All times are U.S. Mountain Time
(Yesterday's Discussion.)
PRITCHO (9/11/05; 23:19:45MT - usagold.com msg#: 135881)
@ Mas - -Re Privateer -- Post 135842 @ge
I have been subscribing for quite some time now & find his views to be very well thought out & realistic as to what's really happening -- regardless of where he's commenting about.Value for money well spent. He gives separate views on Gold which I usually don't post.
Be careful though with the length of his material you post & always give credit by posting his website details. It is jealously guarded copyrite --and failure may bring trouble.
I have been on the receiving end of a blast from him for posting (some time ago & another site)his material even though it wasn't over lengthy & I did give full credits.
-----------------------------------------------------------
@ge - - Thanks for the help re Hoye.
Sundeck (9/11/05; 23:08:19MT - usagold.com msg#: 135880)
@TC - Inverting Yield Curve - Outstanding Response
Sir TC
I have not forgotten your question in #135279 of 24Aug05 ...it has been often in my mind...but I have put off responding for one reason or another until I got "a round tuit".
Well...the round tuit finally arrived in the form of Miner49er's #135872...an analysis of much greater depth and breadth than I could have delivered...
May I just refer you to #135872 and sign my name at the bottom?
;-)
(Pretty good stuff 49er!)
Cheers
Gene (9/11/05; 22:20:46MT - usagold.com msg#: 135879)
(No Subject)
Yeah, wait until the morning & they knock silver down to $6.98 & gold down to $448 or lower on each. I'm convinced in their omnipitence.The a$$hole$. What's the saying, "Don't fight the Fed".
OvS (9/11/05; 22:04:20MT - usagold.com msg#: 135878)
If I may paraphrase Miner49er
We lilliputian public
perceive the irrational
as almost rational. Were
it not for the Masters of
the Universe's archilles
heel: The derivative beast,
whose hot seething lava-
flows of the past, is a rich
source of allegory for the
temporal and fickle way of men
who are but a droplet in the
timeless river, endlessly cour-
sing to the endless sea. OvS
Smeagol (9/11/05; 21:39:29MT - usagold.com msg#: 135877)
Looks to uss, like....
...another Archive in the making this passt week! We wishes we could jusst remember it all! Thank every one of you for the great Thoughtses... sss... even chased a lurker or two out into the firelight (welcome!)! (cackle)
S.
goldquest (9/11/05; 20:38:38MT - usagold.com msg#: 135876)
In The Meantime,
Gold tip-toes through $450! I see $500 on the horizon!
Liberty Head (9/11/05; 20:21:06MT - usagold.com msg#: 135875)
Thanks For The Recommendation CP
But I'd rather deal with a hopeless situation than an imaginary situation.
Best Wishes
Goldilox (9/11/05; 20:06:19MT - usagold.com msg#: 135874)
Earth
http://www.mysteriesofthemind.com/archives.htm
OMAGOD Chris,
Did you just suggest that I would blame the Earth itself for the corruption in what passes for government these days. You're one of the last people from whom I would have suspected such vituperation! If you don't believe the root sources of collusion should be addressed, why are you whining about the teeny-tiny "gold market"- only because it is your personal "cash cow"?
Assuming that gold market collusion is completely independent of other market/banking corruption is incredibly naive. No professorial points for that weak [lack of] connection!
Are you really willing to "excuse" the FED from any potential causal relationship in our fiscal nightmares? Better dust off your copy of "Creature from Jeckyll Island". To unravel the little mysteries, you're gonna have to look at the bigger picture at some point.
For a real philosophical mind-opener, I invite you to listen to Alex Merklinger's interviews with "Cliff" of Web Bot fame Sept 1 and Sept 6.
Have a good investigation -
OvS (9/11/05; 20:03:57MT - usagold.com msg#: 135873)
Goldilox
I stand corrected. But I always
thought Belgian was "putting-on"
his spelling mistakes to stay
camouflaged.
From that angle correcting his
spelling would be tantamount to
"exposing" him? OK. That's too
twisted to explain here.
My input to this great give-and-
take happening here for the last
view days is:
If you take a finer mesh and view
it not as Euro vs. Dollar faction
a lot of mystery would vanish. It
would illuminate cross-currents
that are not obviously seen from
this round-table discussion. Un-
fortunately such talk cannot be
conducted on an open internet
medium. Some things can only be
honestly discussed privately, un-
less one is naive. OvS
miner49er (9/11/05; 19:48:16MT - usagold.com msg#: 135872)
The double-edged sword cuts more than one swath?
A while back when TC posted his thoughts on the "conundrum" that Alan Greenspan made reference to -- this stubborness of the long end of the yield curve in USTs to behave like history and the textbooks say it should -- I engaged a very dear friend in this discussion. I posited how Mr. Greenspan's CB colleagues probably were biting their lips, as they (as well as Alan) know there is no conundrum, and that there are tools in the toolchest to keep the long end under control. They know the mechanics of why the yield curve is flattening. What Alan is, is frustrated. Frustrated because the mechanisms to keep the curve normal are not in fully in his hands at this time. This presents a dilemma, more than a conundrum. I want to look at 3 elements that work to keep the long end strong.
On the one hand, and most superficially, is that there are still plenty of people that still genuinely, and not without substantial argument, do not see an inflationary period ahead, but one of disinflation or deflation. Individuals such as these still control a ton of money in their portfolios, and are still betting on a strong bond market in the foreseeable future. Chiefly the argument centers around vast over-capacity, and competitive pressures manifest in downward pressure on wages globally. One of the best articulated statements of this viewpoint can be found in Van Hoisington and Lacy Hunt's quarterly reviews that you can find online at hoisingtonmgt.com.
While this is the most superficial (because it is most obvious) of the components in this analysis, it is not trivial. Globally there are still a lot of people that are (have to be) very cautious with what they do with the gargantuan sums of money under their control, and to buy into an inflationary viewpoint, which will only come about with a full paradigm change in the monetary superstructure, is something these people cannot hastily buy into. Whether they get caught short is a matter of discussion. Nonetheless, these enormous sums of money change direction very slowly.
Second in consideration, would be the overwhelming dominance in the financial markets of leveraged speculation. The vast proliferation of these entities have made it valid to say, "it IS different this time." And, I contend that while precedent is there in numerous instances, even in the recent past, for a rate curve inversion, it will be very difficult for this to happen in this day because of the dominance of leveraged speculation that has positioned itself in various arbitrage and spread bets in anticipation of a continuation of a normalized yield curve relationship.
The chief reason that we have this seemingly endless cycle of capital flows that keeps the US capital account flush, is the existence of hedge funds. Without the hedge funds, foreign entities would have only three basic things to do with imported dollars: 1) short term cash holdings -- bills, notes, CDs; 2) long term dollar denominated securities -- bonds, equity holdings, real property; or 3) sell dollars into the forex markets.
In this world, the conventional text book economics 101 principles would work out quite well. Banking intermediaries, risking disproportionate maturity mismatching would only be able to borrow short from the foreign entities, and lend into longer dated notes to capture the spread to just such a point before they went out of bounds in terms of risk. The dollar holders would be forced to accept smaller yields, and the lending intermediaries would demand higher returns. The resulting steepening of the yield curve would put downward pressure on the dollar, making dollar consumers pay more for imports, and make dollar exports more competitive. Just like the text books say. Foreign dollar holders would also be more likely to just sell dollars into the foreign exchange markets, putting further downward pressure on the dollar. There may then be times when foreign holders would find good value in longer dated securities, or outright business ventures, and this would take place in conventional market-driven terms, again with textbook macro- and micro-economic principles at work.
The presence of the leveraged speculator throws this all out the window. When conventional borrow-short-lend-long, the cornerstone of traditional banking, starts to become lopsided, the ability to offload the risks inherent in disproportionate maturity mismatching is presented by the leveraged speculator. (Securitization of the loan portfolio is another way this is done, to great advantage of the lenders, and has also worked tremendously in keeping the cycle of capital inflows going for so much longer than conventional wisdom ever could have foreseen. And even the life of securitization of loan portfolios has been extended way beyond convention by the transformation of these loan portfolios into synthetic entities, and divvying up the risk in the security into tranches -- different flavors for different investor tolerances...)
Now, the bank can have its cake and eat it too, by finding someone that will take on the risks, for the lucrative rewards, by derivatizing the bet. While the bank still secures and commands the monumental notional monies, they carve up the agreement to define and parcel out the risk element, in this simple example the interest rate risk. The LS is happy to be able to earn the spread on other people's money -- notional amounts his own typically highly undercapitalized venture holdings could never secure outright. And these bets would not be practical or profitiable unless they are made in such super-sized quantities. He is betting he can augur the trend, and In a day when it behooves CBs to be more transparent, the LS has been largely successful in these bets. So far a win-win.
Foreign dollar holders can even bypass the banks and deal with the hedge funds directly, if they so wish. This has tremendous impact on the exchange rate of the dollar, and helps explain why we see this anomaly also present itself so frequently: that when the long end burps and experiences a short term precipitous drop, the US dollar usually goes up very suddenly and strongly. Despite there being a secular trend of dollar devaluation, these short term movements indicate the presence of large amounts of leveraged betting from foreign speculators.
Two things cause the recovery of the long end, and the strengthening of the dollar: 1) betting strategies and formulas calculate the downward drop as an aberration -- too much too soon -- and the betting strategy says to buy into this temporary weakness; 2) LS players get margin calls, and have to liquidate non-dollar holdings, and compete suddenly for dollars, exposing temporary shortages in dollars and causing the often sharp spikes in dollar recovery we see on an intraday basis. These dollars going into margin accounts typically buy liquid dollar securities, the proceeds of which then go into bonds which are now temporarily "underpriced" to avail themselves of an advantageous spread -- this too usually by other LS's -- and things return to "normal" with the mechanics of simple arbitrage.
Not complicated really, but it seems few people consider the impact of this activity, not so much for its existence, but for the absolutely incomprehensible volume of it, and the impact it has on the indices.
The leveraged speculators -- despite all the words to the contrary -- are 100% indispensible in this paradigm, and the US dollar faction has no choice but to support them at all costs. Without the LS, the cycle of capital flows we have seen as something of a financial phenomenon, allowing us to run trade and current account deficits of unheard of proportions, would never have happened. And, from it, we can never return. Since IR bets overwhelmingly dominate the compostion of derivative bets, we can no longer tolerate any sustained inversion of the yield curve. So, unless the long end decides to follow the play book, there is a very real ceiling ahead for the short end.
Frustrating, and a dilemma. But no conundrum.
The third thing to look at, which may be the smallest in terms of quantitative contribution, but perhaps much larger in terms of potential influence, is what our TC pointed out a few weeks back -- the plausibility that foreign banks may be buying more long dated US securities with their dollars, then previously. The statement he emphasized amounts to the first edge of this two-edged sword. I.e., the public statement of "confidence" in the dollar, by their willingness to hold long dated debt. But, in the same vein that we perceive foreign CBs supporting the current paper gold regime to publicly give the impression of dollar credibility (first edge), while at the same time never letting the gold price rise enough to successfully hedge dollar devaluation or systemic price inflation (second edge), might the more potent reason such a strategy be employed in the treasury market be to confound the US strategy of slow but steady IR hikes? Might a deliberate strategy to keep the long end down, serve as another catalyst to expose the untenableness of the U.S. financial system, the grotesqueness of the face under the mask?
As noted above, the Fed effectively has a ceiling on the short end, unless they can "wag" the long end, lest they risk inversion, and chaos in the derivatives' markets. The Fed wants to keep raising rates in nice measured teaspoons for 3 chief reasons: 1) to allow time for portfolio adjustement -- chiefly among the dominating LS community; 2) to cause a slow leak in the super-hyper-inflated housing market (and the associated refi dislocations); and 3) to provide more wiggle room for a subsequent period in which they will want to lower rates again to restart the economic engines.
So far, lenders have scarcely stopped for a moment of silence in respect to rate increases. The long end remains almost iron cast within a range, and the housing/refi markets, encouraged by this, continue their party unfazed and unabated. Thinning spreads from crowded trading among LS's, are met with stronger doses, as the difference is made up with even more volume, which is readily found from ever increasing trade deficit dollars, and readily lent to an endless appetite for mortgage lending.
Would that Alan could control all levers in the airplane, and bring it home for a "soft landing." But alas he does not. Like spoilt children, the LS's control the parents, and will get whatever they want. So, the long end does not budge, and cannot be forced by a Fed induced inversion, because this could mean catastrophe.
As such, the short end ceiling of about 4+% does not leave much room for any reversal into aggressive rate cutting to shove liquidity (financial adrenaline) into slumping markets. The current cycle of increasing deficits balanced by increasing capital inflows continues. If a soft landing could be engineered, and the real estate, and credit bubbles go phhhh... instead of pop, we might actually see the non-$ plans for a new monetary paradigm themselves get frustrated.
The ensuing disinflation or deflation, in a world already stuffed to the gills in over-investment, and low wages, with an infrastructure that architecturally channels money away from domestic development, and into furthering the dollar consumption cycle, cannot tolerate much more of a consumption downturn. With dollar hegemonics still stifliing domestic investment in foreign countries, the infrastructure is not poised to just turn its back on the current framework. Like it or not, the Fed's strategy, if left unchallenged, might still lead to another 97-98 crushing contraction in the non-$ world, and a hot money surge back into the $ world, and suddenly it's deja vu all over again.
This is a fear of the foreign CBs, who cannot tolerate another go round of this. This is why they must employ the second edge of the sword in the gold markets, and also very possibly in the Treasury markets. The existence of the derivatives leviathan, although out of control, by its nature allows the current paradigm to continue far longer than we can stay liquid (smile Mr. Keynes). A benign stance by foreign CBs only gives the Fed more ability to get its way, and more time.
What about high oil prices? Yes, a bit of a spanner in the works, but on its own only further promulgates the disinflation/deflation argument, as the inflation it causes only serves to further reduce demand. This would lead to stagflation globally, and the political pressure on the engineers of a new monetary paradigm, just might cause someone to blink, and then all would blink, and a frantic race to the bottom would commence (again), as few and less profitable exports are still better than no exports at all, so every nation state for itself.
The euro might in this world totter, as players still not fully recognizing the architectural independence of the currency from the nations associated with the currency, and still by the very composition of their portfolios, may take all sorts of reflexive action based on what they know, and not on the basis of what is being presented to them as new. This would mean a faltering of the euro, a return to the dollar, and suddenly the game goes into extra innings.
The gold markets appear to be drying up in terms of a willingness to supply just that extra measure of liquidity to keep a semblance of credibility. Volume in LBMA is continuously dropping, which keeps contract prices low by reason of demand -- not just oversupply. (Just mho, but it seems that the presence over the past couple years of more unusual coins in CPMs offerings, may be anecdotally an indicator of gold holders reaching deeper for something to put in the display window.)
So, if credibility is not fostered in the gold markets for much longer, and the dollar derivative beast is still able to suck foreign capital into a dollar hegemony vortex, what additional active behavior might be taken on the part of CBs to show a public face of cooperation, but engineer further exposure of a failing system? A surging gold market might indeed leave CBs free to start looking at successful lending into their own domestic markets, without fear of their reserves (as only dollar forex) contracting, as their gold would hold its own. But this would take time to manifest into actual plant and equipment, and too much possibility exists in the interim for destabilization. Hence, the desire for global CBs to extend the transition. This is also an achilles heel that dollar forces wish to play upon -- they know foreign countries cannot afford to lose the dollar export market just yet, and that they still have them by the proverbial short hairs.
So, it is incumbent upon foreign CBs to continue with 2-edged sword strategies. And in the bond market, it would seem that with little pain, they can buy up bond offerings left and right, and keep the long end at bay. This traps the dollar into a box. Even if the global economy sags into a painful contraction, the Fed's inability to aggressively provide liquidity for any sustained period of rate cuts, as well as the lack of a robust market interest in long dated US debt (foreign money market perception that it is over-priced -- due to artificial support from CBs as hypothesized, and magnified by derivatives activity), would permit at the very best a shadow repeat of the past, with the Fed pushing on a Japanese-like string in terms of reliquefying the credit markets, and only warm money rivulets into the dollar markets, instead of the hot seething lava flows of the past.
Without a reinvigorated dollar, the hegemonic paradigm it enjoys would suffer a significant blow, and out of the ashes would rise not one core hegemonic phoenix, but potentially a bunch of smaller phoenices, i.e., capital financing of a host of well-educated, skilled, developed and developing peoples, made so by years of being agents of production for a dollar empire, now champing at the bit to capitalize on pent up domestic demand.
Yet nothing is guaranteed, and some things can take a lot longer than even the experts on the inside believe. I think the extent to which the dollar has survived has been underestimated, again in this time. Not whether it will eventually wilt into the marginalization, but when. By the tone of things (at least those made public) since WAG2, those wanting to see a break from a dollar-centric world financial system, are getting antsy. In the line of thinking discussed here, and held by several at the forum, the freeing up of the gold price is integral to a shift in the world monetary frame, and that this is just as much an act of political will as the current leashing of the gold price. The distinct thing to note, as Belgian mentioned earlier (and as has been stated hundreds of times here), is that the general lilliputian public stands to benefit by gold ownership, as gold is freed from monetary association, whereas gold ownership is frustrated in the current setting where gold is suppressed to keep the currency numeraire appear strong and stable.
Those wishing to benefit by a freed up gold price, cannot passively wait for fundamentals to play out, as the dynamics of today's financially hyper-engineered world, within a seemingly impregnable dollar fortress, make irrationality almost rational. Life through the looking glass may be fine for a children's story, or a rich source of allegory for the temporal and fickle ways of men, but will not sustain itself in the long run. As in FOA's river, the sometimes contradictory movement and activity at any given point is ultimately always overwhelmed by the overall coursing of the timeless river endlessly to the sea.
Goldilox (9/11/05; 19:25:57MT - usagold.com msg#: 135871)
"Wich"
@ OvS,
Au Contrare! I was taught that when quoting someone, it is improper to correct their grammer, spelling, etc.
Thus I quoted Belgian "exactly".
It might also stem from my admiration of Samuel Clements, whose poetic street verbage suffers viciously from the editor's knife.
Goldilox (9/11/05; 19:19:34MT - usagold.com msg#: 135870)
Openness
@ Spikedog,
While I certainly won't contradict your suggestions about what is wrong with our "government welfare system", I find it hard to lay the blame for this on "openness".
One of the attitudes that most nurtures the government trough is that there is "no piper to pay". I think this is generated by statements like Dick Cheney's flippant remark that "deficits don't matter" - not that he has any copyright on this attitude.
While I'm not sure that gold money entirely "fixes" the problem, demanding "accountability", and "openness", in government, business, and personal lives certainly seems a step in the right direction.
The most telling thing about our current fiscal predicament is that Congress has so very few "Ron Paul's" preaching fiscal conservatism. Where is Davy Crockett when we really need him?
Cavan Man (9/11/05; 19:17:42MT - usagold.com msg#: 135869)
This incessant debate......
......on free gold and GATA et al....Dear friends...what we can value and hold close is what we can SEE clearly--what we can use as a knowledge base for our OPINIONS is revealed, primarily in black and white. CB's and governments have a long, documented history when it comes to monetary matters. Remember, opinions are wonderful when supported by FACTS (the unambiguous kind) and reason. All else is pissing in the wind.
PS to MK: Good to see your (excellent) intellect at work here. We are soon drawn asunder....CM
OvS (9/11/05; 19:17:14MT - usagold.com msg#: 135868)
Belgian!
You are exerting too much
influence over our minds:
ie: Goldilox's msg#:135861
Instead of "which" he is
spelling it now like you:
"wich"...Seems like your
mindbending pharmaceutical
concoctions are seeping
through the internet...OvS
Chris Powell (9/11/05; 19:05:16MT - usagold.com msg#: 135867)
Replies to Liberty Head, Goldilox, Tapper Light, Spikedog, and Belgian
For Liberty Head and Goldilox: If Earth seems so hopeless to you both, all I can recommend is another planet, preferably one with Internet access so we can keep comparing notes here.
For Tapper Light: You ask what the American view would be on the transition from dollar supremacy to the free gold/euro/Dubai/Asian currency bloc or blocs. Just speculating, but perhaps the American view of that would be much like the American view of the decision of Saddam's regime in Iraq to start pricing its oil in euros. Maybe THAT was the REAL "weapon of mass destruction" in Iraq. I agree with YGM that central banks will work together to ease transitions and avoid shocks ... insofar as they can.
But is the U.S. government willing to let the dollar fall enough that those oceans of dollars and treasury bonds abroad start coming home for redemption into something real that doesn't depreciate? Do the foreign governments holding those dollars and treasury bonds not realize that their dollars can't really be redeemed quickly, if at all? If the foreign governments do realize it -- and surely they do -- do their holdings of dollars and treasury bonds not give them an interest in supporting the dollar and easing and stretching out its decline?
As far as I can see, the market-rigging schemes to support the dollar are still in operation all around the world.
For Spikedog: Yes, Americans have been incredibly spoiled by the unreal world their reserve currency has given them. The $52 billion appropriated by Congress just last week for hurricane relief was all deficit spending -- not a thought given to raising it by taxing or by economizing elsewhere. And why not? The foreigners are paying for the U.S. war in Iraq by lending the U.S. the money, so why shouldn't the foreigners pay for hurricane relief too -- except, of course, for the reprehensibility of asking them to? But the world lets us Americans get away with this.
How nice if the posters at this forum, who understand this and are spreading the word here, could get a little help from some foreign central banks via the occasional statement that they're going to stop buying U.S. government debt in six months or a year or so, waking Americans up while giving them a little time to adjust.
For Belgian: When I wrote that the U.S. government could declare gold a "weapon of mass destruction," I didn't mean to endorse such a position. But it is simply historical fact that gold possession has often been restricted by governments, and the gold price suppression scheme, in which the U.S. government and the Western European governments remain deeply involved, signifies the danger governments see in gold -- that is, their loss of power to set the value of everything.
I agree that the haters of gold are those who run the dollar currency bloc. Of course I would not consider any country's use of gold today to be aggression; rather it would be self-defense against U.S. dollar imperialism. But gold indeed is a weapon, and a powerful one. If gold was not so powerful, you would be spending less time here and more with your goldfish, and I'd be spending less time here and more with my vegetable garden ... and maybe even my family!
You write: "The euro currency/EMU strengthens when the price of gold goes up, while the dollar currency and $-IMS weakens with gold's rise." I do not have handy the necessary charts, but I've read lately that gold has been rising in euro terms as well as dollar terms. And does the euro rise because gold rises, as you suggest, or simply because the dollar is falling against everything else in a world where the currency choice remains pretty stark, a choice essentially between the dollar and everything else?
You write: "Chris labels the ECB's MTM 'creative bookkeeping'!?" Well, I don't think I was as positive as that; rather I meant to be speculating. In any case, as I think I wrote, what the ECB lists as the value of its gold reserves is less important than what the ECB does or contemplates doing with those reserves.
Indeed, if the euro is independent of gold, as the late Wim Duisenberg has been quoted here as saying, why does the ECB hold gold reserves in the first place? If the ECB's marking its gold reserves to market is support for Duisenberg's boast that the euro is independent of both gold and nation-states, I remain skeptical and unimpressed -- and perhaps just ignorant. For the U.S. Treasury could mark its gold reserves to market and what difference would it make? Does anyone now take seriously the Treasury's gold bookkeeping price of $42 per ounce, a price that has no application to anything? So what if the ECB is marking its gold reserves to market when that market is still rigged by central bank gold sales and leasing, and rigged in large part by the ECB itself! For the "market" price of gold is not a market price at all; it is simply the price at which central banks are prepared to continue to dishoard their gold so as to defend their own currencies.
Independent of gold or not, the euro, like the dollar, has a price in gold, and gold has a price in euros and everything else. Is the ECB truly indifferent to gold's price in euros -- or indifferent to the price of any currency or strategic commodity in euros? Or does the ECB not monitor those exchange rates closely, as any central bank might, considering those exchange rates to be gauges of the success of the central bank's management?
As long as gold is a currency, it would seem that NOTHING that has a price is really independent of gold.
Further, the ECB has aspirations for the euro to become a reserve currency, which it already is becoming. By definition a reserve currency is a currency issued in such abundance that it becomes held in large quantities outside its own jurisdiction and is used in international trade so much that a great bulk of its float is never repatriated. That is the potential for empire building and imperialism. Of course U.S. imperialism is in the here and now and European imperialism is but a speculation. But can the operators of a reserve currency forever resist the imperialist temptation?
While the ECB may aspire to a free gold price as a strategy for replacing the dollar, the ECB is helping to rig the gold price and the rest of the currency markets now, so where is the assurance that once the euro replaces the dollar, the euro's operators won't seek to preserve their position by rigging the gold price and the other currency markets again?
Perhaps the assurance is that, by then, Asia will have most of the gold and won't let the gold price be determined anywhere else?
Of course I too want a free-market gold price, now and for all time; it would be a powerful force and perhaps the decisive force against imperialism. (Maybe the quickest route to free gold would be for all governments to dishoard all their gold reserves, for central bank reserves inevitably are used to rig the currency markets.) If the ECB's maneuvering helps get us to a free gold market, fine. I just think that accomplishing it is going to take a lot more than the ECB's bookkeeping entries.
Goldilox (9/11/05; 19:02:45MT - usagold.com msg#: 135866)
Euro / Gold
Thanks TC,
Your charts helped me see the bigger picture on the Euro/gold ratios.
I don't mean to completely challenge Belgian's premise, but the Euro seemed less "directly" tied to POG than the US$, perhaps because gold is priced in $.
Perhaps "IF" the Euro challenges US $ hegemony, we'll see gold revert to a more "direct" (or indirect, as it may be) relationship to the Euro.
Is this what I am seeing?
spikedog (9/11/05; 17:42:45MT - usagold.com msg#: 135865)
Re: C Powell and the openness of government, MK and socialism
Chris makes the case that government should be open and honest with its citizens and when it is not, it is the citizens’ responsibility to keep their elected officials in line.
With this premise, I do not disagree.
However, I believe that our (US) elected officials are dealing with the results of giving us exactly what ‘we’ wanted. For the past 60+ years, the population of the US has been lining up at the hog trough fighting to get (more than) their share of the Congressional pork. It has been a very small minority that ever wanted government to be smaller (despite Mr. Reagan's overtures otherwise). It would seem that this country, at least mythically built on the premise of hard work and wise investing – has now descended to the level of open mouths and outstretched hands. This has become obvious in the wake of the pleas from the Katrina victims, "where is government to help me?"
I believe that this attitude stems from what I call "ground beef syndrome" – the concept that there is ground meat wrapped in plastic at the super market – but I had no idea it came from a COW! Similarly, people hope to get the fat, juicy government:
1) contracts
2) welfare checks
3) student loans
4) subsidized housing
5) subsidized farming
6) etc.
without ever stopping to stopping to think, "Hey, where is this money coming from?"
MK, is our brand of socialism really any better/worse than Europe's? At the very least, Europe's appears to be more honest. I am not waving Europe's socialism banner here as I am a "charity begins at home" advocate. If people took care of themselves and their families first by preparing for life's inevitable catastrophes and lesser dramas, many fewer people would fall through the cracks. Then we could easily take care of those very few without government taking a (rather large) slice of our benevolence.
Most of the posters here are staunch advocates of being prepared – probably the reason we are all here in the first place. I doubt most people would find what we do fun – or even educational. And the fact that we do it in our SPARE TIME!!!! Am I missing ‘American Idol’ for this?
Humbly submitted,
Spikedog
mikal (9/11/05; 17:41:01MT - usagold.com msg#: 135864)
Spot and spike roam the night
Spot market is OPEN! POG @ $449.20 + $.70
Go GOLD!
TownCrier (9/11/05; 17:25:08MT - usagold.com msg#: 135863)
Goldilox, on Belgian's $250 low
http://www.usagold.com/goldenchalkboard/gc_welteke.html
Perhaps Belgian meant to point not to the August 1999 low but rather to the following $250-ish gold low that occurred in April 2001.
That period marked the middling point of the euro's double bottom against the dollar where the euro dipped to approx 81˘ in late Sept 2000 and dipped there again in July 2001.
You can see my helpful charts of this period at the url given. Click and scroll midway down the page.
R.
Goldilox (9/11/05; 17:09:38MT - usagold.com msg#: 135862)
Dubya and Sir GS at lunch
http://www.commondreams.org/views05/0910-23.htm
snip:
No one likes to admit to being dull, so occasionally the task of making the observation falls to others. George Bush is a case in point. All his friends tell us his is a keen mind that cuts right to the quick. Since many of them have known him since prep school people tend to believe them even when the evidence is overwhelming that he is in fact one of the country's duller presidents. The evidence is most often presented by his tongue that, embedded in an otherwise empty chamber, by its wagging gives voice to the vacuousness of his thought
One of its finer moments was during the New Orleans disaster. On the Thursday after New Orleans was wiped out by hurricane Katrina, Mr. Bush, invited a friend over for lunch. His choice of a luncheon companion at the time there were 25,000 people huddled in the Superdome in New Orleans without food, water or sanitary facilities and looting and a general crime spree were in full flower, was a strange one. Of all the people he might have invited to help him decide what to do, he, bereft of ideas to the extent he'd tried coming up with any, invited the 78-year-old Alan Greenspan over. Whatever Mr. Greenspan's skills, flood control and clean up are not among them. Not that that mattered. Relieving the distress of the people directly affected by the flood was not what was on the president's mind. As always, what was on the president's mind was money.
Describing his luncheon conversation with Mr. Greenspan, Mr. Bush was quoted in the Washington Post as saying: "We particularly spent a lot of time talking about the damage done to our energy infrastructure and its effect on the availability of the price of gasoline. [This was probably a tongue gone wild since the price will always be available. It's the gasoline that may go missing.] In our judgment we view this storm as a temporary disruption that is being addressed by the government and by the private sector." That was the kind of reassuring talk from a commander in chief that people who were homeless, starving and surrounded by dead bodies floating in the water, needed to hear.
-Goldilox
I wonder whay Dubya and GS really talked about? My guess is something like:
"How high can we turn the spigot to fund "Reconstruction II"?
Goldilox (9/11/05; 16:45:32MT - usagold.com msg#: 135861)
Weak Euro
@ Belgian,
"Do you remember 1999 and $253 POG ? That was the dollar's pressure on the euro ! Wich is plain vanilla evidence that a dollar is strong with a low goldprice and that a low goldprice weakens the euro !"
Wasn't the Euro at $1.19 when officially intro'd in 1999?
The Euro's downward move to $0.85 occurred while gold was strengthening from $250 to $350.
The $-gold inverse relationship seems more recent.
Maybe I'm missing your point?
TownCrier (9/11/05; 16:43:14MT - usagold.com msg#: 135860)
Belgian, Tapper_Light, very good to see your thoughts on the anticipated U.S. position in all of this
http://www.usagold.com/analysis/strauss-20050819.html
In a similar vein, you may want to have a look at the 'EPILOGUE' which was recently added to my previous 'conundrum' commentary in which a friend and I had an e-mail exchange briefly discussing very nearly this subject of motivations and reactions of the various parties.
R.
Gandalf the White (9/11/05; 16:28:10MT - usagold.com msg#: 135859)
YELLOW -- P&F Chart ! -- SHHHHHHHHH!!!
http://stockcharts.com/def/servlet/SC.pnf?chart=$GOLD,PWTADANRBO[PA][D][F1!3!!!2!20]&pref=G
Are you ready for "BREAKOUT" ?
<;-)
Belgian (9/11/05; 16:14:44MT - usagold.com msg#: 135858)
Hoi Tapper_Light
So many years a lurker without posting ? And now you bring this "giant" interesting question. Would like to know your view on the matters. Don't hesitate to join, please.
Imo, the $-IMS will transition into the €-IMS (yes it will)...if and when the dollar-reserve system is collapsing under the weight of its own mismanagement (cfr. YGM).
When all the participants/users/supporters of the $-system, realize that it cannot go on this (mismanaged) way.
Then, the entire load of political will will shift versus a compromise between the diverging factions. They will have to come to an agreement. But those main factions will have arrived at this moment of compromise at different strengths. Stronger (more adult) euro factions and a weaker (aging) dollar faction. That will then decide on who will have to accept who's terms. Concrete : will the dollar accept that a gold-euro comes in place of the dollar reserve, or not !? For as long as there is no agreement (modus vivendi) possible, the pressure on the $-system will continue to increase and the dollar's mismanagement will have to increase, because of the pressure.
That's why oil is testing the dollar and why the dollar doesn't want to ship gold, yet ! Imagine the dollar tries to buy time with gold shipping at today's obscene low prices. That's what I mean with "pressure" versus dollar defense.
Other pressure is in the field of $-monetary expansion. How exhuberant will the dollar handle its expansion (deficits !) ?
Do you remember 1999 and $253 POG ? That was the dollar's pressure on the euro ! Wich is plain vanilla evidence that a dollar is strong with a low goldprice and that a low goldprice weakens the euro !
It seems...SEEMS...that the currencies' struggle (€-$) has calmed down (?) But for how long ? I think that oil and Asia will decide this, rather than (neutral) Euroland.
GREAT question Tapper ! Thanks.
USAGOLD / Centennial Precious Metals, Inc. (9/11/05; 16:04:18MT - usagold.com msg#: 135857)
A world of gold at your fingertips...
http://www.usagold.com/buy-gold-coins.html
Belgian (9/11/05; 15:34:56MT - usagold.com msg#: 135856)
Gentlemens...
As a pharmacist, I've spend quite some time with balances.
I continue to do this when observing the planet and try to come up with a "balanced" evaluation...always ready to adjust it, when nescesarry.
Indeed Sir MK, the many fractals that we can (partially)grasp, activate the intuitive urge versus gold (cfr. Knallgold). But I still don't agree with your view on Euroland & C°, when put on the balance with the AA faction of the globe.
After reading your post...I simply mumbled >>> Political Economy and its all embracing character. Have been putting this on the balance of course.
My conclusion (for the time being) remains the same : Euroland & C° is one step ahead (in its totality) versus the AA block.
An example from today's postings : CP suggests that we should not exclude sabotage on Dubai's expansion in gold matters. My immediate reaction was...here we go again...not with that former (charming) Bonanza state of mind, but with an evil one (the beast). Euroland has left most of this attitude behind it...up until I see evidence of the contrary.
This brings us automatically back to gold : And more precisely the incredible idea that gold might be considered as a WMD !? Is Euroland-EMU and the gold-euro acting in a way that it could ever be labeled of having given to gold the force of mass destruction ? No is is NOT !
Is India with an estimated stash of 10,000 + tonnes of bullion, profiling itself as a dollar/US hater ? No it is not.
It is rather the dollar and the $-IMS that hates gold. And it is the non-dollar part of the globe that has no problem with goldmetal in possesion at all.
I wish to stick to the gold matters and not mix it up with the other aspects put on the balance.
The non AA world LIKES gold !!! Bullion as the consolidation of one's wealth. It is the AA world, with its giant financial industry, that has the paper-chase (the make money mantra) element (mentality) in its political economic system. A "Huge" fundamental difference between dollar and euro faction,, when put on the balance.
Consequently, it is from the euro side of the coin that freegold will rise and not from the AA side.
Recently a very reliable German research on opinion bureau (forgot the name) concluded from its public enquete that the Trans Atlantic freeze was deepening amongst the general public. The public was asked to put its EU/US perceptions into a balance. Increasingly positive for the Euro block and increasingly negative for the AA block. There is no doom thinking in Euroland. And we are very aware of the weaknesses of our collectivist (welfare state) political economy. But we are anticipating it, slowly but steadily.
Deficits under control, trade surplus and Big net savings with debt internally financed (not a drain).
Gold-euro is one of these anticipations to cushion the demographic shock that we have be seen coming already long ago.
In Manchester we concluded that more investment in oil exploration and pumping should be done. Nobody doomed about peak oil ! Simply because we know WHY the price of oil goes up...WHY this is organized with deliberate (purposely) decline of oil-investment. Quite another approach by the EU versus the oil-problem (rather the demands for exchanging equal value).
Hu (China) is visiting...Canada and Mexico. His visit to the US has been postponed !?
A re-enforced Koizumi (elections) might radicalize the AA attitude versus Asia.
Etc...
All these fractals are to be separated and put on the right scale of the global balance ...increasingly getting out of balance . It is not a matter of what is right or wrong but only a matter of increasing unbalance/disharmony. And gold is an element in this and imo a VERY important one...for the AA block and the other side of the global coin as well.
Let's simply things : The euro currency/EMU strengthens when the POG goes up, whilst the dollar currency and $-IMS weakens with the POG rise ! Hope there is no doubt left about this !? Otherwise rethink the arch simple concept of MTM of gold reserves. Not only for the CBs, but for the gold-wealth-metal in your personal/private possession.
What an enormous luxuary advantage for the euro system and all who wish to leave the $-IMS and join the alternative (gold)euro-system. What a position of strength as to work on re-balancing the world. The perfect alternative to replace the dollar-reserve system at any given (appropiate)moment.
The concept is so revolutionarry in its simplicity that nobody dares to consider it seriously as to not have to face the dramatic changing consequences this will bring.
A planet that shifts more and more into dangerous unbalance is NOT walking massively to the slaughterhouse !
This month, $153 Billion was added to the M3...in less than one (1) month and there are 12 months in a year...>>>
Chris labels the ECB's MTM as "creative" book-keeping !? It is the AA financial brotherhood that rises the price of the Dow, the price of bonds, the price of houses...as to make one's book look very bright. But goldmetal in your vault is NOT a stock, not a bond debtpaper, not a fiat confetti digit, and not a house that is permanently taxed.
How revolutionarry would it be...having a goldcoin in your vault that can be priced freely in a market that cannot be dominated anymore by any financial brotherhood !? As a matter of fact...the entire non AA world just adores the idea (concept) and is working on it to make it happen. Remember the gold-dinar period ! What was the real significance behind this concept ? Nothing less than a free gold market. The non AA world doesn't want to hold erzats wealth that is being priced (not valued) by the $-IMS regime. That is the "cause" of the rising global imbalance and as I stated before a very difficult situation for Euroland to remain as neutral as possible (with its concept)!!!
I still remain amazed about the fact that the term "freegold" is oh so a difficult (impossible) notion, for many on this forum. The more so now that all can see that a goldprice rise is nothing more than a compensation for a declining dollar exchange rate. On top of that, the dollar's purchasing power declines much faster than its exchange rate and consequently the goldprice permanently loses purchasing power !!! HOW CAN ONE POSSIBLY SEE/EXPERIENCE THIS AS FREE PRICED GOLD...FREEGOLD...A FREE GOLDMARKET !? Don't you all see how the financial brotherhood has a section responsible for controlling the dollar/gold equation as to keep the $-IMS up and running !?
Do you really think that the non AA world wishes to go on living under such a dominant regime that pushes the entire planet out of balance !?
Amen.
Gandalf the White (9/11/05; 15:27:53MT - usagold.com msg#: 135855)
WELCOME Sir Tapper_Light !!!
Tapper_Light (9/11/05; 13:28:07MT - usagold.com msg#: 135851)
---
You ask the BEST Questions !
If only I could answer, BUT, I am sure that there are ones here that shall try.
Thanks for ending your long "lurking era" !
<;-)
Goldilox (9/11/05; 15:00:24MT - usagold.com msg#: 135854)
Governments "brought to heel"
@ CP, et al
Your quote, "Yes, governments tend to lie about important things but democratic governments CAN be compelled to tell the truth eventually and even be brought to heel."
- is more salve than truth. Governments "admit" the truth only after they have had ample opportunity to rewrite it. WWII post-war history is a great example of that. Spin seems to always overcome truth, even when some truth "rocks the boat".
Liberty Head's description of history being owned and masssaged by government schools is so prevasive, one can argue the oil mess we are in can be attributed to the fact that energy research labs for the last four decades have found non-petroleum focused funds few and far between.
Now that oil is in trouble, big corps are again pushing for nuclear, which due to their own bad press was "out of favor". They favor it again for the simple reason it includes massive construction and maintenance projects for them to enjoy. Renewables just don't offer big business the same "control" opportunities.
YGM (9/11/05; 14:26:27MT - usagold.com msg#: 135853)
Tapper_Light
At the risk of giving an overly simplistic reponse to your question, I would just say any transition will definately be gradual and planned. Consider that ALL CB's of the world are members of the BIS. As you say the CB's don't operate in a vaccum. Bankers will not make drastic changes without involvement and concern for each other in their 'House of Cards' banking system. The whole Fiat Currency/Banking mess is far too fragile at this point in history for a currency war. Where one fails, so go the others IMHO....YGM
968 (9/11/05; 14:11:50MT - usagold.com msg#: 135852)
@ Tapper_Light
A currency can be given reserve status by
a) political support
b) structural support
Ask yourself the question : what kind of support has the reserve currency today (from which factions and why) ?
These structures can't change (and it would be in nobody's interest) overnight. These things have to go VERY SLOWLY AND GRADUAL; you will see no currency war.
And above all : who wants to be blamed for having taken (stolen) the US currency reserve status ?
Tapper_Light (9/11/05; 13:28:07MT - usagold.com msg#: 135851)
Belgian,Chris Powell, MK and All...America's take on the coming changes
Further, the oil-gold-euro bloc does not implement its plans in a vacuum. The dollar bloc surely has plans of its own, perhaps including currency and capital controls, just for starters.
------------------------------------------------------------
I wonder what you gentlemen think the American take on the coming transition away from dollar supremacy to the free gold Euro/Dubai/Asian currency blocs (if indeed that's what happens), would be. Is this something that will turn into an all out currency war...or is the outcome an already agreed upon G-8 type solution with the U.S. making the most of it's time remaining as the printer of the world's reserve currency? Thanks for any and all responses.
I've been lurking here for 4 or 5 years...my apologies if this subject has already been addressed.
968 (9/11/05; 13:11:40MT - usagold.com msg#: 135850)
Hello Sir MK
http://www.usagold.com/goldenchalkboard/gc_charlemagne.html
I would love to hear your position also on a Central Bank using a MTM system for goldreserves, and the system the US uses.
What do you think Wim Duisenberg meant when he said : "It is the first currency that has not only severed its link to gold, but also its link to the nation-state."
Do you see in difference in link between oil-gold-dollar, and oil-gold-euro ?
Thanks in advance !
Liberty Head (9/11/05; 12:57:40MT - usagold.com msg#: 135849)
Losing Our Country
@Chris Powell
We no longer live in a democrcy, we now live under autocratic rule disquised as democracy.
No matter how unpopular the current regime becomes, the next election will still be a choice between autocrats.
The election results will be dubious, as well.
Our time in the sun is over.
While folks have become more angry, few have become any wiser.
Best Wishes
Liberty Head (9/11/05; 12:29:08MT - usagold.com msg#: 135848)
Bravo MK, Well Said
Over reliance on gov't happens when folks receive thier education at gov't run schools where compliance is the constant lesson.
Most people are willing to have another entity take responsibility from their lives in exchange for compliance.
It's a fool's bargain.
Best Wishes
Knallgold (9/11/05; 11:27:32MT - usagold.com msg#: 135847)
Belgian
Just read all your last posts,I think I'm getting it now,though my head is smoking.
Bought 10 more ounces,also put Mum into Another 10 ounces...now watch the price on Monday...
MK (9/11/05; 11:15:53MT - usagold.com msg#: 135846)
Chris Powell, Caradoc, Belgian, Goldilox, et al : What's wrong with America?
The same thing that's the matter with Europe, Russia, China and Japan:
• An over-reliance on the government.
• A concentration of too many financial resources in the wrong place: the federal government bureaucrasy.
• A voluminous and for the most part incomprehensible compendium of federal rules and regulations meant to take decision-making out of the hands of the individual, and place it instead in the hands of a vast and distant bureaucrasy fundamentally detached from the problems which arise -- an operator's manual without an operator.
• An abdication of responsibility for the strength of the society and its insitutions from citizens to federal politicians who value their career goals over the equitable and efficient functioning of the society -- Mr. Smith has not and will not go to Washington.
• A frustrating and readily apparent impotence to solve the problems facing our society in almost all theaters -- including the financial and economic spheres. New Orleans is symptomatic of the disease, not the disease itself (which is all the above).
• Constant diversion from the very real problem created by socialist governments worldwide, which at the core are economic, instead of addressing those problems directly, fundamentally and systematically -- the problem of a society essentially running out of money.
The word "exhaustion" dominates the mind -- a society worldwide whose institutions are exhausted, driven by bankrupt socialist theory on both the left and right, and deaf to the warnings being voiced, just as the warnings on New Orleans were ignored.
And its not just the United States in this position, but the entirety of the industrialized world, including Europe, Japan and the current rising star - China.
As you can see, I am not optimisitic. That's why I advocate and encourage gold ownership. The trends I describe above may be beyond anyone's ability to turn them around. Most likely, they will simply run their course despite well-laid plans. If the frustration of New Orleans is evident to you, then the words I have spoken above are not foreign to your thoughts. New Orleans becomes a fractal -- evidence of what could happen in a wider economic crisis when the government fails to respond, or resonds so weakly that its presence is not readily apparent. Only in the face of rising economic waters, there is a practical and cost-effective remedy.
The response of the rational individual is to prepare. We have just seen what the lack of preparation engenders. How often have those who prepare been laughed at as paranoid fools? But how irrational does that response seem now?
I am now reading what I consider to be a remarkable series of books on the Arthurian legend by Jack Whyte (The Skystone, The Singing Sword, et al). The series begins in Britain at the time of the Roman Empire's dissolution. A Roman aristocrat, Senator and honored general foresees the fall of the Empire and with like-minded individuals founds a colony in Britain (his birthplace) as a matter of mutual protection and survival. At the time, even prominent Romans still working under the SPQR believe that the fall is inevitable -- an empire at the point of exhaustion. The disintegration, General Brittanicus believes, will begin when the military presence is withdrawn from the farthest outposts - like Britain. There are invaders and enemies on all the coasts who will overrun Britain should Rome fall. The empire has already been split between Rome and Constantinople. It is to fill the power vacuum left by the fall that wealthy Britannicus founds the colony on his vast estates. The book is particularly appropriate for veteran readers of this page in that it deals with themes with which we are intimately familiar.
An example of Whyte's writing I found particularly striking:
"There is a beast in every many who breathes, a beast that is born in him and lives within him all his life, in a constant struggle for dominance over what he would prefer to think of as his better self. I say that with complete conviction because I have had to come to terms with my own personal beast, and it now lies dormant inside me; dormant, but far from dead. It stirs occasionally, reminding of its presence, of its poison.
My beast's chains are strong -- as strong as I, a maker of iron chains, could make them. I know to my own cost, nevertheless, that are frighteningly fragile. . ."
More:
"I was here -- we were here -- because of Caius' conviction, to which I had subscribed at first reluctantly, but later with total dedication, that all of this incredible wealth and organized intensity and efficiency surrounding us would soon cease to be. . .that Rome herself, the eternal Mistress of the Universe, would shortly die. Marching through those corridors at that time however, hearing the disciplined, exact cadences of the iron-nailed military boots crashing on marble floors, observing the blanked, visionless, forward concentrated vigilance of the ranked guards as we passed and knowing that they had assessed and were ignoring us, their attention focused upon and identifying threats to the Imperial Regent, it seemed unbelievable to me that such a presence, such formidable, inexorable power, would ever fail, or even falter, in its supremacy. I found myself wondering briefly how Britannicus could have ever been so misguided, so mad as to doubt this reality. But then my own perception of reality returned, reminding me that Caius has never talked of instant death. The fate he envisioned for the Empire would begin with an inevitable self-protective withdrawal, a convulsion, a fear-engendered retraction of the Imperial armies from places like this, and from peaceful Britain most of all, leaving chaos and emptiness in its aftermath."
These words are delivered by the novels' narrator, the smith who forges the sword. . .
Chris Powell (9/11/05; 09:55:17MT - usagold.com msg#: 135844)
We gain nothing if we lose our country
Thanks again, Belgian, for your latest about gold and oil and the recommendation to review the archive of this forum's Year 2000 postings on the subject, which I am already doing. But I did read them when they were first posted and do remember and grasp their main points about oil's unrecognized value and its centrality to the gold price. Indeed, while oil is not really GATA's issue, I think the GATA dispatches I cited to you yesterday give some indication of our awareness of its relevance.
Where I will disagree with you is where you write: "All states are chronic liars and will always get away with it for the simple reason that it takes a lot of effort to detect and expose and come as close to the truth as possible. Once you find that truth, nobody believes you."
Yes, governments tend to lie about important things but democratic governments CAN be compelled to tell the truth eventually and even be brought to heel. As for the truth never being believed.... Yes, it can be a slow process but "never" is wrong. YOU are believed here, as Another and FOA were, and the knowledge shared at this forum and the dialogue undertaken here have influenced many. Like it or not, they have been crucial to me.
Some Americans ARE waking up to the financial recklessness and arrogance of their government, which is, after all, only the inevitable corruption of any empire. (A couple of excellent Associated Press series analyzing the U.S. government's financial recklessness recently were published widely in American newspapers.) Certainly not enough people are awakened to alter policy at the moment, but perhaps in time. In any case good citizens are obliged to try. We will hardly protect ourselves and our families with gold if we end up having to spend much of it on ammunition just to survive, if we lose a decent country to live in.
Further, the oil-gold-euro bloc does not implement its plans in a vacuum. The dollar bloc surely has plans of its own, perhaps including currency and capital controls, just for starters. You cite the growing physical gold market in Dubai. What if, for example, the United States purports to discover "weapons of mass destruction" in Dubai? I wish I was entirely joking. But the gold there well might be considered a "weapon of mass destruction," even if few people would understand right now how that could be so. At least Dubai seems defenseless against any of the U.S. Marine regiments in the neighborhood.
My points are that the future is not always as sure as logic and reason might make it seem, that The Powers That Be don't always win, that knowledge is responsibility, and that the truth may have more utility than you think. I've always liked the way William James put it:
"I am against bigness and greatness in all their forms, and with the invisible molecular moral forces that work from individual to individual, stealing in through the crannies of the world like so many soft rootlets, or like the capillary oozing of water, and yet rending the hardest monuments of man's pride, if you give them time. The bigger the unit you deal with, the hollower, the more brutal, the more mendacious is the life displayed. So I am against all big organizations as such, national ones first and foremost; against all big successes and big results; and in favor of the eternal forces of truth which always work in the individual and immediately unsuccessful way, underdogs always, till history comes, after they are long dead, and puts them on top."
Well, one quibble with that: May we all live so long.
Yes, as you remarked to Ned, there is no clash here. Cordial regards to all.
Caradoc (9/11/05; 09:26:44MT - usagold.com msg#: 135843)
After the storm: What's wrong with America?
http://news.scotsman.com/index.cfm?id=1920362005
No single paragraph stands out as a representative snip of the article linked above. This dispassionate piece goes far beyond its title. It's as much about post 9/11 as post Katrina in looking at a broad range of symptoms, even the apparent preference for escapist fiction.
A good read! If it had included failure to defend borders and coin money, it would amount to a set piece showing that US taxpayers aren't getting their money's worth.
Caradoc
mas (9/11/05; 09:08:47MT - usagold.com msg#: 135842)
Pritcho, for your review
Again from the Privateer. Another view as they would say.
THE BEGINNING OF THE END OF ILLUSION
The bureaucratic and institutionalised incompetence displayed before, during and after Katrina was
inevitable. Bureaucrats and their institutions have no need of competence. Being insulated from any and
all forms of economic reality, they are not subject to the need to co-operate with those around them, nor is
there any requirement that they earn or create the resources which they so casually use up. The wielders
of government do not need to show a profit, they merely need to write a law or a regulation.
Even a cursory examination of the actual workings of government will make all this clear. In an almost
real sense, those who "debate" the rules and regulations and those who write and enforce them have
something in common. They think that all that is necessary to bring wealth into existence is to put words
on a piece of paper decreeing that it be so. In "normal" times, the surface appearance is that this actually
"works". The "need" is found, the rule is written and passed into law, the "money" is (quite literally)
created and used to "buy" the raw materials, the people required to do the actual work are hired or
assigned, and a new dam or bridge or levee or road appears.
The "problem" arises in ABNORMAL times, such as in the aftermath of the devastation wreaked by a
hurricane aided and abetted by an inadequately constructed and maintained levee system. Suddenly, to
quote the headline which begins this issue: "The facade is washed away". What is left is devastation
made much worse by a desperate government need to "control" the situation and worse still, by their
attempts to control the perceptions of those involved in it and witnessing it.
The clearest examples of this have been the decrees issued by the Bush Administration as the true
magnitude of the devastation has been revealed.
Behaviourism - Washington DC Style:
First, and as already reported on the "Inside The United States" page, President Bush has ORDERED all
functioning US oil refineries to throw their maintenance schedules away and run flat out for the next four
to six weeks. To hell with the increased risk of the breakdown of the entire US refinery capacity, what is
"important" to Washington here is a simple fact. The rest of the world can supply the US with enough
refined petroleum products to keep the price from skyrocketing - for the next four to six weeks. By this
order, one which no politician would dare to make in an even "semi-free" society, the Bush
Administration hopes to have enough refined oil in hand at the end of this period to keep prices down.
Not content with that, Mr Bush signed an Executive Order on September 8 which permits FEDERAL
CONTRACTORS rebuilding in New Orleans and elsewhere in the Gulf States to pay below the
"prevailing" (read minimum) wage. This "accomplishes" a number of things. It ensures that only those
firms "approved" by Washington DC will get the contracts. It also ensures that the federal government
will be "in charge" of the rebuilding, thereby giving the impression that it is THEY who are the saviours
of the devastated areas. There is also the incidental benefit that companies with direct ties to the Bush
Administration are already being signed up as these government contractors.
A "minimum wage" is disastrous economically, acting as it does to price out of the jobs market all those
whose skills cannot command the mandated sum. Just as clearly, the young and unskilled are the worst
hit because they cannot get a low-paying job in which they gain the skills needed to increase their value to
present and future employers. In a welfare state, the professed reason for a minimum wage is to elevate
the "poor" by raising the price of their labour. In reality, the minimum wage swells the ranks of the poor,
thereby swelling the potential and actual ranks of the "clients" of the welfare state. The political purpose
of all edicts which hamper or circumvent the MARKET is to give an impression of the indispensability of
government CONTROL. But when that control is in danger of slipping, the rules are "bent".
Money Is No Object:
Do you remember the message as the government ramped up spending in the wake of 9/11? It went along
these lines: "Money is no object - FREEDOM has been attacked". Then there was the refrain when they
ramped up spending still more in the lead up to and during the attack on Iraq: "Money is no object, we
must make the US safe from terrorists". Now, the refrain - and the oceans of money spewing out of
Washington DC - have broadened still wider: "Money is no object, we must rebuild the nation".
The official estimate is that the war in Iraq and Afghanistan has cost $US 300 Billion. Now, so far
unofficial estimates are claiming that the "final" cost of the Katrina devastation could be another $US 300
Billion. With just under three weeks to go in fiscal 2005, the increase in US Treasury debt for the year
stands at $US 571 Billion.
Then there is the funded debt which is now rapidly approaching $US 8 TRILLION and the $US 40-70
TRILLION in future promises to pay. Add to that the trade and current account deficits, now guaranteed
to escalate. Add to that the debts of US consumers and corporations and stir in a now NEGATIVE US
savings rate. That's quite a stew.
Of course, to government, money is no object. If you, dear reader, had the ability to start with a blank
piece of paper, label it as legal tender, decree that it was a valid payment for debts incurred, forbid anyone
to refuse to accept it, and multiply its issuance without any limits whatsoever, would money be any
object? Clearly not. Of course, in reality, modern "money" is indeed "no object". Most of it doesn't
exist except as collections of binary entries in the bowels of computer networks. The problem is that
WEALTH is comprised entirely of real existing objects, ones which take time and expertise to produce,
which exist in finite quantity, and which cannot be grown on trees or given substance by decree.
Since the US emerged as the predominant world power in the aftermath of WWI, both its government and
its people have been progressively insulated from that basic truth. Since the final demise of "objective
money" with the severance of Gold and the US Dollar in 1971, they have been entirely insulated from it.
It took twenty years to get entirely used to the idea, and then in 1991 the US became the world's sole
remaining "superpower" as the USSR crashed and burned.
That ushered in the era in which "money" really did become no object - as tallied by the debt totals listed
above. It also ushered in the era of the biggest market bubbles in history inflated by the biggest and
longest lasting credit (read DEBT) expansion orgy in history. What few noticed and fewer still chose to
take seriously was the inevitable result. With any expansion of money based on debt comes a
proportional implosion of the supply of and the means with which to create more real wealth. The
reasons for this have already been given in this issue of The Privateer.
Bursting The Biggest Bubble Of All:
If the disastrous aftermath of Katrina has provided anything positive, it lies in a harsh and merciless
exposure. The combination of chaotic action and the brutish need to control events exhibited by
government has laid them bare for all to see. Katrina has unveiled the workings of the combination of
welfare and warfare state of any government which pursues empire.
One must try very had indeed to refuse to recognise the incompetence of government. It is difficult to
ignore the arrogance of the bureaucrats and politicians who maintain that their wishes make it so. But
acknowledging these facts does not penetrate to the root of the problem. The root of the problem is that
the pursuit of political power leads inevitably to the production of economic impoverishment - for all
those not in political power. When someone from government says: "I'm here to help you" - please
translate. What he or she is really saying is: "I'm here to CONTROL you." The tragedy is that
historically, it almost always takes a calamity the size of Katrina to expose that fact.
mas (9/11/05; 08:55:29MT - usagold.com msg#: 135841)
Some additional points
From the Privateer.
RAISING THE POLITICAL LEVEES ALL AROUND THE WHITE HOUSE
Finally, the political proverbial dime dropped in the US Executive Branch. They promptly panicked.
The White House has told US refiners to postpone all their scheduled maintenance in a drive to maximise
petrol and diesel production in the wake of hurricane Katrina. This is, potentially, a deadly dangerous
move. The entire system is now labouring under a "diminished capacity". To throw maintenance out of
the window in what now remains of the rest of the US refinery system - already working flat out trying to
cover for the lost output of the refineries missing in action - is to expose the remainder of the system to
more and possibly full production breakdown. If any more US refineries suffer a full breakdown, the US
eastern seaboard is cruising towards a systemic crash.
A senior executive from a big refinery in Houston said: "The message from the government is ‘run the
refinery as high as you can and avoid all the non-priority maintenance in the next four or six weeks’."
The US Economy Is Flashing Red Lights:
The US Commerce Department has reported that durable goods orders dropped 4.9% in July. But US
consumer spending rose a hearty 1.0 percent for the second straight month in July, outstripping a weaker
than expected 0.3 percent rise in incomes. The personal saving rate was thus sent into negative territory
for only the second time on record. The saving rate, the percentage out of all disposable income, was a
negative 0.6 percent - the smallest rate since monthly records began in 1959. This is, quite literally, the
real economic consumption of the US capacity to produce at all.
Economic Cascade Sequence:
The US new orders index fell from 69.6 to 46.5. The US production index dropped from 70.5 to 56.2.
The measure of prices paid by manufacturers for materials rose from 61.3 to 62.9. The employment index
dropped from 56.1 to 51.7. These are the economic numbers of an economy stripping all its gears.
The US new orders index and the production index dives are terrifying. The climbing costs to US
business are grim, as is the US employment index. The Chicago Purchasing Managers said that their
Business Barometer fell to 49.2 from 63.5 in July! US median household income stood at $US 44,389,
unchanged from 2003. But US households compensated for that by using their own houses as if they
were ATM machines. US homeowners took $US 59 Billion in cash out of their houses in the second
quarter, double the amount in the equivalent quarter of 2004 and SIXTEEN times the average rate for the
mid-1990s, according to data released this month by mortgage giant Freddie Mac.
There are no savings, there is precious little "equity", only the borrowing rolls madly along.
Now, here comes another stark warning from the US Comptroller General about the current US debt and
deficit and the unfunded promises. That huge total comes to $US 43 TRILLION, says Mr Walker, the US
Comptroller General, who runs the government's Accountability Office. That works out to $US 145,000
for every American or $US 350,000 for every full-time worker.
America spends $US 1.9 Billion more a day on imported clothes and cars and gadgets than the rest of the
world as a whole spends on its goods and services. New US household debt currently fuels over 12% of
GDP. Piled on top of all that is the Federal budget deficit and the deficits on the State and local levels.
When US consumer comes to a halt, 12 percent of US GDP will disappear. It will vanish, unless the
government replaces it with its own borrowing, or the Fed literally prints the money.
Topaz (9/11/05; 04:09:34MT - usagold.com msg#: 135840)
Gold, currencies.
http://www.futuresource.com/charts/charts.jsp?s=GC&o=100/DX&a=M&z=610x300&d=medium&b=LINE&st=
This strong PoG in a non-delivery month is indicative of big time Physical off-take sufficient to overcome a normally softer futures derived Spot price.
Delivery notices didn't update Fri which is a bit curious but judging by OI, theyd've only done 3 ...or DID they?
An interesting week ahead for sure!
Belgian (9/11/05; 02:41:04MT - usagold.com msg#: 135839)
@CP
Have been reading some of the articles you mentioned. Shall read the other ones, now.
May I suggest that you go to the Gold Trail (thoughts-?) and study Archive I (2000). It is a conditio that you have assimilated the historical background of the past 3 decades.
Then watch the daily behavior (tick to tick) of $-€-$/POO-$/POG. Realize that you might not have the time to do so.
When some significant changes occur in this market segment, listen and memorize the (planted) comments from the financial media. Kind of spy work that evidences day after day the struggles that are taking place between €-$-POO-POG (IRs).
But I get the impression that your energy and commitment goes to your "concern" about Amerika. That's noble.
But the more the politicos "talk" about transparency...the less there is on the Big fundamental issues. And often I do agree that such a degree of transparency is impossible for strategic (political) reasons. Public opinion can get in the way as to make things NOT happen. All states are chronic liars and will always get away with it for the simple reason that it takes a lot of efforts to detect and expose + come as close to the truth as possible. Once you found that truth, nobody believes you. Smile Chris.
Without the internet, I would have remained an analphabet on many topics. But once you get how the systemic lying is organized, it becomes much easier to automatically separate half lies from half truths with a reasonable adequacy score.
Tell me when you finished Archive I (2000) and please do reflect on it, here at the forum. Touch what has been said in 2000 with today's realities as to evaluate the theories/studies/experiences/expertise on their merits. Today's events don't come out of the blue. They have an historical context and consequently a (visible) future.
Currencies, gold and oil are a close trio that has evolved (still is) for the past 70 years. We will NEVER run out of oil and gas. This does NOT mean that we are going to continue consuming it like we did. Oil is the very basis of organic (carbon/hydrogen) chemistry. Without oil for this purpose w're catapulted back to the stone age. The politicos gathered in Wales (oil consumers) are demanding transparency on oil matters from those who are the owners of the reserves. But all have been lying about it for the past 80 years. So don't expect transparency on a plate when you ask about oil and gold. Find as much dots as you can and connect them to form a picture that makes sense (adds up). That's why one has to assimilate the recent history.
Gold has always been involved with oil flows and oil pricing. This will intensify in the very near future. It's about RE-VALUATION...WHERE THIS TIME THE PRIVATE SMALL PHYSICAL GOLDHOLDER IS GOING TO PROFIT FROM...TAKE PART IN IT. That's the whole purpose of coming FREEGOLD.
Gold and oil were always highly valued...but this very evident value had to remain out of reach for the masses for very sound reasons. Sticking to the gold discipline would have made the growing political economy, that brought prosperity, impossible. So "re-valuation" in fact means letting the real true value being exposed to everyone. And we have to go on that trail simply because the political economy was based on the backing of debt, making it always look credible. Too much debt already as to be able to back it up without exposing the real values and let those real values manifest themselves. The notion of real genuine "wealth" has to be called in, back again. The oil history started with physical gold, then this relationship was pushed into the dark to live a (an untransparent) life on its own. Now this oil/gold/currency numeraire is coming back into the lights. The euro-gold concept. Check the behavior of these parameters on your ticker tape. Actions and reactions by the (opposing) factions that make their moves as to work towards their goals.
Impossible to trace how gold reaches oil. The ECB/BIS complex is not dishing transparency out on a www-plate. Oh no. The only thing we can do is to try looking "behind" the scarce statements perfectly concepted for neutral public consumption. Things have to add up, make sense and we have to find out "what" makes sense. Gold actions (sales-commitments) serve a purpose...and that's NOT the jewelry business/industry, wich's (gold)function isn't even understood by goldbugs.
Goldmetal is in the process of being taken out of its organized marginalization. Today's goldprice behavior is not yet evidence of this. The gold-actions of the past decade is.
Maintaining the minimum liquidity in the goldmarket with mobilizing gold to circulate (ECB-Belgian gold) is evidence that goldmetal is drying up...most probably prematurally.
Coincidently, Euroland's politicos are gathering around oil and the oil future. Again oil + gold events in the same timespan and as untransparent as ever. But intuitively one smells things are moving faster due to building pressure. That's what I'm interpreting from the ticker watch (pushing and pulling on the parameters-prices).
The old dollar-gold regime was concepted as to have oil invoiced in (reserve) dollars. Why shouldn't EMU working on the same purpose and initially coexist with the dollar ?
Watch the ticker and look what happens when the euro comes under pressure...etc...etc
It is from this kind of dialoque that forumers (myself included) and physical gold interested (clients) can profit (no clashes, Ned).
ge (9/11/05; 02:07:28MT - usagold.com msg#: 135838)
@PRITCHO
Hoye seems to be suggesting that hot money would run out out of the emerging market debt, causing a spike in local interest rates and devaluation of local currencies.
He is suggesting that gold/silver ratio might be a good proxy for the interest differentials between US debt and emerging market debt (why, I don't know?!). He expects the gold/silver ratio to increase during an emerging market crisis.
If the hot money flees to the dollar, this might lighten the pressure on the dollar. Interestingly, this is what Jack Crooks of Asia Times expects. Perhaps, this has already been discussed in a meeting between major central banks (may be during a dinner :) ) and a deal was reached.
In Scwager's book, "Market Wizards", Ed Seykota said that (quoting from memory), silver had a schizophrenic personality. It sometimes acted as an idustrial metal, sometimes a precious one.
PRITCHO (9/11/05; 01:06:19MT - usagold.com msg#: 135837)
@Goldilox et al - - - RE "Euphoria! Sudden loss of liquidity?"
http://www.prudentbear.com./archive_comm_article.asp?category=Guest+Commentary&content_idx=46042
Can someone please read this & explain in "simple terms" as I'm buggered if I understand him properly - Thanks
( Especially the "outlook" for Siver )
Bob Hoye
Snip - --One of the more interesting such indicators is not widely followed. At times, the gold/silver ratio seems to act like a credit spread in anticipating or confirming a boom by decreasing, or the same for contraction in increasing.
The ratio increased to 81 in June, 2003 and, as it reversed, it confirmed that the boom would soar. The chart follows and the main thing is the decline to 55 on June 1 (the spike-down to 51 in 2004 seems anomalous in the context of this discussion).
However, since early June the ratio has had a significant recovery and today's swoon in silver popped it above resistance at 64 to 65.5. Technically, this is breaking out of a reverse "head and shoulders" pattern which is opposite to that at the top in 2003.
At this stage of speculative euphoria, typically its exhaustion is signaled by dramatic plunges in silver relative to gold. This seems to be starting and it is worth noting that currently Brazilian and Indonesian credit spreads have been widening. The latter reminds of the Asian Crisis that started with the Thai baht on July 1, 1997.
PRITCHO (9/11/05; 00:54:57MT - usagold.com msg#: 135836)
They Wait & Watch To See What Consumers reaction Will Be To Higher Pump Prices - - -
http://www.prudentbear.com./archive_comm_article.asp?category=Guest+Commentary&content_idx=46357
Ted Geoca is Partner in Maxout Savings Group and Vice President Wunderlich Securities Inc. and hosts the website MaxoutSavings.com
Snip:
Today we have an equivalent of $100 barrel oil. With oil selling for over $67 a barrel, what is not well understood on Wall Street is that now gasoline is selling close to $100 oil equivalent. Most economists are used to watching the price of oil in predicting consumer behavior. This is the case because oil and gasoline typically move up and down together percentage wise. In the past when oil was in short supply there was not a refinery shortage so the price increases moved up the supply chain equally. In today's markets we have a shortage of crude oil and refining capacity. This has led to a dramatic increase in the price of oil and the crack spread. The crack spread is roughly the difference between the price of crude oil and the refined products that the oil refinery produces (gasoline). In other words, the spread of gasoline over oil measures how much value the refinery adds.
PRITCHO (9/11/05; 00:49:21MT - usagold.com msg#: 135835)
Credit Bubble Bulletin, by Doug Noland - - -
http://www.prudentbear.com./creditbubblebulletin.asp
Snip: (From end of commmentry)
Watching the markets’ response to Katrina – higher stock and bond prices at home and abroad – I will err on the side of expecting continued economic "resiliency." There will surely be wide-ranging financial ramifications and some economic dislocation. But, for the economy as a whole, I expect activity to continue to be dictated by interest-rates, mortgage rates in particular. And while some point to economic weakness prior to the storm, I will stick with the analysis of a U.S. and global economy demonstrating inflationary boom characteristics. If the inflationary bias is as prevalent as I suspect it is, then expect the major impact of Katrina to be higher prices for things ranging from gasoline and other fuels, to chicken, shrimp and oysters, to lumber and other building supplies. If some of these reside in "core CPI," then we can simply adjust the core, again. To be sure, this catastrophe will ensure that an unsound and unbalanced economy becomes more so.
Goldilox (9/11/05; 00:31:57MT - usagold.com msg#: 135834)
Wall St a la "Privateer"
@ Pritcho,
"First, it is focussing on all the juicy contracts which will now be up for grabs to rebuild the damage."
When Wall St "burned", we (the collective enterprise computing industry) worked our tails off to get the data centers back up in < 48 hours, but TPTB decided to remain closed for business a couple more days "in memorium". Then they proceeded to transfer a major share of our livelyhood to Indian sweat shops as fast as they could train them to answer the phone with "American accents".
When NO and the Gulf are trashed many times worse than the Wall St carnage, it's "business as usual" on Wall St, with the trading vultures circling for "scraps" of recovery funds. Not to downplay any of the serious charitable responses, but the vultures are not about to take a day off in reverence when there's gubmint money to be had!
US response to the tragedy in the south will resound loudly to the rest of the world, with the potential to escalate foreign reserve balancing.
ViewYesterday's Discussion.
