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ARCHIVED DISCUSSION FROM 2/12/2001
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Mr Gresham (2/12/2001; 23:46:58MT - usagold.com msg#: 48134)
Black Blade: Energy Derivatives
http://www.freecreditderivatives.com/riskpowr.htm
Paper electricity? They'll have us back to candles before they're done with us...

SHIFTY (2/12/2001; 23:41:36MT - usagold.com msg#: 48133)
IRS radio commercial
I heard a commercial for the IRS tonight on the radio. They were pushing the file on-line thing. Well in the add the lady say's something about how fast her tax return was processed and she even signed her return on line. Then she said something to the effect that " she got her refund before she could spend it!"

$hifty: I should hope so!

Mr Gresham (2/12/2001; 23:00:25MT - usagold.com msg#: 48132)
My Simple Aha! of the Day
http://www.usagold.com/gildedopinion/TurkGoldValue.html
From the James Turk Gilded Opinion piece:

"While the practice of hedging coincides neatly with the divergence between the actual price of Gold and the target price, this relationship is not just coincidental. Logic also explains why hedging is the culprit that has caused this divergence. It can be explained by one basic monetary principle -- extending credit cheapens a currency."

Extending credit cheapens a currency.

When you buy a gold call you are extending credit to someone who is not going to deliver you any gold until later. That is credit.

You want the solidity of gold but you are willing to extend credit to people you don't know, never met, and probably wouldn't trust if you did meet them. Incredible.

Mines: You are willing to leave your gold in the hands of these "shining knights" of industry, to futz around with your property, getting themselves robbed blind by fast operators, for how long?

On South Africa: After reading Howe, seems like the mines are likely to end up in anyone's hands (govt, bankers, miners) but the current shareholders. Forget mines!

Forget mines! I want to understand more about how CB/ECB/BB/papergold intertwines with a crashing dollar system. That is the big show going on right now. Mines are just something for somebody to write some paper out of to keep part of this game going. It's too far gone for mines to be a profit center for YOU.





John Doe (2/12/2001; 22:40:58MT - usagold.com msg#: 48131)
@Trail Guide
I continue to see inferences that Harmony would have to "sell into the market" if the put goes into the money.

If the market is below the strike price, the gold that Harmony normally mines will simply be "put" the originator of the contract at or perhaps sometime before expiration, and not "sold into the market". This would actually reduce the normal, direct flow of Harmony's gold into market and may well even require one or more of Harmony's lesser-favored clients to scramble for supply and buy gold at the market.

Now THE PUT SELLER might sell this gold at market and cover the difference with some extra cash in order to pay out to Harmony at the contracted strike price. But Harmony is only doing what they would have done anyway (in real-time by the way, with actual mining production, not with forward sales before it was even dug out of the ground) and thereby received a better-than-market price for their newly-mined production. Yet, the better price came only at the cost of a an "insurance policy", the put.

Keep in mind, however, that if the put originator had maintained a delta-neutral position as the market declined, they would have sold short via some mechanism (which may or may not have involved actual gold) to stay somewhat even with the risk they had assumed. The physical gold that Harmony "puts" to the put writer simply COVERS the originator's previous short sales, if any, i.e., it neutralizes the previous sales. The put writer might even keep the gold as a long speculation in the same way that a put writer on stock keeps the underlying when it is put to him because he wanted the stock in the first place, but at a better price than at the time of writing the put. The point is, this particular mechanism does not place the cart before the horse in anything like the degree that the forward sales engaged in by Barrick and Anglo do.

I sense you are trying to fit Harmony's recent financing into a contributory role in the process whereby the paper-gold markets are predicted to freeze and/or collapse. I see this 40 ton put hedge as a much less market-damaging, negligible input to that particular scenario, as the mechanisms of a simple put contract simply do not support it. Harmony hasn't sold any gold yet. Their counterparty might short some gold, if the market falls FIRST, as well they should.

Carl H (2/12/2001; 22:26:19MT - usagold.com msg#: 48130)
Gold Manipulation Theory V2.0
Gold Manipulation Theory (Version 2.0)

I would like to thank everyone for the comments about the first version of this. I have expanded and modified it somewhat. There is more discussion of the options included now, as well as less of a conspiratorial tone. I tend to believe that the creation of the mess was due to stupidity and the cleanup of it has caused a conspiracy to form. As always, I would greatly appreciate it if anyone reading this would point out any errors or omissions on my part.

First, if there is any question that the gold market is being manipulated, I suggest reading the GATA lawsuit filing at www.gata.org and the articles by Dr. Clawar on www.gold-eagle.com. (eg
http://www.gold-eagle.com/editorials_01/clawar020201.html )

Section 1 – Bullion Banks Establish the Gold Carry Trade

From what I have read, it seems that a few years ago a number of Bullion Banks started borrowing gold at interest rates of around 1% from Central banks. This gold was immediately sold on the spot market and the money and invested it in higher yielding investments. This type of operation is referred to as a carry trade. For a better understanding of carry trades, please see http://pub5.ezboard.com/fyourdongold.showMessage?topicID=53.topic This practice went unchecked and has reached a point where at least 6000tons and probably as much as 10000tons of gold are owed to the central banks. To put these numbers in perspective, annual world mine production is estimated to be about 2500tons.

***Anyone know where to get a graph of known amount loaned VS time.

Section 2 – The Call Options

I consider the above paragraph to be fairly well established information. Now, I will step into the shoes of the Bullion Banks for a moment. I would want to maximize the return on the gold carry trade. To do this, I would write a lot of call options based on the assumption that establishing the carry trade would depress the price of gold. I might also be forward selling some the gold to get higher prices for it.

To put the call options in perspective, consider the Comex Call Open Interest at the time of the Washington Agreement was about 500,000 contracts. This does not include:
-synthetic calls created using futures and puts (increasing the effective number of contracts)
-private contracts outside the Comex (increasing the effective number of contracts)
-spreads (reducing the effective number of contracts)
I will assume these three effects are small compared to the total number of Comex contracts. If I understand the terms of the options correctly, they cover 50 million ounces, or about 1550tons of gold. If these options were all in the money, then the liability would increase at a rate of $50 million per dollar increase in the price of gold.

Section 3 – The Washington Agreement

Considering that the price of gold before the Washington Agreement was about $260/oz, I speculate that above $300/oz, most of these call options would have been in the money. After the Washington Agreement, gold got to $325/oz. The sellers of the options were probably sitting on about 1.25 billion dollar loss at this point. If gold were allowed to rise to its suspected equilibrium value of $600/oz, the loss would have expanded to 15 billion dollars. There was no guarantee that the price would stop at the equilibrium value. I would guess that the bullion banks were the sellers of a large fraction of these options. I suspect that losses on this order would be enough to bankrupt some of the bullion banks.

The bankruptcy of the bullion banks would threaten the entire financial system, and make the central banks look stupid for lending them so much gold. Scandals of this magnitude can change the outcome of elections. Hence, the central banks and governments were put in the situation that they must either cap the price of gold, or face a collapse of the financial system. Given how anxious the central banks are to bail people out (eg, LTCM, Turkey, Argentina, Mexico, etc.), I doubt they would have a problem with bailing out the bullion banks under these circumstances.

*** Anyone have any ideas how LTCM might fit into this?

Section 4 – Finding Gold to Repay the Loans

Even if the options could be unwound by suppressing the price of gold and allowing the options to expire worthless, the debt of physical gold owed to the central banks would still exist. I will assume here that the central banks would be very reluctant to let the bullion banks default. Hence, the bullion banks would want to get their hands on a lot of physical gold. As far as I know, only the central banks and mining companies have large amounts of physical gold. In the case of the mining companies, it is still in the ground. Ok, so this means that the mining companies have to be convinced to sell most of the gold they produce for the next several years at prices close to what they are currently. So, how would one go about convincing the mining companies to sell their future production? You'd either have to convince them that the price of gold was going to stay low for the period of time for which you wanted them to sell you the production, or you would have to coerce them into selling future production. Comments like those of Alan Greenspan, "Central banks stand ready to lend gold should the price rise." (loosely quoted), would probably be enough to convince quite a few mining companies to hedge. The other option is to coerce the mining companies to sell you future production. Bribery and black mail of corporate directors would not surprise me here.

Hedging by the mining companies would tend to be a process that would feed on itself for a couple reasons. First, it would help to suppress the price of gold initially. This would put pressure on other mining companies to hedge. Second, people, including corporate directors, tend to act like lemmings.

Section 5 – Depressing the Price of Gold

Now I will step into the Central Banker's shoes. I have just been posed with a potential crisis that requires me to cap the price of gold for some length of time while the options that the Bullion Banks are holding expire. How would I accomplish this? The best way would be to talk gold down by calling it a barbarous relic etc. The next best option would be to convince or coerce other central banks that are not aware of what is going on to sell or lend their gold out. This might be accomplished by arranging sweet arms deals (eg Kuwait), or putting it as a string on some disaster aid (eg Bangladesh flood aid). The third option would be to depress the price by manipulations in the paper market for gold. Finally, as a last resort, I would sell physical gold on the New York market. The New York market is considerably smaller than the London market and should require less physical gold to manipulate. The starting price is London will be influenced by the closing price in NY. (see Dr. Clawar's work cited above.) As an added benefit to me as a Central Banker, manipulating the price of gold will help to conceal and contain inflation.

*** Does anyone have other examples of gold sales or loans being intertwined with goodies?

Section 6 – When can the Price Cap be released?

The price cap can be released when one or perhaps two conditions are met, the price cap on gold will be released. The condition that must be met is that the Bullion Banks must have significantly reduced their derivative positions. One would suspect from http://www.gold-eagle.com/editorials_01/XXX.html that their derivative positions are shrinking. The second condition that might have to be met is that the Bullion Banks have acquired enough future mine production to pay back the central banks.

One should ask here if there is honor among thieves? If one of the bullion banks manages to get enough forward production to unwind their carry trade and gets out from their option positions, then what is to stop them from buying physical gold or going after even more purchases of future mine production than what they need?

Section 7 – The Unwinding of the Carry Trade

So, what happens when the price cap is released and the carry trade begins to unwind? The Bullion Banks will basically be acting as a conduit for sending the mine production back to the Central Banks. This would mean that the effective supply of gold from mining would drop substantially for a number of years. Even if the same number of dollars were purchasing gold under these conditions, it would cause the price of gold to rise several fold. However, as we have seen in recent years, "investment" dollars tend to chase whatever is going up in price. Hence, I suspect that the increase would be larger than the number that would be arrived at by assuming a constant number of dollars buying gold.

The central bankers would probably not mind this too much because they could blame the situation on the forward sales of the mining companies and effectively cover up their own incompetence at controlling inflation.



tedw (2/12/2001; 22:20:02MT - usagold.com msg#: 48129)
quote
http://www.usagold.com

Milton Freidman in todays USA Today

"Its clear that we're in a slowdown,but I dont know if we'll
end up with a recession or a burst of inflation".

Article on page 4B



John Doe (2/12/2001; 22:01:47MT - usagold.com msg#: 48128)
@Tree in the Forest
Well, I certainly didn't mean to imply ALL derivatives are a scam, just most of them. :o)

To clarify, allow me to submit that derivatives are entirely unnecessary in a free market with market-determined money (and by this I mean financial derivatives, and financial derivatives only; and in this context I view gold as the premiere financial instrument it is, not a commodity). Since the current monetary system is de facto anti-free market and inherently fraudulent, the "insurance" instruments devised by this system to cover it's own self-generated risks are as much a scam as the system itself, if not more so.

I say this because:

1) systemically and mathematically, the risks cannot, ultimately, ever be covered.

2) the speculators who purchase the other side of these bets will not be paid, or be paid at best with extreme dilution.

3) the fees and salaries collected for setting up these transactions are tainted as the institutions who are paid either to originate or police these transactions know this.

The original commodity futures markets, operating under a reasonable semblance of a free market, served a valuable function for smoothing supply, demand, production, and consumption. Everything "invented" since is time-, energy-, and capital-wasting overhead -- yet another price exacted for the "privilege" of using the current monetary system.

elevator guy (2/12/2001; 21:24:07MT - usagold.com msg#: 48127)
@Pandagold (2/12/2001; 6:51:31MT - usagold.com msg#: 48069)
I would like to take a "stab" at your "grave" question.


<snip>

Incidentally, why do they nail (screw) down coffins?

<unsnip>

The reason why coffins are nailed or screwed shut is,

BECAUSE PEOPLE ARE "DYING" TO GET IN!

har-har, yuk-yuk..

Sorry, couldn't resist the "golden" opportunity.

And now back to your regularly scheduled cerebral programming.

Randy (@ The Tower) (2/12/2001; 20:33:27MT - usagold.com msg#: 48126)
Yet another update to The Gilded Opinion!
http://www.usagold.com/gildedopinion/TurkGoldValue.html
You got reacquainted with Adam Hamilton earlier today; now, see what are the latest thoughts on James Turk's mind these days, too.

In the commentary to be found at the link above, you'll see Mr. Turk offer a unique perspective on gold valuation as related to total central bank reserves. But more importantly, he again lends his strong voice to our growing chorus of individuals offering explanations of the price-suppressing impact of "paper gold" on the current gold market, and nodding to the inevitable outcome in favor of the current metal holders.

Trail Guide (2/12/2001; 20:18:53MT - usagold.com msg#: 48125)
Reply

SHifty, I have your post now, but am trying to keep these two Grizzlys from eating me up. Be with you as soon as able.(grin)

----------------
OK, John Doe and R. Powell, now we are diving in (smile).

I want to flatly state that all of what I have been talking about here is using Harmony as an illustration. They may or may not be in the situation described. Even though I don't own them, they are a good gold company. Out of a trillion bad ones.

Rich,
I may have to take your posts a little out of sink to address each item, but will try to stay in order. You said in R Powell (2/12/2001; 14:58:56MT - usagold.com msg#: 48109):

------ However, if POG does fall, H can still sell gold at $250/ounce- a price that (the bank is satisfied) will keep H in business and repay the loan. Answer to your question, Harmony will exercise its option to sell at $250 if POG is lower than $250 but is not forced to.-------

Now,,,,,,, we need to think about this a little bit? On one hand we say that H does not have the obligation to use their puts, only the right if they choose to do so. But, on the other hand, if the price of gold falls below $250, they would not be forced to sell into those puts? My friend, that begs the question; "if their loan package is built on the presumption that they must have $250 or better to make their payments, who would they sell their production to if the world paper price is below that"? Will the bank let them just hold the puts and sell into a lower world price? That's right, they won't. It's not a question of them being forced to sell into those puts, they "WILL" sell into those puts. And the bank will make sure of it. Below $250, H has no choice and the obligation stems from the loan structure itself. As I stated below, the loan itself implies that the puts are collateral and controlled by the loan covenants below $250. next:

-------The seller of the option holds liability for its exercise, the buyer (holder, Harmony) of the option has no obligations, just the choice of whether or not to exercise the option.------

Even though you understand the function, I think you are somewhat out of context and seeing these puts as being entered into more as a business speculation by H. These contracts are collateral against the loan and carry an obligation of use below $250 in order to season the loan further. Again, as I said above and below in #48106, H will use these puts under these conditions, as they will have no choice. next:

-----------The banks have no control over Harmony's business- they can foreclose on the note if H does not make the payments but- just accepting a business loan does not give the bank control over how you run your business-----------

Rich, how did you come to the conclusion that these puts are part of H's business? They did not own them and didn't want them prior to the loan. As the article in Barrons (and their own statements) make clear; they were forced to make these part of the loan structure as collateral. Once again, below $250, the conducting of H's business has no bearing on whether these contracts are used. The loan requirements will make them use it even if they somehow didn't want to. I hope
we have at least established that these puts assets are bank collateral and cannot be harmed. Yes? next:

----------If POG is less than $250, Harmony also has the choice of selling gold (at that option price) or selling the option which amounts to a cash settlement (no physical involved). Either way, H has insured that it will be able to repay its loan. Trail guide, If the puts for $1 million ounces of gold sales (or cash offsets) generates enough money to make the loan payments, then the banks would have no further interest in marking to market gold in the ground or anything else at Harmony.-------

Rich, this is where a lot of us investors go off on the deep end if we are not careful. Myself very much included. (smile) I think you know that these loans are made based on the performance of the entire company, not just the one little segment they finance.

Sure, H could sell gold into these puts or cash them out as needed to cover their usual expense,,, then out of profits make the loan payments. But in order to do that they must still mine gold and that requires all ongoing operations to at least break even.

I point back to the context of my earlier post. We, as industry players are concerned of a sudden fall of gold to say $200. As my example below used. At that point, H, as a viable operation in it total would be impaired. Yes, that one loan could be covered if they run just that one segment of their business and sold into these $250 puts. But, no lender will carry such a loan. If they originated the loan with limited liability, they still must act prudentially.

They will not let H simply eat up that put to keep them going. Just because the loan is being serviced, doesn't blind the lender to the fact that his total collateral assets are being impaired. You can't park your brand new ford pickup in the ocean, up to it's engine, and still expect the bank collectors not to come for it? Even if you are making payments!(smile)

Because that put is collateral, it is subject to seizure and use to not just pay the loan but close it out. In the case of many of these mines, the sale of the hedge securities, Harmony's puts in this example, would not cash out the loan. It's not enough. That could only happen by the lender borrowing gold and selling it into the put. Then they would have full cash with a very small or almost no payment
liability. Sure, they would oue gold. But, that trade off would stick as an attachment to H's unmined assets until something happens??? Don't think for a min. that their reserves are not totally involved in a loan with gold at these current levels. next:

R Powell (2/12/2001; 15:29:48MT - usagold.com msg#: 48111)

-------- The bank expects repayment of the loan but (unless the bank owns the puts!) the bank can not force business decisions involving the puts. The bank can foreclose on a business for non-payment but they can't force business decisions on a company just because a loan exists.-----

Once again, Rich, it's the old "pick up truck in the water" analogy. I guess, in a way you are right. If you lent someone $25K to buy a pick up and he left it in the ocean one month later,,,,,,but kept making payments,,,,,,, you couldn't force him to make a reasonable decision,,,,,, and place the truck in safety. Yes, it is his business to run. But, somehow, someway, I bet you as the lender would try to take control of the way that truck was being used. I think laws concerning collateral assets give lenders (yourself in this case) the ability to grab their collateral! And even allow then to use it in a way that covers their exposure. Boy, in my past life I must have been through this before
because I just know I'm right,,,,, (grin).

My guess is that you would try your best to remove yourself from "salt water truck ownership" and get as much of your money out from behind that collateral as possible. Just as the lending banks would do in H's case,,,,,,if gold fell to $200. You see, the whole darn truck is worthless at $200,,, I mean with all that salt water and seaweed! (smile) next:

R Powell (2/12/2001; 15:49:13MT - usagold.com msg#: 48112)

------Agreed. If I have payments due on a new truck, the bank wants it well taken care of (and not sold) unless the bank is paid-in-full. As the purchase of the options were conditional to obtaining the loan, their well being (even though they are time wasting assetts) is a concern of both lender andborrower. Harmony has also obligated itself to performing as profitable enough to repay the loan which it will do by conducting its business which is gold mining.-----------

Well sir,,,,,, My whole thrust has been regarding what the impact would be on the total marketplace if gold fell into a very low range. H is just our example. Your point leaves out several things. They cannot conduct a profitable business of gold mining if the price falls too far. If they begin using these put profits to fund the entire operation, the collateral behind the loan is degrading just as a truck would do in salt water.

They (H) purchased these options as part of the loan package not "next to" their loan package and these puts became collateral "within" that package. The loan officer (lender) will seize that truck (put options) and sell it (cash out the put) to cover the loan. If that action does not cover the loan, then he will drive the truck personally (sell borrowed gold into the put) until his lost asset is
recovered as best as able.

Rich, you have misconstrued my point. Under certain circumstances, to low a gold price, the lender will be the one borrowing gold and dumping it into the put,,,,,, not H. Yet, the degradation of H would be just the same. next:

John Doe (2/12/2001; 16:05:50MT - usagold.com msg#: 48113)

Hello John,

------- @ Trail Guide
The only way Harmony's put deal could drive gold down is if the originator of the put (whoever that is) bothers to hedge its exposure to the put by borrowing and selling (i.e., a direct physical short)some or all of the gold covered in the contract. As the normal course in these types of common
derivatives is to maintain a continuous delta hedge, perhaps some small amount of the total 1 million ounces has already been shorted and more would be added as the price falls (if it falls).-------

OK, I could live with that position(smile) next:

------As the originator's hedging away of the risk of selling the put to Harmony can be carried out in the futures market without any physical involvement whatsoever, even the sale of physical is notassured, though one could assume, though a chain of trades offsetting the futures, that eventually, someone, somewhere, will sell enough physical gold to maintain a "valid" hedge. As some principal
somewhere is likely "good" for naked shorting, even a terminating physical sale is not necessarily
assured.--------

Again, I'm with ya! next:

---------- Harmony, is, at worst, only driving the gold price down indirectly, if at all, and then only to the extent that its put purchase is being delta hedged by its counterparty, if at all. ------------

John, all of what you present is how it's usually set up. It's after the clock starts that the real action begins. I posted earlier that:

""" True, I never for a moment thought that they sold forward. But they are locked into a cash loan obligation and that contract's credibility depends on the bank's ability to use several methods to remedy a future situation. Sure, if we freeze the moment and all prices stay the same, their contract is static and everything is fine, just as is any other contract in such a situation. But, any and all loans
are dynamic, my friend. Ha! Ha!, ask any banker? What you can and cannot do is subject to future circumstances.""""

That "future situation" I speak of is a quickly falling gold price. Falling well below most everyone's ability to function. If gold falls, it's not just H that is in the "salt water", the whole industry is and all these paper hedges will be seized long before the companies can use them to hang on with. This is when the system really implodes as every bank with a contract (read that salty truck) will be trying to remove their money from the entire sector. Not just make the loan payments. To do this, they will sell borrowed physical until it's supply is gone,,,,,, even at a very high rate. All this supply coupled with everyone unloading long paper positions that can no longer be credible,,,,, will crash the gold market!

This, is a very crude micro explanation of how and why any amount of further hedging is giving the sector the shakes. It's far worse than you think.

On that happy note, I'm done for a while

TrailGuide

R Powell (2/12/2001; 19:59:29MT - usagold.com msg#: 48124)
Tree in the Forest

Harmony's business is selling gold. How can they meet expenses and stay in operation without sales? Of course they will sell gold and that fact, by itself, will lower the POG. If this is what you are saying, then of course, I agree. Harmony must sell gold with or without options.
I believe any business that relies on sales would be happy to be able to guarantee a base or bottom price for the next year. They can sell for whatever the market will bear but they will get no less than $250/ounce even if the POG falls to 6 pounds for a buck. That they will sell is assured or they must close down. The loan is to increase production. A good move if POG goes up.
Fire insurance or puts. The lender wants secure collatorial. This is just good banking.
Rich

SteveH (2/12/2001; 19:57:52MT - usagold.com msg#: 48123)
Seems as though...
the EU told the English Chancellor that they are now ready to enter the EU, said the BBC today.

Couldn't have anything to do with their gold having been sold off, could it?

Tree in the Forest (2/12/2001; 19:10:45MT - usagold.com msg#: 48122)
Farfel, John Doe, R Powell
Farfel: "Bravo! Author! Author!" There's got to be a screenplay in there someplace, no? Always love your posts!

John Doe: Sir, if I may differ with you for a moment. IMHO derivatives are not inherently a scam. They were developed as a way of casting off risk onto a speculator who was willing and able to take it on. However they have developed into a monster in the hands of those who do not know how to use them or deal in derivatives at a level of complexity beyond their capability.

R Powell: As a hedge, buying puts may be somewhat better than selling forward because it protects investor equity in the event of a rising market. However, a miner's hedges are worthless if they're not used in a falling market and in that sense a miner is "forced" to sell gold into a falling market once his puts are in the money. This may be good for the miner but not for the POG and this is one of the complaints made against miners i.e. that they don't do enough to support the POG.

Also, bankers may indeed require certain performance as Trail Guide says, depending on how the loan agreement is worded. When you get a mortgage to buy a house, the bank requires you to purchase fire insurance to protect the collateral. If you fail to, you may be in breach of contract and they could conceivably call the loan.

Pandagold (2/12/2001; 18:54:06MT - usagold.com msg#: 48121)
Chris Powell and Reg Howe's latest

Well, I know what I am going to say won't add to my friendship list but after reading Reg Howe's latest 'essay', I can only conclude he was wasting his time in SA'

The British Lion? What Lion? This conjures up days of Empire when Britain had a large powerful navy and a reasonably large well trained and disciplined army.

This at that time was used by those who really ruled Britain (but were even then part of an international elite that owed allegance only to themselves), to exert their economic empire around the world. They use, to this day, ANY country, especially ones which are militarily powerful — as they currently use the US.

Britain has very little military machine today. What it has is highly efficient, and it could fight a few bush fires here and there, but could never have stopped China. for instance, retaking Hong Kong if it (China) had so desired — and would have done had we not returned it to them.

So, where are the teeth of this lion? As a nation financially we just about manage to pay our way, there is nothing in the kitty for waging war, or exerting influence with the fear of a military back-up if they don't play ball.

He talks about a 'gold cabal' orchestrated by Clinton and Blair. What an over estimation of these two ineffective wimps. Neither could organise a trip to a brick sh*t house (Brit, Northern phrase, crude but explicit).

His historical references are about as true as all the other 'truths' put out for historians to write up as the cause of this or that war, ot this or that event. The truth is never revealed, just as the truth will never be revealed about Kennedy or Princess Diana - and they happened quite recently. Oh 'secret' papers turn up from time to time - never before revealed. They always contain 'grains' of truth
but it is just more red herring.

He talks about " To most Americans, strong U.S. support both for the new multiracial government in South Africa and for other African nations trying to move toward stable democratic regimes appears unquestionably in the national interest......................."

He is right there, and to most British people the support for American sanctions against Iraq, and the RAF helping them with their bombing missions is abhorrent, and many other things our country does.

It is NOT the people of either country that want these things, but the people are NOT in power. Once we elect people into power, and it doesn't seem to matter much on major issues who that is, the people who really govern, will ensure that who ever is in that office endorses their policies.

You don't have to go to South Africa, or even get off your backside to learn that.

A lion is pretty useless without claws or teeth, so what I would like Reg Howe to tell me is where are the teeth?

Oh there are teeth, but not the kind that using such outdated epithets as British Lion will reveal. That is old colonial bunkum, which no educated commonwealth member would have in his vocabulary as it signifies gunboats up the Nile diplomacy, for which they know Britain is now impotent to pursue.

No sir, the teeth are not a lions teeth.

If I sound upset it is only because this man is the hope of so many, and so many are looking up to him as some saviour. I have paid him little attention up until now, but when I read that bunkum, I know he has absolutely no chance.

As far as I can see, all he has done is tweeked the nose of the real lion and made him angry - and I don't mean a British lion.

When you start tipping over the tables of the money lenders, and changers, you are asking for trouble as one man discovered 2000 years ago, Since then there has been a 2000 year build up of power.

After reading Mr Howe's essay, I was left wondering if the man is really that naive, or is he (and I wouldn't blame him) too darn scared to reveal in open letter — the truth.

Sorry for all those Reg Howe fans. I tried to stay silent, and there is much I have erased, but, I am weak, I gave in
knowing I will probably regret it. No I won't, but sorry again

mhchuck (2/12/2001; 18:37:13MT - usagold.com msg#: 48120)
Barrick's Sales pitch. "Squashed Gold Bug Stew"
The SUPERFOOD of the new millennium!

Ingredients: Honesty, Integrity,
Independence, Intelligence, Fortitude,
Perseverance.

A product of Barrick Foods Ltd.(TM)

A special message from Barrick Foods
President and founder, Peter M. Skunk.

Hi, I'm Peter Skunk, President of Barrick
Foods. I developed "Squashed Gold bug Stew"
especially for today's inactive people. If
you will note, all the ingredients in our
stew are noticeably deficient in the world
today. Frankly, we don't know how long we
will be able to produce it, since "Gold bugs"
are as scarce as raindrops in the desert. But
rest assured, Barrick will do its best to
acquire only the finest "Gold bugs" for our
product. Our pledge of commitment to our
shareholders remains our top priority. Barrick
will never sell you short.

P.M. Skunk.

mhchuck.

Stocks, Lies, and Ticker Tape (2/12/2001; 18:06:30MT - usagold.com msg#: 48119)
Farfel,.........gold mining stocks
Owning such stocks under the circumstances you describe is indeed foolish. Since the stocks are actively traded, what is the sales pitch used by these companies to get people to buy their stock? It must be one hell of a spiel.

Farfel (2/12/2001; 17:21:09MT - usagold.com msg#: 48118)
@Black Blade re: WGC and Whores in the GOLD Industry
Yes, thanks for the compliments.

The fact is this: gold producers have been overtly STEALING from their shareholders for the past several years, via overhedging their gold production, then sending cheap gold to the bullion banks in order to allow them to cover their hefty short positions; thereafter, they pocket the surpluses for super lavish perks, salaries, and bonuses. They do NOT work for their shareholders in any way shape or form, they work AGAINST them, and then they have the audacity to ridicule or deprecate them when they raise questions about the chronic miserable performance of their stocks.

I will tell you this categorically: I would not wipe my ass with share certificates of Barrick Gold or Anglogold or these other bullion bank whores, that is because it would be an insult to my ass.

Thanks

F*

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


World Gold Council: Cheap Whores for the Bullion Banks.
Feb 11, 11:03

"London--Feb. 11--The World Gold Council has doubled the fees it charges
leading gold producers to fund a $20 million marketing campaign intended to
combat weak gold prices, the Sunday Telegraph reported."

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

I think it is absolutely hysterical that the sleazy whores from the World Gold Council have decided to increase their marketing campaign in order raise gold prices.

As most readers know, the World Gold Council is comprised of the bullion banks' favorite whores in the gold industry, most notably Anglogold and Barrick Gold. These whores can be counted on to act as bullion bank proxies in selling forward years and years of future gold production, thus preventing the gold price from rising, thereby protecting the huge gold short positions of the various bullion banks, enriching bullion bank exec and shareholders, while ultimately bankrupting the smaller gold producers, devastating their shareholders, and throwing tens of thousands of miners into the street.

Now as many of you know, these WGC whores enjoy raising money in order to persuade people to buy gold jewelry, as opposed to purchasing gold as a sound investment alternative to financial paper instruments.

Now you would think these WGC whores would leave the gold jewelry marketing to Tiffanys or Cartier, as those kinds of jewelry retailers have entire departments dedicated toward the purposes of marketing gold items to the masses.

But the WGC whores, creators of the most pathetic, unintelligible, irrelevant, advertising campaign known to man (namely, the "Y2k Conquistadors in Search of Gold" ads), have decided that they will try and outdo that amazingly, uninspiring effort...and with $20 million bucks at their disposal, one can only imagine what whorish, sub-moronic crap is about to be released by the most ineffective, the most whorish trade organization in the world.

However, keeping with the spirit of churning out grossly ineffective, whorish mediocrity designed to "turn off" people from gold purchases or investments, I have a few exciting new ideas for new gold ad campaigns for the brainstorming WGC whores:

1) Fade In: Headquarters of a South African Mining Company

Dissolve to: the face of a pin-striped exec, sweat pouring down his flushed face. Between grunts and groans, he yells, "Yes, you're the king... I hate gold... yeah, harder, my king, give it to me....I really hate gold!"

CAMERA PULLS BACK to reveal a bullion banker, his pelvis thrusting back and forth, his own grunts and moans punctuating his raspy exclamations, "Yeah, baby, sell gold...yeah, gold sell, sell gold, baby, gold sell, ohmiGod...Sell!"

Dissolve to a slogan that reads:

"Even Gold producers Hate Gold, Maybe You Should Too!"

Presented by The World Gold Council


2) Fade In: the Bathroom of a South African Gold Producer


A pinstriped exec opens a toilet stall, pulls down his pants, and seats himself comfortably upon a shiny gold toilet.

CAMERA ZOOMS IN SLOWLY upon the gold toilet, while offscreen we hear the grunts and groans of the exec as he responds to the call of nature.

Dissolve to a paragraph that reads:

"Many Years Ago, Lenin Warned the World that Someday Gold would be Used to Make Toilets....

Well, We're Doing the Best We Can to Turn His Dream into a Reality"

Presented by the World Gold Council

3) Fade In: the Parking Lot of a South African Gold Producer

Dissolve to: a group of unemployed gold miners, dressed in tattered clothes, their bodies emaciated from hunger, sitting upon the parking lot, under the hot scorching sun.

ZOOM OUT SLOWLY to reveal the Rolls-Royce driven by a pin-striped exec as it pulls up beside the miners. As the exec exits his luxury auto, the miners raise their hands in a begging gesture. "Food, sir, please some food," we hear their weak cries. Without even looking at them, the exec pulls some gold coins from his jacket and tosses it to the poor, hungry miners. The starving miners are so hungry that in desperation, they devour the gold. Yet, within seconds, they regurgitate the inedible meal.

Dissolve to a slogan that reads:

"GOLD...You Can't Eat It, So What Good is It?"


Presented by the World Gold Council

R Powell (2/12/2001; 16:54:44MT - usagold.com msg#: 48117)
Barron's article on Harmony's hedge

Thanks to John Doe, Tree, T.G., Lamprey_65 and Blake Blade and all for a good hashing out of Harmony's hedge position.
Blake Blade gave us the link to the Barron's article reporting this news. It can be found at #47936.
I think it's very encouraging that Harmony, when forced to satisfy the banks uneasiness concerning H's ability to repay, chose to buy puts rather than forward (futures) sales. This speaks well of Harmony and perhaps signals a new attitude in the mining industry. It's certainly overdue. Now if Bill (GATA) can explain to the miners how a little reluctance to sell causes the shorts (forward paper gold sellers) to feel a squeeze on the time limited positions they hold- well, at least Harmony didn't take the futures sale route. This is good.
Rich

canamami (2/12/2001; 16:23:09MT - usagold.com msg#: 48116)
Article on the Fed's origins, and the legality of fiat currency
http://members.home.net/flaherty15/conspire.htm
An interesting article, though contrary to positions sometimes taken at the Forum.

Chris Powell (2/12/2001; 16:14:54MT - usagold.com msg#: 48115)
Latest essay from Reg Howe, just returned from South Africa
http://groups.yahoo.com/group/gata/message/653
South African gold is still prey to the
British lion.


To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@yahoogroups.com


Randy (@ The Tower) (2/12/2001; 16:09:30MT - usagold.com msg#: 48114)
The voice of the people...(a "truth" you should know)
http://allafrica.com/stories/200102120459.html
HEADLINE: Zimbabwe Farmers Demand Currency Devaluation

From this article:
-----Zimbabwean tobacco farmers, the country's biggest foreign currency earners, are demanding a devaluation of the local dollar before sales of their crop start in April, sources said Monday.
Last year, the farmers withheld their crop from auction floors to press their demand for devaluation, which the government later agreed to.------

In a "political world", children choose candy over medicine. And here we see the selection of "liquidity" and a degree of debt repudiation in favor over the sanctity/integrity of the value of the national currency held by hapless savers. Well, nobody said mankind was perfect.

It seems like I've seen a viable proposal for an alternative method of operation for these people...it's laying around here somewhere...

John Doe (2/12/2001; 16:05:50MT - usagold.com msg#: 48113)
@ Trail Guide
The only way Harmony's put deal could drive gold down is if the originator of the put (whoever that is) bothers to hedge its exposure to the put by borrowing and selling (i.e., a direct physical short) some or all of the gold covered in the contract. As the normal course in these types of common derivatives is to maintain a continuous delta hedge, perhaps some small amount of the total 1 million ounces has already been shorted and more would be added as the price falls (if it falls).

As the originator's hedging away of the risk of selling the put to Harmony can be carried out in the futures market without any physical involvement whatsoever, even the sale of physical is not assured, though one could assume, though a chain of trades offsetting the futures, that eventually, someone, somewhere, will sell enough physical gold to maintain a "valid" hedge. As some principal somewhere is likely "good" for naked shorting, even a terminating physical sale is not necessarily assured.

Harmony, is, at worst, only driving the gold price down indirectly, if at all, and then only to the extent that its put purchase is being delta hedged by its counterparty, if at all. Of course, by misreporting the facts, and further intimating that "the deal" is more than it is, much more psychological damage can be done (if there are any sane minds left in the gold arena) than actually merits the reality of the situation. Harmony's sizeable put purchase affects the gold market no more than anyone's sizeable put purchase affects the gold market.

Derivatives are scam set up for the sellers to provide "income" to themselves, exclusive of whether or not any risk is truly offset, and the banking system is plainly a scam unto itself. So it comes as no surprise that one scam requires the participation of another scam in order that "funds" are extended for real industry. Meanwhile the larger, all-consuming scam (the dollar), can chug merrily along.

R Powell (2/12/2001; 15:49:13MT - usagold.com msg#: 48112)
Trail Guide
Harmony's options as collateral assets

Agreed. If I have payments due on a new truck, the bank wants it well taken care of (and not sold) unless the bank is paid-in-full. As the purchase of the options were conditional to obtaining the loan, their well being (even though they are time wasting assetts) is a concern of both lender and borrower. Harmony has also obligated itself to performing as profitable enough to repay the loan which it will do by conducting its business which is gold mining. In this sense, the options did increase the cost of the loan and will require more gold sold on the market. It's a business expense, just as a Christmas bonus for the workers is in a good year. Hope they all get big ones.
Rich

R Powell (2/12/2001; 15:29:48MT - usagold.com msg#: 48111)
Trail Guide

Concerning H's puts you said, "because that option performance was made in conjuncture with the loan, H will be required to use it "as the bank directs"- If- their business function is impaired by a gold price so low that they cannot conduct All their business in a reasonable manner."
If POG tanks badly, Harmony will be happy to exercise their put options, that's why they bought them.
At $200/ounce POG those puts might keep H in busuness while other mining companies fold. However, I don't believe the banks have the right or say as to how H runs their business including the options they hold. The bank expects repayment of the loan but (unless the bank owns the puts!) the bank can not force business decisions involving the puts. The bank can foreclose on a business for non-payment but they can't force business decisions on a company just because a loan exists. This is a mute question as H will exercise its options, as need be, to repay the loan or, if POG is higher than $250/ounce at expiration of option life, H will smile and sell gold at a higher price. These were out of the money options- a fairly insignificant cost in relation to what's involved. A contract of gold is 100 ounces, the average cost of just out of the money options covering a years time? Maybe, $350-400 each (this is a guess) or a cost of 1-2% of the contract covered. Cheap insurance but as options are leverage instruments, a POG at $200, each $250 put is $50 in the money X 100 (ounces in a contract) equals $5000. Sort of like a $400 homeowners policy that will cover the cost of the loss of a house. An even better insurance value.
For those not familar with options, the seller of the option is at financial risk to cover the options gains if it is exercised in the money. The holder (buyer) of the option pays a fixed up front cost but then has no further monetary obligations (other than to collect money, a nice "obligation") or watch the option expire worthless as almost all do. Harmony bought (holds) options. God bless them , they did not sell forward!
Rich

slingshot (2/12/2001; 15:15:15MT - usagold.com msg#: 48110)
Tree in The Forest Msg 48105
My discription of Greenspan, as Mr. Magoo, was in poor taste. I agree with you he is not a stupid man. He is a man of great power in the markets. My problem is that a man in that position should not be talking riddles. Just facts.
Maybe he can not for reasons of confidentiality. If we only knew what he knows. Because of his with-holding nature, I can not trust him. Yes, Time will tell.

He does look like him alittle.

Slingshot

R Powell (2/12/2001; 14:58:56MT - usagold.com msg#: 48109)
Harmony
Tree in the Forest, Trail Guide

You asked, "If an issuer of gold were holding puts that went in the money would he not be "forced" to take profits and deliver gold into a falling market?"
Harmony has taken a business loan and will need to repay with interest. I'm quessing that repayment will come from business income, the sale of gold. The banks apparently think that H will be able to service the loan if gold prices do not fall. However, if POG does fall, H can still sell gold at $250/ounce- a price that (the bank is satisfied) will keep H in business and repay the loan. Answer to your question, Harmony will exercise its option to sell at $250 if POG is lower than $250 but is not forced to. The seller of the option holds liability for its exercise, the buyer (holder, Harmony) of the option has no obligations, just the choice of whether or not to exercise the option. If POG is less than $250, Harmony also has the choice of selling gold (at that option price) or selling the option which amounts to a cash settlement (no phsical involved). Either way, H has insured that it will be able to repay its loan.
Trail guide, If the puts for $1 million ounces of gold sales (or cash offsets) generates enough money to make the loan payments, then the banks would have no further interest in marking to market gold in the ground or anything else at Harmony. The banks have no control over Harmony's business- they can forclose on the note if H does not make the payments but- just accepting a business loan does not give the bank control over how you run your business.
Rich

Randy (@ The Tower) (2/12/2001; 14:47:18MT - usagold.com msg#: 48108)
Fed buys Tresuries outright, adds permanent and temporary reserves today (see URL for semi-related news)
http://biz.yahoo.com/rf/010212/n12368902.html
With the federal funds market trading at the target rate (5.5%) the Fed chose to permanently add $1.281 billion to the nation's banking system reserves through the purchase of Treasury coupons (dated September 2001 to March 2002).

Prior to this operation, the Fed also entered into 28-day system repurchase agreements to add $2.005 billion in temporary reserves to the banking system.

A bold prediction: Those of you that have not yet established a core gold position in your portfolio, or have not embarked upon a program of regular gold acquisition will likely never do so...finding yourself (to your lasting bewilderment) on the outside looking in. You do not call upon a child to do a man's job, and yet we see you confidently rely upon your feeble paper shares and contracts to outperform the metal they strive to mimic??? As history teaches, such paper/contract systems provide for their own failings (witness the 1971 dollar that had previously carried an impressive U.S. government guarantee of FIXED gold convertibility...any subsequent COMEX/counterparty failure is laughably a foregone conclusion to many independent thinkers!)

Only when the failure occurs, and likely not a moment sooner, will you finally see the fullness of your own folly for abstaining from gold ownership by seeking better prices than these 22-year lows, or for betting your wealth in the form of counterparty performance adversely leveraged against the physical market's inevitable day of reckoning, or for betting (with stock ownership) against the goverment changing its tax or regulation laws pertaining to the corporate business of mining economically strategic national treasure.

When you choose to hold gold, the reliability of your wealth is naturally "locked in stone". Since Guggenheim, no central bank has been as steadfast.

got metal?

Pandagold (2/12/2001; 14:03:50MT - usagold.com msg#: 48107)
Simply Me

You are right. When I saw your post, I thought what on earth did I put, so had to retrace. I am making so many errors these days. I did get it right in an earlier reference to this character, but where I got this last name from, I don't know.


Thanks again for your comments

Trail Guide (2/12/2001; 13:30:43MT - usagold.com msg#: 48106)
Reply

R Powell (2/12/2001; 9:13:48MT - usagold.com msg#: 48083)
Harmony hedge
-------------

Rich, we still are on different channels. Let me take another poke at it (smile). From your post:

----Trail Guide, whether or not the one time cost (premium) of the put options is included in the loan is irrelevant.---

Ok, I completely and totally agree with that item. The premium that H paid to buy the option contract came out of their pocket and has no place in the context of this. Whether they get the premium money back or lose it all means nothing to this discussion. next:

---------The loan was for mining expansion.------------

Ok, the bank gave them a bunch of cash to spend on infrastructure. As H makes money from their business plan they will pay back this loan. next:

--------The bank was worried that Harmony wouldn't be able to repay IF POG sank lower SO the bank required some insurance of the Harmony's ability to repay. ------------ Harmony bought the right to sell gold at a future date at a set price. They own this right, it is NOT an obligation.
-----------

Ok again!
However, before they sign on the dotted line, H buys an insurance option so the bank can be covered. True, in standard nomenclature an option,,,, "in and of itself" and "standing by itself" is but a right to do something, not an obligation. BUT, H does have an obligation to perform on their loan AND this option is tied to that performance. In contract law, that obligation on the loan is passed thru into and upon this insurance collateral called a put option. Therefore, because that option performance was made in conjuncture with the loan, H will be required to use it ""as the bank directs"" --IF-- their business function is impaired by a gold price so low that they cannot conduct
ALL their business in a reasonable profitable manner. next:

----------If you buy an option to buy a piece of land at a set price for a length of time, youhave the right BUT NOT the obligation to buy. ------------

Absolutely! next

--------- Harmony can sell gold at a future date for a set price. If POG is higher than that set price at that future date, Harmony will get the higher price.-------------

Rich,
Harmony can do what ever they want with this option contract AS LONG as it does not infringe upon the collateral the bank used to make the loan. But, you see, that option is part of the loan collateral. This option, this contract right to do something is part of what the bank claims as an asset
against the loan. If the price of gold went to $200, as an extreme example, the bank may not allow H to just sell the option for a cash profit. The bank also has several implied "RIGHTS" within the loan agreement on how to make the best use of "collateral assets" in a default situation.

We, as outsiders may not make assumptions as to what liabilities the bank incurred to supply the cash for this loan. The assets that originated this transaction, that is, "where the cash came from", may want themselves taken completely out of the deal if gold was to tumble. Or they may want physical gold outright? Or the bank may want to simply retreat also. So,,,,, in the event of Harmony being financially impaired from a too low gold price, the bank may seize the option, borrow physical gold at the then much lower price and sell said gold into that option's higher price. Then simply hold this new cash in an interest bearing account that would pay the low borrow rate on the gold loan. Still, H would be on the hook because their assets, gold in the ground that was already attached for the cash loan, would be attached to eventually pay off the new gold loan. No, if prices remained too low and H could still not operate, then the gold loan would just sit there and roll over and over.

This may or may not be the case for them, and I am just explaining how some of these things work. But it is a very common structure today. next:

----They did not sell forward, they are not "locked in" or obligated to sell at all, at any price.---

True, I never for a moment thought that they sold forward.

But they are locked into a cash loan obligation and that contract's credibility depends on the bank's ability to use several methods to remedy a future situation. Sure, if we freeze the moment and all prices stay the same, their contract is static and everything is fine, just as is any other contract in such a situation. But, any and all loans are dynamic, my friend. Ha! Ha!, ask any banker? What you
can and cannot do is subject to future circumstances. next:

---- If they do want to sell, they have assured themselves a minimum sale price. Futures sales = obligations ------

As long as they are up to date, and have permission to liquidate loan collateral, yes. next:

-----Options may or may not be exercised.------

If your option is not part of a loan obligation and held as collateral, this is true. next:

------Many of the complaints (forward sales) against the paper gold market are valid, this one does not hurt POG and seems misunderstood.----------

I don't think any big players are confused about this. Perhaps the investing / trading crowd may not grasp it fully? It's the possibility that all these paper hedges may be forced to crowd into the forward sales area that shakes the market dynamics. Further, it's all together possible that naked shorting and carry trading could overwhelm the paper supply and force paper prices into a future lower price range. Staying on such a trend, paper gold could lose all credibility to perform as a proxy for physical gold! Eventually trading at a discount. All because every long holder that's in the game for paper trades only, is trying to unload because of all this new supply. This is why I said a long, long time ago that at the end of all of this we may see a colossal spike in comex futures OI (400,000 1,000,000 contracts) as everyone tries to cover their cash risk. Caring nothing about who is , can or wants to take delivery. Long before this begins, the premium on physical gold will
start a vertical rise the likes we have never seen! (smile) We shall see.

That's my take on it, my friend

TrailGuide

Tree in the Forest (2/12/2001; 13:12:45MT - usagold.com msg#: 48105)
Slingshot, Mr. Gresham, ORO, R Powell
Slingshot: I don't have infallible knowledge about Mr. Greenspan and he certainly is not infallible himself but many of the thoughts or opinions that I see attributed to him would imply that he is stupid and I don't think that this is a stupid man. Time will tell.

Mr. Gresham: Thanks for the financial links.

ORO: Thank you sir ORO for expressing an opinion on conspiracy and saying it so much better than I ever could. I do believe in conspiracies but more along the line that you have expressed. I do a lot of surfing on the web and I believe that some of the conspiracy theories that I have read are so laughable that the conspirators themselves are reduced to stitches. An example: A conspiracy of freemasons but not all of the lodges are involved, only some of them and of those which are involved, not all of the members of those lodges are involved only some of them. This is hysterical. Does it pay to describe this as a conspiracy of freemasonry at all? Are there not opportunists in every group? Are the posters at this very forum not conspirator-opportunists, helping GATA every chance they get, taking physical gold off the market, talking gold up at every opportunity, waiting for their chance to "cash in" etc? I'm not saying there aren't conspiracies, just that I think we need to use the word conspiracy more carefully.

R Powell: Re: Harmony puts. Would it be possible to look at it this way: If an issuer of gold were holding puts that went in the money, would he not be "forced" to take profits and deliver gold into a falling market? If he were not holding puts guaranteeing a higher than spot price, might he not close down mines when mining became unprofitable? Doesn't having the puts aid and abet a crashing gold market? Does this make sense? Thanks.

Stocks, Lies, and Ticker Tape (2/12/2001; 13:12:43MT - usagold.com msg#: 48104)
Pandagold
No offense taken.

Peter Asher (2/12/2001; 12:37:19MT - usagold.com msg#: 48103)
@ Dave C

Looking for the motivations behind gold rising in an environment of extended rate cuts, I see two possible factors.

First, as interest yield diminishes, the "Non-performing" aspect of gold abates.

Secondly, the prospect of lower rates and the presumed expansion of money supply, increase the expectancy of inflation and generates more gold buying by those who believe in the POG/Inflation correlation.

It would seem therefore, that regardless of whether the current rate cut trend creates price inflation or deflation, gold stands to benefit from here forward.

Pandagold (2/12/2001; 12:30:04MT - usagold.com msg#: 48102)
Stocks lies and Tickertape


Yes, I figured from where you chose the name. In fact when I am writing it, I often start to write videotape.
Don't worry too much about it, if you are happy with it that's all that matters.

You made the comment anout how it would sound to you re my error. I merely made a comment, because you appeared sensitive to way others may see it, that it was the 'lies' part which always hits me, much more than whether one wrote stock or stocks.

But this is just my subconscious reaction.
I was merely trying to be helpful, but would have said nothing had you not raised it.

I apologised for my error, and though I am prone to errors these days because I am trying to do so many things at once
I will try to get it right in future.

Simply Me (2/12/2001; 12:29:44MT - usagold.com msg#: 48101)
@Pandagold
Hi Pandagold:
From one 'Black Adder' fan to another....I believe the name you are looking for is Baldrick.
One more quick note. The content of a post is far more important than the spelling, punctuation and grammar. We are not reading with a red pencil in hand. Like Picasso, Einstein and James Joyce, please feel free to "color outside the lines"!

simply

Stocks, Lies, and Ticker Tape (2/12/2001; 12:28:48MT - usagold.com msg#: 48100)
Another visit from the gas company.
Just received the gas bill for last month. Upon looking at it I knew I would get another visit from a gas company employee. This starts in November and ends in May. I only use gas for the water heater. To read my gas meter you have to walk past the eleven cords of wood I put up last spring. The gas company just can't seem to understand that someone could have a $31 gas bill.

Stocks, Lies, and Ticker Tape (2/12/2001; 12:08:42MT - usagold.com msg#: 48099)
Pandagold,.....why "lies"
My name was chosen as a play on the words of the title of a movie "Sex, Lies, and Videotape" (circa 1990). Neither my wife or I have seen it, although it has been alluded to all too often over the years. While I was trying to figure out a name to post by, my wife again mentioned that the movie had just been mentioned on the tv. I thought I would manipulate the words to express my sentiments about the manipulation of the stock and gold markets. Hence my name.

DaveC (2/12/2001; 12:02:59MT - usagold.com msg#: 48098)
Fed Rate Cuts and Gold
From Today's Daily Reckoning
"While it is not a precise one to one ratio," John
Myers tells me, "over the past 30 years, there is a
consistent correlation between Fed rate cuts and a rise in
the price of gold. In 1973, the Fed cut rates for several
months, gold rose from $100 to $183. The crash of 1987 also
saw the Fed cut rates... while the DJIA corrected 22% in a
single day, bullion prices rose 10%. Again in 1989, when
the Fed moved to abrogate a short-term correction gold rose
from $360 to $410. And most recently when the Fed cut rates
in 1998, gold again rose 10%. Rates are again being cut...
we may be on the cusp of a serious gold revival."



DaveC (2/12/2001; 11:56:45MT - usagold.com msg#: 48097)
Interesting Take On Japan
From the International Herald Tribune last Friday:

the issue that Japan has to slow savings and begin to spend is perplexing. Japan is the world's largest net creditor, and therefore the world's richest country. Some feel that Japan's standard of living is so high already that many simply don't feel the need to consume more.

"Japanese have higher incomes, more savings, longer lives and better health than Americans...and they work less to achieve it."

Japanese workers pay lower taxes (less than 12% of income vs more than 16% in the US), receive more services, have the best public transportation system in the world, and saved about 13% of their income last year (vs a negative number for the US). Japan is estimated to have about $6.5 trillion in savings. After more than a decade of economic weakness Japan's unemployment rate is 4.7% while after 8 years of "rip-roaring" growth the US has an unemployment rate of 4.2%.

In other words, if savings, health, security, taxes, vacations, and services are ignored, things are pretty tough right now in Japan.



Chris Powell (2/12/2001; 11:12:37MT - usagold.com msg#: 48096)
Murphy reports on meetings with miners union, SA Reserve Bank
http://groups.yahoo.com/group/gata/message/652
South Africa is awakening.

http://groups.yahoo.com/group/gata/message/652


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you don't have to go look for them,
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SHIFTY (2/12/2001; 11:09:52MT - usagold.com msg#: 48095)
Trail Guide
Old question
Trail Guide. Back on 1/4/01 I asked you a question and I never did see an answer. Did I miss your response or what ? I will re-post it below so you don't have to look it up.

Thanks $hifty
----------------------------------------------------------

SHIFTY (1/4/2001; 3:11:38MT - usagold.com msg#: 44999)
Trail Guide/FOA
Trail Guide/FOA: I am a small placer miner and own physical gold ( in most all forms) and also un-hedged mining company shares in equal amounts. I have a problem understanding how Gold will have a tremendous value and that this will not also be the case with un-hedged mining companies that produce the very substance that you say will be so valuable.If we hold physical gold in a safe place to be pulled out for use when needed , what makes the gold I hold better than the gold that will be poured into a bar on the same day in the future? Will it not have equal value in whatever is being used as the medium of exchange . I can see where physical may out perform shares ,and I also can see where hedged mines can go bust , but I must be missing something here. Are you saying that mining will be outlawed in the future? Or will it be performed only by a world government of some sort and all the people that own the mines can kiss their wazoo? I hope when time permits that you can shed some light on this for me. I know your time is more presious than gold right now and I pray that things work out for you and your family.

$hifty




Pandagold (2/12/2001; 10:42:08MT - usagold.com msg#: 48094)
Dave C

Whenever there is any change in money ( like when the UK changed to decimal currency) it is always an opportunity to short change the masses while they are confused.

However, the Euro will be a strong currency (it is now - it is just that the rhetoric doesn't allow you to believe it)
As you say, there is as yet no tangible currency but will be in January. I covered all this in a couple of posts.

Britain WILL join the Euro currency, the pound, like the Mark, and Franc, will fade into history. Totally ignore the
rhetoric to the contrary, as you would the oohs and ahs at a wrestling match. Bringing in the Euro is like bringing a great liner into dock, gently as she goes, touch on the tiller, pull on the ropes, avoid any bumps.

It WILL be a good thing now that the whole world is changing
and there is no going back. Nationalism is dying, you can't tell now which country a company belongs to.

I've got past worrying - just go with flow
Sorry for any errors have not time to edit

Thanks for your communication



Pandagold (2/12/2001; 10:27:19MT - usagold.com msg#: 48093)
Stocks Lies and Tickertape


Oo-oo-ps Sorry sir, I am making so many errors these days.

The part that really gets me about the name you use is the 'Lies', I am surprised you chose that. If one gives it thought I can possibly arrive at what you mean, but when one has to take in things quickly, like here, it could be mistaken incorrectly as to what, or who lies.

Just a thought. I don't mind I will go along with anything - for a quiet life - well, more or less.
Once again my apologies.

Midas Mulligan (2/12/2001; 10:25:18MT - usagold.com msg#: 48092)
Sun is rising with the price of gold. Both will peak on June 21st solstice
Minds/capitalists (suns) are buying gold from hearts/statists (moons) in conjunction with the rising sun and falling moon. Gold changing hands so price is kept artificially depressed as state central banks unload all of their supply to producers who will hold their gold until after June 21 when sun is at highest point/solstice and thus P.O.G at highest point, and then unload it for dollars which will put them/the sun on top and create a gold standard which means perfect universe and world... heaven on earth forever. Be prepared as the famous eagle scout Ross Perot would say, whose birthday is ironically on June 21. Gold is the leveraqe putting capitalists on top of socialists forever or sun on top of moon, and creating universal harmony/"nirvana" forever. Sell junk bonds to raise dollars to buy gold at it's bottom and then sell gold back at it's top for dollars. If you are wealthy buy physical due to liquidity problems with paper gold. If you aren't then maximize leverage using options with strike prices far out of the money.

Midas Mulligan (2/12/2001; 10:25:17MT - usagold.com msg#: 48091)
Sun is rising with the price of gold. Both will peak on June 21st solstice
Minds/capitalists (suns) are buying gold from hearts/statists (moons) in conjunction with the rising sun and falling moon. Gold changing hands so price is kept artificially depressed as state central banks unload all of their supply to producers who will hold their gold until after June 21 when sun is at highest point/solstice and thus P.O.G at highest point, and then unload it for dollars which will put them/the sun on top and create a gold standard which means perfect universe and world... heaven on earth forever. Be prepared as the famous eagle scout Ross Perot would say, whose birthday is ironically on June 21. Gold is the leveraqe putting capitalists on top of socialists forever or sun on top of moon, and creating universal harmony/"nirvana" forever. Sell junk bonds to raise dollars to buy gold at it's bottom and then sell gold back at it's top for dollars. If you are wealthy buy physical due to liquidity problems with paper gold. If you aren't then maximize leverage using options with strike prices far out of the money.

DaveC (2/12/2001; 10:21:38MT - usagold.com msg#: 48090)
Pandagold, The Firming of the Euro
Pandagold, I think you said you are in the UK. I am in Italy and have been here for almost two years.

When I ask people about the Euro, I usually get something like "Europe is not ready for it."

I think once the coins and notes are in circulation all this talk about who does not want it will disappear. People must touch it, hold it, spend it. Right now, it is not real to the man in the street.

Do you see it this way? DO you have another perspective on when it will, or what will cause it to, firm?

We went over to France saturday. Life will be SOOO much easier with the Euro, though I think prices will rise slightly as merchants "round up" their prices.

A friend of mine from Italy was with us Sat. He was trying to buy antiques in Nice. One dealer would not sell to him in Lira, only Francs. Of course, on a Sat it's hard to exchange money, especially when it's Carnival day! Needless to say, the merchant did not get the deal. Typical French.


Stocks, Lies, and Ticker Tape (2/12/2001; 9:51:44MT - usagold.com msg#: 48089)
Pandagold,......Japan cashing in its chips
They will have to in the event of a earthquake devastating Tokyo. The "money" for rebuilding will have to come from somewhere. They have not shown a willingness to print their own, at least not in AG's league.

(Although I am sure it was inadvertant, for my name, please keep the word "Stock" in the plural. In the singular it yields the whole of my name in a most unflattering way!-- Smile--)

Pandagold (2/12/2001; 9:40:51MT - usagold.com msg#: 48088)
Latest from Hong Kong re GOLD

Contained in my latest e-mail from HK is the following:

TOP STORIES
Li stakes $150m on gold project
Li Ka-shing's Cheung Kong (Holdings) is set to buy a HK$150 million stake in a gold bullion refiner in its latest diversification move.

There is much activity in China in various aspects connected with the gold industry, and they are putting a lot of money where their thoughts obviously are.

Now what is it that they know, and that Wall St et all appear (or pretend) not to?






Leigh (2/12/2001; 9:33:45MT - usagold.com msg#: 48087)
Journeyman
Journeyman, thanks for standing up for AG. I just know in my heart that he's still a goldbug. I'll bet he reads this Forum in his spare time.

Wouldn't it be great if we could get Ron Paul to ask him on TV sometime if he still believes gold is money? Wonder what he'd say?

Journeyman (2/12/2001; 9:27:35MT - usagold.com msg#: 48086)
Greenspan & tax cuts @Black Blade, ALL

Hi BB!

I'm partisan to Greenspan. I've followed him closely for over five years, tapeing his speeches and Q&A sessions whenever possible.

The man tells the truth whenever possible - - - which is more often than you'd think.

His position on tax cuts has been unequivocal: He has constantly said he preferred paying down the debt to tax cuts, BUT that he favored tax cuts over new spending.

The democrats immediately interrpreted that statement as an endorsement for their "tax and spend" mantra. If you know the propensity of congress to spend more than any increased revenue - - - that propensity reached something like spending $2.25 for every dollar of increased income during the Regan years - - - Greenspan was actually endorsing tax cuts.

But the republicans like to spend too, so they didn't call the democrats very often on Greenspan's message.

In short, given his statement and governments' historical proclivities, Greenspan has ALWAYS favored tax cuts.

Regards,
Journeyman

P.S. BB, thanks again for your great work on morning news and interpretation. I don't go anywhere without it!


VanRip (2/12/2001; 9:22:48MT - usagold.com msg#: 48085)
Black Blade
http://biz.yahoo.com/prnews/010209/co_newmont.html
Have you seen this? Looks as if Newmont wants to make sure it gets its share of power. Smart move for them?

Newmont Mining Corporation Executes Letter of Intent To Negotiate Power Purchase Agreement

DENVER, Feb. 9 /PRNewswire/ -- Newmont Mining Corporation has signed a Letter of Intent with El Paso Merchant Energy Company, a subsidiary of El Paso Corporation, to negotiate a 15-year power purchase agreement for 150 megawatts of a proposed 480-megawatt power plant near Carlin, Nev. The power project, to be owned by El Paso, is expected to be a major customer for the proposed 291-mile Ruby Pipeline project sponsored by another El Paso Corporation subsidiary, Colorado Interstate Gas Company.

Marketing efforts with other Nevada customers to secure additional purchase commitments to support the construction of the project are underway. The proposed power facility is estimated to employ up to 200 people during its two-year construction period and will have an operating staff of about 25 employees. The proposed power facility would utilize the newest natural gas-fired technologies available and would be one of the most efficient, environmentally friendly power plants in the western United States. The project is contingent upon securing additional purchase commitments, financing and regulatory approvals.

``As Nevada's largest power user, Newmont will be better able to manage its energy requirements into the future to ensure that it receives the lowest-cost and most reliable electricity and natural gas supplies possible. We will also be able to show our continued support to the local community and Nevada by leading the way for the development of this important energy project,'' said Jim Mullin, Newmont's senior vice president, North American Operations.

Newmont has also executed a Memorandum of Understanding (MOU) with Sierra Pacific Resources that will facilitate the ability of this proposed, new plant to market electricity directly to anchor retail customers within Sierra Pacific's service territory based upon subsequent regulatory approval. Newmont currently gets 110 of the 175 megawatts of power it uses annually from Sierra Pacific. This cooperative effort with Sierra Pacific ensures that generating capacity will be available to meet Nevada's growing energy demands.

The Ruby Natural Gas pipeline will transport natural gas from Rocky Mountain supply basins to the new power plant and to other customers along its route. The pipeline will extend from central Utah, where connections are available with Questar and Kern River pipelines, to an interconnection with Paiute Pipeline Company in the Elko area. The proposed route generally follows the I-80 highway corridor.

Newmont Mining Corporation (NYSE: NEM - news) is the largest gold producer in North America and second largest in the world. Newmont has been producing gold in Nevada since 1965. Last year the company produced 3.0 million ounces at its Nevada operations.

SOURCE: Newmont Mining Corporation


Pandagold (2/12/2001; 9:15:35MT - usagold.com msg#: 48084)
This one line said it all

In my post #48079 I felt that this line helps to divide the two camps.

Unfortunately, there is no provision on the page for highlighting or underlining, so sometimes the point is missed. This is especially true because most of us have to scan read because of time and wealth of material.

".....Hitchen said the majority of the complaints that led to Purcell's e-mail came from consumers rather than major financial firms........."


R Powell (2/12/2001; 9:13:48MT - usagold.com msg#: 48083)
Harmony hedge

Trail Guide, whether or not the one time cost (premium) of the put options is included in the loan is irrelevant.
The loan was for mining expansion. The bank was worried that Harmony wouldn't be able to repay IF POG sank lower SO the bank required some insurance of the Harmony's ability to repay. Harmony bought the right to sell gold at a future date at a set price. They own this right, it is NOT an obligation. If you buy an option to buy a piece of land at a set price for a length of time, you have the right BUT NOT the obligation to buy. Harmony can sell gold at a future date for a set price. If POG is higher than that set price at that future date, Harmony will get the higher price. They did not sell forward, they are not "locked in" or obligated to sell at all, at any price. If they do want to sell, they have assured themselves a minimum sale price.
Futures sales= obligations
Options may or may not be exercised.
Many of the complaints (forward sales) against the paper gold market are valid, this one does not hurt POG and seems misunderstood. In fact, because Harmony choose options rather than forward sales, I think this a good, positive sign.
Rich

Pandagold (2/12/2001; 9:06:39MT - usagold.com msg#: 48082)
Stock lies and Tickertape

True, and then there's the California one...........

I am not so sure about Japan having to cash in its 'chips', this has been suggested so many times over the years. Their economic situation of recent years has been such that this should have happened.

One has a feeling they would rather commit Hari Kari than surrender them, as to do so would admit defeat,or some such dishonour buried in the Japanese psyche.

I still think my first option is a possibility - almost a probability. It could get them off the hook in so many ways.

As Broderick would say, they have 'a cunning plan', and should they detect the sh*t is about to hit the fan, it is probably plan No1.

lamprey_65 (2/12/2001; 8:32:28MT - usagold.com msg#: 48081)
Correction
http://www.harmony.co.za/
Strike price, according to MiningWeb, is $250 vs the $260 I stated earlier.

I still don't see the gold lending arrangement here...it might help if I could read the original announcement from Harmony - unfortunately, I'm without Word on this computer.

As far as I can tell, this insurance (the purchase of puts) is required by the bankers lending money to Harmony to purchase the mines. Since the price of gold continues to fall, that seems like a prudent requirement on their part. I'm not saying there isn't more to this arrangement - just that I'd like to see it for myself in black and white.



Stocks, Lies, and Ticker Tape (2/12/2001; 8:18:49MT - usagold.com msg#: 48080)
Pandagold,......coiled gold spring
Too often overlooked is a trigger event that has a 1000 year documented history of human witness. It has a periodicity of 75 years. It last occurred in 1923. Although the loss of life due to fire will be limited due to extensive preparation, the physical destruction will be severe. It will again devastate the city of Tokyo. Japan will have no choice but to cash in their US treasury debt.

Pandagold (2/12/2001; 8:13:36MT - usagold.com msg#: 48079)
Just one of many
www.kico.com (Morgan Stanley , Clinton


Time an time again we are seeing clear evidence, which I personally, don't need to convince me, though others may, that there are two distinct camps divided, both in numbers, and in controlled wealth.

The two camps see the world from two entirely opposing perspectives.

Oh, the wealth side has by far the lesser numbers but by far the greater wealth (and power).

Only when we see that, can we hope to understand just a little of what is going on.

One tiny little example, so insignificant in a way but says it all, I set out below. But the world is full of them.



Sunday February 11, 6:36 pm Eastern Time
M. Stanley: Clinton Speech Was Wrong
NEW YORK (AP) -- The chairman of Morgan Stanley has told clients it was a mistake to invite former President Bill Clinton to speak at a company conference last week, a company executive said Sunday.

Chairman Philip J. Purcell said the decision to invite Clinton did not receive the proper review within the investment firm, Judy Hitchen, Morgan Stanley Dean Witter's vice president of communications, said in a telephone interview.

``We should have been far more sensitive to the strong feelings of our clients over Mr. Clinton's personal behavior as president,'' Purcell wrote in an e-mail message. ``We should have thought twice before the speaking invitation was extended.''

``Our failure to do so was particularly unfortunate in light of Mr. Clinton's actions in leaving the White House,'' he added.

Clinton has come under fire for pardoning billionaire fugitive Marc Rich and for accepting thousands of dollars worth of gifts. Clinton has stuck by his decision to pardon Rich, but he has returned several of the gifts.

Morgan Stanley Dean Witter acknowledged last week that it received several phone calls from customers irate that Clinton spoke at the company's annual High Net Worth conference, held this year in Boca Raton, Fla. Clinton was paid between $100,000 to $150,000 for his first speech since leaving office. It was closed to the press and the public.

``I fully understand why you are upset that former President Clinton spoke at one of our conferences,'' Purcell wrote. ``We clearly made a mistake.''

Purcell's comments were initially reported by The New York Times.

Hitchen said the majority of the complaints that led to Purcell's e-mail came from consumers rather than major financial firms.

Clinton spokeswoman Julia Payne on Sunday referred calls to Joe Lockhart, Clinton's former press secretary who attended the conference.

Lockhart, who left the White House last fall, criticized Purcell's comments. He said Clinton was given a warm reception and many of the people who attended ``came up and thanked him for the last eight years.''

``I think they (Morgan Stanley) worked very hard to be the first group to have the president speak,'' Lockhart said. ``To come out now and make a comment like that lacks class.''



Trail Guide (2/12/2001; 8:06:52MT - usagold.com msg#: 48078)
Reply
Chris Powell (2/11/2001; 12:32:20MT - usagold.com msg#: 48009)


CHRIS,

Thank you for your comments and clarifying your reasoning. I'll have another comment and note later.

TrailGuide



Trail Guide (2/12/2001; 8:00:44MT - usagold.com msg#: 48077)
Comment
lamprey_65 (2/12/2001; 7:40:22MT - usagold.com msg#: 48076)

Hi Lamprey,

The bank has the prerogative of cash settlement with these options, for the premium alone, or reorganize that portion of the financing into a gold loan,,,,, using the put as part of a physical deal. It all depends on whether the actual lender (whoever that may be (smile) is seeking immediate gold or not. Yes, the put writer may just function on the side with a cash settlement, completely outside the
physical play, to his favor or not, depending on the price. And physical gold may or may not be forced into the play. This is the problem that has overhung the whole paper market for a long time.

All through out this period, no one knows when someone is going to forces real gold to move. Usually, when it does, it's because a need exists in someone's portfolio and that need requires existing material. Not mined gold over time.

TrailGuide

lamprey_65 (2/12/2001; 7:40:22MT - usagold.com msg#: 48076)
Clarification
The opportunity cost in Harmony's case would be the money they spent on the puts (which could have been spent elsewhere) if POG stays above $260 and they decide not to exercise the option to sell at that price but at a higher level.

Pandagold (2/12/2001; 7:39:41MT - usagold.com msg#: 48075)
The coiled gold spring

I have have plugged this since I first started posting, I make no apologies for saying it again ( and again, and again).

The downward pressure on the coiled spring (gold) will be eased (not released) EASED, only when the Euro is firm on its feet, and not one minute before.

Unless, some huge metaphorical volcano, twice the size of Mnt Vesuvius erupts ( like Greenspan having a heart attack, or assassinated by a demented gold bug - or the Saudi government being overthrown) then, all hell would be let loose.

The first one IS a possibility.

lamprey_65 (2/12/2001; 7:36:31MT - usagold.com msg#: 48074)
TrailGuide
I don't agree with your analysis of the Harmony Puts. TVX has been buying puts rather than selling forward and this path has worked nicely - even during the FAll '99 spike.

The purchaser of the put, once again, has no obligation to sell, and I don't see any requirement to borrow.

Could they have an opportunity cost from the cost of the put -- yes, of course, that's what insurance does.

Trail Guide (2/12/2001; 7:30:19MT - usagold.com msg#: 48073)
Comment
http://www.iht.com/articles/10291.htm
Anyone that could not get the piece below from NY Service ( I mentioned it in a post to MK), it's now at IHT. See link above.

An Evolving Europe Raises U.S.-NATO Anxiety
Roger Cohen New York Times Service
Monday, February 12, 2001

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

-----R Powell (2/12/2001; 7:04:05MT - usagold.com msg#: 48070)
Salmon, the writer of that Bloomberg article is not correct when he says, "Harmony Gold Mining Co., South Africa's third-largest gold producer, said on Tuesday that it secured an option to sell 1 million ounces of borrowed metal." Harmony bought options but not for "borrowed" gold.-----

Hi R. Powell,
The problem with their structure of the deal is that if gold falls below $260, to $240 for instance,,, their banks would force them to borrow at the new $240 range and spot the gold onto the physical market. The paper market is not concerned with their mining new gold to sell into this option over
time,,,,,,, it's their precedent to almost every other miner to exercize their position with existing gold as the paper created price falls. Further breaking the system.

Again, whether or not this much gold can be borrowed today or not makes little difference. Once the paper sellers start piling on with naked positions on the otc, these mines will be forced to use their options. This is just another example of non-hard money players using existing paper market
structure to limit their cash risk. They don't care about gold, the market or the metal, they are just following the leader.

All of this is leading to a complete breakdown in the entire pricing system. We watch and learn.

TrailGuide

barnacle bill (2/12/2001; 7:21:10MT - usagold.com msg#: 48072)
Leigh #48055
Dream interpretation
I had an astrologer tell me one time that dreams are the reverse of what you dream. She then went on to tell me of a South Africian miner who dreamt of seeing his daughter covered with excrement. Knowing dream interpretation, he went down into the mine and came up with a very large nugget.
I had a dream years ago of being handed a large bag of garbage by a gaunt black man, shabbily dressed. I took the bag. I am still waiting...

Belgian (2/12/2001; 7:09:59MT - usagold.com msg#: 48071)
Forces.....
Still asking myself about a possible Squeeze force. Why it is not attempted and if such an attempt would make a chance to be succesfull and leave the manipulation away, once and for all ? I realise now that you can't fight a 32.000 tons army + hedged-tons ! So we better leave the paper-maniacs alone whilst working on their selfdestruction. That's the advantage of physical gold's force.

A General goldminers strike : I was afraid this would pop up with GATA's visit to South Africa. This is definitely a two edged sword. Ailing mines cannot afford a strike, without an immediate substantial POG-rise. Badly overhedged mines go bust in case of a possible result of POG-spike.
And what are the demands of the goldminers going to be in case of succes ? Some very difficult choices are to be made in case of a global strike-action. And is an eventual stike, resulting in an immediate and substantial decline in produced (delivered) gold ? What will be the reaction of the banks who provided the loans for survival or expansion or to be delivered hedge-gold ?

20 million $ for WGC marketing : their narrow point of vieuw is that jewelry gold is never returning to the market and that investment gold, always returns to the market when a hefty profit can be made. Not all gold-investors (goldmovers) are investing in gold for ever. But a sale of familly jewels is often a very critical decission.
Of course there is a gold-investment public. Parents who are steadily offering a golden coin to their children is not an act of instant rewarding speculation. Gold as a loyalty gift for years of faithfull service, has more emotionnal value than speculative purpose...etc...
My suggestion remains in promoting the use of gold in a broader spectrum of luxus items. To make this shift in perception happen...people should be reminded about the intrinsic value of gold. A global re-education campaign.
This is impossible today, due to the hyper focussing on POG's decline through the negative media mantras.
The entire gold-industry knows this state of mind very well.
But they do not know how to handle it. They can't get their act together. They must surely have their reasons for it.
And above all...the jewelry industry is not cooperative at all. That's why I suggest that gold-producers take their share of the gold-industry. !!!! And not only by producing 40 tons of gold chains ! The entire goldproduction must get a big piece of the 300% jewelry cake.
If Anglogold knows that we are in for a 5 year of physical gold overhang...they should unite and act, now !
Or start with an international Central Bank congres on GOLD.
South Africa + USA + CANADA + Australia, could embark on such an idea. If they consider this as a ridiculous suggestion...than they admit that gold has no public reserve-value anymore for them ! To commodity or not to commodity...that's their choice.
But realising that another 50.000 tons of proven underground gold is going to be slowly confiscated, needs a high degree of courage to face. Producers and jewellers remain stubbornly silent. They limit their responsibility, strictly to the good (?) mining practice. They wan't to have nothing to do with the above ground goldproviders.
OK fair enough... let POG decide if and when they will be forced to do so.

R Powell (2/12/2001; 7:04:05MT - usagold.com msg#: 48070)
Sal;mon
Not only irresponsible but wrong

Salmon, the writer of that Bloomberg article is not correct when he says, "Harmony Gold Mining Co., South Africa's third-largest gold producer, said on Tuesday that it secured an option to sell 1 million ounces of borrowed metal."
Harmony bought options but not for "borrowed" gold.
Re-post of 47942

Thanks Black Blade for the Barron's article (47936).
It is mentioned that in order to secure a bank loan, "Harmony agreed to purchase a put option, giving it the right, but not the obligation, to sell one million ounces of gold- about 40% of the company's annual production at about $260 apiece."
Harmony has bought insurance- namely that it will be able to sell gold no lower than $260/ounce. If the POG is lower, Harmony will exercise its options to get $260/ounce. If gold is priced higher than $260/ounce, Harmony will get the higher price and the option expires worthless. The bank's require insurance of the ability to repay, this is insurance but in no way obligates Harmony to sell at low prices. Forward sales in the form of futures contracts forces (obligates) sales at those predetermined prices. Options do not. Harmony has, IMHO, made an excellent move but purchasing options rather than forward selling gold production (with futures).
Think of these options and their cost as similar to homeowners (fire) insurance and the premium it costs. The bank requires the insurance so that you will be able to repay the mortgage. You hope never to collect on the fire insurance, Harmony hopes never to exercise those options.
It would seem Harmony thinks POG will be higher in the future as it spent money on the options premium rather than simply selling forward production. Also, the loan secured is to increase production which also makes one think they are betting on a higher POG. I see this as good news, too bad I don't determine the POG, no? It would be much higher!
Rich



Pandagold (2/12/2001; 6:51:31MT - usagold.com msg#: 48069)
Gold and the BBC

(First let me say WOW! Gold up over $1 in NY, and after all that heavy flak)

On with the main post:


Unlike the USA the UK on its basic TV channels (as opposed to cable TV) supports few 'business' (as in financial markets) programs. For just one half hour at midday we have what they call 'Business Lunch' (BBC2) where things appertaining to the financial markets are discussed.

I watch this daily while having lunch, and, until today, gold mention has been conspicuous by its absence.

Today, however, the disillusionment with gold was highlighted. Great mention was made of its fall from grace. ( plug, plug). Also mentioned was WGC's attempt to restore its flagging interest by promoting its uses for jewellery.

It mentioned that in trying to understand how people viewed gold they got a random crowd in a room and asked them to air their views on how they see the metal.

They didn't explain fully how this was set up, but any psychologist would know that if it was by voicing it publicly, one person's views can tend to rub off on another. Many said it was brash and ostentatious (probably the 'have nots' and those who didn't want the have-nots to think that they were brash and ostentatious)

What aroused my interest was the conclusion drawn that somehow the past allure of gold, its — 'sensuality, and spirituality' (whatever that means) has been lost and should be restored.

I wonder how many millions WGC paid to arrive at that.

I concluded the program was another, slightly subtle, metaphorical nail in the gold coffin. Incidentally, why do they nail (screw) down coffins? (smile, we get so few opportunities)

Pandagold (2/12/2001; 6:16:40MT - usagold.com msg#: 48068)
Correction

should be 'THEY even care that we notice.'
Sorry

Pandagold (2/12/2001; 6:14:56MT - usagold.com msg#: 48067)
Salmon Irresponsible? To whom?


It could only be really termed irresponsible if we afford the press (or all media) the accolade of being 'free'.

They are merely behaving 'responsibly' to their masters by structuring their journalism within the confines, and direction, of what 'his/her master's voice' dictates.

This is becoming so evident as each day passes. I don't think we even care that we notice, just as the cigarette manufacturers don't mind putting the health warnings on their products.

There is the surveillance and might of the government security forces, behind them, to put down any insurrection should anyone dare.

SALMON (2/12/2001; 5:56:04MT - usagold.com msg#: 48066)
IRRESPONSIBLE JOURNALISM
02/09 13:06
Gold Falls on Increased Selling of Borrowed Metal by Producers
By Claudia Carpenter

New York, Feb. 9 (Bloomberg) -- Gold fell to a 16-month low, dropping for sixth consecutive session, as producers rushed to sell borrowed metal to lock in prices for future output.

Prices have dropped 3.6 percent since last Thursday, partly on expectations that a stronger dollar would reduce global demand. The decline has prompted mining companies such as AngloGold Ltd., the world's largest producer, to sell borrowed gold, adding supplies to the market and extending the price slide.

``Producers are just scared that they're going to miss out'' on current prices, said Clive Ginsberg, a fund manager at Mariner Investment Group, a hedge fund based in Harrison, New York. ``They see everybody else selling, so they just do it. It's the same attitude that prevailed in 1999,'' when prices fell to a 20-year low, he said.

Gold for April delivery fell as much as $1.30, or 0.5 percent, to $260.90 an ounce on the Comex division of the New York Mercantile Exchange, the lowest price since Sept. 21, 1999, and only 3 percent higher than the low of $253.20 reached in July of that year. In London, gold for immediate delivery fell $2.75, or 1.1 percent, to $259.80 an
ounce, also the lowest price since September 1999.

Gold has lost more than a third of its value since 1996, as central banks sold bullion from reserves and tame inflation reduced investor demand for the metal as protection from higher prices. Gold futures may fall as low as $225 this year, said Carlos Perez-Santalla, president of Hudson River Futures in New York.

Contributing to the slide in the past week were expectations that the earthquake in India will reduce demand from the world's biggest consumer of the metal.

AngloGold, Harmony

Mining companies anticipating a drop in prices can sell borrowed gold on the assumption that they will be able to repay the loan with future production that would be worth less if sold on the market.

An AngloGold executive this week reaffirmed the company's policy of selling gold forward to lock in prices. AngloGold will sell forward 50 percent of its annual production over the next five years, Kelvin Williams, executive director of
marketing, told a mining conference in Cape Town.

Harmony Gold Mining Co., South Africa's third-largest gold producer, said on Tuesday that it secured an option to sell 1 million ounces of borrowed metal.

Thee increased demand from producers has helped send lease rates for gold in London close to a six-month high of 1.0113 percent for one month, on an annualized basis. Producers also are increasing sales of borrowed gold on concern that a further strengthening of the dollar would give them even less when the proceeds are converted back into the local currency.

The dollar has gained 3.8 percent against the South African rand and 4.2 percent against the Australian dollar this year. South Africa is the world's biggest producer of gold and Australia is No. 3.

India

The earthquake last month in the Indian state of Gujarat that killed at least 30,000 people will reduce the country's gold consumption by about 20 tons in the first three months of this year, said Derrick Machado, regional director in India for the World Gold Council.

The earthquake struck ``right in the middle of the marriage season,'' when sales of gold jewelry normally soar, Machado said. Jewelry makers fled manufacturing centers in the state fearing aftershocks, he said.

Gujarat accounts for about 5 percent of India's total gold consumption, Machado said. The country consumed 785 metric tons of gold last year, according to Gold Fields Mineral Services Ltd. in London.

MY COMMENTS IN CAPS RESPONDING TO EXCERPTS FROM ARTICLE ABOVE.

HERE YOU HAVE, WHAT IS CALLED IRRESPONSIBLE JOURNALISM, AND THAT IS THE USUAL FROM BLOOMBERG
BAD, VERY BAD BLOOMBERG…

Gold fell to a 16-month low, dropping for sixth consecutive session, as producers rushed to sell borrowed metal to lock in prices for future output.

HOW DO THEY KNOW THAT? GID THEY SEE THEM ACTUALLY RUN TO THE SELLING COUNTER?

``Producers are just scared that they're going to miss out'' on current prices, said
Clive Ginsberg, a fund manager at Mariner Investment Group, a hedge fund based in Harrison, New York. ``They see everybody else selling, so they just do it. It's the same attitude that prevailed in 1999,'' when prices fell to a 20-year low, he said.

SCARED OF WHAT? MR.GINSBERG, THEY CAN BUY THE GOLD CHEAPER ON THE MARKET THAN PRODUCE IT. ARE YOU SELLING YOURS AS WELL MR. GINSBERG?

Gold has lost more than a third of its value since 1996, as central banks sold bullion from reserves and tame inflation reduced investor demand for the metal as protection from higher prices. Gold futures may fall as low as $225 this year, said Carlos Perez-Santalla, president of Hudson River Futures in New York.

HEY MR. CARLOS SANTALLA FROM HUDSON RIVER FUTURES IN NEW YORK, CAN YOU SELL ME THE GOLD AT $225/OZ FOR DECEMBER DELIVERY? IF NOT, THEN SHUT UP.
BY THE WAY, I HEARD THAT CARLOS SANTANA WAS CALLING FOR GOLD TO GO TO $1025/OZ. BOTH STATEMENTS ARE IRRELEVANT, SO WHY PRINT THEM.

The increased demand from producers has helped send lease rates for gold in London close to a six-month high of 1.0113 percent for one month, on an annualized basis. Producers also are increasing sales of borrowed gold on concern that a further strengthening of the dollar would give them even less when the proceeds are converted back into the local currency.

THIS IS NEW CURRENCY CONVERSION COURTESY OF CLAUDIA CARPENTER. HEY CLAUDIA IF YOU CONVERT US$ TO RAND, AND THE DOLLAR WENT UP, NEXT TIME WOULD YOU RECEIVE LESS RANDS? HELLO!


AND THESE PEOPLE ARE ACTUALLY GETTING PAID FOR WRITING THIS NONSENSE. I WILL CONTINUE READING USA FORUM FOR GOOD INFORMATION.
SORRY I CAN'T PUT THE LINK, THEY CHARGE YOU $2.50 FOR THIS TRASH.





Pandagold (2/12/2001; 5:11:37MT - usagold.com msg#: 48065)
GOLD, POG, WGC (and their promotion efforts)

Why any efforts by the WGC to promote gold jewellery will fail while accompanied by a falling gold price:


One of the allures to buying, and wearing, an item of fashion is its exclusivity -which goes hand in hand with price.

Would the more high grade perfumes become more sought after by lowering the price — something the perfumeries could do quite easily? Of course not, it would kill them stone dead.

When 'copies' are made — and indistinguishable ones from the real thing have been, and sold in the street markets cheaply, they have only sold because the original is still exclusive (that's why copies are made).

There are lots of uses to which gold could be put to replace other metals, not just because of its appearance but because of its properties. Only price, so far, prevents this.

There are many wealthy homes, and some not quite so wealthy but like to feel so, that have splurged on having all the bathroom fittings in gold. The benefits being two fold, a smart luxurious feel to that one room in the house that alongside the kitchen is the pride of she who rules the roost, and the fittings don't rust, or discolour.

If POG falls, and this could be in two ways — the price falling against the general market, or the general market rising against the POG, then demand could increase for the use of gold in areas where the metal has been unacceptable because of cost — and these could be, and likely to be, in more areas that would be contradictory to fashion and exclusivity.

Once an image is destroyed, be it human, or otherwise, it is very difficult, and often impossible, to restore. This, with gold is, regrettably, happening at this moment.

Thankfully, It has not yet passed the point of no return. Gold will always have a demand and a use — but, if the brakes are not applied, for 'exclusive' jewellery, or an Indian brides dowry, its time could well be limited.

My faith, and my understanding of who are behind gold, and all precious metals (besides all things of great value) is such that I do not believe this will be allowed to happen at least not too hastily, and drastically, until a replacement that can fill the void has been found, and controlled.

Platinum, is being 'pushed' in so many ways (even credit cards) as the new exclusive and fashion desirable PM, but I do not know enough about this metal — such as production costs, availability, and just how much is in full control of the 'cabal' (I hate the word but it is a convenient euphemism). I do know most of the world's supply is in Russia, and South Africa where, as yet, governments, and economies are so unstable and can turn on a coin, that this alone, at the moment, could be a deterrent to a full take over by the 'upper crust' silver metals.

Pandagold (2/12/2001; 5:08:56MT - usagold.com msg#: 48064)
Errors

Why can I NEVER spot my typo errors before I post? It is so frustrating.

Pandagold (2/12/2001; 5:06:44MT - usagold.com msg#: 48063)
Leigh

I once read that what is depicted in dreams is opposite to what will happen in reality. I am not that much into the 'meaning' of dreams ( save that they are necesary for our well being, though I am a psychologist. However, I hope I misread something, or the writer was as cluless on the subject as I am.

WAC (Wide Awake Club) (2/12/2001; 4:58:47MT - usagold.com msg#: 48062)
Euro on its way to a reserve status
http://uk.news.yahoo.com/010212/80/b0zfy.html
Prodi says euro will rise due to use abroad
PARIS (Reuters) - European Commission President Romano Prodi said in an interview on Monday the euro would rise in value because it would be increasingly used in countries outside the eurozone.


Prodi told the newspaper France Soir that it was normal that the euro lost value against the dollar last year when it was being talked about as a "phantom currency."


"Today it's different. The currency will strengthen thanks to its use in neighbouring countries," he said.


"The common currency will be accepted in the Balkans and in North Africa... one could add Turkey, Poland, Ukraine, Romania and Slovenia.


"Don't forget Britain, even if its reference currency is sterling and will remain so," he added. "The euro will be accepted by many merchants in London as a means of payment."

MY COMMENTS
===========
What does he mean abroad? The Americas, Africa? Any ideas anyone.

ORO (2/12/2001; 4:33:53MT - usagold.com msg#: 48061)
Consumer debt service - not as bad as advertised
Consumer Debt Service Payments as Percent of Disposable Personal Income
1980 8.4225
1981 7.7450
1982 7.5450
1983 7.4450
1984 7.6525
1985 8.1375
1986 8.3975
1987 8.1000
1988 7.7200
1989 7.5650
1990 7.2225
1991 6.7200
1992 6.2100
1993 6.1200
1994 6.3750
1995 6.8275
1996 7.3625
1997 7.5025
1998 7.5725
1999 7.5900


Black Blade (2/12/2001; 4:32:47MT - usagold.com msg#: 48060)
Greenspan to Give Prognosis on Tuesday
http://biz.yahoo.com/rb/010211/e.html

Snippit: …when the venerated Fed chief presents the testimony that used to be known as Humphrey Hawkins to the Senate Banking Committee on Tuesday, he will probably be forced to repeat what had to be a painful admission for him several weeks ago -- that the economy has ground to a near standstill. Greenspan will also face angry Democrats who felt slighted when he gave a green light to tapping huge budget surpluses for tax cuts in his last appearance on Capitol Hill on Jan. 25.

Black Blade: So it goes, with Cheeta facing the music. He's quickly running outta bananas. He's quick to change direction when a new face settles in at the White House – isn't he? Call it "self-preservation", he has had a taste of power and he wants to keep it at all cost. Now he has to pander to the new boss.




Black Blade (2/12/2001; 4:24:47MT - usagold.com msg#: 48059)
Calif. Utilities Face Judge, Deadlines
http://biz.yahoo.com/rb/010211/r.html
The Kalifornia Utes that are in techical default on their "paper" face "da Judge" today. They hope to get a reprieve with suppliers "forced" to "rob Peter to pay Paul." could get "interesting" as the Utes hope to someday be able to recover tens of billions in past costs.

- Black Blade

ORO (2/12/2001; 4:23:26MT - usagold.com msg#: 48058)
Gold and disaster - it ain't necessarily so
Gold held as insurance does not mean that the holder is hoping for disaster. No more so than one wishes for a fire burning down their house. Gold advocates such as myself are, however, calling for a monetary disaster because the earlier it comes the less damage is done.

Seismologists always state their hope to see a California quake earlier rather than later. Not because they wish Californians any evil, but because the sooner the pressures that create earthquakes are released, the better.

Investors in gold are speculating that the price of gold would rise because they think it is undervalued, or because of certain instabilities they expect would push people to stampede into gold, raising its price. Few understand the basics of banking and money, including many top level bankers, therefore it stands to reason that the gold investor is expecting sales from inventory (CB reserves etc.) to behave as commercial interests would, and expect prices to adjust to supply and demand. The point is that the CBs and bankers in general behave in quite the opposite way one would expect of a commercial interest. Their profitable business (and the political standing of the CB leaders, and thus their practice of patronage) are dependent on gold not functioning as a money, and not resuming its trade premium as such. Their business is the capture of the trade premium of gold (particularly that of the CB and government).

MK presented the picture of the gold holder as hedger, investor, and short term speculator well. That speculators in gold contracts believe they can "make" money out of a disaster of the type that would wipe out their counterparties still amazes me, even after hearing the protestations repeated ad infinitum.



Black Blade (2/12/2001; 4:18:19MT - usagold.com msg#: 48057)
Consumer Credit Quality to Worsen on Layoffs
http://biz.yahoo.com/rb/010211/n.html

Loose credit may be about to end.

Snippit: The deterioration in consumer credit-worthiness, analysts predict, would dent economic growth as families scale back their spending to manage debt payments. In the meantime, credit card companies are bracing for increases in late payments and defaults among their cardholders. According to the Federal Reserve Board, the household debt-service burden -- the percentage of household debt to income -- at 13.5 percent is the highest in nearly 13 years.

Black Blade: Ouch! Like a replay of the 1970's!


Black Blade (2/12/2001; 4:04:03MT - usagold.com msg#: 48056)
RE: tg
Sorry, I didn't mean to strike a raw nerve. Obviously you must be aware that the FA and TA crowd have been trading light banter over these differing approaches for many a year now. I apologize for my feeble attempt at humor. We all have different approaches though we strive for the same goals. Yet, I have never lost because of my gold positions. Gold is only a diversifier and insurance policy as far as I'm concerned. My gains have come mostly from other sectors. I never have expected to make tremendous gains from gold though it is possible in the right circumstances. I played the Dot.Com and High-Tech game for substantial gains knowing full well that it was grossly over-valued by any stretch of the imagination. I just took advantage of the speculative greed of others and sold out way before the bubble burst. This financed several gold purchases and a strong move into energy, energy services, drillers, real estate, and Utes. I have taken gains here as well. The point is not to get greedy. The old saying is still true: "pigs get slaughtered." For me, the big-picture still holds. The economy is about to come apart, slowing growth, earnings warnings, grossly over-valued markets, flood of money supply, etc. and if we are lucky, it will only be as bad as the recessionary 1970's. I fear that we have gone too far over the edge and it will be worse. However, I position myself accordingly while still being well diversified – come what may. Take care.

- Black Blade



Leigh (2/12/2001; 3:57:34MT - usagold.com msg#: 48055)
Dreaming of Gold
I just woke up from a fantastic dream! Gold went up to $710 one day. Then, as I kept pressing the Refresh button, it went up to $835 and on and on. It was a very vivid dream, and I have the feeling something good is going to happen soon.


Randy (@ The Tower) (2/12/2001; 3:48:22MT - usagold.com msg#: 48054)
"Exploding Inflation" at The Gilded Opinion!
http://www.usagold.com/gildedopinion/HamiltonInf.html
Once again we are pleased to share with you the literary/economic stylings of Adam Hamilton of Zeal Research at our Gilded Opinion pages. Click the link above to gain gain valuable perspective on historical investment manias spawned by periods of easy money...and witness the massive credit bulge now in the works as the Fed slashes interest rates on borrowing -- and with it, the remaining vestiges of monetary restraint.

Black Blade (2/12/2001; 3:46:09MT - usagold.com msg#: 48053)
Gold slumps as markets ponder the 'd' word
http://afr.com/marketwrap/commodities/2001/02/12/FFXL6AUJ2JC.html
Deflation? Uh-Oh! Anything spin will do if needed to knock down gold a peg or two.

ORO (2/12/2001; 3:24:59MT - usagold.com msg#: 48052)
USAGOLD, of conspiracies and like minds
Needless to say, conspiracies are always with us. It is quite routine to speak of in-groups and cliques anywhere from High School, fraternities, corporate politics and boardroom coups, university faculties, competitors "conspiring" to form a cartel, stock jobbers coordinating a gouging of investors and traders, unions and contractors pressing their politicians to forbid "outside" competitors etc..
The particulars of who occupies positions and what the rules are is being traded for support, favor, or money all around us. In all cases conspiracy is intended to obtain something at the expense of others, even if it is only to undo an injustice. It is only in positions of duty, whether fiduciary, representative or other, that conspiracy moves from being the plot for a bank robbery into the gray area where the plotters are likely to have none seeking their undoing.
Some conspiracy is done in public debate, some in view of the public, but most is done in sectret because those conspired against are deprived of defense if an attack is unknown. Most conspiratorial of all are politicians and government officials who are positioning themselves always for positions that would provide them a chance to trade favor for payoff. The revolving doors of regulator's offices lead directly to the regulated's.

Like minds see like opportunities and tend to meet often. Bankers, because their business is so much dependent on each other's actions, are most prone to cartels (VISA and Mastercard involve a consortium of 4000 banks and 3000 banks, with most of the banks in both systems - just to provide an example). A bank that is expanding more rapidly than average is always in danger of going broke, one expanding more conservatively (holding ample liquidity) may become the refuge of depositors in time of turmoil, accelerating the demise of his weaker competitors, even the largest of banks. The solution: eliminate competition on the issue of safety (fiduciary performance) by creating a common reserve to all banks - a central bank, create a regulatory body whos job is to make sure all banks are proceeding with the same (loose) credit standards, and create the FDIC which prevents the bulk of depositors from having a motive to check on their bank's creditworthiness.

The elitist discussions of technocratic global government were commonplace in academic circles of the 19th century and even before, both in writings and in discussion. Bankers discussed openly their intentions to create these systems, which amount to cartels enforced by government, since banks were first chartered in Venice and Florence.

It takes very little to put like minds to like purpose in coordinated action unless it is the people at large and the promoters of liberty and free markets. Why? because the prospect of free markets offers no particular and specified advantages to any of the particular participants in a coordinated action to gain such an objective. It's that simple.

If there is an opportunity to gain advantage by statute, regulation, or action of law, you can be assured of some group trying to obtain the advantage. The scope of conspiracy matches the size and extent of the opportunity for advantage or favor.

tg (2/12/2001; 3:22:12MT - usagold.com msg#: 48051)
re blackblade
You say that you're "no expert on 'Waves' or so-called 'Cycles.' Then again, I don't follow the stars or read chicken entrails either."'

I say, if you followed the stars and looked very closely at those chicken entrails, you may have made more money than holding gold for the last 20 years. NEVER DISMISS ANYTHING
and please don't patronize

Black Blade (2/12/2001; 2:36:38MT - usagold.com msg#: 48050)
Television Gold Commercial
OK, so here's my shot at it

Fade in: Several black families in SA with pencil thin arms and legs, bloated bellies and with flies climbing in and out of their facial orifices. The narrative graphically describes how life has changed in SA since the SA gold mines have closed and miners have lost their jobs. Fade out.

Scene 2

Fade in: Several obese bankers surrounding a full banquet table, laughing, joking, swilling various liqueurs and lighting cigars with $1000.00 bills. Their faces morph into those with facial features resembling pigs. Pan back and other "guests" are wearing white hoods and robes with the "Stars and Bars" prominently displayed in the background surrounded by "lawn jockeys." All the while, the narrative describes that in spite of a gold deficit, manipulative forces are out to shape the "New World Order." Fade out.


Black Blade (2/12/2001; 2:17:23MT - usagold.com msg#: 48049)
RE: tg
I don't quite understand the T&A chartists. I'm no expert on "Waves" or so-called "Cycles." Then again, I don't follow the stars or read chicken entrails either. I just look at the "big-picture" and see that there are a lot of inconsistencies as well as blatant contradictory information. When there is a demand greater than supply, one could reasonably assume that a price of any given "commodity" would rise in response. Yet with gold, there is no such reaction. This only occurs when there are price controls and manipulative efforts to control pricing. These efforts tend to end badly as with the Nixon, Ford, and Carter attempts to control energy prices in the 1970's. The results were disastrous just as today's attempts in the energy markets will be. These concepts are as basic as the old economic paradigms such as the "Guns and Butter" models, etc. I still say that I can't prove beyond a reasonable doubt that there is a manipulation scheme as far as gold is concerned. However, Reg Howe is pursuing a civil action where only a positive outcome can be gained based on a preponderance of the evidence.

- Black Blade



Randy (@ The Tower) (2/12/2001; 2:16:04MT - usagold.com msg#: 48048)
Food for golden thought...
http://www.usagold.com/productspage.html
When popular perception and sentiment of the Western investing masses change, leading to massive money chasing physical gold, the higher prices that will be paid will not be because the gold is suddenly "new and improved" over the good quality substance we are currently acquiring today with knowing smiles.

It will rather be because the paper gold market and the dollar itself are seen in popular perceptions as "old and impaired". Given the choice to hold either substance (nature's metal or government's mettle) in proportion to what the market dictates as the instantaneous equivalent between the two, would you readily give up significant quantities of your life's tangible gold savings in exchange for a paper "price snapshot" of the failing dollar?

No, and neither would your neighbors. With this newfound perspective, where do expect the physical gold to come from to satisfy demand after "the sentiment turn"? Remember, this is a tight market that is already dependent upon "fractionalization" of bullion banking to meet the current demand--putting the same gold seemingly in several "satisfied(?)" pockets at once.

You have the recipe for an explosive and unrelenting upward revaluation driven by realities of this same physical market that currently (blissfully) yields to us (the acquisition-minded) adequate gold for only so long as the price falls or holds steady while paper gold remains to be seen as a credible substitute. Who dares to awaken to a new dawn without the comfort of gold already in hand (now available near 22-year dicount pricing due largely to the inflated supply of "ledger (paper) gold")? Now is a good time to establish your core portfolio holdings of this world-class reserve asset if you haven't any, and look to add more gold later if time remains on your side. Only YOU can do this for you.

Call Centennial today, and say "Thanks" for bringing you this website...a bastion of clear economic thought within a wayward world searching for meaningful direction.

Black Blade (2/12/2001; 2:06:08MT - usagold.com msg#: 48047)
An Ingenious Plan?

Farfel,

that was a really good one. I could just see ads like that on TV. On a more serious side is that there is a campaign of misinformation. Recently a couple of gold producers and the media have talked of an "overhang" in the gold market, and yet there is a yearly deficit of up to 1700 tons with up to a collective 10,000 ton short position. The WGC does not seem interested in anything but to push forward with a campaign to spur jewelry sales. I don't see a lot wrong with that angle, though that is a somewhat lame approach. They could show the gold markets in the middle-east and Asia where 22K to 24K gold jewelry is also an investment and shame the western jewelry trade by calling their product crap. They could also show that there is a deficit in the gold supply-demand equation through ads on CNBC, CNNfn and Bloomberg. They could also make their case in paid ads in the Wall Street Journal, Financial Times, and Investor Business Daily. Apparently they do not wish to do this. There is more to this than meets the eye. Right now, investors are subsidizing the vast majority of gold miners. When they ultimately fail, as in the case of Pegasus Gold for example. The bankers simply take over the operation and say "adios" to the shareholders. I suspect that most forward sold miners will ultimately suffer that same fate. It is an ingenious plan. Let the investor float the operation until the POG looks appetizing and the resulting rise in price forces the companies into financial distress. The shareholder gets screwed, the top management and board of directors grab their golden parachutes (as did Warren Nenecker – former CEO of Pegasus - $10 million, and the board of directors), and the bankers get the company (now called Apollo Gold). Though Pegasus Gold's problems arose during lower a period of lower prices, you can appreciate how this same scenario will play out with the large forward sold miners. As I said, it is an ingenious plan. Only fools would buy into forward sold miners. Shareholders finance (float) the operation until the opportune moment. We are heading into "interesting times."

- Black Blade


tg (2/12/2001; 1:22:49MT - usagold.com msg#: 48046)
Gold slumps as markets ponder the 'd' word
http://afr.com/marketwrap/commodities/2001/02/12/FFXL6AUJ2JC.html

I think sometimes we ought to look outside our conspiracy theories of manipulation and perhaps take aboard another view to why the POG is where it is.

Part of the following from the link above may be valid to some degree.
Makes sense too if you follow kondriateff cycles.

Please consider

" Gold, the most inflation-sensitive commodity, fell on Friday through $US260 an ounce for the first time since September, 1999 and is now close to the 20-year low of $US252 an ounce hit in August the same year.

"The gold market is telling us that inflation isn't the concern, it's deflation that is the worry," one bullion dealer said.

A number of economists are concerned that a muted response over the next few months to the aggressive interest rate cuts by the US Federal Reserve may result in deflation.

This is a cycle of falling prices of goods, of money (interest rates) and of financial assets, such as stocks and bonds. Japan has been in a deflationary cycle for more than 10 years.

Japan's stockmarket has lost two-thirds of its value since 1989 and is now back at 1986 levels, Japanese 10-year bonds are yielding 1.4 per cent and Japanese growth is still flat.

And while Japan has special economic structural problems and political rigidities that have made adjustment difficult and prolonged deflation, the root cause of deflation was the financial and real estate asset bubbles in the 1980s.

Mr Barton Biggs, an economic strategist with Morgan Stanley Dean Witter in New York, said that in the US "it seems unlikely that the biggest bubble and the longest boom in history can come to an end without weeping, wailing and gnashing of teeth".

"If inflation is almost non-existent at the tag end of a boom, what will happen during the recession?" Mr Biggs said.

"What is unusual about this cycle is that the US is entering a recession with very weak core pricing. Despite a massive infusion of liquidity and strong growth, commodity prices have been falling since the Asian crisis, wage inflation is low, job growth has slowed, and the world has substantial excess capacity of many goods and services."

Most economists at this stage expect a V-shaped recovery later this year. Certainly the gold market is not telling us this, and nor are other commodity markets.

Silver fell back to its Asian crisis levels. It slumped to $US4.53 an ounce at one stage on Friday, its lowest level since August, 1997, and the base metals were also soft.


Nickel lost more than 5 per cent of its value last week and fell to its lowest level in 19 months to close at $US6,250 a tonne on Friday and zinc fell to 20-month lows to close at $US1,026 a tonne.

Aluminium and copper, however, remain firm because of supply cuts in the US that have resulted from the power crisis in the US Pacific north-west.

Rural commodity markets are also generally soft. Cotton fell to its lowest level for a year on Friday, wheat is still hovering just above its December, 1999, 22-year lows, oilseed markets are very weak, with US soybeans at their lowest level for six months and just above 25-year lows, and even wool in US dollar terms is still weak at around half its price back in mid-1997.

Cattle prices and energy prices are the exceptions to this sluggish commodities picture."




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


Black Blade (2/12/2001; 1:20:54MT - usagold.com msg#: 48045)
Thieves in the White House
A few months ago I got to joking around here at the forum about the corruption at the White House and I said that the Secret Service should make an accounting of the silverware before the Clinton's left. Wish we had a search option here. It seems that the joke has become reality. I see that Sen. Arlen Specter (R-PA) is calling for an investigation with possible impeachment proceedings. How can an ex-president be impeached? Apparently he can be impeached, though he would only likely lose his pension and Secret Service protection. At least he left with some silver. His ol' Lady could even sit in judgement of him. I'll venture another prediction - she divorces him within 4 or 5 years.

- Black Blade

Randy (@ The Tower) (2/12/2001; 0:45:51MT - usagold.com msg#: 48044)
Father of the "strong dollar policy" fears for the life of his offspring?
http://biz.yahoo.com/rf/010211/n11474157_2.html
(Reuters) HEADLINE: Former Treasury Secretary Rubin opposes Bush tax cut

In an op-ed piece penned for the Sunday NY Times, former SecTreas Robert Rubin wrote, "I feel so strongly that a tax cut of the magnitude proposed is a serious error in economic policy," thus putting himself at odds with his Citigroup boss, Sandy Weill, who was said to have supported tax cuts during a breakfast meeting hosted last week by current SecTreas Paul O'Neill.

Rubin continued, "We should avoid committing ourselves to dramatic courses of action that are hard to reverse in the face of the inherent uncertainties of any projections."

When "uncertainty" defines the uncharted waters ahead, especially seen reinforced simply by the differing views of these "giant" financial helmsmen, then the tangible wealth of "gold" is surely the compass to help you navigate your personal lifeboat through the shifting seas...under sole control by your own sovereign management backed by the natural fiscal austerity of Mother Earth.

Always remember this: when the going gets tough, they can't print gold.

(But oh, how they do try!)



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Friday February 3
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