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ARCHIVED DISCUSSION FROM 7/1/1999
All times are U.S. Mountain Time
View Yesterday's Discussion.
koan
(7/1/99; 23:24:37MDT - Msg ID:8333)
Martin Armstrong - breath of freash air
When one is investing, REALITY and knowledge are the most important tools. I do not know if Armstrong is correct or not, but I suspect that he is correct. When I cannot get my mind around a subject I look for another approach. Gold: would it make sense that just about all commodities and the CRB are at historical lows, but gold should be different? It makes more sense that it is low. The truth should be whatever the truth is. Especially, when we are just talking about a metal. It either is being manipulated or it is not. Period. And we should all want to know only that.
Golden Truth
(7/1/99; 23:20:47MDT - Msg ID:8332)
Martin Armstrong You Are A Worm Of A Man And A Coward.
Hello Martin? didn't your Mother tell you it's not nice to lie to people? Come on Martin? why don't you tell the Truth? "We should welcome the Liquidation of GOLD From the C.B" How COY Martin? "The I.M.F goes hat in hand asking for money"? Are we talking about about the same I.M.F that destroy countries finacially? You make me sick. You say there is no manipulation????? You are insulting the the intelligence of every Human Being on the face of the Earth. Why did A.GREENSPAN say the" C.B's stand ready to lease GOLD in increasing quantities should the price rise??" Why would they give a shit if GOLD was just a commodity,Hello Martin? Come in Martin, time to come down from the ivorytower. You MR.armstrong are in bed with the rest of them,just don't try and grab our asses also. Buy GOLD now and watch out for Ass Grabbers. EH Martin?
AEL
(7/1/99; 22:45:13MDT - Msg ID:8331)
interesting post
http://prudentbear.com/bbs/index.cgi?read=53284
on the Prudent Bear board; you might enjoy it
sample:
"Given the absolute global disaster that awaits us upon the unraveling of the "carry trades", the
defense of the U.S. dollar is of the highest priority. REPEAT: THE DEFENSE OF THE U.S.
DOLLAR IS OF THE HIGHEST PRIORITY! ALL trading decisions you make need to keep this point foremost in mind."
Al Fulchino
(7/1/99; 21:33:53MDT - Msg ID:8330)
Cavan Man
re: #8264. Amen. And my two favorite holidays are Thanksgiving and the 4th Of July, in that order
SteveH
(7/1/99; 20:56:09MDT - Msg ID:8329)
Aristotle and Aragorn make kitco...
www.kitco.com
Date: Thu Jul 01 1999 22:31
strat (A nice piece on gold...) ID#93241:
http://www.jasonhommel.com/aristotle.htm
Apparently, "Aristotle" ( haven't I heard that name before? ) posts over at the other guy's forum ( USA Gold ) . Good read. Optimistic for gold.
SteveH
(7/1/99; 20:27:43MDT - Msg ID:8328)
Armstrong to GATA
Somehow I don't see all the issues covered here. He certainly doesn't hold any credence to the A/FOA posts. He views CB's as to be all on board demonitizing gold, which I believe has been shown false. I see partial truths, not all issues discussed, and history thrown in to throw off the main point that gold is being manipulated. Why didn't he say, "I admit this that and the other event seems a bit too coincidental and suspect but the reason is this...that... and you know what else...."
2:30p EDT Thursday, July 1, 1999
Dear Friend of GATA and Gold:
Martin Armstrong of Princeton Economics
International has replied to Professor von Braun's
reply to his essay of June 28.
While I have received some hostile and even violent
reaction to my posting Martin's commentaries because
they disagree in part with the beliefs of many
advocates of gold, I think we benefit immensely from
being able to test our views against those of such
an expert and historian. Martin honors us by
engaging and arguing with us. I always learn from
him even where I disagree with him. And where we
disagree, as decent people we should be able to
agree to disagree.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
Dear Professor von Braun:
The statistics you quote about the gold market may
be reliable, but then again they may not be. For the
smoke-and-mirror act that is going on is in fact the
assumption that there is a huge conspiracy to drive
down the price of gold.
The word "manipulation" implies that there is some
goal to be achieved. No one seems to have defined
that goal, and the assumption that a conspiracy has
been in motion among the central banks for some time
shows the lack of understanding that governments
themselves have no memory beyond the current
administration.
Regarding being "off the gold standard," I am sorry
to inform you that the European Central Bank changed
the classification of gold from an asset "backing"
to the same category as a currency. That is the
"official" demonetization of gold on the part of
central banks.
If there is a conspiracy involved, it is indeed to
demonetize gold, perhaps without making a public
statement. But that is a change in monetary policy
objectives and it is simply due to the fact that
most governments are facing monumental debt problems
just past the year 2010. Their way of meeting that
problem is as always the silent debasement or
devaluation of the currency while increasing their
ability to collect revenue.
The sales of gold by the central banks of Europe
began in late 1996 and continued into 1997. Most
sales were done on a forward basis and then the gold
was delivered. The purpose behind the liquidation
was to "cook the books," if you will, to reduce
their debt-to-gross domestic product ratios in order
to meet the criteria to join the European Monetary
Union. The German government actually sold its
entire gold reserves on a journal transaction to the
Bundesbank. The price of this transaction was never
disclosed. The paper profit was used by Germany to
meet the criteria for the EMU.
This is the primary reason why the Bundesbank
opposed IMF sales, because the Bundesbank also has
the highest cost of gold on its books.
It does not make sense that the central banks,
including Germany, would try to drive down the price
of gold. What purpose does this serve? Surely, if
the goal is to fight inflation, governments have
already manipulated the consumer price index
statistics to achieve that goal.
Targeting gold is no longer a critical issue for
governments. We have been off the gold standard now
for nearly as long as we were on it in the postwar
era. Governments won. They have been able to create
money at will and are free at last of any restraint.
Gold is by far not worthless. Gold has simply fallen
out of favor, as have most other commodity
investments. When people can earn 15 percent on
equities and perhaps double their money on
individual stocks in a matter of weeks, it is hard
to get them to buy anything else.
The decline in gold is directly linked to the
decline in demand by investors. Such demand is never
constant and it swings back and forth between
sectors. Our models are based upon global
correlations. Based upon such analysis, it does NOT
appear that gold is doing anything abnormal that
would constitute a "manipulation."
That word is used freely as an excuse for having
been wrong on expectations for gold. To argue that
gold is being manipulated is in reality a statement
that gold would not have declined against
expectations has there not been some giant
conspiracy.
A bear market in gold is NORMAL at this time, given
the strength of the dollar, the fall of the euro,
and the rise in equities. When gold reached $875 in
1980, the dollar was declining and making its
historic low. It is impossible to expect a raging
bull market for gold when investment money has more
attractive alternatives.
The central bank sales from Australia were in fact
front running what the bank already knew was coming.
The purpose of the International Monetary Fund's
holding gold was to lend it to nations in trouble to
meet gold payments. Now that the gold standard is no
more, the IMF lends dollars. The IMF goes hat in
hand begging for more funds and refuses to offer any
tranparency to its contributors. The IMF gold sales
are the result of governments getting tired of
handing over cash and getting nothing in return. The
IMF has simply been told to start using some of its
own capital. The only problem is that 90 percent of
its liquid assets are tied up in gold reserves.
I do not see how telling the truth is trying to
scare anyone out of gold. It was Princeton Economics
International that blew the lid off the manipulation
of the CPI.It was PEI that uncovered the
manipulation of the GDP statistics. We hold no love
for governments and regard them as self-interests
that are most often opposite of the interests of a
free society. If we saw any sign of a coordinated
effort on the part of the CBs to manipulate gold for
some sinister purpose, we would be the first to
point it out.
There is no denying that any shortfall between
supply and demand in gold is being made up by CB
selling. Unlike England, most central banks sell
gold first and announce later. We do see a policy
shift to where the central banks do not see gold as
a reserve asset. This is their view. We have also
been on record that floating exchange rate systems
throughout history have ALWAYS been followed by high
volatility and a return to a fixed exchange rate
system. This is a fact and it will be inevitable
after 2003.
As for NORMAL technical trading patterns, it is NOT
uncommon for any bull market to make a correction
that retests its high of the previous cycle. In the
case of gold, that stands at $192 in 1974. This BY
NO MEANS is bearish for gold long-term, nor does it
imply that gold is worthless. It also does NOT
suggest that gold will never rally again. We believe
firmly that a major sector shift back to
commodities, including gold, should materialize
either next year or by 2003. Our models strongly
suggest that the next peak for the commodity markets
will arrive around 2007.
But none of this has any impact on the short-term.
If you would like to see a true free market, then
you should welcome the liquidation of gold by
central banks and get it over with once and for all.
At least at that point they will be unable to lend,
lease, or sell gold.
The key will be a shift in investment demand back to
commodities. We saw a brief hint of that following
the 30 percent decline in Internet stocks after
April 8. That trend did not prove sustainable.
Nonetheless, that trend will re-emerge in the near
future -- just not in 1999.
There have been many monetary standards through
history. Western culture began with cattle, moved to
grain, and then to silver. Gold did not emerge as a
circulating medium of exchange until 600 BC in
Turkey.
The Greeks issued no gold coinage until the age of
Alexander the Great. The Romans used bronze as money
for the first several hundred years and did not
issue silver or gold until after the First Punic
War. When Rome fell in 476 AD gold disappeared and
the silver penny formed the monetary system. Gold
did not resurface as money until the reign of Henry
III in England during the 12th century. That is why
the British pound is still called "sterling" today,
a referance to silver as the monetary system.
China used bronze as money along with paper money,
which shocked Marco Polo. China never issued silver
or gold coins until the 19th century.
The United States abandoned the gold standard during
the Civil War, and gold also traded on the New York
Stock Exchange until the return of the gold
standard.
Monetary systems come and go. What we are seeing is
not the only lapse in a gold standard, and we may
see a return to the gold standard beyond 2010,
despite the objections of government.
Nevertheless, all this changes nothing and it means
nothing to gold now. Those who want to see a return
to a gold standard should be very careful for what
they wish. The dream may come true at the cost of
another confiscation.
Gold is still a viable hedge against government. Its
role is fulfilled because it is the only commodity
that is easily transported and internationally
recognized by the same grade and standard. That
cannot be said even of oil. Silver is just too bulky
and its storage is costly.
In conclusion, we see no manipulation and no goal
for manipulation. We do see liquidation and the
disinvestment on the part of the central banks. We
see this as a normal process of the business cycle
and nothing more.
Coincidences are merely that and too many people are
just looking for a reason why the price of gold is
declining. We should not forget that the United
States and International Monetary Fund held regular
gold auctions between 1976 and 1979. Those sales did
nothing to depress the price because demand was
strong. When Russia was a big seller after 1980, the
rumor was that the Swiss would NEVER allow gold to
decline below $400. Now there are too many people
trying to blame too many other people, and meanwhile
there are too many theories that are clouding an
issue that may be rather simple after all.
MARTIN ARMSTRONG
Princeton Economics International
-END-
koan
(7/1/99; 20:20:40MDT - Msg ID:8327)
AEL - leverage
I try to keep specifics at a minimum as I try to conform with the USA forum protocal. I can say this much regarding leverage, first: it depends on what you think is going to happen. If you believe as I do that gold will be lucky to reach the low $300's in the next twelve months - leverage is sort of out of the question for that metal. but if you think gold is going to $10,000 like some on this forum, just look at the stock options on the Toronto exchange. There are stock options on that exchange that would make the buyer a million dollars with a purchase of a thousand dollars if gold just went to a $1,000 an oz in the next twelve months. I actually own some, but they were a mistake. As I have posted many times I am hooking my star on silver and am purchasing both long and short term options close to the money, and a few way out of the money. I have a larger position in the junior silver's and an assortment of other companies, many of which have all sorts of goat pasture (which does fine in a bull mkt).
The Stranger
(7/1/99; 19:55:14MDT - Msg ID:8326)
Dow Jones Article on Today's NAPM Report
http://dowjones.wsj.com/n/SB930869846264290350-d-main-c1.html
"In an alarming note, NAPM's prices paid index moved to its highest level
since October 1997. The index came in at 53.5 in June, up from 52.2 in
May. As recently as December 1998, the index was at 31.1, indicating a
strong acceleration in prices over the past six months."
Technician
(7/1/99; 18:24:11MDT - Msg ID:8325)
Short interest?
I am sorry, but the premise of technical analysis is the increase of open interest with higher prices in a commodity. Short covering is weak, but that is what so many have been counting on. For each long there is a short. I must be missing a point on this conspiracy thing but gold is going up simply because it is it's time. Not because of God or whatever. BOE, etc. aside I have waited almost 30 years for this market. Best not to not muddle it with conspiracy theories. Having said that, there has been a lot to learn from this forum. Thanks to all for my continuing education.
Al Fulchino
(7/1/99; 17:33:13MDT - Msg ID:8324)
AEL
Thanks for the comment. I was in fact referring to gasoline. I may not have been clear in my post. AS far as water goes. Have a great well. A 20x40 inground and about 42 inches of rain
Thanks again.
Al
Aristotle
(7/1/99; 17:21:59MDT - Msg ID:8323)
Thanks for the responses everyone!
I had to take a much needed break from typing. Jason Hommel, thanks for the effort to assemble the miniseries into one ordered piece of text. 58k...Whew! Had I known what I was in for when I embarked on that mission, I surely would have quailed at the task, and picked another pursuit.
MK, thanks for the recognition. I am humbled by your honor, yet glad to see the efforts of fact-checking and research were deemed so worthy by others. I guess you never know until after the fact, though I had a hunch it would be as helpful to others as it was for me. All I did was to lay out Aragorn's framework with my own research of the various historical quotes and numbers as needed to provide an accurate, stand-alone essay. It would appear from the relatively few questions that I have succeeded in my charge. MK, with your coordination I would be happy to work with TownCrier to edit out the various typos and small blunders.
Give me a chance to take a better look at some of the specific comments, and offer what replies I can.
Gold. Get you some while the world is still in denial... ---Aristotle
TownCrier
(7/1/99; 16:36:33MDT - Msg ID:8322)
"OOPS!"--Kosovo numbers were best available, officials say
http://www.usatoday.com/news/index/kosovo/koso1006.htm
Many of the figures used by the Clinton administration and NATO to describe the wartime plight of Albanians in Kosovo now appear greatly exaggerated as allied forces take control of the province.
That is good news for humanity, bad news for U.S. politics.
TownCrier
(7/1/99; 16:25:19MDT - Msg ID:8321)
The tea leaves...
http://biz.yahoo.com/rf/990701/zb.html
Most IMM currency futures end lower, euro erodes
TownCrier
(7/1/99; 16:24:07MDT - Msg ID:8320)
U.S. Treasuries jolted, drop as Fed view changes
http://biz.yahoo.com/rf/990701/4p.html
"If Wednesday was a dream, then Thursday was a nightmare for the U.S. Treasuries market."
Another really good one that you should read.
ET
(7/1/99; 16:17:01MDT - Msg ID:8319)
BIS
http://biz.yahoo.com/rf/990701/rw.html
BIS says financial markets not ready for yearend rollover.
Article follows;
BASLE, Switzerland (Reuters) - The world's financial markets are still not ready for
the Year 2000 change and much work still needs to be accomplished, the Joint Year
2000 Council at the Bank for International Settlements said Thursday.
"The productive exchanges today between senior representatives of major public and
private financial sector organizations made clear the significant progress on readiness
being made in financial markets," Council Chairman Roger Ferguson was quoted as
saying in a statement.
"However, the meeting also indicated that much work is still to be accomplished;
therefore we will need to remain focused in our efforts and avoid complacency," he
said.
The Joint Year 2000 Council Thursday held a meeting of public and private sector
representatives of the world's banking, securities and insurance industries.
It noted participation in mandatory tests for the SWIFT (Society for Worldwide
Interbank Financial Telecommunications) interbanking payment system
remained low and urged supervisors to check whether participants had
successfully tested with the system.
The Joint Year 2000 Council was established in April 1998. It is jointly sponsored by
the Basel Committee on Banking Supervision, the Committee on Payment and
Settlement Systems, the International Association of Insurance Supervisors and the
International Organization of Securities Commissions.
AEL
(7/1/99; 15:41:36MDT - Msg ID:8318)
Al Fulchino: water/Y2K
"I will need 15-30 gallons per day IF Y2K really is anything."
... no, you won't. 1 gallon per day for drinking and minimal hygeine will do it. One thing you do need: a CASE of those pre-moistened baby doo-doo cleaner-uppers -- great for no-water cleanup, personal bathing, etc. These things will be worth MORE than gold if the water pressure goes down.
AEL
(7/1/99; 15:41:07MDT - Msg ID:8317)
Al Fulchino: water/Y2K
"I will need 15-30 gallons per day IF Y2K really is anything."
... no, you won't. 1 gallon per day for drinking and minimal hygeine will do it. One thing you do need: a CASE of those pre-moistened baby doo-doo cleaner-uppers -- great for no-water cleanup, personal bathing, etc. These things will be worth MORE than gold if the water pressure goes down.
AEL
(7/1/99; 15:29:17MDT - Msg ID:8316)
koan
koan: ". I have been cruising around looking for the best value in leveraged positions with the idea that there may be a good run here and looking to increase my positions. The values I have found are really beyond belief."
......... care to share a few with us, friend?
TownCrier
(7/1/99; 15:28:35MDT - Msg ID:8315)
Cautious U.S. Fed may fall behind curve
http://biz.yahoo.com/rf/990701/wr.html
An excellent piece of work. Check it out.
AEL
(7/1/99; 15:19:06MDT - Msg ID:8314)
bullets?
http://www.kurtsaxon.com/select10.html
Kurt Saxon: "I believe bullets will be the
main currency after the crash...."
(http://www.kurtsaxon.com/select10.html)
TownCrier
(7/1/99; 14:53:37MDT - Msg ID:8313)
Does anyone know if the USAGOLD shop (CPM) will be open for orders tomorrow?
MK? Anybody else around know the last US business day available for gold/currency exchange prior to next Monday's overnight auction in the UK? Is today it?
Anybody?
TownCrier
(7/1/99; 14:44:12MDT - Msg ID:8312)
TreasSec Rubin slaps his knee as he bounds from his chair saying, "I'm OUTTA here!"
http://biz.yahoo.com/rf/990701/z0.html
U.S. Senate approves Summers for Treasury chief
TownCrier
(7/1/99; 14:10:09MDT - Msg ID:8311)
NY Precious Metals Review: Gold Up
By Melanie Lovatt, Bridge News
New York--Jul 1--Aug gold climbed, settling up 80c at
$264.40 per ounce after making a 12-day high of $264.70.
Gold climbed on growing fears that the market will see a short-covering
rally after the UK Treasury's gold auction set to take place early
Tuesday.
Gold edged higher on continued talk that the market will see a short
covering rally after the UK Treasury's auction Jul 6. There is market
speculation that the auction will be over-subscribed. A UK Treasury
official told Bridge that a lot of potential buyers have said that they
intend to bid at the auction. A Bank of England spokesman
also confirmed that the UK Treasury is not recalling any of the gold it
had leased to market participants in the runup to the Tuesday auction.
"The dealers want this to be good auction," said Bill O'Neill analyst
at Merrill Lynch. He noted it is likely to be well bid and said that gold
would probably see "a good bounce back" afterwards. While today's climb in
the dollar today against the euro did not help gold, gold is tending to
react more to official sector news than financial news, he noted.
Gold lease rates continue to move higher with 1-month at 1.70%,
2-month at 1.60% and 3-month at 1.59% and 1-year at 1.90%. "They are
double to triple what they were a month ago," said Kaplan, noting that
this is not typical for "this time of year."
He said that high lease rates at the bottom of a market (gold hit a
fresh 20-year low in June) typically signal that the market has bottomed
out.
"I see a change in gold's long term perspective if gold doesn't make a
new low within a couple of weeks of the UK auction," said Kaplan.
He said that if the auction price is higher than the market price and
cash jumps over $265, a short-covering rally could be "explosive."
Some players are predicting that prices could reach $280, although that's a
long shot, Kaplan said. David Meger, senior metals analyst at Alaron
Trading, said that gold also got a boost from the US Federal Reserve's
shift Wednesday to neutral from its previous tightening stance. The Fed's
25 basis point hike Wednesday was widely expected.
Gold is also seeing some support from growing opposition to the
proposed IMF gold sales and US legislators today introduced a bill which
would force the US to veto IMF gold sales unless they are in the form of
restitution to member countries.
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN
Peter Asher
(7/1/99; 13:10:58MDT - Msg ID:8310)
I must admit it's looking better,
Looking better all the ti-i-i-ime.
Hopefully, this week's action in gold is NOT analogous to this philosophical joke. ---A fellow fell out of a tenth floor window and as he was passing an open window on the fifth floor, was heard saying to himself; "So far, so good."
Pete
(7/1/99; 12:43:26MDT - Msg ID:8309)
All
Sorry, I meant to include all in my post Pete (7/1/99; 7:36:25MDT - Msg ID:8291).
I also meant to elaborate on allowing price to go no higher than cost of production. The gold cartel(oil), in order to continue producing and supplying a vibrant market would then have the power to say to the USA, or whomsoever they desire, "This is it! We will continue to supply our asset(oil)
as long as you maintain the value of your currency at this level. We can and will adjust the POG & or POO if you do not get your houses in order." They now have what they desire, most if not all present and future gold production(real money) for their their prime asset. Their next problem is how can they collect on their gold contracts that they deem in default or undeliverable? Evidenced by the recent announcements by the BOE, IMF, and Swiss gold sales. Pressure is probably being exerted by cartel for a portion of reserves held by the major powers to release some of their physical gold to cartel, ere the cartel take all by default. If they do not cough up a portion of their reserves, I believe cartel has informed them the ball game is over. Why else would they sell a strategic reserve that
defies all logic and is very unpopular to their citizens. A plausible explanation for announced sales??????
For this cartel to cause upheavals in the markets would be akin to shooting themselves in the foot, so a compromise with CBs is in their best interest. IMHO.
This small mind needs help from those more astute and
knowledgeable, please tell me one way or tother that I'm in left field and get lost, or there is some merit to my simplistic thinking.
Thank you,
Pete
PS: Who do you believe will acquire the gold from announced sales???
TownCrier
(7/1/99; 11:34:53MDT - Msg ID:8308)
Audit: Russia Misreported Reserves
http://biz.yahoo.com/apf/990701/imf_russia_2.html
A promissory note in exchange for a loan was sent to an offshore firm which skewed the Russia reports to the IMF to the tune of $1 billion.
Gee, a billion here, a billion there...pretty soon you're talkin' some real money!
koan
(7/1/99; 11:29:52MDT - Msg ID:8307)
most interest ing acronym and stock
In the early 80's there was a company in Hemlo called Golden Septre - the acronym was GOD and that stock went from .02 to $20.00, and actually showed the hi and low on the bottom of the screen. We always got a kick out of that one.
TownCrier
(7/1/99; 11:26:57MDT - Msg ID:8306)
IMF says it won't speculate on Russia Central Bank review
http://biz.yahoo.com/rf/990701/qc.html
Russia urgently wants new IMF money so it can repay old loans.
TownCrier
(7/1/99; 11:24:00MDT - Msg ID:8305)
Fed has no comment on forex intervention rumors
http://biz.yahoo.com/rf/990701/js.html
Japanese officials had recently warned that steps would be taken to curb any excessive yen appreciation. Rumors are that the BoJ and the ECB have been buying euros for yen which has helped the euro pare its losses.
Peter Asher
(7/1/99; 11:23:56MDT - Msg ID:8304)
Heads up!
Spot gold just popped through that $263 barrier. The possibility that gold is finally moving from distibution to accumulation is becoming more probable with each dollar of recovery. This appears to be a carefully controlled buying pattern designed to acquire, without setting off a short covering panic.
TownCrier
(7/1/99; 11:19:03MDT - Msg ID:8303)
Robust NAPM growth portends U.S. economic strength
http://biz.yahoo.com/rf/990701/qj.html
Happy Days are here again!
Happy days are here, are here again!
Happy days are here again...
koan
(7/1/99; 11:17:56MDT - Msg ID:8302)
Gandolf The White 104% - good question
No, 104% would be nothing unusual. It was 104 times. Remember those stocks were mostly a few pennies each - so what we are really talking about is a stock going from .02 to $2.00. Coeur was one of those companies - it went from.02 to $20,00 (2.000%). Echo Bay - I think started the same way. They had a small rich silver mine which went to the moon when silver went to $50 and they took the porfits and bought the Lupin gold mine which has been its meat and potato's for many years. If we get a run in silver to say $10,$15 or $20 I know many silver stocks now selling for pennies which will probably go to many dollars. By my calculations silver should be over $30 right now to have an accurate relative strength to gold, whith gold at $260. The reason I have concentrated on these junior stocks is that I have had many stocks run to 20 times the value I paid; and we have been in a bear mkt for almost 20 years, all the time I have been trading. I am patient and can wait for the really big move. Could be soon. PS I do not play the Spokan stocks. I do not know if that exchange still exists. I do my mining stock trading on the Canadian markets.
TownCrier
(7/1/99; 11:15:21MDT - Msg ID:8301)
U.S. stocks up on earnings, rate euphoria
http://biz.yahoo.com/rf/990701/p2.html
Doesn't the use of the word "euphoria" in a headline give you cause for concern?
TownCrier
(7/1/99; 11:12:14MDT - Msg ID:8300)
Euro/dollar pares losses on profit-taking at U.S. noon
http://biz.yahoo.com/rf/990701/qw.html
I'll give you one slip of my paper for one slip of your paper...
canamami
(7/1/99; 11:01:48MDT - Msg ID:8299)
Interesting Piece from the Northern Miner, via a Kitco poster
The Northern Miner Volume 85 Number 19 July 5-11, 1999
EDITORIAL & OPINION -- COMMENTARY -- Who killed the golden
goose?
By Pierre Lassonde
Whenever logic falls short of explaining actions or facts in the popular mind, conspiracy
theories tend to surface. We saw this in the aftermath of president Kennedy's assassination,
and we're seeing it today, with gold at 20-year lows. We think we know who killed Kennedy,
but we'll never know for certain why. As for the Golden Goose, there's even less mystery as
to who, and yet the why is just as enigmatic.
The single greatest damage caused to the gold price has been indiscriminate leasing, by central banks,
of their gold reserves at give-away interest rates. The current one-month lease rate for gold bullion is
less than 1%, while the 12-month rate is around 1.5%. Compare this with U.S. T-Bills for the same
duration going for 4% to 4.8%, and you find a spread of more than 3% in favour of U.S. T-Bills.
U.S government T-Bills are the most risk-free form of dollar-denominated debt. Gold, which is not a
debt of any government, is denominated in U.S. dollars. Does it make sense that it be priced at a 75%
discount to U.S. T-Bills? I think not. Perhaps a 25%, or at most a 50%, discount ( as with the silver
leasing rates ) might be more appropriate. The gold lenders -- that is, the central banks of Switzerland,
Germany, etc. -- are conferring on borrowers billions of dollars of benefits while their gold reserves
have been depreciated by more than $50 billion in the past year alone. These suicidal rates are a gift to
the speculators, hedge fund managers and producers who hedge.
In the meantime, producers who have hedged their short mine lives or high cash costs of production
( such as the Australians ) have enjoyed a huge windfall. Some have made the most of it by hedging up
to 10 years of production or, in some cases, not only their entire reserves but all their resources. For
long-life producers that are heavily hedged, this could prove to be a pyrrhic victory, as they are helping
to reduce the value of their remaining ounces in the ground, which can be four to five times larger than
their hedge books. Clearly, the biggest winners are the speculators, the people least interested in gold.
The sale of gold reserves by central banks is another issue. In the past, it could be done without
affecting the market. Canada, for example, disposed of close to 1,000 tonnes over 10 years without
causing so much as a ripple. Why, then, has the Bank of England's proposed 415-tonne sale, to take
place over several years, been so devastating? Gold has lost 10% of its value in just over a month. The
answer is simple: different times. In a non-inflationary environment, such as we experience today, the
great bulk of gold's demand is in jewelery. Jewelery demand, in turn, is directly a function of world
economic activity. Right up until 1996, the world economy was solidly growing, mostly because of the
tremendous expansion of the Asian tiger countries, which also happened to be large gold buyers. Gold
demand grew accordingly, more than doubling in that timeframe and absorbing large central bank sales
yet keeping prices in the range of US$360 per oz.
Not so today. With the Asian economies in disarray, and Europe barely escaping recession,
incremental gold sales can be absorbed only at lower prices. If the central banks continue to ignore
these market conditions, their sales could overwhelm whatever demand there is and drive gold prices
right down to US$200 per oz., if not lower. The gold market is not as infinite as the central bankers'
incomprehension of its workings! Producers have reacted in typical miner-like fashion by boosting
output to cut cash costs. At a time when gold is hitting 20-year lows, production is setting new records.
Does that make sense? Obviously not. The miners have driven down their cash costs of production to
about US$200 per oz. at the end of 1998 from US$250 in 1995. This didn't do much to help the bottom
line as gold plunged more than US$100 per oz. in the same period. Even worse, a great deal of the cost
gains were achieved by mining at grades well above reserve grades: for example, in the U.S. some
millhead grades are 36% higher than the mine's reserve grade. In plain language, it's called "high
grading," and it can't go on forever, as orebodies are being depleted at a much faster rate than is
prudent.
In the past two years, about US$3 billion in gold mine investments has been written off, and more will
follow. At US$260 an oz., 40% of worldwide gold production is losing money on a total-cost basis. It is
not surprising that, in light of the dismal returns generated by this industry, the equity markets have all
but disappeared for the more junior companies and shrunk considerably for even the seniors.
Unfortunately, the mines and mills that were built with easy money are now hard to shut down and
contribute to the downward spiral in the price.
What can be done? Plenty, as it turns out. First, gold lenders should recognize that gold is denominated
in U.S. dollars and not Japanese yen. Much like the physical market, the gold-lending market is finite.
By charging below market rates ( compared with, say, silver, where the stockpile is already in private
hands ) , central bankers are encouraging massive speculation in one of their reserve assets. If they
were to help develop new financial instruments using gold, they might be able to put more of their
reserves to good use without giving them away. How difficult is it to understand that they have
everything to gain: from higher interest revenue to larger capital gains on their gold reserves to a more
stable financial market.
Second, central banks should co-ordinate and monitor the effect of their sales on the gold price. It
would be entirely to their advantage to refrain from driving down the price by holding back sales in a
weak demand environment or, better still, picking a price of say US$300 per oz. as a floor to any sales.
Whether they like it or not, as long as six central banks own about 30% of all the gold ever mined, their
actions will have a profound influence on the market. As for producers, the longer they wait to take
action -- that is, to cut production -- the worse things will become. Maybe the world economy will
briskly turn around and save the day, and maybe the CIA killed president Kennedy.
-- The author is the president of Franco-Nevada Mining and Euro-Nevada Mining, both of
which are based in Toronto.
USAGOLD
(7/1/99; 10:05:46MDT - Msg ID:8298)
The Permanent Hall of Record......Aristotle's Series the First Entry
I would like to congratulate Aristotle on his extraordinary Five Part series on the relationship between oil and gold, gold and humanity. I am especially thankful, not just for what he did for all of us interested in the subject, but for the young people coming up behind us, who might make their way to gold in future years and need intellectual grounding to make their intuitive understandings stick. They aren't going to get it at most of the universities (unless things change), so they'll have to find it here.
Let us make it the first entry in a new section of USAGOLD called "The Permanent Hall of Record" so that anyone searching for this sort of information can find it. Let us not take lightly that which we place in this Hall. Any knight or lady is free to nominate a post or series of posts for the Hall. It must be seconded intelligently (and or cleverly) by at least three other knights or ladies. The more members who speak in its behalf, the better its chances of entry. A final determination will be made by me under consultation with my advisory council as to whether or not a piece should be entered into the Hall. As Towncrier has already asked to be appointed Keeper of the Records, we will ask him to make Aristotle's Five Part Series the first entry, and trace the flow of nominees and seconds. Aristotle, I must ask that you give this fine work a title. It will take a week or so to get The Permanent Hall of Record up and running.
Fellow knights and ladies.......I want to thank all of you for making this such a fine place to gather. We keep this Table Round as our personal intellectual holding to advance our own knowledge and wisdom as well as the knowledge and wisdom of others. Each a member. Each a contributor. Each an important voice. Let this Permanent Hall of Record be our shrine.
As with all our endeavors, we will start this as an experiment and make sure that it does not present problems or create unnecessary tensions around the Table, before accepting it as a permanent institution. Don't forget that this FORUM started as an experiment -- an experiment that has gone very well.
Let the discussion continue..........
Peter Asher
(7/1/99; 10:05:45MDT - Msg ID:8297)
I like that last paragraph!
http://infoseek.go.com/Content?arn=a1601LBY703reulb-19990701&qt=gold+silver+platinum+palladium+rhodium+-olympic+-olympics+-medal+-medals&sv=IS&lk=&col=NX&kt=A&ak=news1486
From >>((Patrick Chalmers, London Newsroom +44
171 542 8057.
london.commodities.desk+reuters.com))
``There's a suggestion that somebody's trying to squeeze things, trying to build up a long position on the basis that the sale outcome is going to be taken fairly positively and that there's going to be quite a bit of short-covering,'' said one London analyst,
who asked not to be named.
Dealers and analysts have been at a loss to predict exactly what might happen as Britain begins its programme of cutting reserves from 715 tonnes to 300 tonnes in the coming years.
`Taking the day off would be a pretty smart tactic. Almost anything you do is going to lose money,'' said Andy Smith, Mitsui Global Precious Metals commodities analyst.
Gandalf the White
(7/1/99; 10:01:36MDT - Msg ID:8296)
Question for koan
Could it have been that the rise in stock prices on the "Spokane exchange" was 104 PERCENT ?
The Stranger
(7/1/99; 9:32:51MDT - Msg ID:8295)
turbohawg
You didn't offend me at all, turb. The term "biker" conjures up the very same caricature to me that you described. I do have the pot-belly, by the way, but none of the rest applies.
I also believe there is a magic interest rate that will burst the bubble, but it is a magic REAL interest rate. Nominal rates alone won't do it. The bond market is already delivering higher nominal rates, of course, but higher REAL rates will have to await tighter money. As you have rightly pointed out, money growth does appear to be slowing lately. However, I would not bet one dime that this is a change in policy. If one looks at the "M"s over the past two years, the big liquidity injections have happened coincident to crises such as Russian default and Brazilian devaluation. In between, the rate of growth has been allowed to subside somewhat but nowhere near enough to reverse the trend. Just yesterday, A.G. took the opportunity to remind us all that his hands are tied. He cannot, and will not, slow the bubble here because of the risk over there. Unfortunately, or fortunately, if one owns gold, there is still too much fragility in the world economy for the Fed to tighten now. Do you think this will change with commodity prices so close to twenty-year lows? I don't.
Perhaps the most delicious aspect to all of this was watching the mindless surge in bonds yesterday. Somebody obviously took the Fed's message to be, "we don't see any threat from inflation." With that, they couldn't buy 'em fast enough. What a shock they are getting this morning.
As to the origins of "The Stranger"... like you, turbohawg, he had to come up with something, and that was the best he could do. Who knows, perhaps he chose the name because circumstances prohibit divulging his identity.
So what is the bond market telli
USAGOLD
(7/1/99; 9:14:11MDT - Msg ID:8294)
Today's Gold Market Report: Active Day in All Markets
MARKET REPORT(7/1/99): Gold leveled a bit after trading almost a dollar higher near
this morning's open with rumors floating the market that the Bank of England is calling in
its gold leases to shore up reserves for the upcoming auctions. Gold closed up sharply
yesterday on a late surge of buying power that drove the yellow higher. Lease rates on gold
bolted higher yesterday as well and some analysts believe that higher lease rates are a
prelude to higher gold prices. Also pushing gold is the decidedly inflationary position on
interest rates revealed yesterday by the Fed's quarter point increase in interest rates and its
switch to a neutral -- from hawkish -- stance on monetary policy. The Treasuries market is
getting hammered this morning despite the dollar's rise against most major currencies. The
euro got clobbered this morning -- down over a full cent and moving quickly toward parity
with the dollar. Currency analysts were at a loss to explain the euro's strange behavior
which doesn't seem to square with the rest of the markets response to yesterday's Fed
actions. One analyst was quoted by Reuters as saying: "Unfortunately, if you are looking
for news (on the euro), we don't have any actually." So, all in all, it's been a fairly active
morning for a transition day going into a long weekend.
In gold news this morning, UK government phone lines were jammed yesterday and today
with irate citizens calling on a special hot line to complain about the Bank of England gold
sales after the World Gold Council placed full page ads in the nation's largest newspapers
explaining to the people what the government intended to do with their gold. ``In 10 years
of operation we have never had such a response,'' said a (concerned) spokesman for the
call centre. At one stage the call centre's switchboard was so heavily log-jammed that its
system crashed. Forty operators have been hired to field the calls.
More proof of the dichotomy between Wall Street and Main Street on the gold question
surfaced yesterday in poll results released by the World Gold Council. The poll reveals that
"76% of the US public see gold as important to strength of both the US dollar and the
economy. 'It shows that most are opposed to a sale of gold assets', said the WGC, which
represents gold producers. 'My supposition is that the policy makers are detached from
public attitudes on gold reserves,' said Ethan Wagner, of public affairs consulting firm
Wagner Associates, who commissioned the survey on the WGC's behalf."
Wall Street and the government bureaucrats hate gold. Main Street world-wide loves gold.
Wall Street does everything it can to keep a lid on the price and interest in the yellow at a
minimum. Main Street continues to accumulate the metal at bargain basement prices. Wall
Street believes that keeping the price down is a deterrent to purchases. Main Street sees
these artificially low prices as an incentive to purchase. Standard Charter Bank of London
recently reported that the world's gold refineries cannot keep up with demand and that a
bullion shortage had developed. Wall Street, I am sure, is beginning to wonder which big
trading firm is going to run for the door first when the short covering begins. The rumor is
that some already have. Main Street is content in the understanding that it has safely tucked
away the one asset that can unquestionably weather any storm created by Wall Street's
excesses.
The gold rally which began in New York yesterday extended into Asia and Europe
overnight. I will leave the last few days reports up over the weekend. I will be out of town.
If I have access to the internet I will post a report tomorrow and possibly Monday. If not,
this will be it until Tuesday. Have a Happy Fourth. God Bless America and all the good
people who live here!
turbohawg
(7/1/99; 8:52:27MDT - Msg ID:8293)
InvesTech
http://www.investech.com/
Jim Stack is now posting weekly on his webpage charts that were available only to subscribers. One of the two charts this week is on gold stock capitalization.
If you scroll on down to 'Previous Charts of the Week' and click on the 6-14-99 chart there is another related to gold, this one regarding gold in euro terms since the first of this year.
Clint H
(7/1/99; 8:51:14MDT - Msg ID:8292)
Islamic Dinar & Dirham
http://www.murabitun.org/WITO/intro.html
Thank you Aristotle for your "Life on earth: Gold and the free market."
If so much gold has transferred and is being transferred to the OPEC nations could we be looking at a new world trade medium that does not include the US$ or the Euro?
Could the Euro be a first step in a long term plan to establish the Islamic Dinar and Dirham as the new "currency?" The following is from the web sit "The History of the Islamic Dinar and Dirham.
THE RING - The trap and decay of the Khalifate
Up until the XV century the Muslims were in total charge of world trading. From then on the Europeans started to take over by the power of the ring.
The ring is a simple mathematical equation, which, as mentioned by Richard Wagner in his famous opera, gives total power to the person who uses it, although it contains a curse: "Whoever uses it, will never be loved". Power was not wielded by gold, but by storing it in a guarded cave. People slaved to mine it, but were ruled by whoever possessed the
ring.
This mathematical formula attached to debt and symbolic money destroyed the Muslim Khalifate. This mathematical formula is what banking is all about.
Think 30 years ahead, buy gold NOW.CH
Pete
(7/1/99; 7:36:25MDT - Msg ID:8291)
Aristotle
Thank you for your insightful thesis. I have a question that has been bothering me. In essence the gold market has been cornered by oil producers. They have been paying above spot to begin with. Why not take over unprofitable mines that are unhedged and pay themselves above spot to keep the supply of gold to themselves continue as before in lieu of allowing a shortfall in supply to occur? This would accomplish two things:
1) Oil producers will continue to accumulate gold, and in effect, a "TOTAL" control of gold market.
2) Demand of their asset, oil, would continue as before. If this demand dried up because of international turmoil in financial markets and subsequent collapse of economies, they will have harmed everyone, including themselves.
They could establish a floor on the POG by negating the effects of hedge fund shorting. Say the cost of production is $360/oz. Allow the price to rise to this level and no more. They can then accumulate "ALL NEWLY MINED" gold(real money) and still satisfy shortfall for demand by public and fabricators and at the same time maintain price stability. In effect they will be paid for their asset(oil) by accumulating all excess gold produced now and in the future, outside of normal demand.
For them to destroy their customers is counterproductive. IMHO. Does this make any sense to you or others?
PS: Would the powers that be nationalize their mines to stop this gold cartel? I think not! They will want to continue as before and this act of nationalization would be to their detriment.
PPS: A gold standard would be forced upon the worlds currencies by proxy.
Jason Hommel
(7/1/99; 1:32:41MDT - Msg ID:8290)
I figured it out.
http://www.jasonhommel.com/aristotle.htm
I opened up the .htm file in wordpad, and did a search and replace and thus, deleted all the break returns. So, it's all fixed. Also, it's 58k now... Alright, so I'm off to read it one more time! 8-)
Peter Asher
(7/1/99; 1:29:49MDT - Msg ID:8289)
Hey night-owls!
Check the POG, 264.3 & spot at 262.75
Jason Hommel
(7/1/99; 1:16:35MDT - Msg ID:8288)
Aristotle's 5 posts; Archived.
http://www.jasonhommel.com/aristotle.htm
It's 59k in size. Large. I couldn't figure out how to eliminate the page breaks when copying it over. Sorry. It looks ok on a full screen at 600 x 800, but it might print out funny.
http://www.jasonhommel.com/aristotle.htm
turbohawg
(7/1/99; 0:29:07MDT - Msg ID:8287)
Stranger
It should've occurred to me that there might be more behind your question the other day. I sincerely hope it was obvious that my reply post was painting a caricature of my handle and not of "biker dudes". (<--- turbohawg attempting to nimbly extract foot from mouth). It's quite possible that I'll turn up with one some day myself ... right now, tooling around in my little sports car gives me plenty of thrills.
My intention was to comment on your Fed comments, but Enjoys Tulsa said just what I was thinking. That probably comes as no shock to you. It's my belief there is a magic level at which higher rates will pop the credit bubble (if something else doesn't first), leading, as you're well aware, to spiralling deflation of the money supply, but I don't have a good feel for what that magic level is. When that deflation sets in, rates may still skyrocket due to a collapsing dollar, a scenario the 'experts' don't seem to be considering.
Ok, given your demonstrated interest in probing the psyches of various posters, how 'bout spilling a little on the genesis of the Stranger ... this I've gotta hear.
koan
(7/1/99; 0:26:07MDT - Msg ID:8286)
thoughts
On oil: As strong as it is, oil should not go much, if any beyond $20 a B. Saudi's and others know that above that price natural gas can be turned into oil (lots of gas), also a zillion barrels of tar sands and very heavy oil becomes economic. On silver: the only reason I prefer silver to gold is that I do not think there is very much silver left except at much higher prices. Also, remember we have low stocks and almost no speculation or hoarding. My experience in the past is that if prices start to really rise people will increase the offtake even more. The big $50 an oz run up in 1980 took out a lot of the silverware and junk silver. Last, almost 80% of silver is a by product of copper, zinc and gold. But I would be happy to see gold run alongside of it, or ahead of it, whatever. After watching the frontline special last night (the crash)I have a new born respect for those who believe there is grand manipulation of gold. I just cannot see the real outline of its true form. The next few months should be interesting. I have been cruising around looking for the best value in leveraged positions with the idea that there may be a good run here and looking to increase my positions. The values I have found are really beyond belief. Last an amazing statistic: In the 1974 or 64 silver run up, the average of the first 20 silver stocks ( in alphabetical order)on the spokan exchange were up 104 times in value (I read that stat almost 20 years ago, so take it with a grain of salt.
TownCrier
(7/1/99; 0:16:46MDT - Msg ID:8285)
Top US House Republicans Oppose Imf Gold Sale for Debt Relief
By Steve Marcy, Bridge News
Washington--Jun 30--US House Republican leaders today
told Bridge News they are opposed to a Group of 7 plan for
the IMF to sell a small part of its gold reserves to finance
an expansion of an existing debt-relief program for the
world's poorest, most heavily indebted countries.
However, the second and third top House Republicans said
they don't know how or when the House will act on the issue.
For the sales to go forward, Congress must approve them.
House Majority Leader Dick Armey of Texas, the second in
command, said the proposed sale is akin to "selling the
family jewels so that you can engage in a destructive
policy."
House Majority Whip Tom DeLay, the House's third-ranking
Republican, said the sales would "set a bad precedent"
because "anytime the IMF got in trouble, anytime they want
to do something they shouldn't be doing, they'll sell
gold."
DeLay said he wasn't heavily versed in the issue and
there hasn't been much discussion of it so far. "I'm not a
financial wizard, but it's starting to get on the radar
screen, and it concerns me greatly," he said.
"They're buying themselves liquidity without
accountability," Armey said in explaining his opposition.
"I've not been happy with the IMF. I don't think it's been
an agent of stability for world markets. I think it's been
very destructive all over the world."
"We've tried to hold them accountable," said Armey, who
was chairman of the Economics Department at North Texas
State University before his election to Congress in 1984.
"To me, selling gold is just a way to put themselves right
back where they have been."
Sales advocates have said the amount IMF would sell is
too small to have any impact on world gold markets. Armey
said he also wasn't worried about the sales' impact.
"I'm not worried about what they're doing in world gold
markets," Armey said. "That's just money. I'm worried about
what they do by way of buying themselves the ability to
leverage bad economic policy without being accountable."
The G7 at its summit meeting in Cologne last week
approved IMF selling between 5 million and 10 million troy
ounces of gold, about 5% to 10% of its reserves. Timing of
the sales wasn't specified, but Treasury Secretary Robert
Rubin has said the sales would be designed so they would
have no market impact.
Rep. Jim Saxton, R-N.J., plans to introduce legislation
that would prevent the IMF from selling its gold reserves
unless it sells them back to the countries that contributed
the metal originally to the IMF's reserves.
Armey said he didn't know enough about Saxton's
legislation to say whether he could support it. However, he
did send House members a letter Tuesday saying, "if the IMF
does not need the current gold reserve, the profits from the
IMF gold sales should be returned to the contributing nations."
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
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