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ARCHIVED DISCUSSION FROM 6/14/2000
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Peter Asher (6/14/2000; 23:46:58MT - usagold.com msg#: 32358)
Massive revolt at state capitol stops new income-tax plan
http://www.worldnetdaily.com/bluesky_poole_news/20000614_xnpol_tennessean.shtml
As protestors began to gather outside the legislative chambers Monday evening, several legislators were taken away by ambulance and hospitalized for blood pressure and heart problems as tensions and tempers began to rise.

Tennesseans honk for freedom

By Patrick Poole
� 2000 WorldNetDaily.com

NAHSVILLE, Tenn. -- Police cars
blockaded Tennessee state capitol
entrances and troopers patrolled legislative
hallways this week as the state legislature
found itself under siege by thousands of
angry taxpayers upset at a plan to
implement a state income tax.

Tennessee is currently one of only nine
states without a state income tax.
Opponents of the measure, which would
assess a 5 percent tax on any income above
$100,000, are skeptical that legislators
would maintain that high an exemption
threshold for very long.

As protestors began to gather outside the
legislative chambers Monday evening,
several legislators were taken away by
ambulance and hospitalized for blood
pressure and heart problems as tensions
rose and tempers flared. By Tuesday
morning, tax protestors were brandishing
signs reading, "Let's send them all to the
ER!"

Trouble began brewing Friday evening as
the state income tax proposal emerged from
a legislative conference committee
considering the state budget after local
news shows had already aired.

Legislators supporting the income tax had
hoped that a vote would be taken on the
proposal Saturday morning to avoid giving
anti-tax groups time to mount a repeat of the
tax revolt that occurred last November,
when an earlier income-tax measure died
as taxpayers besieged legislative offices
with tens of thousands of calls and e-mails
every hour.

But the hopes of income-tax supporters
were dashed when two of Nashville's
competing talk radio stations, WLAC and
WTN, joined forces and served as the
catalyst for opposition to the legislative
proposal.

Speaking to WorldNetDaily and barely
audible above the virtually non-stop horn
honking, WLAC's morning show host Steve
Gill gestured to the standstill traffic
encircling the state capitol and said, "Do
you hear that? That's the sound of freedom."

SHIFTY (6/14/2000; 23:46:32MT - usagold.com msg#: 32357)
Java Man
You said " It's a scene at the end of High Plains Drifter, I think, where the last bad guy left is facing off Clint Eastwood and the bad guy yells in desperation"� "who are you!!!???" I always thought he ( Clint ) was the ghost of Marshall Duncan. Was wondering if you had any thoughts on who (he) was.

Black Blade (6/14/2000; 23:07:08MT - usagold.com msg#: 32356)
THX-1138 and unhedged Au companies
This may be a start. You have some listed, but try these:

Harmony (HGMCY), Agnico-Eagle (AEM), Homestake (HM) - very light hedge, and Meridian Gold (MDG). There are probably some others, but these are off the top of my head. Also Newmont (NEM) has a light hedge as well, were tricked into it to preserve their bond rating when Au sank to $252, after they were forced into their hedge, Au rose on the WA spike. Go figure! Also Tocqueville Gold fund vests heavily in unhedged producers as well. Also, Royal Gold (RGLD) is a Au royalty company similar to Franco-Nevada (FN).

MarkeTalk (6/14/2000; 22:48:59MT - usagold.com msg#: 32355)
Cycles, eclipses and other phenomenon
Now that the multi-year cycles in gold and silver officially arrived around the end of May, the pressure (from a technical perspective) to the downside has been removed and it is now up, up and away. It is nice to see how gold is responding with much more resilience than silver due to the HUGE short position, courtesy of Goldman, Chase, JP Morgan, Deutsche Bank et al.

Conversations I had today here at Centennial with market professionals lead me to believe that this area between $290 and $300 is critical. One market participant was "shorting his brains out" in the belief that the Hannibals would triumph once again. He also has a close stop just in case he is wrong. Another market trader in Florida believes that gold could be at $300-315 by this Friday or next Monday! That is music to these ears. Only time will tell. Long term, I have no doubts gold is going much higher.

Today's CPI report was a joke. Who can believe there is only 0.2% inflation in the economy? Filled your gas tank lately? Bought any food? Even movie theatre tickets are now $7.50-$7.75 here in Denver. I remember not too long ago they were $6.50-$7.00 each. I believe that the brief dip in oil prices to $24 per barrel in late April/early May contributed to the skewed numbers of the CPI. Just wait until next month's numbers are compiled! The PPI and CPI will get the full brunt of oil now above $30 per barrel and possibly on its way to $34 again. That will make for interesting spin doctoring on Wall Street.

Timing wise, June 19th is a full moon and options expiration. Expect volatile markets Friday leading into next week. We will see if Steve Puetz' "eclipse theory" can get back on track. I sort of like his theory. If it is working, then expect a sharp selloff in all stock markets after Friday which should continue until the next new moon.

Then on July 1st we have a big one: a solar eclipse and new moon. For some reason unknown to me, markets tend to really gyrate around these events. I have always watched July 4th as a major turning point regardless of any eclipses or lunar cycles. But maybe the combination will produce a big move in gold, oil, and commodities in general. It is interesting to see how the CRB Index is holding up well despite the selloff in the agricultural commodities. When oil sold off, the grains and meats rallied. Now with grains in the toilet, oil has returned with a vengeance. Maybe the CRB Index has been watching the tag teams on All Star Wrestling.

At any rate, the fireworks in the markets are just dead ahead. Tomorrow is "D-Day" or Derivatives Day when the bullion dealers and hedge funds and mining companies can no longer bury these little time bombs in the footnotes to the financial statements. It should be interesting to see who has what positions. Rumor has been that these market players have been trying to cover short positions since the end of May in anticipation of tomorrow. My advice: Load the boat with gold now while it is still under $300 per ounce.

THX-1138 (6/14/2000; 22:31:42MT - usagold.com msg#: 32354)
Unhedged Gold Company names needed

I have been talking to an older gentleman at work for the past 6 months about the gold market. I think now he is getting interested as I show him the daily moves on the Kitco graph. I have also pointed out the $290 resistance level and discussed the GATA GDBC Report with him. He is retiring and moving to Alabama and selling his house. He just might have an interested buyer who wants to pay in cash. I told him whatever he does that some of the money he gets from the sale of the house should go into gold coins or bullion. Silver is good too, but it isn't Gold.

Anyway, he asked if I could provide him a list of some good gold mining companies that he can watch daily for price moves. I have told him about NEM, GOLD, FN, but don't really know what others are almost unhedged.

I keep emphasizing to him that physical is the better investment because the IRS and government don't know you have it, unlike a bank account and brokerage account.

If someone could provide a list of some unhedged companies I would be greatful.

Thanks,
THX-1138

Leland (6/14/2000; 22:26:19MT - usagold.com msg#: 32353)
@Hill Billy Mitchell
Hey! you're "right on". Just like Howard Ruff, I believe
Simon is one of the modern day heros.

Hill Billy Mitchell (6/14/2000; 22:19:33MT - usagold.com msg#: 32352)
Spelling
Boy did that ever suck!

Should be Czar!

HBM

Hill Billy Mitchell (6/14/2000; 22:15:23MT - usagold.com msg#: 32351)
Oil prices and inflation
@ Leland (6/14/2000; 19:27:57MT - usagold.com msg#: 32341)

Sir

Anyone who has read the book "A Time for Truth" by William E. Simon will know that when prices at the pumps go up it does filter through everything. Simon was "The Oil Zahr"(sp) and Sec'y of the Treasury when the Arabs got tough. He was on the inside looking out. It turned his stomach. He could have had anything he wanted, possibly even could have been the president of the U.S. Instead he opted out of politics and the bureaucracy and chose to tell the truth.

A re-reading of "A Time for Truth" will give a glimpse of the near future should the price at the pumps continue up as in my opinion they will. When Harry Shultz makes the type of prediction he made around Dec. 99 ($75 per barrel oil) you can bet that it was based on some real plans by those who could and would pull it off.

The lies are for those who want to hear them.

Fleck certainly has a way of communicating, doesn't he?

HBM

Leland (6/14/2000; 22:07:29MT - usagold.com msg#: 32350)
@Journeyman
I know!, I know! How well I remember...putting cardboard
in my shoes during the Depression!

Journeyman (6/14/2000; 21:57:49MT - usagold.com msg#: 32349)
Savings @Leland msg#: 32345, ALL

Zero Balance-Part 1-Searching For Private Savings

Can't even ONE of this collection of cretins figure out the glaring truth? It's so simple:

Why people don't save? They can't and they don't think they have to!

1. Governments at all levels conservatively takes half of what everyone makes in taxes of hundreds of varieties.

2. Governments tell everyone they have a "retirement account" called Social Security that will take care of them when they get old - - - so what me worry?

3. After taxes and inflation, simply putting money in a bank doesn't grow buying power.

What really lights my fuse is the apparent ignorance of the media and damn near every expert I've ever heard; virtually none of them implicate the main culprit in poverty, lack of savings, family instability, etc. That culprit is fur cry'n out loud TAXES TAXES TAXES TAXES. People and families are empoverished by TAXES!

Regards,
Journeyman

Leland (6/14/2000; 21:24:14MT - usagold.com msg#: 32348)
Looking to the Future...From Calgary
WORLD PETROLEUM CONGRESS: Technology key to natural gas's future

CALGARY� Natural gas will overtake coal and begin to challenge oil as the prime global energy source
within 20 years, the World Petroleum Congress in Calgary was told Tuesday. Gas demand will increase
faster than any other primary energy source, predicted one speaker at a WPC forum on gas supply and
development, but industry must focus on achieving technological advances to reduce costs throughout
the gas value chain, said another.

Andy Jenkins of TransCanada International (TCI), Calgary, was one of several speakers at the forum who
forecast significant world growth in gas use.

Jenkins said world gas consumption is expected to increase 50% in the next 20 years, with Asia and
Latin America registering the largest growth. New and more-efficient electrical generation plants will be a
major growth factor for gas, and there will also be growth in countries where hydroelectric generation
fluctuates by season, he said.

Olivier Appert of the International Energy Agency predicts that gas demand will increase faster than any
other primary energy source and that gas's share of world energy use will increase to 30% from 20% by
2020.

Government policies on emissions could have a significant effect on gas demand, he noted. A 10%
switch from coal to gas in the US market would increase world demand by 110 bcf/year.

Appert says there appears to be no reserves restraint for natural gas. Gas reserves are now equivalent to
oil reserves, but not all gas is equally accessible, he said, and the concept of proven reserves varies from
country to country. It might be better to use a concept such as "useful reserves," Appert suggested.

Supply-demand disconnect
World gas reserves total an estimated 5,145 tcf, with 70% in the former Soviet Union and the Middle
East, while major consuming areas are Europe and North America, said Jenkins. The need for additional
infrastructure to connect remote and stranded gas with markets will underpin strong growth in the world's
pipeline network.

There are more than 532,000 miles of pipe now in place, said Jenkins. Of that, 24% is in Western
Europe and more than 60% in North America. He anticipates a global pipeline growth rate of about
7%/year through 2020.

The largest trans-border trade movement of natural gas is between Canada and the US, at 3.1 tcf/year.
Movements between Russia and Europe are second, at 2.7 tcf/year.

IEA's Appert agreed that global distribution of gas relative to markets is not ideal. Transportation
costs�about 10 times more than for oil, on an equivalent basis�are a major restraint, he said.

There is a need to reduce all costs in order to connect remote and stranded gas to markets. Frontier
reserves in locations such as the Arctic and deep water account for more than half of world proven
reserves, says Appert.

Improved technology, integration of regional markets, political stability, and an attractive and stable
regulatory and financial regime to support investment all will be needed to support required future gas
development.

Technology the key
Jenkins and Jean Bercy of Institute Fran�ais du P�trole agree that technical innovation is the key to
cutting costs and making gas more competitive with other fuels.

Jenkins said new technologies have contributed to more efficient operations and lower costs and will
continue to do so. These include automatic welding, high-strength steel, better quality control, online
pipeline data, and satellite communications that aid remote control operations. He believes the internet
also will play an important role in continuing technology advances in the industry.

Bercy noted that major natural gas projects are capital-intensive, with overall costs at $3-4/MMbtu and
do not leave much room for profit.

Taking an LNG production train as an example of how technology can reduce costs, Bercy says a 15%
cost reduction is feasible through the use of technical and process improvements of a standard train.
Cost savers include more-efficient acid gas purification, condensate recovery, and economies of scale.
And large and technically improved LNG carriers reduce transportation costs.

Natural gas will be the prime energy source of the 21st Century, but to industry must first focus on
achieving technological advances to reduce costs throughout the gas value chain.

Solomon Weaver (6/14/2000; 21:06:25MT - usagold.com msg#: 32347)
a digital gold banking dream
I have this wierd vision...so folks, help give me a reality check.

Most of us on the forum should remember how slowly credit cards set into the shopping mainstream during the late 60s early 70s...those 16 digit wonders....and then there came the gold versions and the platinum versions...then as the cards caught on, banks realized that they could make debit cards that would run over the same system (simply needing a PIN code to be given at the point of sale).

So, what would stop any large bank from using this same system in the following way (let us say an honest bullion bank):

1. The bank must establish a vault for the storage of gold.
2. The exact gold content of the vault and all daily changes in inventory are published on a real time website and the vault is available at anytime for immediate audit.
3. Persons who want to establish an account with the gold bank are able to send dollars (or any fiat) and the bank uses all dollars pooled on a deposit day to buy gold in that day's spot market.
4. A 16 digit debit card (needs a pin code) is issued to the depositor.
5. When the depositor decides to spend some of his gold, he presents the card to a cashier and the system approves a fiat currency transfer to the store (in the fiat of the country where the shopper buys)...obviously, a corresponding percentage of that persons gold is "sold".
6. The management fee for the bank is contained in the "spread" values between buy and sell. This same system already functions if I use a card in Germany to draw on my dollar account....so why could my balance not be held in gold instead???

In order to encourage gold to stay in the bank vault, the following rules will apply.

1. All gold will be in 100 ounce bar format or larger.
2. A depositor who has physical gold shipped to the vault pays no entry fee.
3. A depositor who "deposits" fiat money and wants to convert immediately to gold pays a 2% entry fee in addition to the in house spread.
4. A depositor who "deposits" fiat money and wants to save the 2% entry fee has his money deposited in an interesting bearing fiat account at the bank which is used to pay out withdrawals...thus clients are in a "waiting line" to "buy" gold from other clients who are liquidating to make a payment in fiat.
5. The primary purpose of the bank is to accumulate gold in a digitally liquid form which can be spent at any location which accepts debit cards...no interest is paid on the gold.
6. Depositors who want to earn "interest" on their gold are able to "earmark" a portion of the gold into time deposits (like CDs) which will allow the bank to loan out the gold in the form of fiat money (with all repayment of principle and interest being converted into gold). A very strict set of guidelines will determine who may borrow gold. If there are bad loans, the costs of these writeoffs are distributed over all of the earmarked interest bearing gold accounts.

Given that the actual interaction with the outside world will happen over a fiat mechanism, I see no reason how any country could refuse to do business with such a bank.

The key to the whole thing is that the bank is credible...meaning they have the gold they say they have and their sole purpose in life is to safely store that gold and to make the asset as highly liquid as possible.

The pieces are already there...anyone know if such a bank exists already????
And in this case I mean a bank which would not be at risk of having its assets seized in a bank holiday...so these USA based eGold type internet things are not fitting the picture.

Poor old Solomon

Chris Powell (6/14/2000; 20:41:39MT - usagold.com msg#: 32346)
Help me, Hill Billy Mitchell
Your quote from Hitler about gun control
is a classic. Can you cite any authority
for it, any book it is written down in?
I would love to use it but would need
some authority for it. Of course the NRA
probably has things like this nailed down
pretty good; I could ask them too.

My favorite from Der Fuhrer: "The future
belongs to us vegetarians."

Thank God it didn't!

Leland (6/14/2000; 20:29:44MT - usagold.com msg#: 32345)
Something You May Want to Sent Your Children
06/13/00: Zero Balance-Part 1-Searching For Private Savings

LINDA O�BRYON: Well, the economy is as strong as it has ever been. So why
are so many Americans saving so little money? Tonight, in the first of a three part
special series on savings called Zero Balance, Darren Gersh looks at the
problem.

GARY FOREMAN, "THE DOLLAR STRETCHER": Dear Gary, do you know of a
method to teach a 60-year-old man how to learn how to save?

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Gary
Foreman is the Dear Abby of savings advice. Foreman runs a Web site called The
Dollar Stretcher.

The e-mails pour in.

FOREMAN: Hi Gary. I have trouble budgeting my money. The sad thing is I study
international business and accounting at school.

GERSH: Foreman says many people he hears from don't even know where to
begin.

FOREMAN: If you take people in their 20's today, so many of them, they can't go
to their parents for the answers on how to stretch a dollar because their parents
are my age and really don't know how to do it. We've been raised with credit
cards and for us, really, the question has always been not so much how do I
stretch what I have, but who will loan me money so I can go buy what I want?

GERSH: Too many of us, Foreman says, have forgotten how to save.

FOREMAN: It's like we've lost mom's recipe book, so we don't know how to
make meatloaf anymore.

GERSH: The statistics bear out Foreman's e-mails. According to the Federal
Reserve, 44 percent of Americans say they are not saving at all. Subtract out
consumer debt and the typical American family has net financial assets of less
than $1,000. Even in the midst of the best economy in a generation, we are to a
surprising degree a nation of zero balances. Treasury Secretary Lawrence
Summers says the savings issue is greatest for middle income Americans. He
worries that half of the nation's families don't have pensions, don't have access to
a 401K plan and have few assets other than their home.

LAWRENCE SUMMERS, TREASURY SECRETARY: So they're in a very difficult
position if there's a rainy day. They're in a very difficult position as they face
retirement. They're very much left behind in the process of wealth accumulation in
our country and I think that that needs to be something that we all focus on.

GERSH: To economists, the fact that so many save so little is something of a
puzzle. Economic theory says people rationally calculate their needs over a
lifetime and plan for retirement accordingly. It's called the life cycle theory of
savings. And that theory has helped define the nation's savings policies. But
economist Richard Thaler has been fighting that model over the course of his
career.

RICHARD THALER, UNIV. OF CHICAGO BUSINESS SCHOOL: The standard
economic model of saving is as bad as the standard economic model of dieting.
The economic model of dieting would say people eat just the right amount. And
an economic model would say we don't need companies like Weight Watchers
because people are already eating the right amount. What do they need Weight
Watchers for?

GERSH: The basic life cycle idea is right. People do save money for retirement.
But in practice, it's not that simple. For example, half of all families on the brink of
retirement have financial assets of less than $45,600.

JAMES POTERBA, ECONOMICS PROFESSOR, MIT: Discovering that close to
half the population is not doing much private saving, not doing much personal
saving to get ready for retirement, I think is just a, it's a kind of gross
inconsistency with a modeling description that says people are building up assets
for retirement as the primary mode.

GERSH: So economists are reaching for new explanations using psychology and
they're focusing on issues like self control.

THALER: No model of saving that leaves out self control can hope to capture
what's going on.

GERSH: Many economists now realize things that weren't supposed to matter
under the classical theory� simplicity, automatic savings and education�matter
a great deal in crafting successful savings policies.

SUMMERS: I think what all the research on savings now really shows is that
savings is sold, not bought; that it is a behavior that is learned like any other
behavior, that people can be persuaded, they can be influenced by advertising,
that force of habit has a very large role.

GERSH: Tomorrow, we'll take a look at one solution that is helping companies
like 7-Eleven (SVEV) sell savings to their employees. Darren Gersh, NIGHTLY
BUSINESS REPORT, Washington.

(Fair Use For Educational/Research Purposes Only.)

Solomon Weaver (6/14/2000; 20:09:06MT - usagold.com msg#: 32344)
For everyone of us reading this forum, there are a hundred folks reading articles like this one
http://www.siliconinvestor.com/insight/weekly/index.gsp
No complaints to the author....

As a matter of fact, he does a pretty good job of showing what the average investor is getting fed.

reminds me of a little family story when my little sister was being fed by dad and she was against the peas....so he hid one single pea under a little dollop of mashed potatoes...I still tell my son today....if you don't like something on your plate, eat it along with something you do like...not many of us want to hear that the great USHayride is changing....especially now that we have all these cool wide screen TVs and digitally modified visuals.

Poor old Solomon

Solomon Weaver (6/14/2000; 19:43:33MT - usagold.com msg#: 32343)
(No Subject)
http://blacktusk.commerce.ubc.ca/fx/cache/XAU-USD-0000-0-0-2451346-2451710.PNG
The last link worked...shows how well the unsupported euro is doing lately...and this link shows gold....it does look like we are getting a little spike going....a spike that is paper price of gold, no?

I wonder what Trail Guide is out there doing????

Poor old Solomon

JavaMan (6/14/2000; 19:30:38MT - usagold.com msg#: 32342)
Hill Billy...Gutsy post.
I think the difference between one who is ignorant and a fool is that the former realizes he lacks understanding (the first step to wisdom), the later doesn't. I find many of the posts here consistent with other material of great depth, in that, they may not be assimilated with only one read. This brings me to a thought I have from time to time as I read some of the posts here. It's a scene at the end of High Plains Drifter, I think, where the last bad guy left is facing off Clint Eastwood and the bad guy yells in desparation� "who are you!!!???"

I think, as far as this forum goes, some of those who post here are gun slingers (skilled professionals) in finance, economics, business, etc., and as such "they are what they do" so their thinking and insight is, for the most part, on another plane from those of us who work the farm or mind the grocery store. In other words, its unrealistic to expect to grasp all that is said on the first pass or even, ever.

BTW, I'll be watching for a response to your post too.

Leland (6/14/2000; 19:27:57MT - usagold.com msg#: 32341)
Wow!...Bill "Fleck" is DISGUSTED
http://www.siliconinvestor.com/insight/contrarian/
"Once upon a time, much higher oil prices showed up in the prices of darn
near everything else. Nowadays, as graphically illustrated by the recent PPI
and CPI data, oil price increases don't even show up in oil price
measurements as increases, but rather as dramatic decreases! We are living
with the most manipulated markets in history. As always, it will end badly.
The 'Committee to Save the World' failed."

(Click for More)

Solomon Weaver (6/14/2000; 19:27:33MT - usagold.com msg#: 32340)
(No Subject)
http://blacktusk.commerce.ubc.ca/fx/cache/USD-EUR-0000-0-0-2451346-2451710.PNG
that one didn't work...maybe this one

Solomon Weaver (6/14/2000; 19:24:47MT - usagold.com msg#: 32339)
(No Subject)
http://blacktusk.commerce.ubc.ca/cgi-bin/fxplot
just trying a link

Henri (6/14/2000; 19:15:36MT - usagold.com msg#: 32338)
Steve H Msg 32335
Yes odd isn't it. I prefer to think of it as a natural bouyancy being resisted by BB's. Kind of like trying to hold an inflatable raft underwater while trying to balance on it standing. When you get one section submerged the others pop up. Eventually you are tossed off by the instability

Henri (6/14/2000; 19:07:45MT - usagold.com msg#: 32337)
Steve H. Post# 32300
http://www.bis.org/about/index.htm
You said:
SNIP
"...4) BIS helping to accelerate the end game (isn't the US part of the BIS?)..."
UNSNIP

Well yes and no,
From the BIS constituent charter(full version accessible at the link above at bottom of abridged version in pdf format.)
SNIP
(of 20th January 1930)1
Whereas the Powers signatory to the Hague Agreement of January, 1930, have adopted a Plan
which contemplates the founding by the central banks of Belgium, France, Germany, Great Britain,
Italy and Japan and by a financial institution of the United States of America of an International Bank to
be called the Bank for International Settlements;
And whereas the said central banks and a banking group including Messrs. J. P. Morgan
& Company of New York, the First National Bank of New York, New York, and the First National
Bank of Chicago, Chicago, have undertaken to found the said Bank and have guaranteed or arranged for
the guarantee of the subscription of its authorised capital amounting to five hundred million Swiss
francs equal to 145,161,290.32 grammes fine gold, divided into 200,000 shares;
UNSNIP

Hmmm...our old friend JP Morgan...the same JP Morgan that just transferred all its gold dealings to the London market?

The US is represented on the Board of Directors of the BIS.
This clipped from the BIS "Profile" section 4 If you click the hyperlink "Board of Directors" you find this:
SNIP
Chairman of the Board of Directors, President of the Bank: Urban B�ckstr�m, Stockholm.

Vice-Chairman: Lord Kingsdown, London.

Members of the Board:
Vincenzo Desario, Rome; Antonio Fazio, Rome; Edward A.J. George, London; Alan Greenspan, Washington; Herv� Hannoun, Paris; Masaru Hayami, Tokyo; William J. McDonough, New York; Hans Meyer, Z�rich; Guy Quaden, Brussels; Helmut Schlesinger, Frankfurt a/M; Gordon G. Thiessen, Ottawa; Hans Tietmeyer, Frankfurt a/M; Jean-Claude Trichet, Paris; Alfons Verplaetse, Brussels; Nout H.E.M. Wellink, Amsterdam.

Alternates:
Jean-Pierre Patat or Marc-Olivier Strauss-Kahn, Paris; Ian Plenderleith or Clifford Smout, London; Jean-Jacques Rey or Jan Smets, Brussels; Alice M. Rivlin or Karen H. Johnson, Washington; Carlo Santini or Stefano Lo Faso, Rome; J�rgen Stark or Helmut Schieber, Frankfurt a.M..
UNSNIP

Hmm...Who is this "William J. McDonough, New York;" fellow? Why don't we hear anything about him? At least one of the alternates looks familiar. Alice Rivlin Hmmm. And who the H*ll is Karen Johnson?

This explains why the US govt is not involved in the BIS. Rumor is they were opposed to the idea all along and have resisted the efforts of the BIS to maintain stability

SNIP
When the Bank's initial capital was issued, the subscribing institutions were given the option of taking up the whole of their respective national issues of shares or of arranging for those shares to be subscribed by the public. As a result, part of the Belgian and French issues and the whole of the American issue are not held by the institutions to which they were originally allocated. In all, some 86% of the Bank's issued share capital is registered in the names of central banks, the remaining 14% being held by private shareholders. While all shares carry equal rights with respect to the annual dividend, private shareholders have no right to attend or vote at General Meetings of the BIS, since all rights of voting and representation are reserved for the central bank of the country in which the relevant national issue of shares was initially subscribed.
UNSNIP

SteveH (6/14/2000; 18:48:10MT - usagold.com msg#: 32336)
Interesting...
I will say that even though I don't expect much from this run up in gold, it is certainly unlike the other run ups because there would seem to be a lot of pressure on it to rise, it rises slowly, even in face of lots of selling, and lease rates don't seem to support the rise. Plus when it does get knocked down, it appears to persist to the upside. This is most unlike the other rallies that seemed to be quick to the start and just as quick to end.

SteveH (6/14/2000; 18:41:35MT - usagold.com msg#: 32335)
re:1935 quote and more
http://skybluemonthly.freeservers.com/sbm/sbm00n.htm
First, gold (futures) appear up, now over $295.00.

Next, 1935 quote, I heard, was bogus. But I am no authority and that period or that man.

Next, check this out:

Date: Wed Jun 14 2000 18:07
nomercy (Gold Carry Trade and Martin Armstrong- an analysis) ID#207145:
Copyright � 2000 nomercy/Kitco Inc. All rights reserved
The following is an analysis on Mr. Martin Armstrong's paper "Gold: Manipulation or Exaggeration?" ( http://www.pei-intl.com/TOPICS/GOLD0699.HTM ) His paper is very thoughtful. We agree with most of his points, but we disagree with his analysis on Gold Carry Trade and we came to an opposite conclusion. The quotes from his paper will be printed bold and black. If we agree with Mr. Armstrong's points, our comments will be printed bold and blue. If we disagree with his points, our analyses will be printed bold and red. Here we go:

http://skybluemonthly.freeservers.com/sbm/sbm00n.htm

Leland (6/14/2000; 18:03:27MT - usagold.com msg#: 32334)
For Those That Missed Farfel's Posting Today at GOLD-EAGLE:
Lunch at Hooters re: GOLD
(FARFEL)
Jun 14, 19:16

What an interesting lunch today with an old bank owner
friend @ one my
favorites, HOOTERS. Always enjoy a nice steak sandwich
along with a heaping
pair of sides.

I will keep him anonymous; however it is worth
discussing the contents of
the discussion.

First the man is extremely interested in my thoughts on
the gold market,
more so than ever before. Very unusual since we are long
past y2k worries
and he prefers normally to avoid discussion on certain
topics where there is
a big chasm between our respective opinions.

But he peppered me with questions about gold as never
before.

Here are three of the more notable questions and my
responses:

1) What will send the gold price flying?

My answer: the revelation that the gold market today is
a Ponzi scheme
essentially no different than the one that has
transpired among internet
stocks. The only notable difference: the Ponzi scheme
developed for
internet stocks acts to SUPPORT internet stock prices
whereas the Ponzi in
the gold sector acts to SUPPRESS gold prices.

Reason: corrupted/lazy financial regulators who have
failed to rein in
speculation in the various financial markets this past
decade.

Trigger: when a large purchaser or consortium of
purchasers buy gold AND
TAKE PHYSICAL DELIVERY, thus revealing the overabundance
of derivative paper
with claims upon the relatively scarce gold supply.

2) Don't you think the major Western nations or Western
banks can
effectively suppress a sharp gold price rise no matter
what the reality of
the physical gold market?

My answer: of course, so far that seems to be the case.

But it only takes one major renegade to upset the whole
Ponzi scheme. We
live in an Age of Greed and there must be tremendous
temptation on the part
of some nation or bank to break the cohesive ranks of
gold suppression and
take unilateral action to upset the apple cart. The
nation or bank left
standing after the Hell hits is in a "winner take all"
position.

In the case of a nation, the nation that is adequately
prepared to exploit
the currency market hell resulting from a gold short
squeeze can dictate
thereafter what currency will form the new global
reserve standard.

In the case of a bank, the bank with a covered gold
short position can wreak
havoc and devastate all UN-covered competitors, leaving
it as the sole
surviving monopolist capable of controlling the entire
financial sector.

3) If these potential systemic problems really exist,
then don't you think
it is better to keep quiet and avoid public discussion
of the issues?

My answer: I did not create these systemic frauds,
others did. I did not
invent the gold carry trade and short more gold than I
could possibly
produce at these absurdly low prices, others did.

Should we encourage and enrich the perpetrators simply
because there will be
economic victims resulting from the revelations of their
misdeeds?

Don't the beneficiaries (direct or indirect) of the gold
carry trade owe
some kind of compensation to the victims of this market
manipulation,
particularly if it is proven that the manipulators acted
with inside
knowledge, collusion, and market rigging as their
indispensible tools?

As it stands, there are already many economic victims,
from gold miners to
gold investors to market contrarians to Third World
citizens who have been
bankrupted by these gold suppression schemes.

American capitalism demands the exposure of market
manipulations whereby
market participants are harmed severely while special
insiders prosper.

In fact, it is Americans who constantly claim to be at
the forefront of
"the war" against market manipulation, cronyism, and
moral hazard.

Well, the time has come to see if America really stands
for anything anymore
other than shallow empty talk.

The gold market is the proving ground, let's see the
result.

Thanks

F*

Hill Billy Mitchell (6/14/2000; 17:38:14MT - usagold.com msg#: 32333)
"Gold is what is returned and not reinvested"
@ORO # 32319 AND # 32320

I have not read the above referenced posts in their entirety. I consider myself a student of economics and have a large dose of post-secondary education in economics. I have scanned both of these posts and then gone back to begin reading them carefully. Oro, sir, you write on a level which just blows over those of us which have a less than genius IQ. I do not have time to absorb all that you have here written today. I plan to spend a good deal of time on it in the near future; however I fear that I am not cerebral enough to be able to take it all in without mental breakdown (grin).

I know that it is not fair to comment on any of what you have written but I am not in the mood to be fair at the moment. I do not know what Another and/or FOA have been trying to sell and I do not know what you are trying to sell. I simply absorb all that I can from all intelligent sources and try my best to come to some conclusions as to what has happened in the past and what is now happening and what is about to happen in the not too distant future. Therefore I mostly theorize from all the information I can obtain from the likes of you and Another/FOA, as I am not a technician

Now my question or comment or whatever one might call it:

You say in Item # 1) "Investments earn a return, gold is that is returned and not reinvested. Traditionally a 3% net profit is all that is necessary, thus 97% of trade can be done without gold, but the only justification for the 97% is the 3% that will be put into gold."

My comment etc.:

Would not this assume that every enterprise in the world would take all of their net profits and 'not reinvest' them, but rather place them in physical gold storage. I am missing something. If this were the case neither you nor I would have been able to obtain physical gold in this century, as all gold other than current production would have long been permanently in 'old blood' hands never to reappear again. I submit that a very small portion of profits in this world, probably less than 1 tenth of 1 percent, is 'not reinvested' but rather placed in physical gold storage on a permanent basis. I find it very hard to accept your theory but do not deny that my mind is a bit boggled and that I may not even understand what you are saying.

Could you please try to re-state your thoughts on this item # one in a simpler way so that us mere mortals can be able to take it in.

I know that I have, by opening my mouth, removed all doubt as to whether or not I am ignorant. So be it. Please just don't put me in the same category that I have placed R. Limbaugh, that of a fool when it comes to economics.

If I survive the ridicule that I deserve from this post, I will delve further into this scenario.

Highest regards,

HBM

Hipplebeck (6/14/2000; 17:37:38MT - usagold.com msg#: 32332)
public debt
http://www.publicdebt.treas.gov/opd/opdpenny.htm
I noticed that the US was able to pay a pretty hefty chunk of money right after they got all those capital gains on April 15.
Other than that, it sure don't look to me like they are going to pay this debt down.
Just ANOTHER brick in the wall

Hipplebeck (6/14/2000; 17:30:17MT - usagold.com msg#: 32331)
LELAND
My wife and I spent a day and a night there (actually camped in the back of my truck in the park). We ran out of gas and had to wait till morning for something to open. We hung out in the only bar and had a great time talking to a bunch of raggedy locals. The next day we walked around and looked at all the old run down stuff.
I learned more from your post though.

Hill Billy Mitchell (6/14/2000; 16:21:31MT - usagold.com msg#: 32330)
Official release
http://www.bog.frb.fed.us/releases/H15/update/

Official: Federal Reserve Statistical Release

Release Date: June 14, 2000

Rates for Tuesday, June 13, 2000

Federal funds 6.46

Treasury constant maturities:
3-month 5.88
10-year 6.11
20-year 6.30
30-year 5.94

upside-down spread FF vs long bond = (52.%)

Hill Billy Mitchell (6/14/2000; 16:14:10MT - usagold.com msg#: 32329)
Gun Control
@ SteveH

A good while back someone asked if there were any information concerning the removal of right to bear arms in Germany or other totalitarian states prior to the takeover.

I have a plaque on my wall which reads as follows:

"This year will go down in history. For the first time, a civilized nation has full gun registration! Our streets will be safer, our police more efficient, and the world will follow our lead into the future!" Adolf Hitler, 1935

I do not know the source of this quote and therefore cannot verify the accuracy. I do not even know where I obtained the plaque.

I do not about the safety of the streets in Nazi Germany; however I doubt anyone would question the efficiency of the German police force during the period.

Can anyone shed any light on the authenticity of the quote?

HBM

SHIFTY (6/14/2000; 15:58:55MT - usagold.com msg#: 32328)
NY Ponzi
Nasdaq 3,797.41 + Dow 10,687.95 = 14,485.36 divide by 2 = 7,242.68 Ponzi

Up 6.23 Ponzi points

TownCrier (6/14/2000; 15:54:35MT - usagold.com msg#: 32327)
Sir goldfan...you've given me cause to open my dictionary for the first time in ages
As you've probably noticed, I certainly haven't been using it to improve my spelling. "Circumlocutions"...just wait 'til I drop that on on my drinking mates this Friday!

From the longer excerpt, I thought that this was the key point, which I will repeat here with the proper emphasis added.

"Ever since the advent of floating exchange rates in the 1970s, there has been no shortage of ACADEMICS calling for free floating and arguing that reserves are of NO practical benefit.
YET in practice, MOST CENTRAL BANKS continue to VALUE their reserves, and indeed since the Asian currency crisis most Asian countries have shown a preference for reserve ACCUMULATION. In Europe, meanwhile, despite the weakness of the euro, the ECB has NOT SEEN FIT to deploy ANY of its massive reserves to intervene to support the new currency."

As you rightly point out, the Titanic went down. But to be sure, there have been more than one successful trans-Atlantic crossings in the history of shipping. In the end, successful or not, SOMEBODY can always be found in the Captain's chair, and very likely "in-the-know" long before the passengers.

In the final analysis, it may prove that these central banking news blurbs were of no benefit to anyone, yet it never hurts to "listen in" on these elements that sometimes go beyond what Reuters and Bloomberg and the BBC deliver. As it is, coding that page takes a fair amount of effort and time. It is fine if you are among those that have no use at all for the thing, but please do try to spare my well-intentioned sensibilities by openly dismissing it outright. The purpose of the thing is to provide additional material for discussion, after all. So if you see commentary in there that looks like smoke and mirrors, bring it to the forum's attention and we'll all have a look and a thought or two to share. Deal?

By the way, who likes the new "post" page?

"I do, I do!"

Boxman (6/14/2000; 15:02:50MT - usagold.com msg#: 32326)
Investec to sell gold to China
http://news.excite.com/news/r/000614/10/minerals-safrica-china
Long time lurker here. My thanks to all of you. Without this board, it would be very easy for me to sell my physical, as my family has had to do without for far to long. You keep me encouraged.

I thought that this article was interesting. One of the few times (maybe the only time) that I have viewed the Chinese favorably. Enjoy

Hill Billy Mitchell (6/14/2000; 14:33:58MT - usagold.com msg#: 32325)
Surge protection team
@TheStranger(06/14/00; 13:21:34MT - usagold.com msg#: 32322)

I was thinking more along the lines that there has been no news at all. If so this is also a good sign. The truth is still being suppressed, yet gold surges.

On another note, Rush Limbaugh opened his mouth again today on his take on the economy, ie why oil prices are high. As he always does he removed all doubt. In his case it would be better to remain silent and thought a fool than to open his mouth and remove all doubt.

HBM

Leland (06/14/00; 14:12:24MT - usagold.com msg#: 32324)
An Enjoyable "Feature Story" Thanks to Mercury at Kitco
Date: Wed Jun 14 2000 16:03
mercury (The Ghostly Remains of Goldbugs Collective Dream Past�) ID#306104:
Copyright � 2000 mercury/Kitco Inc. All rights reserved
Is a place called Goldfield, Nevada. I spent last weekend there. Goldfields is just about
smack dab in the state of NV ( the Silver State ) , USA. Two NV miners struck found
gold in 1903 and the rush was on. Between 1904 and 1940 the town produced over 82
million in gold deposits ( $ not updated 4 today's prices. Source- NV historical marker ) .
Financial problems back east slowed down investment in 1909/10, but the hotel was built
by 1911 ( ? Memory ) . The story is that when the hotel opened, �twas the nicest one
between Kansas City and San Francisco.

The town's population peaked in 1919 at @ 20K which made it the largest population in
the state at that time. Had all the amenities of the day ( water, sewer, electric ) . By the
time the courthouse was built ( 1921? Source-local chamber of commerce print ) , like
many NV boom/bust towns, the town population was already in decline. A flash flood in
�23 and fire in �35 destroyed many structures and put the death knell on the city. Current
town population is @350 according to a local. Goldfield is the county seat of, Esmeralda
County, population currently under 6K.

Current operating structures/businesses in the town include: 1 bar/grill, antoher bar,
courthouse/county building, doll store, rock shop, and antique shop, all in buildings circa
1915. A gas station/mimi-mart and school are housed in temporary buildings. Several
hundred structures still remain: commercial and residential buildings including the old
school, mining corporate office, retail operations, etc.

An investor bought the hotel a few years back and put over 2 million$ ( all $ Merkan )
into renovations ( fire sprinklers, plumbing and electric upgrades; the hotel is sound
structurally ) but went broke ( or gave up ) . Hotel is haunted. The NV deputy governor
gave a speech from the hotel balcony, according to the local D.A, the first by a politician
from that spot since 1919.

NV state highway 95 ( main N-S highway between reno and las vegas ) runs directly
through Goldfield. The county of Esmeralda is in poor financial shape and decided to
publicly auction off over 100 old properties that were property tax delinquent. This
auction brought me ( and several hundred others ) to the town. I was hoping to get some
city lot at opening bid price ( $300 �600 ) .

Unfortunately ( for me ) , the auction proved popular and most lots were averaging 2x to
5x bid, so I opted out as I deemed the lots overpriced at these levels, inflated by the
auction and feeling that some of these bids were for the sake of novelty only ( hey, I own
a piece of a ghostown ) . Besides, much better NV land available for less $/acre. (
However, a family member did but a city lot under $1000. I provided some real estate
valuation on the land for them. ) This lot has a BRAND NEW sewer and water hook up
available. Putting in power involves paying the utility company to install a new pole and
running off the nearest above ground connection ( @200 yards away ) . A friend of the
family had bought @ � acre w. H20 and sewer hookups, and a mobile home ( including
delivery ) , for under $7,000! Cheap weekend/Y3K refuge.

Goldfield and Esmeralda Co. gambled heavy that the auction would be a success (
indicated by the investment in new utilities ) . I believe the auction was a partial success
b.c. most lots went much higher than opening bid, and almost all sold. However, the hotel
did not sell and this was a major blow. Overnight stays are a MUST for any
tourism-based economy. Opening bid on the hotel was a low $636,000 but over $2million
in liens scared away any potential investor.

Many of the lots near the ore body were being sold as surface rights only. The County
D.A. gave a spiel b4 the auction regarding possible lien and title problems. He
recommend a silent title search on any land where someone may have visions of building
a valuable structure. One thing he left out was possible environmental problems and the
odds of running afoul of the Fed. EPA or the NV. Dept. of Env. Quality. Buyer beware.

Walked into the antique store, down the block from the old brothel. ( The new brothel is
located 10 miles outside town; yes, prostitution is legal in Esmeralda County ) . The
antique guy had some interesting stuff. Outside, by the chicken coops was a perpetual
open air flea market. The wares were old mechanic tools and car parts, remnants of a
former garage. Since Goldfield averages only 4 inches of rain/year, one can have a
perpetual outside flea market. Indoors, the price of silver was $14 oz ( NV
commemorative rounds, one ounce bars, etc. ) . He also had gold and silver foil for sale,
in a small water filled bottle. I gotta admit, it's an attractive way to market metal, looks
like a lot of volume for 5$, though there can't be anymore than 1/100th of an ounce in it.

Moseyed on down to the gem store/coin shop. Learned why so many older ( 1880-1940 )
coins have small holes cut into them. I always assumed it was for jewelry purposes (
cheap bracelets ) . Apparently this served a more utilitarian purpose; often the miners
would cut the holes to keep their silver coinage on a chain. Better than having loose
coinage. Many of the coins this guy had he had discovered with a detector. His prices
were very high and wouldn't come down ( his market niche was the foreign tourists who
would pay the extreme prices for a silver coin from a NV ghosttown. ) . I didn't argue
with his business plan.

Thing I did take exception to, was the fact he was selling Sacajawea dollars for $1.50 (
granted, they were uncirculated ) claiming they contained gold. I diplomatically waited
until everyone else in the store left and then asked how many people actually believed the
dollar contains gold. He told me he actually believed the coin contained a small piece of
gold. Despite my skepticism, I took his word for it.

The area around Goldfield is one of the very few places on the planet where one can find
crystallized sulfur. Fascinating geology in this part of the state. A ghost town called
Gemfields is a few miles from town. Nearby Silver Peak was a major silver/gold
producer, but apparently now only produces lithium.

Talked mining with couple of the locals. Only about 12-15 guys are full time
mining-employed in town; lots of part time speculators though. He said only about 250
full-time underground hardrock miners left in the state. This number seems low to me, but
it has been a while since I have looked at NV employment figures and thus had no
knowledgeable base from which I could disagree. ( Most everyone left now into heap
leaching or open pit operations. )

All in all, a fascinating look at what was once a bustling community of Goldbugs; a look
into the current metal mining scene; and a glimpse into what the remaining Goldbugs pin
their future hopes on. Anybody else spend time there?

Caio-Mercury

Leland (6/14/2000; 13:54:33MT - usagold.com msg#: 32323)
Re-Post...From Flambeur at GOLD-EAGLE. Thanks Flambeur!
@Oldbug: answer from Ravi Batra
(Flambeur)
Jun 14, 15:18

You recently asked me to inquire with author Ravi Batra,
what he thought of the current situation.

I asked him what he thought were the reasons why a stock
market crash with a devastating impact on the US economy
had not occurred yet (and as he has been predicting for
a long time).

In his e-mail reply, he mentioned that someone had asked
him a similar question recently, referring to a number
of macroeconomic indicators that are very high now -
debt/GDP, debt/net worth, his "index of artificial
demand, etc. -- and that were also very high in 1929.

He offered the same reply sent to that person:

" It is true the indexes indicating a depression have
exceeded their 1929 values, and none has come yet. Still
a depression is inevitable, even though events have been
delayed this time. The delay arises from the fact that
this time around the system, i.e., monopoly capitalism,
itself is going to collapse, and we all know the bigger
they are the harder they fall.

Through history decadence precedes revolutions, but to
the contemporaries, who look forward to the change, the
decadence seems to go on and on. Yet a point comes when
the revolution does occur. Today we are at that
juncture, where decadence abounds, but deliverance
appears to be elusive. The laws of nature are such that
truth and justice always prevail in the end.

There are good reasons why a depression has not come
yet, but it is on its way, only to be followed by a
golden age."

------

Note: the word revolution in this context refers to an
acceleration in social evolution -- or where a new class
of people (most often warriors, but sometimes
intellectuals, and rarely acquisitors or labourers)
apply collective energy to change outdated and
oppressive social structures and conditions, typically
after a social situation has become completely
unbearable. This definition comes from the Social Cycle
Theory of his mentor, P.R. Sarkar -- the conceptual
paradigm from which his ideas emerge.

TheStranger (06/14/00; 13:21:34MT - usagold.com msg#: 32322)
Where the Heck is the SPT?
I guess gold is giving the Surge Prevention Team more than they can handle this time. The last two gold rallies occurred with good news in the background. First, it was the Washington Agreement, and then it was the decision by PDG and ABX to begin reversing hedges. But, this time around, gold rises amid what might easily be construed as bad news. The economy, we are told is gently slowing, and inflation has been vanquished. (Anybody want to buy a bridge?). This strength in the face of adversity is a welcome and promising sign if you ask me.

As OPEC production reaches the upper limits of its capacity, the world is suddenly discovering that prices are not artificially high. They are now very much a function of limited supply and of demand which has been juiced by rapid monetary growth, same thing for natural gas. Oh, MAMA!

Silverbaron (06/14/00; 12:21:05MT - usagold.com msg#: 32321)
A currency exchange rate model for the price of gold
http://expage.com/goldexcurrenciesdaily
Please contact me if you would like a copy of the spreadsheet.

Tom_Hixson@Yahoo.com

ORO (06/14/00; 12:11:48MT - usagold.com msg#: 32320)
FOA, ANOTHER - A summary analysis - Continued

The people freed up from the manufacture of our consumer goods are now occupied in retailing and distributing these imports and in other services. Most important is the fact that some of these people were freed to conduct technical research, study finance, and invent � and many technical people came to the US and will remain here if conditions do not turn sour too quickly. The technology edge of the US will help us survive the retrenchment of the dollar since the products of these technologies would not have to be produced outside the US as the dollar distortion would not work against US based manufacture any longer. Furthermore, some of the people freed from manufacturing by imports had moved to construction work, where relative wages have fallen from far above average to substantially below.

The US has not conducted itself fairly in the eyes of many in the indebted countries. Europe and Japan have also suffered from the need to support the dollar as much of the Japanese surplus had to be accumulated in potentially worthless US paper. Many indebted peoples see the US and its banking arms (World Bank, IMF) as enemies because of the financial, environmental, political and economic damage done to them by projects that were supposed to help but instead destroyed the core of the economy and by US political pressures that had brought unpopular socialist and militarist leaders so as to assure the flow of cheap bananas or shoes or to invite Anglo and Euro bankers to print up overvalued money with which they bought whole economic sectors and created monopolies that hiked prices shortly after they were assembled.

In the aftermath of the latest debt entrapment and financial disaster in the Emerging Economies, the US/Anglo and EU banks and corporations are in a hyena like rush to take over and consolidate industries.

Would these countries not come to try to unseat the dollar at the first opportunity where US retaliation is not possible? Would Europe not try to secure independence from the dollar trading, debt and settlement system? The Oil potentates who traded oil for promises of gold but ended up holding a paper stuffed bag, wouldn't they do all they could to avoid the possibility of their having to go through that again?

7. "The giant's footsteps"
The value of gold as the core of the monetary system is not a function of its tag to oil, it is oil's pricing which is tagged to gold, as most of the Arab's share of the oil price is profit and must be converted into PMs in order to survive the ages. Like all major private wealth holders that are not forced to keep accounts in currency (as all public corporations are), Gates, Buffet and the partners of Warburg, Goldman, etc. are getting their wealth insurance at the discounted price while they unload their investments by going public or selling out to public firms. Aside from Rothschild, is there another familly bank not sold out or gone public?
There should be no surprise that silence is maintained on the issue, as everyone must run along the path "in the footsteps of giants" before rush hour begins.

The golden tail wags the dog.

ORO (06/14/00; 12:09:27MT - usagold.com msg#: 32319)
FOA, ANOTHER - A summary analysis

FOA, ANOTHER - A summary analysis of their view and its consequences

The following summarizes my take on the view FOA presents, within the context of my monetary and economic understanding.

First a little note.
I am well aware that one can not go to a government and banking system and "sell it" the concept of unilateraly disarming in their war against the productive individuals that make those things available that governments and bankers want to control/take a piece of/steal.

Of course, banks will not like to lose their monopoly on creating the exchange money. Government, the partner in the scheme, would not want to have banking lose its usefulness because of the desire to have unlimited credit - that is to have the option, when they feel like it, to tax away a large chunk of an economy's production by inflation. Also banking serves to have the government as the only economic actor with no nominal possibility of failure - the highest credit rating possible, rather than government's traditionally low credit rating under the REAL free gold banking system.

The aspect of having gold contracts by the banks unenforced would sell the banks on the deal any day, as it would for the Arab Oil interests

So, now to the secondary note on this subject.
The program ANOTHER presents gives the governments (EU, US, Oil, Japan, China, Tigers, Anglos, Latin America) an opportunity to save the nominal currency systems they feel they can control and use in order to control the economy. Quite frankly, the detachment of gold from the currencies would eliminate the benefit of having them. Any attempt to inflate would destroy the currency values. Any attempt to restrict credit will cascade into a Japanese style disaster while still destroying currency values (unlike Japan, the US does not have any chance at achieving currency stability because it does not have the excess exports by which to maintain the international value of the currency).
The debt currency, as says ANOTHER, is a "negative value asset". Without a tie to gold, which is a positive asset value, its nature will show.

Like the indexed pesos, or reals, or rupiahs, or shekels in many accounts around the globe, the indexed interest rates and index adjusted wages and prices will move to undo the advantages that banking and government derive from inflating in the nominal world. That advantage is provided by the gold tie-in of the currency; the inflation of gold through paper gold substitutes, allows debt money currencies to be accepted so that the currency can be inflated relative to the paper gold outstanding, while the paper gold inflates relative to gold assets.

That ANOTHER has managed to sell governments (and I assume this extends to banks as well) the same lie they sell the public is quite an achievement.

Now to the summary:

1. Gold IS THE MONEY: The core of the financial system is gold. The profits of trade are placed in rarities and gold. Like all profit motive operations (the only motive) the 100% of the enterprise exists because of the expected 15%-20% gross margin, the gross margin is only important because it provides the profit which can be invested or stored. Investments earn a return, gold is what is returned and not reinvested. Traditionally, a 3% net profit is all that is necessary, thus 97% of trade can be done without gold, but the only justification for the 97% is the 3% that will be put into gold.

2. The philosophy ANOTHER sold is that debt money exchange media are useful for the conduct of business, but the 3% that goes into gold must not be manipulated by government or by banking.
This separates the motive of business from its conduct. Thus business will cease to have purpose if conducted in disconnected currency that can not be exchanged to gold at a predictable exchange rate (which one expects to fix in a futures contract etc. - all gold debt securities). This also separates the risk from the return.

3. Reserve structure: central banks will have the option of issuing cash to buy gold. Gold holdings will not be accessible to the currency holder, he will have to trade in parallel by purchasing gold (rather than converting) at an unknown future rate. Since the gold is the purpose of the business activity, the only way to convert into gold at a known rate is to do so BEFORE business is conducted - by borrowing to buy the gold before the enterprise is started. Thus we have central banks needing to take in gold in order to issue non-debt currency that can prevent the dismall fate of Japan. Inflation of currency - Euro in particular - would require purchase of gold or of debt securities. Guess what the central bank would do when the debt system needs cash pushed in. They will purchase gold - good for us gold holders - very good for oil based gold accumulators.

3. History of the modern gold-currency connection post 1971: The dollar debt bubble of the past 50 years broke the gold tie midway in 1971. After that, gold was separate from the dollar till 1979-1980. At some point at that time, the connection was reestablished for the purpose of stopping the conversion of dollars into gold that the Arab oil required. Why? because oil was priced by them at the unrealistically high historical gold contract price of 20 barrels per ounce - appropriate for the paper inflated gold price of the time, instead of the appropriate rarity ratio that would price oil at 100-200 barrels per ounce. In short, they were trying to get more gold than existed, could be mined, or more than can be provided by anything but for imagination. The source of the problem was the historical leverage of dollars relative to gold when the expectations were built in Arab Oil's perception.
The world at large was trying to fill the conversion requirements of Arab oil into gold after the world had converted so much of its energy consuming plant into using oil, and after years of excess extraction of oil without consideration of its depletion. The world was locked into using oil, but had locked oil exploration out of profitability by inflating currency in relationship to nominal oil and oil product production. Oil was what everything worked on, and there was more of everything but the only oil of which more was available was from Arabia, and the "sacred trust" of the dollar-gold conversion window was violated - Arab Oil wanted payment as in the contract and raised dollar prices as high as they dared in order to obtain it.
Only when sufficient oil supplies were found did the oil price fall. In 1986, the US was nearly free of OPEC supply.
During the Arab chase after gold, every cow pasture was explored for gold. In 1980 it was possible to provide more gold than before as annual production grew at a 5% rate during this period of 1980-1986. Possibly, a large supply of gold rumored to have been made available during this time, was under US control and was disbursed, off market during this time, largely to the Oil interests. It is noteworthy that the substantial Oil revenue accumulated up to that time disappeared during this period despite a hefty (though falling) dollar revenue.
1986 marked a change in the US so far as oil and banking/monetary issues were concerned: The US had grown new money at a globally unprecedented rate over an unheard of period. The dollar was back to its situation in 1971. Germany (Bundesbank) was unwilling to support the dollar (by lowering rates) at the expansionary conditions at which the US operated its banking system. In response, the tax preference for debt was reduced substantially, as was the tax loophole system that caused investments in cash positive operations with high depreciation. This reform dropped the rate of debt expansion like a rock but created a deflationary danger. The Asian and South American crisses were over and US had to inflate if it were not to suffer the same consequences. The resumption of growth in these nations caused a new draw on oil supplies and OPEC had to be tapped. But they would not trade for dollars after having had gold delivered for years, much to their satisfaction, even though dollar balances declined.
The deal following the near collapse of 1987 was structured to allow the Arab oil interests to convert petrodollars to gold at an artificial gold price by trading oil futures and gold futures backed by mine obligations and central banks promising to step into the breach if necessary. If the gold did not arrive, neither would the oil.
The US inflated at the minimal rate that allowed survival of banking while not killing the dollar. The NET dollar supply into the global markets was absorbed as long as the contracted gold parity was maintained, and the deal's cieling was not reached.
The US inflated at the minimal rate that allowed survival of banking while not killing the dollar. The NET dollar supply into the global markets was absorbed as long as the contracted gold parity was maintained, and the deal's cieling was not reached.
Seems that this deal dates to 1987, probably negotiated after the Plaza Accords. It also seems to have been renewed in 1992, with the UK on the US side. EU dropped support for the sterling and collapsed out of the ERM and brought the UK into recession and gave the EU members a chance to revel at one of the creators of the IMF turn into a major suplicant.
The renewed deal I suspect started in 1992 was put together to allow time for two items: do the EMU and get Britain back in the fold. The old unofficial parity values were still set, but the future gold requirement had to be contracted out of reluctant gold miners, and even then quantities were insufficient to provide the necessary gold. Gold had to be displaced from the central banks or from the public. Not only were current holdings to be displaced, but the complete diversion of gold investment out of the physical markets had to be achieved through the provision of the right interest rates and gold price behavior.
Henderson's 1997 Fed study was intended to provide price targets and interest rate policy guidance needed to achieve this. Judging by the cutoff dates for new information going into the simulations, the running model had a preliminary version as early as 1996, and possibly the informal work was done in 1995 or before, running on spreadsheets with best guess estimates. The "welfare" calculations are a joke. It is the price curve and interest rate requirements that the work was intended to produce. Also, the work was intended to provide an estimate of the availability of gold in the future in case the deal could be renewed again in 1997, and in order to provide the downslope numbers for the benefit of the large group of private investors who needed to convert at the best possible prices while unloading investments.
The gap between the intended start of the EMU and the actual schedule was bridged by the action of the past few years since 1997.

4. Euro-Oil and the ultimatum.
In 1997, Oil representatives revealed their intention of having the gold market and bullion banking destroyed by the institution of an open pricing of oil in gold in full public view. The choice was simple: either the EU trades gold without the possibility of gold banking and gold debt having the potential to dilute gold purchasing power, or the EU along with the US will have to pay in cash gold bullion for each oil delivery. The reserve structure of the Euro must also force the ECB to partake in a runup in gold prices and align the ECBs interests with a high gold price.
Was there an alternative? "Take the oil and the gold?"

No one would let anyone else take the oil fields by force, and no agreement can be had where a consortium of states would do so. The presence of US troops after Iraqi-Kuwaiti war was resolved has nothing to do with Sadam's ambitions and everything to do with Saudi (and Kuwaiti) desire to eliminate Sadam's oil supplies from the markets without US occupation.
Another problem is the destructibility of oil fields which rely on natural pressure to push up the oil. The seal that keeps the pressure high is relatively easy to destroy (you only need to crack it), though it takes quite a bit of technology (which is available from Russia, Taiwan, Israel, China, India, Pakistan and others at a price that is affordable to the Oil nations). If this is done, the oil extraction becomes substantially more expensive. The threat of destroying the oil fields is enough to prevent most nearly sane Western politicos from even trying.

5. Legal status of gold, PMs and gold banking/debt.
Legal tender status
Pressure is rising to allow use of gold to pay debt, returning its status as legal tender. Gold and other PMs are the only financial assets to benefit greatly in hyperinflation. While all avoid currency and financial assets like the plague during the steep price rises, they do chase PMs. The result is that the only financial assets available to repay debt without extremely aggressive central bank currency printing are the PMs.

Thus there is pressure to return "real cash" into the bank system. However, if you can pay debts with a PM, why should you hold any non-PM assets but for what is needed for payment for day to day expenses? The use of PMs for legal tender would cause the bulk of the demand for currency for the purpose of debt repayment to be transferred to these monetary metals.

A legal tender concession for gold on the part of the ECB/EU is dangerous for the Euro. However, it is more dangerous for the dollar because the debtors would prefer to hold PMs to holding dollars for reserves (used for debt and trade settlement) if they could use them for debt payment somewhere. As a result, they would tend to replace dollar debt with Euro debt, as they are doing now � just much more rapidly.

The dollar debt to Euro debt transition is occurring right now, though not for the same reasons. This was causing a monetary expansion in the Euro while destroying both dollars and dollar debt until recently. The dollar spike that resulted from this and from the exacerbating factors of the recent interest rate hikes by the Fed. The resulting dollar stream from the current accounts deficit is expanding by leaps and bounds. It could soon reach a point where even the Japanese can't afford to sop up the excess dollars that overflow the debt payment demand.

A note on hyperinflation:
Hyperinflation in debt money systems is a result of a previous overexpansion debt collapsing. It is, paradoxically, a deflationary phenomenon. In a hyperinflationary currency collapse, the cause for the price rises is the injection of funds by the central bank. The reason such apparently foolish action is taken is the danger of a deflationary collapse of banking due to loan defaults. In the attempt to keep the banking system afloat, the central bank can inject enormous amounts of currency to replace currency that could "evaporate" with the accounts held at weaker banks. Once the price rise process begins, people hold less an less in currency and currency accounts relative to their incomes and expenditures. The reason for this is the tendency to avoid holding a significant portion of their assets in a devaluing medium. As a result, they are unprepared for income loss and for the rise in price of basic necessities for business and personal purposes. This causes deterioration in credit performance and eliminates bank assets.
The process is self reinforcing as the speed of price rises causes lesser purchasing power to be held in currency and associated assets. Less currency results in a cash shortage and therefore will result in defaults. Defaults destroy bank assets and the banks must sell assets to obtain cash with which to settle. The defaulted loans are no longer a source of demand for currency, and so the value of the currency erodes further. The low cash levels cause a reduction in actual sales as inflation progresses. The central bank tries to replace lost funds from the banking system so as to maintain the ability of depositors to spend.

Gold Banking
The agreement regarding the gold banking system comes down to one thing: it will not survive. The Oil based gold holders will have none of it. They are unwilling to allow any gold debt in the future. They are not willing to suffer from the expansion of gold debt with or without cartel conditions � i.e. with free gold banking (the "ideal" state economically) or with central banks and government pushing further inflation of fiduciary gold to dilute the POG.

The point at which the banks default on gold liabilities is when all gold available to the banks has been displaced by fiduciary substitutes, and the supply from accumulated reserves has stopped because none dare sell anymore and all gold "investors" who care about price rather than wealth insurance, have converted their gold into paper. The gold bankers know that they are going to fail and will have to default. However, by accepting the deal with Oil on ceasing further gold banking and perhaps allowing gold its legal tender status, they may have an outlet from their predicament in having the rules changed so that their delivery requirement on gold obligations is lifted. They can be "saved" from delivery of gold and will need only to deliver currency, perhaps at a level that does not reflect the physical price. This deal, at least for EU banks, is a saving grace, for the US banks, not joining would mean that they will be sued for the next two decades until all claims are settled. Since the bulk of gold contracts have dollars on one side, joining the deal would mean that there is likely to be a dollar pump if the official markets (that serve as reference for POG contracts) continue to operate. The recent joining of Credit Suisse into the LBMA fixing five could be a sign of this market possibly maintaining life as a physical gold trading arena, if that is so, then the US banks would not be let off the hook easilly since the potential for a gold-dollar pump would remain.

6. Ill will and the cost to the world of the dollar's reserve currency status:
The US has enjoyed over 55 years of currency hegemony as a result of imposing Bretton Woods on the decimated economies at the end of WWII. It was the only economy that was intact at the time. Militarilly there was no possibility of resistance to it. The US demanded the right to print money in return for goods and purchases of foreign assets. In order to make it seem "kosher" the agreement allowed gold redeemability to stay in place with a gentlemen's agreement as to the nations of Europe not exchanging their dollars for gold.

Furthermore, it was thought that the nations of Europe and Japan would fall into debt traps as they are forced to import US capital equipment paid for by loans. US corporations and the military spent so heavily abroad, that there was not that high a need for US dollar borrowing and Europe was soon flooded with dollars.

Without the danger of gold redemptions and with no competition from European, Japanese (or any other) consumers, the US saw a tremendous growth in consumer oriented imports of foods, rare woods, rubber and porcelain at negligible prices that barely made a blip on the import numbers.

By 1960 the US had created enough of a dollar float so that the Europeans, confident of their security after the death of Stalin, started redeeming dollars for gold despite a nominal trade balance that was slightly favorable for the US. The dollar supply was in excess of demand for debt repayment. By the late 60s the gold markets of Europe were short of gold and a pool was put together to supply gold to the markets from central banks. The dollar supply, however, would not go away and continued growing because of the expansionary Fed policy accommodating massive government borrowing in order to finance an artificial war in Vietnam and an attempt by Pres. Johnson to institutionalize and make permanent the poverty of millions of Americans, complete with prizes for people who do not work, and social workers who make certain that the recipient of welfare aid is well motivated not to seek independence or employment.

Soon after this, the US ran out of new oil and its domestic production fell just in time for baby boomers to enter the workforce, enabling them to buy cars and houses while the WWII generation started for retirement with Social Security benefits exploding. The government was then spending at its record pace relative to business and private spending. The oil situation was dire because the falling production came just after the conversion of so much power generation and chemical feedstocks from coal to oil, and the expansion of polymer product manufacturing from oil. It was necessary to import as much as possible to satisfy the new demand pressures, but the dollar glut was pressing gold reserves as the gold redemptions were emptying treasury's vaults at an incredibly quick pace while Americans were enjoying their best economic times ever, with a currency overvalued by 220% on a PPP basis. The official nominal trade balance was doing fine, but the trade balance was understating the volume of imports because of the distortion by the currency exchange rates. The volume trade imbalance was as double the level of exports. THIS WAS THE ESSENCE OF BRETTON WOODS, the reward for America winning the war was to have an overwhelming stream of imports coming in as the overvalued dollar teetered for years after it was obviously insolvent.

In 1971, the world was stuck with dollar assets in a sufficient quantity to redeem all the gold the US ever possessed ten times over. The reality of the US being broke since the early 60s was driven home when Nixon suspended gold convertibility. OPEC attempted to regain the gold price of their oil through dollar pricing under the assumption that the US could revert back to gold conversion (though I don't understand by what economic process this could have been achieved. It was an irrational expectation).

The US needed higher relative oil prices so that domestic or near domestic supplies could refill the oil supply gap. Rather than that being a motive for dollar inflation and the closure of the gold window, as Aristotle, ANOTHER and FOA contend, I believe the US was insolvent in the first place, the events were the classic events surrounding a "bank run", and inflation was necessary to undo the deflationary pressures from an overextended debt system. The higher relative oil prices were just the results of this policy, though a much desired result from a strategic viewpoint.

The explosion of dollar supply before and after the dollar default and the attempts to cash that supply for gold on the open markets led the gold markets to explode in price. Nominal imports grew tremendously as new oil demand was met with imports and import prices rose. However, import volumes were not increased in proportion as the dollar declined and exports recovered. Since 1980 we have seen a repeat of the pattern of the 50s and 60s but at a greater pace, greater order of magnitude, and greater proportion to the non-import economy. The currency distortion today is equal to that of 1970 at 220%. The imports which we trade for paper chits have grown to over 50% and peaked at near 60% of our goods sales volumes (not dollar values).

The people freed up from the manufacture of our consumer goods are now occupied in retailing and distributing these imports and in other services. Most important is the fact that some of these people were freed to conduct technical research, study finance, and invent � and many technical people came to the US and will remain here if conditions do not turn sour too quickly. The technology edge of the US will help us survive the retrenchment o

goldfan (06/14/00; 12:02:34MT - usagold.com msg#: 32318)
TownCrier (6/14/2000; 11:18:40MT - usagold.com msg#: 32317)
I'm wondering what use these central bankers circumlocutions are, where the systemn they inhabit is plainly headed straight for self-destruction, and where their discussions are about as relevant as those on the bridge of the Titanic, when the exalted persoanges of Captain and Mates spent their last hour debating how best to keep the passengers from taking seriously the "ill-founded" rumours that the ship was mortally wounded.

Goldfan

TownCrier (6/14/2000; 11:18:40MT - usagold.com msg#: 32317)
An interesting excerpt from our new "Cental Banking Insider" page
http://www.usagold.com/centralbank/current.html
Central Banking Publications has held several meetings of central bank reserve managers and international institutions to discuss trends in reserve management policies and has also published surveys of central banks' attitudes to reserve management. These meetings did not debate in depth, however, the basic question of the role and function of external reserves. At a time when some academic economists are again questioning whether the benefits of holding reserves exceed their cost, Central Banking is bringing together a small group of economists, financial analysts and central bankers to discuss the issues involved. The purpose is to explore possible future scenarios for the development of reserve policies and intervention and to discover whether any consensus can be reached in the group on the future role of reserves in national policies and the monetary system.

Clearly, these questions are inter-related. Future possibilities for intervention will depend crucially on the type of exchange rate policies adopted by individual countries. Here there is currently a paradox: it is fashionable to say that countries should choose between either fixed rates or freely floating rates - the two extreme ends of the spectrum of possible exchange rate policies where there is no obvious need for reserves at all. Ever since the advent of floating exchange rates in the 1970s, there has been no shortage of academics calling for free floating and arguing that reserves are of no practical benefit. Yet in practice most central banks continue to value their reserves, and indeed since the Asian currency crisis most Asian countries have shown a preference for reserve accumulation. In Europe, meanwhile, despite the weakness of the euro, the ECB has not seen fit to deploy any of its massive reserves to intervene to support the new currency. The UK has been equally reluctant to intervene to counter the excessive appreciation of sterling.

In fact, Murray Sherwin, deputy governor of the Reserve Bank of New Zealand, was speaking on exactly this subject at the World Bank's annual conference on reserve management held on May 9. RBNZ has not intervened in the FX markets since 1985 - probably some sort of "world record" among developing and developed countries alike - yet the bank still holds significant reserves ($2.5bn or 10 weeks of import cover). What is the point of holding reserves, Mr. Sherwin asks, if you never use them? The answer is based on three propositions:

(1) Fx markets, more than most financial markets, are prone to becoming dysfunctional under stress.

(2) Dysfunction in fx markets may carry significant externalities affecting parties well beyond those directly involved in the market.

(3) There may be circumstances in which the central bank, via direct market operations, can usefully accelerate the return to more normal market trading.

Dysfunctions to the market primarily relate to liquidity concerns, rather than "overshooting" per se. By intervening in the markets, central banks can assist in unlocking logjams between market players at times when credit quality concerns are impacting on the trading capability of market participants. Mr. Sherwin also says that central banks have an advantage in this situation of not being subject to the same risk/return framework that commercial banks operate under. Mr Sherwin highlights what Alan Greenspan calls the "essence of central banking" - the role of the central bank in deciding what level of risk should be borne by the private sector and what level should be borne by the central bank and government.

TownCrier (6/14/2000; 11:11:59MT - usagold.com msg#: 32316)
Our "Cental Banking Insider" page has been updated!
http://www.usagold.com/centralbank/current.html
We are pleased to be able to provide you with this intimate weekly look at central banking events, policies, and staff. The source commentary "Newsmakers" is reprinted at USAGOLD with permission and by courtesy of Central Banking Publications Ltd.

The following excerpt is one example showing why we have really taken a liking to this new USAGOLD feature out here in The Tower.
-------
June 13-- Eddie George, governor of the Bank of England, argued today that the UK's arrangements for dealing with a systemic banking crisis remain untested. Commenting on the new arrangements by which the Bank, the FSA and the Treasury cooperate via a financial stability committee, he said, "it is early days to begin to assess the new arrangements from this perspective. It is true that we have not had any serious threats to financial stability in this country over the past three years, but I suppose that putting that down to the new structure would be a bit like the man who claimed that the absence of pink elephants in Hyde Park was the direct result of his clicking his fingers there on his regular morning walks. We really haven't been tested."

He repeated his concern that the transfer of supervision to the FSA might deprive the Bank of "information from, or contact with, the banking sector which might reduce our capacity to exercise our responsibility for the stability of the financial system as a whole." However, he went out of his way to praise the "tremendous" job which Howard Davies had made of the transfer, and commented that not having to worry about banking supervision may have allowed him to keep his hair (Howard Davies, who was present at the speech, is bald).

Goldfly (6/14/2000; 9:56:43MT - usagold.com msg#: 32315)
What do you see, Grasshopper......?
http://www.kitco.com/image/gold.gif

SHIFTY (6/14/2000; 9:47:30MT - usagold.com msg#: 32314)
Kitco Gold Chart!!!
Here we go again. UP UP and Away!

ax (06/14/00; 09:17:48MT - usagold.com msg#: 32313)
Gold Fields / Franco-Nevada Merger
Compability of the two companies in an even merger such as the Gold
Fields/ Franco-Nevada one just announced can be gleaned to some extent
from the price/earnings and % dividend yields of the respective
companies. The following table lists this data for various gold mining
companies. In the case of Gold Fields and Franco-Nevada , whereas the
dividend yields are very close, there is a much wider separation of
price/earnings ratios. The new evenly combined company would have a
higher ( less favorable ) price/earnings ratio than the original Gold
Fields, and a lower ( more favorable) price /earnings ratio than the
original Franco-Nevada. On this limited though very fundamental
criteria, and excluding many other factors, it would seem that
Franco-Nevada got the better deal.

REPOST OF GOLD MINE DATA

Gold Mine Data ( redone)
Some comparative data on some gold mining companies:
As of May 26, 2000:
P/E Ratio /// Dividend Yield
Newmont 46 /// .5 %
Barrick 19 /// 1.2 %
Anglogold ads 13 /// 8.1 %
Franco-Nevada 29 /// 1.7 %
Placer Dome 21 /// 1.2 %
Homestake 68 /// .7 %
Rio Tinto ads 16 /// 3.6 %
Freeport B 37 /// 0.0 % since 12-9-98
Freeport A 16 /// 0.0 % since 12-9-98
As of June 13, 2000 on the JSE *
Gold Fields Ltd 19.65 /// 1.86 %
Harmony 11.52 /// 2.86 %
Anglogold ord 15.13 /// 6.71 %
*( due to recent market movement the div yields could have been somewhat
higher and the p/e ratios somewhat lower on May 27,2000 as is the case
with Anglogold
included in both time frame groups to illustrate this difference.

USAGOLD (06/14/00; 09:12:07MT - usagold.com msg#: 32312)
Today's Gold Report: Asia Leads Gold Market Higher
http://www.usagold.com/DailyQuotes.html CHECK THIS OUT! A Worthly Addition to Your Pre-1933 Gold Coin Portfolio Our First-Ever Offering of the Uruguaya
6/14/00 Indications
�Current
�Change
Gold August Comex
289.80
+1.70
Silver July Comex
5.0
+0.02
30 Yr TBond Sept CBOT
96~21
-0~02
Dollar Index June NYBOT
106.10
+0.01

Market Report 6/14/00): Gold rebounded strongly this morning led by physical buying and
short covering in Asia. Reuters reports that a "significant" mining company, possibly Australian,
might be closing out its hedge positions. Similar market action in Asia yesterday drove the gold
price almost $7 higher before the rally was stopped in New York. One source reported Goldman
Sachs as the rally stopper. There has been no verification at this time that a major buy-back is in
progress or that Goldman Sachs is trying to cap the price, but with gold up another $1.70 in the
early going and the obvious attempt to check the rally in New York yesterday, we would have to
say that something worth noting is in the works. As suggested here yesterday, the merger between
two strong anti-hedging mining concerns -- Gold Fields and Franco Nevada -- into one powerful
entity could be having an direct effect on other mining companies. If corporate managers have one
major concern, it is the value of the stock in the company they represent. If the profile of the
attractive mining company to mutual fund managers becomes one that is unhedged, then there
could be a mad scramble to see who unwinds their hedgebook first. It seems that someone may
have gotten the message early on. Later today, the CPI numbers will be released.

That's it for today. We'll see you back here tomorrow. Have a good day, fellow goldmeisters.

Black Blade (06/14/00; 06:33:00MT - usagold.com msg#: 32311)
Morning Wakeup Call!
Sources: Various
Asia Precious Metals Review: Physical buying supports gold
By Hiroyuki Fujiwara, BridgeNews

Tokyo--June 14--Spot gold was supported by buying from some local physical dealers in Asia Wednesday after an overnight slip, dealers said. Short-covering by dealers for profit-taking also sustained gold prices but the absence of follow-through buying prevented a sharp rebound, they said. Platinum was supported by palladium but profit-taking prevented prices from breaking over U.S. $560 per ounce, the dealers said. An overnight slip following the short-covering rally discouraged players from buying gold here, the dealers said. Some physical dealers showed buying interest Wednesday, while they expected players might stay on the sidelines in the near term on expectations of a possible further price decline. Meanwhile, dealers said bargain-hunters may start buying near U.S. $280. They see gold prices staying between $282 and $289 in the near term. Australian producers continued to stay away from the market during Asian trading hours, while dealers were hesitant to lift spot gold in the afternoon despite the weaker U.S. dollar/yen, the dealers said. Overnight weak NYMEX discouraged players from buying platinum aggressively on Wednesday in Asia, they said. Short-covering sustained Tokyo Commodity Exchange (TOCOM) platinum futures in the morning, but the absence of fresh incentives led all of contract months to negative territory from Tuesday, the dealers said. Palladium failed to extend its overnight rally in Asia amid daily maximum price limit-up on TOCOM, they said. Sufficient palladium supply is seen in the market but higher prices on speculation of strong demand still prevents end-users from buying, dealers said.

Black Blade: There appears to be rampant speculation as to who the Aussie producer was that was involved in the short covering yesterday. It is suggested that the short-covering is not quite finished. Who is it? One could make a list of Aussie producers and throw a dart. Anyone could be covering their a**, as most are forward sold for years ahead. The short list includes: Delta, Normandy, Newcrest and Sons of Gwalia. Read on�..

Australia gold trade says mystery buys spur spike 06/13/00

SYDNEY, June 14 (Reuters) - A spike in gold prices was believed to have been caused by a significant gold producer closing out hedge positions, with the play possibly not over, Australian analysts and traders said on Wednesday. But the identity of the company involved, despite apparently inaccurate rumours that it was Delta Gold Ltd , remained a mystery. "Until that mystery is solved the action cannot said to be over," one analyst said, asking that he not be named. Most Australian analysts contacted on Wednesday believed that hedge buybacks had been behind a US$7-plus spike on Tuesday which led to further early gains in European trading before they subsequently evaporated. Most focused on rumours that Delta Gold, which suspended its mining operations in the politically tumultuous Solomon Islands last week, was behind the buybacks. A Delta official told Reuters she had "not heard" of the company being engaged in buybacks, while on balance traders tended to discount Delta buying back. Delta was comparatively lightly hedged and could handle any required delivery of gold itself, analysts said. One leading gold analyst, after spending much of Wednesday attempting to identify the source of the buybacks, said he had eliminated the major Australian producers of Newcrest Mining Ltd and Normandy Mining Ltd . And the market was saying that it was not Delta, he said. This analyst put the size of the position which was closed down on Tuesday at 300,000-350,000 ounces of gold or even more. That was enough to move gold in Australian/Asian trading up by US$3.50 to $290, then on to $293 in Europe. "There was panic covering of some short positions by hedge funds. When they found out it was just due to closing out a forward position by a producer the price just drifted back again," he said. This left gold trading in the US$286.50/7.00 range by Wednesday afternoon in the Asian/Australian time zone. "Something did happen. Who it is is still open to question," a Trader said.

Black Blade: The Aussies have their collective "tits caught in the wringer" as it were. Now it is desperation time. It has been known that Normandy has been trying to close out much of their hedge position for the last several months. The end-game is within sight and some Aussie producers are likely to suffer worse fates than what befell Ashanti and Cambior. The question is whether anyone can or will bail them out. My take is, Don't count on it!

Big gold merger seen hastening industry consolidation
Alden Bentley 06/13/00

NEW YORK, June 13 (Reuters) - The planned merger of two Canadian and South African gold companies to form the world's third-largest producer may portend faster consolidation in the beleagured and hesitant gold mining industry, analysts said. The all-stock deal announced Tuesday by Canadian gold miner Franco-Nevada Corp. Ltd. and South African gold giant Gold Fields Ltd. would give the newly-merged company a market capitalisation of C$3.7 billion, the industry's fourth largest. Output wise, it would rank behind only Denver's Newmont Mining Corp.and top-producer AngloGold of South Africa.

``I think the trend is certainly accelerating,'' said David Christensen, director of global mining research at Merrill Lynch. ``As this industry has fallen to less than one percent of the market caps of most major markets it is just no longer on the radar screens of most investors.'' The new company, to be called Gold Fields International, will have its primary listing in Toronto. It has ambitious plans for global expansion and is the fifth big South African company to move its primary listing abroad in recent years. ``There is a need for the (gold mining) industry to consolidate and we should like to be a part of that,'' Chris Thompson, the company's designated president, told Reuters. ``The intent is to end up with cash flow coming one-third from North America, one-third South Africa and one-third the rest of the world,'' he said.

The deal was attractive to Toronto-based Franco-Nevada, the world's leading metals royalty company which also operates a U.S. mine, because there was no more room for expansion in its traditional areas. In its 14 years of existence, the company had acquired all the royalties it could and was looking for other areas in which it could grow. Christensen said that the best way to rekindle interest by generalist portfolio managers in gold and gold stocks -- traditionally held by investors seeking to protect wealth against inflation and volatility in paper asset markets -- is to merge. In recent years, investors salivated over gains in the high-flying technology sector while treating gold shares, and bullion itself, as a relic of the old economy. Low gold prices have killed some high cost producers and raised speculation that the industry would consolidate in a rush by the main producers to achieve synergies and cut costs as the aluminum and copper mining industries did in the last year.

Current spot gold prices near $290 an ounce are well below the estimated $340 to $350 an ounce global cost of production. Even the most efficient mining operations had a hard time turning a profit when prices tumbled to 20-year lows just above $250 an ounce last August.``I think the market is expecting there will only be three miners going in the future,'' said Donald Eckert, global bullion risk manager at Chase Manhattan. But consolidation in the gold business has at times seemed to move at a snail's pace. ``At least with the North American companies that I cover, the valuations are extremely high, which makes it prohibitive for anyone outside the gold industry to acquire. It would almost inevitably be dilutive,'' said Peter Ward, mining equity analyst at Lehman Brothers. Ward said synergies were hard to realise in the gold mining industry, providing little incentive for a company to pay a sizeable premium for another miner.

``When you combine mining company A with mining company B, you'll fire some senior management, you'll produce one annual report instead of two and that's about it,'' he said. The industry has experienced bursts of tie-ups since 1997, such as Newmont's merger with Santa Fe Pacific Gold Corp. and AngloGold's purchase of Australia's Acacia Resources Ltd. Canada's Barrick Gold Corp., North America's No. 2 producer and the darling of gold equity investors, has made acquisitions the hallmark of its growth strategy for more than 15 years. There have also been distress sales. Ghana's Ashanti Goldfields Co. Ltd., which was nearly wiped out by its hedge book during last year's gold price surge, is due to complete the sale of its treasured Geita mine in Tanzania to AngloGold in September. ``There is probably only room for no more than a handful of large global gold producers and then a large contingency of exploration-type companies, which provide the feed stock or new projects for the larger companies,'' Christensen said. ``Many of these companies have actually grown through the acquisition of exploraton companies as they found or developed new deposits,'' he said.

Black Blade: This is only the beginning as many marginal and heavily hedged producers scramble for survival. The large producers will swallow the most profitable smaller producers. Yesterday's merger just set the pace, now the dominoes will fall. Reminds me of a cartoon by G. Larson (The Far Side) where a flock of ducks are walking in a "V" formation and the lead duck points toward another flock of ducks flying in a "V" formation, and loudly exclaims, "Hey look what they're doing!"

On that note, Au is up +$1.10 at $286.60, S&P Futures up +0.50, fair value +7.48, indicating a higher open on Wal;l Street, however, any surprise on this morning's CPI numbers and anything can happen.

SteveH (06/14/00; 06:01:33MT - usagold.com msg#: 32310)
Protecting gold...
Let us hope the judges have gold in their closest too.

5:30 p.m. June 13 Neal Knox Report -- "The Court really beat
up on the government" Linda Thomas of Houston ecstatically told me
a few minutes ago.

She was on a cell phone, standing on the steps of Fifth
Circuit Court of Appeals in New Orleans. A three-judge panel had
just heard oral argument in the Emerson case, in which Lubbock,
Texas, Federal Judge Sam Cummings struck down part of the 1996
Lautenberg Amendment prohibiting persons under a restraining order
from possessing firearms.

The government prosecutor said the Second Amendment only
applied to arms issued to militia members, in Dr. Timothy Emerson's
case either the Texas National Guard or Texas State Guard. Judge
Harold R. DeMoss, Jr., a George Bush appointee, told him he was
misreading the 1939 Miller case.

The court held in Miller that there had been no evidence that
Miller's sawed-off shotgun was a militia-type arm. Nothing was said about
the gun having to have been issued.

Judge DeMoss asked the prosecutor if Dr. Emerson's Beretta 92
9mm pistol isn't the type used by armies. Of course, it's the
standard U.S. sidearm.

Judge DeMoss also raised a critical question that addresses
the Tenth Amendment. "I have a 12 gauge and 16 gauge shotgun, and
a .30 caliber deer rifle in my closet at home. Can you tell me how
those affect interstate commerce."

All Federal gun laws are based on the power of the Congress to
regulate interstate commerce. The present Supreme Court has struck
down several laws in a series of narrow decisions based on the
Tenth Amendment's stipulation that powers not specifically
delegated to Congress "are reserved to the states and the people,
respectively."

Judge Robert M. Parker, appointed by President Carter, and to
the appellate court by President Clinton, told the government: "I
don't want you to lose any sleep over this, but Judge Garwood (the
senior judge) and I between us have enough guns to start a
revolution in most South American countries."

Linda, a gun rights activist who has just finished law school
and is preparing for the bar exam, said the folks on our side of
the aisle "are all smiles."

Unlike most firearms-related court cases, there was no
reluctance to discuss the Second Amendment, and, Linda said, the
judges had done their homework. "It was like sitting in on a Gun
Rights Policy Conference legal seminar."

One thing about it, Timothy Emerson's case is going to have a
full and fair hearing. And so will the Second Amendment.

If the Fifth Circuit concurs with the trial judge that the
Second Amendment protects gun ownership as an individual right --
which now seems quite possible -- there would be a conflict between
the circuit courts, almost guaranteeing a Supreme Court hearing
after the next election.

That's just one more reason to make certain that Al Gore isn't
in a position to appoint Supreme Court justices.

Leland (06/14/00; 05:40:46MT - usagold.com msg#: 32309)
Whew!
Only a few minutes after I posted about natural gas shortages, the article appeared on Kitco. "Kahn", fast
work!

Leland (06/14/00; 05:23:12MT - usagold.com msg#: 32308)
I'm Just Wondering...Are Natural Gas Shortages Going to Break the Bubble?
NATURAL GAS: THE FIVE STAGES TO MARKET PANIC by Charles T. Maxwell, Senior Energy
Analyst (maxwell@weedenco.com)

The low natural gas reinjection numbers we have seen so far this spring in the US tell their own tale. We
are not on our way to putting three trillion cubic feet of gas, or anything like it, into storage for use next
winter. From a low of one trillion cubic feet (and nearly 50 % of that is facility and line "fill", i.e., is not
usable), we would be fortunate now to bring stored supplies up to 2.3 Tcf by early next November, the
start of the gas consuming season. Given the presumed retreat of the La Ni--a weather pattern, the
strong US economy, and the substantial number of new natural-gas-fueled base-load generating plants
using combined-cycle technology coming on stream over the next six months, I have had to revise my
estimate for peak gas storage down a bit from the 2.5 Tcf number I was using two months ago.

In practical terms, unless the coming winter approaches the highly-unusual, +13% warmer-than �usual
season we have just passed through, US gas storage numbers are accumulating in a potentially
disastrous pattern of insufficient gas to take this country through the full span of cold weather to April of
2001. There is the possibility that we will be forced to allocate gas supplies to private homes,
government departments and public institutions, to defense installations and to schools, universities,
hospitals, and so on. To the degree that is necessary, gas will have to be allocated away from
manufacturing industry. Hit hardest, in such a period, would be sectors of the economy that use a high
proportion of natural gas in their fuel mix such as cement plants, glass works, heat-treating and
metal-shaping plants, heavy chemicals, steel, copper and aluminum makers, and so on. Subsequently,
problems of insufficient production of component parts and intermediate materials could quickly spread
to car and aircraft manufacturers, commercial construction and machine assembly industries. In short,
the use of natural gas is so widespread in our manufacturing system that shortages of it for, say, a two
month period from late January of 2001 to late March would wreak havoc on many areas of our economy.
It would surely slow national GDP growth, and heavily penalize the profits of many industrial firms.

However, all this is theoretical. It really couldn't turn out this way, could it? Yes, it could. And, unless the
trends I see in place now of close to 3 % incremental natural gas consumption in the US vs. flat or
slightly down natural gas production are reversed for some reason I cannot now perceive, the "disaster
scenario" outlined above must be considered the most likely one.

Perhaps the most intriguing part of the emerging outlook for a shortfall in gas supplies is not the fact that
the crisis has arrived (after all it has been predicted for years, and, up to now, nothing serious has
occurred), but rather the point that we are advancing deeper and deeper into this energy problem and no
one, other than a few Wall Street analysts, are making any warning noises about it. The media is quiet.
It is either non-believing or unimpressed by the dimensions of what is visible. Government, at all levels, is
complacent. There are no public outcries even from executive figures in gas consuming industries that
are heavily dependent on the fuel. We are becalmed in a sea of silence on this issue as we pass into
summer. The weather is fair, and the "livin� is easy". And, when winter comes? It's just another season,
following summer. Nothing to worry about.

However, a few important people in the system quite plainly see the outlines of what is to come. Their
traders are bidding up the price of natural gas dramatically (now 100% higher than the last year's $2.10
per mm btu price at this season) in order to secure supplies for storage now - supplies that may not be
available next February when many industries could be facing downtime. These gas buyers are doing
their homework. And, it is their lead that investors should be following.

Still, I am ahead of the story in my surprise that the media has not yet picked up on the coming crisis.
For over the years (and I have a good many of them), it has been my experience that there is a repetitive
cycle to how these "threats" to the system are understood and acted on by different parts of our society.

In the case of the emerging shortage of natural gas, to take the example before us, the first group to
identify it was the industry specialists (apart from many natural gas production company managers who
had spotted it years in advance), in particular a small group of Wall Street analysts who were doing their
weekly storage sums and saw that behind the fa�ade of last winter's warmth was a highly worrisome
picture of an industry failing to convert its greater effort to find supplies (some 650 rigs drilling for gas this
year vs. some 380 drilling for gas last year at the same time) into rising output figures. Across the board,
analysts in the oil and gas industry are now convinced there is a substantial problem ahead. This is
Stage One, and it is nearly completed.

Stage Two is the tricky one. Analysts must convince their portfolio people that the problem is real, and
direct them to what areas of the market to buy and what to avoid to maximize investment returns. But,
portfolio managers are resistant to these arguments (they have heard them before). So, only a few
comprehend and accept the fundamental story, then take action. But, those brave souls start building
upward momentum into the limited group of gas producing stocks that can be bought in size by the
institutions (APC-53, BR-45, UCL-38, APA-60, DVN-60, and EOG-32, in order of descending
capitalization). Then, that section of institutional portfolio managers which cannot yet grasp the play
itself but which is attuned to moving into stock groups with rising upward momentum in the market (for
whatever reason), can be expected to swing onto the story. In this case, the natural gas producing group
has recently come up on everyone's charts as being in the lift-off stage. Finally, the remaining portfolio
managers, still not convinced, are forced to act in order to maintain their performance rankings, and they
belatedly enter the game.

We are better than halfway through Stage Two now, as I make it out. The fundamental players are "in",
and the momentum players are starting to react. But, as to a general capitulation of portfolio managers
to the natural gas shortage concept, that will be reserved for quarter-ending rallies in June and
September yet to come, if I am reading the tea leaves correctly.

As I have previously noted, the media have not yet focused on this problem. That will be Stage Three.
There is a substantial story to tell here. Outages in industrial plants across (mainly) the Midwest and
Northeast, with tens of thousands of workers staying home, is a major development. When TV reporters,
newspapers and magazines eventually pick up the trend, perhaps several months will have passed and
the situation may well be seen as more grave. Having professionally worked through the period of Energy
Crisis I and II, it would not surprise me if the media termed the new "threat" as Energy Crisis III.
However, I don't think that this natural gas problem will have the public impact of the first two crises.
Lack of gasoline (read mobility) and long waiting lines to obtain it may be more effective in influencing the
American psyche than 100 industrial plants being shut down. However, Energy Crisis III is a convenient
name, and at least it has the advantage of catching people's attention. Stage Three is a big step in the
development of a crisis mentality in the market for gas-related stocks. But, we are not yet into this stage
yet.

On the basis of widespread (future) media attention, Stage Four would involve governmental reaction to
this, on all levels. By late summer and early autumn, we will be into the late days of the Clinton
Administration's time in office. It certainly could be a political problem to admit that something this
important had been allowed to develop, unbeknown to all, into a significant threat to the system. On the
other hand, the issue cannot be easily swept under the carpet because its effects are too close to
breaking through into public consciousness. Moreover, the Gore-Bush pre-election debates should be in
full swing by then, and Bush would be well guided to raise points, such as this, in which he has had
some practical experience and for which no anticipatory consideration has been made in the
non-existent national energy plan that President Clinton never formulated (nor did any other previous US
president). As I see it, the Government will be forced to confirm the size and scope of the gas problem,
and will further alarm industry by referring to the possibility of gas allocation on a national, state or local
level.

Stage Four could well occur in September and October of this year. Its outcome would logically lead to
Stage Five, the final rush to panic and overexposure. This would be the result of heightened media
attention, followed by effective governmental confirmation that the problem was real and might not be
easily fixed except through significant sacrifices on the part of the public. Stage Five would represent a
general recognition that we could be entering a difficult period of fuel shortages and that the effects might
be more serious than mere "inconvenience". It should be noted that under any allocation formula, those
organizations and industries that could switch from natural gas to propane, butane, heating oil or residual
fuel oil would be asked to do so. And, subsequently, these products might themselves run short under
the impact of unexpectedly high demand. They might also advance dramatically in price. Stage Five
would also imply a highly visible case for investing in companies that might be best positioned to assist
in solving the natural gas shortage. The final run of small investors� funds into the natural gas producers
might represent a "tsunami" of money seeking entry to a play already suffering from limited
capitalization, thus forcing gas producer share prices into the "blue yonder".

Stage Five, perhaps occurring in mid-to-late autumn, would, of course, be immediately followed by the
actual onset of cold weather. By then, investors would also have full knowledge of the country's
three-quarter-filled gas storage position. Early outages might start to occur, for coincidental reasons, in
late January of 2001. However, the main weight of the shortfall would be expected to fall when different
major storage points in various consuming regions of the country ran out of supplies in February and
March of next year. That is when companies, facing closedowns for lack of fuel, should be most
pressured to bid for gas to avoid the termination of output and temporary disbandment of their labor
forces. So, we have assumed a peak to natural gas prices in February of 2001, probably in the $6.00 �
7.00 per mm btu range following a prolonged period of cold weather. This could be the high point of fear,
when many businesses could be driven to uneconomic decisions just to survive.This would logically be
the exit point for experienced investors. With all five stages of the play completed, and the axe of cold
weather fallen, this would be the time to collect your chips and leave the game. Conditions will likely not
be so desperate or so uncertain again for some time, experience teaches us. Of course, the natural gas
problem itself will not suddenly go away. It will take many seasons to find an answer to it. But, we will
solve the problem, as we always do. And, as we move through the crisis and consider our options, all
kinds of answers will present themselves. Meanwhile, the stock prices of natural gas producers would be
expected to start down as early desperation gave way to later resolution.

What will be the eventual answers to the natural gas shortfall? Think about a higher range of prices,
application of additional technology, new generations of sophisticated drilling rigs, more LNG receiving
terminals, and what can come south from Alaska.

(Fair Use For Educational/Research Purposes Only.)

Gold Trail Update (06/14/00; 05:19:31MDT - Msg ID:32307)
The Gold Trail Discussion has been Updated
The Gold Trail Discussion has been updated. Click on the link to read the latest updates.

RossL (6/14/2000; 4:04:17MT - usagold.com msg#: 32306)
Test
Anyone awake?

ViewYesterday's Discussion.

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