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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...

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ARCHIVED DISCUSSION FROM 2/12/2003
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Black Blade (02/12/03; 23:51:29MT - usagold.com msg#: 97539)
Human shields are "moths to a flame"
http://www.reuters.co.uk/newsArticle.jhtml?type=topNews&storyID=2219765

Snippit:

WASHINGTON (Reuters) - The U.S. State Department has suggested that Western anti-war activists who aim to stop a U.S.-led war against Iraq by acting as "human shields" are like moths flying to a flame. "While you're at it you might as well ask me why moths fly into porch lights," State Department spokeswoman Jo-Anne Prokopowicz said when asked about the reports that people planning to act as human shields had received Iraqi visas. About 50 activists, including U.S. citizens, announced in Turkey on Tuesday they had obtained visas to enter Iraq, where they hope their presence and the possibility of Western casualties would prompt Washington to rethink any attack.

Black Blade: Human Shields? Somehow I find using human bodies ineffective against bombs and fragmentation devices. But then again, when it comes to natural selection Darwin was right. Future "Darwin Award" candidates?

timbervision (02/12/03; 23:46:21MT - usagold.com msg#: 97538)
Belgian and miner49er
I wanted to write this brief note to again express my thanks to both of you for the time taken in sharing your understanding of gold. Reading and absorbing what both of you have presented today has occupied much thought. When the future of gold-in-possession is matched to all that is unfolding in the world today, not owning gold has to be seen as the greater risk and danger.

timbervision

Black Blade (02/12/03; 23:34:00MT - usagold.com msg#: 97537)
Japan fears shrinking feeling
http://news.bbc.co.uk/2/hi/business/2751653.stm

Snippit:

Japan's government is piling pressure onto the Bank of Japan (BoJ) to inject more money into the country's economy. The pressure comes ahead of figures due out on Friday which are expected to show the country's brief spell of economic recovery is over. Interest rates in Japan are already practically zero - the only thing keeping many of its debt-ridden firms afloat - but politicians bereft of options want the bank to be radical. All eyes will be on the change in gross domestic product between September and December, which most fear will show contraction and thus an abrupt end to the shortest economic revival since the Pacific War.

Black Blade: Meanwhile Japan props up the US dollar and sells Yen to weaken its already nearly worthless currency. In about a month and a half the next "April Fools Surprise" will be sprung upon the Japanese people. I suspect that we will perhaps see another surge of gold buying in the panic. Just like last time. Then there's the talk of nationalizing the banks. Hmmm�

Black Blade (02/12/03; 22:58:36MT - usagold.com msg#: 97536)
Barrick Gold Fires Oliphant, Names Wilkins CEO
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_box.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&box=ad_box_all&tag=financial&middle=ad_frame2_topfin&s=APkpzDRMaQmFycmlj

Snippit:

Toronto, Feb. 12 (Bloomberg) -- Barrick Gold Corp., the world's third-biggest gold producer, fired Chief Executive Randall Oliphant after the company's stock fell while the price of bullion surged to a six-year high. Barrick replaced Oliphant with Gregory Wilkins, who worked for the Toronto-based company from 1981 to 1993, when he resigned as chief financial officer. The 47-year-old Wilkins has been a Barrick director for the past 12 years. Barrick's policy of pre-selling some of its gold production to protect against a drop in prices left it unable to benefit as much as rivals such as Goldcorp Inc. when bullion soared. Under Barrick founder Peter Munk, who's now chairman, Oliphant pioneered the hedging program in the late 1980s. ``Peter Munk had to do something to get some positive attention,'' said Glenn MacNeill, who manages C$180 million ($118 million) in natural-resource stocks for Sentry Select Capital Corp. in Toronto, including Barrick shares. He said Barrick ``has been a terrible performer.'' Barrick shares fell 13 percent in the past year, while Goldcorp and Gold Fields Ltd., which don't sell their metal before it's mined, rose 40 percent and 12 percent, respectively.

Barrick fell out of favor with some investors because they saw its hedging as a bet against the price of gold. ``Any investor who buys gold-mining stocks is positive, rightly or wrongly so, on the price of gold,'' said Jean-Marie Eveillard, who manages the $200 million First Eagle Gold Fund in New York. ``Hedging reduces the opportunities.'' Other investors, including Kevin Nyysola, who runs the C$270 million ($177 million) Investors Canadian Natural Resource Fund at Investors Group Inc., said hedging was too complicated. ``You don't want to come into the office one morning and have something blow up on you,'' he said. ``The big question is whether this signals a change in strategy,'' said Nyysola. ``Replacing one person with another and not doing anything with the hedge book isn't going to get the stock price moving.''

Black Blade: That about says it all. As most all other hedgers are getting out of the practice this leaves Barrick as the ugly step-child of the gold industry. No wonder that investors shun the stock.

Rocketman (02/12/03; 22:49:02MT - usagold.com msg#: 97535)
Short Covering R Powell

Thank you for the explanation.

More blood in the streets in the night market! Now down another $4.50 from Chicago's close

Fuel where I live is 82.5 cents a litre plus another 3.5 cents per litre in taxes just announced beginning March 1st.

OK, I'm about ready for the rapture.

Black Blade (02/12/03; 22:41:55MT - usagold.com msg#: 97534)
Gas prices unjustified, AAA says
http://www.arizonarepublic.com/business/articles/0212gasprices12.html

Average cost about $1.60 gallon in U.S.

Snippit:

ORLANDO - The American Automobile Association, the biggest U.S. motorist organization, said Tuesday that a recent jump in gasoline prices isn't justified and that makers of the fuel may be "close to" gouging consumers. U.S. pump prices for regular gasoline averaged $1.605 a gallon as of Monday, up 10 cents from a week earlier and the highest since June 2001, the group said. The price was the highest the AAA has recorded for the month of February and is up 45 percent from a year ago. At some locations in California this week, the price at the pump for regular unleaded has soared above $2. "There is no shortage of gasoline. There is no shortage of crude," AAA spokesman Geoff Sundstrom said. "I think we're getting very close to" price gouging, he said. Prices for oil and gasoline have surged over the past two months as tensions have increased in the Middle East and a strike in Venezuela hobbled the nation's petroleum industry, slashing exports from the fourth-largest supplier of crude to the United States. "It's supply and demand," said Chris Kelley, spokesman for the American Petroleum Institute. "Crude oil prices are extremely high, higher than they've been in an awful long time. And crude oil prices are bringing gasoline prices upward." Some U.S. refiners are shutting down for two to four weeks this month to clean units and replace worn parts. That has helped send the nation's gasoline production to a five-year low, analysts said. U.S. production fell to an average of 7.521 million barrels a day during the week ended Jan. 31, the lowest weekly total since March 1998, U.S. Energy Department figures showed.

Black Blade: how amazing it is that what we assume to be otherwise intelligent people have no concept of how markets work. The same old argument that "There is no shortage of gasoline. There is no shortage of crude," belies the inventory data released today (28 year lows!). As far as The Peoples Republik of Kalifornia gas prices are concerned they decided to switch to ethanol (from MTBE) reformulated blends of gasoline that added to the cost. If a company can sell its oil on the world market for a higher price than domestic refiners are willing to pay then fine � these companies are businesses accountable to shareholders, they are not charities. If they are upset about gasoline prices, then just wait until they see their utility bills. There is a building energy crisis and the US has done absolutely nothing to head this mess off at the pass.

miner49er (02/12/03; 22:11:47MT - usagold.com msg#: 97533)
goldenboy @ 97524 ... Confiscation

Hello Sir goldenboy,

As I said, "Doesn't mean it can't or won't happen, just that the overall setting is not conducive to it." True, anything is possible, and we build our analysis here from our assessment of what the US Government's aims actually are. Where you suggest that the "equivalent of the FDR Gold Grab could easily be accomplished here without appearing to hurt anyone," I am lead to ask whether the US wants to accomplish this at all? If the US is bent on confiscation for whatever reasons, then any number of variations on your proposed theme could be deployed to that end. I submit that they are more bent on preserving their status of global currency hegemony, and credibility in the world arena. Thus, to undertake the course of action you outline, as I attempt to illustrate in the earlier post, would be instantly fatal to that end.

The complexity of transacting global commerce is monumental. The incredibly complex and fragile systems are not easily built. They rely on nearly absolute confidence in their capacity to reliably, consistently, and predictably perform, and they require a vehicle of perceived equal confidence and reliability in which to move these transactions. Running gazillions of currency units from one account to another across the globe all day and every day is incomprehensibly involved, as I'm sure you are aware. From one perspective, it appears a beast because of its ubiquitous reach. From another, it is a work of amazing intricacy, yet of unbelievable proportion, clearly worth studying.

Should the US impose any of the steps that you mention, especially at this stage of the game, where their credibility and leadership are called into question more each day, they would seal their fate and relegate themselves instantly to second-class status on the global stage, as this type of behavior is not expected from global leaders. Again, doesn't mean they won't, but in my opinion, there are so many counter-current forces that make this type of policy directive unlikely at this time.

I maintain that the US is more concerned with upholding its role as the grand puba of global finance for as long as it can. This motivation in my view has much more plausibility than a sudden state-of-emergency crisis. I'll ask, what would be the point? So they have all the citizens' gold? First, after a decades-long full court press discouraging the citizenry from holding it, how much do you think they have? Joe Sixpack doesn't own enough gold collectively to fill the teeth in a small zip code. And how does the government go about collecting all this? Sure, they could marshall the resources to metal-detect every square inch of the country, but are the costs worth the benefits? What exactly are the benefits?

Anyone with real quantity is smart and capable enough to avoid this type of simplistic intimidation, especially when the rest of the world is on a pro-gold trend. Remember, this was NOT the case in 1933. And moreover, the converse: this no longer IS 1933. The economic powers in their ascendancy are all pro-gold: Eurozone, China, Arab nations, Iran, India, Southeast Asia, Russia, and all the nations that will place their bets on them in the future. This is a formidable force. This was not the case in 1933. So, I suggest that we look at 1933 for contrasts more than comparisons.

While a government usually can do whatsoever it wills against its citizenry, what would be the benefit to locking down all the gold like you suggest at this juncture? The US would immediately become a byword to its global peers, and lose credibility in their system, as their is no economic rationale for the behavior. Such behavior would be perceived in today's world as government acting overtly by decree without justification, and wouldn't do much to settle any foreign claims to begin with. At the very least, they would become a laughingstock, as this paragon of free-market virtue, backslides into clumsy, heavy-handed 20th century style authoritarianism. More likely it would be viewed as presaging things to come, and cause foreign money to head for the doors, before it's their turn. It would shatter the fragile confidence that remained in the US dollar as the vehicle currency of choice.

The euro was developed among other reasons to break the asymmetry whereby US domestic policy had so much influence on the rest of the globe. Such an irrational exercise of domestic policy, with no economic justification to connect dots by, other than taking what doesn't belong to them to pay back someone else, would be one final endogenous shock that would discredit once and for all the currency unit itself, as its issuers' intentions were laid bare for all to see.

Additionally, as I mentioned earlier, I contend that they could put hefty restrictions on the mines, for a host of reasons, as this is construed "acceptable" practice. But in a world that wants to encourage CITIZEN gold ownership -- for the express purpose of allowing gold to blossom to its full and proper valuation -- foreign nations would be all but compelled to condemn any activity that does not promote that end.

So again, just the humble opinion of one guy who listens to the game on his AM radio from the bleachers... Thanks for your input, goldenboy...

cheers,
miner

Black Blade (02/12/03; 22:05:35MT - usagold.com msg#: 97532)
Rich, davefinger, etc. � Gold Correction Opportunity

I don't know how far or how fast the POG will move but I did mention a few times over the last month or so that I was more inclined to accumulate physical precious metals as opposed to gold shares for the time being. The reason is that shares simply stalled out even as the POG charged on. I figured that a resumption of a steady accumulation through the "peaks and valleys" would be the best strategy, sort of a "dollar cost averaging" for physical until the bull regained his legs. That would make the current environment just about right for adding to portfolio insurance positions on a weekly/monthly etc. basis. These pullbacks offer a window of opportunity and now that the so called "war premium has been mostly blown off we could see the sell-off wind down soon enough. There are far fewer long positions (mostly hedge funds and weak speculators) than short positions (mostly commercial interests like jewelers, etc.) to begin with. Eventually these shorts will have to cover and with "Wedding Season" underway in Central Asia, strong physical demand in the far east, central bank gold buying, and de-hedging by gold producers, etc. lending underlying support I would suspect that the "bottom" can't be too far off. Another point of interest is that below $350 an ounce, most gold producers will shelve exploration and expansion plans and like a coiled spring this will add to the gold production decline. Now that the weak "quick dippers" are bailing out a stronger more powerful base of PM investors can emerge. Should be fun!

- Black Blade

Farfel (02/12/03; 21:32:35MT - usagold.com msg#: 97531)
What I Have Learned About Gold....
The phone rings and it is a friend informing me he has dumped all his gold stocks.

"I saw the gold price crashing, who knows how much lower it will go," he states emphatically. "I couldn't reach you but frankly I didn't need your advice, I could make up my own mind."

"And what did you decide?" I asked.

"I think gold rose on war expectations and now that we are going to attack at any moment, the market assumes a victory against Iraq will be quick and easy. I think the market is right"

He remains on the phone, silent, awaiting my response, probably expecting me to offer objections.

I have none to offer. I have learned that unless you have been a personal witness to the path of gold over the past decade, then you cannot have any conception of what is truly transpiring in the gold market....and it is pointless to try and enlighten those who do not share a similar experiential background, at least where gold is concerned.

"Anyway, thanks for the gold stock tips," he continues, "I still made money, though not as much as I could have made," he continues. He remains silent, still awaiting what he assumes will be my rebuttal to his decision.

I have none to offer.

"Well, good for you. Hope all is well with the wife and kids," I respond.

Nervous, he asks me, "Do you think I did the right thing? Have you sold anything yourself?"

"Don't worry about it," I offer in a comforting manner, "Look, I have to run, I've got to wrap up some things quickly because I've been invited to see Jeff Goldblum play piano tonight."

The only reason I refer to this conversation is by way of illustrating that the newbies in the gold market are afraid. Many have already seen their Nasdaq tech stocks crash and they have no faith that gold stocks are immune from the same fate.

But I have never felt more confident that a spot market
panic buy is just around the corner, one that will astonish even the most optimistic gold investors in terms of the degree and intensity of the move. The absence of a limit up rule in the gold spot market in concert with one of the largest net short gold positions ever held by commercials ensures fireworks are coming.

What lessons has gold taught me over the past decade?

Well, first, never listen to what they say, only pay attention to what they really mean.

If Barrick Gold announces a swing from a loss to profits in its latest results, yet fires its CEO just before the release of such positive news, then be assured that Barrick is in far worse shape than it suggests...and do not be surprised should Barrick be exposed someday as "Enron, Part 2." Just remember that Barrick and JP Morgan have a close association...and JP Morgan was the architect of the offshore SPE utilized so avidly by Enron such that, when Enron would state that it had no debt and no losses, it stated the Truth because those losses had been hidden in the offshore SPE's. If JP Morgan created such an artful scam on behalf of Enron, surely it should come as no surprise if it has done so on behalf of its favorite gold company, Barrick.

If gold's spot price drops dramatically, then do not automatically assume that the problem is related to gold, it may be related to something else. Since the year 2000 and the final bottom of the gold bear, any sharp drop in the gold price very often indicates a liquidity problem on the part of a major spec(s)-- and that liquidity problem more often than not signals an impending tremendous drop in S & P/Nasdaq stocks as the spec(s) in question scrambles to obtain liquidity wherever it can be found. A double digit drop in gold more than likely signals an imminent dramatic downturn coming in the stock market.

Since gold and gold stocks are falling together, cast aside all speculations that there is a "long gold, short gold stocks" strategy in effect by the majority of Street hedge funds. Assume that Mr. Sinclair misinterpreted his hedge fund buddy who told him that the hedge funds were "long gold, short the stocks." The hedge fund honcho likely intended Jim to understand that, during the most recent gold run, the hedge funds were buying gold and shorting S &P /Nasdaq stocks," which happens to be a much more sensible hedge strategy.

Fact: gold and gold stocks are despised by the Street in general and are shorted with equal glee on the part of mainstream funds.

Fact: even the mainstream funds like Fidelity, who own tremendous positions in various gold stocks, are happy to loan out gold stock to short players or equally happy to write call derivatives in those same gold stocks, knowing full well that , owing to their huge positions in these gold stocks, they can manipulate/sell the stocks downward in advance of expiration and collect tremendous derivative premiums in doing so.

Fact: the mainstream funds such as Fidelity make far more commissions in their mainstream stock and bond funds than they will ever hope to make in their relatively puny gold funds. The mainstream funds will always champion mainstream stocks and bonds above and beyond gold or gold stocks any day of the week because their commissions from mainstream stock and bond funds are gargantuan in comparison to the relatively small amounts earned from their gold funds.

Fact: If you really want to ensure that your gold stocks are in gold-friendly hands, then take direct control of the stocks and remove them from the mainstream funds...or ensure that you have bought gold stocks through funds that NEVER loan your gold stock to shorts nor write call derivatives in those same gold stocks. Get such assurances in writing so that, if you should discover otherwise, you will have legal recourse.

But, in conclusion, I must underscore the following lesson as being absolutely imperative to any true understanding of the gold market:

"Gold is not for kids, nor for silly rabbits."

R Powell (02/12/03; 21:10:53MT - usagold.com msg#: 97530)
Physicalman
More silver !
Yes sir! Glad to hear it. It always seems, in hindsight, that the best times to buy are when everyone else is panicing to sell. These are the hardest times too. And how many traders took reasonable profits in gold before the fall? I fear that POG might find sell stops under 349?

Whether physical buying or paper trading, I'll agree with you as to this being the time to acquire more, especially silver. I base this, if for no other reason, on my belief that eventually the market will be forced to respond to the law of supply and demand. This is underlying both gold and silver, yes?

From my past dismal failure at dicphering the price moves of silver, I'll let the bottom of this downturn in gold tell me when to buy more silver. I would guess the recent failure of silver to top last summer's highs while POG rocketed higher has thinned the silver believers' ranks even more. My problem is that I can't refute the basic fundamental facts and they tell me to be long. But how long must we remain long if we're not wrong? For traders, this is a hard game to profit in, even if we assume that POS is going much higher and we are right. But, where's the fun if it's not hard to figure out?
Rich

R Powell (02/12/03; 20:39:06MT - usagold.com msg#: 97529)
Rocketman
Sinclair's view
I also read Sinclair's opinion of the last few days' drop in gold price. I believe he credits the quick run up from about 370 to whatever highs it made on Comex, OZ, Tocom or London as somewhat of a panic to buy back previously sold gold. This he calls short covering. The shorts had sold and were offsetting (by buying) to get out of losing positions.

Sinclair then says that the smart money that was selling into this buying (to offset short positions) also keep selling even after the short covering abated. In essence, those who were long and sold (at a higher profitable price) then kept selling and have now become the new shorts! I believe this is what Sinclair said.

I found this logical as what Sinclair says makes sense, in that those who (were long) and just sold into the short covering knew that it was short covering that spiked the POG up too fast. They also are betting that the end of the short covering will see POG fall back. Then, these new shorts will cover (by buying) at the lower price. Sell high, buy low. But, with the weak long positions now scared out of the market, where will the new shorts find willing sellers to from which to buy? They will need to buy to offset. I would guess that poorly financed and/or unhedged positions have suffered badly and been forced out of the market. The survivers will not be as likely to sell to the new shorts when POG starts up again. The COT numbers may give a clue as to how many weak hands are gone.
These new shorts are strong hands but they will cover as fast as the old shorts did if POG can show strength.
Thoughts?
Rich

physicalman (02/12/03; 20:28:24MT - usagold.com msg#: 97528)
all
Make your move soon ladies and gents. The correction in the spot price of gold is only a short term move to let a few players off the hook. I look for the Comex spot to bottom out at between 339.10 to 341.50. It may not hit this level as we are now below 354.50 and this level lets 3 big players an opening to relieve some pressure. ( i personally do not see enough counter-parties, besides the Fed to step in and cover enough to save the day for them). When gold crosses 412.00 and silver goes over 5.11 (which they will) there will not be any corrections below 400.00 for a long, long time , if ever.
R Powell: just raised my ag. position by a large amount today (just can't see it getting much cheaper) can't help myself, i'm possessed! Everybody check the buy/sell spreads % on physical in many places (they are increasing) our hosts are holding steady though. That is your early sign of seperation. Call our fine hosts soon! The Cabal has given us many second chances, but they are about to stop!
Mr. Gresham I was around in the early seventies on buying/ selling and some things now are the same and some are very different. The paper game against the PM's then did not really kick until late 79 so you had a much more free, but still whipsaw market in most of the 70's. Back then most dealers that were marketmakers bought/sold at the daily rate and it also took much longer to turn inventory. No Internet/800 no's (except for a few big ones) and the large daily swings hurt some people who could not turn inventory quickly. Several people i knew who bought at tops and had to sell a few days/weeks later and who had high interest rate/short term borrrowed funds to work with had their heads handed to them, it wasn't very pretty! I think it was Sinclair who was a large player (late 70's) who sold a large physical position (almost a million ozs. au) and a large amount of futures at the top of the market. The reason he did this if i understand correctly was not that the fundementals for gold had changed but that Volcker was going to raise interest rates high enough to kill off inflation/stagflation and Sinclair knew that such high yields on bonds and their safe haven status would draw much wind from the sails of the gold bullion armada and stave off the day of final reckoning for the USD. These are not things that i totally understood at the time that they were happening but in looking back and from what i have learned in the last 8-9 years seem to me to be very clear now.
I know several individuals that bought silver back in the late seventies near the top of the market. Some are still holding 1000.00 face bags at 17-1 and some got out in the late 90's at 2.5 to 1. At the time they bought i personally ( in the 70's never advised anyone to buy at over 8-1) told them the top of the market was near and the ones who sold in the 90's, my advise was that it would never in my lifetime be any cheaper. Couple of them needed the money desperately and i cannot fault for that but a couple of others wanted to get on the DotCom hayride, it's a free country, not anything i can do about that.
To all those who are out of work/ short hours i pray every day for you to be able to be productive and care for yourselves and loved ones. I have been very blessed in my occupations and have never had to suffer through being out of work. With the level of knowledge at this forum ( which i believe rivals most of the worlds finest universities) and even some of our own are not able to trade their knowledge/labor for substinence, to me is a very sobering/foreboding sign of things tthat are to come.
If the Cabal thinks that they are getting a shakeout from this correction, it will probably be in the shares, not the physical. So if their intent is to nationalize the mines/Deep storage, then what we are witnessing will level off around 345.00 and hold for a few weeks. Remember their intent is to save the dollar. Right now that means beating down au/ag. In the future free gold and silver is the only hope and i am not sure that it is not to late for that to be possible! Remember BB's advise, seems like the govt. and press are advising everyone to now (except for the au/ag part) As always FWIW,JIMVHO,DYODD and all welcomed to respond

sector (02/12/03; 20:21:44MT - usagold.com msg#: 97527)
Master Trader Sinclair Opines that this downdraft...
...resembles a crafted set-up for short covering
In his late ammedned commentary:

[Generally, the entity that acts as broker/gold bank for the short cover can
be counted on to sell the final ounces SHORT to the covering entity,
followed by the gold bank's pounding of the market after the finish of the
short cover. Generally, a short cover action is recognized in the market by
pro-traders who also seek to fill the final purchases. Everyone tries to
pile on the top prices of a short cover to become short themselves, as it
always falls hard just then.

You might like to read about the life of the great trader, Jesse Livermore.
After he cornered Piggly Wiggly Stores (the then Wal-Mart) on the NYSE anddrove the price sky-high, he had a falling out with the Chairman of PWS who retained him to affect the long corner. He quit the operation and sold his final Piggly Wiggly shares SHORT to the strangled short sellers who were forced to buy. Piggly Wiggly (PWS) did exactly what gold did today-exactly. If it walks like a chicken, smells like a chicken, clucks like a
chicken, has feathers and lays eggs, it is a chicken. This smells like,
looks like, and acts like a short cover. Therefore, we may well have seen
the first painful and bloody short cover of a gold producer hedger.]
+++++++++++++++++

His view is as plausible as anyone's and offers the weight of logic when we consider the mountain of producer hedging that has yet to be covered...3,000 tonnes. That is a number that everyone agrees on.

So, here we go. The miners may just be getting their buying gloves on.

If so Sinclair predicts huge volatility as each run-up is followed by a hammer.

Jim can trade those things like a violin, I can't. Just hold on to the real thing and say hi to my miners. The juniors should catch a break as folks realize the world needs metal and the East somehow got it.

a nation of one (02/12/03; 20:16:33MT - usagold.com msg#: 97526)
Re: Daniel Druff

DD says: "I get it; you want some seer to make you rich in money. Sorry, that's satanic stuff...I wouldn't go there."

--I would. Been there many times.

Daniel Druff (02/12/03; 20:02:25MT - usagold.com msg#: 97525)
Rocketman
"Daniel declined to offer the Almighty's perspective on tomorrows gold action � perhaps due to the consequences that come to Biblical prophets when they are wrong." Rocketman

Oh my, I missunderstood you. I thought you must be referring to "rich" in the spiritual sense.

"If only we could see the future . . . we would be rich.

"Perhaps some of those prophetic type Christians that frequent this site could help us out here."

I get it; you want some seer to make you rich in money. Sorry, that's satanic stuff...I wouldn't go there.

Thank you

goldenboy (02/12/03; 19:44:26MT - usagold.com msg#: 97524)
Miner: Government Confiscation; War; Covering Your Tracks
The equivalent of the FDR Gold Grab could easily be accomplished here without appearing to hurt anyone. Imagine the worst case scenario; that the US has no gold left. Now assume that they even have to appear to replace it. (another discussion)Also assume they are on the wrong side of a lot of comex contracts and that the "fair market real value of gold is $1,000" (but really $3000 at some future revaluation date.)(please no lectures Ari, I know there is no paper value for gold) So what happens?
We wake up one morning to an announcement that the terrorists have illegally tampered and interfered with the gold markets and in the interests of National Security:
1. All Comex gold contracts are cash settled at yesterdays` price. (or plus 10-20%)
2. All gold mines in the US are nationalized; but all shareholders are reimbursed at yesterdays close plus (fill in a %) less a withheld capital gains tax deducted at source.
3. US citizens cannot own gold stocks; all stocks held by US citizens are hereby property of the government subject to fair market takeover value of (fill in the %) over yesterdays close subject to a capital gains withholding tax of (fill in the %)All gold held by the Federal Reserve through CEDE & Co. will be reassigned to the Treasury.
4. All physical gold held by US citizens with the exception of numhismatic gold and jewellery (defined as .....) is to be tendered to the government at a price of $1,000 per oz.
5. All institutions holding gold on the behalf of any organization or individual will report said holdings immediately. All safety deposit boxes are hereby barred from access by their holders under the Patriot Act unless and until a federal agent of (fill it in) has examined the box, whereupon all gold will removed and sold to the Government at (x).
and so on..........

Rocketman (02/12/03; 19:41:42MT - usagold.com msg#: 97523)
A boy named sue!!
http://www.jsmineset.com/s/Home.asp

That is indeed one of my favorite songs Mr. Rich

Attacking Iraq without the French is like . . . going deer hunting without an accordion!!! lol. (credit to Mike Cambell for this joke)

Jim Sinclair refers to a "short cover rally" in todays summary. Could someone please expain exactly what he is referring to in relation to the recent run up and subsequent "retracement" (small comfortable moderate pullback � cough, cough) in gold prices.

Daniel declined to offer the Almighty's perspective on tomorrows gold action � perhaps due to the consequences that come to Biblical prophets when they are wrong. I am still hoping someone is willing to contribute a nice fat juicy chicken or perhaps a skunk's entrails � for the benefit of all on this forum.

ElGordo (02/12/03; 19:26:55MT - usagold.com msg#: 97522)
Greenspan: We are close to the point of NO RETURN!
http://cbs.marketwatch.com/news/story.asp?guid=%7B14E24E25%2D8F5F%2D4DB3%2DA428%2DFC27D41E4A36%7D&siteid=mktw
"That's not inconsistent with stability. But if we get into a position ... where we are finding that the debt-to-GDP ratio begins to accelerate, we have to be very careful because there is no self- (correcting) mechanism when that is occurring, because a rise in the debt increases the amount of interest payments, which in turn increases the debt still further, and there is an accelerating pattern after you reach a certain point of no return."

We're almost to that point. President Bush's proposed spending shortfall of $304 billion amounts to about 3 percent of projected GDP, or economic output. That's above Greenspan's comfort level.

"It is crucial that we keep in mind the long-term pattern of debt-to-GDP on a unified basis," Greenspan, ever the economist, says. Well, if President Bush gets his spending plan, and a proposed 10-year, $665 billion package of tax cuts, "deficit spending" will be stamped in the lower right-hand corner of every bond coupon the U.S. Treasury issues, just like the 1980s and early 1990s.
_____________
Read this article.
Got Gold?

goldenboy (02/12/03; 19:16:41MT - usagold.com msg#: 97521)
Timbervision: Retirement Account Physical
Point taken: But some people have no choice, that is their funds must be locked-in. (LIRA) in Canada. (Pension related) Also, you can afford to buy more metal.(eg. @ 50% tax rate then you can buy twice as much) I guess there may be a requirement to get out while you still can, but say you lost your job in a future year and gold has tripled.......then you close the fund and take it into income then.

miner49er (02/12/03; 19:10:41MT - usagold.com msg#: 97520)
timbervision @ 97393 - Questions, part 2...
Greetings, Sir timbervision,

Now to questions 2 and 3...

2) You ask: "Do you imagine that institutionally identified storage sites of already mined and stored bullion are at risk of political confiscation, or "commodity" price purchase, as the mine share holders might be?"

The significant part of your question is: "as the mine share holders might be?" First, the mine share holders don't mean anything. The mines they hold shares of, are what you are probably referring to. So we should ask ourselves what is the motive for any action that prohibits private ownership and commerce in gold?

Regarding the mines, this has been dealt with here quite a bit. Effectively, any reason the government has to obtain or control large amounts of gold are easily met in this fashion. Depending on the requirements, measures may be anything from rapacious taxation (like a "windfall profits" tax), production limits, price caps on production, penalties for "price gouging," handicapping regulation in an effort to steer the industry this way or that, state-of-emergency orders, or outright nationalization. Who knows. Just depends on the situation. Any outright nationalizing-type behavior is probably not likely, as it sends very negative sentiments into world markets. Stiff taxation or regulation generally flies under the radar screen, however.

Now, why would the Government go after citizen's gold in this day? To answer that it is useful to understand why they went after it in the past, and what if any similarities exist from that time. In 1933 gold-as-money relied on the efficiency of gold being held centrally. Since the money supply was convertible into gold, and circulating coin was actually made of this gold, it was easy for the private sector to redeem their paper dollars for gold, if confidence in the system was at stake. Any drain however that threatened these efficiencies had to be countered, since the entire banking system was put at risk.

Foreign money did not care how the US citizen felt about it, so long as they could and would get theirs. Whether the confiscation then was a good idea or not in retrospect is immaterial. At the time, it was considered an acceptable alternative, justifiable on economic grounds that were in vogue. What is different now, is not that our creditors have changed, rather the underlying paradigm is different. As gold is not money in this day, there are no efficiencies to be gained by centralizing the gold, hence no benefit to gathering it up from the citizens insofar as it directly affects money supply, and thus indirectly economic expansion and subsequently the means to settle foreign debts through a macroeconomic phenomenon. Gold that is held in a bank's reserve in the euro paradigm benefits from free market pricing, and that pricing can only realize its full potential if ownership of gold is encouraged at all levels.

Today the global trend is pro-gold. Efficiencies in this paradigm are found in DE-centralizing gold ownership. Any nation taking contrary action in this time, will not be perceived positively. Since there are no direct economic reasons to call in citizens' gold (as in 1933, where gold was the main macroeconomic variable), any such action would confirm retrograde US economic developments. Such an action would be seen as a true, out-and-out act of arbitrary government power, with no economic justification. This is NOT the stuff that AT ALL befits the issuer of a global-standard reserve currency -- the primary concern here for the US.

This is why China for instance, even if it owned a third the world's gold, held no restrictions on capital flows, and had real growth potential in double digits expected for two decades out, could not yet wear the mantel of global reserve currency issuer. They have exhibited far too many years of unpredictable behavior (still do), and present a virtually non-existent foundation for the rule of law, for global powers to entrust anything but speculative financing to them (large a sum as these may be...). They will not entrust the exponentially larger daily transactions of international payments/settlements, or expose their banking system's reserves to the risks found in this maverick power. Gold reserves, growth potential, and easy access alone do not make for a global currency. Social, and legal stability/predictability are equally, if not more important. This is why the euro-builders have been carefully crafting an all-encompassing social and political architecture to go side-by-side with the economic/financial framework of the euro (FOA's bonsai illustration). Just having big-gold, and valuing it to market does NOT of itself qualify your currency for the hand of global suitors.

So, a sudden calling in of US citizen's gold would only demonstrate the potential for other surprises (shocks) that would frighten global money far away. Especially, now that there IS an alternative to run to.

One additional consideration tossed around occasionally as motivation for potential confiscation is simply that the US Government may want to stop a drain from financial assets into commodities (particularly gold) so as not to show up the dollar's inflationary dilemma through commodity price escalation. This too would be clumsy and bad policy. It would have no downward effect on gold prices whatsoever, since the physical gold markets are not driven by US buyers. If gold was on a roll, it would be energized by global pressure. Taking the US citizen out of the loop would not stop this freight train. In fact, it would probably only exacerbate the negative impression of the US economy (ala the reasons mentioned above), and further highlight the marginalizing of the US as a whole.

Essentially, the lack of any clear economic reasoning to support a Government confiscation of gold in this day is what would make it very bad policy, as it would augur a trend to further surprises, would run counter to global macroeconomic (and socio-economic) trends, and provide further evidence that the dollar had become unfit for global reserve/settlement use. Doesn't mean it can't or won't happen, just that the overall setting is not conducive to it. (So MHO...)

3) You ask: "When we talk of gold-in-possession are we taking a big risk to let anybody besides ourselves "hold" our gold for us?"

If you are talking about some fund, or other agent who "holds" something to which you do not have absolute title, then yes. Now, you may not want to hold your gold locally in a safe deposit box, personal safe, (or like one gentleman mentioned the other day -- in an old box under some old tools, so as to escape a thief's metal detector). You can hold it in an allocated account in a depository. So long as law means anything, this is probably quite fine.

Necessarily, you have less control over it, as it is further away from you, but it is an option to consider. You pay for storage and insurance, and it's not likely that a burglar will get it. Everyone has to make the choice best suited for their circumstances, as the world has no one-size-fits-all solutions, never mind any perfect ones.

Regarding your retirement plan stuff, have you considered calling CPM? I believe George Cooper may have some words of wisdom in the area of retirement account procedures. It may or may not be applicable in your case, but it's worth the phone call.

Hope this helps,
miner

ElGordo (02/12/03; 19:10:24MT - usagold.com msg#: 97519)
Iraq will be expensive
Tokyo, Feb. 13 (Bloomberg) -- The dollar fell against the yen after Secretary of State Colin Powell yesterday told Congress a U.S. invasion of Iraq may lead to a prolonged military conflict and heighten risks of a terrorist ``blowback'' at home.

The U.S. currency also declined after NATO members failed for a third day to agree on when to supply military assistance to alliance member Turkey, suggesting the U.S. may have to go to war without support from its allies. A lack of full support by the UN may leave the U.S. bearing the full cost of a war, analysts said.
__________
I don't worry about price fluctuations. I'm in for the long haul.
US Budget deficits will grow for many years into the future.
In the next couple years I believe we will see the Dinar and Dirham
come into use. The Chinese will be buying gold ...and soon silver.
The fundamentals remain the same.

Truthcaster (02/12/03; 19:01:08MT - usagold.com msg#: 97518)
Iraqi war
RE; Mikal
Yes the comming Iraqi summer is going to make it
very hard and not only for the troops on the ground
but also the computer equipment used. Plus the many days of
sand storms. I heard the other day a general or maybe
a colonel in charge of the war preps. saying that
the window to wage war before the summer weather
would quickly be ending after March first.. Hmmm
maybe more delays in the war game.. ;o)

a nation of one (02/12/03; 18:55:39MT - usagold.com msg#: 97517)
Reply to Paper Avalanche (02/12/03; 17:55:58MT - usagold.com msg#: 97507)

Quote: "Well outside of a terrorist attack we all know that the UN is going to vote down war with Iraq."

To which you responded: "I hesitate to post what I really feel regarding this quote."

--I wish you would.

a nation of one (02/12/03; 18:52:19MT - usagold.com msg#: 97516)
Reply to 21mabry (02/12/03; 18:06:42MT - usagold.com msg#: 97509)

Lyndon Larouche is a man on the make. Like everyone else, he is right about some things and wrong about others. About some things he is amazingly insightful. About others he is just as wrong. He goes on too long. He has too much hair. And his followers don't have their own imaginations. Gold is better. It won't betray you. And it isn't trying to get itself elected president.

sector (02/12/03; 18:47:12MT - usagold.com msg#: 97515)
@ mikal Is it Spring yet?
Down here in Florida Feb and March are the Best
Orange blossoms...like a tanker truck load of scent tipped over somewhere upwind.

As for a March gold event. I don't know except that the current drop will wither away and gold will, with greater volatility, move back on up where the G-10 wants it. The price was managed smoothly up and I suspect it will be left alone to claw its way back up in a temporary free market. Maybe as a kind of trial run by the Fed just to see how a free market really acts. A gold solo if you will.

The Greenspanster can't be too happy with deflation. He "Needs" gold to go up but it's more complex than that one-dimensional take. The Japanese need inflation but their gold bugs are ready to pounce Watch those elders and their $600 Billion. They are the really dry powder behind the golden powderkeg.

The Master of the Universe is a person who has trouble making decisions so once he gets going on a track, he stays on that track until somebody derails him [That hasn't happened yet]. His strong dollar can't realistically continue. For the last four days it's been flat [The Major Currency Dollar Index] while gold has fallen as a result of margin fiddling by the COMEX clerks.

So we are at a pausing place...a breathing mask application in the death throes of the strong dollar. Not totally dead but unable to walk around any more.

The other G-10 guys play a role too and they aren't too happy with the Bushies. In fact, how can dubya start killing people in Iraq with, as General McCaffery boasts, 2,000 lb. bombs and night goggled Speznatz look-alikes with all those former allies opposed? The Turks with 100,000 troupes within hours of Mosul and Kirkuk, warned to stay out by the US...as if they would actually follow dubya's orders. Turks gotta eat too. They want oil too.

Jeeze! 9 out of 10 Brits are for more inspections.

It may be that the DOW finally just croaks and gold just goes up and March looks as good a time as any. As things resolve, gold will accelerate upwards.

a nation of one (02/12/03; 18:47:12MT - usagold.com msg#: 97514)
subject in text
http://www.kitco.com/charts/livegold.html

The price of gold is set by New York. The rest of the world has no guts, they just watch.

Paper Avalanche (02/12/03; 18:45:21MT - usagold.com msg#: 97513)
OT...............
The lead reporter on CNN during prime time is more lame than John Bobbitt. TV sucks.

Watching the financial report on CNN is akin to having your mom (when you were a child) swirling the spoon in front of your mouth and saying "open up, here comes the train!" Pathetic. By morons for morons. Parens Patriae.

BTW, I don't really work for the Russian or Chinese Central Banks. Truth in advertising.

PA

ElGordo (02/12/03; 18:44:06MT - usagold.com msg#: 97512)
Corporate scandals revisited
http://www.washingtonpost.com/wp-dyn/articles/A64484-2003Feb12.html
But Grassley said on Wednesday: "I've not been briefed, but I'm informed by the finance committee staff that the report is an absolute barn-burner."

"In addition to the eye-popping account of executive compensation, the report provides for the first time the complete story of Enron's efforts to manipulate its taxes and accounting. The report is very disturbing in its findings," he said.

Enron filed for bankruptcy in December 2001, amid revelations of previously secret off-the-books partnerships that hid debt and enriched certain executives.

A year ago, Citizens for Tax Justice, a labor-backed tax research group, analyzed Enron's financial reports for 1996 through 2000 and said Enron did not pay U.S. taxes in four of those five years.

The group said Enron had used hundreds of subsidiaries in tax-haven countries, as well as deductions for stock options, to avoid paying taxes.
_____________
I think it was JPM that arranged all these "disturbing" schemes.

mikal (02/12/03; 18:31:34MT - usagold.com msg#: 97511)
@Truthcaster
"Bottom line war is still a long ways off maybe two months yet..." Briefly, what do think the fast approaching Iraqi summer season will do to the timing. Sand storms and the heat are both strategically paramount, IMHO.

Paper Avalanche (02/12/03; 18:28:31MT - usagold.com msg#: 97510)
Will no one buy my gold contract??????
Can't guarantee that the counter party to the contract has the gold to deliver.

Shouldn't matter to those seeking dollar gains anyway.

Please take this off my hands!

Need to get physical gold before the disparity between the contract and physical price becomes too large.

Thanks for playing the game,
The Chinese and Russian Central Banks

21mabry (02/12/03; 18:06:42MT - usagold.com msg#: 97509)
Lyndon Larouche
Lyndon Larouche,this perenial presidential canidates supporters have been passing out his literature all over campus last two days.I know who he is and have read his work before.I have heard him catagorized from far left to far right,does anyone have any thoughts on this enigma of a man.

R Powell (02/12/03; 18:01:10MT - usagold.com msg#: 97508)
Being rich, or Richard or Dick, anything but Sue!
Rocketman, you said....

"If only we could see the future... we would be rich."

I can not see that future but I'm often called rich. I just wish I were wealthy. However, I am reasonable happy and still somewhat healthy. It's a state of mind.

Davefinger, I'll agree with that rambling. Nicely rambled.
Rich

Paper Avalanche (02/12/03; 17:55:58MT - usagold.com msg#: 97507)
@ Truthcaster
From your post below:

"Well outside of a terrorist attack we all know that the UN is going to vote down war with Iraq."

I hesitate to post what I really feel regarding this quote.

PA

misetich (02/12/03; 17:53:06MT - usagold.com msg#: 97506)
NATO Allies Reject New U.S. Plan on Iraq
http://abcnews.go.com/wire/World/ap20030212_1921.html
Snip:

France, Germany and Belgium rebuffed the United States for a third straight day Wednesday, rejecting a watered-down U.S. request for military assistance from NATO in preparation for a war with Iraq.
The standoff at NATO headquarters, two days before the chief U.N. weapons inspectors report to the U.N. Security Council in New York, cast doubt on U.S. chances of gaining support from the world body for war against Iraq for Baghdad's failing to disarm.
*******
Misetich

Are the Europeans Superpowers humiliating the US? The "war" is heating up - the stakes high -

Whats next?

French industry faces squeeze from Congress (headline on the Financial Times)

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1042491836448
Snip
The resolution is only one of several efforts being considered in Congress to punish French industry. Dennis Hastert, speaker of the House, has discussed with Republican colleagues imposing regulations on French wine and bottled water imported into the US.
End of snip

How will this end? Will the Europeans sell US $? Will China, Russia sell US $
Will Iran pull the plug ala Iraq and sell oil in Euros?

How will this play out? How long can energy prices stay this high before the US economy collapses taking the GSE's and Debt bubble along with it? (the longer the uncertainty and delayed "war" (better known as) invasion- ) the higher the % of a financial mess.

Perhaps the scenario painted is pitch black -

Maybe...not

Got gold?

Foreigner (02/12/03; 17:47:16MT - usagold.com msg#: 97505)
Davefinger
All I can say is that nobody has a crystal ball that foretales future. I have learned during my course of trading that markets DEVELOP in certain fashion and price action is very PRECISE at key points. What I try to convey is that gold market has finished (in my opinion) the most probable course of DEVELOPEMENT and created very obvious to trained eye channel of future price action. I agree with Mr Sinclair that it may go lower but all what I am suggesting now is that this price developement I discuss looks most probable. Political events will serve to nothing more than to give a "pretext" for change in market price action. True reasons are of course based on fundamentals.

R Powell (02/12/03; 17:42:33MT - usagold.com msg#: 97504)
Drop in POG // Uneasy feeling
As Black Blade mentioned in 97488, many seem very upset over the sharp, sudden drop in gold. I'll admit to being in this group, upset but not surprised. We'd all like POG to do nothing but rise but markets do not work this way. Once the 330 level was breached, the 350-355 level seemed to be the next real test to brake through. Will this now support the POG? I'd guess from the volume numbers and the quickness of the recent $30.00 fall that Comex absorbed many temporary, weak buyers when the POG broke through that 350-355 level. Hopefully, most of these weak hands have folded. We'll soon see. Hamilton stated last week that a retraction all the way back down to the 330 level still leaves gold in an uptrending market! I don't think this will happen but I judge this only on the strength POG showed on its short, quick retractions while running through 330 to the 350-355 level. In other words, like everyone else, I don't know.

Pizz, GoldnSilver and P.A. all commented on an uneasy, foreboding feeling. Slingshot gave us the NYSE volume number for the day, 725,456,000. I don't watch this number regularly but believe it is low, no? The cheerleaders on CNBC have mentioned of late that both price movement and volume have been very quiet. Is this the quiet before the storm? I've read that most big crash days for stocks occur not so much from large sell volume but rather from a severe or total lack of buyers. I'm glad I don't fool with stocks. They reach unbelievable prices only because no one cares what they are worth and then crash only when someone remembers that they are supposed to represent profitable companies with legitimate accounting. They are imho too dangerous.
Thoughts?
Rich

Truthcaster (02/12/03; 17:42:05MT - usagold.com msg#: 97503)
Gold off and falling again
Well here we go again gold is off and
falling again tonight down 1.50 so far.
Will see if 350.00 will hold. I bet we will
still see a five dollar drop as we continue
to peel off the war premium. Yeah you heard
me right I said war premium. It looks to me and after
watching this whole war game unfold that Bush
has set in front of us, if you look at it
close you can see delay after delay this is
because of the fight that is going on between the
Bushies and the UN with Colin Powell stuck in
the middle. I was watching the world news tonight
and once again the war talk has been toned way down.
And it seems that this war ball is being tossed
back into the UN's court and the UN is going to vote
in two weeks if we sould go to war. Well out side
of a terrorist attack we all know that the UN is going
to vote down war with Iraq. France Russia and a few more
are not going to vote for war and let the USA have
Iraq's oil. And the big boys in gold knew this was coming
and sold off the war premium in gold. Thinking back
before all this war talk got strong gold was trying to
climb above 350.00 and this crazy war talk took it
to 390.00 and now here we are back where we sould be
350.00. Bottom line is that war is still a long ways off
maybe two months yet... Silver is a diffrent story
and it will take months to make it back to 4.85 an oz.
and that's just plain sad...
But gold will level off here in the next few days
somewhere between 345 and 350 and sould start tracking
the dollar again... That's my two cents worth...
Hey one last thing what are you all paying for gas
where you live? Here in the land of corn and hogs
good old Iowa, we are at 1.71 for the cheep grade....
Diesel is 1.85.. OUCH.. Think that there's a chance of
a big economic recovery with gas prices like that
NO WAY IN HE--... ;o)

timbervision (02/12/03; 17:34:37MT - usagold.com msg#: 97502)
Goldenboy
Thanks for your jumping in here, but the two vehicles of which you speak, are well known to me and one of them I have held for over a year now. My concern is about how safe this sort of gold-in-someone-elses-vault investment will be when gold "revalues." Is it better to pay the heavy income tax now, and use the reduced proceeds to buy gold-in-possession. Read Belgian's and miner49ers' replies with their views on someone else holding one's gold. Aristotle, too, talks to that question.

Daniel Druff (02/12/03; 17:23:44MT - usagold.com msg#: 97501)
Rocketman
"If only we could see the future . . . we would be rich.

Perhaps some of those prophetic type Christians that frequent this site could help us out here." Rocketman

Why it would be my pleasure...if only it were not off topic.
Do your own DD and don't forget The Revelation. [To really have any chance of understanding, you'll need to start at Genesis...loads of types, figures, and symbolism.] Enjoy, if He wills it.

Thank you

Boilermaker (02/12/03; 17:21:56MT - usagold.com msg#: 97500)
Industrial Natural Gas Users Squawking
http://pro.energycentral.com/professional/news/power/news_article.cfm?id=3637723
"High natural gas prices are causing large industrial consumers to squawk to Congress about gas-fired power plants. Two trade groups have sent letters to congressional energy leaders suggesting there may not be enough gas to go around, and coal is a viable option for power generation. Privately, some industrial groups are even discussing proposing a moratorium on new gas-fired generation.
Today's Headlines

The American Chemistry Council represents most large chemical firms, which use gas as a feedstock as well as for energy. ACC writes that "as the largest industrial consumer of natural gas in the United States, the business of chemistry has been severely affected by the steep increases in natural gas prices. In fact, future prices for natural gas are currently up more than 130 percent from last year and are the highest since April 2001. Most experts believe that these increases are driven by increased demand for natural gas and falling levels of domestic production. Faced with these trends, it is now more important than ever that Congress look for ways to promote abundant and diversified sources of domestic energy, including natural gas, coal, oil, nuclear and cost-competitive renewable resources."

Another squawk comes from the Industrial Energy Consumers of America, whose members range from Dow Corning to Coors Brewing. IECA argues that "it is particularly critical that Congress and the states act quickly to stem the national energy crisis by enacting legislation that provides a robust, diverse and affordable supply of energy. It is particularly critical that Congress and the states act to increase the supply of natural gas; and address regulations, such as New Source Review, in a manner that makes it easier for power generators to meet air quality standards without switching from coal to natural gas."

The ACC is even more pointed, saying, "Our nation must rely on its natural resource strengths. Certainly our most obvious natural resource strength is abundant coal. Congress and the administration must advance development of electric power production from clean coal technologies. We cannot, as a nation, walk away from such an obvious choice for energy self-reliance and should take all reasonable measures to advance its use."
-----------------------------

comment; High prices for NG will force curtailment of its use in the production of fertilizer, synthetic rubber, plastics, process and other non-power generating uses. The US will need to import these products to fill the gap. Two years ago when the price of NG spiked up to $10/MCF several nitrogen fertilizer plants sold their NG supply contracts and closed their plants, making more money on the NG sale than they would making fertilizer from it.

High prices for nitrogen fertilizer encourages farmers to plant more soybeans than corn. A trader (not me) might want to go long corn and short beans.

Boilermaker

Rocketman (02/12/03; 16:58:47MT - usagold.com msg#: 97499)
GoldnSilver 2002
http://www.jsmineset.com/s/Home.asp

I also saw Jim Sinclair's emphatic response to the $345 question. I appreciate his commentary but I think he will have egg on his face if we do break through that level.

I noticed in todays commmentary that he is talking about support at one of three places; here, at $340-$343 and $330. Hmmm? so Mr. Sinclair, help us out please, which is it?

If only we could see the future . . . we would be rich.

Perhaps some of those prophetic type Christians that frequent this site could help us out here. Or perhaps those of you who specialize in the reading of entrails might sacrifice an animal for our benefit.

davefinger (02/12/03; 16:57:21MT - usagold.com msg#: 97498)
Somewhat to Foreigner, BlackBlade, mostly rambling
I had a rather heated discussion today with a coworker and fellow gold holder about the pullback that Spot's doing. I too was feeling that the correction _had_ to be over about here, but he convinced me, in particular from looking at the longer term charts and moving averages on INO, that we could see it go to the 320 level, even if only briefly. Politics is a definite wildcard though. I personally take a pretty fundamentals oriented view of gold, but the fact remains that all those Wall Street traders don't. They are mostly chart watchers and swing riders in one way or another, and the effects of even a relatively small section of them moving into the relatively tiny gold markets can make for some big action. Shorts, longs, whatever, they're all relatively short-term paper traders. The fundamentals of gold, if anything, are better now than ever, but the traders still hold the markets, and Spot, on a leash that they are intent on whipping up and down, even as the whole game goes in the toilet. I really don't think that on this level there is any conspiracy, just standard Wall Street mentality (and plain old human nature) leading to somewhat self-fulfulling gyrations in their current (last?) market of choice. On the grand scale I can't say that though. Something sure has kept gold down, below what a lot of rather critical thinkers seem to believe is the 'fair value', for a long time. I'm gathering what I can in the meantime. :)

goldenboy (02/12/03; 16:52:07MT - usagold.com msg#: 97497)
Paper Avalanche: ABX
As hedging is a part of their business, I imagine they have been booking reportable profits in January and Feb. selling at spot. If so, loss is being deferred to a later period. I wonder if some Funds are tired of this "have your cake and eat it sort of bull s___ reporting.
Also wonder how they can be buying a part of their options position? Surely closing such positions will cost them in the current period? 'Sounds like quicksand to me, but one can never underestimate an accountant`s imagination.

Rocketman (02/12/03; 16:43:31MT - usagold.com msg#: 97496)
Hmmm higher or lower tomorrow?
http://www.admis.com/public/site1/top25.htm

Snippit from Gavin Maguire

"Now the pendulum is swinging back - and it hasn't stopped yet."
Indeed, he said there was a "reasonable chance that we could go below
$325" if the "pendulum swings back to the same degree that it swung higher.
"This is how markets work. When they get obviously overcooked in one
direction they invariable head off with force in the other direction at some
point. And that's what we're seeing now," he added.
However, Kaplan also maintained that the gold market remains in a secular
bull market that will see prices scale the $390-$400 level in the longer run.
"Gold will definitely see $390-$400 at some point, but more likely at the
end of the year than now," he said.
"The market is positioned to go higher, but we just moved way too fast,"
he added.
Other dealers agreed that further weakness in gold may bee seen in the
near term.

Rocketman's comment.
Hmmmm? If I would have left the paper trading and speculating to others, I wouldn't be even a little concerned about this current pull back. Any other opinions on tomorrow's gold action?

I did call up a local bullion dealer who normally has lots of supply and heard that the mint is backed up. No delivery of physical until Monday.

GoldnSilver2002 (02/12/03; 16:39:31MT - usagold.com msg#: 97495)
Jim Sinclair:"will gold hit 345?.....NO!"
According to Jim Sinclair,when asked on his Mineset.com site,when asked if gold will hit 345 again,he states emphatically no!

Buongiorno! (02/12/03; 16:26:33MT - usagold.com msg#: 97494)
FEEEEMA SUGGESTIONS!
Our resident geniuses down by feema have told us to get THREE whole days worth of food and water set back in case of emergency. (How 'bout that,Blade?) Get plastic sheeting and duck tape for windows and doors. (keep the bio-and-chem thingies out?) But they do not mention what to do with my fresh-air supply to my furnace. a) Air gets heated some, but not enough to kill most bugs, I think? Filters, likewise marginally effective, I think? b) If this fresh air highway needs attention, what to do? Any Ideas? GRAZIA! BUONGIORNO!
ps--my gold comes from MK sealed in nice plastic, bet that is ok!

Foreigner (02/12/03; 16:13:45MT - usagold.com msg#: 97493)
Gold hit bottom of its correction today
FWIW it is my opinion that we most probably hit the bottom of recent correction in gold. This is what I see on charts and I expect some confirmation in political arena this Friday. All I can say as credentials is that I trade futures for several years now. As is in the nature of the markets we never know for sure but I give it 70% chance that todays bottom will hold. Hope we will find some confirmation of my opinion in Mr Sinclair gold market action view.

goldenboy (02/12/03; 16:07:32MT - usagold.com msg#: 97492)
@Paper Avalanche: ABX Defers Options; Sells @Spot in January
Well, i guess this only gives us a better idea as to who is ultimately at the other side of those options!

Daniel Druff (02/12/03; 15:57:07MT - usagold.com msg#: 97491)
Black Blade
ABX boots The O- man
"One small interesting item of note was that Barrick fired CEO Randall Oliphant just before this week's earnings release." Black Blade

WOW, I missed this entirely. Thank you kind and generous Sir. Mr. Oliphant, The Great Satan of Gold Hedging, himself. This has to indicate a sea change of sorts, no?

Thank you

mikal (02/12/03; 15:33:07MT - usagold.com msg#: 97490)
@All
How easily could U.S. stock shorts get cleaned out in the next couple days? All it would seem to take would be a classic ESF(Exchange Stabilization Fund) intervention. Does the President's Working Group on Financial Markets have dual purposes- 1) maximize commissions for futures brokers and profits for "connected" commercials, the NYMEX, etc. 2) cushion equities to lower and sustainable PE ratios?

knotakare (02/12/03; 15:30:35MT - usagold.com msg#: 97489)
I want out !
of the gold paper system. And I took major steps earlier this week by selling my positions in KGC, RGLD and GLG. I made nice profits, but now I want out.

When I read about the secret Patriot Act 2 waiting in the wings, I realize that someday soon we will not have markets in this country. The markets will disapear and many will be left with nothing. Believe me, I d not want this to happen, but now I see it will. I am going to cash out my IRA's, and invest in myself, survival gears, more gold.

I have had it with this casino. I don't believe in it anymore.

enough is enough

Black Blade (02/12/03; 15:28:51MT - usagold.com msg#: 97488)
Gold Price

I find it quite amusing that so many are uptight over the pull back in the POG. We see old settled back to where it was a little less than three weeks ago. Hedge funds and speculators went long gold and short the dollar. No one can make a quick buck when everyone goes the same direction so when the dollar gained many funds bailed driving the price lower. This is actually a good thing as the weak hands get shaken out and the shorts are more inclined to cover setting up a stronger and sustainable upward move. It can be argued that the so called "war premium" was largely blown off the POG as well. One small interesting item of note was that Barrick fired CEO Randall Oliphant just before this week's earnings release. Maybe the hedge book is not quite as solid as he had said. This could spark more short covering as ABX wriggles on the hook in an effort to extricate it self from a large short position on their product. The fundamentals for gold remain quite strong as producers continue to unwind hedge books, physical demand is robust (even more so with lower prices), the dollar remains relatively weak, equities markets plummet, Asian and Russian central bank buying, energy costs keep rising as a new energy crisis develops, economic and geopolitical concerns abound, etc. In every bull market there are peaks and valleys along the way. Long term precious metals look very good.

- Black Blade

"What me worry?" - Alfred E. Newman ;-)

Off to the gym!

goldenboy (02/12/03; 15:23:05MT - usagold.com msg#: 97487)
Timbervision: PM`s in Retirement Accounts
In Canada there are 2 ways to hold pm`s in your retirement account. One has equal amounts of gold, silver and platinum (balanced daily) but US citizens, I believe cannot purchase. The other is gold and silver which US citizens can hold. Unfortuneately, this one often trades at premium to its asset value.
Are there specifics of your plan that precludes these types of holdings?

mikal (02/12/03; 15:20:12MT - usagold.com msg#: 97486)
@Sector- Correction
"SPRING, not Sring deadlines.
P.S. Why is the US stock market being allowed to stay below significant resistance and moving averages? TIA!

mikal (02/12/03; 15:16:06MT - usagold.com msg#: 97485)
@Sector
I enjoy your thoughts on the markets and the many subjects that affect them, especially gold and silver. Is it true that the period around/before Easter still holds special significance? I have been feeling for many months, that financial and related political and geopolitical events are consolidating or winding down in preparation for one or more near-simultaneous Sring deadlines. But I've been wrong before.

White Rose (02/12/03; 14:55:14MT - usagold.com msg#: 97484)
We are all frustrated at these price levels
Here is one theory with nothing to back it up:

The price of gold is totally controlled. The virtually perfect line from Dec 4th to two weeks ago (with the slope pointing to $630 by the end of the year). In the last two weeks, the line jerked up to see if anyone would sell enough real gold to justify the pain (the the shorters) of the high price. No? no-one wants to sell? When, lets jerk it down and see if we can shake some physical out of people by scaring them with a fast elevator ride. It reminds me of the attraction "Twilight Zone -- Tower of Terror" at MGM Studios in Orlando. It seems real scary -- more than you would expect. The secret is that the elevator "falls" 30% faster than gravity would take you (you experience 1.3G's). In essence they manipulate your fear by a faster then expected drop. I hope you see the connection. I suspect we are all enjoying the ride, but no gold is being deposited at the bottom of the elevator shaft. Instead, this is an excellent time to buy more physical. Even I will lay off buying gold stocks for a while.

I wonder what they will try next? We have been through the list so many times:

-- demonizing gold -- the money of terrorists
-- don't buy it -- it is too expensive
-- don't buy it -- it is worthless, sell it now
-- we are about to confiscate it -- don't buy it
-- don't think about it -- it is a barbarous relic
-- don't buy it, you can make so much more with tech stocks

Maybe they will try to convice us of all of these things all at once.

Paper Avalanche (02/12/03; 14:45:12MT - usagold.com msg#: 97483)
@ Caradoc
This week: POG $352 / Eagle Coins $372

Next week: POG $344 / Eagle Coins $380

The next week: POG $339 / Eagle Coins $387.50

The separation is underway IMHO.

PAPER AVALANCHE

White Hills (02/12/03; 14:28:42MT - usagold.com msg#: 97482)
Comex
Clearly the POG is being manipulated on the Comex, If that is the case, and I believe it is, the the whole thing is one big con game and like all good cons it looks legit. You have to ask yourself; Who is doing it? Why are they doing it? Its a paper game and just because it has a good story it sells doesn't mean anything. I remember years ago a scheme that ran through Orange County, Californa looked so good and seemed to have all the logic and the answer to any question you could ask and even as the Police were shutting it down as an illegal Pyramid scam people were going to court trying to keep it running they were so convinced that it was legit.I guess the moral of the story is that if looks to good to be true it probabily isn't Another thing can you get info on exactly who is dumping gold contracts on the Market? I don't think so. White Hills

Daniel Druff (02/12/03; 14:15:44MT - usagold.com msg#: 97481)
Market Shock
The Veneroso Scenairo
This would be a propitious time of inflict Market Shock to the Gold Mining Sector. If you're not levered up too much you should get a real bang out of this probability, should it manifest itself.

Here are some ideas:

1. Peace scares lead to Exile.
2. Fed/Treasury to Nationalize the country's gold mines...we must assume that the shareholders will receive a fair price.
3. Confiscation...yea, right! Tell that to the Chinese.

We discussed this stuff before so if you kept your powder dry you're in good shape. BUY 'EM when there's blood in the street...I can't remember who said that but I'm certain he was subconsciously referring to the Gold Mining Sector.

Thank you

Pizz (02/12/03; 14:06:12MT - usagold.com msg#: 97480)
Sector
Re Barrick: Longer term bullish, short term I'm not so sure. Can't help but feel that some of the daily momentum traders who wouldn't know a fundamental from an instramental probably construe it as a negative for the industry - big hedge players in trouble, and too few good companies out there so let's get out of the mining arena for a while. . . .

Read next door that last October a 307 number for Barrick was their over/under hedge book line in the sand. At 350 or so kind of puts them 700 mil out of round (390 would have been 10 figures).

Sure as heck ain't dull and boring no more. . . .and this is probably just foreplay. . . .

Mr. G: I'm surviving - barely. Never try money management for a business with cash balances that look like personal checking accounts. . . . resumes have been out for a couple months. . kind of hard not to know the end result when you see the finances. Any kind of terror shock to this country in the next month will be just like bungie jumping without the bungie for many small, medium business. . .thanks for the concern.

Nice to have something golden to fall back on, and here's hoping I don't have to use it too soon.

Pizz

Operative (02/12/03; 13:38:47MT - usagold.com msg#: 97479)
Leaving The Flatlands Behind
I remember the gentle walks along the trail. How lucky I felt to have found a group of men who could explain not only what would lie ahead, but offer up reasonable answers to why. The trail was easy back then, almost boring to tears actually on some weeks. A dollar or two up, then a dollar or two down, (yawn) it was hard somedays to pay attention to the teachings along the way. I remember a 3 to 5 dollar gold move was reason for celebration around the evening campfire.
The talk of mountains to come seemed, a long long far away.

Welcome to the foothills gang!!

Enjoy this portion of the journey, be of good spirit. The mountains dont seem so far away now.

Caradoc (2/12/03; 13:18:31MT - usagold.com msg#: 97478)
It isn't all that complex....
Sector: First the sugar coating: I've enjoyed many of your posts and have learned from them. Thank you.

Now the hard part...

I admired Ari's recent post for managing to be clear and polite at the same time. He did a much better job than my previous attempt to explain why "buy low, sell high" doesn't have to happen in chronological order, thus allowing a paper short to reverse out of a position with a paper buy even though no real asset was involved.

You're such a persuasive writer that it's disappointing to see you respond almost immediately, apparently without without pausing for a moment to consider whether you might be wrong. I say disappointing because -- by introducing arguments based on analogy and extension and by raising cosmological issues about the nature of reality -- you make the argument more difficult to follow and cause this forum to risk having some percentage of readers categorize the discussion as something taking place way over their heads.

I must point out that you chose oil as the analogy (arguing that title to an oil contract for future delivery and oil itself are both "real" and that gold is the same. True as far as it goes, but try it with land (which is undeniably real). With title to a piece of land, you can go there, walk on it, dig holes, and plant trees. With title to a contract for future delivery of a commodity, all that's "real" is the contract, which is a piece of paper. Since future gold has been sold three years out, the reality of those future ounces is at best separate atoms of gold chemically bonded to other elements at the rate of so many ounces per ton and in a form that doesn't even look like gold. The pending reality of those ounces as shiny yellow metal depends on things like the mine staying in business. Further, as owner of a contract for future delivery, your right to delivery depends on Comex staying in business and not renegging on your right to delivery by announcing cash settlement only. With all that, if you want to call those ounces "real," so be it. But the whole cosmology/reality issue you raise is really a red herring in terms of discussing whether a seller must own in order to sell. Fact is, he doesn't.

The other analogy you raise is EFP (Exchange for Physical). It's hardly a surprise that physical is involved in such transactions, but the fact that they have a special category for trades involving physical says something all by itself.

Rather than attemmpt to arrive at truth by logic, I suggest you talk with someone who trades or -- if need be -- open an account and take a short position yourself. You will notice that selling short does NOT require you to own either a paper or a physical asset in order to sell short. It really is that simple.

Take this as more sugar coating... I've had the privilege of knowing three people whose intellect set them apart from the the level you would bump into at a Mensa meeting (except for those golden days in the 70s when Isaac Asimov would show up at meetings in New York.) One of these individuals had the quirk of thinking that the word "charicature" had the emphasis on the second syllable instead of the first. It never occurred to me to correct him since it did no damage, made him seem more human, and served to indicate how well he had self-educated himself long before he picked up a PhD from a majoir university. Similarly, I wouldn't be inclined to address this issue with you were it not for how important it is for readers of this forum to know the difference between paper gold and real gold. Those now walking down the price of gold by selling paper at lower and lower levels may have the arrogance of princes in assuming they can reverse their way out with more paper, but they are at best princes of paper only.

For one indication that their house of cards isn't tied to real gold, look at the spread on one ounce eagles: bid 347.10 and ask 372.52. That spread in the range of 25 bucks says those who sell real coins are -- day by day -- paying less and less attention to the world of paper.

sector (2/12/03; 13:12:52MT - usagold.com msg#: 97477)
@ Pizz Barrick's Bullish News
The termination of their CEO seems bullish...even to a hedgehog
...in that there is new uncertainty regarding their hedging phiosophy.

Perhaps they begin to cover? Only time will tell.

The war uncertainty just keeps going up and up. I imagine that gold will be whipped back and forth here until the unceratinty goes away. However, now that China has joined Russia, Belgium, France and Germany in blocking NATO's involvement and the UN Security Council, Bush just may be snookered. The Admin, BTW, look pretty weak asking for UN help with North Korea while telling them to "Pack Sand" on Iraq.

It's clear that the linear, post-O'Neill and pre-Snow phase for gold is at an end and we have more corrections to COMEX open interest as a result of margin reductions and maybe just a bit too many small specs borrowing money to play. No really big boogymen. It just took a tripwire like increased margins, then the rest took care of itself.

The new spike down can't change the primary bull market for gold and may hearld a recovery spike right back up in a few weeks. The days of relentless week in and week out selling by official sources are over because they have offered all the gold they can stand. The question is silver. Who is the official seller? Meethinks it is Mexico but how does one prove it?

The real thing in one's hands is soooo much more reassuring. It removes the uncertainty.

Mr Gresham (2/12/03; 13:01:34MT - usagold.com msg#: 97476)
Shakeout
Could only read down a few posts -- financial upheavals come in all shapes & sizes -- Pizz, hope you're OK.

Looks like they're shaking the last coins out of the piggybank? WHAT is going on -- is this strength, or desperation masquerading as same? Well, we've placed our bets, so let 'er roll!

Was thinking this morning about the 1970s first spike, up to $200 I think it was, and then down to around (?) $120 before it took off again. I wonder if this is the first instance of something like that? Any historians around?

timbervision (2/12/03; 12:50:09MT - usagold.com msg#: 97475)
Belgian, miner49'er
Again, my thanks to your replies. Although the future is still ahead of us, and I would hold no one here to anything, I feel quite privaleged to be party to your thoughts. My question had a second twister that I hadn't described, and that is that the bullion funds/stocks have significant income tax implications upon sale. i.e. they are in my government registered retirement plan, from which early deregistering results in one's current marginal tax rate being applied, ouch! (Gold bullion can not be held in these plans) This, not inconsiderable amount, has slowed me from making the move earlier, but it is penetrating deeper and deeper into my thinking that "gold-in-possession" can not be interpreted any other way, other than what it is.

Aristotle, thank you too for your steadfast depiction of your understanding of the gold market. I'll remember this one: "I tell them having Gold on hand is like having the *value* of owning the winning powerball lottery ticket before the numbers are actually announced.

Paper Avalanche (2/12/03; 12:48:09MT - usagold.com msg#: 97474)
@ Pizz & Goldnsilver
Thanks for the feedback.

I too have this uneasy feeling about the coming days, very uneasy. I keep asking myself what would bring US and world opinion around to justify the immenent war and I don't like the answer.

Take care. May you and yours be safe in whatever lies ahead.

PA

PH in LA (2/12/03; 12:42:34MT - usagold.com msg#: 97473)
Dubya's plans: Coming Apart at the Seams?
http://www.latimes.com/la-oe-scheer11feb11,0,4491596.column

"...Depressing as it is to acknowledge, it now seems clear we are witnessing the tantrum of a woefully untutored and inexperienced president whose willfulness rises in direct proportion to his inability to comprehend a world too complex for his grasp."

Here we have the conclusion of no less an authority than the Los Angeles Times voicing what shouldd have been obvious the moment the republicans thought they could get away with grabbing the reins of presidential power by pre-empting the electoral process back in 2000. It seemed like a good idea at the time, but how does it seem, now?

Dubya is probably asking his dad "how did I ever get myself into all this, anyhow?"

And the LA Times will no doubt soon be asking the same thing.

How long until it all becomes painfully obvious to the man in the street, too? (Sure glad I didn't vote for him!)

Pizz (2/12/03; 12:27:19MT - usagold.com msg#: 97472)
Goldsilver2002
That something big. . .I feel it too. My sixth sense is working overtime - more so than the cold war, gulf war, etc.

Hope it's just stress and overwork. . .just doesn't feel like it though.

Pizz

Zhisheng (2/12/03; 12:14:05MT - usagold.com msg#: 97471)
Down into the close.
http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=GLD.FX1
The fundamentals are still fircely bullish: circa 20% more demand than supply, inflating currencies around the globe and especially in the US, over-hedged mining companies needing to climb out of their shorts, huge US deficits likely to grow with the expense of preparing for and (probably) waging war, gold production going down, cash looking for a home due to low interest rates and a falling stock market, etc.

So why the massive correction: $35 in three or four trading days? Some thoughts...

First: the weak long specs caught the gold (greed) fever and made themselves vulnerable again by wagering too much too soon.

Second: with war imminent, it is to the advantage of the belligerents to minimize the prospect of associated financial danger---and pushing down the price of gold helps in this regard.

Third: the size of the gold market is small enough that short-term manipulation is practicable.

Fourth: the massive shorts of the gold world are particularly subject to the influence of those who could "forgive them their trespasses", and so serve as willing allies.

Fifth: for those pulling the strings to extract maximum profit from the rise of gold, they must persuade so many as possible to stay away from gold: ergo every so often they stop, turn around, and bloody a few green horns' noses-- and the more the potential profit, the more violent the attack and complete the massacre.

Pizz (2/12/03; 12:01:28MT - usagold.com msg#: 97470)
PA
Well, even though we see the paper prices falling and physical in short supply, if they were expecting the paper price to crash (thus vindicating the shorts), I don't think the rats would be either leaving the ship or being tossed out.

It would appear to me that it's expected that the dollar may drop down an elevator shaft and Spike may have his pole vault pole in his hand.

The selling by the PM paper longs appears to me to be weaker hands taking profits and boosting cash reserves - maybe in anticipation of market disruptions.

Too much airport and homeland security alerts here and abroad not to see a small run to cash. . . .

Thoughts only, cause not any historical basis for this type of mess. . .

Glad I got my physical early. . .wish I had more, but I'm better off than 99.9999 of the rest. . .(and thankful)

Pizz

slingshot (2/12/03; 12:00:36MT - usagold.com msg#: 97469)
Is this the Last Hoorah?
Dollar at 100.47. Gold $353.00 NYSE 7792 with volume at 725,456,000. They are running out of breath. How close were they to collaspe with the dollar at 99.21? Pulled all the stops to get the dollar above 100.00. All they done and gold at $353. Afraid if it went to $330.00 they would have a run on Gold. They are counterbalancing the Titanic with compartment flooding so it will not capsize. Even as they sink. Now this may sound foolish but I am having some fun in this market.
Hold on to the Gold. When everyone else is looking to buy ,Why would we sell?
Think Positive.
Slingshot------------------------<>

GoldnSilver2002 (2/12/03; 12:00:08MT - usagold.com msg#: 97468)
As the physical dries up they drive down paper price to get back physical
Interesting theory Paper avalanche.When one looks around or asks,there isnt as much gold or silver(physical) to buy as there was last year.So what do they do?Drive down the price to try and scare people into selling it,why?Because when the price rocketed to 390 not enough people sold gold back.They may be ignoring what is really happpening here,people are buying physical as a vote against the fed and for security,not just investment.At the same time,the rest of the world sees gold acting very strangely.They know war and terrorism,the markets crashing and geo political unrest abounds.They see gold going down when it shouldnt,and finally get fed up and/or bail on paper games of all types and buy up what physical is actually out there.This is bad news for the Down jones and the nasdog,everyone knows Greenspan is kept,and that wall st is a joke/lie.Logical reaction dump paper and buy physical gold,while they can.Something rather big is afoot,too big too mention.

ElGordo (2/12/03; 11:49:43MT - usagold.com msg#: 97467)
N Korea has missile that could reach US
http://www.washingtonpost.com/wp-dyn/articles/A62869-2003Feb12.html
North Korea has an untested ballistic missile capable of reaching the western United States, intelligence officials said Wednesday.

The North Korean missile is a three-stage version of the Taepo Dong 2, said Vice Adm. Lowell Jacoby, director of the Defense Intelligence Agency.

It has not been flight-tested, Jacoby said, leaving some questions about the North Korea's capability to successfully launch the missile.

CIA Director George J. Tenet, who joined Jacoby in briefing the Senate Armed Services Committee, also acknowledged the North Koreans have the capability to reach the western United States with a long-range missile.

Paper Avalanche (2/12/03; 11:33:24MT - usagold.com msg#: 97466)
@ the forum....
Does anyone else interpret the plunge in the paper price of gold as an indicator that the world is walking away from the dollar/paper/gold game?

Fishing for thoughts here........

PA

Pizz (2/12/03; 11:32:30MT - usagold.com msg#: 97465)
Nervous Lenders
Not only are the war jitters spooking the public (just go into a bar or restaurant and listen to the conversations),

But banks, finance companies, etc. are doing collateral checks, companies are grinding on their collection managers, and even trying to collect cash before normal due dates.

Last two weeks have been a bit trying. Everyone wants as much cash as they can find. . .even if there was enough to go around, everyone want's just a little more. . . .

Went into my favorite gun and pawn boutique lasd night - they were doing a very brisk business - especially in the jewelry area ... high carat items are almost non existant - no gold coins for sale, bullion or otherwise. . .

Pizz

Buena Fe (2/12/03; 11:29:37MT - usagold.com msg#: 97464)
spec
markets near very crital juncture, banks push paper au to hell to balance books, won't work imo , bkx.x under great pressure, leading way down

separation of paper vs physical may be moments away

go au

The Hoople (2/12/03; 11:10:48MT - usagold.com msg#: 97463)
Paper Avalanche
Oliphant getting axed seems to be a very bullish signal. ABX for whatever reason seemingly is admitting their existing strategy has failed. Might his departure also avoid those nasty depositions and subpoenas when TSHTF? Also COMEX margins raised just prior to his leaving? I can't help noticing all the resignation, firings, and departures between JPM,ABX, the Treasury, and FNM. Coincidental? I don't think so. Something is up in a big way.

USAGOLD / Centennial Precious Metals, Inc. (2/12/03; 10:43:45MT - usagold.com msg#: 97462)
Why should YOU buy gold? Because no one else will do it FOR you. We can help.
http://www.usagold.com/ProductsPage.html

Gold Today!

Because you never know what tomorrow will bring.

In this global marketplace, a single event on the far side of the world can suddenly and adversely affect the performance and credibility value of the commercial positions within your investment portfolio.

Gold has no employees, no overhead, and no financial statement to balance. It cannot go bankrupt. Gold is wealth itself. It is valued worldwide on the basis of its uniquely reliable form and function -- a steadfast financial asset which is immune to the contagious collapses to which all financial paper is prone.

In the final analysis -- in times of stress -- paper is only paper.

How solid is your portfolio?

USAGOLD - Centennial is here to help.
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USAGOLD / Centennial Precious Metals, Inc. (2/12/03; 10:41:32MT - usagold.com msg#: 97461)
What you need to know before you buy your first ounce of gold...
http://www.usagold.com/cpm/goldhelp.html

Q. In your book, The ABCs of Gold Investing: Protecting Your Wealth through Private Gold Ownership you start the chapter by saying "Who you do business with is one of the most important aspects of gold investing." Why is that?

MK. Most, if not all, of the progress an investor makes towards realizing his or her goals with respect to gold ownership hinges on that relationship. Unbiased, objective advice from one's gold advisor is a key element. So are market information and education. Pricing, product selection, fulfillment and on-going support also rely on that relationship. Above all, it is extremely important for gold buyers to match their objectives with the type of gold they buy. Positive results in all of those areas depend upon a strong relationship with a gold firm. That is why it is important to spend some time finding the right one.

Q. Can you briefly describe some of the pitfalls a beginner might be on the look out for?

MK. The biggest trap investors fall into is buying a gold investment that bears little or no relationship to his or her objectives. Take safe haven investors for example. That group makes up 90% of our clientele, and probably a good 75% of the current physical gold market. Most often the safe-haven investors simply want to add gold coins to their portfolio mix, but by the time they finish talking with a typical national firm, they might end up in a leveraged gold position, exotic rare coins, or being diverted into silver or platinum. Others drift into gold stocks or gold futures which in reality are proxies for real gold ownership and could actually act opposite the intent of the investor. There's nothing wrong with any of these non-physical investments per se, it's just that none of them is really a safe-haven. The investor should bear this in mind. The question investors must always answer for themselves is "How will this investment serve me should the economy or financial markets suffer a major disruption?"

sector (2/12/03; 09:55:28MT - usagold.com msg#: 97460)
@Ari It Sould'nt be all that complex...
...the COMEX liquidity come from real metal. The EFP is the exchange of the bulk of that metal
...in the form of title to known assets. One must accept that title to gold is gold just as title to oil is oil unless in today's world one has a very big army with which to steal those oil titles :-)

When a mine sells forward its production as Barrick and others have done they have sold real metal. They have not as you seem to suggest created faux metal for paper markets which they can print mre paper to settle out of.

Wayne Murdy knows all-too-well this sad fact. Normany's hedges and forward sales contract holders demand real metal and not paper settlements thus Newmont can't close their hedges as quickly as they want and are getting into a bind.

The real Barrick metal sold forward is as real as title to an office building. That metal circulates because it is real gold and is divided into parcels in the form of titles to and from various owners in the world's gold markets. Barrick received cash for that metal yet to be delivered. Barrick spent the cash. Barrick has a liability to deliver metal in the future at a specified price.

To imagine that the millions of ounces traded daily on the London market do not have any direct link to gold is just not credible. Consider:
++++++++++

CME Definitions - EFP Exchange for Physicals

http://216.239.53.100/search?q=cache:QRK8pLmZsIsC:www.cme.com/allaire/spectra/system/securemediastore/efpfaq.pdf+exchange+for+physicals&hl=en&ie=UTF-8

Exchange-For-Physicals (EFP) and Exchange Basis Facility (EBF) Trading Practices

This document - in question and answer (Q&A) format - is intended to provide an understanding of the EFP and EBF transactions on the Chicago Mercantile Exchange.

The CME Rulebook defines Exchange-for-Physical (EFP) transactions as "a privately negotiated and simultaneous exchange of a futures position for a corresponding cash position (i.e., a basis trade) apart from the public auction market in the context of a non-interest rate contract." An Exchange Basis Facility (EBF) trade is defined as "Exchange-for-Physical (EFP) trade transacted in the context of interest rate contracts ..." This terminology is intended to differentiate these transactions conducted in interest rate contracts from other product sectors - in order to conform with terminology in common use elsewhere within the interest rate futures community.

The following questions and answers (Q&As) are offered to explain the execution, reporting, and submission of EFP and EBF transactions.

Q10: Must there be a cash trade during the EFPs or EBF transaction?

A10: Yes. The seller of the futures contract must simultaneously purchase the cash commodity, and, in the case of the buyer of the futures contract, he must simultaneously sell the cash commodity as part of an EFP or EBF. In addition, the party that is the seller of the cash or "spot" commodity must have the cash commodity in his possession at the time of the transaction. Transitory EFPs or EBFs are not allowed in equities, interest rates or agricultural products.

[Please note the repeated references to the seller having to purchase the cash commodity. They purchase that cash commodity from a pool of available liquidity...a pool of gold]
++++++++++++++++++++++++++++

This definition from authoritative sources should lay to rest the question of whether a contract seller "A short" must own the commodity in order to conduct what are by far the largest part of the CME [And by implication, the COMEX] physical transactions. These EFPs were established mainly to accomodate large trades by banks and institutions. The reason that nearly all brokers are ignorant of EFPs is because the amounts involved are very big.

Markets all over the world use EFPs.

By far the Exchange for Physicals portion of the COMEX and CME are the bulk of physical activity, dwarfing the warehouse activity. The key perspective to appreciate is that the warehouse is not the whole physical story. The trade of titles to gold is where thebulk of market liquidity derives.

It is here and in the LBMA equivalent that the central banks have lost title to tens of thousands of tonnes of their gold. The gold entered a pool of liquidity from which short contracts [Excluding options] were sold. It was real metal with real addresses and it's gone from the central banks. It was necessary to sell forward all that gold in order to drop the price of gold for the last many years.

White Hills (2/12/03; 09:55:03MT - usagold.com msg#: 97459)
Greenspan speaks
Greenspan trying to answer some very tough and to the point by Ron Paul before congressional committee states " Clearly the rise in the price of Oil and Gold are War related" If thats the case maybe he could explain the drop in the price of Gold. Watching the POG rising and falling leave no doubt ,in my mind ,that it is a rigged game. Of course, just about everybody on this forum should be aware of this as the case has certainly been made here. IMHO nobody that owns gold really knows how much it really is worth. Its anybodys guess. As more and more of people of the world, given the opportunity, buy and hold gold the true value will begin to be clear for all to know. White Hills

Paper Avalanche (2/12/03; 09:31:15MT - usagold.com msg#: 97457)
Anyone care to read between the lines here?
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_box.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&box=ad_box_all&tag=financial&middle=ad_frame2_topfin&s=APkpzDRMaQmFycmlj
Snip #1:

"Barrick Gold Fires Oliphant, Names Wilkins CEO (Update2)
By Joe Schneider

Toronto, Feb. 12 (Bloomberg) -- Barrick Gold Corp., the world's third-biggest gold producer, fired Chief Executive Randall Oliphant after the company's stock fell while the price of bullion surged to a six-year high."

More importantly, and for everyone who believes that there will be a short squeeze:

Snip #2:

"The company sold all the metal it produced in January on the spot market to take advantage of bullion's surge, spokesman Vince Borg said. By doing so, Oliphant tried to make the point that Barrick can profit from higher gold prices.

Using its size and investment-grade credit rating, Barrick convinced its gold lenders to allow repayment deferrals as long as 15 years to allow the company to sell on the open market when prices rise, Chief Financial Officer Jamie Sokalsky said in an interview last year."

PA

Paper Avalanche (2/12/03; 09:16:56MT - usagold.com msg#: 97456)
Anyone want to buy my paper gold contract???
I am desperately trying to get any cash that I can for this paper gold contract so that I can purchase physical gold. I will take any price! Please hurry and let me know. Rumor has it that the price of physical is going up by the hour.

Best regards,
A gold long seeking the real thing

MK (2/12/03; 09:12:04MT - usagold.com msg#: 97455)
Belgian, Farfel, FOA -- Comments
Belgian:

With respect to official gold movements West to East, Singapore's Dr. Tan Khee Giap, an economist at Nanyang Technological University, was quoted by "Gold" magazine as saying:

"The recent interests of East Asian central banks in increasing gold holdings is certainly not a knee-jerk reaction. The reasons behind this wider interest in gold is simply, in my view, to maintain the ratio of gold holdings in the swift accumulation of foreign exchange reserves by East Asian economies since the 1990s."

China has made an official announcement, according to this article, that it "will increase its gold holdings." He says other countries -- Malaysia, Thailand, South Korea, Singapore, Taiwan and India -- will also buy "more" gold.

To not do so says Dr. Giap "would make them look silly and underinvested (in gold)" when compared to other Western central banks. He adds that the East learned a lesson from the Asian contagion and for that reason gold is making a comeback in the official sector there. "The mistake of perhaps over-investing their reserves the the greenback prior to the East Asian financial turmoil serves as a vivid lesson that would not be repeated."

"So long as there's financial markets volatility and uncertainty and no measures to overcome the crisis, gold is always looked upon as a store of value, safe haven and a hedge against risk," he concludes.

--

I might add that this last comment by Dr. Giap applies just as readily to the individual investor as it does to the East Asian central bank.

--

Farfel:

Inform your friend that for every ounce of gold used by al quaeda to finance terrorist operations at least $1,000,000 in U.S. currency was used for the same purposes. The problem is al quaeda, not the currency. The problem is Osama bin Laden not the five bankers who set the London PM fix each day at the venerable offices of Rothschild-London, or the law-abiding gold owner. He needs to get beyond his narrow self-interest to a wider understanding of world events, and the forces of instability tugging on each and every one of us.

--

FOA:

So, much of the discussion we've had over the years about rising Europe as a factor in international affairs vis a vis the introduction of their new currency has begun to surface in the international real politic, has it not? And this is the important development that will carry forward no matter what happens in Iraq. The world has changed -- significantly. Some will see it as a "sudden" change but for those who've read these pages all these years will not see this as sudden at all. The events of the past several days have been in the making for a long time. A client asked me the other day with all the extraordinary events which have occurred over the past several months what I rated the most important. I responded: Russia switching a substantial amount of its reserves from the dollar to the euro. That surprised him. A week or two later Putin is standing with Chirac before the cameras talking about areas of unified stance between the two countries with respect to Iraq. Next the headlines appear about cracks in NATO over Turkey. All interests in the end are commercial interests. These are dangerous times for all the world's citizens, but those who've read these pages have had something of a warning, as we saw much of this coming -- particularly with respect to the emerging EU -- years ago.

We move forward in these uncertain times as friends and associates at this Table Round. . . .

a nation of one (2/12/03; 08:57:13MT - usagold.com msg#: 97454)
Re: prudent bear statements

Someone I know had this to say about the prudent bear article. He has experience in the oil business. Is this correct? "Opec's target price for oil is $25.00/bbl. Their policy is that whenever oil goes over $28.00 per barrel (I believe that's the figure) for more than three weeks, they
increase production to increase supply and reduce the price. This has been their policy since the mid-l980s. They understand the economics of supply and demand, and the point of optimum returns for them is $25.00/bbl." He said it shows that the writer doesn't know what he's saying. I don't believe that it does. My friend knows nothing about gold and is opposed to the Internet on ethical grounds. I would love to be able to tell him what's wrong with his view. Then maybe he would take my admonitions more seriously when I tell him he should buy gold.

Old Yeller (2/12/03; 08:52:01MT - usagold.com msg#: 97453)
New mannfm11 post for Mr. G
http://www.prudentbear.com/bearschat/bbs_read.asp?mid=88848&tid=88848&fid=1&start=1&sr=1&sb=1&snsa=A#M88848

I know you're a big fan of his too.

Gets down to brass tacks,ouch.

PS,there's some new ORO out there.

GoldnSilver2002 (2/12/03; 08:40:55MT - usagold.com msg#: 97452)
Going of the rails of the crazy train.....not!No war premium now
Bah,what blatancy!Knocked down right before open in new york,cause the dow is gonna tank.The message"if you dont lose 30 to 40 percent per year with our paper markets,then there is no where to put your money."My advice,dont wait around for the long awaited "short squeeze"'sell 1/3 plus into any rally and wait for the pullbacks.It is 99 percent certain there will be a pullback and if there isnt then let the other 67 percent rip.Then take any profits and buy physical gold on the pullbacks.The gold stocks havent reacted much to the pre market smash down simply because they never caught up.I can find no gold stock(although there may be some),which have hit there June 2002 highs.

The goal here is to make the so called gold experts look good or bad.Those like James Turk,who predicted gold would hit 434 by the end of feb are made to look bad,while those who said,"dont buy gold!" are made to look good.Thus the bullish experts lose influence.

The trap i found myself in was trying to catch the "short squeeze".Dont do it!Most likely the shorts dont have to cover anyway.We forget sometimes how badly the american markets and those of the "free world" are rigged.If you dont like roller coasters,buy physical on the dips.When does the game end?When the physical runs out.When faced with the collapse of the markets now,or sell all your gold and have the collapse later,usa uk will choose later.When a man is dying he often gives of one last powerful attempt to save his life.We are looking at it,a wasted attempt to scare the masses of "volatile" gold.

Socrates964 (2/12/03; 08:14:57MT - usagold.com msg#: 97451)
Gold Price
Key fib levels for April gold are 356.12 and 346.6. I don't use harmonic numbers to trade, but gold's is around $17, so I note that $356 is 2 harmonics down from the top at $390. I'll thus bet that we'll stop here.

If I may break a taboo, I note that for the size of sell-off, gold stocks seem to be surprisingly firm.

Truthcaster (2/12/03; 07:58:04MT - usagold.com msg#: 97450)
Support???
So where is support in gold?
370.00 No guess not. Has to be 360.00.
No wrong again let's try 350.00?? Hmmm...
And In Silver? 4 bucks?

EagleOne (2/12/03; 07:56:29MT - usagold.com msg#: 97449)
usul - New Islamic Dinars
Thanks for bringing up the Dinars for discussion again. Using the convertion weights stated in the article I have trouble arriving at a reasonable value for converting Dirhams to Dinars. They state that (7) 4.3 gram gold Dinars can be exchanged for (10) 3 gram silver Dirhams. If true, I get an exchange rate of gold worth over $300 for silver worth $5 or so. Anyone know what the real weight of the coins might be? If true, please let us know where we might find a broker where I can exchange part of my silver stash.

EagleOne

Belgian (2/12/03; 07:47:17MT - usagold.com msg#: 97448)
Yes Ari....some more reflexions on paper and GOLD
Three decades of fast moving (gyrating) papers against frozen, hardly cycling, Physical Gold. What an unfair competition. But exactly fitting into your lottery picture.

During the past 20 years of Gold-containment, about 50,000 tonnes of new Gold have been added to the, approximate, existing stash of 100,000 tonnes. 3/4 (35,000 tonnes) of this new Gold, went to jewelry and 15,000 tonnes into Wealth-vaults as wealth conclusion (750 tonnes/year).

Who are the accumulators of that "slow" Gold-Wealth (non-jewelry) and what profile do they have ? Kind of statistics one should expect from a WGC. Let us try to give this some thoughts :

1/ Central Banks, simply get their Gold-Exchange-Reserves through complicated reallocation maneuvers, between each other (flow from West to East). With the exception of states who have goldmining on their territory and can always fall back on their underground Gold that can be bought directly from their miners in local currency.
IMVHO, intuition tells me that the *total* *net* holdings of CB-Goldreserves, remained almost unchanged for the past 3 decades. And something tells me that these total Physical Goldreserves are not going to alter much in tonnage but rather in Value...> price. It is the CBs that organized the gold paperplay for the past 3 decades WITHOUT substantial and definitive (final) losses of Physical in possession.
Those who pretend to know the contrary should answer the main question of "WHERE" the Gold has gone to.

2/ Small,individual, Gold-hoarders (non jewelry) around the world. Coins, bars, kilos...These Gold-Wealth accumulators increased their holdings in line with the increased jewelry uptake and neutralized by greater mine output. This category is not going to make POG, gapping or putting unsustainable pressure on POG.

3/ The Gold-Giants : Those who accumulate and HOLD, multiples of the 400 ounces bars (12.4 Kg lingots). WHO are they ? What is their profile ?
- Arabian oil related idendities. Total amounts are absolutely unknown and will never be possible to even guess.
- Asian and Far East internationalists. Total private holdings unknown.
- Private stashes of black Gold scattered all over the world.
- Discrete tycoons from different origin with an intact Gold-reflex-instinct. Those who never needed to be educated by any Gold Advocate.
- Other unknown categories.

The profile of the above Giants has one constant : Extremely rich people who have concluded part of their wealth into the physical metal holdings and have only sold to others of the same kind.

Not "all" those Gold Giants are fully aware of what is happening behind the Gold scene. They simply don't care and are not interested in the immediate future of their Gold.
But some very particular Gold Giants are aware of what is to come. The Arabian oil related Giants and Chinese/Russian/Indian internationalists. Those that "actively" keep on accumulating by every means possible. Those ones who came to the conclusion that Gold will set FREE within their lifetime. Those that are indirectly taking part in the Gold containment sheme and play the goldball and keep hoarding available physical that comes their way, as well (members of the goldclub).

I am sure that Sir M. Kosares will certainly add some other categories of Gold accumulators that are overlooked here.

Point is that by trying to understand the profile of the different Gold Holders/Accumulators...we can eliminate with a certain degree of certainty, those that will not be responsible for a hoped (long awaited) dramatic and lasting, Gold-cornering.
The final Gold-Revaluation must come from the builders of the FREE GOLD MARKET. The euro-architects and Friends/allies ! Most other Physical Gold participants can only add to temporary POG-pressure and make available Physical scarcer and scarcer as to make paper-maneuvering more difficult and disturb some derivative timing schedules.

But at a given moment...all sleeping dollar-reserves of any nature will scramble for Physical, when the dollar is blowing away with hyper-price-inflation tornados. For the time being, many Giants and lilliputans are restrained in their latent Gold-desire through the almost perfect low/lower, paper-price *deterrent* ! The Gold pioneer population is a very small one. Yes, Ari...you are surely one of them (an original one), for wich I'm still very gratefull...because you told/teached us already a long time ago in what one should conclude its wealth, small or big. Thanks Sir.

canamami (2/12/03; 07:45:22MT - usagold.com msg#: 97447)
New Chinese demand on the way
http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=36597674&ID=cnniw&scategory=Metals+%26+Minerals%3APrecious&
Gold sparkles in heavy trading
Source: China Daily - North American Edition
Publication date: 2003-02-12
Arrival time: 2003-02-11

The Spring Festival and approaching Valentine's Day celebration will offer glimmering business opportunities for gold retailers, experts and insiders say.

.............

"Liberalization of the market has brought a new business - gold trading - to banks, in other words, it has provided a new revenue channel for them," said Lu.

Liu Shan'en, an expert with the Beijing Gold Economics Research Centre, said that the banks trading enthusiasm has been bolstered by a likely change in trading laws, which is set to allow individuals to invest in gold.

Publication date: 2003-02-12

canamami (2/12/03; 07:34:59MT - usagold.com msg#: 97446)
Another downward spike in the POG
I don't believe the disconnect between the Comex and physical is as great as some on the Forum believe. At some level, there must be physical available to back up the shorters and the manipulators. My conclusion: Some official sector gold has been conscripted into action. The question: Which CB's gold, and how much has been thrown into the mix?

steady (2/12/03; 07:16:40MT - usagold.com msg#: 97445)
gold
did you ever think gold itself might be afraid of sinking into oblivion? waiting patiently for what has been done to happen! free gold open the mint allready!

miner49er (2/12/03; 07:16:19MT - usagold.com msg#: 97444)
timbervision @ 97393 - Questions...

Hello, timbervision... Good questions. Let's look at them. I will only address them one at a time, since I have very little time right now.

1) You ask, "I have another question for you that speaks to how gold politics will unfold. There are some investment vehicles that store gold bullion in vaults and part ownership of that stored gold is through share ownership. Are those investments to be seen as a form of paper gold?"

I don't believe you could conceive of one that isn't. Remember that an investment instrument exists because someone thinks they have an angle they can work, and the only thing that's missing in order for them to strike it rich, is your money. And you as an investor presumably give them your money because you believe they can make it worth your while to do so.

If you look at the range of possibilities for such an instrument, it could be anything from 100% bullion owned outright to some mix of almost anything + some bullion. On the 100% bullion side, if such an instrument were not "paperized" in the sense that share ownership in this instrument did actually represent a 100% proportional ownership of that gold, then what would be the point?

The manager would have to charge shareholders for costs, and the only benefit comes from a rise in the gold price, which doesn't take a manager to effect. You can do that yourself. Besides, if the instrument is open-ended, then additional shares sold only dilute your stake. There would be no point to such an instrument at all.

If you add things to it to make it "attractive," like a dividend, you must necessarily be doing something more with this gold than just letting it sit there. If they were paying you a dividend, and still swearing that all they were doing was just storing the gold, then they would either a) be selling some to pay the dividend (unlikely), b) lying (possibly) or c) selling additional shares, but still claiming no change in the proportional gold ownership for shareholders, or "paperizing" the gold (most likely).

On the other end of the spectrum, you could have almost any kind of investment/speculation taking place to bring some bang for the buck. And likely for appearances sake, some gold bullion thrown in the mix. So on behalf of the managers, they will be pressured to perform at or better than the least scrupulous competitor in their space. This is because investors are typically so non-discriminating as to where they throw their money, and so grossly ignorant of finance in general that they only are concerned with return and yield.

That being the case, both Joe and Bob run "safe" conservative gold funds, purporting to give the security of gold, preserve capital, and a little income to boot. Joe keeps 10% in outright bullion, and then does whatever he does to return say 4% growth, and a 2% dividend. Bob on the other hand wants to take Joe's business, so he pushes the limit to eek out 6% and a 2.5% dividend. Bob still has to maintain the impression of a safe harbor type of fund, so he will employ various tactics to do this. Let's say gold is still not actually moving in price very much. Well the first thing that gets thrown overboard in Bob's fund are any bullion holdings, since the cash he obtains for them can be invested in something that can get a more "guaranteed" return, quickly. The investments will be in arguably "safe" vehicles (diversified currency holdings, sovereign bond issues, dividend yielding gold mining seniors, etc.), so the fund's stated purpose is not breached.

Joe, now losing business, has to put up with the heat or get out of the kitchen. Whether he likes to or not, he will likely lighten up on his bullion holdings, too, in order to go after something that can get a better return in the short term. Possibly both Bob and he will short some gold, after the manner that has been explained here extensively in the past.

Any such instruments are in no way a proxy for gold ownership. In times where gold is not appreciating, they won't own much of it to begin with. And when gold is appreciating, there is no sense to pay someone to manage that aspect of it, since there is nothing to manage. If you have the belief that gold mining shares will do well in a time of gold appreciation, why burden your gold mining fund with bullion ownership? If you want to allocate a certain portion of your money to physical ownership, do it yourself. Then if you want to allocate some to speculative ventures in mines, own something that does just that. Why encumber this fund with doing something that it cannot do efficiently (bullion ownership), and for which you are only a derivative beneficiary. Even if you "own" a percentage allocation of its gold via your shares, you can't go claim it. Just try.

I've only touched on this, but I think you get the message. What's the use? Just own it yourself... As Belgian stated to you: "A simple and straithforward answer : Keep *YOUR* Gold in * YOUR * hands ! Do so for more the 1,000 different reasons"

I'll try to get to your other inquiries soon... btw, I entertained this discussion a while back (11/1/02) in two other posts: #88620 and #88644, should you want to reference them.

cheers,
miner

Aristotle (2/12/03; 04:18:34MT - usagold.com msg#: 97443)
Belgian, yes I agree!
Yes, I indeedy do.

To tell someone how I *VALUE* Gold in this remaining period of the dominance of PaperGold price discovery is a bit of a trick, since everyone puts so much emphasis on the *obvious* paper market price. (Especially since we can still accumulate our Gold at this price, right? Right.) I tell them having Gold on hand is like having the *value* of owning the winning powerball lottery ticket before the numbers are actually announced. The fact that its purchase price was cheap and the same as all the other non-winning paper tickets doesn't mean that its fate will be the same as all those other worthless paper tickets. The key to tapping into this value, obviously, is in finding enough understanding to know what's going to win and what's going to lose before the balls stop bouncing.

When Gold and paperGold can each be bought for similar prices like they still can at this mid-stage in the game, it should be a no-brainer to choose the Metal. Oddly, lots of people are still lured easily away by the losing lottery leverage. When this market really *really* heats up, all paperGold will burn/default, but they can't imagine it. The problem is, everyone is foolish enough to think that all the tickets can be winners. They can't!

Thanks! It's always a pleasure sharing thought with you, Belgian.

Gold. Get you some. --- Ari

Usul (2/12/03; 03:41:51MT - usagold.com msg#: 97442)
@Waverider
Cheers. One wonders whether these interesting and pertinent discussions are brought to Dr. Mahathir Mohamad's attention (or to anyone delegated with implementation of the gold backed currency plan).

Belgian (2/12/03; 03:38:49MT - usagold.com msg#: 97441)
Ari....
Couldn't agree more with you about the total IN-significance of COMEX in the total Gold picture...the Physical one, of course. COMEX = a playground for the paper-boys...paper-ball plays...NOT the Gold-Game !

Goldmarket callers looking at their small paper-gold-balls, NOT knowing / realizing in WHAT game they are playing/rolling up and down. Three decades of paper-gold management...containment...delusion, with the only purpose of winning time to design and prepare the ultimate FREE GOLD GAME.

Three decades of paper-hysteria and growing Gold-aversion, made all Gold adepts BLIND and DEAF. Even the most sophisticated ones !

Three decades of gold-paper-play is nothing but a gigantic *fore-play* to the Free Gold orgasm (sorry).

The endless speculations about the percepted CB-stupidities, concerning Gold, is part of the papermarket background music, whilst playing. CB's accidental mistakes (miscalculations) are NOT all embracing stupidity.

One remains a paper-gold-player for as long you deny that there is NO Gold-Plan in the running. Paper players have not the slightiest of explanation of substance, for POG's behavior during the past 3 decades. But those same paperists write books when POG moves 6 $.

A Physical Gold Accumulator is convinced about Gold's final direction and has sound arguments for doing consequently so.

The start of the *FREE GOLD MARKET* is impossible to pinpoint. The two dollar-alternatives, Gold and euro, must be ready for that mega-transition and a lot of other elements must be in perfect line, before the Big jump.
Up until then...all ball-plays are allowed within the great Gold-Game. That's why we both get us more and more of that same yellow precious. We *VALUE* Gold without loving it. Do you agree Ari ?

Waverider (2/12/03; 02:35:02MT - usagold.com msg#: 97440)
Trade: Malaysia goes for gold
http://www.atimes.com/atimes/Southeast_Asia/EB08Ae08.html
Good evening Usul - I've linked another article (posted last week)which may also interest you. I include here an analysis which Miner posted in May, 2002 (thanks Miner). It is in reference to an earlier article on the dinar proposal, but it still appears pertinent and maybe some of our newer posters will not have seen it. Cheers,
Waverider

miner49er (5/3/02; 06:51:56MT - usagold.com msg#: 74821)
Trade Settlement in Malaysia - Old Wine in New Wineskins...?
...
The other day there was some discussion regarding Malaysia's plans to institute a gold payment mechanism to manage settlement in its international trade. The discussion arose out of an interview with Prime Minister Dr. Mahathir Mohamad of Malaysia as reported by several news organizations.

I admire Dr. Mahathir, as he demonstrates again his willingness to adhere to convictions and principle, even in the face of enormous pressure from the Beast. Although castigated in 1997 for his stance restricting speculative currency movements, his country withstood much of the ravages of the tsunamic lava flows of "hot money" that laid waste the financial landscape of his neighbors.

Looking over the information provided in news accounts of this interview, I saw some things that raised a few questions, though. Dr. Mahathir envisions the use of the Islamic gold dinar to be the means of account settlement in trade between countries. He highlights the general plan of how the gold exchanges would take place. Using a two country example to simplify the illustration, the trade balances of each country are calculated using their respective local currencies, and are then priced in gold, which is employed as payment. It is also used as the medium to conduct these exchanges. In order to reduce the physical movement of gold, these balances wash each other out, so only the amounts in surplus or deficit are exchanged. (Essentially, convert and net...) To further eliminate unnecessary movement, credits or debits can be applied to these imbalances. The assumption here that Dr. Mahathir makes is that the price of gold is reasonably stable. Its value [gold] may appreciate or depreciate according to the world's demand and the demand in a given country. But the fluctuation would be minimal, he said.

Malaysia seems to want to restore gold to its historic prominence, but risks conducting affairs according to the old ways of doing business. They evidently do not wish to fix the price of gold, yet pursuing this course of action, it seems, will make this nearly unavoidable. I would like to analyze this situation in terms of the discussion of money for which we began laying a groundwork the other day [#71878].

A quick review... Money is defined as that means, which takes an individual's inarticulate, and unquantifiable appraisals of things, and translates them into commonly understood terms, so that the individual and others inside this universe of commerce can fluently dialogue about their prices. The currency of the realm is any mechanism that satisfactorily expresses, and transmits, these monetary evaluations. Its primary purpose is to facilitate commercial/financial exchange. Chief properties of the currency must be 1) its ability to dynamically adjust to changes in society's appraisals of these things; and 2) its ability to predictably suspend the considered value held by the parties of any given exchange for the duration of the transaction.

In the past, this was attempted by pegging the currency to a fixed gold ratio (or some derivative of this function). The emerging paradigm seems to want to let currencies discover their value through a truly free exchange ratio to any and all commodities, paramount of which is gold. As we discussed previously, our legacy of commodity-backed currency causes us to confuse the currency instrument with the real wealth denominated by it. This is why we can lend something that has no intrinsic worth, or anything backing it that does, claim it to have stable value, and do it with a straight face. Effectively, our "money" today is nothing more than an irredeemable, you-must-use-it credit claim. And callable, too.

First gold, then gold certificates, gold notes, then contracts for gold not yet born. Then default. We have spiralled so long and far down this vicious vortex, that the intolerable systemic default of the current quasi-gold standard is imminent. Not only will the powers, that exist by virtue of this precarious structure, fight to the death to keep it intact, the more astute among them also recognize the serious threats to U.S. national security (and by extension, global stability) from the instability such a collapse would incite -- especially in this day.

Therefore, the show must go on. This is the inevitable, inescapable result of a system that pegs its currency to a commodity in order to give it worth. The intent may originally be to enhance its currency property of temporarily sustaining value for its immediate transactional use. This quickly gives way, however, to the impression of lasting value being stored in the currency, which then causes it to be perceived as a real asset in the minds of lenders and borrowers alike. This is what ultimately breaks the system. Currency is not meant to be construed as a long term value store. To the degree that it does or should have non-monetary worth, is only to the extent that this property is necessary to make commercial transactions easier for that particular economy. It should contribute to the medium's ability to adequately convey the monetary appraisals held by its users. Otherwise these monetary appraisals end up becoming distorted, and inflexible, as those forces take over, whose interest it is to control the medium's monetary use, by manipulating its non-monetary value. Once currency is wrested from its natural role of expressing fluid monetary processes, and becomes bound in contracts of fixed convertibility, it no longer serves to represent dynamic value concepts, but fixed and arbitrary value illusions instead.

Thus gold in the Malaysia plan (if it works as described in these [very] summary accounts) is set up for a fall. I want to point out that their plan may actually work differently, but owing to the likelihood that the editors undoubtedly perceive things through traditional understanding, they may well have reported the whole affair with the wrong slant. That said, we'll approach our analysis with what we're given.

In the first place, it fails its exchange facilitator role right out of the gate, with concerns about gold's physical movement. The purpose of these account credits and debits, according to the article, is to further diminish the costly transportation of gold. It is obviously inefficient if one designs a process in which gold is to be a vehicle for account settlement, and then has measures put in place before the fact to accommodate transactional obstacles brought about by inherent attributes of the medium.

Additionally, in mandating settlement in gold, we instantly introduce the prospect of default. By permitting credits or debits to be applied against balances ("...the surplus or deficit can be credited or debited against future imports and exports."), it seems we only perpetuate the present dilemma. If the trading partner is gold-poor, then deficits on the part of this country must be met with a gold debt, whose purpose is not for some administrative benefit of efficiency, but genuinely a need for more time to make good. If the gold price fluctuates significantly, and moreover obtains a new, higher plateau, this only exacerbates the situation of the gold debtor. Simply, an agreement that mandates payment with physical delivery fosters an environment of defaults and non-performance, and invites efforts to keep the price down.

Other considerations... Say I run a deficit to you one month, and you agree to let me make up the balance later -- ostensibly for the above-mentioned administrative purposes of reducing gold movement. I compensate you for the delay either with interest payable, or a fee. I do indeed, currently have the gold, but find our negotiated settlement to be more cost effective than the costs of moving the metal itself. Now if the gold price remains stable, or moves in a creditor-friendly direction, then it won't be long before you prefer to just hold onto this paper, as it is effectively stronger than gold, so long as confidence in its convertibility is maintained. It won't be long before this "good as gold" paper is traded, speculated upon, hedged, lent against and lent itself. Then in order to help our speculations, or rescue our over-extensions of credit, assistance will be provided to make sure the gold price doesn't "get out of hand," and we will all agree that it is better for us to manage the indiscriminate volatility of the markets, so as to promote overall stability. Thus we are back once again to fixing (or "managing") the gold price.

Let's look at this yet another way. It appears that transactions will take place in the local currency, and be priced to gold at some point after they are recorded. So now the whole gamut of tricks will be employed to ensure the best exchange rate, from the simple attempts to "time" the transaction's entry to the books, to the panoply of hedging practices currently employed in today's environment. This is so because the transactions are not settled with actual delivery at the time they occur, hence creating all the opportunities to abuse the float that exist today. Since the goal here is to secure the best price, the pressure will continually and always be to depress gold relative to the local currencies.

FOA maintains that the way the Euro courts will avoid these problems is by not enforcing contracted terms that require physical gold delivery. Cash settlement will be the typical workout. In response to the conclusion that this would simply cause contract dealings to take place outside the Euro court jurisdiction, he contends that there will not be any substantial, organized markets in which to do this after the current dollar market cracks up. You could make whatever deals you wanted, but you would not find anyone willing or able to enforce gold delivery, if one party decided to back out. With no one able to bind your counterparty to delivery, you would find it hard to even organize a market to deal in gold paper, as there would be no incentive. The effect of all this, according to FOA, is to drive gold dealing mostly into the physical spot markets. Gold in this environment becomes something that cannot be inflated through credit use (with its subsequent debasement, and defaults). [FOA #78, 6/19/01]

A note that is issued by an entity that owns substantial real-wealth assets free and clear, is genuinely productive, and keeps its debt within check relative to its assets and income, is likely to be used, holding its worth not on the basis of contracted convertibility to the issuer's assets, but simply on the basis of who the issuer is... on his authority... in his good name. This concept is not new and has existed forever. What is different is to contemplate this in the realm of an international currency. FOA discusses this point in addressing some of the very fundamental concepts behind the design of the euro:

"Not long after the US defaulted on it's gold loans,,,, dollars held as gold certificates,,,,,, major thinkers began the long process of forming another world currency. One that would not maintain the fiction of a gold standard with the somewhat fixed gold prices inherent in such a system."

"[ ... ] After operating on a fiat system for 20+ years people are starting to realize that the only thing that backs a currency is the real productive efforts of their people. Yes, over time we always borrow more than our productive efforts can pay back and proceed to crash the money system. But what else is new? (smile)

"We call this a money's "timeline" [ ... ] "

"It seems people saw something else that would make the Euro unique. Paid up assets also stand behind circulating money. Indeed, if someone ow[n]s a $100,000 dollar piece of land , has a good producing job and borrowed $50,000 against his land,,,,,, the world is likely to circulate that debt note as a fiat land backed currency. But, if his gold (the land) is worth $1 million in a free physical market,,, AND RISES FURTHER IF CURRENCY SUPPLY OUTPACES REAL PRODUCTION,,,,,,, and his other debts are relatively low ,,,,,, the same note would circulate just as effectively if the $50,000 was borrowed against his name alone." [FOA #7, 2/26/00]

A currency designed to work in an environment where gold is exchanged free of the impediments of paper manipulations, is likely to be used by those who want physical gold -- as it is not threatened by gold. This is diametrically in opposition to the current reserve currency paradigm. They would seek to use this new currency as the medium with which to conduct their business. It's simply easier (and less costly...).

If an oil producer wants to take partial payment in gold, even a miniscule portion, he simply cannot get it in markets that trade at today's prices. His bona-fide, serious, and completely backed demand, introduced directly to this system would kill it because there simply is not ever going to be enough actual gold to meet this demand at current price levels. But if we should let the price rise to obtain its market level, it would fight this with maniacal desperation, as the entire system relies upon gold at the present artificially low prices. Every kind of pressure, intimidation, compromise and creative forward financing would be deployed, all in an effort to thwart delivery (or at least postpone it into the sweet bye-and-bye). Just do anything to prevent exchange at the offered price...

But isn't the currency supposed to facilitate exchange? It seems if I try to use THIS currency to get the job done, it will prove woefully inadequate for the task. This currency does not freely express the value estimates of buyers and sellers in its markets, so necessary to facilitate transactions. Rather it handicaps and sabotages the effort instead. The policies of its issuers by design do not allow the instrument to perform its job correctly. So, if a new currency ascends from the horizon, whose design is to make the process a lot less painful...

Will the euro be ideal? No, it will have its own pressures that cause its own imbalances, and subsequent destruction. It will have its own timeline... birth, youthful beauty, age and treachery, and ultimately death... But the point is not to create the perfect system, which in an imperfect world is impossible. It is just to identify reality (political, technological, predominant world-views, etc.), and put something together that most successfully accommodates the dynamics at work in that season. That said, it seems a currency modeled like the euro, would better serve the demands of modern international trade settlement. The application of gold is best left as something physically acquired with the surpluses in an open (and free) marketplace.

The Malaysian concept (at least as far as we've been introduced to it) is not unlike putting old wine into new wineskins. They correctly wish to allow the free pricing of gold, they also seem to want to elevate gold to its traditional status as "the" premier wealth holding [new skins]. They err, however, in trying to use gold as a currency [old wine]. They confuse the concepts of money, currency, and wealth. They mistakenly wish to make gold function with the dynamic properties of currency, while still attempting to establish in it the longer term, fixed value attributes, required for something you issue paper against. In this day that role is inefficient and inappropriate, as it leaves gold subject to endless manipulation because of these dual conflicting roles.

I know that if you put new wine in old wineskins, the skins burst from the action of fresh fermentation. I don't exactly know what the outcome is of putting old wine in new wineskins, except that it doesn't make sense. (I suppose all you would get is leathery tasting vinegar.) Albeit the interview snippets give only a very removed glimpse into what the Malaysian plan contains. Nonetheless it seems there is a lot of room to "work" the system. However, I'm certain they have thought this through much further than I could even fathom, and have the bases covered. With that, may it be then, that Dr. Mahathir's Malaysia prospers, and their trade surpluses avoid the entanglements of the paper-plying middlemen, and are instead deployed in prudent investment, and in the outright acquisition of this grand metal of the kings...

miner

krash (2/12/03; 02:12:33MT - usagold.com msg#: 97439)
US Wants Iraq's Oil As Collateral For More Borrowing
http://www.rense.com/general34/coll.htm
excerpt:

US Wants Iraq's Oil As Collateral For More Borrowing

The United States desperately wants a war with Iraq, but not for the espoused reasons of eliminating hard-to-find "weapons of mass destruction."

The U.S. wants another war with Iraq in order to control Iraq's immense oil-fields, to be used as collateral for more international borrowing, and to increase the huge, unsupportable U.S. debt.

The U.S. has big, big economic problems. The debt-based U.S. economy is being squeezed because international borrowing is getting harder. The U.S. has been living off the savings of the rest of the world for years, now absorbing some three-quarters of the world's debt finance. The U.S. government, corporations and people are now the most indebted in the world.

Altogether, the U.S. has borrowed nearly $40 trillion, and needs $2 billion a day in debt finance to support its huge trade deficit.

The U.S. corporate debt market is a mess, with a corporate credit crunch underway. Highly indebted, highly leveraged U.S. corporations cannot borrow any more money, or pay their debt.................If the U.S. grabs the Iraqi oil-fields, U.S. oil corporations can then move in and develop what are believed to be the world's largest oil reserves, surpassing even Saudi Arabia's oil-fields. That's money in the bank, and collateral for new loans, and new debt. U.S. portfolio manager and economics writer Marshall Auerback suggests the U.S. wants Iraqi oil-fields to repair its credit rating. Increased Iraqi oil flow to the U.S. could ultimately keep oil prices low, break OPEC, and prop up the U.S. economy.

Yet in the meantime, oil prices are high, slowing the world economy, and oil prices could skyrocket in an actual war, pushing the world economy into recession, or worse.

Thus, the U.S. wants war with Iraq as a way out of its economic and financial mess................

Black Blade (2/12/03; 02:05:17MT - usagold.com msg#: 97438)
Market Indicators
http://www.mrci.com/qpnight.asp

US market index futures are essentially flat, Gold is flat even after going limit down in Tokyo, the USD is flat, oil is surging again, and NatGas is down slightly. Still so many economic and geopolitical disturbances are creating a lot of uncertainty and it could get "interesting" by the opening bell in NY.

- Black Blade

Usul (2/12/03; 01:57:18MT - usagold.com msg#: 97437)
How the Islamic World Plans to Beat the West: A Gold Coin
http://www.lewrockwell.com/sardi/sardi20.html
"... The result of a gold-backed currency in the world could cause the US dollar to crash in value. Some suggest the gold dinar would cause a shift in economic power from the West to the East..."

Usul (2/12/03; 01:56:14MT - usagold.com msg#: 97436)
The New Islamic Dinar
http://ccdev.lets.net/materials/dinar.html
"... Taylor reports that the Islamic Dinar is now being privately used in more than 22 countries and is currently being minted in four countries, including South Africa. The State Government of Kelanton, the Northeast Sultanate of Malaysia has officially adopted the Islamic Dinar, so the new gold coin can be expected to circulate "through the hands of hundreds of thousands of people there."...

...The new Islamic Dinar represents a renewal of a centuries old coin. Its weight (4.3 grams) and its role are set by the Sharia---i.e. the Islamic Law . There is also a silver Islamic Dirham coin of 3.0 grams. Seven dinars can be traded for ten dirhams..."

- which, as others have commented, has interesting implications for the gold/silver price ratio, and the circulation of the two coins!

Usul (2/12/03; 01:52:43MT - usagold.com msg#: 97435)
Petro-Dollars and Sound Money
http://www.millennium-money.com/islamic_bank.htm
"... An interesting observation is that at the time of the Prophet, around 600 AD, a silver Dirham would buy a chicken. Today the same 3 grams of silver in England will still buy a chicken..."

Usul (2/12/03; 01:51:07MT - usagold.com msg#: 97434)
The Introduction of the Islamic Dinar and Dirham
http://home.iae.nl/users/lightnet/world/gold.htm
"... Gold and silver had value because they satisfied the needs of man. Contrary to what happened to other useful merchandise, they were easy to divide into fractions, could be transported at low cost and kept safe with relative ease. The small weight of the Dinars (4.2 g. of gold), complemented with Dirhams (3 g. of silver), facilitates small transactions to occur with gold and silver coins, thus making these coins available to the widest number of people..."

Black Blade (2/12/03; 01:45:28MT - usagold.com msg#: 97433)
Euro Markets Awash In Red
http://quote.yahoo.com/m2?u

Euro markets start off the trading session in the red. Apparently the Osama Bin Lasen tape has the Euro markets a bit nervous.

- Black Blade

Usul (2/12/03; 01:19:51MT - usagold.com msg#: 97432)
Return to an old standard?
http://observer.co.uk/business/story/0,6903,891682,00.html
"... An audacious plan, pushed by Malaysia, seeks to reassert the role of the precious metal in the international trading system through the minting of 'gold dinars'..."

Usul (2/12/03; 01:11:47MT - usagold.com msg#: 97431)
Cytek #97414 Silver tetroxide
The silver tetroxide claim is stated to date back to 1997.

Today, in 2003, there is virtually no "chatter" about it either on the web or on Usenet. This can easily be verified through a vivisimo or google search.

Conversely, there is a huge amount of information on colloidal silver in general. It would be reasonable to assume that the market for colloidal silver would swamp this other application. As colloidal silver has been known for a long time it would also be reasonable to assume that the market share for silver in this sector is unlikely to change much, or rapidly.

The area where I would expect rapid change in demand to affect the price of silver would be in investment demand or in demand for the minting of a silver based currency such as the dirham. Perhaps, one day, we will see gold and silver in circulation in the US and/or Europe, but that is another matter.

If the silver tetroxide treatment were to be a conventional one there would be clinical trials, discussions, and so on. It would not lead to a sudden impact on the price of silver without a lengthy period of news about the trials and approval process.

If this were to be an "unofficial" treatment then more than likely somebody would be peddling it all over the internet; it would attract only a small minority interest at first; and would not grow rapidly.

If you have "breaking news", then you should support that claim by quoting a link, or an excerpt from a cited source. A filing made in 1997 is hardly "breaking news".

The web site you quoted came up instantly, not jammed up as you claimed. It is principally about a well-known AIDS conspiracy theory, not about the topic of silver tetroxide treatment.

Aristotle (2/12/03; 00:41:10MT - usagold.com msg#: 97430)
sector, one final thing
Please know that I can easily choose to ignore all this COMEX stuff, and suggest that you do likewise, except for one thing. I think its important that you appreciate how absolutely papery and disconnected to Metal the mechanism for Gold's price discovery via COMEX truly is. Especially since you're trying to put this all in some context with umpteen thousand "equivalent" tonnes of BIS-recorded Gold derivatives along with ties to the CB Gold lease programs.

Your interpretation tends to give more substance to COMEX than really exists, and I don't think that false impression is anything that we want anyone to leave here with because, as Belgian might say, it would make it harder for them to keep their eye on the play of the game (realGold, real winner) rather than on the path or intermediate location of the ball (Price of paperGold prior to FreeGold!)

Gold. Get you some. --- Aristotle

Aristotle (02/12/03; 00:01:35MT - usagold.com msg#: 97429)
sector, I've been following your posts pretty darn closely lately
I wish I could break it to you more gently, like in a quiet corner of the room, but let's hope this slow hour of the day will do just as well. Your take you offered on market operations via COMEX the other day is seriously flawed and your spin on EFPs only made matters worse, but on the upside it helped me begin to see how you've probably been led off track.

For starters, the liquidity that you've misinterpreted as meaning METAL really only means an orderly market of buyers and sellers for the *paper* contracts (i.e., FUTURES) within a generally accepted range of volatility. With your idea of physical-backed shorts you seem to think that EFPs are standing behind a goodly portion of the shorting that occurs, but in truth its nothing like that. If you were to take a survey of every active commodities futures brokers, you'd have a hard time finding any who knew intimately how the heck an EFP worked. Even fewer from this elite group would have ever been involved in one.

EFPs were a helpful tool during the Hunt fiasco, but that was coming at this from a completely different direction than the one you're trying to look at. It was done because the Hunts went about their effort to acquire physical metal in a very poorly devised way, causing the overseers of the exchange to roll out settlement alternatives (EFPs) that wouldn't pressure the market further toward disorder (contract illiquidity) by taking action effectively off-market as both parties, the long and the short, cut mutually agreeable deals. Suffice to say, day in and day out this doesn't normally happen in the futures market, but you're assuming that it is the norm. Or at least that's what I'm getting from an objective review of your comments. Let me know if I can be helpful at all squaring this away any further.

Gold. Get you some. --- Aristotle

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