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ARCHIVED DISCUSSION FROM 10/13/1999 All times are U.S. Mountain Time View Yesterday's Discussion. elevator guy (10/13/99; 23:44:49MDT - Msg ID:16292) Complex systems! The Earth is a complex system! How can energy gathered from the sun ever escape? I'm not a physicist, but it seems that nothing can radiate away through the vaccum of space, since open space lacks any matter for which heat to radiate into and through. But then there is light, so I guess there is a very small amount of energy disapated there, but that is reflected from the sun, so it doesn't lessen the energy level any. Seems like the Earth can only receive energy from the sun, but not radiate it away. How is this possible? I mean forget about ultra violet for now, and forget about the ozone layer for just one minute, and just think about the zillions of watts of heat in the visible light spectrum, that is bad enough without going off into ultra-violet light and global warming. I'm having trouble just imagining how it is that we absorb so much energy during the day, with no way to release it into space. Maybe the absorbed energy just kind of slows down, as the heated molocules of matter bang against each other, losing velocity internally.Now to make this post gold-related, imagine a big meteor of gold smashes into the earth, quadrupling the supply. What effect would that have on currencies?Ok, Ok, I know I'm off the wall tonight. Feel free to dis-regard this message. *^) Tomcat (10/13/99; 22:39:50MDT - Msg ID:16291) DD Hey DD that was a great post on complex systems. Let's apply it to an economic system like our entire planetary system. What would be the energy that the system needs: Perhaps profits reinvested into functional captital or perhaps production? What would be the dissapation: consumption? Is there a simple example/model that has been published that allows one to get the hang of the theory? Perhaps a scientific American type of article would help? Gandalf the White (10/13/99; 22:25:18MDT - Msg ID:16290) Thank you Richard, Leigh, Angel and the tens of email acclaims!!! <;-) Richard -- I quote from the front and back flaps of the dust cover on my First American Edition of JRRTolkien's book titled "The Silmarillon" which was published posthumously." J.R.R. Tolkien, known to millions as the author of 'The Hobbit' and (the trilogy) 'The Lord of the Rings', was also known as a distinguished scholar in the field of English Language and Literature, which he taught at Oxford for many years. "The Trilogy was madeup of (in order) "The Fellowship of the Ring" -- "The Two Towers" -- & "The Return of the King".So not to bore too many here, I shall send you an email related to the best starting point. BUT, let me warn you that some think that the writing styles of Tolkien are matched by the one called ANOTHER !! IF you make it through the Trilogy -- then try the "The Hobbit" and then you are ready for "The Silmarillion" !!! <;-) Richard, Oregon (10/13/99; 21:50:38MDT - Msg ID:16289) Gandalf the White (10/13/99; 16:26:40MDT - Msg ID:16259) Gandalf - How are you these days? Hope your trip went well. I often reflect on our meeting @ Peter's and enjoyed your and Velma's company much. Now - your story today - great. You have our (Carol and mine) interest up in the Hobbits and we wish to meet them. Is the "The Fellowship of the Ring" the proper starting place or? DD (10/13/99; 21:49:21MDT - Msg ID:16288) Systems, Vibrations, & Reorder Hi All - Is it me or is there a vibration in the air? I don't think it's me. The brilliant chemist Ilya Prigogine won a Nobel Prize for his Theory of Dissipative Structures. In essence, he showed that everything is a system which becomes stressed as it grows and becomes more complex. In order to keep the system from going out of control, more and more energy is required to maintain the system's increased complexity. However, all systems have only a finite capasity to dissapate energy. At the end game, it take very little additional energy to push a system into a new state. When the system becomes too stressed and no additional energy can be brought to bare to maintain the status quo, the systems go into a process Prigogine called a "reorder". The stages of a reorder begin with "chaos" followed by the formation of a completely new system that can handle the increased energy. The chaos stage may take years or decades. Once a system goes into reorder, nothing can stop the process. An example of a system currently in this process is the former Soviet Union. It's still going deeper into in the Chaos stage. The new system that forms there will not be similar to any of the old ones or a bigger version of the old one. There's no way to predict what the new system will look like. OK. So what?Well, here's so what. Look at what is happening with many of our old systems. Fiat dollar money. Gold games. Croney capitolism. The IRS. Education. Healthcare. Criminal justice. I could go on and on. These and many other systems are stressed to the point of breaking. It probably won't take much to push them into a reorder. Oh. And I forgot one other little item. Y2k! We have never in our history had an event like Y2k. I believe Y2k could very well inject huge energy and stresses into our already over-stressed systems. If so, can you spell the word C-H-A-O-S? At this late date, I'm now recommending only two actions for my family and friends. "Please, dear hearts", I emplore. "Prepare for almost certain disruptions in basic systems and buy gold coins. I'll even help you find the best sources for your Y2k preparation and I know a high intregrity and wise coin dealer who just happens to host the finest round table of golden knights on the planet. However dear ones. Time is short. The clanking of the chain which raises the draw bridge surely does not bode well for those who terry" Carpe Diem. Best, DD SteveH (10/13/99; 21:27:11MDT - Msg ID:16287) rhody www.kitco.com Date: Wed Oct 13 1999 22:17rhody (@chzcake: If you have silver certificates or a bullion) ID#410367:Copyright © 1999 rhody/Kitco Inc. All rights reservedaccount with a certain position of silver, I would advise that you take delivery. I was down at Scotia Mocotta in Toronto on Tues pm, and got the impression that the 100 oz bars were in short supply. They seemed to have 1000 oz bars, but few people take delivery of silver in that form. If you have paper that says the bank owes you silver, this paper will be honoured only if the silver is still there. In a full scale financial crisis, the government is likely to freeze bullion accounts, and again you would not be able to take possession. If you leave your metal with a bank, I fully expect they lease it out and give you nothing of the interest. This is the real problem. One of these days, that leased silver will not be returned. SteveH (10/13/99; 21:18:16MDT - Msg ID:16286) Howe This is such a powerful article from Howe reprinted by GATA that I had to repost it here. See if you agree. I sent it to Leroy and posted these comments to him:SteveHLeroy,If you were a person of wealth living in 1928 and you read this article one year before the stock market crash of 1929 you would probably discount it as pure rubish of a doom and gloomer. But, what if it turned out that it was true and that you were able to make investment decisions built around a foresightful article that saw it coming and for which everyone else yelled chicken little, chicken little, don't listen to him? Well, I have a feeling this is just that article and you are reading it before any market crash (question: can the market crash as in 1929?). It explains much and does so very well. This is a must read, if only from a stand point that at least if what he fortells does occur and you didn't do anything then you will at least be able to say, "I knew it was going to happen." The other person, of course, would think, "Yeah, so why didn't you prepare?"It isn't Y2K that will be the big deal, it will be what Mr. Howe discusses below. So pretend it is 1928 and read this, it might actually be true (I hope not)and if it turns out that truth lies elsewhere then so be it. But it is no coincidence that the Internet and freedom of information arrived at a time when the very sharing of information may have truly exposed the financial problems of today in a way that those fortunate to read and discern truth from fiction may actually have a leg up. Truly every man's opportunity, eh?Here are indicators I see as adding basis to Mr. Howe's words:Gold price surge and 14,000 ton short position.Long term bond yield above 6%.Bill Gates, Soros, and Buffett with large positions in Silver or Silver mines.Largest negative feelings on gold in history.Largest stock market bubble in history wherein pundits say it is a new paradigm.Stock market finding it difficult to make new highs.New lows to new highs in a 3:1 ratio.Tech sector only sector holding markets up right now.Introduction of Euro as a competitive currency to the dollar.Secret oil for gold deal in place since at least 1976, if not earlier (Jamaica Accords), which kept oil down in price in dollars.Most everyone is in the stock market.Negative savings rate.Virtually no people for jobs.No physical gold available in quantity to deliver against any future contract.Price of oil doubling with room for higher prices yet.Alan Greenspan Jackson Hole speach with over 100 powerful and negative words.The list goes on....SteveH9:05p EDT Wednesday, October 13, 1999Dear Friend of GATA and Gold:Here is another brilliant essay by Reginald Howe, Harvard-trained lawyer, financial analyst, and former mining company executive. I think it belongs in the same rank as the recent prophetic essay by John Hathaway of Tocqueville Asset Management, "The Golden Pyramid."Howe easily beats 99 percent of the people writing about economics and investment. You can review his other essays at www.goldensextant.com, from which I copied this one.Please post this as seems useful.CHRIS POWELL, SecretaryGold Anti-Trust Action Committee Inc. * * *Real Gold, Paper Gold, and Fool's Gold: The Pathology of Inflation By Reginald Howe www.goldensextant.com October 10, 1999There was a time when, as someone recently said, everybody and his cat knew the difference between real gold and paper gold. But today's kool cats, if they own gold at all (which few do), are too smart to pay storage or insurance on allocated gold, too sophisticated to tie up funds in stodgy old coins or bullion bars with no yield, and too greedy to forswear the allure of maximum leverage. On the other hand, gold investors know gold first and foremost as a portfolio anchor to windward, a shelter in a monetary storm. Ashanti and Cambior are examples of apparently good hooks that dragged badly at the first stormy blasts. Why? The nub of the problem is to recognize that while the line between real gold and paper gold is quite clear, the line between paper gold and fool's gold can be a moving target. Paper gold is all paper instruments credibly repayable in, or otherwise linked to, gold. Fool's gold is paper gold that lacks credibility. Typical examples include unallocated gold in unsound banks, options or futures on gold from parties that may not be able to deliver, and mining shares in companies whose ore deposits or finances are questionable. To appreciate the potential force of the coming monetary storm, a basic understanding of gold, gold banking, inflation, and deflation is essential. Forget the Consumer Price Index and other such price indices. They are generally lagging indicators of prices in certain sectors of the economy. What is more, the CPI is now subject to so many "adjustments" that its usefulness except perhaps as a tool to reduce government expenses tied to it (e.g., Social Security payments) is suspect. Forget as well most blather about whether gold does better in an inflation or a deflation. Gold is insurance against severe currency or credit destruction, whether its precipitating cause be inflation or deflation. Inflation and deflation are, respectively, expanding and contracting credit relative to some reliable measure of money. Historically, the monetary measure was gold, which does not do well in periods of controlled or hidden inflation precisely because more credit can be built on less gold without arousing widespread public alarm. Measuring inflation today is difficult because what passes for money -- unlimited paper currency -- is itself so intermingled with credit as to make the two virtually indistinguishable. A money market fund is nothing really but short-term credit obligations aggregated to look like what was once a bank account backed (in a sound bank) by a 40 percent reserve in gold coin or bullion resting in the vault. Measuring the amount of real money in the world is no more difficult today than a century ago. It is the total above-ground physical gold stock, now somewhere around 120,000 metric tons (excluding the double-counting of gold leased by central banks but still on their balance sheets). Going off the classical gold standard and the quasi-gold standards that followed has not change gold's inherent nature as real, permanent, natural money. What it has done, besides changing for a time at least general public perceptions about gold, is to reduce to a small but elite group (international financial institutions like the Bank for International Settlements and the International Monetary Fund, national central banks, bullion banks and their customers, and the gold markets themselves) that portion of the international currency/credit structure directly tied to gold. The short gold position created by the bullion banks with leased gold mostly from the central banks is a fractional reserve position. This physical gold sold short must at some point be replaced, either by purchase in the market or new production. Be this short position 6,000 metric tons, 10,000 tons, or higher, it is a significant multiple of annual new production of around 2,500 tons. Some portion of this short position represents forward sales by gold mining companies; the remainder is largely borrowed gold used in the so-called carry trade. Accordingly, counting forward sales by gold mining companies as existing gold (which they really aren't) and assuming these contracts cover approximately half of the total short position (as good a guess as any), the gold banks are operating with fractional reserves not far from the minimum safe level of 40 percent sanctioned by historic experience. Half the physical gold they owe to their lessors must be obtained on the market. What is more, the other half is not really in the vault. It is underground, but in an ore deposit, where it must be dug out, processed, and refined before it can be delivered. On top of this shaky reserve position the bullion banks have created gold derivatives, principally options and futures. Cambior's hedge book shows how the gold banks have created options for gold in amounts that far exceed the amounts already sold forward by producers. What is more, they have done so primarily in the over-the-counter market out of public view. The gold banks' exposures particularly as they relate to the gold mining industry are detailed in an excellent article by John Hathaway of the Tocqueville Gold Fund entitled "Simple Math and Common Sense: A $66 Billion Problem." (www.tocqueville.com/brainstorms/brainstorm0041.shtml). All that is reported about the activities of the London Bullion Market Association is its monthly average daily clearing volume, a figure that will be quite interesting to watch in the months to come. The LBMA dwarfs the two best-known public markets, the COMEX and the TOCOM, which, though smaller, are more transparent. They offer gold futures contracts where open interest now exceeds warehouse stocks by multiples of 20 or more. On the COMEX open interest is north of 600 tons (200,000 contracts x 100 / 31250 = 622) against warehouse stocks of some 30 tons. On the TOCOM, where the percentage of coverage appears even lower, open interest has very recently shrunk from over 500 tons to 400 tons on Oct. 7. Fear, perhaps, is hitting the TOCOM a bit before it hits New York. As I have discussed before, TOCOM futures, which are priced in yen, are in backwardation. But the degree of backwardation is more than accounted for by interest rate differentials between the dollar (in which gold is almost universally priced internationally) and the yen. In other words, the implied yen forward rate is not what the difference between gold lease rates and yen interest rates would suggest, but less (that is, a smaller negative percent or discount) than on dollar/yen futures. But as a result of the backwardation, open interest on the TOCOM is mostly in the further-out months, although this too is beginning to shift. The COMEX also offers options on futures contracts, where the call open interest at strike prices between $310/oz. and $335/oz. running from November to February exceeds 500,000 contracts, representing futures on another 1,500 tons. Including options, the two public futures markets could be asked to deliver about one full year's production within a year, mostly in December and next spring. This potential obligation has been assumed on the erroneous assumption that because gold is just another commodity, there is no possibility of ever having to make actual delivery of the total outstanding open interest. With another quick $60 on the gold price, all the options will be well in the money, and futures on gold will almost certainly be fool's gold. But what is most alarming about the strained condition of the gold banks is the larger world financial picture of which they are a small but very important part. At the macroeconomic level, not only are there eye-popping figures on credit creation, derivative exposures, and stock market valuations, but the potential collapse last year of a single hedge fund, Long-Term Capital Management, threatened sufficiently dire consequences for the entire international financial system to warrant a bailout orchestrated by the Federal Reserve and backed by three discount rate cuts. Determining what paper gold is credible and what isn't is difficult enough under ordinary circumstances. Far harder, and in extraordinary times much more crucial, is gauging the external factors -- macroeconomic, geopolitical, cultural, whatever -- that paper gold and even real gold may have to survive. The bullion banks and their customers were not caught wrong-footed by a free gold market. They were caught out of position by the first attack in a monetary war they they didn't expect and on terrain they thought they controlled. The full story of how British-American manipulation of the gold market led to a counterattack by the European central banks is yet to be told, but Ashanti, Cambior, and their shareholders are among the first victims. Before the gathering monetary storm is over, there will be many more casualties, caught in the crossfire as nations fight a currency war the likes of which the world has never seen. Governments that try to wage this war with the weapons of old -- foreign exchange interventions, interest rate changes, currency controls, gold restrictions, competitive devaluations, etc. -- are likely to be overwhelmed by the very free-market principles that they have recently preached if not always followed. For in a truly free market for money, one with no legal tender laws, gold wins. In the United States the legal and cultural settings are vastly different from the 1930s or 1970s. As a matter of law at least, gold is in a free market, hugely complicating the legal basis for any effort at confiscation. Trust in government officials, starting with the president, has never been lower. So turned off to their government are Americans that nearly half the eligible voters no longer participate. So offended are they by the shenanigans of the two major parties that third-party or otherwise apparently independent candidates arouse astonishing levels of interest and support. And then there is the Internet, giving freedom of speech and debate rein to affect public policy as never before while restraining the power of the mass media. What is more, the Internet is now as international as gold, giving gold bugs worldwide their own web in which to catch miscreant officials and expose official scams. So-called "gold clauses" were a standard feature of many private contracts from the "greenback era" of the Civil War to the midst of the Great Depression, when the monetary measures of the New Deal made them invalid by government fiat. Thus fell at a blow supposedly certain protection against the gold devaluation of the dollar, catching off-base the most prudent and best-advised lenders of their era. For ordinary American citizens in that particular financial cataclysm, mining shares proved a much better refuge than physical gold or gold dollars, ownership of which was made illegal on the ridiculous theory that government gave gold its value by making it money. So too in 1971 not even an international treaty, the Bretton Woods Agreements, could protect those nations that had placed their reserves in U.S. dollars from a second unilateral gold devaluation by the United States. Only the French, by redeeming dollars in gold "avant le deluge," gained a partial measure of protection. The monetary history of the 20th century, for both individual nations and the world at large, is a story of swift and devastating discontinuities, not a linear progression of events. Today the evidence points to an impending conjunction of macroeconomic and geopolitical events that will almost certainly sweep from the scene the entire monetary and credit structure erected on floating exchange rates with the U.S. dollar as the key reserve currency. This lopsided international structure -- imposed by and so favorable to the United States that it has for years run balance of payments deficits of truly gargantuan proportions -- is hopelessly dysfunctional, often placing smaller economies at the mercy of forex market speculators. As this structure disintegrates, gold will retake its accustomed place at the heart of the world monetary order not so much by official choice as by international necessity enforced by free-market principles that will be virtually impossible for free governments at least to resist. To ask at what price gold is to misunderstand both the problem and gold. No one could foresee in 1929 that gold, then $20.67/oz., would be $35/oz. in 1934? Similarly, no one could could tell in 1971 that gold, then $35/oz., would rise as high as $800/oz. within a decade. What a few could and did predict in the months and years immediately preceding these devaluations was that the world would soon be forced to confront the effects of then unprecedented credit inflation built with far too little regard for the underlying amount of gold available to support it. What they also could and did predict was that the existing dollar/gold exchange rate (or price) was too low and would have to rise substantially to offset what would otherwise be devastating credit deflations. As they say, history repeats though never in quite the same way. Eight years ago in The Golden Sextant I discussed the problem of setting a new official gold price in the context of an orderly return to an international gold standard. Today 40 percent gold cover for U.S. currency in circulation would require a gold price above $800/oz., almost twice the figure of eight years ago. Yet we are constantly told that this is the decade when inflation was vanquished. When gold was at $800/oz., in January 1980, one ounce would buy the Dow Jones Industrial Average, as it would have done in 1932 if it had been fixed at $35/oz. two years sooner. If you must guess a future gold price, ask yourself what will be the price when next one ounce, two, or even three will buy the Dow. Eight years ago I also held little hope of an orderly return to a gold-linked dollar. By then American officials of both political parties and all three branches of government had decreed by their actions over many years that any formal return to gold would come, if at all, only under almost unimaginable crisis conditions, when the golden lifeboat was the only lifeboat. What historians may call "The Great Gold Scandal" and Americans may call "Moneygate" did not begin just a few years ago only to surface with the Bank of England's gold sales. It began in 1971 when President Nixon closed the gold window and for the first time in U.S. history cut the dollar free from any meaningful link to gold. Compared to what is coming, Watergate was a bagatelle. It is no accident that Moneygate began with the first president to be driven from office and will likely end with the first in this century to be impeached. Scandal -- indeed, the most egregious breaches of public and private trusts -- are part of the pathology of all great inflations, a pathology not unlike that of the drunk or the addict. Nowhere is this pathology better described than in today's addition to my reading list: "Fiat Money Inflation in France" by Andrew Dexter White, founder and first president of Cornell University. This essay, written in 1876 and read by its author to members of the House and Senate in connection with the debate over returning to the gold standard after the Civil War, tells the story of the French assignats of the 1790s. This great paper money inflation, originating in the French Revolution, ended "in the complete financial, moral, and political prostration of France -- a prostration from which only a Napoleon could raise it." The tragedy for today's America is not just that the looming monetary shipwreck could have been avoided by more honest policy decisions, but that it would have been avoided if mostly well-intentioned but misguided officials had stuck to the letter and spirit of the monetary provisions of the Constitution. Its framers knew when they met in Philadelphia in the hot summer of 1787 what the French were about to prove to themselves the hard way despite their inflationary experience 70 years before in John Law's Mississippi Bubble. Nobody can predict with certainty or in detail the consequences of a hundred-year storm, be it financial and monetary or meteorological. Gold will more than survive; it will prevail as it always has. Gold mines will prosper, though certain mine owners may fail. With clear thinking, preparation, nerve, and luck, gold investors will survive; some may even prosper. As for the nation, let's hope that aided by their ability to speak directly with each other on the Internet, exercising their good judgment and common sense, the American people will demand for themselves, their children, and their Constitution -- as is their right in accordance with its exact terms -- early passage on the golden lifeboat. -END- ORO (10/13/99; 21:02:43MDT - Msg ID:16285) FOA Thanks, I don't know if they are getting better because I rarely have time to read what I write. Yellin' of Troy challanges me to try my best at clearing up my explanations and checking my reasoning. Hopefully this improves the writing.Thanks again.How "cut and dry" is the current ECB vision of their new fangled floating gold standard? Any mechanical details that can be disclosed? TownCrier (10/13/99; 20:49:52MDT - Msg ID:16284) After the Close: the GOLDEN VIEW from The Tower Canadian-born Robert Mundell, a Columbia University economist, was named today as the 1999 Nobel Economics Prize winner for his pioneering role in laying the foundation for Europe's single currency, the euro. Today it was also announced that six additional countries have been elevated to negotiation status for EU membership, bringing the total to 12 potentially new members as early as 2003. It is only fitting, therefore, that the euro closed trading in NY up 0.4 cents against the dollar and up 0.83 yen from its previous close. The dollar had a tougher day with a sell-off in equities in full swing, however, and itself lost ground against the Japanese currency by 0.32 yen. The dollar somehow managed to give back its overnight gains which came on news that the Bank of Japan would take steps to add to its money supply to stimulate economic activity through outright purchases of qualified collateral. Anyway, The Tower sends "Congratulations!" out to Mr. Mundell who long ago set out to discover "what effect monetary and fiscal policy might have in a situation where exchange rates were floating and capital perfectly mobile." In a special side note to The Tower from a respectable gold broker who had recollections of past dealings with Mr. Mundell, his memory was that the man had "a 'golden' view."The Dow Jones Industrial Average was anything BUT gold, falling well beneath its 200-day moving average of around 10,385. The DOW closed at 10232.16, down 184.90 (-1.77%) on the day. Declining stocks outnumbered advancers 2,142 to 904, and new 52-week lows creamed new highs by 317 to 15. The Nasdaq lost 71.16 (-2.48%) where losers topped advancers by 2 to 1.TheStreet.com quoted Randy Billhardt, co-head of block trading at PaineWebber who described today's action like this. "It was more of a slow death than an immediate kill [but] volume did sneak up to 800 million which is not like holiday trading. I put more credence [to a move] as volume creeps up. I didn't feel like it was a disaster but I think some of the fundamentals people are starting to see are frightening." He said that trading itself is getting difficult..."liquidity in individual stocks is not high," further elaborating an example that IBM traded nearly 15 million shares, but the average sized trade was 1200 shares.Seems fitting...you can't SELL stocks in size without tanking the market just as you can't BUY gold in size without springing the price. In the credit market, the 30-Yr Bond's effective yield was pushed to a new high for the year (nearly reaching the 2-year high) at 6.288% as it cheapened by 20/23 in price. Traders were spooked as the Bridge/CRB Index rose 2.1% to 209.37, its highest close since July 20, 1998. Tony Crescenzi, chief bond market strategist at Miller Tabak Hirsch, said of this pickup in commodities "It's really a global phenomenon. There's a global economic upturn under way, particularly in industrial production, and that's pushing commodity prices higher." Also pressuring prices lower was a large amount of offered corporate and agency debt, together with apprehension of key economic reports due out tomorrow and Friday -- the September retail sales report and Producer Price Index. The PPI is expected to match or exceed its previous gains of the past year. Bond traders were clinging to hopes that these expectations were already priced into the market.The year's span of gold lease rates have almost fallen into a normal looking bond-type yield curve, though still abnormally high for this monetary precious metal.1-month 3.6060%2-month 3.7080%3-month 4.3770%6-month 4.4086%12-mnth 4.4130% The Tokyo commodity Exchange gold contracts were said to have firmed yesterday due to the demands on "the overseas spot market," according to dealers. Imagine that...Americans must be buying gold. The masses are waking up. Well, they might actually be still in bed, but at least one eye was opened, and spot prices were last quoted in NY up $3.30 today, at $319.80. As this report is being written, spot gold has climbed further in overseas trading, topping $323 per troy ounce.As long as Bridge News can deliver objective market reviews, we'll keep passing them along (and also to give the fingers a chance to recover!)---NY Precious Metals Review: Gold up $3.6 on short coveringBy Darcy Keith and Tina Petersen, Bridge NewsWashington--Oct 12--COMEX Dec gold cut some of its morning gains afterlate session bank sales, settling up $3.6 at $321.8 per ounce. Gold postedstrong gains this morning after rallying more than $6 in overnight ACCESStrade amid short covering, hitting a high of $325.3.In gold, a lot of the morning buying activity was said to be comingfrom hedgers and there continued to be talk of large producer buybacks."Producer buybacks after the Asian selling lent support to the market,"said a trader, "but the follow through did not hold. It was basically justanother sideways day." Traders said most of the activity occurred inLondon in the morning, with very light activity in the afternoon."I still think we're seeing lots of short-covering, especially forpositions off of the exchange," said Jim Steel, analyst with Refco.Traders said there was not any particular news driving today's gains,attributing the move to technicals and range trading. "It's just a lack ofselling around the $320 level," said one trader, adding that the lack ofselling interest extends to producers as well.Another trader said the market "is very volatile and just seems veryskittish" following its big rally over the last few weeks.Leonard Kaplan, chief bullion dealer for LFG Bullion Services, saidthe gold market is forming a positive technical formation and a temporarybreak out spike to as high as $360-380 is likely in the next 30 days. Hesaid shorts are getting increasingly nervous as it becomes more apparentthat the higher gold trading ranges are likely to be sustained.Another dealer disagreed with Kaplan's assessment that the market isgoing higher. He said most of the short-covering should be over at $335,and then Dec will head back into the $275-300 range. "This might take amonth," the dealer said. "I think this is just a short squeeze and whenall this is unraveled gold will gravitate to $300, plus or minus $20."[Doesn't this particular trader with the dissenting view have any appreciation for what will happen to his understanding of "technical trading fundamentals" when it becomes clear that there is an unfillable (at these prices) requirement for metal to satisfy the outstanding gold LOANS? That is a realm completely outside of the contract and hedging world that he is apparently too close to. So close, in fact, that he can't see anything at all...like having your nose against the bark of a tree. You certainly can't see the forest until you step back. +The European decision didn't rock the pricing world because it made these simple futures contracts for hedging and speculation on prices any more difficult to enter and exit. It didn't. It put the kibosh on the musical chairs of gold loans...that is, paying old loans (or simply the gold interest) using newly borrowed supply. Game over. The derivative boys, like this anonymous trader, have a mouthful of bark and no grasp on the forest. Well, that's probably understandable, as sorting out the aftershocks of the various bets that went tremendously bad for short-side specs or producers in this first price jump has no doubt kept them pretty close to the tree. So much for resting the fingers! Back to Bridge...]A trader said one factor that might push prices up in the near term isthat traders are trying to get their customers that hold short positionsto cover those positions and square up. "That should put gold on tack totake out the old highs," he said.He said that while prices might slip in the near term to $295-305 onprofit-taking, " I don't see it going below that range. I think priceslikely will rise in long run." He said he thought prices would have comeoff by now, "but we're seeing aggressive buyers at the $320 level."A Commitments of Traders' report by the US CFTC on Tuesday showed thatspeculators and funds have whipsawed a considerable net-short futuresposition with a more massive one in COMEX options during the latest pricerally. The report also eased concerns that a similar, futures-only oneFriday was incorrect.***(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:http://www.futuresource.com/internet.shtmlNo further reproduction without written permission from FWN---For the third straight day, 2 hapless October futures contract holders received notification from their counterparties this morning that delivery of metal would be the expected form of contract settlement, bringing the total for October to 2,510 contracts (251,000 ounces.)Final figures for yesterday's futures trading on the Commodity Exchchange divison of the New York Merchantile Exchange reveal that there was no net change in the level of open interest for the October contract (111 contracts), four rookies teamed up to add 2 contracts to November's whopping <grin> 14, and the truly eye popping open interest of 117,885 contracts for December expiry had dropped by 1381 from the previous day. Total open interest on COMEX gold futures thru June 2004 stand at 216,938 (as of yesterday's close, that is.)The Republic National gold depostory for COMEX saw their Registered inventory fall by one contract worth. This 99 ounce withdrawal leaves 918,729 brethern ounces sittin' on the shelves, shakin' in their shoes, worried about their fate come December. From this vantage point, there is no knowing how much of this gold is in place as simply enough to satisfy margin requirements on open contracts, how much might be fully backing an open interest contract, or how much is simply sitting there in safe storage without contract attachments--and therefore not at risk to a future change in ownership via a counterparty's announcement of delivery intentions.After a textbook coup, there now seems to be a lot of standing around and blinking as the dust settles in Pakistan. The down-but-never-out, back-from-retirement, tanned-rested-and-ready-for-"reelection" military chief General Pervez Musharraf put off until Thursday any official policy statement since seizing power on Tuesday. Pakistan's economy had been in the dumps, and businessmen had actually been eyeing with envy the liberalized markets that had been growing across the border of their "rival" India. In a report we posted earlier today, the central bank ordered a bank holiday and the termination of all foreign exchange transactions as concerned depositors rushed to access their accounts. (Should have had some gold at home, eh?) Depending on the type of government chosen to replace the one now ousted, further IMF "assistance" is in jeopardy. Government sources say it is not clear whether a caretaker government that might replace parliment would be exclusively civilian or include military officials.In another textbook example, but this time focusing on the economics of supply and demand, November crude futures rose more than 3% as traders had a chance to fully react to Tuesday's after-market release of American Petroleum Institute data which showed the massive decrease in crude oil stockpiles that we briefed you about in yesterday's GOLDEN VIEW. November crude settled up 76c at $23.06, and traders will be now be poised to see if tomorrow's 9:00 release of Dept. of Energy data confirms this sizable drop. In the past, it has not been uncommon for the two sources to differ significantly, sometimes one showing a decline while the other shows a rise. That's modern science for you, folks. It's no wonder our last Martian probe crashed and burned...poor thing.Price seems to be of less concern to the producers these days...almost like they've got an ace up their sleeve. In two FWN headlines, we learn that an energy official in Mexico says "Recent oil drop no cause for alarm" (referring to price, not supply), meanwhile a UAE oil minister say while "Unconcerned on prices," they want "better compliance." Call me simple, but I'd be willing to settle for just a cheeseburger about now.And that's the view from here...after the close. THX-1138 (10/13/99; 20:39:26MDT - Msg ID:16283) BILDERBERG GLOBALISTS TO MEET IN WASHINGTON D.C. http://www.jvim.com/cgi-bin/update.cgi This came off the Jack Van Impe website.October 12, 1999 WorldNetDaily reported: "The secretive Bilderberg society, a group some believe conspires semi-annually to foster global government, will hold a steering committee meeting in Washington next month, WorldNetDaily has learned. The Nov. 4-5 conference, featuring invited guests such as Vice President Al Gore and presidential candidate John McCain, is scheduled for the Library of Congress in the nation's capital and is sponsored by the American Friends of Bilderberg. The U.S. group is directed by Henry Kissinger, David Rockefeller, Paul Allaire and Richard C. Holbrooke. Since 1953, the Bilderberg group has convened government, business, academic and journalistic representatives from the U.S., Canada and Europe with the express purpose of exploring the future of the North Atlantic community. The international steering committee includes Conrad Black, publisher of newspapers throughout Canada, the U.S. and the London Telegraph and Jerusalem Post, Vernon Jordan, George Mitchell, Kissinger and Rockefeller. On the agenda for the November meeting is a panel discussion of the U.S. presidential elections and an exploration of the national security requirements for the 21st century. Among those involved in the discussion of the latter subject will be former U.S. Sens. Gary Hart and Warren Rudman, former Speaker of the House Newt Gingrich, journalist Leslie Gelb and Secretary of Defense William Cohen. McCain, at the special invitation of Kissinger, will speak at breakfast Friday morning..." FOA (10/13/99; 20:27:47MDT - Msg ID:16282) (No Subject) Goldspoon, I was just thinking. (smile) Perhaps you should switch to a fine Arabian horse? Like Golden sun,no? They are proven winners from long before your entry was ever seen. They even run strong during economic storms. Just a thought, my friend.PH, Karachi? Call your bank and say "get me ten tonnes". Yes sir Mr. PH, it will be on your statement next month. (30 DAYS LATER) Hey, my gold isn't on the statement? Well sir, we have a little problem. Let's talk? Can you come down here and.................... Time, PH, time. FOA Journeyman (10/13/99; 20:20:41MDT - Msg ID:16281) Oro, FOA: Time horizon?? You suggest 1. severe devaluation of currency ($) and 2. a default on external debt (Russian style.) What are the time horizons you envision. I realize, as Yogi Berra quipped, "Prediction is very difficult, especially of the future." But and educated guess is better than none at all! Regards, Journeyman Chris Powell (10/13/99; 20:11:52MDT - Msg ID:16280) An appeal and some good reading at GATA Good reading at GATA tonight 1) GATA Vice Chairman and Treasurer John D. Meyer appeals for help from the mining industry. Friends of gold, we really could use your assistance here. If you endorse the letter, please send it to your favorite mining company with your endorsement. http://www.egroups.com/group/gata/253.html? 2) Reginald Howe of www.goldensextant.com has another brilliant essay, "Real Gold, Paper Gold, and Fool's Gold." Everybody must know the difference. http://www.egroups.com/group/gata/254.html? 3) A major Dow Jones News Service story distributed this week quoted GATA Chairman Bill Murphy prominently. http://www.egroups.com/group/gata/255.html? CHRIS POWELL, Secretary Gold Anti-Trust Action Committee Inc. FOA (10/13/99; 20:05:55MDT - Msg ID:16279) Comment Strad Master, welcome and glad to see you here!ALL, Today was a good day for gold, again. It looks as if the beginning realignment of the dollar against the Euro is beginning to affect the financial markets. I have seen several write-ups by our well paid "bold bears" Mr. Smith and Mr. Arnold. They certainly do have a good understanding about how Euroland values gold. An understanding that, in their reference of experience must span all of twenty years+/-?? Truly, their full life comprehension of assets must have never seen total loss due to war, economic failure or political injustice. Why else would they so boldly speak for an entire continent of people and the official monetary stance of their leaders. These "paper boys" would have the EMCBs sell off gold because holding more interest earning dollars will back the Euro more effectively, right? Conversely, even a fool would see that the US should then print more of it's currency and buy the debt of any higher yielding countries. Why miss out on all of that return by just "holding the ability to print money and not use it"? Their concept would see a printing press as an asset with no return. Again, the "paper boys" are following a path that's made "sensible" because in their lives they have most likely not been defaulted on. Gold does not pay a return as a reserve asset because it isn't lent like the currencies. Lend it out and it's at risk, just like the currencies. Hold no unlent gold (or paper money) and you have no reserves outside of risk. It begs the question; why not lend out all real assets? Lend out every thing that's held in quantity, the chairs, books, lights, bricks, food! Get a return on everything useful? If it's usable, someone will borrow it and pay a return. Truly, young boys always look smart until the world makes fools of them. They pretend to speak for the masters as long as followers listen to and act on their concepts. I think that, this whole group has entered a play written by oil and the BIS. What they are about to experience is "the last act". Today, the real ECB masters have brushed aside these loud youths as concern for their Euro Gold takes precedent. As the need to hold an "unlent currency of world class" becomes undeniable, the "paper boys" will suddenly mature into "grown wise men". With new jobs perhaps? and much poorer for the ware?, no doubt, but wiser in the future, never the less. Presently, the US holds (percentage wise) little foreign exchange currency because it's position is one of setting interest rates on the world reserve currency to effect it's value. The years of being the major trade settlement currency allows such a luxury. Negate this position in it's present economic condition and the US will have to face severe inflation. I believe, investors world-wide will attempt to run from the dollar by buying gold. This fear is manifest in the ongoing success and advancement of the Euro. If the "paper boys" (above) even half way understood this position, they would see that it's the dollar reserve holdings of the EMCBs that are "dead assets". As the Euro ascends to the world reserve position, it will, like the present US dollar, be able to affect value through interest rates alone. Foreign currency reserves will begin to fade in importance. Indeed, what good are interest bearing dollar reserves when the country of origin is running a trade surplus? How does one use a dollar (and it's interest) if the trade flow never flows into the US? Indeed, how does one effect a "profitable interest return" on dollar reserves if it takes a major devaluation to reverse said trade flows? If one does not buy goods from America then a further rebuttal asks; if the alternative to buying goods is buying assets, then why invest more money into a foreign country if your own is growing faster? If Euroland begins to run as a currency transition tears apart the Dollarland, our "paper boys" will find that the only "dead asset" in the EMCBs reserves may just be Dollar! ORO, I read your ORO (10/13/99; 17:12:48MDT - Msg ID:16267)------ and vote for a combination of (2) the severe devaluation of its currency both at home or abroad, or (3) the default of external debt, Russian style. Also add extreme foreign exchange controls aimed directly at the Euro. One of the reasons internal "street gold" will run so far! Question, when do your posts stop getting "better" (smile). Thanks FOA PH in LA (10/13/99; 19:11:17MDT - Msg ID:16278) An Innocent Question FOA, ORO, Tzdeak, Anyone Else:So far, we have seen no connection whatsoever drawn between the collapse of the Karachi gold exchange last week and the military coup in Pakistan today. Mere co-incidence? ORO (10/13/99; 19:09:40MDT - Msg ID:16277) Yellin' of troy In a pure cash economy, where (1) debt was outlawed (since it is a natural market phenomenon there is little reason to believe this law would work), (2) there are no taxes, (3) no commodities are denominated by law at any exchange rate with the currency, the cash issued by the government would have no demand and would buy nothing. The fact that a government issued a paper that says "I am money" does not make it so.No degree of monetary and fiscal responsibility would make anyone want it. Perhaps collectors would start interest in it, perhaps paper recyclers would find a method to bleach the ink off.As the US did in the 30s the demand for the unbacked Federal Reserve Note was created by the government's decree of it replacing the word "gold" in contracts of transaction and debt, and that where these contracts say $, these notes must still be accepted. Furthermore, FDR and his rubber stamp congress produced an avalanche of taxes that enhanced demand for the currency. Gold Power (10/13/99; 19:03:09MDT - Msg ID:16276) Comments on Kaplan's Comments I want to key in on one statement Kaplan made:"... speculators have actually gone very heavily net long, but they have done so by purchasing gold call options rather than going long gold futures."The reason they have done this is because psychologically, they still do not believe this rally. They are willing to risk premium money, but they aren't willing to risk real money by buying a futures contract.This shows great skepticism. The move to higher gold prices will not be over until this skepticism is gone. Any maybe not even then.Gold Power mike55 (10/13/99; 18:55:26MDT - Msg ID:16275) Tomcat & JCTex I've been granted computer access by the boys ("Hey, take 5 from your homework and let the old man on!"), so I'll be brief. It astounds me when talking to co-workers, even (or perhaps especially) the finance folks, how most refuse to believe that any financial slowdown can occur due to interconnectivity issues related to manufacturing, delivery of raw and finished goods/oil, financial transactions, etc. A very few, though, young and old, have moved out of equities and see the potential for problems. The fiat game is a real eye-opener once you begin to understand it. Since the rollover is the issue that brought me here in the first place a year ago, I've learned so much more than years of formal education and business experience have taught me. Starting ten months ago, I also became a holder of physical as insurance for the first time in my life. The bargain prices of PMs continue to be a blessing. Thanks to all on this forum for the continuing education. I came, I saw, I continue to learn. Oops...gotta' go -- I've used up my allocated five minutes. Hope to be back later. Leigh (10/13/99; 18:49:47MDT - Msg ID:16274) New Krugerrand (Info from Flierdude) Flierdude posted this article on Kitco a while ago. I hope he doesn't mind my reposting the first two paragraphs of it:S. Africa launches millennium Krugerrand gold coinJOHANNESBURG, Oct. 13 (Reuters) - South Africa launched its millenium Krugerrand gold coin on Wednesday as part of a global drive to boost demand for the metal into the new century."As the world's largest gold producing country, South Africa and South African gold mining companies have an obvious responsibility to support the promotion of gold..." Kelvin Williams, Chairman of Rand Refinery Ltd., said at the launch of the Krugerrand 2000 gold bullion coin. SteveH (10/13/99; 18:12:33MDT - Msg ID:16273) Kaplan www.goldminingoutlook.com kaplan (today)-- THOUGHT OF THE DAY: The most recent COMEX traders' commitments showed commercials net long gold futures, with speculators roughly equally net short. On the surface, this would be moderately bullish. However, if one looks at the combined traders' commitments for futures and options, one discovers [thanks to Mr. Robert Doyle of Credit Suisse First Boston] that speculators have actually gone very heavily net long, but they have done so by purchasing gold call options rather than going long gold futures. Looking at options only, the speculator long position essentially doubled while the speculator short position was cut in half, while open interest increased by over 200,000 contracts. This makes the current speculator long option position equivalent to 5.0 million ounces (155.52 tonnes), up from 3.7 million ounces the previous week. This is three times the previous all-time record. Historically, very heavy call buying usually stimulates the market in the very short term but strongly increases the likelihood of a significant pullback in the intermediate term (over the course of several weeks). ***Could be that the speculators finally have it right only to find out there are so many of them that it will cause a default of all option writers when gold goes higher. Also, note that the provider of the information (correct me if I am wrong) to Mr. Kaplan is a known gold-shorting company. Canuck (10/13/99; 17:56:32MDT - Msg ID:16272) With the rain pouring down, wasn't it a Golden Day! 7:30pm Eastern.Just checked my 'Online Discount Brokerage' service and myUN-hedgeded major made a couple bucks and my UN-hedged junior has been very aggressive again today. My Physical made a couple more bucks per onze today and I am a happy camper. Please excuse my gloating, I apologize . . . . .not!I hope everyone had a nice day, financially and emotionally.I hope that everyone who made less money than me soon catches up and I hope to catch up to the 'bugs' that made more than me.More than the money issue, I had a great day. A co-worker that has been bad-mouthing Y2K and gold and etc. called me today and ushered congratulations. I accepted his thanks and in the appropriate spirit of the moment offered mycondolences (sp) to his wallet. His quick wit offered this reply, "Oh, I didn't tell you ... I moved all my internet stock into gold on the 24th" I answered, "Sure you did, pal.Then why, for the past 2 weeks, do you look like you've sh*tyourself."Bonds are tanking, dollar is re-dropping, Steve's NAPM has bottomed, oil fires are burning, and PPI/CPI is lurking.I said on Saturday, we got our good news Sept.21/26, now give us the BAD news. CoBra(too) (10/13/99; 17:52:32MDT - Msg ID:16271) A short note to PPT! It does appear you guys lost control of what to control!Finally - CB2 JCTex (10/13/99; 17:37:41MDT - Msg ID:16270) Mike55: everything hunky-dory [if they only knew] Three or four years ago, I took a look at the National Debt [the real one that includes the so-called off budget stuff]. I then assumed a standard 8%, 30 year amortization note PER TAX RETURN. My computer backlashed, and I fled to the little room with my barf bag in hand. I would give you the numbers, but have purposely forgotten them. It really gets cute and fun when you add in the taxes that those people are already paying. Fiat money has done so many wonderful things for us. Gandalf the White (10/13/99; 17:26:28MDT - Msg ID:16269) Keep Jumping SPOT --- HIGHER ! $322.30 at 19;25 NY time !!<;-) JCTex (10/13/99; 17:23:49MDT - Msg ID:16268) Leigh: Ron Paul for President Nice thought, but not going to happen. Remember: this is the same electorate that is so dumbed down that they elected Slick and that woman.....twice!! ORO (10/13/99; 17:12:48MDT - Msg ID:16267) Yellin' of troy I view labor as affecting the pricing of items in demand as the major element in the cost of their replacement. The capital as labor concept of the Ricardian/Marxian labor theory is not why I look at it and not the view I take. However, the fact remains that labor was used to create capital and much of the value of physical and intellectual capital is dictated by the labor costs of its replacement.The Austrian subjective valuation theory pretty much comes down to the fact of an individual's choices being dictated by the information available to him. That currency can be valued in context of its history and the individual's observation of it being accepted around him, does not indicate what buying power that currency has, whether it is a commodity money or fiat currency concept money.The main contribution of the Austrian school, as I see them, are in analysis of monetary systems and the debt cycle. Part of the analysis is dedicated to the liberty in economic context. One of their observations was that fiat concept money is a tool of government power and a cause of distortion on the economy. In context of the debt cycle, the fiat money is a mechanism that tends to prolong and amplify distortions caused by the malinvestment of the late expansion phase, and prolong and amplify the debt repudiation phase. In their subjective valuation theory, the government's replacement of a multitude of decisions of market participants with one decision by government, distorts the signals available to both individuals and government decision makers. Though the distortions may not be apparent, the Austrians insist that they are there. I agree.My thinking about the market's setting of the value of money by supply and demand views the supply and demand components as follows:For any money at all:(1) Demand for money to settle debt denominated in that money.(2) Demand for money to settle taxes, which are a form of induced debt.(3) Demand for money to purchase necessary products available solely in exchange for the denominated money, as is dictated by government decree. (In this case, gold and oil.) For commodity money alone:(4) Demand for the commodity as such.On the supply side:(1) The creation of debt money, as long as the debt is accepted as equivalent (at some exchange rate close to par or above it) to the item denominated.(2) The issue of money by a government or by the producer of the commodity money.(3) The acceleration of the monetary velocity has the effect of supplying more money from an increased pace of economic activity. This can usually be ignored.The assignment of value to money because it is used as such is universal to all moneys, and can not be assigned to one over another. It is a residual value that remains when one takes out the elements specified above. It is also the erroneous to think this value to be permanent. It transfers in proportion to usage.Concept money has no demand of its own when not tied to specified products and services. What does it mean to have a money with an unspecified backing; "full faith and credit of the ..."? When one tries to redeem fiat concept money beyond the demand elements above, one has to face the fact that it is nothing, unless there is a legal obligation for its acceptance by government decree (hence "fiat"). The legal obligations for fiat money derive from legal tender lawsthat enslave us. History reveals that the instances of fiat money issued in excess of the 3 elements of demand, cause price inflation and the price controls that commonly follow, make the inflation that much worse, as they eliminate all supply of price controlled items and set a universal floor price rather than a cap. Even the most draconian of legal tender laws are, eventually, unenforceable.The point of the discussion comes in the analysis of the demand and supply of moneys when the economy unwinds the debts of various denominations and actual "cash" money is supplied, or not supplied through commodity money production and "printing" of concept money. This is when reality sets in, and the inherent values of the commodity money and the concept money come in. The US has refrained from large scale monetization of debt over the past two decades. However, the government has made itself legally liable for an enormous amount of debt in the form of the items covered by the CAFR ($60 trillion or so). This includes insured pensions, mortgages, government debt of all levels (municipal through Federal), FDIC insured deposits, Brady bonds etc.. Aside from monetization, the only source of money in the current global system is new debt. When new debt is either not created or not valued at par (or above) by the markets, i.e. principal is discounted. Then monetization is the only course left that would not destroy the banking system. This has already started. The size of "overnight" repos is growing rapidly, and soon will be transferred into longer term repos and into outright purchases by the Fed. Looking at the historical data, the Fed's monetization of debt, rather than its creation, is the leading cause of price inflation during low growth periods. Because the monetization is sourced in the US and much of the debt is in the hands of foreigners (if Eurodollar deposits are included it is very much more than appears in the commonly cited statistics), the $ assets of the world are under threat of severe dilution. Well before the threat is realized, the exchange rates of the dollar against most anything will fall steeply.As pointed out in previous posts, the US now faces a choice to balance among the following: (1) destruction of its banking system (potential for a much greater depression than the great one), (2) the severe devaluation of its currency both at home or abroad, or (3) the default of external debt, Russian style. (4) There is the option of delay by increasing indebtedness by government deficit spending, making some new rules to slow things down. Any delay in this will just exacerbate the problems as the debts grow with time, as is their nature. The cost of buying more time is now so high that very little more time is being bought. Gandalf the White (10/13/99; 16:53:59MDT - Msg ID:16266) OOPS === 2nd try I will bet that most folks did not know that "13" is considered to be a lucky number by Hobbits. Well it is indeed the favorite date of the month for the Hobbits that work for me, as it is also PAYDAY ! Well, today was no different, but having read about The Stranger's payday activities, a large group of them, (the twenty that call themselves the POG) all wanted me to take them downtown to see their favorite LOCAL coin dealer.SOOOO, off we went, right after the COMEX closed for the day. Upon arrival, we found the dealer at his desk in the back, talking with someone. BUT no one was in the shop but us. He "buzzed" us to enter, and came up front to greet us all. After greeting were exchanged by all, he said that he was indeed happy to see the Hobbits today, because he had a story for them. ALL the Hobbits were excited because of course, they LOVE stories and they know that the dealer tells only TRUE stories. The dealer locked the door and motioned to the Hobbits to sit down on the floor as he went back to his desk in the back and picked up a item. Then he came back and start to tell this story.He had this morning received a call from an older woman that wished to sell some coins as she had a need for green paper moneys to settle her debts. They (the dealer and the older woman) agreed on a price for the coins and she later that morning arrived at the shop with the coins and sold them to the dealer. The dealer did not ask the older woman for ID as she was selling less that the twenty-five oz. of Gold that the US Federal law requires data to be reported, and she left as happy as a clam. (local PNW joke)Then the dealer had carefully looked at the coins before he bought them, but for some reason, he took them all from the tall square plastic tube again before he put them in the safe. TO HIS SURPRISE, the coins started to speak to him ! He had spoken to coins before, but it had been a long time and he felt that he had lost the gift. He was thrilled to again speak to coins, and ask them to tell him of their travels. Well, that is the problem they all told him. EACH of the forty coins had the same story. They had been minted at the height of the last gold boom in South Africa and only taken one trip via ship to NYC and then to Seattle my train. AND they had been seasickor stuck in a bouncy mailcar all the way to where this middle aged woman picked them up at the Registered Mail desk at the postoffice. *****Sorry -- lost the first portion of it !<;-( TownCrier (10/13/99; 16:51:02MDT - Msg ID:16265) Sir Goldfly...great coin. The others in the set look elegant too http://www.bank.lv/naudas/english/index_coins.html I took special note that politicians' faces (dead presidents) were completely absent from the currency. Click the "Banknotes" link on this page to see the Latvian paper. I wish ours looked this nice, with the additional knowledge that it was convertible for such a handsome gold coin!Food for thought...If America established a similar coin tomorrow that weighed one ounce and had a face value of $350, how many people might be inclined to walk to their bank and withdraw some of their deposits in gold coin to get while the gettin's good? If you were to pull out a thousand bucks for safe keeping on the front side of Y2K, would you choose paper or plastic, er, I mean gold? A no brainer! Well, that's essentially the situation that we have now, although your bank can't complete the whole operation. You need to involve a gold broker such as our good host, MK, to supply the REAL money side of the withdrawal. I'm not surprised that more and more Americans are catching on to real money, but I am surprised that the precipitating moment were they all rush in at once hasn't arrived yet. Hopefully Sir Aragorn III can give us any thoughts he might have on Latvia's banking system. If I may venture a guess, a republic such as Latvia that has recently gained its independence is more likely to act in such a way to "do right" by their citizens ahead of all others. That is, they will put the individual person's interests ahead of the corporation, big business, exporter, politician, etc. (Just look back at American history to see that our own constitution required our money to be no thing other than gold and silver.) The integrity of a nation's currency is a direct reflection on the integrity of the nation itself.That Latvia has adopted use of convertible gold coins seems to give the Second Articles of the IMF (precluding a link to gold) a firm smack upside the head...revealing an anticipation of the direction to be taken (that being an eventual participation in the currency union), and putting their own citizens interests at the forefront in a position to easily gain personal possession of gold. You've got to admit, if getting gold here in America were as easy as simply withdrawing money from your account (as it is there,) a lot more people would probably do it.But what do we get instead? Big business and bankers and a media rife with otherwise inexplicable anti-gold propaganda at every turn of the page or dial. Why do they bother to mention the stuff at all if it is so vile? Why should they trouble themselves to dissuade a handfull of American citizens from acting on their own intiative, implulse, or whatever, to get themselves some real gold in hand? Because once you've actually held real money as a product of your earnings, you're forever wise to the monetary shenanigans that they have been using to their advantage for years.It's nice to see a country put their people's interests first, isn't it? Thanks for the link and the opportunity for a little impromptu expression. Angel (10/13/99; 16:46:09MDT - Msg ID:16264) Gandalf The White I'll bet the kids at your house loved storytime. Thanks for more adventures of the Hobbits. Gandalf the White (10/13/99; 16:46:09MDT - Msg ID:16263) Leigh's Question Hobbits are the "Halflings" of the works of the GREAT author JRRTolkien from which SIR Aragorn III and others, such as I devote our earthly days to try and equal the eminent.<;-)PS: there are no such things as a dumb question!!(only dumb answers.) Leigh (10/13/99; 16:46:08MDT - Msg ID:16262) Hobbits Boy, those hobbits know how to strike a deal! What if gold goes up to $1,000 an ounce by next month? That dealer's going to be real sad! Leigh (10/13/99; 16:34:45MDT - Msg ID:16261) Gandalf the White Dear Gandalf: Please excuse this dumb question, but what are hobbits? Are they your kids? Leigh (10/13/99; 16:30:10MDT - Msg ID:16260) Ron Paul for President I'd vote for Ron Paul in a heartbeat! Maybe Clinton will overdo his grab for dictator-for-life and cause a backlash. Can't you just see Ron Paul for President, America on a gold standard, our citizens treated as responsible adults by the government? Gives you hope! Gandalf the White (10/13/99; 16:26:40MDT - Msg ID:16259) (No Subject) A Story -- (fiction ?) The Hobbits "Lucky Day" !I will bet that most folks did not know that "13" is considered to be a lucky number by Hobbits. Well it is indeed the favorite date of the month for the Hobbits that work for me, as it is also PAYDAY ! Well, today was no different, but having read about The Stranger's payday activities, a large group of them, (the twenty that call themselves the POG) all wanted me to take them downtown to see their favorite LOCAL coin dealer.SOOOO, off we went, right after the COMEX closed for the day. Upon arrival, we found the dealer at his desk in the back, talking with someone. BUT no one was in the shop but us. He "buzzed" us to enter, and came up front to greet us all. After greeting were exchanged by all, he said that he was indeed happy to see the Hobbits today, because he had a story for them. ALL the Hobbits were excited because of course, they LOVE stories and they know that the dealer tells only TRUE stories. The dealer locked the door and motioned to the Hobbits to sit down on the floor as he went back to his desk in the back and picked up a item. Then he came back and start to tell this story.He had this morning received a call from an older woman that wished to sell some coins as she had a need for green paper moneys to settle her debts. They (the dealer and the older woman) agreed on a price for the coins and she later that morning arrived at the shop with the coins and sold them to the dealer. The dealer did not ask the older woman for ID as she was selling less that the twenty-five oz. of Gold that the US Federal law requires data to be reported, and she left as happy as a clam. (local PNW joke)Then the dealer had carefully looked at the coins before he bought them, but for some reason, he took them all from the tall square plastic tube again before he put them in the safe. TO HIS SURPRISE, the coins started to speak to him ! He had spoken to coins before, but it had been a long time and he felt that he had lost the gift. He was thrilled to again speak to coins, and ask them to tell him of their travels. Well, that is the problem they all told him. EACH of the forty coins had the same story. They had been minted at the height of the last gold boom in South Africa and only taken one trip via ship to NYC and then to Seattle my train. AND they had been seasickor stuck in a bouncy mailcar all the way to where this middle aged woman picked them up at the Registered Mail desk at the postoffice. They then went directly into a dark drawer with perfumed thingies and never saw the light of day until today. They all were about to celebrate their 20th mintdate and they had not been able to see the world as they had all wished to do.The dealer had hesitated to tell them that their value had decreased from over US$200. to about US$80. while they were safely kept in the drawer, but he did and as expected they all cried and felt depreciated. BUT, then the dealer saw the Hobbits coming to visit him and had a GREAT IDEA !!!SOOO, he ask the Hobbits if they would like to each purchase one of the 1/4 oz. KRands of 1980 and give it an opportunity to travel the world and see the sights ???WOWERS !! Did the Hobbits enjoy that idea, and soon the green paper was traded for twenty of the 1/4 oz. KRands, taken from the bottom of the tube, and the twenty Hobbits promised each brilliant piece that they would take them wherever they traveled and also promised the other remaining twenty 1/4 oz. KRands, that they would all return next month to get them too, if the dealer would save them for that period. The dealer said, "Consider it a done deal at the same price!" SOOO, everyone went home happy as a -- "you know !"<;-) Tomcat (10/13/99; 16:13:07MDT - Msg ID:16258) mike55 Interesting. Just because a technological Armageddon has been avoided doesn't mean real trouble has been avoided. What a play on words. The sad part is people read this junk and believe it. There is also a good side to it. Because of articles like this, the Y2k run on gold is delayed and you and I get more of a chance to buy PMs and bargain prices. TownCrier (10/13/99; 16:07:28MDT - Msg ID:16257) Ron Paul For President, Again? http://www.spintechmag.com/9910/ma1099.htm Article says that Congressman Paul "personally absorbed Austrian economics and other subjects until he was an expert on the gold standard. When he came to office, he understood that militarism was the chief enemy of liberty, that capitalism allows for free action, and that he was going to be lonely in his knowledge."In 1981 he served on the Gold Commission, formed to try to advise the President whether a return to a gold standard would be wise for the nation at that point. SteveH (10/13/99; 15:53:02MDT - Msg ID:16256) Dec gold and more... www.mrci.com Overnight trading. Check oil out!Market Mth Open High Low Last Change Date Time Ask Bid Gold(CMX) Dec 322.5 323.2 322.5 323.0 +0.2 10/13/99 14:33 323.3 322.7 Gold(CMX) Feb 324.0 324.0 324.0 324.0 +1.3 10/13/99 14:33 324.3 323.5 Platinum(NYM) Jan 407.0 411.8 405.1 408.4s -0.3 10/13/99 13:39 Palladium(NYME) Dec 10/13/99 11:11 Silver(CMX) Dec 561.0 563.0 561.0 561.0 10/13/99 14:20 562.5 561.0 Copper(CMX) Dec 79.70 79.70 79.50 79.65 +0.10 10/13/99 14:26 79.85 79.45 Market Mth Open High Low Last Change Date Time Ask Bid Crude Oil(NYM) Nov 22.75 23.16 22.60 23.06s +0.76 10/13/99 13:36 mike55 (10/13/99; 15:21:57MDT - Msg ID:16255) What Year 2000 Problem? http://cbs.marketwatch.com/news/current/poll_y2k.htx?source=htx/http2_mw A link to an article with the results of a CBS MarketWatch poll. The lack of disclosure and preponderance of spin are currently succeeding (for a while). An excerpt: "...the public has become increasingly convinced that government and corporate attempts to prevent a technological Armageddon have succeeded and that there's nothing to worry about." Hmmm...wanna' take that bet? TownCrier (10/13/99; 15:04:05MDT - Msg ID:16254) Pakistan closes its banks http://news.bbc.co.uk/hi/english/business/the_economy/newsid_473000/473047.stm Pakistan's financial institutions are now closed and the central bank ordered the suspension of foreign exchange transactions in response to frantic depositors seeking to withdraw their foreign exchange depositis. The head of research at a brokerage said, "We thought we had seen the worst in May last year and that a modicum of confidence was returning... The fear is that this coup could turn out to be a bigger jolt than the nuclear tests." Goldfly (10/13/99; 15:03:07MDT - Msg ID:16253) Yo, Townie!!! - The "100 Lat" http://www.bank.lv/naudas/english/Coins/mLs100.html This came to us courtesy of Aragorn a few months back.The pieces of the jigsaw puzzle fall together so much easier when you know what the picture is! beesting (10/13/99; 14:54:45MDT - Msg ID:16252) Stocks going down worldwide! http://finance.yahoo.com/m2?u Is what's happening in stocks worldwide a correction or a collapse? 38 stock exchanges worldwide show losses in the last 24 hours, 4 show gains.They're all following the dollar based U.S. exchanges down.Oct. 1999 soon to be history, Gold up 'stocks down, T-Bills .0622 interest.....all of us watch together.....beesting Tomcat (10/13/99; 14:51:18MDT - Msg ID:16251) Repost on the availability of silver Date: Wed Oct 13 1999 16:44 chzcake (Availability of Physical Silver) ID#159259: Copyright © 1999 chzcake/Kitco Inc. All rights reserved Local coin dealer says very strong interest in gold and silver these days. Says supplies of '99 Silver Maple leafs are finished -- kaputsky. Confirmed by M-nex broker who claims they have the last of the '99 Maples that were minted. Looks like that's it for further production of Eagles and Maples for the next 3 months as both the US and CDN mints concentrate on their higher margin millenium collector sets. BTW, dealer says he is having trouble getting silver bars in. M-onex still has lots ofbags of the 90%. With a move in silver over $6, we should see the premiums increase sharply. Premium on Silver Eagles @ M-nex is 55% at present. They apparently have some in stock, if broker knows what hes talking about. TownCrier (10/13/99; 14:22:28MDT - Msg ID:16250) EU set to spread east http://news.bbc.co.uk/hi/english/world/europe/newsid_473000/473541.stm Slovakia, Latvia, Lithuania, Bulgaria, Romania and Malta have been upgraded from second-tier status to join with Poland, the Czech Republic, Hungary, Slovenia, Estonia and Cyprus in European Union negotiations to join as early as 2003. European Commission President Roman Prodi expressed that this oportunity to unite Europe is the first since the fall of the Roman Empire--but done on the basis of shared ideals and common rules. TownCrier (10/13/99; 14:01:33MDT - Msg ID:16249) -"Godfather" of euro wins Nobel economics prize http://biz.yahoo.com/rf/991013/mq.html Robert Mundell has been named the 1999 Nobel Economics Prize winner for "his prophetic theory on common currencies which formed the foundation for Europe's single currency, the euro," according to this Reuters article.The Nobel officials said "The world has caught up with Mundell's idea. The world has changed and he foresaw this change...and had some very revolutionary ideas about how one should restructure economies to manage the world we live in right now." In forming his theories, the secretary of the prize committee, Torsten Persson, told a news conference that Mr. Mundell first "asked what effect monetary and fiscal policy might have in a situation where exchange rates were floating and capital perfectly mobile. At a time when a national currency was considered a must, he asked under what conditions a country should give up its monetary sovereignty and enter a monetary union. This turned out to be highly significant."Click this link for a further introduction to the concept of "optimum currency areas," a reagion in which the willingness to migrate will ensure full employment if one subarea experiences economic shocks. Sortof a macroscopic extension of what occurs in a city. If your business goes under, you'll generally seek employment elsewhere within that region rather than wallowing in despair within the empty halls of your former employer. Yellin' of troy (10/13/99; 13:38:46MDT - Msg ID:16248) ORO I find it remarkable that you recommend Mises to me (perhaps only for some history?) and then reject what I take to be the Austrian school's main contribution to economics, the subjective theory of value, in favor of what sounds for all the world like a Ricardian/Marxian labor theory.Sure, if a kind of money costs almost nothing to produce and anyone is free to churn it out, it will be overproduced and lose its value. But if it has a monopoly issuer, who derives seignorage from producing it, but only so long as it stays money, and who therefore has an interest in keeping it reasonably sound and thus acceptable as money, why can't supply be controlled? I fail to understand the inevitability of collapse. No doubt if the issuer is a government, a bunch of politicians with short time horizons and no interest in or understanding of economics, they can be expected to screw up the money, but that's a political problem, not an inherent economic feature of concept money.More later. I am planning a long post for tomorrow, complicated enough that I want to write it offline. CoinGuy (10/13/99; 13:36:13MDT - Msg ID:16247) Gandalf Gandalf,Gold and "THE HORSE WITH NO NAME" did look good today, if Goldspoon fell off this wild beast, we won't be seeing him for awhile. The Nasd and the Dow are dumping...Dow: -164Nasd: -79The bond yield looks strong at 6.29...Things seem to stay interesting these days.Coinguy Gandalf the White (10/13/99; 13:17:29MDT - Msg ID:16246) GC9Z = Dec Au on COMEX Closed at $321.80 today Wednesday 10/13.Hey PeterA -- Blue enough for you ?<;-) Gandalf the White (10/13/99; 13:11:53MDT - Msg ID:16245) Seattle PM dealers! re Megatron's question ! Come on down --- I have yet to find a dealer in Seattle that looks beyond your paper dollars. Seattle Coins is my favorite. Talk to John D.<;-) megatron (10/13/99; 13:01:43MDT - Msg ID:16244) Gold dealerz Can anyone post the name of a PM dealer in Vancouver or Seattle area who does NOT ask for ID when buying PM's FROM you? Is this the law only in Canada or is it the law? Asked if ID was required to sell to my local guy and he said yes, you need picture ID and that it's faxed to the RCMP every day!! I refuse to do this. Names, I need names!!! EMSAEMSA (10/13/99; 11:59:43MDT - Msg ID:16243) GOLDBONHOLDERS IS THERE GOLD IN THESE GOLD BONDS STILL OUTSTANDING SINCE THE 18TH CENTURY......GOLD BONDS OF UTILITIES OR RAILWAY CO.... THEY PAY THERE INTEREST WITH GREENBACK... (NO GOLD AS PER CONTRACT BETWEEN PRIVATE PARTIES.) THE JUDICIARY SYSTEM DO NOT PERMIT PRIVATE CONTRACTS TO BE RESPECTED BUT, POLITIC CAN CHANGE THE LAW AT WILL???? IN THE FORBES MAGAZINE DATED 6/2/97 PAGE 47 THE LAW WAS CHANGE IN FAVOR OF THESE GOLD CLAUSES BUT REVERSED .... AND POLITIC CONTRIBUTION WAS MADE BY THE RECEIVING PARTY.....OTHERS MAGAZINES HAVE ALSO POSTED INFORMATION ON THE SUBJECT....FOR THE AUSGOLD READERS'S KNOWLEDGE CAN ANYBODY GO TO THE LIBRAIRY AND POST THE FALLOWING: FORBES MAGAZINE 6/2/97 PAGE 47....WASHINGTON POST 8/30/97 PAGE A 27....ROCKY MOUNTAIN NEWS 8/25/97 PAGE 8A.... DES MOINES REGISTER 2/21/97 PAGE A1....DES MOINES REGISTER 7/27/97 PAGE B1....THANK YOU....EMSAEMSA Gandalf the White (10/13/99; 11:48:01MDT - Msg ID:16242) Where is Goodspoon ? I'm betting that he fell off the horse with no name !<;-) onlychild (10/13/99; 11:34:33MDT - Msg ID:16241) Jack You'll have to play nice, or go home. Simply Me (10/13/99; 11:24:42MDT - Msg ID:16240) Jack Why don't you go run a few miles, and come back to post when you can express yourself without so much vulgarity. Hill Billy Mitchell (10/13/99; 11:15:33MDT - Msg ID:16239) Jack Not much room on this site for Jack??? RossL (10/13/99; 11:04:07MDT - Msg ID:16234) Caledonia http://www.caledoniamining.com/ They have a big debt load. A higher POG could help them pay it off and then earnings would raise the share price. JCS (10/13/99; 10:46:35MDT - Msg ID:16230) Murphy's Latest Email Just received this from Bill Murphy:Subject: BULLETIN!! - MIDAS - BULLETIN!!! Date: Wed, 13 Oct 1999 11:45:17 -0400 From: LePatron@LeMetropoleCafe.com Le Lemetropole members,The CRB is up over 4 points and trading over 209. Yesterday, it was up almost 4 points too. The bond market cannot rally for diddly even with the threat of a sharp stock market sell off. Inflation signs areeverywhere.This just in from Cafe member SteveH: Date: Wed Oct 13 1999 03:28"nuggets (you wont hear this on CNBC Squawkbox USA...) ID#386129: but on the same program, EURO version..just had guest , James Mckay from Nat Aust Bank on..he says that Fed is helping out major co who are short on gold...one major investment bank is in deep doo doo...he expects volatile trading, gold reaching $375..."Expect the gold producers to continue to buy in their forward sale positions. Management is under great pressure from shareholders to cover hedges and minimize exposure from the "structured deals" dealt to them by the "Hannibal Cannibal" bullion dealers.All the best,Bill MurphyLe Patronhttp://www.LeMetropoleCafe.com TownCrier (10/13/99; 10:40:23MDT - Msg ID:16229) Camdessus says US economy could stand Dow setback http://biz.yahoo.com/rf/991013/f6.html You will notice that IMF Managing Director Michel Camdessus mentions this DOW setback, but makes no statement about whether the US economy could withstand a Martian invasion. That's because they only bother to talk about the troubling things that will likely come to pass. Think about it.Additionally, he praises the ECB for having managed their monetary policy without being influenced by the past swing in the euro's exchange rates.Now consider this...if it is praiseworthy to have monetary policy independent of influences by exchange rates, then why is Japan being leaned on so hard to stem the tide of the rising yen? Because under the historical arrangement utilizing the dollar as the reserve currency, an appreciation of the yen against the dollar weakens the very foundation upon which it stands. Then all bets are off and it becomes "every man for himself" in the currency world. Maybe that's why the BOJ has been reluctant to do the government's bidding--to act quite liberally under an easy money policy. It could be that the BOJ already sees the dollar as doomed, and they are acting (to the extent possible with hands that are tied) in such a manner to best position the yen for the day the dollar sinks (and wipes out their foreign assets.) When it becomes every man for himself, it would seem that the BOJ doesn't want the yen to have become so tied to the dollar that it has to go down with the ship.Bottom line: The fortunes of the yen and the dollar have become nearly as one. beesting (10/13/99; 10:34:17MDT - Msg ID:16228) Why can't I post accurate URL's?????? http://www.bfanet.com/cgi-bin/bfaweb.exe/bfamemo?file=sens&page=STH Try this!! beesting (10/13/99; 10:25:28MDT - Msg ID:16227) Skip#16224 CALVE (Caledonia mining) http:www.bfanet.com/cgi-bin/bfaweb.exe/bfamemo?file=sens&page=STH Skip please give more info on mine statistics.(balance sheet etc.)I have been following a small well established South African company,which has been paying great dividends for many years. St.Helena Gold mines(sgoly) 54% owned by Gold Fields(the guys that bought 12 1/2 tonnes of Gold at the BOE auction Sept.21) St. Helena has only issued 9,625,000 shares of which Gold Fields owns 5,217,151. Current U.S. price about $3.00 per share.The South African Government recently lifted "ring fencing", which means:NO TAXES ON GOLD MINING OPERATIONS!!Here is a release by Mr. Chris Thompson, Chairman of Gold Fields:Aug.26,1999..."The South African Gold mining industry is experiencing one of the most difficult times in its history(written a few weeks ago, before the Gold Blastoff)and the opportunities which have been created through this decision will certainly have a positive impact for stakeholders, we applaud the Government for its industry support in approving our application",he said. Gold Fields is now in a position to create a mega mine.More at above URL.Way back, St. Helena reached $50.00 U.S. per share I got real lucky on timing and made a great profit.Our portfolio is currently heavy into physical Gold also.....good luck in your investing.....beesting elevator guy (10/13/99; 09:46:15MDT - Msg ID:16226) CALVF hedged or unhedged or hedged lite? When I get time, I'll see if it has quarterly reports on the web. Mundane duties beckon me away- TownCrier (10/13/99; 09:46:10MDT - Msg ID:16225) BankOfJapan statement on Y2K lending policies http://biz.yahoo.com/rf/991013/go.html Partial text of the BOJ's official statement on Y2K policies:"...the Bank will respond flexibly such as by providing ample funds ...the Bank of Japan intends to respond in a timely and appropriate manner through its lending in case an institution experiences a temporary liquidity shortage..."Makes you consider that all other central banks have similar policies, and makes you wonder if the carnage among the gold lending markets isn't being temporarily treated with regulatory kid-gloves in the name of Y2K. Skip (10/13/99; 09:14:33MDT - Msg ID:16224) CALVF and other small gold stocks Although I've enjoyed significant moves up in GSR, DROOY and HGMCY since late September, CALVF (Caledonia Mining) still sits around 6 cents per share...in spite of the fact that it reached over $8.00 per share within the last five years. Caledonia Mining has property in Africa larger than the country of Switzerland, so they seem to have potential.Is there some reason why investors have not yet discovered CALVF? Truly it appears to be a realistic 100-fold shot for investors, so what am I missing here? Is CALVF a home-run waiting to happen? Educated comments welcome.--Skip USAGOLD (10/13/99; 09:05:55MDT - Msg ID:16223) Gold Market Report: Gold Surges Higher on Short Covering MARKET REPORT(10/13/99): Day Thirteen of the Big Breakout....And coincidentally October 13, 1999.....Gold up $5.90 in the early going on short covering.........Oil is surging with crude oil inventories dropping and the realization sinking in that winter looms and OPEC means business on the production cuts..............In the gold market, we are starting to see reports of mining company position squaring. Also, though talks are under on the Ashanti/Lonmin merger, the whole deal rests on whether or not Ashanti's hedge book problems can be resolved before the merger. From what I can gather, that appears to mean that Lonmin wants someone to bail out Ashanti before they will proceed. Trading restriction have been lifted on Ashanti stock............Leonard Kaplan, chief bullion dealer for LFG Bullion Services, is quoted on FWN this morning as saying "the gold market is forming a positive technical formation and a temporary break out spike to as high as $360-380 is likely in the next 30 days.".......FWN also reports what many in the gold market have suspected in recent days: "A key report by the US CFTC Tuesday showed that speculators and funds have whipsawed a considerable net-short futures position with a more massive one in COMEX options during the latest price rally.".............In other words, it appears the big speculators were attempting to defend their short positions by going in even deeper ala Nick Leeson, Martin Armstrong, Sumitomo. Once again, this implies that if the restraints were removed, gold would skyrocket. The big question among gold traders on Wall Street. Who's going to be shown the door first?...................In an opinion piece headlined Gold Market Unleashed J. Moeller, Senior Economist at Germany's Dresdner Bank, makes the bullish case for gold in light of the recent decision among European central banks to restrict supplies: "Overall, prospects have improved significantly on the gold market. Uncertainty over sales by the central banks, as powerful market players, has given way to a manageable assessment of the supply side. Given the ongoing improvement in world economic activity and the general tendency towards brighter commodity markets, the demand side looks quite positive. Even in a largely inflation-free environment, i.e. without the classical incentive from a threat to the monetary value of the major currencies, gold could still gain further ground."... We also find the following from Deutsche Bank's daily report via Reuters: "Gold lease rates and option volatility remain high, suggesting that recent strength in the gold market is likely to be sustained until such time as the initial damage and aftershocks driven by recent official sector announcements have run their course."................ That's it for today, fellow goldmeisters. See you back here tomorrow. The October edition of News & Views is on its way to our readers and we invite all our visitors to take advantage of a free trial subscription to one of the most popular, widely read and quoted gold newsletters. Last month we predicted an explosion in the gold price. This month we deal with the nettlesome subject of paper assets in this tenth month of the penultimate year. And we all know what that means. October brings with it our annual Halloween issue. Here's an excerpt: "And this October could very well foreshadow a most fateful stroke of midnight only two months away. October. When markets crash and assets go bump in the night........." We think you will gain by taking advantage of our offer........... Please call 800-869-5115 (Ask for Mary Conway) if you have an interest in receiving a trial subscription to our widely read newsletter, News & Views: Forecasts, Commentary and Analysis on the Economy and Precious Metals. Or you can go to our ORDER FORM and submit your request by E-Mail. You will also receive our introductory packet on investing in gold. SteveH (10/13/99; 3:01:34MDT - Msg ID:16222) look at oil go (gold too) www.mrci.com Gold(CMX) Dec 318.5 323.2 316.9 322.0 +3.8 10/13/99 1:48 322.1 321.4 Silver(CMX) Dec 556.0 558.5 555.0 556.0 -0.7 10/13/99 1:40 558.0 556.5 Copper(CMX) Dec 78.70 78.80 78.50 78.70 10/12/99 23:54 78.70 78.40 Platinum(NYM)(Access) Jan 408.7 412.0 408.7 408.7 10/12/99 21:20 412.0 407.7 Market Mth Open High Low Last Change Date Time Ask Bid Crude Oil(NYM)(Access) Nov 22.40 23.00 22.33 22.90b +0.60 10/13/99 1:48 22.98 22.92 Crude Oil(NYM)(Access) Dec 22.35 22.94 22.33 22.90b +0.58 10/13/99 1:48 22.92 22.85 Heating Oil(NYM)(Access) Nov 57.80 59.60 57.80 59.25b +1.35 10/13/99 1:36 59.40 59.10 Heating Oil(NYM)(Access) Dec 59.00 60.50 59.00 60.15 +1.56 10/13/99 1:21 60.15 59.95 Unleaded Gas(NYM)(Access) Nov 63.00 64.25 63.00 64.00b +1.00 10/13/99 1:44 64.20 63.80 Unleaded Gas(NYM)(Access) Dec 62.45 63.60 62.45 63.40 +1.01 10/12/99 22:49 63.70 63.40 Natural Gas(NYM)(Access) Nov 2.919 2.987 2.919 2.987 +0.060 10/12/99 16:00 2.988 2.984 Natural Gas(NYM)(Access) Dec 3.110 3.170 3.110 3.170 +0.052 10/12/99 15:59 3.175 3.168 Market Mth Open High Low Last Change Date Time Ask Bid Soybeans(CBOT) Nov 498.00 498.25 497.25 498.00 -1.50 10/13/99 1:11 Soybean Meal(CBOT) Dec 156.20 156.20 155.70 155.90 -0.30 10/12/99 21:09 Soybean Oil(CBOT) Dec 16.79 16.79 16.72 16.73 -0.15 10/13/99 1:49 Corn(CBOT) Dec 200.00 201.00 200.00 200.50 -0.75 10/13/99 1:46 Wheat(CBOT) Dec 257.50 258.25 257.50 257.75 +0.25 10/13/99 1:28 Oats(CBOT) Dec 10/12/99 11:35 SteveH (10/13/99; 2:59:51MDT - Msg ID:16221) letter to a friend Leroy,Looks like FOA is getting right to the point again. Also, his repost of an old post of ANOTHER is showing the early predictive powers or 'inside' position he held even two years ago. Interesting. Opec production cuts are three times more than analysts thought they would be. Longer term bond closed above 6.22% yield yesterday. Things are heating up, eh? And rumors are rampant that the Fed is bailing out major bullion banks for their manipulative ways and rewarding their manipulation through removing responsibility from shorting activities. Add to that Ashanti and Cambior having difficulties in a rising gold market and you have the makings of a real mess (bullion banks told many mining companies they would lower their credit ratings if they didn't hedge gold product, which means that they believe it wouldn't rise. Ultimately when it rose $65.00 this put these mining companies at financial risk because they can't produce enough gold, quickly enough to meet their margin calls on the gold market's rise -- seems like fraud by the bullion banks to me because they forced the hedge and then benefit from the negative impact that coercion caused. Not moral busines practice.) Ted Arnold is calling for Fed assistance because the rise in gold may force closure of bullion banks (cake and eat it too syndrome). Now who would have thought gold would have been driven to $0? At some point this short-selling game of gold manipulation had to end. Now that it is ending, the major benefactors are crying foul. Give us a break!SteveH***Welcome Strad and other new folks. Things are heating up, eh? The pace is most scary too. Definitely snails have been left in the dust, the way things are progressing. This all started off very slow but now the crescendo builds to finale(sp?). Black Blade (10/13/99; 2:11:23MDT - Msg ID:16220) Strad Master If you are looking at PM's as an investment, then perhaps you could allocate more toward acquiring physical as well as PM mining stocks. I hold both physical and stocks with a goal of using the physical as a portfolio hedge against come what may. I hold the stocks with the goal of financial gain in currency (hopefully a lot of currency), provided that the relative value of the currency is not overly diminished when I cash out. I hope that I have accumulated more than enough for insurance purposes, so that I can provide for the needs of myself and family, and any excess for trade or investing, etc. Of course it would be just as difficult to time the PM markets as it is to time the equities markets. However, you could always call the master of the "castle" and discuss your investment needs and goals. At least that is a start. Strad Master (10/13/99; 1:19:32MDT - Msg ID:16219) Black Blade Sure, I have all the aforementioned insurances and you make a good point with regard to gold being one such "insurance" against financial turmoil. Still, it would be nice to use the gold for something other than its just sitting around gathering (gold) dust while the price soars to unimaginable heights and then back down again - maybe even to an eventual ultimate loss. (Where is the insurance then?) Gold going to $30,000 per oz. is still something of a wild appearing dream. If it does, many of my family and friends will be hurting badly since they don't take out the kind of "insurance" policyy you describe. It would be nice to be able to help out in such an instance. Beyond that, it also would be nice to be able to use all gold to purchase goods and services for myself and my family should the need arise. Anyway, thanks for your reply. It does provide an interesting perspective. Black Blade (10/13/99; 0:05:13MDT - Msg ID:16218) Strad Master, why gold? I would would ask, what it is that you want gold to do for you? Is it for investments or insurance? I buy PM's for portfolio insurance, if it turns out to be an "investment", then it may not necessarily be so good if you wish to trade gold into currency, especially an inflated currency at $30,000/oz. I veiw PM's as a transfer of accumulated wealth through transitory markets. If there is an economic crisis, currency crisis, etc., then PM's are "insurance" to transfer wealth into a more stable period. I presume that you have health insurance, auto insurance, life insurance, home insurance, etc. Why not financial insurance? Just a short thought on this matter. Click Here to view yesterday's discussion.
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