 Centennial Precious Metals Gold coins & bullion since 1973 Denver, Colorado 80246-0009 We educate first-time investors! |
for quotes and purchase information.
|
ARCHIVED DISCUSSION FROM 12/14/1999
All times are U.S. Mountain Time
View Yesterday's Discussion.
tedw
(12/15/99; 0:01:01MDT - Msg ID:21035)
Freedom of Information Act
http://www.usa.gold
I faxed a Freedom of Information Act Request to the Treasury Department yesterday, demanding they supply documents which answer the 11 questions posed by GATA in
Roll Call.
The Treasury Department is obligated to respond (and will) to the request. Ill post it on this forum when they respond.
Failure to respond opens a venue in US District Court to
compel the Treasury Department to provide the documents.. At this point in life, Im outraged enough to take them into court.
Anyone who wants to file their own FOIA send an e-mail
to Tedw@internetcds.com and Ill e-mail a form to you.
Their failure to respond will also give you a good reason to call your Congressman and get their office involved.
These Bastards are supposed to work for us.
tedw
(12/15/99; 0:00:59MDT - Msg ID:21034)
Freedom of Information Act
http://www.usa.gold
I faxed a Freedom of Information Act Request to the Treasury Department yesterday, demanding they supply documents which answer the 11 questions posed by GATA in
Roll Call.
The Treasury Department is obligated to respond (and will) to the request. Ill post it on this forum when they respond.
Failure to respond opens a venue in US District Court to
compel the Treasury Department to provide the documents.. At this point in life, Im outraged enough to take them into court.
Anyone who wants to file their own FOIA send an e-mail
to Tedw@internetcds.com and Ill e-mail a form to you.
Their failure to respond will also give you a good reason to call your Congressman and get their office involved.
These Bastards are supposed to work for us.
YGM
(12/14/99; 23:21:17MDT - Msg ID:21033)
More on Australian Y2K Seizure Law............
newsmax.com
With Carl Limbacher and NewsMax.com StaffFor the story behind the story...
Wednesday December 15, 12:32 AM
Australian Report: Y2K "Nightmare" Plans
When we first saw the news report from an Australian paper -- we had difficulty believing it. NewsMax.com's Inside Cover receives truck loads of emails from viewers. Some check out. Some don't.
But we were titillated by the email of one NewsMax.com reader who forwarded us a story that appeared in the Melbourne Herald Sun -- one of Australia's major dailies and the flagship paper for Rupert Murdoch's News Corp. media empire.
The headline was innocuous: "Law Ready for Y2K."
The lead followed: "Food may be rationed and inspectors will have the power to seize private property if disaster strikes on New Year's Eve."
The article continued: "People who refuse to hand over vehicles or any property needed for relief efforts face big fines and jail if they obstruct government-appointed inspectors.
"The emergency laws have been introduced into State Parliament and will be passed before the new millenium.
"Transport Minister Peter Batchelor told parliament the laws may seem draconian but would not be needed if adequate contingency planning was in place for Y2K disasters."
This revealing story received such little press attention, Inside Cover thought it may have been fabricated. We contacted the Herald Sun and confirmed the story.
Perhaps we should not be so surprised. Most Y2K stories that acknowledge concerns or problems about the "Millenium Bug" get little press ink. Stories that give a positive Y2K spin get major media coverage.
Chris Powell
(12/14/99; 22:51:30MDT - Msg ID:21032)
Gold is antidote to technology
http://www.egroups.com/group/gata/311.html?
Interesting mainstream recognition
for gold stocks, particularly GSR
and CBJ.
Peter Asher
(12/14/99; 22:48:07MDT - Msg ID:21031)
Black Blade, Elevator Guy and THC
You just saved me from writing a huge post. just to tie up loose ends, consider that Allen and Bill and probably others around the globe, have had to sell their souls to the "Puppet Masters." I suspect that these people are at best, employees.
I remember Nixon's face on TV when he fessed up to Watergate. The man was terrified of somthing bigger than he was. I wasn't the only one who saw this.
Watch your gold, watch you back, and always be valuble to the creation of the wealth that they compete for.
elevator guy
(12/14/99; 22:47:01MDT - Msg ID:21030)
@Black Blade
Cheeta throwing bananas! Thats rich! And so right on!
Good one, Black Blade! You make me laugh!
I'm going long in crude early am, so as to buy gold, you know.
Gotta sleep now, bye.
Black Blade
(12/14/99; 22:44:53MDT - Msg ID:21029)
All backed by "faith and credit" of the government.
Atlanta Fed chief says no inflationary effects from Y2K cash reserves
ATLANTA (AP) -- The president of the Federal Reserve Bank of Atlanta said Monday he does not foresee any inflationary effects from the $200 billion in extra cash the Fed has on hand in case of problems caused by the Y2K computer glitch.
Atlanta Fed President and CEO Jack Guynn said few banks or businesses have drawn on the extra funds and regulators don't expect a massive run on cash as the new year approaches.
Theoretically, a large influx of cash into circulation could lead to more spending -- stimulating economic growth and perhaps nudging inflation higher.
``We've never been through a Y2K kind of a period before, but we don't think that's a very likely thing we'll have to deal with,'' Guynn said.
Guynn made his remarks at a news conference called to announce that all 10,200 banks insured nationally by the Federal Deposit Insurance Corp. are ready for the changeover Dec. 31.
The Y2K bug may cause computers to break down at midnight Dec. 31 if they recognize only the last two digits of a year and think the date is Jan. 1, 1900, instead of Jan. 1, 2000.
Last year, the central bank ordered an additional $50 billion in new currency to be put into circulation in the event people make a run on banks and automated teller machines this month.
The Federal Reserve also has $200 billion in currency stored in government vaults, up from the $150 billion normally held in reserve. That is in addition to the $460 billion in notes circulating in the United States and abroad.
FDIC Chairman Donna Tanoue, citing a Gallup poll commissioned by federal regulators, said consumer confidence in the banking industry's readiness for Y2K has risen to 90 percent.
That means the clamor for cash hasn't materialized, a possible sign that the anti-alarmist messages federal regulators have been giving for the last month are sinking in.
``We all thought the critical period would start about Thanksgiving, and we are gratified that demand hasn't been more than normal around the holidays,'' said Ellen Seidman, director of the Fed's Office of Thrift Supervision. ``We're still telling people don't take out more than you normally would over a long holiday weekend.''
Guynn said federal banking officials are still prepared to help out institutions in ``a liquidity crunch'' and the Fed has created a special lending system for banks in trouble.
Seidman said consumers should keep paper records during December and after Jan. 1 -- including ATM slips with balance information -- as backups in case of computer glitches.
Black Blade (Toshin Kuro Kosai): BTW, I don't believe that man evolved from a monkey, but rather, he spends his whole life proving that he is one :-)
THC
(12/14/99; 22:40:24MDT - Msg ID:21028)
@Oro re http://members.xoom.com/Nebucadnezer/GoldDDD.htm
Oro,
Pls forgive my late response. I have looked at the chart of DDD vs. the POG, and I have a few questions.
Pls feel free to respond briefly, as I respect that your time is very valuable.
Q1. Is this chart intended to show the effects of overseas DDD on the POG and the $? If so, does that mean that the demand figures are goverseas/non-USh
Q2. Is goutstanding debth defined as gall $ denominated debt in the world,h or gall overseas $ denominated debth?
Q3. What interest rate are you using? Long-term, short term, Eurodollar, domestic US govft debt rates, corporate debt rates, etc?
Q4. What is the definition of gdebt growthh? (Domestic US, global, or non-US?)
Q5. Would it be possible/useful to plot the above values in some aggregate/cumulative format, rather than in year-year changes?
I think that most of these could be answered by just adding footnotes to the graphs, showing the definitions/sources of figures for each parameter.
Many thanks,
THC
Black Blade
(12/14/99; 22:32:22MDT - Msg ID:21027)
AG, ethics and morality
Makes one long for a return to a man like Paul Volker doesn't it?
Black Blade
(12/14/99; 22:29:10MDT - Msg ID:21026)
THC, just my impression, perhaps your right, but.....
It is just my impression that the man can't or won't make any concrete statements, rarely comes to the point, and consistently talks in circles. In congressional testimony the buffoons (congressmen) in the gallery nod their heads as if they know what he is saying, but clearly they haven't a clue. Most of what he says that isn't gibberish is common knowledge or common sense. But this is my opinion only...I may just have a bad pictuire tube, but at times I think that I see "Cheeta" in a suit throwing the buffoons an occassional banana :-)
elevator guy
(12/14/99; 22:23:18MDT - Msg ID:21025)
The phenomenon of AG
It has been pondered as to why AG is part of the deficit/fiat/fed system, since he wrote so convincingly about the evils of deficit spending that robs the people with unseen theft of earned value.
The answer is, that intelligent, idealistic individuals are the best soldiers for the cause of righteousness, and being so endowed by their Creator with intellectual gifts, they are also the best "catch" for the opposition, to trample the cause of the meek, and rob the widows blind, with utter immunity to prosecution or detection, gliding effortlessly all the while with a champion of spinning words and ideas to lead the way.
It is my belief that AG was wooed by a fine sumptuous table, set with all manner of the finest luxuries that can be had. After his belly was full, he was promised a life of insulation from the burdens of being forthright and honest, and traded his natural integrity for the things that the establishment could provide.
A sad death of the spirit, for one who once said great things so well. Now he blows smoke up the markets skirt, to extract monies from the unknowing, in a game of big business finance, like a tax of the willing. A cog in the Borg empire of fiat debt and theft.
By the way, who is AG?
THC
(12/14/99; 22:18:30MDT - Msg ID:21024)
Black Blade
BB,
AG is clearly "intelligent." The question is, does he have "principles?"
*Does he speak what he believes to be true?
*Or does he twist words and numbers to fit the preferred scenario of the powers that be?
*He is clearly intelligent enough to know that the "Natural Principles of the Universe" can only be ignored for so long, and that eventually they are out of his control. Is pretending to be able to accurately "forecast" and "control" the economic outcomes of an infinitely complex world not a falsehood in itself?
Black Blade
(12/14/99; 22:04:00MDT - Msg ID:21023)
AG doesn't impress me!
When I listen to AG speak, somehow I visualize the character of Chancy Gardner in the movie "Being There" played by the late Peter Sellers. Perhaps the idea that AG is some intelligent man is grossly in error.
THC
(12/14/99; 21:54:59MDT - Msg ID:21022)
The Believer
The Believer,
Please note that those were not my words - that post was a verbatim copy of an article written by Alan Greenspan!!!!
So obviously, he knows exactly the problems that exist with the current system. Either he has chosen to ignore them, or he feels that it is best to "make due." Who knows.....
In any case, the time is certainly "not ripe for change." The American people are very happy with the "wealth" created by the bubble economy, and probably do not want to hear about how the system is "unsustainable."
Perhaps now is the time for us to:
*Diversify our own assets for protection
*Study and learn as much as we can
*Slowly help others see the potential risks of the fiat pyramid
I think Oro has a very realistic approach to the issue of "when to take action":
"blame and freedom issues do not interest me for the here and now, since they become a current issue with people only after an obvious crisis that affects many of them. I do need to understand who, how, what and why so that I can do something about it in an ongoing fashion. Later, when people are receptive, I could have a message and a faction to stand with. Now, action is unproductive. So true - utopian liberalism is not in the cards today but may be placed in the deck for the next game."
Cheers,
THC
THC
(12/14/99; 21:47:51MDT - Msg ID:21021)
Canuck Gold
AG is quite an eloquent writer/speaker.
I don't know when he wrote that, but I believe it was from a few decades ago.......prior to his becoming part of "The System."
Cheers!
THC
The Believer
(12/14/99; 21:26:41MDT - Msg ID:21020)
THC - Tribute to FOA
THC,
I read with great interest your feelings about what
has happened to bring us to where we are now.
What I want to know is... when do we as a free people
step up to the batters box and rid our country of the
ever tightining stranglehold of the unconstitutional
Fedral Reserve "System"?
Will we STILL stand by and let these power hungery
fools "FIX" our economic problems after Y2K?
"They" managed to make the crash of '29 shift one hell
of a lot of power.It will happen again.
Soon enough, time will tell.
PH in LA
(12/14/99; 21:00:57MDT - Msg ID:21019)
Public Question for Bill Murphy on Kitco Special On-line Event
http://www.l0pht.com/pub/tezcat/Beter/Beter02.txt
Kitco is sponsoring a special on-line event with Bill Murphy, President of GATA, to be held on Thursday, Dec. 16 at 10PM Eastern Standard Time. They have invited that public questions be submitted in advance that will be read by Bill Murphy and commented upon as deemed interesting during the on-line event. I have submitted the following question to GATA and Bill Murphy and look forward to his/their answer on Thursday:
Dear Bill Murphy:
Have you or any of your supporters heard about and/or looked into the allegations by Dr. Peter Beter, made in the 1970s, about irregularities swirling around the gold in Fort Knox? Original transcripts of these allegations can be found at:
http://www.l0pht.com/pub/tezcat/Beter/Beter02.txt
Like GATA, Dr. Beter also called for an official public audit of the gold owned by the United States government. Up until that time, it was widely believed that America's gold reserves were stored in Fort Knox. In response in part to Dr. Beter's allegations, a media-event guided tour of Fort Knox was staged by Treasury and Federal Reserve officials with the collusive participation of several members of Congress. Beter later claimed that the vaults shown in the well-staged guided tour event were not even the vaults that were supposed to house the American people's gold: "The compartments in the vault shown to the visitors were never intended for storage of gold; and, my friends, what the visitors saw last September were not gold bars--not even junk gold! It has now been confirmed to my satisfaction that what was seen by the visitors is a commodity known as "show gold"--lead bars covered with a layer of gold that is just thick enough to stand up under handling. This even helps explain the high alloy content responsible for the strange redness which many of the visitors last September noticed. Pure gold is extremely soft, and a thin layer over lead could all too easily be damaged and reveal the lead underneath. Highly alloyed gold--that is, impure gold--was therefore used that it would withstand handling. Thus they saw "junk gold" all right, but it wasn't even junk gold all the way through!...
"The visitors of Fort Knox last September of course had no way of knowing that there are two vaults, and no one told them. They were led to believe that the vault they entered with all the compartments was The Vault, and the Treasury had seen to it that none of the invited visitors were experts on gold, much less on the mysterious legendary place known as Fort Knox..."
By way of background explanation, Beter further explains:
"After the wartime modifications to Fort Knox were made, over 10 years
were allowed to pass before the next major step in 1954. At that time
a super-secret complete inventory was taken of the Fort Knox gold.
This was not the same as a relatively cursory audit, so-called, of the
gold which was done in 1953. The project in 1954 involved a complete
count with weighing and assay sampling of all the gold there--about
three-quarters of a million 400-ounce bars worth a total of 12-billion
dollars ($12,000,000,000) at that time, and that was at the old price
of $35 per ounce. That's twice as much as the Treasury ever claims to
have now, and even these claims are complete lies. In addition to all
the weighing, counting, and checking against records, the 1954
inventory included the extraction of a plug of gold from every
one-hundredth bar for assaying, and these samples were sent to Assay
Offices all around the country to minimize the chance of any collusion
to falsify the results. This seemingly enormous job was kept
completely secret, and was completed in only nine weeks. All of the
gold was, of course, in the Central Core Vault at that time--none was
in the bird-cage compartments.
"The contrast with the so-called GAO audit of the Fort Knox gold last
fall can hardly be overstated. The alleged gold stock in 1974 was only
half as large, and they can only claim to have examined about 20% of
that. Assay samples were only taken from only about every thousandth
bar--they were not plugged but merely small chips were taken which
could be taken from a corner, say, without cutting through into the
lead underneath. All the 99 samples were sent to a single location,
the New York Assay Office, and only 54 of these have ever been stated
to have been returned--with undefined results.
"Finally, the results of the alleged 1974 GAO audit--which was
performed, by the way, by 13 Treasury employees and only two GAO
representatives--have never been published. The closest thing to it is
a ridiculous little document printed in February 1975, which presents
no findings of fact concerning the gold and timidly says only "We
believe" the gold is there!
"But returning to the 1954 gold inventory, the question arises:
"Why was it a secret? After all, the law requires an annual physical
inventory of the nation's gold reserves.
"This law has been generally circumvented and ignored; but one would
think that when its requirements were satisfied for once, in 1954, the
fact would have been made public. The reason for the secrecy of the
comprehensive 1954 inventory, my friends, is that its purpose was not
that defined by law. Instead, the Rockefeller interests were simply
taking stock of the American gold reserves which they intended to
start spiriting away a few years later." (from the Beter tapes; 1975)
It is interesting that GATA is still asking the same question as Dr. Beter asked in 1975: What has become of America's gold reserves? Who owns it? Does the Federal Reserve own the gold that was once stored in Fort Knox? Or is it still owned by the Treasury of the United States? In the absence of proper audits (that Beter claimed should have been carried out every year), who is now responsible for America's gold reserves? Is there any gold in Fort Knox at all? Is GATA willing to step up to the plate with these questions and find out for the American people what has happened America's gold? Is GATA serious about a public audit of America's gold reserves?
Americans would like to know!
TownCrier
(12/14/99; 20:45:53MDT - Msg ID:21018)
The GOLDEN VIEW from The Tower
The Fed added more reserves to the banking system today...an act that has become as reliable as the morning sunrise for the past 6 months that The Tower has had its scouts track this particular activity. The only variation has been size and duration of the operation. Analysts today were looking for an overnight repo operation, but the Fed instead opted for 21-day fixed-system repurchase agreements (long enough to clear the century date change) totalling $6.000 billion. We can't help but wonder how squeezed the banking system will feel when the time comes early next year to honor the "repurchase" part of these repurchase agreements?
PAPER
We've really got to hand it to the American consumers at large. Whether or not they collectively realize that the dollar is an unstable institution in the long term, they sure are acting as though they know...they're spending their money now with reckless abandon...a grown-up game of Hot Potato. (How much longer 'til the masses set their sights on gold?) The Commerce Department today released the November retail sales figures...up a stunning 0.9% at a time when analysts had been expecting an increase of 0.5 percent. The "truth" of October was revealed also. You may recall that initial figures indicated that month's retail sales were originally reported as "unchanged," but the revised figures point to an October gain of 0.3 percent. The 30-year bond sold off one-and-a-quarter points on the news, raising the yield to 6.3%. Analysts now expect that their predictions of fourth-quarter GDP will have to be revised higher. Peter Kretzmer, senior economist at Banc of America Securities, said that this latest round of figures is starting to make the the fourth-quarter "look fairly indistinguishable from the third quarter in terms of consumer spending. Those of us who argue that there's a slowdown coming in consumer spending, and that includes most economists, you have to squint harder and harder to see it."
GOLD
As reported by Bridge News, weekly balance sheet figures compiled for the week of December 10th by the ECB revealed that the European System of Central Banks' foreign currency assets were unchanged for the week at 236.8 billion. The gold assets, however, were down by 31 million to 114.955 billion. Coincidentally, <wink, wink, nudge, nudge> the Dutch Central Bank revealed with the release of their own specific balance sheet for the week ended December 10th that their gold assets had fallen by 31 million. So while you may remember that we suggested last week that they might possibly have already sold their first 100 tonne allotment of gold, (an allegation the bank denied the following day,) it is quite apparent that they have at least started down this road. As carried on their balance sheet at the last mark-to-market value established at the most recent quarterly revaluation (Sept. 30,) this 31 million would represent roughly 3 tonnes of gold.
+
A close look at the figures makes us wonder something...perhaps you have noticed it too. If gold assets were sold down by a value of 31 million euros, shouldn't the foreign currency assets have increased by a value of 31 million euros instead of remaining steady? The two possible conclusions we are left with are either 1) that the gold assets are already a SUBSET of the currency assets (in which case you will be pleased to note that the gold assets constitute an impressive 50% of the total reserves,) or 2) that the purpose for the Dutch sale was not to swap one reserve type for another, but rather to let the government get their hands on some spendable euros without busting their budget. Either interpretation contains its own positive revelation about gold in the euro system. Take note!
Elsewhere, Britain's Chancellor of the Exchequer Gordon Brown offered his own brand of fatuous comments in an attempt to defend the UK's policy of selling a portion of its gold reserves through the mechanism of public auction. We'll agree that this has facilitated greater market transparency (which we feel is a good trend,) but he also suggested that the auctions had added to market stability and had led to a recovery in the gold price. Well, ok, we'll give him credibility on the stability comment on the premise that the underlying market was about to fly apart at the seams for lack of physical gold. But as to taking some credit for price recovery?? C'mon, Mr. Brown...whom do expect is going to buy that yarn you're spinning?
Action in the gold market today was described as extremely quiet, with spot gold and COMEX February futures both settling down 10¢ at $279.80 and $282.00, respectively. Gold lease rates for a one-month span jumped by an annualized rate of 0.54% to 1.7125%, exceeding the rates for gold borrowed over longer terms.
OIL
January crude made gains ahead of the release of American Petroleum Institute's crude inventory data with expectations for a decline in US stockpiles. Crude finished up 35¢ to reach $25.73 per barrel. Also helping the market sentiment were comments by the OPEC Governor from Iran, Hossein Kazempour Ardebili. He told Bridge News that "consensus is emerging" for a 3-month extention of supply cuts to reach the end of June. Ali Rodriguez (Venezuela oil minister) reiterated his expectations expressed yesterday that oil prices will remain stable until March...and adding that the oil market in 2000 would be similar to this year.
What does that mean? That the price will more than double again?
And that's the view from here...after the close.
gidsek
(12/14/99; 19:52:36MDT - Msg ID:21017)
Gold Fan ... More than you'll ever want to know about gold leasing
http://www.aci.net/kalliste/homepage.html
J. Orlin Grabbe
is one of the leading experts in the expanding area of financial data encryption systems being developed for the new Cyber Economy. He is also one of the world's leading experts on international finance. His textbooks on the subject are ubiquitous in top universities worldwide. No serious student of international finance is unaware of who he is and what he has done.He is a Harvard Ph.D. While a professor at Wharton, he trained many of the top traders and derivatives experts as well as the "quants" who run Wall Street's automated computer trading systems.
http://www.aci.net/kalliste/gold1.htm
http://www.aci.net/kalliste/gold2.htm
http://www.aci.net/kalliste/gold3.htm
http://www.aci.net/kalliste/gold4.htm
http://www.aci.net/kalliste/gold5.htm
gidsek
Canuck
(12/14/99; 19:48:15MDT - Msg ID:21016)
Oil
http://cbs.marketwatch.com/news/current/futures.htx?source=htx/http2_mw
Oil inventories plunge...big time, look for a spike tomorrow.
JLV
(12/14/99; 18:43:13MDT - Msg ID:21015)
It Must Be A Joke...
But I don't get it. Govenor declares Alabama Y2k ready. What, 57% ready? This is the scariest thing about the rollover. Everyone is so afraid of 'not being ready' that they make the word compliant meaningless. I think Y2k complacent is more like it.
----------------------------------------------------
Dec 14, 1999 - 06:49 PM
Alabama Lags Behind Other States in Y2K Preparedness
By Phillip Rawls
Associated Press Writer
MONTGOMERY, Ala. (AP) - By its own admission, Alabama's state government is the worst in the nation in Y2K preparedness, with only 57 percent of the critical computer systems described as completely ready for the arrival of the new year in two weeks.
Gov. Don Siegelman, who on Tuesday declared the state ready for the Year 2000 computer rollover, has blamed Alabama's low preparedness ranking on a late start caused by his predecessor.
"Most other states had a two-to-three year head start," said Jeanie Layson, an Atlanta consultant hired by the Siegelman administration to serve as a Y2K spokeswoman.
The National Association of State Information Resource Executives in Lexington, Ky., compiles statistics on each state's Y2K readiness. Using standards set by the association, states rate themselves. Alabama came in last, according to the association.
Alabama reported Friday that state government had 328 critical computer systems, with 57 percent of them compliant with Y2K. The next worst state, New Mexico, reported that 81 percent of its critical computer systems were Y2K compliant.
The Siegelman administration contends former Gov. Fob James, who lost to Siegelman in November, failed to move decisively on Y2K compliance. James has denied any foot dragging.
Siegelman said that state systems are ready and he foresees no reason for service interruptions on Jan. 1
Chris Powell
(12/14/99; 18:32:14MDT - Msg ID:21014)
Why GSR is up in last two days
My guess is that it's because Thom
Calandra at www.CBSMarketWatch.com
promoted the company, along with
Cambior, in his commentary over the
weekend by quoting favorable remarks
made by Alan Snyder of Snyder Capital
Management of San Francisco.
TownCrier
(12/14/99; 18:00:23MDT - Msg ID:21013)
Gold stands alone...a sign of special status
http://biz.yahoo.com/rf/991214/t3.html
Russian Prime Minister Vladimir Putin signed a resolution doubling from 5% the export tariff on copper and nickel, and raising to 6.5% the tariffs on all other metals...except gold. Gold, alone of ALL metals (you name it...platinum, zinc, tungsten, silver, lead, molybdenum, etc.) was held fast to the original rate of 5%. Click the link to see the table of tariff changes.
Gold is ever more clearly starting to show itwelf to be in a class by itself, and surely not in this Russian example to facilitate the wanton dumping thereof. Can you say "Money?" I knew that you could.
Cavan Man
(12/14/99; 17:10:45MDT - Msg ID:21012)
JLV
Hello. Century's end is next year this time.
Also, wife reported seeing what appeared to be Y2K buying panic at a large grocer in large midwest city. In same city it was reported today that US Government says we are Y2K ready. Perhaps that pronouncement is what caused the isolated panic.
My understanding of the Constitution is that with regards to Y2K, the government should indeed be ready. The interests of this nation and its citizens must be protected and safeguarded. That is one of the primary responsibilities of our elected officials and the governmental apparatus as far as I know and understand. If it turns out the US is not ready and its citizens and commerce suffer as a result, then, perhaps we need to go back and re-read the document and hope to gain insight and wisdom. That would be my wish for the new year. Regards all. God Bless the USA,
RossL
(12/14/99; 16:59:15MDT - Msg ID:21011)
JLV
http://cbs.marketwatch.com/archive/19991213/news/current/stwatch.htx?source=htx/http2_mw
The GSR move is in response to this article (click link) and a television show over the weekend.
JLV
(12/14/99; 16:32:37MDT - Msg ID:21010)
Strange Indicator
Seems odd. GSR is up 40% in the past two sessions for no apparent reason.
GSR always moves directly in relation to POG, except for now.
What attractor is pulling this stock up? Perhaps the weird beast arrives at the century's end.
Netking
(12/14/99; 14:51:11MDT - Msg ID:21009)
US Stockmarket Crash Index update
http://www.wwfn.com/crashupdate.html
Link herewith for your info;
Latest update 14th December with a reading now of -6.
Farfel
(12/14/99; 14:05:55MDT - Msg ID:21008)
Glenn from KITCO Ridicules Leonard Kaplan
Glenn offers a funny rebuttal to Leonard Kaplan's justification of gold shorting....
------------------------
Date: Tue Dec 14 1999 16:00
glenn (FUTURE POSTS MAY LOOK LIKE THIS INSTEAD!!!!!!! GO
GOLD!!!!) ID#423288:
Copyright © 1999 glenn/Kitco Inc. All rights reserved
secret of the STOCK market
---------------------------------
did you ever wonder why there are always so many shorts in the STOCK market?? it is
because it is fantastically profitable...a bit over 60% per annum at present on your
investment....
you sell dec 2000 S&P which trades at 74.60 over this december...IF STOCKS
NEVER GOES UP you make $18,650 per contract on a $20000 margin ( which itself
can get t-bill rates ) so if STOCKS goes nowhere or goes down you make in excess of
60% per annum....only risk is that STOCKS rises in value....
the market is internally structured to make selling attractive and buying costly....
actually very simple.....
so, gentlemen, as long as INTEREST rates are HIGH, the above structure holds.....
Farfel
(12/14/99; 13:57:47MDT - Msg ID:21007)
Leonard Kaplan From KITCO Explains Why he Shorts Gold...
Very enlightening message and explains his negative bias toward gold and positive bias toward non-gold equities.
----------
Date: Tue Dec 14 1999 15:51
uptick (secret of the gold market) ID#277249:
Copyright © 1999 uptick/Kitco Inc. All rights reserved
did you ever wonder why there are always so many shorts in the gold market?? it is
because it is fantastically profitable...a bit over 60% per annum at present on your
investment....
you sell dec 2000 gold which trades at $12.20 over this december...IF GOLD NEVER
GOES UP you make $1220.00 per contract on a $2000 margin ( which itself can get
t-bill rates ) so if gold goes nowhere or goes down you make in excess of 60% per
annum....only risk is that gold rises in value....
the market is internally structured to make selling attractive and buying costly....
actually very simple.....
so, gentlemen, as long as lease rates are low, the above structure holds.....
CoBra(too)
(12/14/99; 12:58:58MDT - Msg ID:21006)
Re: Stradivari's, Impressionists and other works pour l'arts..
Dear FOA,
Youv'e made it quite clear. There are only 600, or so genuine Stradivari's (pretty good for a lifetime effort, even if family was part of it - and if everone out of 6 billion world population would care to bid for one ...
And there have been only so many impressionists, most of them became famous posthumous, fetching millions due to (relative) scarcity of their products - ... And there are only so many gold producers, surviving the dire straights of
"controlled" asset depreciation in plain view of positive physical supply/demand fundamentals, succumbing to the lure of BB's to minimise not only their price exposure, but to enhance their profitability in an ever and forever losing battle of the reality check of an outdated "commodity, or barbaric relic", once regarded as historical measure of true value, overwhelmed by 20 years of depreciation of their product, despite and, probably because new technology in exploration, extraction, processing and availability (an assessment I don't subscribe to, even if I may had (have?), had BRE-X become true- on a side note - I don't think new technology will further production, exploration or exraction anytime soon, since there is no incentive to do so).
So, where do we stand in terms of physical gold demand vs supply:
a. Demand vs supply (deficit)tops 1000 tons 1999 -
b. Supply of 2.500 tons (annual mine production) - seen as
not sustainable in this environment - <280$/oz AU.
c. Accumulated (gold)deficit over 15 y's - assumed to be
10.000 tons or more (on the physical market)-not counting
paper gold contracts.
d. CB's as net sellers of AU is blatantly untrue, as actually CB gold reserve asets have risen factually
(not as in marked to market a la IMF) by some five +% .
f. Problems of world class gold producers a la' Ashanti
highlight the schemes of BB's to squeeze the life-(of) goldminers via margin calls, structured to replenish their own short positions, (just) in case the market turns against their scams - totally unthinkable! until
as recently - a new FASB reminded us to integrate off
balance sheet earnings (and potential derivative risks - hey we're hedged - vs whom, what and when? - oh -
counterparties - of the world it's time to unite! only
to fend off the .... likes of LTCM). -
Systemic risks can't get any better than earning Black/(S-) hole's Nobel Prices for their scientific approach as to force the US FED to (re)play the noble last minute rescue of the cavalry of the old West.
Unfortunately, this time it was not for the benefit of some brave settlers in the West- granted some protection was forwarded to the Silicon Valley settlers, though overall, it was for the benefit of "old" New England, protecting the benefits of the "Mayflower Syndrome", along with the birth right of printing green(spun)-paper "In GO(l)D WE TRUST"!
Having given up on god, while physical gold is getting more scarce with the day, all bets were off; Except paper gold - so give it to the paupers - in exponential size, since we've already sucked in these suckers to our monopoly game of goldilociks economics, powered by credit, equity and bond bubbles.
Who's going to be the first pr**k to prick the balloon? True musical chairs ... Go get you one!
Sorry for long rambling - CB2
rsjacksr
(12/14/99; 12:36:47MDT - Msg ID:21005)
COMING STOCK MARKET CRASH ANALYSIS ...GOOD READING
http://www.comstockfunds.com/Newsletter.cfm?category=CharlesMinter&newsletterid=63&CFID=82392&CFTOKEN=348637&aol=4235817
COMSTOCK PARTNERS ANALYSIS ON "FIEND BEAR"
TEX
(12/14/99; 12:06:56MDT - Msg ID:21004)
elevator guy
No problem......I got a good chuckle out of it. I can relate to the insufficient funds aspect......in reality, I'm pulling out twenty's until my whole $200 is gone! YIKES!
Crossroads
(12/14/99; 11:18:44MDT - Msg ID:21003)
Oh that reminds me...
FOA (12/13/99; 19:15:01MDT - Msg ID:20954)
I enjoyed your analogy. It reminded me of the movie my son and I watched a few weeks back, Instinct. There was one particular scene where the "madman" had the analyst in a death grip. He was demonstrating the one thing that we, as a whole, are too "dumbed down" to recognize. That we are a society of takers and the most unfortunate part is that this system we live under is an "illusion" if you will. If anybody out there has seen the movie you know how similar the part where Anthony Hopkins goes into the zoo to see an "old acquaintance", who he helped put behind bars, is to the lives we lead. We have grown to accept the familiar prison we are in because they have taken the desire to fight out of us
by providing our every need. We have grown so complacent that there is no need to see the rights we are forfeiting. The vision of our forefathers has given way to the dependency we have accepted as a way it has to be in order to exist together.
FOA, your post brought that to life in a more vivid way than I saw it when viewing the movie. Thanks for the thoughts!
I previously read today where the topic was being discussed that knowledge was the best investment, thanks for reminding us of the benefits we receive because we can come here to learn. Thanks to everyone!
Bill
(12/14/99; 11:16:48MDT - Msg ID:21002)
.5% Lease rise this morning?
..
RossL
(12/14/99; 10:54:02MDT - Msg ID:21001)
Wanniski and Mundell Promote Gold as Y2K Currency Solution
http://www.garynorth.com/y2k/detail_.cfm/7073
Click this link to the Gary North page.
Galearis
(12/14/99; 10:53:34MDT - Msg ID:21000)
@goldfan about lease rates......
Lease rates and their use in the gold markets are typically murky areas for most market followers and are poorly understood. However, given their functions within the gold carry trade - which at least ostensibly mostly ended under the Washington Agreement - they have been a useful guide for some market watchdogs to predict probable spot price
directions of precious metals. They remain now a manipulation tool for US interests with fiscal and oil energy worries. In short the US Federal Reserve and by implication the United States government.
This infers that they are also tools for manipulation by governments with fiscal concerns, and various banking interests including: central banks and bullion banks and their major customers. I am going to try to keep this simple and hopefully accurate according to my limited understanding of this.
Central banks lend gold to each other according to a flexible international bank lending rates. Central banks lend to bullion banks at some mark based on these rates as well (LIBOR), which is probably (for gold) in the 5% and up level in metal interest to be returned to the lender. The rates obviously vary according to the duration of the loans and other significant factors.
Lease rates represent the profit margins for BBs for loans between BBs and CBs and are metal interest due back to the lender when a hedge fund etc. borrows from the BBs. So
LIBOR minus lending rates = lease rates.
Now what does all this mean in the context of today's market environment. The Washington Agreement was tantamount to an announcement that the gold carry trade was ended and a major source of the gold used in the gold carry trade was now curtailed. This however, left many of the bullion banks potentially ruinously short of metal that had been loaned to hedge funds and other non-producers of the yellow. They in turn were/are left short to the CB(s), the original lender(s). This is the huge squeeze play.
It now begs the question that since leasing of gold is still conducted, who is leasing? Where does the most recent liquidity come from that is almost satisfying a dried up
market? One probable source for this leased gold, given that now the gold carry business is a problematic venture, is the Federal Reserve. The game now is not about profits it is about fiscal and financial concerns with certain large hedge funds etc. In a word: bailout.
Only approximately 2% of this market is based on physical supply which means to keep things just barely chugging along and the spot price controlled (depressed) they have to
supply approximately 180 tonnes per month.
Now the question becomes; where are they getting this gold? This brings us to GATA and its demands for an inventory of Fort Knox gold. But there is another source. This is the
foreign reserves of gold that are held "in trust" with the federal reserve. This would be one motive for foreign reserves to have been increasingly withdrawn from the United States over the last 10 years. It would also indicate a possible reason for Warren Buffett to have
taken delivery (home) of his silver.
And that pretty much covers my understanding of gold leasing and conjectures about what is currently happening in the gold market. FWIW.
USAGOLD
(12/14/99; 9:29:40MDT - Msg ID:20999)
Today's Market Report: Retail Sales Boom, Bonds Tank, Gold Sideways
MARKET REPORT(12/14/99): Gold edged lower in early NY trade despite
an inflationary jolt from the latest retail sales report -- up .9%. The
report rocked the bond market, but oddly did not affect the dollar which
was up against most currencies in the early going, or the stock market
which was down only 12 points this morning. Strong retail sales could
indicate an overheating economy and raise the specter of a Fed interest
rate increase early next year. Bond market analysts are blaming the dump
in the bond market on hedge fund selling -- a state of affairs which
should have a ring of familiarity to gold market watchers.
In gold news, the market was quiet and rangebound overseas. The new
Swiss currency law -- which includes enabling legislation to sell 1300
tons of gold -- passed the upper house and now goes into parliamentary
limbo for three months. During this period, any group wishing to push
the law to referendum has the opportunity to muster support. The new law
will allow the Swiss central bank to mark their gold to market. The gold
sales will occur over a period of several years. The Swiss have
indicated repeatedly that such sales will be conducted in a way not to
disturb the market. Cambior, the Canadian gold mining which ironically
almost went under when gold made its rapid rise in late September, has
restructured its hedge book and gotten a reprieve from loan obligations
totaling $212 million until December 31, 2000.
That's it for today, fellow goldmeisters. We'll see you here tomorrow.
Those who find value in these daily gold market reports might be tempted
to try a trial subscription to our widely read, quoted, and acclaimed
monthly newsletter, News & Views -- Forecasts, Commentary &
Analysis on the Economy and Precious Metals. It is offered free
of charge and without obligation or encumbrance save the desire to get
to the bottom of what's going on in the gold market. It will provide
some gut-check insights on why you might want to seriously consider
becoming a gold owner and offers the type of in-depth analysis to which
you have become a accustomed if you visit these pages regularly.
Just click here ---> ORDER FORM <--- and make the appropriate entries.
This month, we
******* go behind the scenes in the gold market to tell
what's happening and why in our GoldNotes Sections;
******* offer a very lucid analysis of gold's fundamentals
from Smith Barney's gold expert, Leann Baker,in a study
titled, A New Millennium Gold Rush: The Bull Market
is Just Beginning;
******* give a helpful and current Review of
Recommendations,
******* and eloquently (though somewhat irreverently)
discuss the state of the American economic, political and
cultural scene throughout.
If you haven't been part of the News & Views experience, you haven't
gotten the whole story on gold.
YGM
(12/14/99; 8:41:44MDT - Msg ID:20998)
Arther Hailey......
http://www.lemetropolecafe.com
The Dos Passos Table
Discussion du Jour: Guest Speaker
David Guyatt
The Gold Crusader
Copyright BusinessAge Magazine - Nov/Dec 1999
London, England
Arthur Hailey has written some of the most successful blockbusters of the century and has earned a fortune from his efforts. Much of it he put into gold stocks, but the author is now furious about the way leading gold producers appear to be fixing the market. David Guyatt reports.
**********************************
Internationally renowned author, Arthur Hailey, has waded into battle on behalf of honest mining-sector shareholders who oppose an international cartel composed of Wall Street's finest blue chip companies and a group of leading gold mining operations said to be manipulating the price of gold.
Hailey, who is now almost 80 years old and has made millions form his bestsellers Airport and Hotel among a host of others, has now written to major gold mining company, Barrick Gold, to tell them he is "disgusted" with the way the company had "excessively" hedged, their future production. He believes that the company's hedging strategy was designed to create downward pressure on the price of gold which would otherwise "rise to natural and honest levels."
Hailey's letter to Barrick states that he is an "enthusiastic supporter of the Gold Anti-Trust Action Committee (GATA) and that until "a few days ago," he was a "long-time shareholder of Barrick Gold," along with his wife. He then adds ominously: "But no more."
"I have sold our Barrick shares and am actively urging others to do the same," Hailey states. "You simply cannot trust these people to put shareholder interest first," he adds. So angered is the acclaimed novelist at on-going price manipulation of the gold market that he has now invested in other mining companies that specifically do not hedge their future production. He urges others to do likewise.
The author in good company when it comes to charges that the gold market is being manipulated. Robert Champion de Crespigny, Chairman of Australia's largest mining company, Normandy Mining, when asked about the recent plunge in old prices told reporters: "I think you'll find this is banks manipulating the price because of the financial trouble two gold companies are in." De Crespigny is believed to be referring to Ashanti Gold and Cambior. Both are said to have been virtually destroyed following the unexpected and massive rise in the price of gold in late September. Their trouble stems, it is believed, from structured hedging programmes that failed to take into account a large surge in the gold price. It was a hedge that didn't work.
Meanwhile, Hailey's action follows a call to arms by GATA, an independent watchdog group, who have led the fight against price manipulation in the gold market over the past year. Long ignored, GATA's claim of market manipulation came to the fore earlier this year when the price of gold plummeted $30 per ounce.
This followed a surprise announcement last May by the Treasury that Britain was to sell over half the nation's gold reserves held by the Bank of England. The move was widely interpreted as being designed to dampen the price at a time when it was close to breaching a significant upward resistance level. A hue and cry followed in Parliament and elsewhere due to the huge losses - almost $400 million was wiped off the value of the reserves prior to their auction. British gold sales had hitherto been conducted in the greatest secrecy and later announced as a fait accompli.
The move by the Treasury is said to have caused deep anger amongst numerous European central bankers due to the damage that the unexpected price drop did to the Euro - itself partly backed by gold. In late September 1999, this anger turned to action when 14 European central banks dramatically announced an agreement to restrict gold sales and gold lending for the next five years. The price leapt almost $50 per ounce on the news.
The issue of cheap gold centres on gold leasing. This is a technique where some central banks have lent their gold to Wall Street and other international investment banks for as little as 1 per cent per annum. Central bankers argue this provides them with an income stream from an asset (gold) that otherwise does not perform in terms of interest growth.
Others argue, however, that this explanation avoids the core issue that has more to do with the banking fraternity networking for profit at tax-payers expense, than anything else. Having been granted a cheap gold loan, the investment bank can sell the physical metal on the spot market in exchange for cash. This can run to hundreds of millions - if not billions - of dollars. The next step in the procedure is to invest the cash in, for example, US Treasury securities. These have paid above 6 per cent annual yield during 1999. The difference of 5 per cent is clear profit for the investment banks.
With short positions estimated at well above 10,000 metric tonnes throughout the banking sector, the derived profits are simply enormous and could run into billions of dollars. The only downside for those banks and firms that have been involved in this action is if the gold price moves against them. Since a gold loan is structured at an agreed "strike price" for the physical metal of, say, $300 an ounce, any downward move in the price will generate additional "mark to market" profits for the "short" bank.
Meanwhile, a price rise above the strike price will cause losses. More importantly, with mining production at only 2,500 metric tonnes a year, those banks with short position are finding it virtually impossible to obtain physical gold to repay their outstanding loans. This, obviously, creates a severe haemorrhaging of balance sheets. Ordinarily, this would create even stronger demand for physical metal and, consequently, force the price even higher.
That is not happening. On the contrary, from a high of $330 per ounce at the beginning of October, the price has now dropped back to under $300 an ounce. This, clearly, defies the rules of supply and demand but complies with heavy selling of options in the derivatives markets. The latter market is the key mechanism of structured hedging that many larger gold mining companies have so heavily relied upon.
Yet matters do not end there. According to market sources, the recent European five-year restriction on gold sales originated with Germany, France and Italy. According to these same sources, Chancellor Gordon Brown was excluded from these discussions in punishment for Britain's gold auctions that the Europeans viewed as favouring the US dollar. This had the effect, sources say, of galvanising the Bank of England into scurrying around in the background in a panicky attempt to participate in the European decision if only to avoid losing influence in European monetary affairs - providing the announced gold sales could proceed on schedule.
By mid-October, the European move was countered by the unexpected announcement that Kuwait had authorised the Bank of England to lease the 79 metric tonnes of Kuwaiti gold reserves. This was a significant counter-punch to the European strategy and has eroded the gold price still further. Round two in this clash of monetary Titans can be marked up to the Anglo-American contingent, it seems.
It was into this fearsome fray that novelist Arthur Hailey strode. His letter to Barrick Gold was timed to coincide with the Denver Gold Conference, an annual event attended by the glitterati of the gold world. Hailey has promised to bring his influence to bear on his "wide circle of friends and contacts" to copy his move and support a "free gold price."
Speaking from Nassau in the Bahamas, Hailey told BusinessAge of his long involvement with gold, dating back to his 1975 best-seller, The Moneychangers, which is due to be re-released in the UK next summer. The author also hit out at the "gold collusion crowd," which he sees as a "conspiracy among the very rich to make themselves even richer at the expense of ordinary, modest investors. " This he added resulted from "dishonest manoeuvring in the gold market," which he believes "along with GATA will be forced to an end soon." This he thinks will cause "an inevitable rise in the gold price."
Although the author still has a small holding of gold coins his investments are now principally concentrated in mining companies that do not hedge their production. His own experiences with the gold market are not good, however. An earlier holding of gold bullion held in Zurich was sold when the price of gold plummeted, causing a "bad loss."
"I resent the manipulation of the gold market," he says, echoing a growing sentiment among many shareholders and others who believe the time has come for the authorities must take action to corral the excesses of the movers and shakers. "There is so much dishonesty."
YGM
(12/14/99; 8:36:34MDT - Msg ID:20997)
FWIW.
Calm The Markets.........???
Moody's expects no big Y2K blackouts
Tuesday, 14 December 1999 3:36 (GMT)
(UPI Focus)
Moody's expects no big Y2K blackouts
NEW YORK, Dec. 13 (UPI) - The potential for liability and the
scrutiny of government regulators has a major Wall Street research firm
convinced there will be no major power outages in North America on New
Year's Day.
Moody's Investors Service said Monday that it was confident the power
grid would experience no serious disruptions due to Y2K computer
problems.
"Moody's is not predicting there will be no Y2K-related events, but
instead we are stating our view that the power grid will provide
adequate power on Jan. 1, 2000," the report stated. "Minor glitches
may occur, but should not have serious consequences and will be dealt
with expeditiously."
An impending collapse of computer-controlled utilities has been part
of the worst-case scenarios circulated in the months leading up to the
year 2000. Moody's said, however, that the electricity industry has
"met the challenge."
Moody's said in an October report it was confident the grid would
continue humming on Jan. 1 and reiterated that conclusion Monday with
the new year less than two weeks away.
In November, the North American Electric Reliability Council, the
organization that represents the regional power distribution systems in
the U.S. issued a report stating that the nation's bulk power supply was
ready for Y2K. Moody's said similar reports had been issued recently by
the Nuclear Regulatory Commission and the Canadian Electricity
Association.
Moody's said the potential liabilities of a major outage and the
growing competitive nature of the electricity market provided the power
industry with ample incentive to prepare for Y2K.
"Avoiding Y2K problems is good customer service," the report said.
Government regulators in the U.S. and Canada have also taken a strong
and active interest in making sure that the power companies are ready
for Y2K, which Moody's said may have been a reason the entire industry
addressed the Y2K issue.
"Utilities themselves may have been just as prepared without
regulatory oversight, but growing financial pressures from restructuring
could have caused some of the industry's weaker players to be less
attentive to the need to prepare," Moody's theorized.
--
Copyright 1999 by United Press International.
All rights reserved.
--
Copyright 1999 by United Press International
Return to headlines.
Canuck Gold
(12/14/99; 8:07:57MDT - Msg ID:20996)
THC (12/14/99; 5:14:00MDT - Msg ID:20993)
That was a very interesting and lucid post. Do you happen to know the date of its creation?
CG
elevator guy
(12/14/99; 8:05:13MDT - Msg ID:20995)
@Tex
Hi, Tex. I hope you dont think I was making light of your or any one else's posts about ATM withdrawls.
I was taking a (humorous?) stab at the CIA paranoia that has appeared on this site. ATM stuff was a convenient vehicle for my tongue-in-cheek attempt to make a mini-ha-ha.
It was not intended to reflect on any post about ATM withdrawls, and mostly is a reflection on my own sometimes "insufficient funds" :^)
SteveH
(12/14/99; 7:55:35MDT - Msg ID:20994)
Bond
Looks like the long term bond yield is taking a beating.
At 6.259%.
THC
(12/14/99; 5:14:00MDT - Msg ID:20993)
A Tribute to FOA's Post Last Night
Gold and Economic Freedom
By ALAN GREENSPAN
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire-that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.
In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.
Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.
The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.
What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible.
More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.
In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value, will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.
Whether the single medium is gold, silver, sea shells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has always been considered a luxury good. It is durable, portable, homogeneous, divisible, and, therefore, has significant advantages over all other media of exchange. Since the beginning of Would War I, it has been virtually the sole international standard of exchange.
If all goods and services were to be paid for in gold, large payments would be difficult to execute, and this would tend to limit the extent of a society's division of labor and specialization. Thus a logical extension of the creation of a medium of exchange, is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.
A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security for his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.
When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth.
When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one--so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again.
A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold, and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post- World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.
But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline- argued economic interventionists-why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely--it was claimed--there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (paper reserves) could serve as legal tender to pay depositors.
When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates.
The "Fed" succeeded: it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.
With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.)
But the opposition to the gold standard in any form-from a growing number of welfare-state advocates-was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.
Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited.
The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which-through a complex series of steps-the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets.
The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.
SteveH
(12/14/99; 3:27:29MDT - Msg ID:20992)
suisse think they can sell gold soon
http://biz.yahoo.com/rf/991214/dq.html
at market!
SteveH
(12/14/99; 3:20:13MDT - Msg ID:20991)
Hot site
http://www.the-times.co.uk/news/pages/sti/99/12/12/stibusnws01009.html?3100615
Economy too hot says the Brits.
SteveH
(12/14/99; 3:19:15MDT - Msg ID:20990)
Cool site
http://www.selectsmart.com/PRESIDENT
Pick the President in an informed way. Prevent, "He chose poorly."
TEX
(12/14/99; 0:22:40MDT - Msg ID:20989)
elevator guy
Comment well received.......its time for me to hit the sack......good night to you too!
Click Here to view yesterday's discussion.
Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.
|
Centennial Precious Metals Gold coins & bullion since 1973 Denver, Colorado 80246-0009 We educate first-time investors! |
for quotes and purchase information.
|
