goldfan, good thoughts
I think it is safe to say that both creatures -- politics and economics -- are born within the realm of human behavior and interaction, and as a result are only as scientifically predictable and interrelated as you might expect them to be.

Christian (7/11/01; 07:03:35MT - usagold.com msg#: 57880)
(No Subject)
Test

goldfan (7/11/01; 07:02:15MT - usagold.com msg#: 57879)
Politics and Economics
Politics and Economics

Does politics lead economics arund by the nose, or vice versa? How separate are these two separate really? How much influence does politics really have on economics?? Politics and the physical/chemical properties of substances like say, iron, are separate. Politicians have to take account of the properties of iron, but the properties of that metal are not at all subject to political direction or political will. What about economics? Are there immutable laws of human behavior governing the transactions and results we call economics? Are these laws superior to politics, meaning that "economics will out" no matter what the politician decrees? Can King Canute hold back the tide of economic affairs?

If there are immutable laws of economics, not subject to political desires, not many economists seem to know them, or at least to publish them.

Does the existence of a King, or any authority decreeing the laws of banking and commerce, make the course of economic history for that time entirely predictable?

What would be the effect of total absence of authority and laws? What about institutions, courts, where laws are made civilly, as by a series of historical precedents?

If economics is something as scientific as chemistry, then we need no laws or decrees to implement its requirements, any more than we need Congress or the Court, to tell us how to mix sodium, hydrogen, and oxygen, to get our daily salt. And if they did make such decrees in defiance of the nature of economics, they would have no ultimate effect.

What is all the fuss about? How come we are still groping after the Periodic Table of Economics?

FWIW
Goldfan

Randy (@ The Tower) (7/11/01; 05:56:31MT - usagold.com msg#: 57878)
News Release - HM Government Gold Auction Result: 11 July 2001
The Bank of England announces that the gold on offer (approximately 20 tonnes or 643,200 ounces) has been allotted in full at a price of $267.25 per ounce.

[Randy's note: the morning London Fix was $266.55, and yet we see that the lowest accepted bid to claim this supply of gold was for 70 cents ABOVE this level. Think about it.]

Details of the result are as follows:

Amount of gold on offer (approx.) 643,200 oz
Amount applied for 2,610,400 oz
Times covered 4.1 times
Amount allotted to bidders 643,600 oz
Allotment price $267.25
Scaling factor at allotment price 48.2353%

All accepted bids which were made at prices above the allotment price have been allotted in full at the allotment price. Valid bids made at the allotment price have been allotted an amount of gold equal to the amount bid for multiplied by the above scaling factor and rounded up to the nearest 400 ounces.

By close of business in London today, applicants whose bids have been successful in whole or in part will be notified by the Bank of England of the exact weight of the gold bars allotted to them and the amount payable in respect of their purchase. Payment must be made in US dollars to the Bank of England's account at the Federal Reserve Bank of New York, no later than 12 noon New York time on 13 July 2001.

Note for Editors
On 7 March 2001, H M Treasury announced that the Bank of England, on behalf of H M Treasury, is to sell approximately 120 tonnes of gold in a programme of six auctions of around 20 tonnes each in the financial year 2001/02 on the terms and conditions set out in an Information Memorandum that was published on 7 March 2001. This is the second auction in the programme of six. The next auction will be held on Wednesday 12 September 2001. It is intended that the remaining auctions will take place on dates to be announced in November 2001 and in January and March 2002.

RossL (7/11/01; 05:47:58MT - usagold.com msg#: 57877)
Auction
http://www.bankofengland.co.uk/Links/setframe.html

11 July 2001

The Bank of England announces that the gold on offer (approximately 20 tonnes or 643,200 ounces) has been allotted in full at a price of $267.25 per ounce. Details of the result are as follows:

Amount of gold on offer (approx.) 643,200 oz
Amount applied for 2,610,400 oz
Times covered 4.1 times
Amount allotted to bidders 643,600 oz
Allotment price $267.25
Scaling factor at allotment price 48.2353%


The Invisible Hand (7/11/01; 05:42:19MT - usagold.com msg#: 57876)
Duisenberg's ‘faux pas’: euro is very stable
http://fr.biz.yahoo.com/010710/85/1gdhw.html
Here's article in French concerning a conference which was organised by the Banque de France yesterday in Paris. Speakers were French Finance minister Laurent Fabius, ECB vice-president Jean-Claude Trichet and ECB president Wim Duisenberg.

After having related what Fabius and Trichet told the conference, its final paragraph has "Faux pas" (misstep???) as its title.

It goes on: Wim Duisenberg reminded the audience that the main aim of the ECB is maintaining price stability in the euro zone.
"Its main task is clearly defined by the treaty instituting the European community and consists in maintaining price stability inside the euro zone"’ he said.
"In other words , the ECB's task is to safeguard the value of the euro whatever be its form – notes, coins or ‘scriptural’ money -, i.e. contain inflation" he added.
Duisenberg had forbidden himself at the start of his speech to deal with other sensible matters. "This afternoon, nothing about monetary policy, nothing about the economic situation (la conjoncture), nothing about interest rates, nothing about exchange rates, so that I will have be in danger of making a ‘faux pas’" he promised in his introduction.
But he could not resist from delivering some commentaries concerning the level of the euro. In doing so, he was asked by Reuters whether he shared the worries of the governor of the Bank of England, concerning the strength of the dollar vis-à-vis the euro, and he answered ‘no’.
A few minutes before that he said that the euro was not "very weak’ but was "very stable".
Following these comments, the euro declined on the exchange markets. By the end of the day, it was worth around 85,35 US cents.

With The Invisible Hand's apologies for the bad translation.

Netking (7/11/01; 03:52:58MT - usagold.com msg#: 57875)
Hong Kong - China reforms present golden opportunity
http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=22144010&ID=cnniw&scategory=Metals+%26+Minerals%3APrecious
Key points to note:

* Hong Kong's gold exchange will undergo the biggest reforms in its 91-year-history in a bid to capitalise on the opening up of the mainland market.

* Last year, about 128 tonnes of gold were imported into Hong Kong, compared with 800 tonnes to India - the world's largest gold importer. Mr Fung expected Hong Kong's gold imports to rise significantly once China lifted its import ban after it entered the World Trade Organisation.

* The new product to be introduced in autumn will be a gold bar with purity of 99.99 per cent. Mr Fung said many of the exchange's 190 member firms were jewellery manufacturers who tended to use more of the 99.99 per cent purity gold. He estimated that when the new gold bars were introduced, the daily turnover of the exchange could increase from HK$400 million to HK$2.5 billion.

Artie Farkle (7/11/01; 02:43:15MT - usagold.com msg#: 57874)
ESSENCE OF MONEY
What is the essence of money? Everyone has their own view as to the definition of money. It seems it can be almost any thing. It can be wealth but, not necessarily. Although the definitions may change and, the values of those things defined as money may change, the essence should not.

The essence seems to be "A marker of value that is redly recognizable, transferable and, accepted by others." IMHO : )

The Invisible Hand (7/11/01; 01:34:03MT - usagold.com msg#: 57873)
G7, 8, or 10 - Has anything been prepared?
Buena Fe,
You wrote in:
Buena Fe (7/6/01; 08:13:37MT - usagold.com msg#: 57585)
To Rome
’Watch for the Roman Agreement (G7-Sunday)’.

Cobra(too),
You are writing in:
CoBra(too) (07/10/01; 18:09:18MT - usagold.com msg#: 57844)
The 17 hundred tons at West Point - Reclassified!
’... See you after Genoa ‘.

As I understand it, Rome was a preparation for Genoa on July 19, 20 and 21.
Have any steps been taken last week-end in Rome to come up with a gold-related solution for the euro/dollar exchange rate in Genoa?

Usul (7/11/01; 01:19:04MT - usagold.com msg#: 57872)
New Data Deepen Fear of Global 'R' word
http://www.iht.com/articles/25695.html
"The U.S. Treasury Department said Tuesday that it, too, saw little danger"

It was at the Battle of Copenhagen that Nelson held his telescope to his blind eye, and ignored his Commander-in-Chief's signal of recall.
http://www.rjt.co.uk/Nelson/html/blind_eye.htm




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