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ARCHIVED DISCUSSION FROM 1/13/2003
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Trojan (01/13/03; 23:44:04MT - usagold.com msg#: 94351)
Puplava Interview with GATA's Bill Murphy
http://www.financialsense.com/transcriptions/Murphy.htm
I really enjoy Jim Puplava's way of thinking. He did a Interview with Bill Murphy of GATA on January 11.

The Transcript of the Interview is in the Link above.

For those who haven't read it as yet it makes for Great reading because of Jim's questions, the way he sets it up. The responses and the graphs added to the transcript. A great interview IMO.

ElGordo (1/13/03; 23:03:19MT - usagold.com msg#: 94350)
Japan still sinking
Tokyo, Jan. 14 (Bloomberg) -- Japanese machinery orders, an early indicator of business investment, unexpectedly fell in November as companies such NTT DoCoMo Inc. limit spending in anticipation of a slowing economy.

Machinery orders, excluding shipping and utility companies, fell 0.2 percent from October, seasonally adjusted, to 828.1 billion yen ($6.97 billion), the Cabinet office said. Orders had been expected to rise 1.8 percent, according to the median forecast of 26 economists in a Bloomberg News survey.

Business investment, which accounts for 15 percent of the world's second-biggest economy, fell 0.5 percent in the third quarter, limiting growth. Tax cuts for research and development planned for the year starting April 1 may not be enough to prompt companies to spend more, economists said.

``Capital spending will fall as the economy slows,'' said Mikihiro Matsuoka, a senior economist at Deutsche Securities Ltd. ``Tax cuts to businesses aren't really going to spur spending, as there just aren't companies that have the luxury to do so under current economic conditions.''

The No. 245 bond, which carries a 0.9 percent coupon and matures in 2012, rose 0.092 to 100.410 as of 2:24 p.m. in Tokyo. Its yield fell one basis point to 0.855 percent. A basis point is 0.01 percentage point.

NTT DoCoMo Inc., the world's second-largest mobile-phone operator, said it would cap spending on new equipment next fiscal year at current levels because expansion wouldn't bolster its high- speed wireless Internet service.

From a year earlier, machinery orders fell 7.2 percent.

Black Blade (01/13/03; 22:25:04MT - usagold.com msg#: 94349)
The cash-out crunch
http://www.freep.com/realestate/renews/refie12_20030112.htm

Many refinancers are unwisely draining their home's equity

Snippit:

A growing number of experts worry that the record rush of mortgage refinancings, spurred by home owners seeking savings with lower interest rates, actually left many in worse shape financially. The culprit is cash-out refinancings -- when a borrower takes equity out of the home as part of the refinancing. In some cases, experts say, home owners are left owing more than the home is worth. Cash-outs exploded, fueled by rising home values and falling mortgage rates. Freddie Mac, the mortgage underwriter, estimates that during the past two years, more than half of refinancings have been cash-outs -- when the loan amount rises by more than 5 percent. "It's easy to see how lenders and borrowers could abuse this source of cash," said Mark Zandi, chief economist at Economy.com. Studies show that the chances of a mortgage default triple when borrowers increase their balances 20 percent or more. But higher fees may not be enough to dissuade home owners lured by the equity in their homes, whether they want money to put a new surround-sound system in the family room, pay off other debts or put food on the table after a layoff. The cash raised in such refinancings nationwide nearly quadrupled in two years, from $44 billion in 2000 to an estimated $172 billion in 2002. Economists say that cash boosted consumer spending that's remained strong despite the economic downturn. "This helps explain the miracle of consumer spending growth amid declining income levels," said John Lonski, chief economist at Moody's Investors Service in New York. "If real estate values fall, refinancings could make matters worse. You'll find yourself running the risk of having an outstanding mortgage that exceeds the market value of your home."

Black Blade: A very good article. When the real estate bubble pops it is going to get very ugly as consumers who were beaten up during the speculative bubble on Wall Street went headlong into an overvalued real estate market. Now as this bubble pops they will get beaten up once again. As consumers have nothing left to deplete in order to keep up the spending frenzy the US economy will get hit hard. There are already cracks in consumer spending as witnessed during the dismal holiday shopping season. The growing "Bone Pile" has led to record foreclosure levels as over extended consumers can no longer make payments on their homes and are forced to pull in their horns on free wheeling spending habits. As always, get out of debt and stay out of debt, stash enough emergency cash for several months expenses, accumulate Gold and Silver portfolio insurance, and start a storage program of nonperishable food and basic necessities.

Black Blade (01/13/03; 21:58:06MT - usagold.com msg#: 94348)
Iraq War May Cause Oil Price Surge, Harming Recovery
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_box.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&box=ad_box_all&tag=financial&middle=ad_frame2_topfin&s=APiKQBxUySXJhcSBX

Snippit:

Dallas, Jan. 13 (Bloomberg) -- Gary Kelly, chief financial officer of Southwest Airlines Co., says he is trying to lock in prices for jet fuel deliveries because he fears they may surge on a sudden rise in the cost of crude oil. The combination of a U.S. attack on Iraq and a continuing halt in Venezuelan oil production could cause crude -- which closed at $32 a barrel Friday -- to soar, pushing the largest low- fare carrier's expenses up and damping demand for air travel, Kelly said. ``If crude goes to $50 a barrel, all bets are off,'' he said. ``If oil prices rose to between $40 a barrel and $50 a barrel, both the U.S. and the world economies would probably be in a heap of trouble,'' said Paul McCulley, who oversees $110 billion as managing director of Pacific Investment Management Company, the world's biggest bond fund. OPEC agreed yesterday at a meeting in Vienna to raise output quotas by 6.5 percent amid skepticism that member nations would be able to boost production by a targeted 1.5 million barrels a day to 24.5 million. Many analysts predicted the agreement would not cut prices by $2 per barrel as forecast by OPEC ministers. ``I would be surprised if the real barrels into the market would be anything more than 1 million barrels,'' said Nauman Barakat, head of the oil trading desk at Fimat International Banque SA in London. ``Every recession in the last three decades has been associated directly or indirectly with turmoil in the oil market, terrorism or war,'' said William Nordhaus, a White House economist during the Jimmy Carter administration who is now a Yale University economics professor. ``Concerns about oil markets in the context of war in the Middle East are not idle.'' In a worst-case scenario, in which Hussein would attack Israel with Scud missiles, set Iraqi oil wells on fire and sabotage other Middle Eastern oil facilities, the center predicts that prices may soar to $80 a barrel, then edge down to $60 and $50. In 2004 under these assumptions, prices may average $40 a barrel. Even $30-a-barrel prices would squeeze the major economies if they remained in effect very long, raising costs for businesses and consumers and leaving less for profits and disposable income.

Black Blade: The increase of 1.5 million "phantom" bbl of oil should be interesting as OPEC has already been cheating on quotas and the only spare capacity lies with Saudi and even that is probably below the increased quota. I have been listening to the financial media primates lately and it's really a hoot. They are of the opinion that the strike in Venezuela will end before the end of the month and that a quick victory over Iraq is assured. The Venezuelan oil fields have been idle and will require several weeks if not months to bring them back into production so there will be no quick flow of oil from the south once the strike ends (if it ends). The reasoning that Iraq will quickly supply oil once the invasion begins is equally flawed. The first war in Iraq was at a time when there were ample supplies in storage and plenty of production from OPEC and non-OPEC producers. However, today we have an oil shortage and OPEC is producing at near capacity not to mention the declining production in the North Sea (already past peak production). Another important point is that world oil consumption is roughly 20% greater today than a decade ago. We may have difficulty counting on Russian oil too it seems as recently China has bid on rights to Russian oil as they too are a net importer in need of greater quantity. Today Daniel Yergin of Cambridge Energy Research and Pulitzer Prize winning author of "The Prize: The Epic Quest For Oil, Money & Power" said that even with the OPEC quota increase the margin of spare oil is very thin at best. The price of oil may decline when the invasion begins but when reality sets in it is more likely to remain near current levels or even rise. There will be no economic recovery � at least not this year.

ElGordo (01/13/03; 21:38:50MT - usagold.com msg#: 94347)
Since Greenspan: $6,250 new dollars for every new ounce of Gold!
http://www.dailyreckoning.com/home.cfm
Since Alan Greenspan has been Fed chief, $6,250 new dollars have been created for every new ounce of gold. People were perfectly happy with this as long as the new money was going into the stock market. Nobody complains about inflation on Wall Street.

But now there's a problem. The boom on Wall Street is over. State governments are running huge deficits; New York says it will run short by $10 billion. California's deficit equals $1,000 for every man, woman, and child in the state. And the Federal government is beginning a large spending program - $600 billion over the next 10 years.

Meanwhile, Americans continue to buy more from foreigners than they sell to them - about $1.5 billion per day.

Getting the money was easy when the going was good. But now the going isn't so good...and the U.S. economy needs more money than ever. Government deficits have to be financed...as well as consumer spending.

Already, foreigners own 18% of all U.S. stocks and 42% of our treasury bonds. In total, they own as much as $9 trillion worth of U.S. dollar assets. Instead of adding to their U.S. dollar positions, a falling dollar suggests they're lightening up.

Trouble is, they might decide to lighten up a lot...and switch at least some of their money from the world's most recent currency of first resort - the dollar - to man's ancient currency of last resort - gold.

Cytek (01/13/03; 21:36:34MT - usagold.com msg#: 94346)
Russia sending missile-armed ships to protect Gulf interests
http://straitstimes.asia1.com.sg/topstories/story/0,4386,165850,00.html
I was wondering when this would happen, Russia has been much to quiet. You know when an Official naval spokesmen refuses to comment, then somethings up. So Russia has now put the U.S. in Check. The chessgame continues, what's the next move,checkmate? Cytek.

MOSCOW - Russia is preparing three naval vessels for a long-term mission to the Persian Gulf within the next month to protect its 'national interests' in the event of an American invasion of Iraq.

The move could heighten tension between Moscow and Washington - both having interests in Iraq's oilfields - and comes at a time when the United States is doubling the size of its troop deployments to the Gulf region.

Sources in the eastern port of Vladivostok said yesterday that the anti-submarine ships Admiral Panteleyev and Marshal Shapo- shnikov - which are armed with missiles and reconnaissance equipment - were to leave for the area, escorted by a tanker, in the first few days of next month.

Their six-month mission, the longest by Pacific Fleet vessels in the past 10 years, would aim to 'observe the military situation in the region of a possible military conflict between Iraq and the United States', the sources said.

Russia, which has extensive economic interests in Iraq, is largely opposed to the use of military force in the stand-off between the US, which is supported by Britain, and Iraq over disarmament.

Lukoil, Russia's biggest oil firm, had its £13-billion contract (S$36 billion) with Baghdad to develop the West Qurna oilfield cancelled last month, reportedly after the Iraqi regime discovered that Moscow had been negotiating with Iraq's opposition.

According to The Observer newspaper, military analysts suggest that the defence of 'national interests' could also refer to the Russian military's desire to conduct surveillance on both sides during any conflict.

Official naval spokesmen refused to confirm the reports, although active preparations for a departure by both ships were visible from the quayside.

News of their likely deployment coincided with US Defence Secretary Donald Rumsfeld's order to about 62,000 more US troops to head for the Gulf region in coming days.

The movements make clear that the Pentagon intends to have sufficient force in place for an Iraqi war as early as the first weeks of next month, although the White House says President George W. Bush has not yet decided to attack.

Just hours after officials disclosed on Friday that Mr Rumsfeld ordered nearly 35,000 troops to ship out, he signed another order to deploy 27,000 more troops. Their actual departure will be spread out over this month.

Eventually, the size of the US force arrayed against Iraq could reach 250,000, but officials said any US attack could begin with 100,000 or fewer troops in place. --AP, AFP, Reuters

Cometose (01/13/03; 21:27:31MT - usagold.com msg#: 94345)
@Peddler
The open interest is a measure that is associated with the amount of contracts open on a future month on a commodity...
Larry Williams has taught (and when he grew up in the commodity markets there was probably very slight manipulation of these markets) that Commercials who are the participants in commodity markets that actually utilize the commodity in the finished products they produce....(general mills /wheat...General motors/steel... Nestle/cocoa
Starbucks /coffee...Electronics-computer/silver...etc) usuallly move these markets and can anticipate what their demand is and establish demand when necessary and therefor move markets.....He has stated that when Commercials open up more short positions...it indicates that the price is going to fall.....and that when they close their short positions and therefor open interest falls the commodity will rise.......THe size of their moves moves these markets (commodity markets) THere is a big difference in this particular market....there is no Commercial sector here in the GOLD market that uses gold supply portion of a fabricated end product save jewlers perhaps.....So gold is the finished product and the commercials in this venture are bankers....I was keeping data on this before I knew how to get in on the internet and since . I don't know if you can access arechive information from the CFTC re: Commitment of TRADERS REPORT...However , I recogize that between 60 and 90 thousand contracts used to be the high end of the swing and that that has consistenly risen since the last 2 years and remained extremely higher than the norm for years past. From the last week in 98 to the first week in Sept 99 , the range in the Commercial longs in open interest was 101000 to 141000 contracts...In the same period the range of the Commercials short positions was
60000 to 90000 contracts ....from my own recordkeeping of the CFTC figures....If I remember correctly , these are the months just prior to the Washington agreement...

I think if one takes a closer look...the dollar topped out in March of 2002 and perhaps prior to that and since the Open interest has been extremely high on the SHORT Side relative to the COMMERCIALS... and GOLD has been moving up ever since.....but more recently in the face of the huge Commercial SHort Position....gold moved through 320 to the current level of 355..........

THere are many in the world financial chess game that are very aware of the feds manipulations and the meanings of these COmmercials open interest figures etc....
TWO CAN PLAY THE PAPER OVER THE PRICE GAME IN THE FUTURES MARKETS >........In the gospel according to Larry WILLIAMS ...it is the small time speculators that usually are always wrong and time the market in such a way as to lose to the COMMERCIALS who are believed to move these markets......

FOr every SHORT position that has been opened on the COmex in the gold market...there is an opposing long position...
WE don't Know who all the longs are who have sat down accross the table from the COMMERCIAL Shorts....Neither do the COMMERCIALS.......if they could see the faces of those who took the other side of these futures contracts....they might not have taken out such a large position.....in the short side of this market...The identity of these longs may also have something to do with the interesting price action/lowered ranges and higher floor...
there are people out there that have the type of dollars required to move these markets and turn this up turn into a self fulfilling prophecy stampede..... One quoted last week that 612 milllion dollars was required to move the gold market a 40% move last year...(may have just been refering to the Miners stock valuations...

People at times like this also make mention of the overbought status of markets .....sometimes reflected in Williams PER Cent R (data chart study- when it is on the high side represents overbought on low side represents oversold) In a bull market....in a commodity such as GOld , the commodity can stay in the overbought range on the chart for months)

These are interesting times we live in....THe specs buying against the SHort Commercials could be an army of CHINESE or ISLAMIC Faithful wantng delivery to finance who knows what....Larry says they are speculators who usually don't know what they are doing....in this scenario It could be they are other commercials (CHINEse/ Islamics/ Japanese)
;in speculators clothing.... Trojan HOrse might be a good illustration.

ElGordo (01/13/03; 21:16:40MT - usagold.com msg#: 94344)
Why Gold is gaining in a World Awash in US Dollars
http://www.thescotsman.co.uk/business.cfm?id=43182003
In truth, the monetary system only works when there are willing borrowers and willing lenders.

In an attempt to boost money supply, the Fed may aggressively buy Treasury Bonds from the banks, thus forcing down long-term interest rates and leaving the banks with vast sums of cash to do with what they will.

But, if banks customers do not wish to borrow then this "cranking of the printing presses" by the Fed may have no impact on economic activity. Remember, this is the first time since the 1930s that the US has slumped because the cost of capital during the "bubble" was so low as to trigger excess investment.

Thus, cutting the cost of capital (interest rates) is unlikely to bring about a recovery in investment. Only a sustained resurgence of demand will, and if the consumer has also "over-spent" in the bubble, and now needs to reduce indebtedness, low interest rates will have a minimal impact on demand.

The European Central Bank, obsessed with monetary stability, seems determined to plunge Euroland into depression. Nothing could be more inappropriate than the current proposals to raise taxes and cut public spending in Germany and France to reduce budget deficits and comply with the totally ridiculous fiscal Stability Pact.

The Fed, by contrast, is prepared to think outside the box. Ben Bernanke, a recent arrival at the Fed from the academic groves of Princeton, has declared that the Fed will do all within its not inconsiderable powers to "print" its way out of trouble before deflation becomes entrenched.

We should not underestimate the efforts that will be made to prevent deflation. With the US trade deficit nearing 6 per cent of GDP, the US is already pumping out so many billions of dollars that it needs to attract about 80 per cent of all the world's savings just to maintain the value of the dollar.

With US interest rates already lower than those in Europe, and US share valuations still close to historic bull market highs, attracting capital flows into the States is becoming mighty onerous, further pump priming will only add to the difficulty.

The dollar has been able to remain fundamentally and seriously overvalued for years because the rest of the world was gullible enough to believe that the US economy would always outperform and thus its bonds and shares deserved a premium rating. Some 75 per cent of central bank reserves, plus a great deal of non-US private wealth, is held in US dollar assets.

Now that the Fed has declared it will "print" as many dollars as it takes to combat deflation, holders of US dollar assets would have to be extraordinarily na�ve not to realise that an unlimited increase in the supply of US dollars means dollars will inevitably be worth less.

Thus, far from attracting the 80 per cent of world savings required to maintain the dollar's value, fear of the bomb bays being opened and the world being showered in paper dollars is likely to cause liquidation of dollar investments.

In a deflationary world every country thinks its currency overvalued and, although the demise of fixed exchange rates has removed "beggar-thy-neighbour" competitive devaluations, if countries resort to the printing press to try and avert deflation all of their currencies become debased.

There is one standard against which this debasement of currencies can be measured and one asset which investors can own to protect themselves: That standard and that asset is gold.

cyberbat (01/13/03; 21:10:22MT - usagold.com msg#: 94343)
@Aristotal
All that you have proposed would make sense except for one small but important fact. A thousand years ago, they managed to do it that way, I might add without computers. I would presume that a good interesting study could be made concerning "When Gold was money" thousands of years ago.
Buy my house---30,000 Bullfrogs. Don't have the money. Pay me over time, but the cost will be more. How much more? Why the prevailing rate of buying property over time with gold.When the man walked up to you and saw all the gold you had counted out to me for my house; he could have just as well said you got a good deal! My house was just like his and I sold it last week for for 2 inches more gold than you paid!!
This could go on infinitum but one thing I'm sure we agree on--"Gold, get you some(fast)!!
Cyberbat

ElGordo (01/13/03; 21:01:17MT - usagold.com msg#: 94342)
@Hipplebeck
Why are you such a supporter of Chavez? He is destroying
Venezuela. The percentage I quoted was a recent estimate.
The poor are turning against Chavez. The economy is crashing,
no jobs, inflation, strikes. When you can't govern a country you
should step down for the good of all the people. It is not just
the oil industry on strike.

If you lived in a socialist paradise you would not be allowed to
own gold. In Cuba common people have to hock their family heirlooms to buy baby formula so their daughters don't have to prostitute themselves to tourists for money to buy food. Meanwhile the communist elites shop in exclusive stores where they can buy
all the capitalist toys like VCRs.

Liberty Head (01/13/03; 20:51:28MT - usagold.com msg#: 94341)
The Great Gold Debate Rages On

18k Gold Light, tastes great.
Now, I know some may say it's less filling, but I say,
it tastes great.
Anyone want to argue with me? :-)

All in fun.
Cheers

Aristotle (01/13/03; 20:37:44MT - usagold.com msg#: 94340)
Miner49er, good show. Don't sweat it.
Having read the first "OVER-valuation" I could see your meaning and the validity of your thought. Then as I eagerly followed along with your commentary, my eyes must have sent a message near to "#####valuation" which my brain sure-footedly decoded according to your original intentions. Magical, huh?!

Rock solid thoughts. If you're not in the business, your talents are surely underutilized. Hell, who am I kidding. They'd still be underutilized WITHIN the business, if you follow me. Politics and all. You'd do better than most, though.

You'll be pleased to know something that Aragorn III had demonstrated out of the shadows for me: some few years ago the euro-hopeful Republic of Latvia effectively introduced a Gold coin modeled closely in spirit to the blueprint you laid out today. With a brief exception in May/June, only within the past month (December) has the market value of the Gold content finally and decisively risen to eclipse the coin's LAT100 face value.

Sends a message as clear as you'd like to see!!

Your thoughts are on rails and at speed. Keep at it!

Gold. Get you some. --- Ari

Cometose (01/13/03; 20:28:02MT - usagold.com msg#: 94339)
IF GOLD FALLS
I suspect a lot of planning has gone into the ultimate rise in the price of gold ....and It appears that many of these events are being timed.....with as much precision as possible.......Let us see what silver does this week.

I'm really ignorant of much of the technical and fundamental issues related to this market......and am therefore so very thankful for the more informed and esteemed knights and ladies here here at the forum...and to our host ...

For part of my professional life I have spent much time assessing weather patterns.....and I can often assess accurately when we are going to have a storm and when there is not enough moisture.....in the clouds....wind , cool , etc.

I have been following markets for years: gold and stocks....
and done a lot of observation....following those markets...
and the data related thereto
at some time after observing enough data , we can become like baromerters and develop a feeling about the evidence...

I've never witnessed the amount of volatility that we have now.... there's something going on out there(priceactions etc ).....that all the information we have coming to us is confirming (fundamentals).........I've also never felt this calm in the face of these type of dynamics.

In light of the above , I will add , that we all may have been preparing for this occasion , the opportunity/ feast/
competition , race (call it what you will) all of our lives. Be patient and enjoy this ....every day ..

People that don't watch this stuff or pay attention...won't see it coming...because they are looking at something else...

but in the unlikely case that GOLD does go down ......
we should all take advantage of the lower prices and perhaps do what MR SINCLAIR suggested and BUY PHYSICAL

WE OWE IT TO OURSELVES...to get it cheap as often as our understaning indicates...

Aristotle (01/13/03; 20:12:44MT - usagold.com msg#: 94338)
Cyberbat, your home is your castle, and I want it
Let's say I want to buy your castle, payment in Gold!!

Because the Fed has so conveniently disappeared as a result of action taken in your latest post to me, the terms of the purchase price and payment will be between just you and me -- no bankers involved whatsoever. Hurrah! God save the Queen! Long live the President!

Let's say I open the trunk of my car and start counting out Gold Sovereigns. At some point, we may both conclude that a fair swap of value will be taking place, and it's at that point that we conclude our deal and we part ways, each one of us fully satisfied with our transfer and transition of wealth.

Any onlooker could easily judge the value of the deal -- the house, the Gold -- by assessing the size of the pile I removed from my trunk. An incremental education for all of us on the relative value of Gold and your house.

But wait just a minute. That's barter.

To fully appreciate the impact of the "money-izing" of Gold, we've got to have a look at an alternative approach to this deal.

Fortunately, the Fed is still out of the picture, so without a bank to function as a payments intermediary, this example will bring things right out into the open as you must stand in for the traditional role played by the banker.

I roll up to your house on my environmentally friendly bicycle, and I whip a Gold Sovereign out of my back pocket as a show of good faith. "Hey, buddy, I'm interested in buying your house."

"But you see, I've only got this one to give you right now. However, lookie here, you see. I'm Mr. So-and-so, here's the income stream from the dividends and coupon payments from my stock and bond portfolio. I'm also the owner of the town hardware store. See, here's all the books for the past 20 years, showing a comfortable profit for each and every quarter. I also hold a patent, and here are my past and projected earnings for that, and these are the typical royalties I still get for my #1 Grammy-winning song."

Since my ability to pay over time isn't in question, and since you are eager to sell your house but haven't had anyone else roll up either credit-worthy or with a trunk full of Gold, you decide to draft up a binding contract with me -- a Gold payment plan for your house.

For thirty years.

To get you to move your family and furniture (yes, and Spot, the dog) out and hand over your keys to me, how much Gold would my monthly payment need to be, and how much would I monthly be willing or able to afford? Then, if we multiplied that amount of Gold by the 360 installment payments, would the resulting purchase price of your house ultimately be found to compare similarly, higher, or lower than the lump sum purchase price "discovered" in the first example?

Let me save us all some trouble. ALL historical experience shows that the in toto installment price is greater than the lump sum price.

So, what then does this second MOST COMMONLY PREVAILING example impress upon our onlooker (and ourselves) about the relative value of Gold and your house? The incremental education we all get is that Gold-as-money (for payments) is seen to be worth not as much as Gold-as-property (for barter.)

Multiply this experience and incremental education times all of the transactions in all of the world that involve installments, and it is there that you should begin to see and understand the way in which the value of Gold is obscured when used *AS* the monetary agent. Banks or no banks.

But we'll always have banks, thus the obscurity of Gold value is compounded more quickly and efficiently, even if not maliciously.

Gold is tangible, portable property. Let money compete for it just like it competes for houses and other things, and only then will we truly be able to judge Gold's incredible intrinsic value in the lives of all men, all of us would-be kings.

Gold. Get you some. --- Aristotle

silvercollector (01/13/03; 19:52:18MT - usagold.com msg#: 94337)
Everyone must relax on this 354 business.....
...it took a couple weeks shy of 6 months to clear 330!!

We've seen 354 since Dec.18, not enough a month. We will clear this threshold in due time.

Truthcaster (01/13/03; 19:40:34MT - usagold.com msg#: 94336)
Re: Peddler. Golds Drop?
Is gold poised for a drop? My thoughts are that
gold still looks bullish, but it's having a hard
time getting over the 355 hump. Friday we was it get
pushed down and then came back to unchanged by the
ending bell, same goes for today we had gold down
well the most I saw it down today was about 4 bucks
and I thought Oh here we go but again by the bell it
had clawed it's way back up to near unchanged. It's just
my thought but I remember back then gold was trying to
climb over the 330 level that for weeks and weeks it
got turned back again and again. So I think that gold
needs to build more of a base here at 354 and will most
likely fall back 10 bucks or so before running up again
and we just might be right at that point. Now with North
Korean crisis looking like it might be calming down somewhat
and the overseas stocks rising tonight, gold might be going
to head south in the next day or two. I guess time will
tell. But with the dollar weaking like it is I think it
will be short lived.. My two cents...

miner49er (01/13/03; 19:34:26MT - usagold.com msg#: 94335)
Correction - 94271
Mea culpa... In three (count 'em, THREE) of four references to over-valuation, I (it's the drugs...) used for some inexplicable, and stupid reason "under-valued."

My 1st reference was correct. Don't ask me why I used the other term after that. I don't know.

All 3 references to "under-valued" should read as "over-valued." So for anyone who has bothered to read, my apologies for the confusion.

Cavan Man (01/13/03; 19:33:31MT - usagold.com msg#: 94334)
Hi Peddler
Buy as much now as you can understand. I recommend a great big plate of physical but some jrs for spice and leverage are nice. Good luck.

Peddler (01/13/03; 19:26:17MT - usagold.com msg#: 94333)
Gold poised for a drop
Gentleman, I have read two different articles stating that with the quantity of "shorts" Gold is set for a big drop.
Your thoughts!!!
The Peddler

cyberbat (01/13/03; 19:13:52MT - usagold.com msg#: 94332)
@ Aristotal
Think about this. When someone finally backs their paper with 100% gold , auditable by anyone, then all other paper money would disappear. Everyone would be buying the 100% gold backed money. Think about it. The Fed would disappear. No such thing as inflation or deflation. There would be no currency traders because everyone would have traded in their dollars, pounds, euros or whatever to get the 100% gold back standard; Everyone's money would hold the same value. Remember the old but true addage--good money chases out bad and that would happen. Be it in 100% gold backed paper or grams or ounces of gold; all would be accepted. Among this august body, if I came to you, Bulldog,Christain, Black Blade, etc. etc. and said may I trade my 1oz. U.S. gold coin for one of your 1oz. gold dinars or a 100% Gold backed unit marked 1 Oz. of redeemable gold, would you trade with me? The value would all be the same. There would be no profit on either side. One ounce for one ounce of gold, no matter in what form. The 100% gold backed paper could have the name of Bull frogs. I wouldn't care. Ah, tis so simple to eliminate global fraud by all banksters; that's why it will never come to pass until the sheeple wake up.

Paper Avalanche (01/13/03; 18:47:23MT - usagold.com msg#: 94331)
Ari
Thank you for so quickly and effectively illustrating my point.

Take care.

Paper Avalanche

canamami (01/13/03; 18:36:40MT - usagold.com msg#: 94330)
Thx for replies 94232-2, 94276, 94280
Re lease rates, I agree. If no one wants to borrow gold because the risk is too high, it stands to reason gold lease rates will be low.

Re breaching the $355.00 wall, I'm not sure. Widespread grassroots demand may very well do the trick. However, if the $355.00 wall is vital to the PPT, a vigourous defence will be made. Some big player may be needed to be the battering ram, in addition to the grassroots demand.

Aristotle (01/13/03; 18:29:45MT - usagold.com msg#: 94329)
Paper Avalanche . . .

Tall and clumsy.

Got it.

Cavan Man (01/13/03; 18:28:08MT - usagold.com msg#: 94328)
The poodle speaketh...
Politicians thrive on crises don't they (and we suffer)?
Defiant Blair says UN has no veto on war
PM ignores party critics, telling Saddam to disarm or face force
By Andrew Grice Political Editor
14 January 2003

An uncompromising Tony Blair said yesterday he would refuse to allow the United Nations to veto military action to rid Iraq of its weapons of mass destruction.

The Prime Minister warned the public that Saddam Hussein's weapons posed a "direct threat" to Britain but angered his Labour critics by refusing to guarantee that any war in Iraq would have to win the approval of the UN.

Pizz (01/13/03; 18:13:20MT - usagold.com msg#: 94327)
Arcticfox
Thank you so much for the post of the bank letter. Believe me, I needed a good laugh today. My bank is right next door and they can't even pay themselves an automated withdrawal from my account when there is money there. . ..

When all the systems are so automated that even the simple things take forever to fix, if they ever do, I tend to wish we'd hurry up and get back to the barter system.

Too bad so much pain will be inflicted getting there.

Gold window still open for long odds on a short time frame, and a virtualy certainty for payment, whether prospering, surviving, or somewhere in between.

Pizz

Aristotle (01/13/03; 18:08:51MT - usagold.com msg#: 94326)
Hipplebeck #94318 I sure echo that, but I don't stop there.
I go it a step further than a verbal expression of thanks for the forum to MK by putting his people to work spinning my paper income into Gold. Offering thanks in a material way, doing decent business with decent folks. Know what I'm saying?

Thanks for the discussion, Hipster.

Gold. Don't just talk about it. Get you some. --- Aristotle

Paper Avalanche (01/13/03; 17:59:58MT - usagold.com msg#: 94325)
@ Ari
The most desirable combination of any two human traits is that of strength and humility. You have a Herculian intellect.

Humility - get you some.

Paper Avalanche

Nibelung (01/13/03; 17:53:17MT - usagold.com msg#: 94324)
@christian
Thanks for the insights regarding gold stocks. Thanks also for reminding me of the rule - it had slipped my mind.

Aristotle (01/13/03; 17:50:38MT - usagold.com msg#: 94323)
Hipplebeck, then that's where it'll stand
But know ye that your cries of "Gold grams as money" will do nothing to redress your grievance from a uniquely personal viewpoint of banking as fraudulent. All it would do, in a sense, is to change the color of our quarters, dimes, nickels, and pennies.

Are you going to ask John Q. Public to give up his ability to contract for a home mortgage, a student loan, or a car loan? Banking as we know it is largely a mountainous feature on the landscape that is here to say, so you'd best get to dealing with it rather than trying to erode it away with your pissing and moaning.

Your arument that the mountain of modern banking is fraudulent really only has legs if something PHYSICAL like Gold is used as the denominating unit. Fortunately, our ability to comprehend relative value doesn't require a single fixed benchmark of ABSOLUTE value, so as things evolved our monetary currency unit isn't tangible, and therefore no fraud -- real or imagined -- need be addressed.

If you want real, honest value where it matters most, then buy Gold for your savings. That's what I do, but unfortunately guy's like you have spend the last century and a half hiding its real value behind your myopic views of money. Or should I say fortunately? After all, this legacy while it yet lasts is what has allowed me to amass quite a tidy mass of tangible wealth that wouldn't have been possible otherwise. Now it's just a matter of adding more as income allows and awaiting the time the physical market breaks free from the derivative illusions that obscure it's market value.

Understanding and acceptance. Get you some. --- Ari

Sierra Madre (01/13/03; 17:46:45MT - usagold.com msg#: 94321)
Right on, Bulldog!!

I share your philosophy 100%.

Grams in a troy ounce: 31.1082. One troy ounce is 480 grains and there are 15.43 grains in a gram.

Write it down.

Cheers

Sierra

Sovereign (01/13/03; 17:44:41MT - usagold.com msg#: 94320)
Belgian--The ECB...
Belgian msg#94176

Dear Man,

You say that "the National Bank of Belgium is owned by the treasury and the public as publicly quoted at the Brussels stock market."

1) How can a bank (or any Company, for that matter) both be public AND private, as far as its policy-making agenda is concerned? The state of Belgium might own shares of this bank, but THE CONTROLLING INTEREST, as in who has most of the shares, is the de facto owner of the bank, no? Who has more than 50% stake in the NB, do you know?

2) How about the other banks (Germany, France)? WHAT DO YOU KNOW OF THE ALLEGATIONS THAT THE BANK OF FRANCE, THE BANK OF ENGLAND (JUST AS THE U.S. FED, FOR THAT MATTER), WERE CREATED AT THE BEHEST, AND FOR IMPLEMENTING THE ECONOMIC POLICIES OF, THE ROTHSCHILDS AND THEIR PARTNERS? Who the hell OWNS these SOVEREIGN ENTITIES? And, consequently, WHO ARE THESE PEOPLE THAT ARE ABOVE THE LAW (The actual owners of the banks in question)?

3) Now all these central banks are supposed to be independent, as in, INDEPENDENT OF THE POLITICAL WILL OF THE RESPECTIVE NATION THAT THEY ARE SUPPOSED TO BE THE CENTRAL BANK OF. This being the case, how can you even suggest that they belong to the people? Central Bank=Political and economic independence=Private AND Sovereign. No?

Regards

P.S. I am not anti-Euro. If I am going to hold cash, the Euro is better than the dollar. And the Swiss Frank is better than the Euro, for that matter ;.)

Christian (01/13/03; 17:32:30MT - usagold.com msg#: 94319)
@ Nibelung - @ Balzac
Nibelung - We can't post possible stock reccomendations here. There is a + and - to this. To me it is a way to keep people ignorant, yet stock buying is gambling away your money. Find another forum and post that forum here. I would like to start a forum on picking good gold stocks. There is no such thing as a clean no hedging gold stock. Nobody knows what is in an off balance sheet transaction. -------- Balxac - Office of Comptroller of Currency and BIS can come up with some very good derivative value numbers on most states and the federal government. Derivative trades of credit creation swaps and debt swaps. BIS has helped me a lot about understanding the difference between commodity gold and credit creation gold. I had no idea that over 30,000 tonnes of credit creation gold trades yearly on the OTC as swaps. Keep in mind that credit creation gold swaps presently trade close to $10,500 per troy oz. Credit creation gold is monetary gold. Monetary gold = any precious metal that can be leased, sold on an exchange like the LBMA. Silver, because of its low price and to much bulk for the money is not considered a monetary metal. Rhodium is. Truth is the OTC is the biggest exchange as far as Dollar volume goes. Monetary metal backing of a currency does no good if the people can not use it as a way to store savings. Gold or any other precious metal in hand is the only true savings account.

Hipplebeck (01/13/03; 17:18:20MT - usagold.com msg#: 94318)
Thanks Aristotle
I consider it an honor to exercise with you.
If the fencing is done properly, both swords are sharpened.
Thank you again MK for the forum that allows us to do it.

Arcticfox (01/13/03; 17:05:11MT - usagold.com msg#: 94317)
Luv it...be nice if this would actually work..lol...
The letter to a bank below is an
actual letter sent to a bank in the United States. The bank manager
thought it amusing enough to have it published in the New York Times.
***********************************************
Dear Sir
I am writing to thank you for bouncing my check with which I endeavored
to pay my plumber last month. By my calculations some three nanoseconds
must have elapsed between his presenting the check and the arrival in
my
account of the funds needed to honor it. I refer, of course, to the
automatic monthly deposit of my entire salary, an arrangement, which, I
admit, has only been in place for eight years. You are to be commended
for seizing that brief window of opportunity, and also for debiting my
account by $50 by way of penalty for the inconvenience I caused to your
bank.
My thankfulness springs from the manner in which this incident has
caused me to rethink my errant financial ways. You have set me on the
path of fiscal righteousness.

No more will our relationship be blighted by these unpleasant
incidents,
for I am restructuring my affairs in 2002, taking as my model the
procedures, attitudes and conduct of your very bank. I can think of no
greater compliment and I know you will be excited and proud I have
noticed that whereas I personally attend to your telephone calls and
letters, when I try to contact you, I am confronted by the impersonal,
ever-changing, prerecorded, faceless entity which your bank has become.

From now on I, like you, choose only to deal with a flesh-and-blood
person. My mortgage and loan repayments will, therefore and hereafter,
no longer be automatic, but will arrive at your bank, by check,
addressed personally and confidentially to an employee at your branch
whom you must nominate. You will be aware that it is an offense under
the Postal Act for any other person to open such an envelope.

Please find attached an Application Contact Status which I require your
chosen employee to complete. I am sorry it runs to eight pages, but in
order that I know as much about him or her as your bank knows about me,
there is no alternative.

Please note that all copies of his or her medical history m ust be
countersigned by a Notary Public, and the mandatory details of his/her
financial situation (income, debts, assets and liabilities) must be
accompanied by documented proof.

In due course I will issue your employee with a PIN number which he/she
must quote in dealings with me.. I regret that it cannot be shorter
than
28 digits but, again, I have modeled it on the number of button presses
required to access my account balance on your phone bank service.

As they say, imitation is the sincerest form of flattery. Let me level
the playing field even further by introducing you to my new telephone
system, which you will notice, is very much like yours.

My Authorized Contact at your bank, the only person with whom I will
have any dealings, may call me at any time and will be answered by an
automated voice service: Press buttons as follows

1. To make an appointment to see me.
2. To query a missing payment.
3. To transfer the call to my living room in case I am there.
4. To transfer the call to my bedroom in case I am sleeping..
5. To transfer the call to my toilet in case I am attending to nature.
6. To transfer the call to my mobile phone if I am not at home.
7. To leave a message on my computer, a password to access my computer
is required. Password will be communicated at a later date to the
Authorized Contact.
8. To return to the main menu and to listen to options 1 through 7.
9. To make a general complaint or inquiry. The contact will then be put
on hold, pending the attention of my automated answering service. While
this may on occasion involve a lengthy wait, uplifting music will play
for the duration of the call. This month I've chosen a refrain from
"The
Best of Woodie Guthrie": "Oh, the banks are made of marble, with a
guard
at every door, and the vaults are filled with silver, that the miners
sweated for."

On a more serious note, we come to the matter of cost. As your bank
has often pointed out, the ongoing drive for greater efficiency comes
at
a cost which you have always been quick to pass on to me. Let me repay
your kindness by passing some costs back. First, there is a matter of
advertising material you send me. This I will read for a fee of $20 per
page. Inquiries from the Authorized Contact will be billed at $5 per
minute of my time spent in response. Any debits to my account, as, for
example, in the matter of the penalty for the dishonored check, will be
passed back to you. New phone service runs at 75 cents a minute. You
will be well advised to keep your inquiries brief and to the point.

Regrettably, but again following your example, I must also levy an
establishment fee to cover the setting up of this new arrangement.

May I wish you a happy, if ever-so-slightly less prosperous, New Year?

Your Humble Client,

(Name Withheld

Hipplebeck (01/13/03; 16:52:28MT - usagold.com msg#: 94316)
Aristotle
Now you are getting to the heart of it!

"artificial expansion"
"efficiencies of banking and derivative usage"
You can't artificially expand gold!
These terms are a complicated way of saying fraud!

Isn't fraud a crime? Now do you understand why I say this is organized crime intended to relieve you of your hard earned wages?

What is fractional reserve banking but fraud?
Why do we have all these problems? Fraud!
It's fine to use digital gold or paper gold, but ONLY if that digit or paper is a reciept for the real thing.
To issue without backing is to defraud someone.

misetich (01/13/03; 16:37:49MT - usagold.com msg#: 94315)
Reality Check - US Trade Deficit to Soar in coming months
http://www.economeister.com/reg/popup/single_story.jsp?prod=62&banner=mainwire_features
Snip:

Almost all agreed that January promises a veritable deluge of
imports, prompted by backed up Asian cargo and a desire to bring in
Valentine's Day, Easter and spring merchandise prior to the Chinese
(Lunar) New Year on Feb. 1, when many factories in Asia close down for a
week, they say.
The trade deficit should widen in November and December, in part
because exports were given extremely low priority as cargo ships rushed
to make up for lost time and declined to load low-value exports. By
January, exports were back on track and cargo ships began to raise fares
substantially, they add.
"We haven't yet tallied December figures yet because of the
holidays but vessels coming in to the Port of Los Angeles are still
profiled," said Al Fierstine, the port's director of business
development. "They're coming in almost fully loaded at 85% to 90%, which
is unusual. It should have slacked off by now."
********

Misetich

Retail sales slowed down significantly in December - January hasn't been getting any better - inventory are rising - commitments (order backlog) are just being received due to port disruption -
SM and reflanists have priced in a good US economic recover (they have been doing so for the last 3 years with abysmal results)as the big bad bear destroys their illusions of a comeback -
Unemployment is rising - government debt out of control - SOS new debt ceiling -

How long will foreigners keep on providing financing? How much will the overvalued US $ depreciate - 10 - 15 - 20 - 30 - 40% -

Take your pick and follow the trend!

Got gold?

Got gold?

Aristotle (01/13/03; 16:34:59MT - usagold.com msg#: 94314)
Hipplebeck -- the curse of oversimplification
Put Gold aside for the moment, and let's see things as they truly are.

Of these dollar thingies that we all use in the marketplace -- this stuff that barbarians like me call "money" -- what proportion of these dollar things undergoing monetary use have real tangible bodies (yes, even if they are just paper,) compared to the portion that "exists" as a digital/ledger entry?

My point: What makes you think that physical grams as money will eliminate the artificial ledger supply any more effectively than the physical paper bills have?

To monetize a unit is to open the door to artificial expansion of its supply through the efficiencies of banking and derivative usage. To ignore this is to stick your head in the sand, and the tide is coming in. Specifically, to monetize Gold is to dilute its value as wealth property. You do so to your detriment and to mine. Where shall we seek refuge from inflation if our Gold, having been monetized as you wish, is part of the tide that is washing away our sense of value? Whatever outlet you suggest, then I say, "Why not let's monetize THAT thing instead!"

Gold. Get you some reality. --- Aristotle

Bulldog (01/13/03; 16:33:43MT - usagold.com msg#: 94313)
gold = ?value
This current discussion (Ari et al) leaves me a little baffled. I would hope that in the future gold is its own standard. How many $U.S. dollars do you want if the dollar is not as readily accepted as it is now?
This past summer I was looking at buying a boat. We negotiated using the means of payment my gold coins. In the end, I decided against parting with my gold.
IMHO, I do not think there will be any actual gold or silver available for purchase by the time J. Dines' mass psychology sets in.
I was buying some wine at the local liquor store and the owner who is a Sikh, has a gold ring (pure gold) and as we get into discussions of world events, I asked him if he bought gold and he said it is the wealth of his family that is passed on to each generation. In his eyes, gold is gold, it is his wealth as it is mine.
In my opinion, those who are always looking for a value of an ounze of gold are in it for the short run. Sell and buy back on pullbacks.
I prefer to simply acquire both gold and silver and I keep no records to see what my dollar cost average is. If I should ever have to dispose of my metal, it will be for a very good reason and hopefully it will be like that bellboy who supposedly bought the hotel in the Weimar Republic for one gold coin.
Gold will have a different value to each of us. By the way, how many grams are in a one oz. Eagle?

mikal (01/13/03; 16:24:30MT - usagold.com msg#: 94312)
Correction
"Kangaroos, though they're called Nuggetts officially." This is imprecise. There are BOTH official names, though the Nugget was made only from 1986- 1988, replaced by the Kangaroo the following year.

misetich (01/13/03; 16:20:57MT - usagold.com msg#: 94311)
G10's George: 'Extremely Conscious' Of Global Economic Risks��Jan 13 / 8:41 EST
http://www.economeister.com/reg/popup/single_story.jsp?prod=114&ts=1042465260000&sn=1&banner=mainwire
Snip:

BASEL, Switzerland (MktNews) - G-10 central bankers are "extremely
conscious" of the downside risks to the world economy and will need to
remain highly vigilant and respond to developments if needed, Bank of
England Governor Eddie George said Monday as spokesman for the group
after their regular meeting at the Bank for International Settlements.
In particular, George told reporters, the G-10 are concerned about
the impact of a possible war in Iraq. A failure of the U.S. economy to
recover this year as expected poses the other major risk, he said.
In other comments, George said that he and his colleagues did not
discuss foreign exchange rate developments at length. Nor did they dwell
on global oil prices, he said, adding however that OPEC's decision at
the weekend to lift production to offset shortages caused by Venezuela's
general strike was a "positive" development.
According to George, the G-10 still expect "relatively slow" world
growth in 2003, with activity "likely to pick up as we move on in the
year." Despite hopes for "steady improvement" in the world economy in
the course of 2003, there are "downside risks and uncertainties," he
warned.
"We need to be extremely vigilant and be able to respond if risks
begin to crystallize," he said, admitting that, for now, policymakers
remain rather helpless with respect to the Iraq crisis.
"There is not a great deal one can do to anticipate that kind of
risk," George said, adding that the G-10 would react to the outbreak of
any war "as it happens." The uncertainties hanging over the global
economy and markets from the Iraq situation are "huge," he said, adding
that the consequences of active hostilities would depend very much on
how the war developed.
George acknowledged that the markets appear to be discounting the
possibility that a war will occur but that it will be short-lived. If
this were to occur, it would remove uncertainty rather quickly, which
would be positive for the global economy. But he warned of the
possibility that a U.S. attack could "degenerate" into a broad-scale
conflict that would usher in a "totally different scenario."
"But that's nothing one can sensibly speculate about," he added.
The other main risk facing the world economy is that the U.S. won't
see "moderate, relatively steady" growth, as now assumed, George said.
"What if the global economy does not move on as expected - if U.S.
doesn't grow as expected?" George asked rhetorically, noting that growth
in the euro area is expected to be more sluggish than in the U.S. -- but
reaching trend potential by the end of 2003 -- and is expected to be
even weaker in Japan.
In that context, he said, the G-10 discussed the general need for
structural reforms to boost economic growth - and not just in Europe.
"We discussed the importance of structural reforms for everyone,
not just for developing countries, but for developed countries too," he
said. "Everybody agreed that it is tremendously important. This is key
to the longer-term impact on confidence, particularly in relation to the
euro zone."
George held open the prospect that the ECB might have to cut
interest rates again, but not immediately, if the economy disappoints.
There is already an "ample" supply of liquidity in Europe, but if the
recovery turns out to be slower than expected, "then we need to ensure
that monetary policy remains accommodative," he said.
"I don't think there was any kind of immediate sense that [ECB]
monetary policy needed to become more accommodative," George continued.
"But if the expansion of the world economy was even more sluggish than
assumed in our central view, then we [would have to act] to ensure that
monetary policy remains accommodative."

***********

Misetich

The Fixers, Powerhungry monsters are sweating - Their egos are being squashed!

Got gold?

Posted in its entirity for educational and fair use only

Hipplebeck (01/13/03; 16:18:50MT - usagold.com msg#: 94310)
Belgian
The people who have cut off the oil in Venezuela are the elite who are in control of the oil business. There is a small group, including the union bosses who have been bleeding off the oil earnings. They pay themselves huge salaries and skim off profits. Why shut down the cashcow? They are desperate and have done this in an attempt to force everyone into hardship, because their coup did not work. Why are they desperate? Because Chavez has vowed to take their power away from them and put the oil profits into the state coffers instead of the oil elites pockets. He has also vowed to take land that is not being utilized out of the hands of the rich and distribute it among the people.
There is a minority of European heritage light skinned people who control most of the wealth. The vast majority in Venezuela are poor indigenous indians or blacks/mixed left over from the slave days.

mikal (01/13/03; 16:13:22MT - usagold.com msg#: 94309)
@cb2, Aristotle
With all due respect, this naming process is actually a two step process. One is very serious, official and financial. Like Aristotle's coins or digital units. Another is informal, flexible and localized, even down to the individual level. You must always have both names- the official birth name used in transactions, and the nickname, surrogate or pet name which identifies the owner's relationship to his/her wealth/savings/property.
The rock star Steve Miller was heard singing: "I want to fly like an Eagle until I'm free."
For the nostalgic or traveling sort, Doubloons or Sovereigns would fit. If I lived Downunder, Kangaroos, though they're called Nuggets officially. Soros, Gates, and Buffett might like Nuggets and Paperweights. Bars are ok too. But for the little people like Polly the parrot, Wafers are just fine.

Aristotle (01/13/03; 16:06:30MT - usagold.com msg#: 94308)
Don't toy with me, CoBra.
A man of your caliber is up to the task of digesting this, my first-choice entree. In good faith would you have me bring out second-best from the kitchen?

Gold. It is what it is. --- Aristotle

miner49er (01/13/03; 16:00:21MT - usagold.com msg#: 94307)
Sierra Madre @ 94282 - Gold Euro Coins
Hi Sierra --

A few points regarding your reply:

---------
You say: "Any coin with any content of precious metal, be it silver or gold, will be hoarded. It will not circulate. Because people recognize that a 100 Euro gold coin with only 50 Euros gold content is far better than a 100 Euro banknote. People will hang on to these coins, as long as additional currency is fed to the public, by the Central Bank and banking system(s)" -------

If they do "hang on" to these coins, GOOD!! If you read my post, that is a perfectly acceptable, and designed outcome. These coins represent a small portion of the overall monetary issue, and the gold reserve base as well. They would then serve their objective of re-introducing gold to a population that is not accustomed any longer to gold. That would be excellent.

However, I have to take issue with you about the coins circulating. If the hypothetical coin (100 euros with 50 euros worth of gold at issue) is released, only a fool would hold onto it. Its purchasing power as legal tender is twice its commodity value. Insanity to hold it! If you want gold, by all means buy it WITH your 100 euro gold coin and get twice the gold for the money!!!

Yes, I agree, that if you have discretionary euros sitting around, you will likely spend the non-gold ones first. And, the average person may get the first couple from the bank, and set them aside as a curio. (Again, WONDERFUL!!) But if the average person trying to barely make ends meet gets a few of these, he IS NOT going to keep them all. He will use them to buy what he needs to live. If the next guy who gets it in change saves it, then great!

If the coin were not overvalued, then what you say is more true, and we enter the dynamics of the traditional gold standard. I.e., why use the coin when the same denominated paper gets me the same stuff at the store? (Even then, not everyone can afford to save all the coins they come upon.) But if in our hypothetical scenario, the same denominated paper gets me the same as the coin, but twice as much as the gold I might extract out of the coin, then the coins circulate just like the paper.

And regarding utility, if the paper is held to be stable at a given time, then it, or electronic transactions will be preferred over the coin for simple utility's sake. Only when the paper issuer is deemed irresponsible will the traditional gold standard cause coins to be lopsidedly preferred when a fixed exchange rate exists.

--------
You say: "Actually, the 100 Euro coin with 50 Euros gold content is OVERVALUING the gold" ------

No, the coin is overvalued in terms of gold. The coin is simply 100 euros legal tender. It is minted into a token coin, that just happens to be a rather valuable token. It is not overvaluing the gold. It cannot, gold is valued in terms of the market. The coin is not attempting to say that gold is now worth 100 euros for the contents that on the market is selling for 50. It is just a plain old 100 euro coin with a kicker...

--------
You say: "(50 of gold "equals" 100 of Euro)" -------

50 ?what? of gold. This coin has gold content equal to 50 euros at the market rate at time of minting. Currently (real ballpark estimate), with gold at approx. 330 euros / oz., there would roughly be, say, 5 grams of gold in this coin. (Didn't use the calculator, so bear with some margin for error, thx). Until the price in euros for gold reaches some amount that the public begins to prefer holding the coin, the coin, being overvalued, will circulate since there is NO good reason to save them, except as novelties. They are not even investments, so as to realize a future appreciating gold price... Why hold this coin when the coin can trade for twice the gold it contains on the market???

-------
You say: "Money that circulates is always OVERVALUED money. However, the 100 Euro bill is even MORE OVERVALUED, as here, .1 gram of paper "equals" 100 of Euro. So, the coin will be hoarded, the paper will circulate, because it is more overvalued." ------

Answered already.

--------
You say: "When the gold content of the 100 Euro gold coin exceeds its nominal, engraved value, either because gold goes up or the Euro goes down, or both, then...the coins will be purchased for slightly more than their nominal "100 Euro" value, and MELTED. So the people are "back to square one", again without gold coinage." --------

When the gold content reaches a point that the public prefers to hold them rather than spend them, then they will either hold them, or melt them into bars. They will be purchased then for their gold content, slightly more or thousands more -- that depends on the price of gold. The people are not back to square one. How? They are either holding the gold coins, or newly minted bars, as design has it. Either way, they still have gold. THE OBJECTIVE IS NOT TO RE-INSTITUTE A GOLD-STANDARD. THE OBJECTIVE IS NOT TO USE GOLD AS MONEY. The objective is to re-familiarize the public with gold and use the monetary system as a vehicle to re-introduce it to them -- AND do this by making people think the ECB is still playing along with the current gold paradigm where gold is stabilized at some amount we are soon approaching (i.e., just enough dollar devaluation to let off some steam).

How many of the average cube-dwellers, or burger-flippers, are even aware of how to buy gold? Start them off easy by putting it into a coin, that they DO understand, and let them, by choosing to use it or save it, gain some basic gold sophistication without even disturbing the banking system.

-------
You say: "The holders will have to suffer a heavy devaluation or miss a large rise in the price of gold, before this OVERVALUED gold coin begins to protect them from further deterioration in the Euro, or allows them to benefit from further rises in the price of gold. That 100 Euro gold coin, is A BAD DEAL." ------

Please, Sierra, READ what I wrote. I am not promoting a gold-standard. If I have a hundred euro fiat value, legal tender coin, that happens to contain, say 5 grams of gold of whatever proper fineness, that at minting and issue happened to be my hypothetical 50 euros of gold, then the owner of the coin, when gold goes to 500,000 euros an ounce, has these 5 wonderful grams of very valuable gold with what is now an immaterial 100 euro stamp on it. The coin now sells and is held as 5 grams of gold.

If gold goes through the floor, or stays where it is, he still has a stronger fiat piece of legal tender. How does the holder lose???? I say it's frankly, A GREAT DEAL!

-------
You say: "The solution to the conundrum of perpetual gold coinage, lies in NO NOMINAL VALUE, and its usefulness can be enhanced, to use Belgian's term, by having its daily value quoted in Euros, by the ECB, and having all banks exchange gold coin for ordinary bills and ordinary coins, at the quoted rate, with no discount." ------

Addressed already.

-------

Anyway, thanks for reading, Sierra... I hope I was able to clarify your questions.

Best regards,
miner

(btw... spot on with your #94155 the other day!)

Hipplebeck (01/13/03; 15:57:47MT - usagold.com msg#: 94306)
Aristotle
I don't know why you want to complicate things.
You say you would use your "excess" paper money to buy gold coins because they hold their value. With gold as money, you would not have to bother with all that. You would simply set a little aside out of your earnings instead of having to go use paper to buy gold.
If gold was not mined into circulation fast enough, then it's value would go up, just as it is now. What you cannot get your mind past is that you cannot stop thinking in terms of paper dollars. You say you hold gold for it's wealth, yet you still measure it by it's dollar value. When you can uncomplicate your mind enough, you will begin to shed the baggage you carry. You will begin to see things as they are and not measured in paper dollars.

CoBra(too) (01/13/03; 15:42:12MT - usagold.com msg#: 94305)
Call it Gold - Coins, Bars, Nuggets, or any other Denomination
of weights as you wish - is it metric or the silly, antique pounds, ounces or paperweights ... what in your terms differentiates any measure from real value? ... Sir Ari!

I'm probably too simple a mind to understand your last two postings in their intrinsic meaning.

Humbly, I would ask to clarify your thoughts - thank you, cb2

Hipplebeck (01/13/03; 15:41:09MT - usagold.com msg#: 94304)
ElGordo
If 85% of the people are against Chavez, how did he get elected?
There was a coup a few months ago, if 85% of the people are against Chavez, who set him free from the coup plotters?

sector (01/13/03; 15:38:36MT - usagold.com msg#: 94303)
@ eddieboy Good BP/Iraq Post
BBP is also a defendant in a pretty big NatGas Case in Calgary
It's the largest Nat Gas field in North America [Outside Alaska] and BP might lose as the big Multi stomping the tiny, three person Canadian company. The case is in the Appellate Court. Raising cash may give them a settlement purse as well as "Iraq Concession" money. Canadian Southern [CSPLF] trades at $USD3. They, own 30% of the field--might get more in the courts.

@ silvercollector Why Easter for the Gap Up?

Any time from tonight through Easter hits right in the sweet spot of a host of gold positive indicators. Not the least of which is the G-10 is bleeding gold from an increasingly open wound. If the war starts later this week [Turkey's incursions in Northern Iraq may force the US hand to move on Basra first] then we can expect a $30-$40 move over night as the first of many G-10 stair steps up to a level that relieves them of further gold selling.

Higher gold prices is the only possible method that can save the central banks remaining metal. After all the years of Rubin/Greenspan created gold manipulation, the final arbiter is a free market.

Technical card-counters can weave their voodoo fibbonacci number magic all they wish, but the government Black Jack "dealer" has an unknown number of decks--so card counting is useless when playing the manipulated precious metals game. It works just fine in a two party trade just not in a three-party trade [(1)Shorts, (2)Longs and (3) the .gov goons].

balzac (01/13/03; 15:22:05MT - usagold.com msg#: 94302)
DEBT IN TRILLIONS
@Christian
Christian,
Where did you get your debt figures.

Balzac

Mr Gresham (01/13/03; 15:21:05MT - usagold.com msg#: 94301)
miner49er
Good to see you here today and enjoy reading your thoughts.

eddiebhoy (01/13/03; 15:16:59MT - usagold.com msg#: 94300)
bp
BP sells $1.3bn in oil assets to Apache

regarding the above post it seems that bp is selling off its mature assests in the north sea
also i have heard on the grapvine that the miller field and a few others are to be sold as well

now why are bp selling its old core assets?
why do they need the money at this point in time?

could it be for the development of some new fields
it is about to aquire in the near future?

also interesting is the fact that new smaller fields
that have been getting developed in the last few years
2000 - 2002 which has created a mini boom in the north
sea has all of a sudden been totally stopped dead
and a lot of oil workers laid off in the last few months
cant quite figure out that oil is $30+ a barrel yet
north sea development of new small viable fields has ground
to a halt

it takes $14 a barrel to get oil out the ground from the north sea but only $2 from iraq

is there a tie up here ?

eddiebhoy

silvercollector (01/13/03; 15:16:17MT - usagold.com msg#: 94299)
sector
I love your confidence.

Why do you think Easter is GAP UP time for the HUI?

TIA

ElGordo (01/13/03; 15:06:05MT - usagold.com msg#: 94298)
@sierra madre
Free coinage of silver will save Chavez? How will the free
coinage of silver get the oil fields up and running?

Chavez is not a socialist? He is an ego maniac nut case is what
he is. If he cared about his country he would step down.
85% of the population is against his administration. His ego is telling him he is more important the the entire country!

Its not about democracy or the last election, he can make the
decision to step down like Nixon did.

Why did Chavez visit Saddam? Does he sponsor terrorists?

Your hatred of the US is making you paranoid. Nobody is paying
people to demonstrate and risk their very lives to bullets.

Who cares what you posted 2 years ago? You must have a HUGE
ego yourself!

Aristotle (01/13/03; 15:01:50MT - usagold.com msg#: 94297)
Perhaps, cyberbat, this phrase is okay for you?
"If Gold were to circulate worldwide as Gold Coins, what would you call it?"

I would call it Gold. Specifically, I would call it coins of Gold.

Furthermore, I would use all of my excess money (i.e., "excess" defined as the remainder after quarterly bills are paid and investments are considered) to buy these Gold coins to add to my growing pile of material savings -- a part of my life's meaningful wealth and security!!

Gold. Get you some. --- Ari

Belgian (01/13/03; 15:00:36MT - usagold.com msg#: 94296)
Sierra / ge
Yes Sierra, I do fully agree with everything that has already been said here, about Venezuela. But paralyzing such a vital oil-supplier for that long is confusing me.
This plays right into the cards of the Arabian part of OPEC.

Whereby I land by Sir ge...

OPEC-president : "Oil supply will be guaranteed" !? Yep, that is the enormous force of Arabian - abundant reserves - cheap - ever profitable - flexible flowing - high quality crude oil. What alternative energy source can compete against this number of aces in Arabian hand ? POO-policies, by OPEC, always take care that as less as possible competition should be able to stand up as to make them lose pricing and production power/hegemony. This ME oil-story can go on for another 2 generations (50 years) before any real alternative emerges on a massive scale. There is not only oil but masses of natural gas, also.

Sierra : One more worth about eventual Euroland Gold coins in circulation . Next year, it will be forbidden to make cash-payments of more than 10,000 euro ! All payments above this figure should be done through banking. We have 500 euro notes now. Is this an indication that those Golden Eurolanders might carry a very high euro-worth for a very little content of Gold ??? (High POG) ???

Yes indeed, those first issues of Gold-coins will meet the hoarding reflex. But this will fastly fade if and when a free physical goldmarket is back in vogue.

No this free goldmarket will NOT emerge overnight in its definite form but will rather develop progressively, proportionate to the growing impotence of paper and the bringing back of "financial" activities to normal growth levels.

A free Goldmarket can only emerge on top of financial ruins.
And today I still percept, concerted efforts as to postpone the crashing process that leads to ruins. There is a time for everything.

Aristotle (01/13/03; 14:50:43MT - usagold.com msg#: 94295)
cyberbat, I like where this is going. Thanks for stepping in!
"If gold were to circulate worldwide as money, what would you call it?"

A miracle!!!

But seriously, already we've come to a communication impasse.

Here's the problem -- as I see it -- put into terms that will help you to see this question through my eyes.

Suppose I were to pose this question to you:

"If barrels of oil were to travel worldwide as electrical energy, what would you call it?"

Now, if my hunch is correct, you know how the wording of your question has baffled me. Would you be kind enough to try another approach? I'm quite eager to have follow this line of discussion because its of vital importance and very, very relevant in the current era of the world with its euro.

Gold. Get you some. --- Ari

cyberbat (01/13/03; 14:26:13MT - usagold.com msg#: 94294)
@Aristotle
If gold were to circulate worldwide as money, what would you call it yourself. Everyone is familiar with a gram which would probably be the smallest denomination. So what would be your description be of one gram of gold as money? Keep in mind now that we are talking world wide.
I eagerly await your answer.
Cyberbat

Aristotle (01/13/03; 14:20:10MT - usagold.com msg#: 94293)
Thinking for Hipplebeck
The issue, my fine fellow, is not one of understanding what *IS* a gram mass of Gold.

The issue is one of mentally assimilating its value relative to all other things in mankind's world of commerce. Observations of supply and demand in the marketplace help us identify and assign relative value (not absolute value) to all things, including that of our money used in the trade.

Do not be so shallow in your own thinking that you ignore the impact that monetization of grams would have on the apparent supply of Gold available in the marketplace. Resulting from the efficiencies of banking and such simple concepts as lending, the apparent supply of grams available to chase goods and services would greatly exceed the tangible grams that truly existed. How then, would you calculate and utilize their "honest" value?

You accomplish nothing favorable in your blind haste.

Gold. A concept too simple for many to grasp effectively. --- Aristotle

Belgian (01/13/03; 14:09:53MT - usagold.com msg#: 94292)
Miner49er / CoBra(too) / Chavez
Yes, housing means taxes and permanent re-valuation against permanent currency devaluation. This could certainly be applicated in a physical-only free goldmarket where one is holding permanent re-valuing Gold against permanent depreciating currencies. Building houses, means business as does free trade in Gold, when freely priced against offer and demand. Compare physical Gold here with the holdings of zero-bonds .

A free physical only goldmarket is as natural as can be, but did not fit into the dollar-concept. That's why it was prevented to happen...to develop. With the expansion of the euro, replacing the dollar, this public, physical only, goldmarket will be as "evident" as pure mountain water. Do we need evidence for the existance of an *official blueprint* for this ?

More than 20 years of stockmarket "exhuberance" were an ideal environment where the general public had the audacity to ignore Gold, whilst it was denigrated. This past 2 decades will be regarded much later as a period where Gold was repositioning itself as we in French say : reculer pour mieux sauter (2 steps back to jump much further).

Thanks miner49er for having finetuned the whole thing !

Sorry guys, but need some more insights on the Venezualan Oil-story. Oil cuts must affect pro-Chavez supporters, very hard as well ! Vox populi must eat something otherwise this will evolve into a civil war.

Hipplebeck (01/13/03; 13:56:12MT - usagold.com msg#: 94291)
spelling correction
thinking

Hipplebeck (01/13/03; 13:49:13MT - usagold.com msg#: 94290)
Aristotle
Only banksterthink could possibly be able to obscure what a gram of gold means,
What world do you live in?
Are you so messed up in your thiniking that you cannot understand what a gram of gold is?

sector (01/13/03; 13:43:03MT - usagold.com msg#: 94289)
Shares Lagging Metal...
...The Next Metallic "Gap"
We all want the HUI shares to move up. They aren't because (1) the hot money hopers pining away for the DOW and NASDAQ (2) They don't believe in the durability of this gold rally [Since Dec 4th] and (3) they are generally confused about things economic.

Time fixes #2. Information osmosis fixes #3 and The Hot money may not come back at all because their [Brokerage] puppet masters won't allow them to buy gold shares and also draw from Fed repo funds.

Actually, the Dollar Index Value of Gold hasn't leveled off since Dec 4th. Today will be another high. This metric is a direct gauge of the per ounce value of bullion sales used to cap gold. The G-10 central banker's "Fuel" meter. They are running way low these days after having spilled over half their reserves during the halcyon days of 1997-9 when everybody bought their "Barbarous relic" and "Goldilocks Economy" fairy tales. Not any more!

If one is worried that the enlightened central bankers will sell the remaining hoard of gold from the Western vaults, forget it. That remaining gold bullion is all that stands between Western Civilization and a Banana Republic paper "Avalanche" [kudos to 'Paper Av' for choosing a most descriptive handle].

BTW unleashing the central bank gold is problematic due to the lack of gold refining capacity. PAMP is the biggest at 400 tonnes per YEAR so forget about rapid processing of "Good Delivery" .999 finess bars [Most if not all the "Deep Storage" central bank bars isn't "Good Delivery" quality. This is a big bottleneck and a barrier to high throughput gold flowing to quench the white-hot physical market. More delivery delays mean a higher demand.

The remaining central bank gold, 16,000 tonnes, is all there IS for the West. They will invoke some sort of shell-moving-currency-game in order to attempt to make the gold last as long as possible. The only issue at hand is when they move. Whatever the plan gold-bugs will see through it in a flash unless it represents a true value currency mechanism. The result of a disengenuous effort by the Fed will be more gold drainage.

Quietly, the debt ceiling is [ooops!] now on the floor and Congress doesn't seem to be in a cooperative mood these days so THAT metric is coming into play too.

When the shares wake up there will be some catching up in order for them to revert back to a metal leading position, so look for 180-200 on the HUI as the Easter 2003 range.

The big move up will take all shares up because there are so FEW of them.

Nibelung (01/13/03; 13:25:54MT - usagold.com msg#: 94288)
are there any unhedged and "clean" gold mining stocks out there?
Dear Ladies and Knights of the Oaken Table,

I am mainly a believer in physical, and never previously considered owning any shares in mining companies. But the thought occured to me recently that I might learn something if I tried to find a "clean" gold mining company and maybe contemplate buying just a very small number of shares of producers.

If anyone can provide any suggestions of a few unhedged, "clean" gold mining companies that I might start researching I would be much obliged. Even if I don't invest in any, I feel I might at least learn something through this exercize.

Thanks, and best Regards to all the Golden people of the Oaken table. 2003 will be a golden year.

-Nibelung

Sierra Madre (01/13/03; 12:52:41MT - usagold.com msg#: 94287)
My predictions of two years ago, here (Jan 24, 2001)

Perhaps my post of two years ago will interest some posters and lurkers. I found it accidentally, while reviewing some files.

************

Sierra Madre (01/24/01; 15:15:10MT - usagold.com msg#: 46328)
The U.S. "Budget Surplus"....some thoughts for your consideration.
Last few years we've been receiving our brainwashing about the great U.S. Budget Surplus and how the National Debt
was going to be paid down in a few years. Totally amazing prospect of unending prosperity!

First of all, with regard to that mythical surplus, we have to take into account that a considerable part of the tax-money
coming into the Treasury, was produced by Capital Gains taxes on rising values of stocks. As is now evident, taxes from
that source are going to be sharply down next April 15th. Stocks are not rising, nor do we - at this Forum especially -
expect them to rise substantially, if at all, for quite some time.

Incidentally, these Capital Gains were produced by: Inflation. There has been, and continues to be, a tremendous inflation,
caused by Credit Expansion. Not only an increase in money in circulation causes a general rise in prices. A general rise in
prices can be caused by a Credit Expansion, which the U.S. has had in spades. Read: prudentbear.com, about the Credit
Expansion. And Von Mises, about the effects of credit expansion not based on savings.

As good old Vern Myers used to point out in his excellent newsletter twenty years ago, Credit Expansion is like a forming
cloud, which grows and grows. Eventually, it cannot grow any further. Precipitation begins. Rain begins to fall. That rain
can be likened to either the default of debtors, in which case the creditors (buyers of bonds, etc) lose out and they pay the
debt with their loss; or else, the cloud comes down in the form of: hyperinflation caused by the desperate attempt to
liquefy debt with mass monetization, i.e., cash is manufactured and delivered for debt instruments in an attempt to stave off
default. But that cash is deadly, in that it immediately becomes demand for goods: runaway prices of things. In this case
too, the creditors lose out big, as their money shrinks drastically in purchasing power. The debt is paid by the creditors. In
both cases, the debtors cannot pay the debt, since they are bankrupt. To some extent, to the extent of their capital
investment, the debtors of course, also pay part of the debt, but they cannot, by any means, cover all of it to make their
creditors whole.

But to return to the theme of Budget Surplus.

So part of the Budget Surplus was the result of a monstrous Credit Expansion, which produced a rather painless tax
revenue from Capital Gains, paid willingly by people who thought it right to pay a tax on part of their very substantial
"profits" in the Stock Market. That is now gone, and its return is very, very doubtful.

Another part of the tax revenue has been coming from Social Security taxes. Instead of attributing the moneys coming in
for Social Security to a Social Security Fund, the U.S. Gov't has mixed this tax revenue with general tax revenue, and
simply creates bonds which are passed on to the S.S. Fund. (Did you see the movie "Dumb and Dumber"? "It's all there,
every last penny, yes Sir!")

This is why the Federal Debt continues to grow - these S.S. Fund bonds are issued, and form part of the
"Non-marketable U.S. Debt".

So these Funds, we might say filched from Social Security, are counted as Tax Revenue and contribute to reducing the
Deficit and producing that mythical "Surplus". But at the same time, the Federal Debt grows by that filched amount.

But there is still another source of Government Spending, very important, which is not, however, included under Federal
Spending. This hidden government spending is paid for by BORROWING MASSIVELY. Where you say? The Federal
Debt is not going up that much?

That Government Spending is being carried out without causing much concern, through the absolutely enormous increases
in Borrowing and Spending by: the Federally Guaranteed Government Sponsored Enterprises, the GSEs like Freddy
Mac, Ginnie Mae and other silly-sounding gigantic financial organization which have taken over a very substantial part of
the mortgage market in the U.S., due to their real (or perceived) Government Guarantee, which makes their debt a proxy
for Government Bonds. See: Prudentbear.com for the horrible facts.

The GSEs are monetizing their debt, by placing it in "Money Market Funds". These Funds accept the "paper" or debt of
the GSEs without question, as Federally guaranteed, and credit the GSEs for their I.O.U.s with credit balances at their
Money Market accounts. Thus enormous increases in Money Market funds which people suppose are Dollars. These
"Money Market Funds" are not really Dollars, from the banking system. They are confused with those Dollars, but really
another "money" which people accpet unquestioningly. Who wouldn't like to have a few million in a "Money Market
Account"? You buy a house for a couple of million, what's the seller going to do with a couple of million? He's going to
put it in his Money Market Account, just where you got the money to pay him.

Once you are dealing with big enough figures, when you spend a "Money Market Account" balance, it is most likely that
the amount you "spend" will simply find its way to another "Money Market Account". And so the game goes on. I leave it
to another, to describe what happens when Money Market Fund assets begin to go sour because debtors - issuers of
commercial paper - cannot make good. Or when the rise in interest rates destroys the capital of the GSEs, and the
insurers or investors in interest rate derivatives, meant to protect the GSE borrowings, go belly up, or the U.S.
Government has to BAIL OUT THE GSEs. That will be a show!

If you add up the Federal Debt, with the debt of the GSEs, and add up on the other side, Tax Income and the Income of
the combined GSEs, you will have a sum - which I have not calculated - which will surely knock your socks off. (PS.- To clarify: Total Federal Debt= Federal debt + GSE debt. Total Revenue Income= Federal Taxes+ GSE Net Income. The amount by which Total Federal Debt grows in a year, is the REAL BUDGET DEFICIT. Expenses greater than income, the difference (deficit) made up by borrowing - which appears on the GSEs Balance Sheets.)

THAT is the real fiscal situation: no Budget Surplus, rather, a totaly outlandish Budget Deficit, financed with massive
government borrowing via the GSEs, which are off-budget.

Now, these GSEs are into mortgages, long-term loans by definition. When you see the yield on the 30-year Treasury
Bond begin to grow, you will know that the present value of the mortgages is decreasing - according what is known as the
"Bond Equation": an increase in yield on a bond means a reduction in its present value.

The GSEs have been working with razor thin margins and lending to ever less credit-worthy mortgagees. When the GSE
assets shrink, they will destroy all their capital and we will have a situation incomparably worse, disastrously worse that
the situation with the S&Ls.

The Fed can contain, to a certain extent, short-term rates, but it can do absolutely nothing about long-term rates, the rates
that are going to kill the GSEs.

Sit back, relax, and enjoy the show! It is going to be historic.

"If this be error, and upon me proved,
I never wrote, nor is my name

Sierra Madre"

USAGOLD / Centennial Precious Metals, Inc. (01/13/03; 12:34:20MT - usagold.com msg#: 94286)
Hard assets... Easy access! Call us to discuss your order today.
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"Treasure chests throughout history
have been filled with gold, and not by idle choice."

-- R. Strauss

Aristotle (01/13/03; 12:28:26MT - usagold.com msg#: 94285)
Hipplebeck asks, "Wouldn't be easiest to just price everything in grams?"

Names for the Gold measuring unit aside, it's been tried, and it has failed.

It can't work. Bear with me.

The effort fails when the meaning of "gram" (or whatever you wanna call it) becomes obscured through the monetary process of installment payments, derivatives, and bank deposits/lending.

If you have reasonable research or observation skills, the fate you can readily witness for the U.S. dollar is exactly the fate that your precious monetary gram would share.

Now why would you want to do something that dastardly to my physical property?

Gold. Treat it with the respect it deserves. And... get you some! --- Aristotle

ge (01/13/03; 12:26:44MT - usagold.com msg#: 94284)
Belgian msg#: 94267
It is possible that Washington has made a strategic decision to switch from oil to alternative energy sources. In that case, the internal elements that would resist to the switch (end users, owners of existing oil-based infrastructure) have to be persuaded. Moreover, rival countries should not be allowed to gain from cheap oil while US switches to alternative energy sources.

The idea may be to make oil unavailable and/or too expensive for a prolonged period of time and force the whole world to make the switch.

US moves around the Middle East are becoming too broad based, as if oil was not the prime target, but military control of vast geographical areas is. This observation reinforces the observations on Venezuela and Chavez.

Just an idea!

Sierra Madre (1/13/03; 11:57:08MT - usagold.com msg#: 94283)
Correction to post below:
I should have written:

"...as paper will displace the 100 Euro gold coin."

Sierra

Sierra Madre (1/13/03; 11:54:57MT - usagold.com msg#: 94282)
Miner49er: regarding your post #94271....

Your post is extensive and I will not enter into discussion of all points you make, but I should like to point out a few things:

The 100 Euro gold coin, if minted with 50 Euro's worth of gold, presents the following problems:

Any coin with any content of precious metal, be it silver or gold, will be hoarded. It will not circulate. Because people recognize that a 100 Euro gold coin with only 50 Euros gold content is far better than a 100 Euro banknote. People will hang on to these coins, as long as additional currency is fed to the public, by the Central Bank and banking system(s)

If and when (an unlikely situation) there is no additional currency being created, then the 100 Euro coin would circulate, as people felt the need to use the hoarded coins. As long as more paper is created, the paper will displace the Euro.

Actually, the 100 Euro coin with 50 Euros gold content is OVERVALUING the gold (50 of gold "equals" 100 of Euro) Money that circulates is always OVERVALUED money. However, the 100 Euro bill is even MORE OVERVALUED, as here, .1 gram of paper "equals" 100 of Euro. So, the coin will be hoarded, the paper will circulate, because it is more overvalued.

When the gold content of the 100 Euro gold coin exceeds its nominal, engraved value, either because gold goes up or the Euro goes down, or both, then...the coins will be purchased for slightly more than their nominal "100 Euro" value, and MELTED. So the people are "back to square one", again without gold coinage.

The holders will have to suffer a heavy devaluation or miss a large rise in the price of gold, before this OVERVALUED gold coin begins to protect them from further deterioration in the Euro, or allows them to benefit from further rises in the price of gold. That 100 Euro gold coin, is A BAD DEAL.

The solution to the conundrum of perpetual gold coinage, lies in NO NOMINAL VALUE, and its usefulness can be enhanced, to use Belgian's term, by having its daily value quoted in Euros, by the ECB, and having all banks exchange gold coin for ordinary bills and ordinary coins, at the quoted rate, with no discount.

Sierra

Christian (1/13/03; 11:36:54MT - usagold.com msg#: 94281)
(No Subject)
There are many precious metals, be it platinum, rhodium, palladium and many more metal I do not know what they are but a lot end with ium. All can be used for credit creation. M3 broad debt money measure is increasing at an annualized rate of 21%. Behind this credit creation machine are household debts of $35Trillion, $8Trillion of vehicle debt, $8Trillion of credit card debt, $6Trillion federal debt and $78Trillion off balance sheet debt along with $49 Trillion off balance sheet state debt and who knows what corporate and corporate off balance sheet debt is, but it is in the $Trillions. Here, in all its naked and insane glory stands the economic "theory" that if you add to "demand" by creating new debt, the economy will climb out of debt.

Gandalf the White (1/13/03; 11:35:41MT - usagold.com msg#: 94280)
Sir Canamami and Sir Slingshot !! <;-)
canamami (1/13/03; 10:30:58MT - usagold.com msg#: 94274)
PPT defending the $355.00 line
Will the line be breached? If so, when? Will a pro-gold battering-ram do the trick? If yes, who/what will that battering-ram be?
===
slingshot (1/13/03; 11:24:14MT - usagold.com msg#: 94276)
Canamami Msg#94274
$355.00
$355.00 will be breached in time as the time between each battle decreases and the time of battle lessens.Our battering ram is the slow accumulation and one ounce at a time.
Slingshot----------------<>
===
WOWSERS -- You are sure fast on the draw today Sir Slingshot !! AND SO correct also ! The days of the CABAL control of the PAPER Pricing Mechanism are numbered ( but that number is becoming smaller as each day passes! ). The continual "one ounce at a time" is killing the CABAL and The Sheeple are starting to THINK about getting some themselves. The are finally figuring out that there may be a reason between everything of a higher value being called GOLD --- and the real PHYSICAL Gold being better than the little green paper notes with numbers and pictures of dead old famous people on them.
Thanks to both of you for the QUESTION -- AND like Henri says ....
CLINK !!!
<;-)

USAGOLD / Centennial Precious Metals, Inc. (1/13/03; 11:34:04MT - usagold.com msg#: 94279)
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Sierra Madre (1/13/03; 11:32:21MT - usagold.com msg#: 94278)
Belgian: your questions regarding Chavez and Venezuela...

As far as I am concerned, Chavez is a Nationalist who wants a renewal of a united Latin America in the ideals of what Latin Americans call "the Liberator" (from Spanish rule).

He is friendly with Castro, but Chavez is not a Socialist nor is his aim - I think - a socialistic Venezuela.

The big problem in Venezuela is no doubt, the American desire to exercise complete control over Venezuelan oil, and a Nationalist in power, does not please TPTB at all, at all!

This whole upheaval in Venezuela is doubtless a work of destabilization carried out by US secret services. You don't get these "demonstrations" without using massive amounts of MONEY to move people!

Chavez has removed 10 tonnes of gold from the Central Bank and has placed these reserves within the military compound where he works and sleeps. Tells you something of the importance of PHYSICAL.

I would advise Chavez to initiate FREE COINAGE OF SILVER at once. This would be his salvation. But - who will tell him?

Sierra

Zhisheng (1/13/03; 11:30:55MT - usagold.com msg#: 94277)
Up Into the Close!
Like a horse headed back to the barn after a day under the saddle.

slingshot (1/13/03; 11:24:14MT - usagold.com msg#: 94276)
Canamami Msg#94274
$355.00
$355.00 will be breached in time as the time between each battle decreases and the time of battle lessens.Our battering ram is the slow accumulation and one ounce at a time.

Slingshot----------------<>

slingshot (1/13/03; 10:54:25MT - usagold.com msg#: 94275)
Siege Engine
" Golds Ascension"
The morning sun had shown its beauty and the sunlight warmed the council chamber on that cold winters day. The days have been dismal with the color of grey skies. Sir MK finished his story of the Looking Glass and the sun shown brighter than ever as to give hope to those who listened. The night was long and it was now mid day. Time to rest.
Stephen the Great entered the chamber and could see that the candles burned low in their holders. He was greeted by Sir Powell. Sir MK smiled and said, Good to see your face again Stephen. It has been a long day for your I see Sir MK. You and your Knights need sleep. The council chamber slowly emptied. When Sir MK left the room, Stephen the Great looked down on the Mighty Oaken Table to see Drawings of Flags and pictures of swords and armament. Lady Waverider was about to pass by Stephen and he stopped her. Lady Waverider would you do me a favor. She said, Of course My Lord. Would you send Bonfir to me. He stands by the outer door.Thank you Lady Waverider.

Gandalf the White and Magdelena watched Stephen as he touch the paper on the table and examined them intensely.

Bonfir was soon by Stephens side. Look at these. Bonfir
looked down upon the table. We have seen these before. What is your command Sire, asked Bonfir.

Return to the Valley of Clouds and bring those of these flags to the castle. Also bring provisions enough for one months march, said Stephen. As you wish'said Bonfir.

As Stephen the Great turned,Magdelena grasped the hand Of Gandalf sitting next to her. Worry not my friends'said Stephen.

Gandalf thinking to himself. Another,FOA do not be long in your quest.

There has been word that The King with No Name has been stopped at the mountains pass. He has with him his main army and is building defenses at the base of the mountain.
Many riders with different flags roam the countryside.

canamami (1/13/03; 10:30:58MT - usagold.com msg#: 94274)
PPT defending the $355.00 line
Will the line be breached? If so, when? Will a pro-gold battering-ram do the trick? If yes, who/what will that battering-ram be?

Hipplebeck (1/13/03; 10:29:52MT - usagold.com msg#: 94273)
gold as money
Wouldn't be easiest to just price everything in grams?
Why bother with all these currencies?
Dollar, peso, euro blah blah blah.
Goldgrams, equal in value all over the world.
I guess that is just too honest.

You know, if everyone had as much gold as I do
Oh....wait
that's impossible

Aura (1/13/03; 10:15:35MT - usagold.com msg#: 94272)
Venezuela
www.zmag.org/ZNETTOPnoanimation.html
Hi Belgian, Itseems it not one mosquito that`s being attacked but a whole swarm of mosquitoes,the recenly re-empowered Venezuelan population!

miner49er (1/13/03; 09:41:43MT - usagold.com msg#: 94271)
Some thoughts (maybe valid) on the prospects of a Euro gold coin...
Among Belgian's excellent commentary yesterday is one item that brought to mind some musings about the occasionally discussed Euro gold coin. From Belgian's #94221:

"As Eurolanders, we all had US$-bonds in portfolio. As individuals we acted as CBs and took the dollar-exchange-reserve as the mother of all derivatives in our financial planning. Euroland had to foresee an escape-route for getting rid of all those paper-dollar-assets for its citizens and CB-dollar-reserves."

Thus in formulating an "escape-route" the question arises as to what kind of strategies the euro-planners have to wean the citizenry from these instruments without causing a rout with all its subsequent destabilization. To reiterate Husky's well stated comment about the whole euro-thing -- which certainly encompasses more than just the euro currency, but all the political and social considerations of a united Europe -- the lower level groundwork for integration has been in the works for a long time. This has occurred mostly without fanfare, or very explicit declarations of what was taking place. This is not devious, just smart. Why tip your hand to your opposition? Why try to explain outright a host of extremely complex diplomatic and political undertakings, that take years to develop, and compromise your efforts, and be entirely misunderstood, as well?

If we use this line of reasoning, and take as true an analysis that views past European support for the current "gold as commodity" framework, as part of a plan to buy time, and prepare for a day when the dollar could be displaced with a more suitable monetary paradigm, then it makes sense to think that any such "weaning" strategy would have certain characteristics. It would be a) indirect, so as not to "tip the hand;" b) seem perfectly appropriate for the current setup, while posturing well for the new thing; and therefore c) cause the desired result, without necessarily having anyone realize what was actually taking place. For if the public really understood, they would run to the new thing to get an advantage, and thereby disrupt the plan before it was ready for fruition, to everyone's detriment.

So, what of this we hear of the issuance of a euro-denominated gold coin? At first glance it causes us to take note of what may appear a contradiction. A contradiction, that is, between this concept of regularly revaluing the gold reserves of the ECB / Euro system, and the comprehensively discussed difficulties with gold usage as money. Curious, yes. Contradiction, no. Rather a clever extension of the above proffered strategy.

The public owns liability-derived assets almost entirely. Save for typically a home, if that, they have bank accounts, with their sundry deposit instruments (loans to the bank); bonds, equities, and a smattering of diverse derivative concoctions. Because of the current paradigm, these holdings are either directly tied to the dollar, or indirectly LARGELY influenced by what the US dollar (effectively, the US economy -- and by extension, the United States, generally) does.

The public in Europe is not really gold-conscious, yet. It can be argued that they are moreso than the US, but this part is trivial. Neither is fully awake to what is happening, and if awake, none of us has explicitly laid out details. If we did, it would only cause panic, as everyone tried to get on board early. It IS, however, in the best interests of those subscribing to the euro-concept to have the euro zone population (and its partners) possess gold. They do not pose a threat to the mighty by holding gold, as that amount that might be held -- while possibly a fortune to the individual citizen -- collectively would still pale in comparison to the holdings of these giants. But in the same way that majority holders of some equity issue benefit by myriad owners of some minor stake in said issue, so giant gold owners benefit by the general population having an interest in gold, too. These interested parties are what we call buyers. They are what create and support a market, and bid up the price.

In order to put gold into the hands of the citizenry -- a citizenry that is no longer accustomed to owning gold, or trading their money for a wealth asset, outright -- it might make sense to include the asset in the money, at least as a first step. This would take the form of an over-valued gold coin. In other words, say a 100 euro coin would contain maybe 50 euros worth of gold (actual dosages may vary...). Thus at their initial distribution, the tendency would be to use the coin for commerce, and not hoard it, as the coin would be worth more as euro currency, than the gold it contains.

Ahhh... but at what value does one fix the gold? And if we fix the price, doesn't that compromise the "free-gold" market-marking properties of the reserve base? Well, not at all actually... Issuing an under-valued gold coin is not going to constrain the ECB or Euro System Banks from revaluing their gold reserves. In the first place, should issued under-valued coins have their gold content appreciate to the point where hoarding them is more desirable than spending them, then the objective of getting gold into the hands of the citizenry would begin its realization. Although these coins would not consume a large amount of reserves, their presence would raise awareness and interest in gold. As these euro users start to recognize that gold was gaining in price, these circulating coins provide an easy, first means for the uninitiated to get at some gold, by pulling these coins out of circulation. This would help bring further momentum to the gold market -- the physical gold market. Thus without "official" proclamation, the gold-acquisition message can be most effectively conveyed to the Eurolander, in that he figures it out entirely for himself .

Since, the amount of gold in the coinage would not be a sizable portion of reserves, book losses due to significant gold appreciation would be small, while the benefits derived from the aforesaid new gold-awareness would greatly outweigh them. The exercise would simply be a cost of doing business. The problem that inheres to the traditional gold-standard -- that being the requirement to maintain the currency at par with the backing instrument, so as not to cause instability in the credit markets -- is not a threat here. This gold coin issuance is NOT a gold backing of the currency. It is simply using gold in a portion of it, specifically a few million higher denomination coins. As the gold content at the time of minting would be valued less than the coins' denomination, transactions using these coins -- including credit transactions -- would still treat the coin as a token representation of the coin's currency value, and not as a commodity itself. Thus collateralization that may include these coins, is actually made with simple euros, and not gold. There is no incentive to depress the price of the coins' gold content. Neither is there any interest regarding this collateral should gold appreciate, as any claims made upon the collateral are not required to be paid with these coins (or their gold content), but simply in legal tender euros -- coins, paper, or electrons.

In a traditional commodity-backed monetary standard, a perception of irresponsibility in the backed currency leads to a rush to exchange the currency for the backing instrument -- which necessarily is also then a currency, and of necessity a superior one. This exposes the inflated issuance brought about by fractional reserve lending. This leads to default as claims don't match assets, and thereby discredits the claims themselves, causing them to devalue.

In the euro setting, an appreciating gold price would only threaten the usage of the coins issued -- a relatively small proportion of the total euro monetary base. And if the coins are hoarded, they are only serving to improve the personal balance sheets (economic conditions) of the private sector "hoarders" -- mostly euro-zone residents, and those doing business with it.

So, while gold is in this contained range, any mintage of undervalued euro gold coins only helps spread the euro. Mostly they would move as simple currency. Some would be removed from circulation in the form of novelties. Think of this. What a great gift idea! Give your grandchildren, say, a birthday or graduation present of a shiny, new 100 euro gold coin. Kind of like the way Americans were (are) encouraged to give the kids savings bonds -- only better. (Although, it would be even BETTER to give them a nice all-gold coin, keep in mind these are baby steps to re-introduce the gold-concept to the populace.)

And when gold finally does go deep north, the booster stage of this present contract-gold, POG-on-a-leash paradigm will run out of fuel, and lose its utility. As it falls gracelessly to earth, the solid gold payload will break away, and accelerate to the heavens. Then each grandkid will have a nice but different souvenir. One, a pretty (but worthless) piece of paper, which might be framed for a wall hanging. The other, a piece of that scarce and precious metal -- the timeless wealth of ages, and the treasure of kings.

Cheers,
miner

Christian (1/13/03; 09:41:15MT - usagold.com msg#: 94270)
Try-ing to figure this out.
When a reserve bank makes a gold loan it passes the physical stock of gold to a borrower in exchange for a secured commitment to repay the gold. The security (first mortgage??) of the gold loans are regarded as a near substitute for physical gold, because gold loans take first place on assets before other loans, bondholder debt or shareholder equity. Most gold loans made to borrowers are sold back in a prearranged arrangement to lender who then monetizes the loan claims. Does this mean that a chief excecutive officer can simply use an off balance sheet borrowing like Enron did, move the money into ITERA, like they did, and in the process wipe out bondholders and shareholders? The Bin Laden Family and the Bush Clan own 1/3 of ITERA. ITERA owns a considerable amount of in ground oil assets in Turkey, Iraq, Saudi Arabia, Iran and a host of other countries that end with istan or tan. Why has ITERA bought into so many oil companies.

Hipplebeck (1/13/03; 09:19:08MT - usagold.com msg#: 94269)
Belgian
They tried to treat Chavez like a mosquito.
The people came pouring out of the mountains and put a stop to the coup.
Now they are desperate.
The spotlight is shining on them.
He is a leader of a new movement sweeping all of Latin America. He's not a mosquito anymore.

CoBra(too) (1/13/03; 09:14:17MT - usagold.com msg#: 94268)
@ Belgian - My Home - My Castle
Maybe, the government encouragement to own a house can be derived from property taxes. Even if in USA today (pun fractionally intended) you can't really speak of broad ownership, except maybe by the mortgage lenders - GSE's and Banks.

Gold, on the other hand doesn't 'lend' itself as easily to taxation! Hmm, cb2

Belgian (1/13/03; 08:57:26MT - usagold.com msg#: 94267)
Help !
Question : Why do Chavez opponents use the vital Venezuelan oil as "the" weapon against him ? There is something here that I don't get. Any takers who can explain what is really going on (behind) there. One never shoots a mosquito (Chavez) with a canon (oil) ? TIA.

Belgian (1/13/03; 08:47:15MT - usagold.com msg#: 94266)
My house...My castle !
All nation states do encourage their citizens to acquire land with a house on it as their private property. This is a very old basic, economic (and social) given. Make man have something to strive for and defend. Debts for the realization of man's home in possession was always considered as quite safe. Not only by the private bankers but also by the states that exercise controls on these banks. But....
Things ran out of hand and housing-debt is now totally unreliable for quite some time now. Refinancing, requires lower and lower interest rates and inflation-instrument, to rise the home's price-worth, is impossible. What now ?

This situation is to a certain extend comparable with Gold.
Substitute *house* for man's physical Gold in possession.
Gold has ceased to be man's property on wich he could rely as a wealth-tangible, over time. Man took Gold on debt and paperized Gold. Man bought houses on credit and isn't able to take ownership of it anymore.

The nation states did everything to make house-property succeed on a broad scale. The nation states did everything to denigrate Gold as to not encourage Gold-ownership.

I found this semi-analogy quite interesting and is perhaps an illustration as to "why" Eurolanders are all born with a house-brick in their stomach and Euroland is in the process to encourage Gold-ownership, again !?

sector (1/13/03; 08:41:47MT - usagold.com msg#: 94265)
U.S. Economy: Fired Workers Exhaust Benefits at Record Rate
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Economies&s1=blk&tp=ad_topright_econ&T=markets_box.ht&s2=blk&bt=ad_position1_economies&box=ad_box_all&tag=economy&middle=ad_frame2_economies&s=APiJcrhTBVS5TLiBF

01/13 01:29

By Carlos Torres

New York, Jan. 13 (Bloomberg) -- It's fortunate that Miguel Lopez has enjoyed being a stay-at-home dad. It's the only work he can find these days.

``There's been nothing,'' said the 38-year-old Staten Island man, who lost his job as a contract worker on the Merrill Lynch & Co. trading floor after the Sept. 11 attacks and ran out of unemployment benefits in July. ``It's like I've hit a brick wall.''

The percentage of unemployed workers who can't find a job before drawing their last benefit check is the highest in at least three decades, Labor Department figures show. The jump in this so- called exhaustion rate is fueled by the despair of job-seekers like Lopez and may further retard an economy that likely grew at a 1.4 percent annual rate last quarter, economists said.

It's part of the reason President George W. Bush last week unveiled a $670 billion tax-cut plan he said will spur the economy and help the unemployed find jobs faster.

``The job market really has become quite inhospitable,'' said Ram Bhagavatula, head of global research at Royal Bank of Scotland Group Plc in New York. ``The creation of new jobs really has weakened.''

According to November data, the latest available, of the people who started collecting benefits six months earlier, 41.8 percent had used up their allotted payments without finding a job. That's the highest percentage since at least 1971, the earliest the Labor Department records are available.

The trend worries some economists. While unemployment usually continues to rise in the early stages of a recovery, persistent joblessness can prolong sluggish growth.

``Households in distress are in danger of skipping mortgage payments or credit card payments, and when that occurs it can ripple through other areas,'' said Steven Cochrane of Economy.com in West Chester, Pennsylvania.
+++++++++++++++++++++++
Times are changing. Denial is giving way to anger, then to acceptance.
The US economic cancer patient becomes a true invalid.

Black Blade (1/13/03; 07:52:31MT - usagold.com msg#: 94264)
Russia sending missile-armed ships to protect Gulf interests
http://straitstimes.asia1.com.sg/topstories/story/0,4386,165850,00.html?

Snippit:

MOSCOW - Russia is preparing three naval vessels for a long-term mission to the Persian Gulf within the next month to protect its 'national interests' in the event of an American invasion of Iraq. The move could heighten tension between Moscow and Washington - both having interests in Iraq's oilfields - and comes at a time when the United States is doubling the size of its troop deployments to the Gulf region.

Black Blade: Looks like it's getting a bit crowded in the Gulf. "Interesting Times"

Rock (1/13/03; 07:52:28MT - usagold.com msg#: 94263)
re: Tricky
Its a pleasure to meet you and may I say welcome to the castle where the unlearned (like me) become the learned (like you). Thanks for your imput. I have always maintained that math was a perfect law and you can't dispute the truth.

Also I wanted to say thank you to Mr. G & Belgium for helping clear up some this confusion about the Euro. Mr G that was a pretty good site you posted on the Euro also.

Black Blade (1/13/03; 07:41:06MT - usagold.com msg#: 94262)
Venezuela's Strike Worsens as Chavez Warns Schools
http://www.themoscowtimes.com/stories/2003/01/13/253.html

Snippit:

The Associated Press CARACAS, Venezuela -- President Hugo Chavez vowed he will not be driven from office by a six-week strike, and threatened to fire or jail teachers joining the work stoppage. Meanwhile, police used tear gas to prevent Chavez supporters and opponents from clashing in the city of Maracay, the military's nerve center 70 kilometers from Caracas. Chavez, who on Friday warned businesses hoarding food that he might send troops to seize basic foodstuffs, told thousands of supporters he would also not allow schools to stay closed. Accusing strike organizers of closing public and private schools, leaving millions of students without classes, Chavez warned that teachers and school directors joining the strike will be fired or even jailed. Carlos Fernandez, head of the country's leading business chamber, said many schools closed because of low attendance. He insisted most parents were not sending their children to school in support of the strike. The country's $100 billion economy shrank an estimated 8 percent in 2002, largely due to political instability. Inflation has surpassed 30 percent while unemployment reached 17 percent.

Black Blade: From bad to worse. Civil war looks like a possibility and the oil fields are shutdown which will require months before they can be brought back to normal production once the strike ends.

Christian (1/13/03; 06:44:47MT - usagold.com msg#: 94261)
Hedging = Financial Engineering Credit Creation.
Hedging-techniques used using the futures and options markets. Forward Contract-a transaction in which 2 parties agree to the purchase and sale of gold at a future date. Mostly used on the OTC for credit creation gold swapes. OTC options, future contracts and credit creation gold swaps are not tradeable contracts, they constitute an agreement between two principals. Because OTC options and futures trades are not tradeable, they are much more flexible then exchange options. Anyone with money can trade exchange traded options and futures. There is no way to trade credit creation gold on the exchange but it is widely done on the OTC. 30,000 tonnes of credit creation gold are traded on the OTC every year on the OTC. The Futures markets make possible the new concept of gold as a trading vehicle on which to make money. Margin purchase for as little as 10%, or $100,000 can control $1,000,000 in gold is very possible on the exchange traded exchange. On the OTC anything is possible as long as two entities agree to it. Sound money is the first bastion of a society's defense. To destroy a nation the best way is to destroy its currency. What better way to indebt a nation with debt then the present system without the means of paying that debt. To devalue the dollar is to make people poorer then what they already are. Costs increase while the value of income decreases is not a way to get ahead.

Black Blade (1/13/03; 06:30:17MT - usagold.com msg#: 94260)
From The Mailbag

Courtesy of Addison Wiggin (DailyReckoning):

"I'm old enough to have experienced the real estate crashes of the 70's, 80's and 90's," writes one reader. "I'm still waiting for the next one which I believe will dwarf the others.

"I work in an area that is being promoted as the Gold Coast or Newport Riviera of California. It's behind the Orange curtain, supposedly far enough away from Los Angeles to make a difference in lifestyles as well as insulate it economically from many of the pitfalls that L.A. has experienced. Won't work. A friend told me today that she has a Steinway baby grand piano from a previous marriage she's been thinking about selling and its worth about $70,000.

"She called one of the premier piano sales firms nearby and the manager said he's getting 6-10 calls a day to sell these pianos. People are hurting so bad that they're trying to stave off the lenders by selling their assets. Another friend told me that his son works for a mortgage firm and many customers who've been buying homes for one million to 1.5 million have debts of $700,000 to 1.2 million dollars! It's only a matter of time - and not much longer at that."

Unfortunately for some this is one 'predictable pattern' that seems to have really taken shape and could pose a problem.

Black Blade: Consumers are buried under crushing debt and it is only a matter of time. This last Christmas Season was by most indications very "grim" for retailers. Consumers are fast going from being spenders to being savers. They simply have no choice as they observe that the "Bone Pile" grows by leaps and bounds as revealed last week by the US Labor Department and foreclosures are rising at a furious pace. Companies are expected to slash the workforce further and new hires are at the bottom of the list for next year. It remains to be seen if the "President's Fiscal Stimulus Proposal" will even make it out of "committee" or be watered down so much as to be meaningless. Meanwhile the US and the UK gear up for war in the Middle East and the threat of renewed terrorist activity hangs heavy in the air. This morning the primates on Wall Street are buying into the Market Index Futures so as to "jumpstart" the market trading at the open. Lately trading volumes have been rather low and the vast majority of trading has been institutional money. A lot of cash may flow into the market as companies must dip into incoming revenues to prop up under funded pension plans. But that will become evident so the savvy investors who study the real earnings and not so evident to the Lemmings who are deceived by "pro forma" or "operating" earnings and line up to become "Lemming Stew". It should be quite "entertaining" today as the Lemmings run to and fro.

Rock (1/13/03; 05:29:07MT - usagold.com msg#: 94259)
Re: Hipplebeck
The days of dueling are over and I dont'a agree that GWB is a coward. Its obvious you hate both Saddam and Bush, but as for me I am backing the US president and praying that he makes the right decision. As a veteran of the US Army in the 39th Infantry Division I would go in a heart beat to protect and defend. Saddam is a time bomb waiting to go off, I don't really feel like waiting until we have an out break of small pox before we say, oh I guess GWB was right after all.

Sounds like you believe Saddam as for me I think he's lying and I don't want to find out after the fact that he has WMD when its too late. I hate war like the next guy but I don't trust Iraq, we know they have WMD but its like finding a needle in a hay stack.

Sorry I got off the beaten trail oh noble host but the futures look good for the markets in these early morning hours, it should be an interesting day today.

Rock

Hipplebeck (1/13/03; 05:17:15MT - usagold.com msg#: 94258)
AX
First and foremost, the dollar (as all fiat currencies) is a confidence game.
If the US began buying gold, it would be betraying a lack of confidence in their own currency.
Everyone would jump on this bandwagon in a second, and the cracks in confidence would widen until the inevitable earthquake would come.
If the US shows the least amount of lack of confidence the game is up.
Did you see last week that they brought out Cheney to make a speech about the economy and the resolve to go to war?
Behind that microthin veneer of confidence is the truth.
Once the truth gets out, the house of cards comes crumbling down.
Do you know the story of the Emporer with no clothes?
Well, in this case, let's just call him the IMPORTER with no clothes.

Belgian (1/13/03; 04:55:39MT - usagold.com msg#: 94257)
The world's Astronomical growing Debt and GOLD....
Gold should not be set out against debt ! Debt is "nothing" and Gold is "wealth". Oranges are not peanuts.
All currencies are debt on theirselves. How can the Value of Gold be expressed in a currency (dollar) that represents nothing but debt ? Gold-Value should be compared with real tangible, positive, things. Monetary Gold against oil-reserves and the real GDP of the world. Not the GDP expressed in debt-dollars-reserve-currency, but Valued against the total amount of available, aboveground Gold.

Debt will never go away and will always weight more and more as a "negative" force (ballast) on any progress.
This astronomical debt must be replaced by something of positive Value, Gold-Wealth. Gold as a measuring rod for what this world is capable of producing, net/net.

Therefore Gold's value needs an appropiate pricing-unit (currency). Up until now, the dollar was on duty for this. Soon this dollar pricing-unit will be laid off and become unemployed as a Gold-measuring-standard.

Give this process all the time that is needed.

Hipplebeck (1/13/03; 04:45:46MT - usagold.com msg#: 94256)
CNN POLL

Should:

A- US go to war against Iraq?

B- George W. Bush and Saddam Hussein battle it out in hand to hand combat inside thunderdome?

vote today.

This is one we'll never see because both these fellers are cowards and would never dream of sacrificing themselves for their country, even though they would both be all to happy to sacrifice your life.

Christian (1/13/03; 04:05:13MT - usagold.com msg#: 94255)
Creating deposits for loan creation.
Banks have insufficient deposits to make loans and therefore deposits are created by leasing gold, sell it at spot, giving them immediate cash to create that deposit to make loans based on the reserve credit creation process. Gold loans provided a large part (52%) of the capital for the housing boom of the 90's. I have yet to see a bank that does not have access to Reuter's Monitor Dealing Information Service (RDS) to check on the Gold Lease Forward Rate Agreement (GOLFRA) and the London Interbank Forward Rate (GOFO). I have yet to see a bank that does not use the Forwards + Options as off balance sheet agreements. I would like to see one bank or SP500 corporation make public their off balance sheet debt. All banks and corporations have two sets of books, one for shareholders to look at their shareholder profits that don't exist and one for the tax man to show the ever increasing tax loss carry forwards. Look very carefully at Enron's or Kmart's books- both show large nonexisting profits to shareholders and at the same time ever increasing tax loss carry forwards when the times were good. Enron like Kmart used GOFRA= gold forward agreements to protect themselves from a rising gold price on their off balance sheet gold debt. Look at General Electric's off balance sheet debt. It is many times it's equity base that should belong to the shareholders but don't. The state of Maine has an off balance sheet debt of $1.7 Trillion on 1.2 million people. The United States Federal Government has a $78 Trillion off balance sheet gold debt. This country has to loot other countries just to stay even.-- Cash in hand, that is what you are worth. All the rest of your equity will perform a disappearing act if you don't have it in cash in your hand. 95% of the debt carried on books can never be paid because on that debt due there is only 5 cents on the dollar of cash money available to pay it with. How does a person pay $1.00 worth of debt with 5 cents? I want to know. Presently debt is increasing at its fastest pace and coin in the realm (circulation) is falling when it should be the other way around. Credit creation is causing inflation and debt payment with more credit creation money is bringing on deflation. When it is all said and done what goes up (inflation) must come down (deflation). How does a nation pay its debt when its debt exceeds the money supply many many many times over. You tell me!!!!!! I would like to know.

Topaz (1/13/03; 03:28:46MT - usagold.com msg#: 94254)
@ax.
I might be way off but I think the Treasury has taken your advice and now has dibs over SA Gold resources (as opposed to company reserves).
The need to weaken the $ is apparent given the T-Bond market Yield, exports dying on the vine (trade defecit) etc. unlike your competitors you ONLY hold Gold in reserve and it is through Gold you must effect a devaluation.
Don't write off 'ol Buckaroo just yet...can you imagine the awesome prospect of an America, in full export mode after (say) a 50% deval. vis all other currencies?
With every cent deval. vis E, Germany receives another "lash" in it's death of a thousand cuts.
Export your Deflation to the World Ax.

ElGordo (1/13/03; 03:24:47MT - usagold.com msg#: 94253)
Machine tools down big
WASHINGTON, Jan 12 (Reuters) - Demand for U.S. machine tools in the first 11 months of 2002 fell 25.8 percent from the same period in 2001, two industry groups said on Sunday in a joint report.
The American Machine Tool Distributors' Association and the Association for Manufacturing Technology said U.S. January-November machine tool demand stood at $1.857 billion compared with $2.501 billion in the same 2001 period.
_______________
I'm just amazed at all the positive happy talk in the media.
How can they ignore all this info? I just don't get it.
Consumer is tanking, the worst is yet to come.

Belgian (1/13/03; 03:22:33MT - usagold.com msg#: 94252)
To all smart Mister FX (forex) with their daily TRILLIONS....
Yes, you can move almost any currency, anytime ! But there is ONE thing that completely incapacitates you ALL : The uptake of physical gold in possession !

Gold is a Central Bank matter ! During the past 20 years, the total (global) Gold-situation has been maneuvered into an exceptional, historical *position*. Confetti can be plundered easely on top of economical sub-ordonation. But you can't get ALL the citizen's Gold confiscated...again !

Don't challenge the euro-concept !

This morning, again on CNBC-Europ : Gold is in a one-way street UP, regardless of what happens on the other economical/monetary terrains ! The long term, "fundamental" changes in Euroland are slowly and faintly recognized, despite many big problems that still have to be overcome.

Get IT in your possession NOW ! NIA but only a strict personal view communicated with all disclaimers thinkable!!!

Belgian (1/13/03; 00:52:23MT - usagold.com msg#: 94251)
@ Ax
My 2 cents with a difficult answer on your question :
* The Paradox* : POG is low / lower, because there is NOT enough Physical Gold available and there might be too much buyers of Physical Gold out there, waiting to get some, all at once !!!

Yeah, right...it took me one year to get this paradox at its fulliest meaning !

This paradox (virtual contradiction) is the one and only explanation for ALL the anomalies we and many others are dissecting.

Those who want to sell their physical Gold "for dollars" have already done so : Private Gold-owners and 3,000 tonnes of underground gold. Central banks DO NOT sell Gold for dollars : They (CBs) are already stuffed with dollar (reserves) and are still adding dollars to their reserves from "exportitis" (US trade-deficit).

Ax, are you going to sell your Gold in exchange for abundantly printed helicopter-money ...THE PRINTING PRESSES working over-hours chez Bernanke & Span ???

Why do we need to drawn in a dollar-flood when OPEC says that "SUPPLY" will be guaranteed and when there is ANOTHER currency ???

GET THAT POG DOWN AND UNDER THE RADAR BECAUSE WE RAN OUT OF IT !!!

Black Blade (1/13/03; 00:42:18MT - usagold.com msg#: 94250)
Plot Reported Against Plane Carrying Gulf Troops
http://www.reuters.com/newsArticle.jhtml?type=worldNews&storyID=2031343

Snippit:

WASHINGTON (Reuters) - The United States, stepping up mobilization for possible war with Iraq, has evidence of a plot to blow up an aircraft carrying troops and cargo to the Gulf region, The New York Times reported Sunday. Citing military and intelligence officials, the report on the newspaper's Web site said the evidence identified a specific civilian airline, a specific airport in the United States and a specific date and time for the planned attack. Officials learned of the plot within the past three weeks, the Times said. A Pentagon spokesman declined direct comment on the report, saying: "We generally would not discuss any specific intelligence that we receive." The military alerted the private airline directly, avoiding the risk of delays that might have come from working through domestic law enforcement authorities or federal transport safety agencies, the report said. Security officials at the company took steps to guard against an attack, changing the date and time of the flight and the route it followed, the newspaper reported. It did not make clear if the date of the targeted flight had now passed.

Black Blade: "Interesting Times"

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