All times are U.S. Mountain Time
(Yesterday's Discussion.)
Goldilox (1/14/06; 23:21:10MT - usagold.com msg#: 140471)
Unbounded Currency Expansion
@ LH,
I think we're pretty much in agreement. History demonstrates that unbounded currency expansion is nearly always a precursor to war, as said expansion is used to fund a disproportionate amount of "defense" toys.
I know Belgian has his fingers crossed for a peaceful redistribution of gold and power, but that's much harder to achieve, as Blake reminded us in the interview.
Liberty Head (1/14/06; 22:42:55MT - usagold.com msg#: 140470)
Global Energy/Global Money
@ Goldilox
You pose some excellent questions. The dollar losing its monopoly on oil is the more immediate concern as I see it. The expansion of big oil/big gov't empires are tied to fiat currency schemes. They intend to defend their empires at all costs. I'll bet the good ole boys will be throwing nukes before they go down. Their arrogance is as unbounded as our Federal Budget.
For the survivors, it will be good to have gold and speak Chinese.
Best Wishes
Goldilox (1/14/06; 17:49:22MT - usagold.com msg#: 140469)
Blake interview
@ LH,
The Blake interview was enlightening, or perhaps better said, "a good summary" of the financial situation the world finds itself in today, especially in the metals and energy markets. But while he does a good job of hyping the Oil industires efforts at staying current in exploration, pricing, and geopolitics, he pretty well brushes over the link between government and big oil althogether and treats them as "adversaries", and one glance at the current US and UK admins suggest this is not so.
Given that oil is so necessary for economic growth in the current scheme of things, his premises are not far off. He alludes, however to a very important variable while he is talking about VW manufacturing in China. He assumes that all energy MUST come from oil, which is not a surprising statement coming from one of "the good ole' boys" of the oil market. But he also mentions the possibility that the billion atomobiles in India and China over the next ten years might find alternate power sources that we are not predicting.
What pray tell, happens to the energy paradigm if, perchance, the many alt energy movements that have been so heavily suppressed (overtly and covertly) by government subsidy of oil (defense support, tax advantages, continuing growth as a customer, etc.), suddenly find new support from the rising tide of world unhappiness with the oil cartels/governments handling of such.
I can't say that I have a a specific scenario in mind, but just for the sake of more complete examination, futures algorithms should include the possibility of oil losing its monopoly on the energy business, and tranportation losing its prioirity in globalized manufacturing. It will certainly not "go away" in our lifetime, but we may experience a radical change in priorities.
How might this affect the gold market? Only enough to redirect its flows from oil masters to "other masters," I would think.
Liberty Head (1/14/06; 15:19:07MT - usagold.com msg#: 140468)
George "Zapata" Blake on FSO
http://www.financialsense.com/Experts/trend/main.htm
There is an outstanding interview with Mr. Blake at Financial Sense Online. This straight talking country gentleman tells it like it is. His topics are oil, gold, silver and global politics.
He sinks every nail with one hit.
Best Wishes
USAGOLD / Centennial Precious Metals, Inc. (1/14/06; 13:58:24MT - usagold.com msg#: 140467)
Especially designed for those who are taking their first step...
http://www.usagold.com/gold/special/starter.html
USAGOLD - Centennial Precious Metals, Inc. (1/14/06; 13:57:35MT - usagold.com msg#: 140466)
A timely reminder of our 2006 New Year's Resolution...
Navigating the Wide Seas of Discussion
As the New Year arrived, we felt it would be a good time to implement a change -- a "New Year's Resolution", if you will. We are looking forward to 2006 as an important year for gold and the international economy. It is our sincere hope that this unique forum will continue its strong legacy in serving as a source of information and opinion for our current and prospective clientele.
After much deliberation, including input from USAGOLD-Centennial Precious Metals clientele who either participate in this forum or visit it regularly, we decided to return to the "gold-only" discussion format, INCLUDING WEEKENDS. We see this return to our original format as being in the best interest of the firm, and best serving the folks which gather here.
***The Litmus Test: Acceptable posts include discussion of economics, financial and monetary markets, and geopolitics -- that is, insofar as they each are made to demonstrate relevance to GOLD ownership, pricing, etc.
***If you see a post disappear, it likely was deemed sufficiently off-topic to warrant removal. Consider that to be a gentle warning. A pattern of individual abuse will be met with subsequent revocation of posting passwords.
The rest is up to all of you -- to carry forward in the spirit with which we created this forum and with which we would like to see it sustained. Let's not forget that it wasn't too many years ago that discussions like this on gold as it relates to our political, financial and economic well-being did not even exist. The mainstream press controlled what was heard about gold, drowning out all others having quiet voices and smaller audiences. We have been turning the table here for nearly eight years! If we all appreciate and take personal responsibility for what we have here and make it better place for all visitors, both new and old, by this we will nourish something special for ourselves and those who follow after.
Onward with the discussion. . .
Druid (1/14/06; 12:51:49MT - usagold.com msg#: 140465)
Druid (1/14/06; 08:54:00MT - usagold.com msg#: 140461)
"Is Europe trying to do an end run around the US politically by pressuring Iran? This would make sense in that Iran (and many others) are trying to extricate themselves from the petro-dollar deal to a Euro-dollar deal."
Druid: That should read "Euro-petro deal" doh!
ge (1/14/06; 12:27:14MT - usagold.com msg#: 140464)
Engdahl site
http://www.engdahl.oilgeopolitics.net/
.
Druid (1/14/06; 10:26:24MT - usagold.com msg#: 140463)
@Goldi
Druid: Thanks. This point in time as it pertains to things economic/political/financial just gets more and more difficult to read as the poker hands keep getting called and then raised. I know that TC takes a lot of heat for his laser like focus in his postings but I for one sure appreciate it because his focus is at the heart of the game and not the ball. The CB's represent the monetary architecture and this architecture IS changing throughout the world. I for one know when my intellectual game has been raised to such a level that it's difficult to keep up, I try to on occasion, thank those that have contributed to that awareness. Belgian's my Seer.
Now back to the "game".
Goldilox (1/14/06; 10:06:23MT - usagold.com msg#: 140462)
Engdahl Article on ME NatGas
@ Druid,
Thanks for posting that great piece of analysis.
With nearly 70% of the world's NatGas in the region, there is definitely some serious "liars' poker" being played.
S/B required reading, before anyone runs off on a tangent about "ideological differences" . . .
As usual, "follow the money!"
Druid (1/14/06; 08:54:00MT - usagold.com msg#: 140461)
UKRAINE GAS DISPUTE - HAS PUTIN GONE NUTS?
http://www.financialsense.com/fsu/editorials/2006/0112b.html
Snip.
It's more useful to assume that the answer is ‘no.’ Then we must ask what is Russia doing with its gas price policy demands and supply cut-off to Ukraine?
It's clear that the move is one part of a complex series of Russian moves in the ongoing Grand Chess Game. That game is between Washington as sole global superpower, and Russia as a reconstructing nuclear power--one with a vast resource wealth needed by its Eurasian neighbours from China to Germany and beyond. Russia, which holds far the world's largest known reserves of natural gas, is playing its own energy card with Ukraine as the current field of that battle.
The Ukraine drama is clearer if we look at it in the context of a series of very quiet but dramatic moves recently by the Putin government in the realm of energy and national military preparedness.
Part I: The Ukraine issue
Just one year after the Washington-backed Ukrainian President Viktor Yushchenko came into office in Kiev, promising to bring Ukraine into NATO and into the EU, Putin and the Russian state-controlled Gazprom natural gas monopoly of Russia, cut gas supplies to Ukraine on January 1. The ostensible reason was that Ukraine refused to pay a 450% price increase for Russian gas demanded by Gazprom for its delivered gas.
By January 4 both countries announced that they had reached a compromise settlement. The terms appear to be a face-save for both sides: Ukraine's state Naftogas, and Russia's Gazprom. Under the Byzantine fine print Ukraine agreed to pay Gazprom's demand of $230 per 1000 cu m for gas. The gas flows to Western Europe were reported back to normal after falling by up to 30% on January 1-2.
Some 75% to 80% of all Russian gas exports to Europe flow via pipeline through Ukraine at present. That fact has become a strategic Achilles Heel for Russia now that Yushchenko's Ukraine is moving towards NATO.
There are two aspects to this peculiar situation which bear further examination. The first is commercial; the second is geopolitical.
Fallacy of ‘world market price’
For more than a quarter century the major Western oil companies led by ExxonMobil, ChevronTexaco, BP and Shell, have tried to establish the artificial construct of a ‘world market price’ for natural gas, similar to the Brent or Dubai or WTI daily price benchmarks. A global market in gas is far more awkward than for oil simply because of the transport problems. Gas needs pipelines or costly LNG terminals and tankers and is thus less mobile. Oil by contrast is controlled by four giant Anglo-American oil majors—ExxonMobil, ChevronTexaco, British Petroleum (BP) and Shell. Those four determine world oil prices. Because it has not been possible to create a controlled global market for natural gas, the gas tends to be pre-sold in contracts typically of 20-25 year term.
What has resulted is a patchwork of different prices, usually in some opaque, undisclosed manner, tied to a formula linking it to crude oil such that, when oil in dollars drops by say, $1, gas would drop along with, but by how much is a proprietary secret of the gas companies and for obvious business reasons—lack of price transparency can hide a multitude of sins. That non-transparent price formula allows companies like Germany's E.ON-Ruhrgas to charge significantly more for its gas to end-users when oil prices climb above $60, even though most of its gas deliveries from Gazprom are in typically 20 to 25 year fixed price contracts with small variances possible.
The Gazprom Ukraine dispute opened the Pandora's box of confidential gas pricing to the world as Russia revealed Western customers paid some $450 tcm compared with the then $50 tcm Ukraine enjoyed.
Gazprom argued that raising that to $230 or about half the western price, was a fair price. Gazprom is in the process of becoming a global energy giant on a par with BP or ExxonMobil.
Putin also signed a decree on December 28 lifting the limits on foreign ownership of Gazprom, an ostensibly market-oriented move. It made good a promise Putin made two years ago on the controversial arrest of Yukos Oil chairman and political rival, Mikhail Khodorkovsky, namely that he would liberalize the shares of Gazprom, in a matter of ‘months not years.’
Gazprom share ownership by foreign interests was previously capped at 20% of total shares, and the Russian government held the remaining and controlling share. Foreign investors were limited to Gazprom London-listed American Depository Receipt shares.
Gazprom shares will now be listed on the Russian stock market later this month. Gazprom has a current market capitalization of $160 billion, dwarfing the next largest Russian stock company, LUKoil with $50 billion capitalization, and Surgotneftegaz with $40 billion.
The new law will also bring Gazprom into the widely followed Morgan Stanley Capital International emerging market index, dramatically shifting weightings there for index tracking investors. That has major implications for international financial portfolio investment.
Gazprom argues it was ‘commercially’ justified in breaking an August 2004 Gazprom-Naftogaz supplement contract which specified a fixed $50 price until 2009, a price it said then was ‘not changeable.’ All that being said, the Gazprom-Kremlin move was clearly a hardball Russian geopolitical warning, with an eye to both NATO and upcoming Ukrainian Parliament elections in two months.
Druid: An excellent read in light of todays and recent discussions. It delves into natural gas price structure and the vaious relations that countries have with each other built around natural gas and oil.
Is Europe trying to do an end run around the US politically by pressuring Iran? This would make sense in that Iran (and many others) are trying to extricate themselves from the petro-dollar deal to a Euro-dollar deal.
Excellent read. Belgian, Miner, MK, TC, OVS, Goldi,968 and many others thanks.
Belgian (1/14/06; 07:24:36MT - usagold.com msg#: 140460)
Hohooo Spartacus
Angel(a) Merkel is part of the EU faction that is still nostalgic for a euro-dollar coalition (or union). Trans-Atlantic free trade zone.
But the bulk of the gold redistribution has already taken place...at those very low goldprices ! There is not that much left for much further distribution.
The increasing priority now is oil/gas-peace and reliable flows at reasonable (economic viable) values. An excellant negociation platform for all parties (forces) involved.
A rising goldprice is "positive" for the euro ...short-medium-long term ...and negative for the $-IMS ! The competing currencies, both go after the oil. The essential (fundamental) difference between the two is gold. That is the only reason why these subjects belong on this forum.
A compromis about Iran's future (US-EU-China-Russia)and(Japan-India) is in our common interest. And seems so far being in the interest of gold's price (and later revaluation). Also a nice frame for having the evolving transition in an orderly way (through further negociations instead of devastating confrontations).
Angela has started with opening doors (multilateralism), but don't expect her to kniel down for anyone/anything. The ongoing (transitional) competition will steadily go further. Now you see some new political action taken by another faction in Euroland. Positive for gold without having negative effects on things (presently) related to gold (currencies) !
France never forced Germany into the EU (EMU). Angela's first visit was straight to Paris. Forget about the divide and rule logic. Isn't having any effect anymore.
All the above illustrates that the evolution towards freegold cannot happen and exist in a vacuum (politically, monetarily, economically). It is a step by step (gigantic) process that builds upon the new fundamental concept for gold.
The present goldprice rise hasn't changed anything, but the price of gold. So there is no argument for suggesting that the goldprice rise was part of any (political) negociation. Russia, China and parts of South America will get their gold-wealth out of the mines on their territories. This can happen with a rising goldprice, without having these mines selling their gold forward with the intention to help (collude) knocking down the goldprice.
Bear in mind that the organized goldprice crash ('99-'01) served the purpose to sabotage the $-competing (gold)euro.
Allowing the goldprice to rise orderly is allowing the euro to compete somewhat more freely. In that sense, it might be percepted as a concession...but it isn't.
OvS (1/14/06; 07:19:45MT - usagold.com msg#: 140459)
Asian Flu
A recently returning
Belgian traveller to
Turkey has been hos-
pitalized with the
suspecion of having
contracted the deadly
flu virus. FAZ.com
Spartacus (1/14/06; 06:16:02MT - usagold.com msg#: 140458)
Iran
Belgian (1/13/06; 15:32:40MT - usagold.com msg#: 140436)
"If one "has" to deliver goldmetal, one better delivers at the highest price possible. In sharp contrast with the strategic redistribution of euro-gold as attractive as possible, at the lowest "official" price...to be revalued at the appropiate time."
What if Merkel and Bush have made a deal regarding Iran…… Germany will stay passive in case of an US attack on Iran and in return get a high gold price, which will undermine the euro(gold)system? ….. AND maybe open a door for Germany to leave to euro…… After all the Germans were forced by the French to accept the euro, as a price for the German unification... Divid et impera? Just thinking out loud.
Goldilox (1/14/06; 06:07:19MT - usagold.com msg#: 140457)
computer bits and bites (pun intended)
Gold Standard,
Your quote,
"It matters little whether oil is priced in Euros or $US, as it all comes down to electronic entries on computer screens anyway."
is exactly what those who control the FIAT currency explosions want everyone to believe. This is truly an antithesis to your own screen name.
Our major agreement here is the about the viabilty of gold as a "measure of value", often to the point of realization that the "out of control" FIAT printing machines (be they real or virtual) employ gold suppression as an important tennant of their success.
Which is the real "measure of value"? gold in hand or the "electronic entries" that have grown 28% in the last six months based entirely on public debt?
Ned (1/14/06; 06:04:46MT - usagold.com msg#: 140456)
Here's a starter.....
http://memri.org/bin/articles.cgi?Page=archives&Area=sd&ID=SP101305
""'In his battle against the World of Arrogance, our dear Imam [Khomeini] set the regime occupying Qods [Jerusalem] as the target of his fight.
"'I do not doubt that the new wave which has begun in our dear Palestine and which today we are also witnessing in the Islamic world is a wave of morality which has spread all over the Islamic world. Very soon, this stain of disgrace [i.e. Israel] will be purged from the center of the Islamic world – and this is attainable."
(Khomeini sets the stage years and years ago with the memorable "wiped off the map" statement. Ahmadinejad references the Khomeini statement)
""There is no doubt that the new wave in Palestine will soon wipe off this disgraceful blot from the face of the Islamic world," he said. "As the Imam (Khomeini) said, Israel must be wiped off the map."
"Anybody who recognises Israel will burn in the fire of the Islamic nation's fury. Anybody who recognizes the Zionist regime is acknowledging the surrender and defeat of the Islamic world""
see:
http://www.realclearpolitics.com/blog/2005/10/the_world_without_zionism.html
also see:
http://regimechangeiran.blogspot.com/2005/10/english-translation-of-iranian.html
http://atlasshrugs2000.typepad.com/atlas_shrugs/2005/10/the_world_witho.html
for a full reference....search
"world without Zionism"
Ned (1/14/06; 05:26:04MT - usagold.com msg#: 140455)
@ Gold Standard, 968, others.......
Gold Standard,
-2 of your quotes
"Are you seriously proposing that Iran's President has not recently given a strong indication that....... Israel should be wiped off the face of the earth?"
"It matters little whether oil is priced in Euros or $US, as it all comes down to electronic entries on computer screens anyway.
To project some sort of US hegemony where a gun-toting President Bush blows the crap out of any nation who has the temerity to even think about selling oil in Euros, to me simply indicates that it well past medication time."
-end-
I think you may want to slow down and go back to the research board.
I had once thought the simple exchange of my home currency to dollars to facilitate an oil purchase was all that was required. It goes a lot deeper than that. There are many, many articles and notes on this throughout the internet. DO NOT assume its only a simple currency exchange or an "electronic entry".
The Iranian President or Prime Minister or whoever WAS CLAIMED to have made the statement of Israel "off the map" did so in a long-winded address that I read a few months ago. There was a carefully presented pre-amble which set up the delivery of that infamous sentence. It's been a while since I read that passage but IT MIGHT have been something to the effect that Israel has been beating the war drums and if it attacks Iran, Iran will retaliate and as a consequence "Israel will be wiped off the map". Again I forget the exact phrasing and posturing but trust me it wasn't as if the Iranian walked up to a podium and blurted "Israel should be wiped off the face of the earth".
I hope during the course of the weekend either myself or someone else can help you (and I) with these 2 misconceptions, if I may, that is perceived.
Thank you.
Goldilox (1/14/06; 05:25:01MT - usagold.com msg#: 140454)
A Partial Resolution
http://www.financialsense.com/Market/wrapup.htm
snip:
The year 2005 will be remembered for many things. For one, it will be remembered as a year that twisted, stretched and broke many statistical relationships and historical norms on both the bullish and the bearish sides of the equation. For example, a bullish statistic that has held true since 1896 was broken. That statistic showed that since the inception of the Industrials, every year ending in a 5 had been an up year. That was until 2005, which broke that record as the Industrials did finish the year marginally negative. Also, a bearish relationship that ultimately proved to be invalid came with the break into the April lows as both averages confirmed each other by breaking below their January Secondary lows. This put both averages in gear to the downside, yet this break was later corrected and the averages moved higher. I could go on and on with more examples, but the point is that 2005 was marked by both failed bullish advances as well as failed bearish breaks, and in the process, many of the historical relationships and norms were either out right violated or stretched.
-Goldilox
2005, the year of financial conundra? Tim Wood offers an interesting look at the first few weeks of 2006.
Goldilox (1/14/06; 05:17:31MT - usagold.com msg#: 140453)
Past Medication time?
@ Gold Standard,
It seems you are suggesting that those who stop taking their medicaton are "a threat"? Given that "homelessness" is now a "crime" in many US cities, there are obviously those in power who are "all too regular" in their medication regimen. Why is it that those with "itchy trigger fingers" always want those who express restraint to take ever stronger drugs?
More seriously, I'm not sure where else you've been lurking, but most here have agreed that war actions of late have had a strong financial component. The major topical disagreement has been the question of how much of one.
Notice that none of the other "Nuclear threats" are targeted for anything beyond occasional rhetoric, even those who are already "locked and loaded".
What makes Iran more "dangerous" than North Korea, Pakistan, etc.? The answer may lie in their oil-based financial independence, because the others are so poor that they must rely on outside "paper aid" to survive, having no serious natural resources to barter. Islamic gold Dinar? That one's been completely squelched.
If Iran falls, No Korea and Pakistan will not be the next targets, as they have nothing to offer in the way of "spoils of war." Venezuela, Bolivia, and Brazil, however, are looking a little too "socialist" to the admin. But wait, if socialism is the target, why are Great Britain, Canada, and the EU not on the list? Ya gotta get way past O'Reilly, Hannity, and Colmes for any of this to make sense.
"Resource wars" has been a strong topic even on right-of-center sites like Puplava, so maybe that's a good place for you to get up to speed on the subject.
Belgian (1/14/06; 04:33:46MT - usagold.com msg#: 140452)
Nuclear deterrent
Pakistan, an islamic fundamentalist state, with a military leaderschip, was allowed to acquire nuclear power as to balance with India's nuclear power. But Pakistan has no oil deterrent. Oil being of "global" strategic interest, through the oil for dollar reality.
In other words : No major oil-reserve state should have nuclear power ! Only oil consuming states have the right to have a nuclear deterrent.
Consumers that control the very fundamental (oil) of global economy and oil-owners who are excluded from this global prosperity.
This is of particular interest for Russia as an energy/resource rich state "with" nuclear power ! Watch how Russia and Germany are getting closer and closer !
Belgian (1/14/06; 04:22:46MT - usagold.com msg#: 140451)
euro-dollar competing currencies....
The main question is : Are both currencies allowed to compete ...ON ALL LEVELS !? Is it opportune for the global $-IMS, to have competition between two major currencies !?
Or, the question that is interesting us here in particular : Does "gold" play a role in the euro-dollar competition !?
968 (1/14/06; 03:51:09MT - usagold.com msg#: 140450)
@ Gold Standard
WHY is it a problem for the US if Iran should obtain a nucleair weapon ? Can you elaborate this please ?
Gold Standard (1/14/06; 03:18:48MT - usagold.com msg#: 140449)
Iranian Oil
http://www.guardian.co.uk/iran/story/0,12858,1677542,00.html
David Linkley, your #140445 hypothesised that "The real crime of Iran is to plan on opening an oil bourse in March of this year trading oil in Euros."
The real crime? Are you seriously proposing that Iran's President has not recently given a strong indication that (a) Iran's nuclear ambitions go far beyond "peaceful" electricity generation, (b) that he desires Iran to have the same level of nuclear arsenal as Israel, and (c) that Israel should be wiped off the face of the earth?
Are these falsehoods that unfairly impugn the peaceful Iranian Government (whose only real crime is to seek to set up its own bourse) being unfairly reported by conservative media sources in the USA? Perhaps you should read what a fair and balanced journal like The Guardian says (see link).
It matters little whether oil is priced in Euros or $US, as it all comes down to electronic entries on computer screens anyway.
To project some sort of US hegemony where a gun-toting President Bush blows the crap out of any nation who has the temerity to even think about selling oil in Euros, to me simply indicates that it well past medication time.
ge (1/14/06; 00:58:20MT - usagold.com msg#: 140448)
EU joins US in condemning Iran – A Sketchy Attempt for Interpretation
http://news.bbc.co.uk/1/hi/world/middle_east/4607492.stm
Observation:
1/ EU does not have indigenous energy resources and must import energy.
2/ Currently, Russia is the main energy provider for EU.
3/ Recent Russia-Ukraine events have demonstrated that energy supply can be used as a political lever.
Assumption:
Iran is the only alternative for EU to gain energy independence from Russia & US. As a side note, EU has to secure both Iranian energy and it transportation route for energy independence from both US and Russia.
Observation:
EU joins US in condemning Iran.
Suspicions:
1/ EU has given up energy independence plans. May be there was a deal and EU received something else in return?
2/ Joint US-EU force is now planning for sanctions. Quoting from BBC:
"What kind of sanctions? They would be trade-orientated, aimed primarily at the one major industry that Iran has - its oil and gas."
3/ Sanctions would result in higher oil and gas prices.
Liberty Head (1/14/06; 00:43:29MT - usagold.com msg#: 140447)
Putting Gold To Work - The Oso Negro Plan
After watching "Treasure of the Sierra Madre" yesterday, I had a business idea.
With the pending implosion of the US dollar, I anticipate a big demand for dormitory style flophouses in the near future. Privately owned flophouses, like the Oso Negro, not gov't owned flophouses, like The Superdome.
Those of us who own gold now are well positioned to own a franchise in these new Oso Negros.
Movies like "Treasure of the Sierra Madre" will play in the lounge. Maybe have kids run around selling lottery tickets, too. Are you with me?
Remind the guests "this is a country where the nuggets of gold are just crying out for you to take them out of the ground and make'em shine in coins and on the fingers and necks of swell dames."
Then perhaps open a prospecting supply/donkey rental business with beans and ammo too, just around the corner from each Oso Negro.
The bonus of this plan is knowing the greedy ones will never make it back alive. On a large enough scale, this could thin the herd until there is nobody left to run for Congress or manage a Central Back or the Federal Reserve.
Only honest people and gold will be left.
Oh well! It's getting late. "I think I'll go to sleep and dream about piles of gold getting bigger and bigger and bigger."
Best Wishes
Bizarro-Greenspan (1/14/06; 00:05:20MT - usagold.com msg#: 140446)
"Euro 350 is the line in the sand." ,ORO,May, 2003
"To make the banker's position clear, the business of banking is the marketing of debt. The denominator of the debt need not be on hand at all. When one opens a non-allocated gold account ( the normal type of gold account ) , then the bank is under no obligation to have any gold to back the account. The bank only needs the gold when the gold is requested for delivery in hand or into a fully allocated account.
Thus the banker will take your dollars deposited as a gold account, and use them to buy bonds or lend. If gold or Pt was deposited the bank will do one of the following:
1. If currency interest rates are higher than metal lease rates, it will sell the metal, buy the currency and invest it.
2. If the lease rate is the higher rate, the bank will lend the metal itself.
3. If reserves are low, and there is danger of a "bank run" ( depositors of metals asking for their metal ) then the bank will keep the metal for reserves, however, it will sell call options into the market in order to make a return on the reserves. Often, these calls would be delta hedged."
ORO
ViewYesterday's Discussion.
