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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

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ARCHIVED DISCUSSION FROM 3/1/2002
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Waverider (03/01/02; 23:54:11MT - usagold.com msg#: 70986)
Black Blade
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3X1U619YC&live=true&tagid=ZZZ60A9VA0C&subheading=americas
Snippit:
"Ecuador's President Gustavo Noboa says he will use his remaining months in office to push through reforms deemed essential if the Andean nation's dollarised economy is to prosper. Mr Noboa denied that Ecuador's economy risked going the way of Argentina. "We've been getting back on our feet for the last two years and I'm optimistic about the future," said the president."

Waverider: Esto es verdad? Planeo para ir a Ecuador este invierno para que el art'culo agarr-- mi atenci--n. Los pensamientos? BTW para preparar, estudio el espa--ol y busco a gente para conversar. Si usted apreciar'a conversar acerca de oro, la econom'a, la pesca, el precio de arroz, mi direcci--n es mi nombre en shaw.ca Yo pienso divertido pero mi espa--ol es muy malo! Si no, entonces usted me ha salvado el trabajo de traducir! Gracias y las vivas!

Rx Gold (03/01/02; 23:40:34MT - usagold.com msg#: 70985)
@ Black Blade
Fidelity and Redstone are the producers that are at this time dumping in the river. They do have some containment ponds for their discharge. These ponds are unlined and sit in the drainages. Water infiltrates to the ground from these ponds, which later ends up in the river. Some of the discharges are piped directly into the river.

The happy ranches you refer to are the ones that are lucky enough to own the mineral rights under their land. The ranchers that aren't so happy are the ones that have BLM administered lands and state lands on their ranch. On these ranches the gas boys just roll in and tear up the range putting in roads, waste water ponds, pipe lines, well sites, electric lines and noisy compressor stations ALL over their ranch. The Government leased these lands out from under the ranchers for around $3 acre without giving them even notice that they were going to do it. When they pump these large quantities of water it depletes the aquifer and the neighboring ranches suffer from lack of water for their stock. The neighbor might not want to ruin his ranch, but if he doesn't, the neighbor just sucks the gas out from under him.

There are two different aspects to this operation: ranch destruction in the area of production and farm destruction down stream. Both of these problems can be remedied by responsible production. If they want to produce the gas they should be make to either re-inject the water or treat it with RO (reverse osmosis). The gas boys don't want to do this, as it will cost them $$$. Much cheaper to dump it in the river. Some of these wells produce over $8000 of gas per day. If they weren't so greedy they could spend a few bucks and we could all live happily ever after with the lights on and food on the table.

I am not talking ‘alkali soil leaching’ when I talk of salt water. I'm talking about high SAR (sodium absorption Ratio) and EC (electro conductivity) and TDS (total dissolved solids). These are the measure of salts in the water. Over 60% of the soils in the Tongue River Valley are very susceptible to even low levels of salt. The salt combines with the clay particles and makes the ground impervious to water. There can be no leaching, as the soils can't move water through them any more. They become ‘Dead’.

Rx Gold

Rx Gold (03/01/02; 23:01:04MT - usagold.com msg#: 70984)
@Galearis/ crowding
A very interesting observation from one standing back and viewing the entire scene.

We have a saying in the west "water flows uphill, towards money".

The four Billion $$ expected to be produced from the gas wells is no match for over 100 years of history or present low farm income. Who cares if the farms will not be able to produce food in the future? We all buy our food from the store anyway. Maybe we can just import it cheaper anyway.

Thanks for the thought provoking post.

Rx Gold



Waverider (03/01/02; 22:48:40MT - usagold.com msg#: 70983)
Worried Japanese go shopping for gold off the shelf
http://www.telegraph.co.uk/news/main.jhtml;$sessionid$KZFRXMIAAAXOTQFIQMGCFFWAVCBQUIV0?xml=/news/2002/03/02/world02.xml&sSheet=/news/2002/03/02/ixworld.html
Snippit:
"AFTER a decade in which stocks have slumped by 70 per cent, with property values halved and interest rates close to zero, the mood in Tokyo's financial district is almost universally gloomy. But in recent months, retailers of gold have been enjoying a boom in sales.

Japanese are turning to the precious metal, typically bought during times of war and crisis, as a safe haven. It is prized because it can be carried and stored easily and because it endures while currencies and economies collapse.

Waverider: There's really nothing new in this article that hasn't already been discussed here - but it's great to see Gold acknowledged as the ultimate safe haven by the mainstream media...word is getting out... Cheers!

Black Blade (03/01/02; 22:36:26MT - usagold.com msg#: 70982)
Rx Gold - CBM Discharge

As far as I know there is one producer - (Northern Energy) that is involved in the Tongue River discharge controversy. For the most part these CBM producers discharge into "holding ponds". I think that your argument has to be with the Californians who demand this "Cheap Energy", much as the Colombia bears the brunt of US action against growers of coca, it is the addict in the US that demands the product. The question is who is more culpable?

Aside from that I am not aware of the farmers and rancher involved. Those that I know are very happy with CBM as they have profited handsomely and it has saved their land from bank confiscation. Many a rancher that I have talked to is quite happy with CBM exploration and production. Many were worried that they would have to sell the family farm to take care of their families. Not every area is subject to alkali soil leaching (as you refer to salt).

As I have said, if you steal lands from the native Indian peoples (in this case the Shoshone, Blackfoot, and Cheyenne), then the minimum you could do is to steal the mineral rights as well. Cheers!

- Black Blade


Goldfly (03/01/02; 22:22:24MT - usagold.com msg#: 70981)
Canuck - from the Larry King transcript.......
http://www.cnn.com/TRANSCRIPTS/0203/01/lkl.00.html
KING: Was this, then, preventable?

SKILLING: I think Enron, when it all -- when it all is said and done, might turn out to be a little bit of the canary in the coal mine. That I think there are some structural things in the economy right now that -- unfortunately, a lot things happened altogether. The old, sort of, what they call the storm -- the perfect storm kind of analogy that a lot of things happened suddenly and once that -- once that domino starts falling, it's pretty darn hard to stop it.



Galearis (03/01/02; 22:10:07MT - usagold.com msg#: 70980)
@Rx Gold re salt poison
A thought occurred to me as I read your post.

John Kenneth Galbraithe I thought developed a pretty good argument relating growth in population densities as having a detrimental impact on democratic freedoms. To paraphrase it went something like this: the closer people get to one another and have to respect each others rights the more these rights have to be legislated for by government action to quell friction- which in turn tends to limit the freedoms of those it ostensibly is supposed to serve. As a structural political paradox it is hard to beat.

From these tensions come the "property rights" argument. So the miners have more or less the right to polute a farmer's land - until the farmers lobby hard enough to present their rights to farm to the governing body to mitigate the negative influence from the mining rights. Until this happens both have equal rights to do exactly as well as they can under the then existing rights of law. Exactly the same situation would surface under firmer "property rights" laws whereby the landowner, if he chose, could cause untold damage to his neighbours until the injured parties got enough support from state or federal government to force respect. Again a problem of crowding when to solve one problem the solution is damaging to the other. And one wonders why there is corruption? Crowding of many economic activities inevitably results in winners and losers and "I was here first!" is seldom a sufficient argument.

For every gain there is a loss, for every loss there is a gain.

Regards,

G

Rx Gold (03/01/02; 21:39:30MT - usagold.com msg#: 70979)
@ RobotGuy // Dream
snip <My dream? To save enough money to buy the piece of land that will allow me to be 100% self supporting.>

You might want to take a good look upstream or all your hard work and saving may be for naught.



Canuck (03/01/02; 21:20:48MT - usagold.com msg#: 70978)
Can anyone confirm this?
From another forum:

"Jeffrey Skilling just warned of an upcoming deriviatives implosion for the USA economy.

He is on Larry King Live right now."

Hope this is true!!

Canuck.


Rx Gold (03/01/02; 20:45:07MT - usagold.com msg#: 70977)
@ Black Blade and Mr Gresham //cheap energy at what cost?

Snip<Kind of funny isn't it? The city dwellers flush there sewage into the worlds oceans, they dump their garbage out in the country, then they have the gall to deride those of us who explore for, develop, and provide the resources for them to live the comfortable lives that they now enjoy as earth rapers and defilers of the environment. I find that curious.>

Speaking of flushing Black Blade, I see that you have your hand on the handle. The farmers in Montana are just about to get your ‘flush’ of coal bed methane produced water. This water, that is produced, is very high in salt and is being discharged now into the rivers. It is projected that there will be thousands of these wells soon. The farmers down stream are being forced to use this water to irrigate their crops. Salt water has a limiting action for growing crops as well as a more extreme function of affecting the soil structure so that after a few years nothing will be able to be grown on this land. And I mean FOREVER.

I can certainly see how these gas men have the right to develop their gas wells, but I think that they should be made to do it in a manner that doesn't degrade the high quality of the water in the Tongue River. If the farms are forced to take this salt water they will soon become unable to make a living while the developers are making huge windfall profits on cheap gas production. You may not live the city but you nevertheless are flushing your sewage on the unfortunate folks that live downstream.

I invite you to take a trip down the Tongue River Valley and see the 100-year-old farms and ranches and beautiful treed bottoms with hay meadows. As the Tongue meets the Yellowstone River the farms are enjoying the long growing season, good soils, and high quality water to grow a variety of crops. At one time this area produced all the vegetables for this part of the country. When the full force of the salt water reaches this area it will be quite a different environment. So when you call the city dwellers "defilers of the environment" you might just take a closer look at what you are.


Cavan Man (03/01/02; 20:41:13MT - usagold.com msg#: 70976)
@sector
But what could save the day; surely something or somebody? There must be a better contingency paln than treading water.

After watching this pot boil for three years I am having a hard time being convinced their game is almost played out because I thought so three years ago!

sector (03/01/02; 20:21:15MT - usagold.com msg#: 70975)
The Fed Equity Derivatives...Japanese Gold FOG
http://www.feer.com/articles/2002/0203_07/p037money.html
The opinion from other wise ones is that this Feb 21, 2002 rule making, or interpretation by the Federal Reserve involves the implementation of the early structure of the CFTC Reform Act of 2000.

What the ultimate effect will be remains in the future. To me [Happy not to be a lawyer] it seems like the big banks want to spread around lots of stock derivatives, futures and options to help "stabilize" the markets.

It won't work… in so far as investors know when they are being shafted. They know when things are unstable and when the government is fudging the numbers to cover a mess of their own creation.

Moreover, the current rise to a six-month high in the DOW is a thin facade. It is better to be long gold than short the stock market. This, because the Fed can and will print an infinite number of dollars to perpetuate their reign.

However, the limiting factor in their scheme is they cannot print gold to continue selling against a rising flood of concerned buyers in Japan and elsewhere.

No matter how many bogus articles about gold are floated to steer folks away [like today's above link], they only draw more and more interest.

The above piece from Japan offers bogus savings numbers saying that only 1% of savings are at risk. By direct calculation from the Japanese population and savings data posted at the official government website, there is $600 Billion at risk, mostly in the hands of the group 60s and 70s and up. They each have $150,000 and $158,000 of NET savings and that means they have over half their life savings at risk...exclusive of real estate holdings. This piece is just another attempt to obfuscate the truth about the pending train wreck for the Japanese government...noted for its Olympian skills in denial.

As April 1, 2002 approaches more and more will check and learn the worst…they are vulnerable. Like US tax procrastinators they will move at the very last moment. God forbid there should be articles about Mrs. Watanabe losing half her life savings because "It wasn't insured". Only 1.7% of the funds at risk is equal to 1000 tonnes at $300 per ounce.

They will overwhelm the central banks…it won't even be a contest. Today it's a powder keg. The slightest tilt and Eddie George's "Abyss" happens.

It will do no good for the casual observer to wait until that day to buy gold…for once the tilt goes, there will BE no gold to acquire…anywhere…at any imaginable price. ALL the available exhaustible rersource will be consumed in the speculative attack...in an instant [Currency Crises experts such as Maury Obstfeld, UCLA have modelled this dynamic for decades]. Thereafter, the resource will trade at it equilibrium level. BTW the level reached after the last great gold correction [1971]?

It was ten times. However, there really wasn't a multiple bubble, runaway economy combined with plunging confidence in corporate transparency and a war to boost pog like there is today. Figure ten X is a minimum.

The ominous pattern this week of a rising gold price succeeding against all the concerted efforts of the Fed implies that forces equally as powerful want to buy all the gold the Fed has. After all, it only takes $9.6 Billion to buy 1000 tonnes…not too much for a determined hedge fund manager or three who KNOWS the Fed is up against a wall. There must be fifty ways for voracious Wall Street, financial predators to get in on the fun.

The real question is when will the Fed capitulate and save at least a few thousand tones to fight another day. From an analysis of the Chairman's past behavior, a pattern of denial upon denial evidenced in the latest FOMC minutes from 1996, he may drain the entire Treasury of every last bar and then shrug and try to retire. Picture Greenspan pulling a "Skilling"..."Things were FINE when I left", "The GDP was primo...wasn't it"?

Cooler heads will prevail and remove the good MoTU...but only AFTER he has completely lost control…when gold hits around $350 per ounce.

Then the new MoTU will be brought in to be sacrificed...Argentina style.


Black Blade (03/01/02; 17:59:11MT - usagold.com msg#: 70974)
Weekly Update - Puplava
http://www.financialsense.com/stormwatch/update.htm
Crisis Intervention

Snippit:

The only difference between today and the inflationary era of Arthur Burns, Chairman of the Fed Board of Governors 1970-78 and Volcker's predecessor, is that under Volcker and Greenspan, confidence was restored in paper. People began to put their faith in paper assets such as stocks, bonds, and money market instruments. Instead of buying things as they did in the 70's, people invested in paper. The government was very careful to keep faith in paper alive. It was possible because the price of gold, an important barometer of inflation, was kept suppressed. Gold became the nemesis of all central banks. If its price rose, it signaled something was wrong with the financial system. As a consequence, it became necessary to keep its priced suppressed. This was made possible by central bank gold sales, gold leasing and the gold carry trade. Through the use of physical gold sales and paper gold sales it became possible to keep a lid on gold prices. These action, combined with discrediting gold in academic and financial circles, made the whole scheme work.

Black Blade: Good article.


Black Blade (03/01/02; 17:49:23MT - usagold.com msg#: 70973)
Market Wrap Up - Puplava
http://www.financialsense.com/Market/wrapup.htm
The Missing Ingredient

Snippit:

There are, however, caveats to this scenario. The one missing ingredient in the upcoming recovery scenario is profits. Companies may be making sales but they are doing so at the expense of profits. Companies right now are operating under a brutal competitive environment so corporations don't have pricing power. At the same time raw materials and labor costs are rising, which means profit margins are shrinking. It's a terrible environment to be doing business with rising costs and the inability to raise prices. This is the reason for the wide variances you now see in market forecasts. The optimists see a recovery leading to higher profits. The analysts and economists fall into this camp. On the bear side are the companies, and they are the ones looking at their top and bottom lines and remain skeptical. Then there is the consumer who isn't sure which way things are going for the household. It has become necessary to supplement living needs with debt. The ratio of debt and mortgages to disposable income is now at 105 percent. This means consumers have to finance consumption through credit cards or installment debt just to get buy. The savings rate is negative so there isn't a spare cushion to whether a downturn. In the meantime daily headlines still point to further restructuring ahead with more companies downsizing. That will mean more layoffs ahead which has to impact consumer spending patterns.

This vicious cycle is what is throwing cold water on Wall Street's hot recovery scenario. Consumers are still willing to spend money, but they will only do so if there are strong incentive to do so. On the other hand, companies can still increase sales, but they have to sacrifice margins to make those sales with profit killers such as rebates, zero percent financing or steep discounts.

This analysis is absent in any of the recovery scenarios. From a macro economic perspective, corporate downsizing and consolidation has a negative effect on economic growth despite what it might do for profits in the short run. When a worker is layed-off, he is forced to retrench on his spending plans. The two main drives of economic growth are public consumption, and capital spending by businesses, which is the most important of the two. When businesses expand and invest in new property and equipment, this increases business receipts because the new plant and equipment immediately generate additional income. At the same time because of accrual accounting, the new investment in the plant and equipment is expensed over time. Without any meaningful increase in capital spending by business, this recovery will have no legs.

Black Blade: I agree. Good article as Usual.


CoBra(too) (03/01/02; 17:31:55MT - usagold.com msg#: 70972)
@ CM - Remember September ...
We've got to make the "mostest"! in corralling up the horses (some fiends say sheeple)in the OK Corral!

So may it be - Al G. is the Genie - gee, I could'a have known, should'a have listened and converted some of my FRN's to reality!

Forgotten ... as it seems ... though the reality of AG's liquidity spas'm - has diverted black beans (A. Anderson among these) to green peas.

Wish the peas would hold some - substance, though at least they're physical.

How about that, Pal?

I know, go gold and not the sweet JPMC peas of derivative extasy ... had my beans in New Orleans ...

cb2

BTW- keep what you've got in EU - it's your due.

Cavan Man (03/01/02; 16:47:08MT - usagold.com msg#: 70971)
@CB(too)
The unfolding spectacle is quite a sight. No question; we are heading for a crack up.

kludge (03/01/02; 16:43:26MT - usagold.com msg#: 70970)
Ahhh, a handgun discussion!
Might I also suggest a revolver for the following reasons:
1) no spent brass to trip over in the night on a hard floor.
2) fire multiple times while concealed in a purse or pocket, no "stovepipes".
3) simpler, more moving parts = more things to fail.

What Sir Trapper said also, .38 or .357, preferably a .357 - can always fire .38's and the added weight of the weapon will lessen the perceived recoil. Only six shots, but rarely is it required to reload to protect your home/family (Randy and the Davidians excluded). Firearms can certainly be worth their weight in gold, given the proper circumstances!

Black Blade (03/01/02; 16:41:44MT - usagold.com msg#: 70969)
Could The Coming Energy Crunch Stop Economic Recovery Cold?

Today (3-1-02) the market indices soared higher on reports of a rise in mortgage applications and industrial metal prices, along with a fall in corporate bond yields, helped to push a weekly indicator of U.S. economic activity slightly higher last week, according to the Economic Cycle Research Institute. The talking heads, media pundits, and an assortment of Wall Street pimps now exclaim that the recession is over and the economy on its way to a roaring recovery. I believe that these claims are somewhat premature. However, if this is the case then what will derail this recovery? The answer could be inadequate supply of energy.

The US economy depends on energy and the demand for new power and gas is unbelievable. The US is an economic superpower. Without the US economy, the rest of the world's economies are toast. Like it or not, abundant "Cheap Energy" is the engine that drives the economy. There were even those who claimed that energy was not important anymore with the rise of the "New Economy". One such voice was the Fed Chairman Alan Greenspan. The truth is quite different.

Last year when energy prices soared due to failing infrastructure and inadequate supply, the US economy floundered and then collapsed into economic recession. Much of this was simple lack of planning and public opposition to expanding energy supply. California experienced a severe energy crisis with rolling blackouts. The energy grid is antiquated and in serious need of upgrade and repair. There are bottlenecks everywhere in the system. Some regions (such as California) impose onerous taxes on energy that are passed along to the consumer. Opposition (NIMBY) to construction of power plants, transmission grids, pipelines, exploration and production of hydrocarbons, coal, and uranium has only intensified the problem.

Let's assume that the economy is in recovery. Then demand for cheap abundant energy will soar to levels at or above those during the last "Energy Crisis". We have not worked to resolve the last "Energy Crisis". America has an insatiable need for energy. The inadequate supply of oil and natural gas will drive prices skyward.

The Energy Information Administration (EIA) projects that demand for energy will rise by at least 40% by 2020. I got news for you; we are now an information service economy. What that means is more energy consuming server farms will be built, an increase in Internet traffic, more powerful computers, more telecom use, etc. This does not even account for the increase in basic industry as the economy recovers. Everyone will want their "fair" share of "Cheap Energy". There simply is not enough energy to meet this booming demand. It will get much worse and we are due for a repeat of the "Energy Crisis" that flung the US economy into recession.

Third world nations in Asia such as China and in Europe, Africa and Latin America will demand ever more energy as well. This will draw off supply of hydrocarbons to those regions as well. Many new discoveries in these regions will find increasing domestic demand.

Planned new power plant construction had been proposed for over 300 plants. Those plans have been shelved with lower prices resulting from the recession and warmer winter weather. There is no incentive to build there power plants and improve the energy grid under the current low prices.

Natural gas production is falling again after a season of record drilling and production. Low Natural Gas prices have reduced incentive to keep producing. If the economy recovers there will not be enough production and supply, and therefore a repeat of the "Energy Crisis" is inevitable. Natural Gas supply will be very tight as power plants struggle to produce electricity.

The Middle East and the Caspian Region are wild cards. Anything can happen there. The US is a hostage to the whims of every piss ant dictator in a volatile region. Instability in the region will make "Energy Independence" the rallying cry and top priority for years to come. Otherwise we had better prepare for many more wars for oil and terrorist acts on US soil.

I think that with the current complacency of Americans as far as "Energy Independence" and rabid environmentalism is concerned, we will not likely emerge from this recession anytime soon. Not unless we see a real concerted effort to establish a secure and abundant supply of energy. I don't see that happening anytime soon.

- Black Blade


kludge (03/01/02; 16:26:57MT - usagold.com msg#: 70968)
Black Blade
I stand (well, actually sit - it's been a long day) corrected, Sir. Perhaps I will watch again.
=================
<Agent Smith sits casually across from Morpheus who is hunched over, his body leaking and twitching.>
AGENT SMITH
I'd like to share a revelation that I've had during my time here. It came to me when I tried to classify your species. I've realized that you are not actually mammals.

<The life signs continue their chaotic patterns.>

AGENT SMITH
Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment. But you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area.
<He leans forward.>
AGENT SMITH
There is another organism on this planet that follows the same pattern. Do you know what it is? A virus.
<He smiles.>
===========

Good weekend to all.

Trapper (03/01/02; 16:24:50MT - usagold.com msg#: 70967)
Robot Guy
Your statement: If you lived in an arid land and my people were dying would't I just go to war for the other guys resources. NO WAY! Thats why God gave us a brain. In the old days that was the only option but today we have done something different...Advanced. The eco folks hate it but it keep us from having to kill our fellow man just to exist. The problem (or any problem) is no water in an arid land. We take the salt out of sea water, we drill wells, we change the genes of our corn so it will grow in arid soil. we build aquaducts, Hell we go find an iceberg and drag the damn thing home...what ever it takes. We own our pleasured existince to men of the mind. Our intellect will solve these problems. The only reason to use force is keep evil from using it. Live Small.
RJ
Sochain the advice offered to buy a revolver is good advice. The "pucker factor" will come into play if you ever have to use it. Buy a good double action Colt, S&W, Ruger or newer Tarus in .357 mag 0r .38 spl.

CoBra(too) (03/01/02; 15:58:36MT - usagold.com msg#: 70966)
There's a Reason ...
in every season,
as all is told -
to accumulate

Gold!


'T was a good day - say's I -
All signals are green - like the green in span - and only one of the nifty 50 Wall Street scammers felt happy to go along with the spammers.

Bill Fleck has this to say - even if I may take the liberty to only post snippets - as it's similar to what I've had to say - or what?:

"Versus Expectation' Equals Speculation Japan was again firmer overnight, as were our futures. Europe wasn't doing a whole heck of a lot. When the casino opened for business, it bolted out of the blocks, ran straight up into the Michigan Consumer Confidence data, which was slightly lower than expected at 90.7 versus expectations of 91 (obviously not a big difference), and then backed off. Next, with the release of the NAPM (now called ISM) survey results -- 54.7 vs. expectations of 51 -- a protracted explosion ensued, such that after the first couple of hours, the Nasdaq was up 2%, the Dow was up 1% and change, and the S&P was up about 1%. The mighty, mighty SOX was leading the charge, up 6%. (More about the Sox later.) The bank stock index was dogging it, up about 0.5%.

.. and more, though Fleck say's ... you can't go (be) too wrong acquiring some insurance (As some do it at Black Jack)
- OK - it's time to double up - your gold!

Oh, I daresay, considering the elevated price? (vs what, which and whom?) ... cb2




nickel62 (03/01/02; 15:41:07MT - usagold.com msg#: 70965)
An Article from "The American Free Press" (Yes there is one)
Will Greedy Moneylenders Collapse World Economy?

A recent lawsuit is exposing a risky scheme in which the federal government and some of the world's biggest banks are conspiring to keep the price of gold low in order to boost profits and prop up the United States dollar.

Exclusive to American Free Press

By Mike Finch

A lawsuit has been filed in federal court alleging that the U.S. government, with Wall Street's biggest banks, has been conspiring in a scheme to keep the price of gold low in order to boost profits for the world's biggest bankers while artificially keeping the U.S. dollar strong internationally.

Reginald H. Howe of the Gold Anti-Trust Action Committee (GATA) has filed a lawsuit (Case No. 00-CV-12485-RCL) in U.S. District Court in Boston against the bigwigs of the Treasury Department, the Federal Reserve and several banks for "damages arising out of manipulative activities in the gold market."

The suit alleges that since 1994 the government has been collaborating with the world's top banks to keep the price of gold stable. The banks do this for profit, and the government does this to fool the world by making the dollar look much stronger than it is.

Alan Greenspan, chairman of the Federal Reserve Board and William McDonough of the Treasury Department, and banks such as Chase Manhattan and J.P. Morgan are among the alleged conspirators.

"This manipulative scheme," plaintiffs said, "appears directed at three objectives:

* To prevent rising gold prices from sounding a warning on U.S. inflation;

* To prevent rising gold prices from signaling weaknesses in the international value of the dollar; and

* To prevent banks and others financial institutions, which have funded themselves by borrowing gold at low interest rates and are thus short of physical gold, from suffering huge losses as a consequence of rising gold prices."

Since Roman times gold has been an international monetary unit. It is a commodity that cannot be grown or reproduced. Because of this, much of the world looks to gold as a yardstick for the value of different currencies-even the U.S. dollar-until recently.

In the United States paper money was backed by gold until 1934 when President Roosevelt ended the do mestic coinage of paper money. Until 1934 you could trade your paper money in for gold coins-even at your local bank. Gold backed the U.S. dollar in international monetary dealings until 1971, and was therefore the ultimate measure of the American dollar as well as other world currencies.

In 1971 the United States ceased redeeming dollars for gold. Since then, the international payments system has "moved to floating exchange rates with no currency convertible into gold at fixed parities," said Howe. Paper money, which once was anchored concretely to the value of gold, was now set adrift.

Even though paper money was no longer formally mea sured by its gold backing, gold was consistently used as a barometer for inflation here and abroad. There fore, if the government could control the value of gold, it could falsely control the value of the dollar.

Right now the International Monetary Fund has shoe-horned the world into using the dollar as the international monetary unit; therefore the world has interest in the dollar's stability.

UNDERWRITING THE BANKERS

According to Howe, the Exchange Stabilization Fund and the Federal Reserve System have not been open in their dealings in the gold trading market. He said that the government is underwriting the gold loans of the big banks, and the big banks are trading to keep the price of gold stable.

The government is helping the banks manipulate markets to their mutual benefit. But the goods economy is based on manipulation of the gold price, not the true value of the dollar, he said.

"At least half of the Senate is aware of this but are doing nothing about it," said Bill Murphy, researcher and founder of GATA.

In dealing with public officials, Murphy said, "I've gotten the distinct impression that this is a national security issue."

BANKERS' IRRESPONSIBLE

The complicated scheme, Howe said, goes something like this: The big banks borrow gold on paper at very low interest rates and then sell it on the open market. The bankers then use that money to purchase stocks or even high-risk derivatives which yield higher returns. The banks then make a killing on the deal if their stocks or options appreciate.

According to Wall Street analysts, many of the world's biggest banks hold trillions of dollars in derivatives. For example, J.P. Morgan's derivatives holdings now stand at $29 trillion-nearly three times the United States' annual gross domestic product.*

The risk for the banks comes in the fact that they can only pay back the original loans so long as the yields on their purchased stocks are greater than the cost of the borrowed gold. If the price of gold were to go up even slightly, analysts note, financial companies like J.P. Morgan, which holds about 30 billion dollars in gold, could go belly up.

If gold increased in value from just $300 to $400, big banks like J.P. Morgan would then have to pay a great deal more to buy their gold back to pay off their debts.

So, in order to prevent the total collapse of the world's largest financial institutions, says GATA, big banks and the government have collaborated to artificially fix the price of gold.

The group alleges in its court complaint:

"Annual new mine production of gold in 1999 was approximately 2,500 metric tons, about the same as in 1998 and as estimated for 2000. At the same time annual gold demand is running at over 4,000 tons. Notwithstanding the annual excess of demand over supply . . . the deficit between new mine supply and demand, which has been growing steadily during the period covered by this complaint, has been met by scrap recovery, by some sales of official gold, and most importantly, by leased gold mostly from central banks."

Under the basic market principle of supply and demand, if the supply is the same as the demand, the price of a commodity will stay the same. What GATA and other people are arguing is that the supply is much smaller than the demand, so the price of gold should skyrocket. They say gold should be worth about $600 an ounce. But because the big banks and government are interfering, the price of gold has not changed. The government and big banks are creating a false gold market for their own profit.

If this is true, what happens when the bankers run out of real gold and paper to satisfy the market demand?

The price of gold will skyrocket, inflation will be back with a vengeance and big banks will have to pay the piper, says GATA.

One byproduct of this scheming has been the devastation of economies of the developing world. Sub-Saharan Africa, dependent on its commodity income, is being cheated out of the true value of its gold and consequently out of other natural resources.

Defendants in the GATA suit are the Bank for International Settlements, Alan Greenspan, William J. McDonough, J.P. Morgan & Co. Inc., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group, Deutsche Bank AG and Lawrence H. Summers, secretary of the treasury under former President Bill Clinton and the current president of Harvard University.



R Powell (03/01/02; 15:00:37MT - usagold.com msg#: 70964)
Mr. Gresham/ too many of us
My dad used to say that this earth is a beautiful, wonderous place with only one flaw, that being too many people. He also held the opinion that this was only a temporary problem and wondered if the next dominant species would fair better after us. He was a kind, honest, hard working soul but his opinion of mankind bordered upon contempt. He thought quite a bit less of government.
I have a feeling that next week's BOE auction may not turn out as business as usual. I sense a disconnect between the equities index numbers and precious metals prices. POG and POS are coming of age, less dependant on other economic occurances. Not now nor ever free, but prices may be set more by precious metal market forces and less as a reaction to other markets' fortunes. Anyone else "feeling" any premonitions?
Happy weekend to all!
Rich

R Powell (03/01/02; 14:42:07MT - usagold.com msg#: 70963)
Up everywhere except for bonds
Dow +262.73
Duck +76.50
S+P +25.60
USD +0.21
Gold +1.30
Silver +5.0
CRB +2.72
Bonds were down
Happy Weekend!
Rich

Rock (03/01/02; 14:23:53MT - usagold.com msg#: 70962)
goldnsilver2002
well said Sir Goldnsilver.

Jon (03/01/02; 13:57:05MT - usagold.com msg#: 70961)
Stock Market Activity
Defies any attempt to rationalize. Could it be the ESF to divert attention from PM? This certainly would explain AG's recent comments. Or am I getting paranoid?

neer-do-well (03/01/02; 13:54:38MT - usagold.com msg#: 70960)
Cavan man Siochain niclkel62
Cavan man..Your remarks about the pschology of the Japanese rang a resonant line of thought with me. I've had some business dealings with Japanese. I expected them to be "honorable", they were not. So since my wife was teaching the language I studied it for about a year,ugh,after 5 years I can barely remember how to say hello. Oh well, I just wanted to cuss them out in thier own language anyway. The answer to the banking crisis will be the result of concensus of one particular group ( as per custom), that group in this case will be the flag officer club of the imperial navy. The navy might be gone but the club remains.

Siochain... If you buy a handgun consider the likelyhood of using it without a moments notice. You can't afford to fool around with a safety and chambering a round etc. Automatics are very sexy but a ole double action revoler is mighty handy.

Nickel62..Freedom as a last resort! Beautiful thought! Every one of us lives at the edge of a legal abyss surrounded by lawbooks. Laws protect us?
Hmm, Argentina? It's warm there huh? Someplaces.

Mr Gresham (03/01/02; 12:59:08MT - usagold.com msg#: 70959)
Valuing Mine Reserves
http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B285256B6F000AAFBB?OpenDocument
Not my topic much, but some may find it a "deeper dig" into mining values...

Boilermaker (03/01/02; 12:32:31MT - usagold.com msg#: 70958)
Curmudgeonry
I'm proud to be a certified gold curmudgeon. My wife isn't always so pleased about it. Curmudgeons will inherit the gold. Alan Greenspans shiny New Economy will be repossessed by the gold curmudgeons of the world when he can't make the payments. Thanks, Alan.

Good weekend to all



GoldnSilver2002 (03/01/02; 12:24:42MT - usagold.com msg#: 70957)
Everything is the same today,as it will be tomm,as it was before...not!
Finanaces aside,the world is facing more than financial problems,we have holes in our ozone,fish stocks dying,forests depleting,population growing,deseases increasing,record debt and the middle east is heating up.At any time now we could have another terrorist attack,a collapse of japan or jpm chase,an earthquake in california
or any other host of natural factors which play into golds hands.On top of all this people are living and working longer.All of these factors did not exist before and have absolutely no intention of going away.So what do we do?The same as Japan ,bury our head in the sand and say"it will go away if i ignore it!"The current system we are running is not maintainable and at some point any one of these natural
factors could come along and rip any financial equation to shreds.Greensapn should have said " We may have a moderate recovery barring anyone of a hundred natural factors which are more likely to happen than the recovery itself!"

sector (03/01/02; 11:41:41MT - usagold.com msg#: 70956)
Rigging the GDP Numbers...The True Clinton "Legacy"
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3WU4TZ8YC&live=true
A true and fair view of productivity
Alan Greenspan has endorsed an overstatement of US economic performance comparable to Enron's accounting methods, says John Kay – Financial Times
Published: February 28 2002 19:36 | Last Updated: February 28 2002 19:51

The collapse of Enron has shaken markets because it has reminded everyone that corporate accounts are interpretations, not facts. Even the most conservative of accountants has been under pressure to find statistical confirmation of the stories of heroic leadership, organisation transformation and technological revolution. Everyone knew these things were true, even if data were sometimes slow to reveal it.

This hubris distorted perceptions not only of the performance of US companies but also of the performance of the US economy itself. We talk about economic growth as if it were objective fact, like population growth or temperature. But national income accounting is every bit as much a subjective enterprise as the private- sector accounting on which it ultimately depends.

When politicians and pundits talk about economic growth they are referring to movements in the level of gross domestic product at constant prices. This concept is measured gross - no account is taken of asset depreciation or obsolescence. And GDP is deflated by a price index so that it represents the volume, rather than the value, of output. Such deflation was easy when output was mostly steel but is much harder in the knowledge economy.

A bar of steel is - more or less - a bar of steel: the volume of computers is an elusive concept. As computer prices have fallen, people have got more computer for their money.

But how much more? Statisticians use two main techniques. One is to track the falling price of the same computer. The other is a technique known as hedonic price measurement, which allows for changes in the quality of goods. Depending on how you do the sums, the fall in computer prices in the past five years ranges from 30 per cent to 75 per cent. Britain is relatively conservative while the US is very aggressive.

This makes a big difference. Real expenditure on computers in 2000 in Britain was about £10bn. The UK's Office for National Statistics estimates that computers that cost £10bn in 2000 would have cost £18bn in 1995. But if US price indices were used, the figure would be £37bn. The difference amounts to 2 per cent of British GDP. Over the five years, Britain's reported growth rate would have been almost ½ per cent a year higher if UK statisticians had used US price indices.

So what is the right answer? We are not trying to measure the benefits of computers. These may well be much larger than £18bn, or even £37bn, but such effects are already included in the output of the industries that use computers.

The £18bn figure is an attempt to answer a different question. What part of business spending on computers should be capitalised, rather than treated as a cost against current output, because it contributes to future rather than current output? General accounting practice allows you to avoid charging such expenditures against profits, with two qualifications.

You must capitalise it at its actual cost, not at some hypothetical measure of what it might have cost in the past or be worth in the future. And you must write off capitalised expenditure over the lifetime of the asset.

The rules for measuring GDP do not impose either of these conditions. They allow extravagant revaluation. And they do not require depreciation of the capitalised expenditure.

Under standard accounting principles, the maximum expenditure you could capitalise would be the whole of real spending on computers in 2000: £10bn or so. And you could justify this only if you could argue there was no need for any write-down of previous expenditure on computers as a result of scrapping or technological obsolescence.

My estimate is that the replacement cost of the stock of computers in Britain in 2000 was probably about £20bn. Available computing power probably rose in 2001 by 20 per cent or so as a result of net new investment, minus depreciation and scrapping. Because of the falling price of computers, this larger stock of computing power was probably not worth any more at the end of the year than the smaller stock was worth at the beginning.

A kindly auditor, such as the Andersen folk down in Houston, might allow you to treat £5bn or so of computer expenditure as capitalised. If a commercial company seriously proposed to credit £37bn to its profit and loss - on the grounds that this is what it might have had to pay if it had not bought them so cheaply - its directors would certainly face a congressional committee and probably end up in jail.

The bottom line of all this is that published data on GDP probably overstate output growth in the UK over the past five years - but by less than 1 per cent. Economists have known for years that constant price GDP was a flawed measure of output. But until the information and communications technology (ICT) revolution, errors were small and were offset by the advantages of data series that were comparable over time and between countries. US statisticians were quick to see the difficulties falling computer prices might pose and adopted a procedure called chain linking to reduce the distortions. Britain's ONS will follow but has not yet done so. The problems of interpreting US accounts are both complicated and reduced by chain linking. But the aggressive US assumptions about ICT price falls mean that the difference between GDP growth and output growth is larger in the US than in Europe.

Over the period 1996-2000, ICT investment contributed almost 1 per cent a year to reported US growth. Simply substituting net investment at cost for gross investment at revalued prices reduces this by about half.

The effect is that reported US GDP growth overstates the real growth of US output by about ½ per cent a year over the period. This accounting difference is equivalent to the main part of the productivity miracle that still enthuses believers in the new economy.

It is not just US companies whose figures are now in question. USA Corp capitalised much of its software expenditure, revalued that expenditure at the highest price it might ever have paid, calculated its profits without any depreciation of revalued assets and announced stunning results to its investors on the basis of these assumptions.

Who were its officers at the time? Bill Clinton, the former chief executive, may be spending more time with his family. But Alan Greenspan, who has repeatedly argued that US economic statistics should be more consistent with the optimistic reports of US business people, is still the chief financial officer.
++++++++++++++++++

A downward spiral...shown above in exquisite detail...unstoppable. Rotten to the core...ith Greensapn at the helm...a perfect "evil axis" chump.

He will never, ever admit falibility or culpability in the coming meltdown. He will continue to babble on in FedSpeak to the end...no wonder Lawrence Meyer quit in disgust.


Siochain (03/01/02; 11:29:46MT - usagold.com msg#: 70955)
Believers battle naysayers; Greenspan talkin' oxen
http://cbs.marketwatch.com/news/story.asp?guid=%7B670E1B27%2DC888%2D4881%2DA617%2D20EE8E77524D%7D&siteid=mktw
Interesting how much "they" may be worried....gold at $100 LOL....vs higher gold prediction...and the fight goes on...but it looks like it's just a matter of short time when maybe they will be saying gold might "fall" to $300


Tom Calandra (partial)
SAN FRANCISCO (CBS.MW) -- The price of gold is trying to keep its head above $300, with little success. Yet shares of the riskiest gold mining companies, the so-called junior exploration companies, are at their highest points since late 1999.....

"Gold stocks had a very good year last year, and they remain the top-performing sector this year," notes Robert Bishop, editor of the longstanding Gold Mining Stock Report. "Despite this, gold funds are not reporting new inflows of cash, and I sense there is a significant amount of disbelief associated with gold's recent flirtations with the $300 level.....

"Veteran gold investors, like Bishop at Gold Mining Stock Report, acknowledge the price of gold needs to notch more gains to keep the high-fliers, well, flying. "Almost nothing in the gold stock sector is cheap at this time," he is telling clients. Yet Bishop is very optimistic that bullion will continue its slow march across the $300 level and beyond. "My expectation is that the days of gold trading below $300 are severely limited."

Andy Smith, a Mitsui Precious Metals analyst in London, says "gold's ambitions as a contender (have been) left on the ropes." Smith points to recent testimony by Alan Greenspan, who chronicles the recuperative powers of the American economy. The strength of the dollar and a steadily recovering U.S. economy could force gold to "sink at least to one knee," says Smith, who predicts gold years from now will trade below $100 an ounce.....

Smith, in his just published report from London, adds a caveat to the Greenspan myth of the perpetual greenback: "What if, defying decades of honed performance, the perpetual progress machine of fiat money took a step backwards? Then, as Mr. Greenspan told the numismatists: 'We may have to go back to seashells or oxen as our medium of exchange.' " (Richard Nixon severed the price link between gold prices and the U.S. dollar 30 years ago.) The Fed chief added, "In that unlikely event, I trust, the discount window of the Federal Reserve Bank of New York will have an adequate inventory oxen."

Greenspan, in congressional testimony this week, clarified his oxen talk, saying the system by which the world's currencies trade against one another appears to have been successful, but he was not about to predict how long that would last. Smith, the analyst, is pessimistic about gold's role in the electronic economy yet still thinks there is room for gold prices to go higher this year.







Galearis (03/01/02; 11:22:26MT - usagold.com msg#: 70954)
@Mr. Gresham
Well said, sir your #70926
Yes, all sides tend to stick heads in the sand when it suits a perceived self interest. Many who label the environmental movement with perjorative names are most often those who have a vested interest in a status quo that is profitable for them OR have choosen to believe a position of convenience for them without the benefit of having looked closely at the other argument. Often the solution to this is just taking the time to care and look at what is being destroyed. If a population does not care about an ecology that is the foundation of their collective lives, the consequences of neglect would seem assured. Having gotten my own feet wet "out there" (in the environmental sense) I can attest that the worries are real. But my arguments not only go unheard when stated, they are not even comprehended. It is easy to become discouraged.

And so we humans are increasingly having to make a choice between the "good life" of economic freedoms and the dictatorship results of these excesses. That the results go unpercieved say more about the human ability to look the other way, a stand on cultural/religious positions, a neglect any educational level of comprehension in the areas, or for the elitest the ability to handle tricky political situations caused by ecological damage in a more tricky mannor than their tree-hugging adversaries. But guess who gets the funding?

The problem with capitalism and free enterprise is that the ecological world does not function on the same principals. There is no such thing as profit in a closed system.

Or from another point of view: the debts of an economy can be paid back in time with pain and consumption adjustments; the debt to the world is increasingly not redeemable in the important areas insulted.

An interesting quote: "I have no confidence in the government or in man for that matter." Ironically the environmental side often says the same thing.... So far they have far more the reasons to complain. And perhaps they hold the high ground too, having deep concerns for what for many is mere abstraction, as opposed to their opponents who wish only to be rich on the more philistine measures of perception.

Best regards,

G.






CoBra(too) (03/01/02; 11:14:35MT - usagold.com msg#: 70953)
Capital Spending!
@ CM -Expansion and turnaround will require business (capital)spending. That's my reckoning. (IMHR)

Exactly, my friend. And real capital spending can only come from real savings, derived from real earnings.
The consumer and most of corporate america has spent today on (potential) future earnings.

Kind'a interesting the POG spikes on a day as today.

Regards cb2



Cavan Man (03/01/02; 11:06:07MT - usagold.com msg#: 70952)
sector
RE: Japan
I think Japan is beaten psychologically (that's important I think) and if I am right, there will be heck to pay globally. I mean, put yourself in the average guy's shoes. In Japan, the situation has steadily been going from bad to varying degrees of worse for over ten years. What has been coming out of Japan in the context of offial announcements does not even appear to be a glimmer of hope for improvement. The cure is strong medicine. They won't take it.

Cavan Man (03/01/02; 10:58:50MT - usagold.com msg#: 70951)
@CB(too)
Expansion and turnaround will require business (capital)spending. That's my reckoning. (IMHR)

sector (03/01/02; 10:53:59MT - usagold.com msg#: 70950)
@uponroof...The Fed's Equity "Derivitive" Plans
It seems from your Fed link that they are implementing the legislation that Congress has foot-dragged on. Others are studying the release more closely so I will wait until we have more minds on this.

Glass/Steagall's repeal permitted lots of stuff so this may just be a calibration that allows banks to own derivatives as hedges but not equities [But what's the real difference anyway?].

This may, just may be the vehicle that the Fed uses to "distribute" gold derivative losses to all other member banks in order to avert a collapse of JPM.

This piece appears to be an important indicator when viewed with the other cabal moves of late...they are not the moves of a confident, in-control group.

Japan is the key to me. Mrs Watanabe has the economic future of the Western World in her hands. If she, and a group of her friends, buys 122 ounces of physical each, then we see tens of thousands of tonnes of new demand...and the fall of the Japanese banks with the fall of JPM as a consequence...it won't take
long to play out.

Gandalf the White (03/01/02; 10:25:02MT - usagold.com msg#: 70949)
OK -- Goldfly !!! It is TIME to let SPIKE OUT !!!
<;-)

Mr Gresham (03/01/02; 10:18:38MT - usagold.com msg#: 70948)
Black Blade
Way to say it, bro. Maybe being a "doomer" means just having your eyes open enough to see when you're living your lifetime on the downside of a longwave trend. (Or waiting for Nature's next "surprise".) And having the spirit and love of life enough to enjoy it while you're here.

Raising a cold one (later, not at this A.M. moment. I'm trying to catch some Dow puts in another window) to Courage and Intelligence, though. They seem a strange anomaly in the long slide to Entropy.

Siochain (03/01/02; 10:02:26MT - usagold.com msg#: 70947)
Question
PMs are still my prime purchasing which I continue to add...but I am considering buying some gas/oil and water that are not impacted by Middle East ...just starting my research

I know some of this board have experience in this area...any suggestions of companies I should include in my DD review

As always

Thanks

You're a great Board!
PS I did buy my shotgun ...no one is going to mess with my PMs ..or family!! (will add handgun)

CoBra(too) (03/01/02; 10:01:06MT - usagold.com msg#: 70946)
Is the Mini-Recession Over, or is it a Mirage?
http://www.dailyreckoning.com/body_headline.cfm?id=1908
In view of the host of recent positive economic numbers, even Greenspan is positive, while not yet convinced. As it seems the consumer is still the main "culprit" for this fast turnaround, if it is a turnaround.

Dr. Kurt Richebächer titles - Recovery Mirage!
snippet
"This unprecedented profits carnage is really the most ominous feature of the U.S. economy's present downturn. Equally unprecedented and ominous is something else: the fact that this recession has occurred in the face of the most rampant money and credit deluge in history".

Not much to add to Dr. Kurt's musings. Except that this hoped for recovery again is brought about by the american consumer. How much more blood can be squeezed out of the already financially kaput consumer in view of an ever growing debt- and RE Bubble?

If the stealth wealth of the consumer is the only foundation for recovery, I would suggest that it can't be much of a recovery, come reality.

There will be no lasting economic recovery until the imbalances of the boom 90's are worked off, including the leveraged derivative pyramid, and real savings - the only source of capital and its investment are rebuilt.

Until that time, which may take a while PM's will be the only safe place to be.

IMHO - cb2





Gandalf the White (03/01/02; 09:58:12MT - usagold.com msg#: 70945)
Jump SPOT, JUMP !!
<;-)

Gandalf the White (03/01/02; 09:56:33MT - usagold.com msg#: 70944)
Hi Ho SILVER !!!
WOWSERS, look at a silver chart right now !
<;-)

USAGOLD Market Commentary (03/01/02; 09:10:03MT - usagold.com msg#: 70943)
The Last BOE Sale on Tuesday; Gold Market "Occupation" to End
NEWS & VIEWS Update!
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Read the full commentary and related information here. (access codes required)

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If you would like to take full advantage of these insights and perspectives, made available from a leader with three decades of experience in the precious metals markets, then we invite you to request your personal access codes for the online News & Views. With your request, you will also receive a hard-copy introductory information packet on gold ownership which details the products and services offered by USAGOLD / Centennial Precious Metals. We welcome your inquiry and look forward to working with you.


"For those who want to buy [gold], the temptations are greater and the justification is stronger. Those who have listened to the naysayers [on gold] have probably missed the recent rally [up 19% from April 2001 lows]. So what should they all do now? Buy on the dips, betting that gold can bounce back over $300 and go a little further." Jonathan Fuerbringer, The New York Times (2/24/02)

"We expect that this [gold] rally may prove to be less of a temporary blip and more of a trend.'' Howard Patten, BarclaysCapital

Gold Market Brief (3/1/02). . . . . . Gold continued its languid drift in a southerly direction biding time in advance of Tuesday's Bank of England sale -- the last in the series. Reuters reports "One large commission house bought three 300 lot chunks early on, according to sources, only to be met by selling from an investment bank." Traders put support at the $295.50 level and resistance at $297.00. Will the market celebrate the end of the BOE gold market "occupation" with a major rally? I'm sure that Eddie George and the Blair government will be happy to see the sales come to an end given the amount of heat they've taken since the first gold left for stronger hands three years ago. At the same time, the British people are unlikely to forget a program that lost the British government a great deal of money and accomplished none of the goals stated by Exchequer and central bank officials throughout the process -- chief among them turning 300-tonnes of gold into paper currencies from which they were supposed to receive a return. Over the past year gold is up in the neighborhood of 20%, the euro has cratered and the dollar approximates a return in the 2% range. So much for central bank prescience when it comes to money matters. As we all know there were other reasons for the sale -- unstated reasons -- probably having to do with British commercial banks in trouble on their gold loans and the BOE was merely fulfilling its legacy as a lender of last resort (only this time it cost them in more than just paper and printing costs.) We stated that as the real reason for the sales the day the auctions were announced. We stick to that thesis. Central banks, as we have said in the past, do not sell gold because they want to but because they have to -- the BOE being no exception.

Along these lines, we think you will find the first installment of our Myths & Realities series an interesting retrospective. Short & Sweet is immediately below. Please scroll. I had planned to update Short & Sweet this morning as I have tracked some interesting new material, but we've been hit with a blizzard here this morning and I ought to try to make my way to the office. I'll try to do something later this afternoon if its a quiet day at CPM, or possibly Saturday morning, since it appears we'll be socked in. In particular, James Grant had a particularly interesting essay recently that I would like to dig into. Have a good weekend, my fellow goldmeisters.

Spartacus (03/01/02; 09:06:46MT - usagold.com msg#: 70942)
Japan
http://www.investavenue.com/article.html?ID=4202
The BoJ talks of systemic collapse By Victoria Marklew from Northern Trust Company:

---We've tended to criticize BoJ Governor Hayami in the past for a lack of realism and for spending too much time chastising the government and not enough focusing on the economy's woes. But yesterday, he stepped up to the plate in quite a remarkable way - not, of course, in actually doing anything but in terms of what he said.

Policy-wise, the BoJ symbolically eased again, raising its monthly purchases of Japanese government bonds from ¥800 billion to ¥1 trillion. However, of more interest was the statement released after the bank's policy-setting meeting this morning, which contained six main paragraphs. The first noted that extremely accommodative conditions are being maintained in the financial markets, and that the year-on-year growth rate of the monetary base has reached nearly 30%. The second pointed out that, with the fiscal year end approaching, liquidity demand may increase and so it is crucial "to secure financial market stability." The third paragraph outlines a promise to provide liquidity to meet a surge in demand irrespective of the current account balance target of ¥10-15 trillion; the increase in JGB purchases; a loosening of the conditions under which banks can use the Lombard-type lending facility for the period March 1-April 15; and finally, a further broadening of the range of eligible collateral for lending.

It is the first measure that is crucial - the bank is promising to do what it can to ensure no March 31 liquidity crisis. Then comes paragraph four: "To realize the full permeation of the effects of strong monetary easing, it is essential to strengthen the financial system and ensure its stability by making a swift move to resolve the non-performing loan problem. It is also vital to make progress in structural reform." Paragraph five states that, to exit from deflation, "it is indispensable to revitalize economic activity and to bring the economy back to a sustainable growth path through decisive steps including those described in paragraph four." The final paragraph says the BoJ will "continue its utmost efforts as a central bank" by providing liquidity and by "preventing systemic risk from materializing as the lender of last resort."

In his subsequent press briefing, Hayami said "If we speed up the disposal of bad loans, banks' capital would inevitably decrease. And it's a matter of who comes up with the funds … I think public funds should be injected promptly." The earlier the better, he said, possibly by March 31.

Let's make this clear: The governor of the central bank of the world's second largest economy, and one that is home to some of the world's (theoretically) largest financial institutions, has just said that he is having to act to avert a systemic crisis, and has called on the government to recapitalize the financial system as fast as possible. The monetary base is expanding rapidly, and the M1 money supply measure has been increasing sharply. Nominal GDP is contracting while real interest rates remain positive. The cost of maintaining the huge public sector debt is rocketing.

For the past decade, successive Japanese governments have been able to duck responsibility for straightening out the economy's problems because the nation is so rich - huge current account surpluses and foreign exchange reserves, and the fact that most government debt is internally held, make Japan the world's largest net creditor. But read the previous paragraph again. At some point, the financial sector and/or government bond market and/or currency is going to collapse. It's just a question of which comes first, and how soon. ----



uponroof (03/01/02; 08:08:32MT - usagold.com msg#: 70941)
sector/usagold/all
http://www.federalreserve.gov/boarddocs/press/boardacts/2002/20020221/attachment.pdf
What do you make of the above link?



RobotGuy (03/01/02; 07:58:26MT - usagold.com msg#: 70940)
To add to my previous post
There is one thing in the back of my mind that always haunts me. I have been a contributor to the 'modern world'. I drive a vehicle, I work in the automation industry, I consume commercial goods and energy and I play my part in the ever expanding human snowball. My dream? To save enough money to buy the piece of land that will allow me to be 100% self supporting.

RobotGuy (03/01/02; 07:42:38MT - usagold.com msg#: 70939)
BlackBlade ---- Resiliant mother nature
One of my favorite topics of discussion. I believe there are way too many humans on this planet. Plagues and diseases that would have otherwise killed millions of humans in recent years have been hindered by the presence of our medical professionals. People are forcing children to have sex with them for food rations in starving countries. Why do they do it? Who knows. What allows them to do it? Because there are so many people that they can't feed themselves, so they'll do anything for survival. North America is obviously less densly populated than most other countries in the world, and we might even have the capacity to be self supporting. Native tribes of North America would battle over fertile grounds and good hunting areas, and once an area was depleted of most of these things they would move to another area and battle for that. I don't think we've really changed all that much, our tribes are much bigger, and we've got better weapons, and we have bigger wars. If this instinct is buried in our self conscious, I think we're in for a big ass war in the near future. If you lived in an arid country and your people were starving and dying, wouldn't you go to war for a fertile land so your people could survive? What if you thought you could somehow overpower North America? I know it sounds riddiculous, but it's not impossible.

Mother nature has come up with some fantastic ways of challenging humans in order to flush the system. I don't go to doctors when I'm really hurting with what might be the latest cold/flu, whatever. I like to allow my body to attempt a recovery, if one day I get some virus and I don't make it simply because I didn't go to the doctor, then I've given back to mother nature all of the wonderful things she's provided for me.

Warped RobotGuy.

USAGOLD / Centennial Precious Metals, Inc. (03/01/02; 06:14:08MT - usagold.com msg#: 70938)
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Myths & Realities Myth: Central banks are massive sellers of gold and that's why the price has been held in check. Reality: In 1950 central bank gold holdings were 33,000 tonnes. By 2000, the central banks housed 30,000 tonnes. Through all the announcements, the threat of sales and actual sales -- the London Gold Pool of the 1960s, the U.S. Treasury and International Monetary Fund sales of the 1970s, the European central bank selling of the 1980s, and the Australian, Argentinean, Belgian, Dutch, British and Swiss sales of the 1990s and 2000s -- less than 10% of the gold sold actually left the central bank network. From this one might conclude that official sector liquidations have been off-set for the most part by official sector acquisitions. Central bank gold selling has been a sound and fury signifying nothing. Chart Courtesy of the World Gold Council / London

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