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ARCHIVED DISCUSSION FROM 9/12/2006 All times are U.S. Mountain Time (Yesterday's Discussion.) Topaz (9/12/06; 21:26:39MT - usagold.com msg#: 147418) Current drop. http://www.freebuck.com/bonds.shtml Gee, you take your eyes off these things for a few days and wham! they whack it good.What used to be the Velvet Glove of Management has given way to the Iron Fist of Desperation I think if the 3mo is any indication. The next FOMC on the 20th could see a 50bp rate cut which in turn could turn DX decidedly south ...it should be giddy-up for our PM's about then I think. canamami (9/12/06; 20:20:05MT - usagold.com msg#: 147415) Recent action confirms.... ...the only safe way to hold gold is as unencumbered physical, as a part (not all) of one's portfolio. Shares, and share and commodities options, and commodities contracts are too vulnerable to manipulation and getting it "wrong" short-term. Even unencumbered physical exposes one to some risk, as the paper price determines what one's physical is worth on the open market if one (or one's estate) must liquidate. However, physical gold is the portable hard asset par excellance, and is a good hedge against currency debasement and currency paradigm shifts. Gold also doesn't become a bad debt. The Invisible Hand (9/12/06; 19:24:44MT - usagold.com msg#: 147413) Most oil states (officially) faithful to dollar-reserves http://www.menafn.com/qn_news_story_s.asp?StoryId=1093126662 OR CAUTIOUS ABOUT EURO-RESERVESTHE TREND CAN HOWEVER NOT BE BROKEN SNIPOther Gulf Arab central banks are studying the euro's growing allure as a reserve currency. A Qatar central bank official said in April the bank was buying euros,which could eventually account for up to 40 per cent of reserves. But the Saudi Arabian Monetary Agency (Sama), the region's wealthiest central bank, reiterated that there would be no change in its reserve policy. ==Perhaps Saudi Arabia wants first to see what happens to the Gulf Cooperation Council (GCC) single currency. The Invisible Hand (9/12/06; 19:02:47MT - usagold.com msg#: 147412) gold containment = also currency management http://www.busrep.co.za/index.php?fSectionId=565&fArticleId=3433167 EU supports IMF reform, but tells fund not to rush it SNIPSHelsinki - The EU on Saturday backed plans to give poor and rapidly developing countries more voting power in the International Monetary Fund (IMF) as the lender seeks to adapt to a new world economic order. +The ministers issued a statement saying a second stage of reform should base countries' voting weight on GROSDS DOMESTIC PRODUCT PLUS HOW OPEN THEY WERE TO TRADE AND IN FINANCE.The ministers said they backed giving the IMF more of a role in surveillance of economies and, in particular, currency policy.==Since it is the US of A and the dollar which have a dominant position in voting, it will always be the US of A and the dollar which will impose "their" dollar-norms as to the meaning of "being open in finance". It is still not the invisible hand but the dollar-regime which decrees the exchange-rate of other currencies vis-a-vis the dollar.The gold containers are thus also managing the currencies vis-a-vis the dollar. The Invisible Hand (9/12/06; 18:24:34MT - usagold.com msg#: 147411) MK and CoBra The POG is down again, isn't it?Why do you continue to be biologised by the bail-out syndrome?The gold containers managed to bring gold down from $850 to $250.What's the relevance of the journey from $250 to $720 (now $580) within 35 years of gold containment vis-a-vis all other explosive evolutions of the dollar-paper?Why do you keep thinking that gold bugs will never be able to claim victory over the paper-gold titans? Can you still not understand that the change can and will come from the HETEROGENE titan-ic complex which is managing the International Financial and Monetary System? The Invisible Hand (9/12/06; 18:10:24MT - usagold.com msg#: 147410) And if we cannot attract enough capital from foreigners ... http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B071E004A%2D5AB8%2D467F%2DA1AD%2D2CAED94860C7%7D&dist=newsfinder&symbol=&siteid=mktw&print=true&dist=printTop WE'LL BOMB IT OUT OF THEIR POCKETS WHITE HOUSE: DEFICITS NOT A PROBLEMBOSTON (MarketWatch) -- Persistent budget and current account deficits are not a problem in the short run, top White House economic adviser Edward Lazear said Tuesday. +"In the short run, it's important that we continue" to attract capital from foreigners, he said. USAGOLD Daily Market Report (9/12/06; 16:53:02MT - usagold.com msg#: 147409) Page Update! http://www.usagold.com/DailyQuotes.htmlThe Daily Gold Market Report has been updated.If you are considering investments in gold we invite you to request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.TUESDAY Market ExcerptsSeptember 12 (from MarketWatch, Reuters) -- As some investors saw Monday's dramatic sell-off as a good buying opportunity bargain hunting gave gold a brief boost in the morning, but the rally soon fell apart due to moves in other markets and a fresh round of speculative selling, trading sources said"The story continues to be one of oil and the U.S. dollar," said Bernard Hunter, a director at ScotiaMocatta in Toronto. Oil failed to sustain a brief rise above $66 a barrel. By midafternoon, crude had fallen to a six-month low below $64."The precious metals markets are taking it on the chin," said Dale Doelling, chief market technician at Trends In Commodities. "From a technical perspective, the markets may see a modest bounce over the next couple of trading days, but the odds favor a retest of the June lows," he said.The dollar traded slightly higher against major foreign currencies Tuesday, as investors shrugged off a record U.S. trade deficit number and instead focused attention on the possibilities of further interest rate increases in the U.S.The nation's trade deficit widened by a larger-than-expected 5% in July to $68.0 billion, the Commerce Department said.Against this backdrop, COMEX December contracts fell $3 to close at $594.30, retreating from an earlier high of $602.50 to close at its lowest level since late June. Prices fell $52.60 in five-straight trading days.Overall, "trading conditions are set to remain volatile particularly with the scale of economic data coming out of the U.S. this week as the dollar and oil still remain key factors in determining gold's direction short-term," James Moore, an analyst at TheBullionDesk.com in London, said in a note to clients.Goldman Sachs said the recent slump in commodities, particularly oil, is excessive and provides an attractive chance to buy.It added there was little threat of a recession, though it said three consecutive months of declines in its indicators underscored the need for a cautious medium-term outlook on commodities demand.In other news on Tuesday, four men shouting Islamic slogans tried to blow up the U.S. embassy in Damascus but their car bomb failed to explode and Syrian security guards killed three of them in a shootout. No U.S. diplomats were hurt. The state news agency SANA said a Syrian guard was killed and 13 people were wounded, including two Syrian security men.---(see url for full news, 24-hr newswire)--- melda laure (9/12/06; 15:55:44MT - usagold.com msg#: 147408) Conspiracy to aid buyers of Physical... (smirk) Yes, something like that sir Lox. Sir Armageddon, I have a serious problem with the idea that ALL the present activity is WHOLLY directed towards the upcomming election. But in any case that is a short term issue; the long term issue of imbalanced trade (aka the dollar problem) is a thornier problem begging for a gold plated solution.So in that sense, the "ultimate end" insofar as a strategy is evident, is vastly higher gold prices supporting a free gold international trade model. There is of course some greater plan in the minds of giants, but that is rather beyond the scope here. Discerning the near term trend (and its causes) is trader talk. I would rather just take the "ante" and laugh at the casino; true, they dont play fair, but since they've been so kind as to facilitate my paper conversion I wont complain too forcefully.The christmas special wont last forever. Goldilox (9/12/06; 15:51:56MT - usagold.com msg#: 147407) IMF Identifies Risk of `Disorderly' U.S. Dollar Drop http://www.bloomberg.com/apps/news?pid=20601085&sid=aYXu7ScpRXC4&refer=europe snip:By Mark Drajem and Shamim AdamSept. 12 (Bloomberg) -- A ``disorderly'' drop in the dollar is the biggest risk to world financial markets, the International Monetary Fund said, urging policy makers to prepare and act quickly when asset prices slump.Investors are buying U.S. bonds under the assumption that the dollar won't slide, and a drop in the currency might turn into a rout as foreign investors and central banks move to cut losses, the global financial watchdog said."A low-probability but potentially high-cost risk to the global financial system is that a dollar decline could become self-reinforcing and hence disorderly,'' the IMF said in its Global Financial Stability Report today.Last week, IMF Managing Director Rodrigo De Rato singled out lopsided global trade and investment flows, protectionist sentiment and high energy prices as sources of concern to an otherwise benign outlook for the global economy. The IMF says the U.S. current account deficit, running at a record rate, needs to narrow.The Washington-based lender will announce new projections for global economic growth later this week in Singapore before its annual meeting. In April, the fund forecast an expansion of 4.9 percent in 2006 and 4.7 percent next year. An IMF spokesman said growth would be about 5 percent in 2006.The dollar has fallen 6.8 percent against the euro this year. It was recently little changed at $1.2710 against the euro and fetched 117.6 yen.The lender forecast that a drop in the U.S. dollar would affect different areas of the world differently.Oil, Inflation"The dollar's real effective exchange rate is expected to remain relatively stable across all major trading partners, but Asian currencies are expected to appreciate over the medium term while non-Asian currencies are expected to weaken,'' the IMF said.World financial markets may experience increased volatility as risks of faster inflation, higher oil prices and a slowing U.S. economy are not sufficiently priced in, the IMF said.Global equity, bond and commodities markets plunged in May amid concern central banks will need to do more to keep inflation from accelerating. The threat of slowing growth may increase investors' aversion to risky assets, the lender said."There are risks to the global economic outlook that have tilted to the downside,'' the report said. "International financial markets could undergo more severe corrections, especially because markets appear to be pricing in the baseline growth scenario with little provision for risk.''U.S. SlowdownDe Rato warned last week there were ``clouds on the horizon'' for the global economy. Still, the outlook for world growth and inflation is one that is a ``continuation of favorable developments,'' even as oil prices and a U.S. slowdown pose risks, the IMF said in today's report. That's a scenario that will lead to healthy corporate earnings, low default rates and improving sovereign finances, it said."Global growth remained strong and continued to become more balanced, providing a broad underpinning for financial markets,'' today's report said. "Financial sectors in many countries are in a strong position to cope with any cyclical challenges and further market corrections to come.''Emerging-market stocks in May had their biggest monthly drop in more than three years as the prospect of higher interest rates and a slump in commodity prices prompted investors to pull out of markets from India to Russia. Stocks in Europe the same month had the worst performance in three years, while those of the U.S. dropped the most in almost two years.Risk ManagementGovernments must improve economic policies and reforms, while investors should increase risk-management strategies, to limit volatility and mitigate the impact of risks to growth, the IMF said."Supply shocks and/or an increase in geopolitical tensions could lead to a renewed retrenchment in risk appetite,'' the IMF said. That "would likely increase volatility, force risk premiums higher, and erode business and consumer confidence, thereby testing the resilience of the global financial system.'' Goldilox (9/12/06; 13:48:41MT - usagold.com msg#: 147406) Conspiracies @MK,"Conspiracies by their nature are short term. For one thing, all the participants must believe in the same set of circumstances today that they did when they subscribed to the conspiracy in the first place. Only those who cannot believe that times change, or have a serious vested interest, can subscribe to a conspiracy for the long run."I think we hold entirely different ideas of what constitutes "conspiracy". Yours seems to be tied to "events", while mine is more the traditional Websters definition - collusion of persons. That's why I added the tag line "legal or otherwise".I think conspiracies quite often outlast particular events, as the protagonists turn their collective attention to new targets. They only collapse when one or more of the protagonists initiate actions against the others - think Rummy and his chosen "Mid-East" secular savior, Saddam Hussein.Would we suggest that that the PPT "conspiracy" is disbanded and reformed every time they choose a new bubble to support? I don't.Just some thoughts on a great day for posted ideas. Thoreauly (9/12/06; 13:28:11MT - usagold.com msg#: 147405) @ MK http://www.minyanville.com/articles/?a=11150 As we are so largely in agreement, let me simply say that a FREE market could in no way contain the enormous imbalances that we witness (and are forced to struggle with) today, as its sound-money basis would preclude it. So while I recognize that a market of sorts exists, it is one that is doomed to collapse and thus, in the near term, to play into the hands of those who will blame "market failure" on what is in fact the unraveling of a gargantuan statist fraud. That said, I would be most interested in your thoughts on the NAHB/S&P graph depicted in the attached link, as it would seem to be of very highly predictive value. If so, then what, if anything could the PPT do about it? MK (9/12/06; 12:42:49MT - usagold.com msg#: 147404) Replies Goldilox: The world is filled with conspiracies of different shapes and sizes. Political conspiracies are of a different nature than the financial type. The financial conspirator must always be aware of the consequences it might engender. You can misdirect a market but you cannot overturn belief. To state it simply, financial conspiracies are overrated.Cobra (too): Welcome back to the table, CB. The Keynesian notion may be the ultimate conspiracy that under lies all, but, of course, as you and I know it is doubtful that Keynes himself would have subscribed to what we see going on in the world economy today. When you consider the level of notional exposure and its geometric growth in recent years, this indeed could be a time bomb ticking away under the dollar superstructure. Others (Warren Buffett comes to mind) have issued the same warning, so we cannot be considered radical to mention it again. Portfolio insurance in the form of gold is essential to any thinking man or woman under these circumstances, as you rightly point out. Thoreauly: Distortion to the markets is the hallmark of the system we are attempting to navigate these days. Make no mistake though: The market exists and we cannot philosophize it away -- distortions and all. I first encountered Ayn Rand as a senior in high school and she forever affected my thinking and view of the world. I am now rereading "The Fountainhead" which I haven't touched since my college days. Conspiracies by their nature are short term. For one thing, all the participants must believe in the same set of circumstances today that they did when they subscribed to the conspiracy in the first place. Only those who cannot believe that times change, or have a serious vested interest, can subscribe to a conspiracy for the long run. I can't believe, for example, that the anti-gold crowd can continue to hold "central bank gold sales" over the head of the market these days without being laughed off the internet (for example). That is a powerful incentive to check one's premises and why you might have joined the anti-gold crowd in the first place. You are right to put the day to day effects on the back-burner. They have to be factored into the overall history and not be allowed to dominate it.Flatliner: Yes, please consider that all you say is from their point of view, not mine. They have a job to do and primary among their duties is to keep the system from imploding. In the case of bullion loans, if defaults were imminent, that run on the bank you mention could develop overnight. You are right, the central banks have no alternative but to allow the price to rise in order to assure market liquidity. I was able to predict the price of gold over the last two years nearly on the money because I had an understanding similar to what you are saying. The G-7 central banks will attempt to manage gold within a band using the same methodology they have used in the past to unsuccessfully manage currencies. The point of much of my posting today has to do with hazards implicit in managing markets. The whole scheme could blow up on you for any number of reasons including the totally left field event no one saw coming. Meanwhile, as you rightly point out, the price is still low when viewed from the point of view of the Japanese or Chinese who have much too little official gold reserves. I have said before that I think if someone were to approach either one of those countries and offer to sell them significant tonnage at double today's price they would jump at the opportunity as long as it were kept quiet so as not to disturb the markets.968: I would say that gold has been "mismanaged" (not "managed") during the whole previous century, wouldn't you? Gold owners did very well by the gold and monetary mismanagement of the 1970s -- including the effects of the IMF and U.S. Treasury Department sales which may be testimony to just how powerful the VERY powerful really are. Gold cannot help the international monetary system and global imbalances under the current architecture. However, it will greatly help the individual owner. Central banks can use gold just as you or I do -- as a portfolio hedge, and that is essentially what Axel Weber said recently and Greenspan has said in the past. That will work for them and they shouldn't expect more. The U.S. hasn't leased gold at all, for any reason, as far as we know. Maybe you have some information that has eluded me. If so, post it. I'd like to see it. Eventually the United States might need to give up some of its gold to rebalance the system, as I've mentioned before. But this will be done at substantially higher prices and as part of a new international monetary agreement. The opportunity for the United States to use gold to support the dollar situation is long past. That went by the window in the early 1970s and the gold connection was abandoned then. As I say, there's no hope of using it now. 968 (9/12/06; 11:21:34MT - usagold.com msg#: 147402) MK "If the anti-gold conspirators are so powerful, how did we get from $250 gold to $730 gold"- Aren't they VERY powerfull ? The POG is already managed during the whole previous century !- What's your opinion about US-Treasury gold ? We know the European CB's are selling some, and value the rest at marketprices, so they actually do something with their goldreserves, they use them. They even discussed if the Eurosystem need 30 or 15% goldreserves before the introduction of the EMS. What do we know about US-gold ? Is it still there ? Is some US-gold sold, leased, swapped, lend out, used to bail out US bullion banks,... ?- In what way do you think the US-Treasury will use US-gold to support the dollar situation ?- In what way do you think gold can help the international monetary system, and the global imbalances ? Flatliner (9/12/06; 11:07:20MT - usagold.com msg#: 147401) @ msg#: 147391 MK, Well said. Motivation must not be overlooked as a key element in any analysis. A stout observer, like yourself, is quick to point out that this element must be considered when looking at the current situation and your willingness to share is highly respectable. I particularly like your (following) collection of words: "It has to do with saving the system and keeping the various bullion banks from getting in over their heads and creating a situation that the central banks could not bail out if they needed to." If I understand this correctly, "saving the system" really means maintaining the status quo with regards to central banks printing fiat as the foundation for economic trade and maintaining public confidence that trade will continue in this manor because, as simple as it can be, the fiat has value. "Getting in over their heads" really seems to mean that the banks have overcommitted reserves. In the classic sense, when people figure out that the deals that a bank has made have compromised the ability for the bank to make good on its deposits, there is always a bank run. If you think about this on a worldly scale where gold is the historical international currency of trade that is still the foundation upon which BigTraders depend, one has to wonder where these big customers will go to do business? Finally, thinking about the last part "creating a situation that the central banks could not bail out if they needed to" will make every physical gold holder think seriously about the physical gold that they hold. We all know that the enemy of central banks is the loss of confidence in the fiat that they print. The central bankers of the world have worked very hard for many years to create a system free of bank runs and quick on liquidity. It is all based on digital transactions and little rectangular plastic cards. But, what lies before our eyes is that there is another market, a gold market, that is as it has always been. To prevent a bank run where the reserves are gold, the banks MUST hold gold. This is an extremely important point and gives support to what Another wrote many years ago. The main idea is this central banks value gold at prices way above public market prices because it buys them the right to print fiat!There is one currency that stands to get hit the hardest if confidence is lost in it. Currently, it is the world reserve paper currency. As we all watch the world move to regional currencies, we are witnessing the loss of confidence in the US Dollar and the growth of confidence in gold. Because central banks understand that physical gold use will give strength to their fiat currency, all central banks are scrambling to not only build reserves but to import gold into their countries! It is clear that all central banks around the world have been watching how business is conducted today and they see exactly what Another wrote when he said that it took a combination of fiat plus a little gold to trade with oil. Even if we, the little ants of the world, do not enjoy the right to print fiat to get the leverage of a central bank, we can still know without a shadow of doubt that what we hold is the foundation upon what the central banks need in order to keep the current system running. Without gold, confidence will be lost. If the central banks do not raise the price of gold, those that understand these words will not give up the gold to support the fiat game.If you do not hold gold, it is time to understand that it is the foundation upon which the world relies. This function is much more valuable then current market price. Thoreauly (9/12/06; 11:07:09MT - usagold.com msg#: 147400) @ MK Well said, as always, to which I would add that in my view, all state action is anti-market in that it distorts the market as a matter of course. Thus, the point is not that state action is conspiratorial; it is that, by its very nature, its conspiracies tend to be more "successful" -- i.e., long-lasting -- than those that are confined to the marketplace. After all, market monopolies are ephemeral at best (including those that result from state-issued patents), while a territorial monopoly on the use of force -- the minimal definition of the state -- exists for as long as it can do what the market by definition cannot: force its "customers" to do business with it. Yet since each of these monopolies exists in a state of nature vis-a-vis its counterparts around the world (and the den of thieves that is the UN in no way alters this fact), each conspires against the other, distorting the market to the point that beyond its surface transactions, the market doesn't actually exist. For while free trade and protectionism are endlessly debated, insofar as all trade takes place within a global regime of centralized, fractional-reserve banking, it takes place under the "protection" -- as in protection racket -- of the state. Thus is "globalization" nothing more than mercantilism, where the mercantilists use their monopoly money to "compete" to see who can fleece their subjects the longest (there being no citizens, properly speaking, in statist society), never mind that this, the most massive fraud in human history, must inevitably fail. And simply put, this is what every true gold bug awaits, not because he will take any pleasure in the ensuing mayhem but because, unlike the vast majority of his fellows, he knows, with Ayn Rand, that "We can evade reality, but we cannot evade the consequences of evading reality." He knows, that is, that while the state is certainly a reality, (1) it exists primarily to DISTORT reality, (2) the more it distorts reality, the more it hastens its own demise, (3) nothing distorts reality more than the corruption of money, and (4) nothing corrupts money more then centralized, fractional-reserve banking.So while these competing conspiracies permeate our existence, we should worry less about their day-to-day effects -- "market fluctuations" and the like -- and instead load up on as much shiny as we can, urge our family and friends to do likewise, and otherwise go about our business. CoBra(too) (9/12/06; 10:55:20MT - usagold.com msg#: 147399) MK's - 3 latest posts A series, condensed to a rather clear and great essay to which I would like to fully concur.As we are still in a mainly Keynesian political, economic and probably and in particular a monetary environment it seems to me that the FED is not the only culprit to remedy its ailments by throwing excess liquidity at any arising problem. This of course can not be seen as a strategy pulled off in a vacuum.The monetary extravagance of the US and its hegememonial IOU called Dollar is still the globe's reserve currency; All major commodities are still traded in this currency unit - and there is not much around to replace this legal tender fiat paper at this time. The US and the rest of world does know it and will play along - as long as it's beneficial to their own goals. At this stage it may seem as a poker game - who dares to be first to fold?!As our intellect and past experience clearly calls for the Dollar's demise in view of the absolute debt levels in the US of A - the charade must go on. And so it will - until the FED and its international partners in crime will succumb to a rogue wave, tempest or any transgressor in the wild West of counter party delinquencies.The portfolio insurance of physical gold - real money - might save your day outside of the spin "mist"*!cb2*Mist - also garbage in German ... Goldilox (9/12/06; 10:33:41MT - usagold.com msg#: 147397) Conspiracies and markets @MK,To suggest that market forces imply that no conspiracies exist (I don't think that's what you were saying) is also simplistic. GATA and others have provided strong evidence to the contrary.After all, a conspiracy is not granted instant immortality, but is just evidence of collusion, legal or otherwise.Is what you are saying, perhaps, that given the knowledge of conspiratorial forces and their "mortality", those who do their homework are better prepared to enjoin the battle?If I understood you correctly, we are saying essentially the same thing, as is Sinclair. MK (9/12/06; 09:19:17MT - usagold.com msg#: 147396) On conspiracies and market action Treasury secretaries, finance ministers, chancellors will play politics with money and finance and use whatever tools they have at their disposal to advance the interests of their political party. That is a given. At this moment, the finance ministers in Europe want lower interest rates. They are campaigning for it vigorously using every avenue and means open to them to make their argument. But they, as powerful as they are, have opposition in Trichet and the European central bank. If you only viewed one side of the equation -- the finance ministers' side-- you might prepare your portfolio for a lower interest rate environment. If so, you might be in for a nasty surprise if the ECB holds sway. It is also a given that the major players with their concentrations of capital and power will endeavor to move the markets in their direction. Some will view this as conspiratorial; others will view it, as I do, as just market elements that need to be figured into the equation. If, in this example, the conspirators were to drive the price of a group of commodities lower, what would be the result? A buying opportunity for those who have a need for or believe in the long term value of that commodity. Gold is a good example in this regard. Let me assure you that the East lies in wait just hoping for lower prices.Powerful players -- even if they sit as head of the finance ministry, the treasury department or the chancellery -- are not omnipotent. They cannot have their way with the markets without opposition. To believe otherwise is the mistake that many conspiracy theory proponents make. How often do you believe some powerful individual somewhere hasn't thought to himself: "No matter what I do to discourage these people from going to gold, it keeps going up. What's it going to take to calm their ardor? What's a finance minister to do??" I believe that those who believe the conspirators are god-like in their powers miss a good deal of the analysis by believing the opposition resides on Olympus. In my view, if the analysis ends there, it stops short. Little do they know how well they serve the lie by making others believe that the perceived powerful can have their way unchallenged. In my view, a group can conspire to make a market do something, but they cannot continue it for long if it is against the primary trend - not without substantial expense. Aas any student of ancient Greek literature knows, there is always a price to pay even if you dine with the gods and goddesses amidst the clouds on Mount Olympus.We should ask ourselves one question:If the anti-gold conspirators are so powerful, how did we get from $250 gold to $730 gold? Now let me take you back to those dark days at $250 gold when we called ourselves knights and ladies of the table and gathered here to discuss gold. How successful might we have been, if we believed even then that the forces opposed to gold were invincible?Having said that, I do believe that there is value to understanding the forces at play in these markets including the powers in the Beltway and along the Hudson. In my view we make a mistake if we accord them status beyond mere mortals. Goldilox (9/12/06; 08:19:05MT - usagold.com msg#: 147395) Balance of Trade Wreck http://urbansurvival.com/week.htm snip:Not that it comes as any surprise to us, but here's the latest on the Balance of Trade out today:The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total July exports of $120.0 billion and imports of $188.0 billion resulted in a goods and services deficit of $68.0 billion, $3.2 billion more than the $64.8 billion in June, revised. July exports were $1.3 billion less than June exports of $121.2 billion. July imports were $1.9 billion more than June imports of $186.1 billion. In July, the goods deficit increased $3.4 billion from June to $73.4 billion, and the services surplus increased $0.2 billion to $5.4 billion. Exports of goods decreased $1.3 billion to $85.7 billion, and imports of goods increased $2.1 billion to $159.1 billion. Exports of services were virtually unchanged at $34.3 billion, and imports of services decreased $0.2 billion to $28.9 billion. In July, the goods and services deficit was up $10.0 billion from July 2005. Exports were up $13.4 billion, or 12.6 percent, and imports were up $23.4 billion, or 14.2 percent. What is amazing about all this, you ask? Well first, it's a new record. Secondly, the dollar jumped on news of this. Totally backasswards of what would make sense, unless even worse news had already been factored into pricing. Or markets are manipulated. Remember, this is rearview economics - July figures and we're in September now.-GoldiloxBorrow more, get mote rich! Armageddon (9/12/06; 07:43:12MT - usagold.com msg#: 147394) @MK - Black Boxes and Paulson "Odds are this latest drop has to do with black box trading more than anything else and the pile on effect that we have witnessed all too often in the gold market, as I pointed out in my previous post." - MKI guess my only comment is that Paulson might have a better idea as to what is actually inside these black boxes that determine when to buy and sell large amounts of gold automatically. For example, Paulson could direct or encourage the "massaging" of key government data that would to the ordinary person or most economists seem not significant but to the formulas inside these black boxes, they are critical turning points that would indicate buy or sell signals for gold. This is where an "insider" like Paulson can be magnitudes more effective than an "outsider" acedemic that doesn't know how and why trading is actually done. Cometose (9/12/06; 07:12:28MT - usagold.com msg#: 147393) If I were a banker tuning up my portfolio and I knew that the equities markets full to the tilt with real estate paper was going to be soft ........I would go looking for a new investment that was going to grow ....To make that growth sector more appealing ,,,,,,,,,,I would begin selling it big time to get prices down at a bargain basement level .My selling of my current equity sectors may take some time to make the market fall as a result of my self fulfilling prophecy selling ....which might take a couple of months .In the meantime , all the while I can transfer these funds into the gold sector as me and my buddies continue to suppress that sector by shorting bullion futures..This also is a great time to be buying gas which keeps nosediving toward 1.40 .... These prices may never be seen again .........when the dollar begins to deteriorate. Knallgold (9/12/06; 06:19:13MT - usagold.com msg#: 147392) MK I see where you are coming from,this sounds logic and very practical.Just curious,it seems you don't believe there's some kind of an ultimative goal in all these CB actions,Gold sales being at least partially a redistribution (into the pro Gold allies I hinted),leading finally into a reform of the international monetary system with Gold at its core?In short,you are not subscribing to the FreeGold theorists?I know this all very speculative so you can remain vague... MK (9/12/06; 03:59:54MT - usagold.com msg#: 147391) Knallgold, Armageddon In my view, the Washington Agreement was signed to abort runaway gold loan volume. Previous to the agreement, it was compounding in what might be described as fractional reserve lending system. Red lights began to flash in certain quarters and Rothschild led the way in calling for more "transparency" in the gold market and a new system to deal with the burgeoning gold lending market.The same gold was being loaned and re-deposited in a way that more than one entity believed it owned the same tonnages. The greater the over all loan volume being generated by the bullion banks, the greater the attrition rate in terms of physical ounces being returned to depositors on an annual basis. If you have five per cent of depositors wanting their gold back and the overall gold volume is x tonnes, it is one thing. Five per cent of four or five times x tonnes might be a problem -- and a drain on the central banks who eventually become the suppliers. In order to keep the system from running amok, the central banks agreed to a system that limited the amount of physical that could be put on the market annually, thus capping the overall loan volume, and creating a manageable situation. Or so they hoped. . .I suggest the European central bank as a potential seller through a process of elimination. It could be an entity out of left field, but logic points me in the direction of the ECB, if, as I say, there is actually a seller. There might not be in reality. As White Hills suggest such speculation may be academic anyway, though the situation does carry some import to gold investors moving forward.Here's why.The allotment for next year is 500 tonnes. If the central banks are unwilling to provide any more gold to the system than 350 tonnes, this will further shrink the lending market unless other cb's, outside the euro system, are subscribed as sellers. You have to think that Germany's decision not to sell has something to do with the U.S.' deliberate, unspoken policy to devalue the dollar so it is doubtful they are going to be pulled in as sellers next year either. This same logic might be applied in the policy of other cb's. With the amount of flak that Gordon Brown and the Bank of England have absorbed for the British decision to sell at market bottom, others can't have failed to take note. In my view, Axel Weber's position at Bundesbank goes beyond politics and is one of principle -- that gold is an important and required aspect of individual nation state's reserves, a position, by the way, which echoes comments previously made by Alan Greenspan in the United States. This is a major change and one that is likely to have a knock on effect elsewhere as the dollar situation proceeds.Odds are this latest drop has to do with black box trading more than anything else and the pile on effect that we have witnessed all too often in the gold market, as I pointed out in my previous post. The rebuilding process in gold will begin on technical factors and gather momentun once the market realizes that the central banks haven't made the 2006 quota and are unlikely to make it next year as well (if that indeed is found to be the case when the smoke clears). The current agreement runs to 2009.As you can see, Knallgold, in my view this does not have to do with gold allies coming together to deliberately push the price of gold higher. It has to do with saving the system and keeping the various bullion banks from getting in over their heads and creating a situation that the central banks could not bail out if they needed to. That is a more formidable and permant force underlying the market than the desire to push the price higher. The system, it seems, requires about 50 tonnes of central bank gold per month. The question is where is that going to come from if you get to a place where the previous sellers, or subscribed sellers, decide not to deliver? As I say, that is the situation with which the armies of the night could very well be confronted when the smoke clears. Armageddon (9/12/06; 02:57:23MT - usagold.com msg#: 147390) @melda laure - MK's Question Actually Sinclair also agrees at least in part with me also since he stated that the recent gold drop ".. is an old fashion politically motivated raid that will fail. It will fail because the dollar has no significant upside and gold cannot be broken unless you can build a bull market in the US dollar. The only question is when and at what price the wash out completes and the bear trap is sprung."Note the politically motivated part that is supposed to support the Republicans up for re-election this November. Knallgold (9/12/06; 02:38:15MT - usagold.com msg#: 147389) MK #147380 Not sure if it was the ECB with the selling.7 years after WAG 1 I just have a hard time thinking there are still bullion bank bailouts in Europe.And weren't the quotas mostly for pro-Gold allies anyway?I do think its mostly the US banks/Treasury responsible for the recent big runup in the LBMA volume.The two sides are diverging.I'm also trying to read between a bankers recent lines.So yes,this drop might be a pure paper phenomenon-one possible reasoning is the unmet quota,its easy to engineer a perception of the rest of the quota is being sold now!Plus,there can't be just Another easy-profit fall rally. I could be wrong though.Do we know any quotas from the next WAG year btw??? USAGOLD / Centennial Precious Metals, Inc. (9/12/06; 02:36:40MT - usagold.com msg#: 147388) Great coins, great prices... http://www.usagold.com/gold/special/stgaudens20.html 9/6/06September Buyers' Group$20 St. Gaudens!Call and Save1-800-869-5115 (Ext. 100) melda laure (9/12/06; 02:03:37MT - usagold.com msg#: 147387) Bears, Porridge, and impertinent little girls. http://www.jsmineset.com/ With apologies to sir 'Lox.... sir Armageddon, apparently mr Sinclair agrees with MK.SNIPThis is an operation to dress the markets for the mid term election that has started too early.... The economy is rolling over hard and unless you lie about the figures it will become quite evident before November...Knowledgeable interests know this and will step in on a margin wash out, which occurred today in many situations and will occur soon in gold. The transparency of what is happening now is totally clear to major interests, but has escaped the ill informed masses. ENDI'm waiting for the part where she goes screaming into the woods. Could it be that the president may find himself invested in Irish real estate should these "gentlemens" agreements not work out? Beyond embarassament, there are horrific collateral consequences if that awful road is taken for then perhaps other gentlemens agreements will also fail. The rule of law, (corrupted as it is) hides many unpleasant but necessary horrors that keep the unbalanced system running. Mr Spitzer doesn't investigate the CFTC silver mess, and with good reason: it is a state-sanctioned crime so regardless who becomes the sacrificial lamb, all of congress, the executive and Spitzer himself are complicit. After all, every member of congress has been briefed on GATA. Post Enron, JPM fingered everybody else. Containment may be impossible. Imagine 9/11 but with lawyers crawling over every inch of the rubble.Better to trash paper pog than reap the whirlwind. melda laure (9/12/06; 00:51:58MT - usagold.com msg#: 147386) Shopping season continues. "We have established over the last year or so that the bullion banks need a bleed-off of about 50 tonnes a month required in order to defray the possibility of a default and runaway price."At $580/oz, or 18.5M$/ton, thats about a billion $ per month to fend off the "ant invasion". Those are quite small potatoes, a can of Raid would be much cheaper. Indeed, compared to 50 tons of yellow it is MUCH cheaper.One thing is certain, the hedgies will never play the long side in physical. Scalping paper tickets is more in their line.One hears odd things about Christopher Story's Leo Wanta affaire: lately its about a hidden crisis in clearing trade balance payments via CHIPS. More credible are the comments about too much leverage by certain gold paper longs, and the need to kill the commodities and petrol prices until the US election is in hand. If so, then expect little in the way of a new trend until late october or november; meanwhile, enjoy the free-lunch harvest, and may your yuletide be golden. TownCrier (9/12/06; 00:14:56MT - usagold.com msg#: 147385) Gold in Asia Rises After Decline to 10-Week Low Lures Buyers http://www.bloomberg.com/apps/news?pid=20601012&sid=arwv3DnktK_o&refer=commodities Sept. 12 (Bloomberg) -- Gold in Asia rose for the first day in five, reversing earlier losses, after its decline to a 10- week low attracted buyers who deemed the fall to be overdone.The precious metal fell 3.5 percent yesterday, the most in three months, as investors who had bought it as a hedge against oil prices and inflation, sold after crude prices dropped.``In the immediate aftermath of the sell-off, people will be jumping in as they see a good buying opportunity,'' Andrew Harrington, an analyst at Australia and New Zealand Banking Group Ltd. in Sydney, said. ``This may also improve the buying from the Indian jewelry market.''``If you look at gold, we are producing about 1,700 tons of gold a year, we consume 4,000 tons, 800 tons of scrap, so it's a huge demand-supply imbalance,'' Juerg Kiener, chief investment office at Swiss Asia Capital Ltd., said in Singapore today.Gold for delivery in December rose as much as $9.70, or 1.6 percent, to $607.00 an ounce in after-hours electronic trading...In India, the price of the metal for October delivery rose as much as 1.1 percent to 9,107 rupees per 10 grams, or 28321 rupees ($611) an ounce, at 10:25 a.m. Mumbai time on the Multi Commodity Exchange of India^---(from url)---^Dwell on this: If gold's price were to move in one direction along a straight line, it would be too late for you to convert paper to physical.R. 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