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ARCHIVED DISCUSSION FROM 12/17/1999 All times are U.S. Mountain Time View Yesterday's Discussion. Chris Powell (12/17/99; 23:57:26MDT - Msg ID:21248) Gold bugs' dream, Barrick's nightmare http://www.egroups.com/group/gata/321.html? Updated and clarified version of Reg Howe's excellent essayexplaining Barrick's hedging. Black Blade (12/17/99; 23:44:35MDT - Msg ID:21247) Cambior gets a little breathing room? hmmmmmm......... Cambior (CBJ:TSE,ME) reached an agreement with its lenders and hedge providers regarding the restructuring of its obligations. The agreement will allow Cambior's loans, which currently total about US $212 million, to extend to and mature on December 31, 2000. The company will continue to pay interest on the loans until June 30, but says that additional interest charges will be deferred until then. The agreement also provides hedging portfolio management for the company, allowing that its flexible forward positions, including spot deferred contracts and call options with initial maturities in 1999 and early 2000, be converted into fixed forward positions maturing over the next three years. Despite the effort, the company's shares fell $0.18 to meet mid-day trading in Toronto at $1.75/share. Netking (12/17/99; 23:03:59MDT - Msg ID:21246) USA Gold Reserve at Fort Knox http://www.gold-eagle.com/editorials_99/turk121999.html USA Gold Reserve at Fort KnoxMarius; Now this IS gambling brother. Number Six (12/17/99; 22:55:31MDT - Msg ID:21245) Thanks Peter I made my last trip to Sam's today to load up on food, water barrels and batteries etc. Hope i don't have to use most of it, and I get to donate it all to food banks next year.BTW - they were totally out of 55gal water barrels, so had to make do with 30gal trash bins... lot's of knowing looks and titters ... :o) Marius (12/17/99; 22:32:54MDT - Msg ID:21244) Commodities, gambling & "legitimate" investing Gentlemen (Goldfan, 'Crier, et al),Enjoy your moral certitude vis speculating vs. investing, but you are all splitting hairs (and deluding yourselves in the process). To my admittedly skeptical eye, your glee at buying gold at historic low prices, in anticipation of an explosion in price, puts you as firmly in the speculator camp as I am (as an aspiring commodities trader). We might rightly decry the manipulation of the market (as has been exhaustively discussed here and at GATA), but like any business venture you pay your money and take your chance. Having worked in the "corporate" world for 25 years before opening a trading account, I can tell you you're deluding yourself if you think your job, your money, your gold, or your retirement is secure in our lifetime. You could be hit by a bus crossing the street, your job could move offshore or be lost to a takeover, I won't even go into what could be going on with your pension money, and we could well see gold ownership illegal again. All life is risk, it is only a matter of degree, and how honest we are with ourselves about the risks we take. I hope you're not all going to start tut-tutting like CNN (Clinton News Network) over the moral outrage of stock market day traders next! Netking (12/17/99; 22:30:21MDT - Msg ID:21243) Y2K - Banks(Indonesia) http://afr.com.au/y2k/991213/comp/comp4.html Fear of a rush on the banks prompts a "no speak" attitude by the Government on y2k in the 4th most populated country. Peter Asher (12/17/99; 22:30:08MDT - Msg ID:21242) Sorry about the lenght but there are importent points here The rest of it > 14. Gold and the currency:>> G.I.: I have at least considered buying some gold because I think Y2Kwill> make it a good investment. I have gotten extra cash in hand since Ithink> bank withdrawals and cashing checks from the government or employers maybe> delayed for a while.>> R.G.I.: I bought gold if I had money left over after funding myphysical> preparations (relocation, food, water, security, medical,communications,> etc.). I have tried to get as much currency as I can, but have largely> converted it into material goods. I have closed all but one of my bank> accounts and keep a mimimum amount of money in it. I expect that prices> will go up drastically soon after rollover on critical goods (food,fuel,> etc.), while people's incomes will generally go down drastically. Theremay> be a period of time next year in which prices are actually falling> (deflation) because of cash having to do the work of credit cards,checks,> etc., but people will be so broke that honest unprepared people willhardly> be able to buy anything. If Y2K goes 9+, U.S. currency becomingvirtually> worthless wouldn't surprise me. Besides, money should be gold-backed> anyway, and fiat currencies [like U.S. greenbacks] historicallyeventually> die anyway, so Y2K may simply hasten the inevitable.>> D.W.G.I.: I do not expect that much will change. I have not bought any> gold if jewelry does not count. [it doesn't] I may withdraw an extra> $50.00 from my ATM on December 30th or 31st, but do not think very many> other people will do this.>> Koskinen's Man: I may have at least considered buying some gold becauseI> think Y2K fears might make it a good investment. Officially, I've done> nothing, telling everyone who will listen that things will beessentially> the same with respect to money. Gold as an investment for the public is> out-of-date; people should put their money in the stock market.>> 15. What are the most important lessons to be drawn from Y2K?>> G.I.: To remain flexible both mentally and in how our lives are set up.> That computers were adapted too fast for reliability. That JIT supplylines> for goods have drawbacks. Like the Boy Scout motto, it's wise to "Be> Prepared!".>> R.G.I.: [same as G.I., plus:] Not to believe the words of governmentsand> corporations when they have incentives to lie. That people's actionstell> you more than their words. [such as corporate stockpiling and governmentY2K> bunker construction when they tell the public that Y2K will be no bigdeal]> That society has become too complex to be reliable. That fiatcurrencies> and fractional reserve banking are nothing but more ways the powerfulsteal> from everyone else. That the quality of communication anddecision-making> in our society in general is far, far worse than most people realize.That> most people are very poor thinkers and are terrified of ever doingthings> [or even thinking] "differently" from how they perceive other people do> them. That the rules and lessons of history still apply very much tous.>> D.W.G.I.: That I really don't understand how computers [or much ofanything> else] really works. People discussing the subject of Y2K keep bringingup> weird boring stuff I have never heard of and don't care to hear about.Can> I turn the T.V. back on now?>> Koskinen's Man: That the "Big Lie" media manipulation techniquepioneered> by Adolf Hitler still works. That Americans have short attention spans.> That the Internet is a pain in the neck for effective spin control byTPTB.> When individuals cannot speak in public, publish books, or post on the> Internet without prior approval from the government, controlling the> public's perceptions of events will be a lot easier. That stooping toany> act to stay in power pays off. [at least for a while...]>> by MinnesotaSmith 12/11/1999> www.y2ksafeminnesota.com> Peter Asher (12/17/99; 22:26:22MDT - Msg ID:21241) Only way to read this is by my posting it > Subject: Major New Article: The Ultimate Y2K Quiz>> > www.y2ksafeminnesota.com>> The Ultimate Y2K Quiz>> This quiz gives what I believe to be representative answers from each ofthe> following four viewpoints on Y2K that everyone interested > This quiz gives what I believe to be representative answers from each of thefollowing four viewpoints on Y2K that everyone interested in Y2K is highly familar with. > G.I.: A "Gets It" about Y2K. Thinks it'll probably play out between a3> (market drops a little; minor problems) to a 6 (strong recession atworst).>> R.G.I.: A "Really Gets It" about Y2K. Sees much unpredictability inY2K,> with neither a 6 nor a 10 (billions of people eventually die from its> effects) viewed as impossible. Expects a 7 (borderline depression) to a9> (collapse of infrastructure, widespread martial law) as most likely.>> D.W.G.I: A "Doesn't Want to Get It" about Y2K. This is basically aperson> who holds their hands over their ears and loudly chants "LA LA LA LA LA"> whenever the subject of Y2K comes up. Presuming they even remotelygrasp> the concept, this person thinks the whole problem was completely takencare> of months ago by large organizations purchasing new computers andsoftware,> and/or by turning back the date on computers. Does not think Y2K willever> get to the point that it causes as many problems as it is causingcurrently.>> Koskinen's Man: Named after John Koskinen, President Clinton's Y2K> spokesman, this person is a public relations flack for either aFortune-500> corporation, a bank, a utility, or a government agency. If he doesn't> receive paychecks from one of these sources, in justice he should start> getting them.>> The Questions:>> 1. What is the origin of Y2K?> 2. What will the U.S. economy be like in 2000?> 3. Going to shelters, getting on white buses/railroad cattlecars> 4. The supply of electricity in 2000> 5. Starving relatives/neighbors on your doorstep> 6. Clinton/rest of gov't leaders doing how good a job re Y2K?> 7. The supply of gasoline in 2000> 8. How will Y2K affect the banks?> 9. Embedded systems> 10. Nuclear power plants and Y2K> 11. U.S. Presidential Elections in 2000> 12. What do you think of Gary North and Infomagic?> 13. Actions I have taken (or would if I could)> 14. Gold and the currency> 15. What are the most important lessons from Y2K?>> Scoring your answers:>> This is easy; whichever category you answered most frequently, you'remost> likely one of those. Incidentally, if your answers are all over theplace,> especially with relatively few "G.I." answers (this is the> middle-of-the-road result for most questions), then there is somequestion> about the accuracy of your answers. If this applies to you, ponder the> questions and possible answers, and try the quiz again.>> Now, the questions:>> 1. What is the origin of Y2K:>> G.I.: The programmers used a shortcut in the early days of computingand> waited kind of late to start using 4-digit years in code.>> R.G.I.: Programmers came up with an elegant way to conserve use ofscarce> computer memory in the early days of computers. They presumed (quite> reasonably) that programs and systems containing 2-digit years would be> retired long before the Year 2000.Short-sighted/nontechnical/penny-wise> and pound-foolish managers in corporations and officials in governmentkept> the old systems and software from being replaced in time.>> D.W.G.I.: Deep down, I think this whole Y2K thing is just a bogus hoaxfor> computer people to get business and for fearmongers to scam money from> gullible people. The peole running big corporations and serving in> government are smart, honest people, and they would never make the kindof> mistake the Chicken Little types are saying Y2K is.>> Koskinen's Man: same as G.I.>> 2. What will the U.S. economy be like in 2000?>> G.I.: Many companies will have problems for certain, and a lot of stock> prices will go down some. Some people will probably become unemployedfor a> while from layoffs; unemployment could go to 10 - 15%?>> R.G.I.: Hundreds of thousands of companies of all sizes will be largely> unable to function for a while, and many of these will go bankrupt. The> stock market will drop to at most half of its current valuation level;to a> third (or less) is likely. I expect 40% unemployment (or worse) whenthe> effects of Y2K are at their worst.>> D.W.G.I.: My stock portfolio will keep going up at a rate of 40% annual> valuation increase indefinitely. My job and my company will beunaffected.> If I think positive, that's how things will go!>> Koskinen's Man: Although a few minor glitches will cause the occasional> problem for a few companies, mot much will really be different.People's> jobs, the store shelves, and the functions of government agencies willbe> unaffected. The potential for panic is the real problem, not brokencode> that won't be fixed in time. Things will be O.K. as long as fearmongers> shut up and the public doesn't panic.>> 3. Going to shelters, getting on white buses/railroad cattlecars:>> G.I.: I don't know much about these, but something about the idea just> doesn't seem right to me. I'll avoid going if I can.>> R.G.I.: No #%*& way is the government taking me or my family to ashelter> or getting us on one of their vehicles. We will all lie, turn off the> lights and not answer the door, or resist with armed force if that iswhat> it takes to keep from being removed from our home. Our supplies arehere at> our home, so anyone trying to make us leave our home would havesomething> besides our best interests in mind. TPTB would be criminal to forcibly> remove people from their homes.>> D.W.G.I.: How novel! Sounds kind of exciting! Heard they haveshowers,> too! I hope so!>> Koskinen's Man: Uh, I have something else lined up, so there's no needfor> ME to go to a shelter, but if TPTB say that a mandatory> evacuation/relocation to shelters is needed, well, I'm sure they'll bedoing> what's best. It should be just fine for OTHER people to go to them.>> 4. The supply of electricity in 2000?>> G.I.: I guess we might be without power for days or possibly even acouple> of weeks. I don't really know what to expect, but something will surely> happen to the power in some areas.>> R.G.I.: I expect much of the country to lose electricity for weeks at> least. Months would not surprise me, and there is definitely a chanceof no> power in some areas for over a year. Electricity will probably berationed> or of erratic quality ("dirty") in much of the country [that has powerat> all] for a long time.>> D.W.G.I.: The power going off for a while, just because it's New Year's> Eve? How ridiculous! Nothing like that happened last New Year's Eve!> Besides, the local power company has said they're "Year 2000 Ready", and> that guarantees no problems with electricity in the year 2000.>> Koskinen's Man: The power companies have spent lots of money on this> problem, which means that they have dealt with/will have dealt with allof> their critical Y2K issues before the end of 1999. Besides, haven't> practically all of them already announced that they're "Y2K Ready"?>> 5. If there were to be sustained food shortages, and some of your> [unprepared] relatives or neighbors showed up at your door and loudly> knocked, wanting to be let in and given food, what would you do?>> G.I.: I'd definitely let the relatives come in, and give them food,letting> them stay pretty much as long as they liked. I'd probably give somefood to> neighbors I know, but wouldn't let them stay.>> R.G.I.: I wouldn't open the door for anyone not already part of my> household. I warned them to store food; they spent their money on good> times instead. Now I have food, and they have the memory of their> recreation in 1999. They made their bed, and now they get to lie in it.> If they started trying to break down the door, I would shoot through the> door until the attacks on my door ceased.>> D.W.G.I.: Of course I'd let them in! I'd share whatever food I had,too;> remember the lesson about the loaves and fishes? Sharing makes food go> farther!>> Koskinen's Man: They would have a right to be let in, and to share the> household's food. If hoarders won't let needy people share their food,the> police should force them to. It's only fair. "From each, according tohis> ability; to each, according to his need" - that's our motto![originally> from Karl Marx; now the credo of all welfare states]>> 6. Clinton and the rest of the top government leaders are doing howgood of> a job with respect to Y2K?>> G.I.: It sounds like a whole lot of work is getting done, but they seemto> have gotten the ball rolling on this Y2K thing kind of late. We'll knowhow> good of a job they did by how things turn out.>> R.G.I.: They have constantly lied about the Y2K situation and beenderelict> in their duties. I expect hundreds of thousands (or more) Americans maydie> because of Y2K, and/or for us to have another Great Depression at best.If> this happens, they should be tried by a Nuremberg-style court for crimes> against humanity and shirking their oaths to the Constitution. They> certainly should be forced to refund their salaries during the last 5+years> for not doing their jobs on this critical issue.>> D.W.G.I.: I'm sure they're doing a fine job, just super! After all,think> of how caring and feeling they are! This is the most ethicaladministration> in history, just like they promised us, right?>> Koskinen's Man: They are doing a magnificent job, especially in keeping> confidence high [markets high], and avoiding panicking people. Anyonewho> criticizes them is ignorant and backward, and in an ideal world would goto> jail for speaking out against the government (against Democrats,anyway).>> 7. What will the supply of gasoline be like in 2000?>> G.I.: Prices will surely be a lot higher for a while, and there mightbe> some rationing.>> R.G.I.: Gasoline production from refineries in 2000 will be half orless of> what it was in 1999. The government will grab nearly all of it. Black> market sales (of gasoline stolen back from/bribed away from government> sources) will probably provide most of what little gasoline is availableto> the average citizen for much or most of the year (at least).>> D.W.G.I.: Gas prices might go up 7 - 10 cents a gallon for the firstweek> in January 2000. This would only happen if people got needlesslyscared,> though.>> Koskinen's Man: It'll be fine, just fine. Can we talk about something> else?>> 8. How will Y2K affect the banks?>> G.I.: They might ration withdrawals of cash for a few weeks. Theymight> also try to push people withdrawing money to accept cashier's checks or> traveler's checks instead whenever possible. I know the Federal Reserveis> making an extra $50 billion available to the banks, but I don't know howfar> that will go.>> R.G.I.: Bank runs will force a de facto shutdown of the banks.Cascading> cross-defaults, the inability of many bank computers provide account> information or normal business accounting, and borrower defaults due to> economic contraction can be expected to keep many of them from ever> reopening. Only about the first one percent of people trying towithdraw> all their money have any chance to succeed in getting it, since there is> only enough actual currency in the system for that number of people toget> cash. The Federal Reserve's touted extra $50 billion is probably a> bald-faced lie, since the greenback printing presses were alreadyrunning 24> hours a day. Besides, even if it were true, that wouldn't be enough to> matter.>> D.W.G.I.: Why would Y2K affect the banks?>> Koskinen's Man: Things will be fine. The extra $50 billion will morethan> cover any needless withdrawals by jittery people. Your money is safestin> the bank, and remember, it's FDIC insured!>> 9. Embedded systems:>> G.I.: I know they are in a lot of things, and I guess they'll causesome> problems. I don't really know all that much about them.>> R.G.I.: There are scores of billions of them, and millions uponmillions of> them will not work right in 2000. Testing of embeds has barely begun inthe> most Y2K-aware countries. The excess-functionality aspect, inability to> even locate many microprocessors, and the cessation of manufacture ofembeds> 3 years after production commenced together made timely embed system> remediation nearly an impossible task. The telcos, power companies,> manufacturing facilities, oil & chemical facilities, air/land/seatransport,> and water/sewage plants will all probably be hit hard by embed failures.> Repairs will be lengthy. [for companies that stay in business longenough to> do repairs]>> D.W.G.I.: Why would these be important? My car and my coffeemakerdon't> care what day it is, and I've never managed to set the date and time onmy> VCR, anyway.>> Koskinen's Man: Most of them have been tested (and replaced if needed)in> critical systems. The ones that haven't been found or tested eitherdon't> use dates or are Y2K compliant.>> 10. Nuclear power plants and Y2K:>> G.I.: I haven't really thought much about them. I'm sure a lot of workhas> been done on them; I hope it's enough. I'd really rather not think toomuch> more about this, because if I did, I'd feel like a criminal for notmoving> my family to where there aren't any nuclear plants.>> R.G.I.: Some nuke plants in the former Soviet Union will surely undergo> meltdown. Some meltdowns in the Third World, Europe, and/or Japan wouldnot> surprise me a bit. Meltdowns in the U.S. are not impossible; this iswhy I> have moved my family to a location no closer than 100 miles upwind and300> miles downwind from any nuclear power plants. I have purchasedpotassium> iodide.>> D.W.G.I.: They'll go on making electricity the same way they alwayshave,> because they have to. Chernobyl was a one-time fluke; a meltdown is> impossible in the U.S., Western Europe, or Japan.>> Koskinen's Man: All of their systems either are analog or have manual> backups. Besides, almost all of them are all done, or practically so,at> least according to the self-reports NERC is going by. Chernobyl was a> one-time fluke; a meltdown is impossible in the U.S., Western Europe, or> Japan.>> 11. U.S. Presidential Elections in 2000?>> G.I.: I expect them to happen. There might be some delays, though, in> transporting and counting ballots.>> R.G.I.: Social chaos and failure of telecommunications will make the> prospect dim for using the usual method for selecting the nextPresident.> However it is done, it won't involve computers, because no one wouldtrust> the results. One possible alternative method for Presidential selection> would be to have the U.S. House of Representatives vote, the way the> Constitution has Electoral College deadlocks settled . Also, something> like the method by which U.S. Senators were selected for most of ourhistory> (before the 17th Amendment in 1913 began direct election of Senators)might> be used. This last involved the state legislatures. However, keep inmind> who is President now; he has repeatedly remarked how much he would miss> being President. Also, he greatly admires FDR, the only U.S. Presidentwith> the hubris to refuse to follow the example set by George Washington to> self-limit to 2 full terms. For this reason, I suspect Bill Clinton maytry> to use Y2K as an excuse to cancel the 2000 elections and remain inoffice.> If he offers the same benefit to current members of Congress, they would> have a huge motivation to go along with it.>> D.W.G.I.: They'll be held just the same as they always are. I can'twait> to vote for Al Gore!>> Koskinen's Man: They'll be held just the same as they always are.The> few days or at most couple of weeks of minor glitches will be long since> repaired before November 2000. Besides, all important FederalGovernment> agencies (including the FEC) have practically all of their criticalsystems> fixed by now, don't they? They've said so.>> 12. What do you think of Gary North and Infomagic?>> G.I.: GN's website has been very useful in helping me to understandY2K.> Without it, I would not have G.I.ed as soon as I did. I haven't readmore> than a few hundred articles from his site, starting in around early1999,> but that was enough. I think he is definitely too pessimistic, but Istill> look at his site around once a week. Infomagic? Haven't read hisstuff.> Isn't he another Y2K pessimist?>> R.G.I.: I thank God [or whatever I hold sacred] every day for him andhis> website. The thousands of articles on his website that I have read were> instrumental in my G.I.ing before 1999. I look at the newest articleson> GN's site practically every day I have Internet access. His site is the> best tool I have found for bludgeoning D.G.I.s [those with somereasoning> capability and good attention spans] about the certainity of theseverity of> Y2K.> Infomagic? I pray he is not completely correct in his conclusions, butwith> worldwide remediation status as it stands in December 1999, I find his> conclusions increasingly inescapable. He helped me better understandjust> what TEOTWAKI could really mean for humanity.>> D.W.G.I.: Who? Who? [like an owl]>> Koskinen's Man: Gary North is a trouble-making fearmonger with anunusual> religious viewpoint [Christianity], out only to make money from his[free]> website. Besides, why should anyone pay attention to anything on hissite?> [besides the links to official corporate and government documents] Heis> not a programmer, either. Infomagic? [who is a programmer] I won'teven> admit he exists, let alone discuss his writings.>> 13. Actions I've taken because of Y2K (or really, really wanted totake):>> G.I.: I've bought several months worth of food, mainly stuff I normally> eat, including a bunch of [water-packed] canned goods. I may havegotten> one dog or one firearm if I didn't already have them. I may have moved> from an urban residential location to a suburban one, but I haven't gone> farther out than the suburbs. I have flashlights with extra batteriesand> some candles.>> R.G.I.: I've bought either or both of thousands of pounds of wholegrains> and/or at least a year's supply of specially preserved foods(freeze-dried,> nitrogen/CO2-packed in buckets or #10 cans, that sort of thing). I ownat> least 2 dogs over 35 pounds and 3 firearms easily capable of use against> human-sized targets. I have moved to a rural location, or have one setup> to go to before the end of December 1999. I have at least investigated> veterinary antibiotics, vaccinations, generators, solar/windmills, andwater> cutoff switches/churney balls. I own a device intended to serve as an> alternate heat source for my dwelling. I have a large supply of candlesand> own multiple kerosene lamps.>> D.W.G.I.: I may have seen the Red Cross Y2K pamphlet, but I either just> glanced at it or didn't read it at all. I may pick up some extra frozen> food and an extra gallon of fresh milk on December 30th or 31st.>> Koskinen's Man: Officially, I haven't done a thing different than whatI> normally would do to get ready for the New Year's Eve weekend, and I> constantly tell people in the course of my job that they should dealwith it> the same way. This is because I officially proclaim that there'snothing> that individuals need to do to prepare for the rollover except buy abottle> of champagne. Unofficially, quite variable, but often the same asG.I.s.>> 14. Gold and the currency:>> G.I.: I have at least considered buying some gold because I think Y2Kwill> Scrappy (12/17/99; 22:25:00MDT - Msg ID:21240) rollover turn-off --- Can anyone here please explain to me what good it will do to turn off a computer system for the rollover as a 'just in case' measure? Won't the system have to be turned back on again, in the year 2000? What is the safety offered if a company, government, etc., takes this action, 'just in case' ? Peter Asher (12/17/99; 22:16:51MDT - Msg ID:21239) Number Six our three posts just now, by them selves should turn a "Don't get it" into an R.G.I. Number Six (12/17/99; 22:09:52MDT - Msg ID:21238) David Tice assessment Here's part of an article from Prudent Bear. No matter what you think of that fund, these are the facts. As I've said elsewhere, NASDAQ and NYSE Margin requirements are now down to 25%. Gas on the fire!! ___________________________________ And look at derivatives. Somehow, Greenspan long ago joined Wall Street as a proponent of derivatives as instruments for reducing risk. As a result, never before have there been 40 million of open stock option contracts at the Chicago Board Options Exchange, having almost doubled in 4 months. Certainly, this explosion of option positions is related to speculating and not risk management. Never before have there been $100 trillion in outstanding derivative positions. Never before have US banking system portfolios had $28 trillion of interest rate derivatives, having almost doubled in two years. Never before has the largest US bank with total assets of $380 billion and shareholder's equity of $23 billion had almost $13 trillion of derivative positions, never. Never before have 3 quasi-governmental institutions increased their lending by more than $500 billion in 21 months. These institutions now have total assets of about $1.5 trillion supported by about $600 billion of short-term debt and equity of about $51 billion. Never have the four largest US brokerage firms had assets of $1.1 trillion supported by equity of $47 billion. Never before have there been about $400 billion in assets in the hedge fund community utilizing huge leverage. Never before has there been a financial system as leveraged and rife with speculation as the one that exists today. For households, mortgage debt has increased by more than 20% in just the past two years. Total mortgage debt has increased by almost $1 trillion. And if households are running to borrow, corporations are sprinting. Total corporate debt has increased almost $900 billion, or 26% during the past two years. And throughout the over-zealous financial sector, the greatest credit expansion in history. During the past 24 months, the financial sector has increased borrowings by $2 trillion, or more than 40%. Yet this patently excessive credit growth is disregarded. Instead of sound analysis, the current fad is to hype the "new era" and celebrate "new paradigms." But the fact of the matter remains that the same dynamics that have for more than a decade fostered ugly booms and busts around the globe are now planted firmly here at home. And with the credit system unrelentingly out of control, egregious speculation and endemic credit excesses combine to covertly malign the real economy. And post boom, this is where the damage will prove the most difficult to overcome. Never before has an economy so gutted its productive capacity while, at the same time, accumulating a mountain of foreign debts. Never before has the structure of the US economy been more dependent on imports to support its standard of living, while at the same time less capable of producing tradable goods. Never before has it been so apparent that the present course is unsustainable, while, ironically, never before have so many been so convinced that the financial and economic booms will last forever. This is as tragic as it is unbelievable. So many lessons were not learned; so many warnings blindly ignored. -- Gregg (g.abbott@starting-point.com), December 17, 1999. Number Six (12/17/99; 21:36:38MDT - Msg ID:21237) One more thing http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=0022Sg Please let me preface this - the reason that I'm posting about Oil on a Gold/Silver forum is that I hold substantial physical in both and have taken a beating in these and in gold stocks, so much so that I am now, alas, out of gold stocks...My reasoning - Oil will skyrocket due to failed/inadequate y2k remediation world wide - oil shock hits the markets - bubble.com bursts - safe haven money hits gold/silver followed by gold/silver stocks... ============================================================FWIW, I've read some internal and confidential comments from a high level insider within a major oil co....who has one of the top experts in the oil embeddeds issue. This fellow that I read makes the Shell article and Paul Milne look like pollies!!!! Can you believe someone that high up and deep inside is that much more doomer than Milne? Amazing. I wish I could get a hold of it and post it. -- R.C. (racambab@mailcity.com), December 17, 1999 at Timebomb 2000. Number Six (12/17/99; 21:24:14MDT - Msg ID:21236) An anlysis of a Shell UK Oil/Y2K speech http://www.shell.co.uk/news/speech/spe_beatbug.htm This analysis is by Paul Milne on csy2k, a man known not to mince his words... :o)For Shell UK, beating the Bug is critical to all of our operations from the North Sea to the forecourt. And my remarks this afternoon will reflect that important reality. Put simply, it is not good enough just to get it right upstream, if we fail to overcome equally important challenges downstream. For example, ensuring marine terminal operations are not affected is critical to both parts of the oil and gas business. I can tell you this - if anyone gets it wrong, no journalist is going to be too bothered about the distinction between upstream and downstream!( This is an astonishing statement. he makes absolutely clear that ALL facets of the operation will have to work properly for the whole thing to function seamlessly. It does not matter if you can pump oil if it can not be shipped or distributed and vice versa. On TOP of that, it is horribly frightening to hear him say that it will not make a heck of a lot of difference which end goes. if it goes, we are completely enscrewed.)So, both sides of the business can learn from each other. We only have one go at getting this right, so its important that experience and expertise in one area of our operations is shared and made widely available to others.( When he says that we only have ONE go at this, he is NOt saying that we have ONE go BEFORE the deadline AND have a bunch of attempts at FOF afterwards. There is ONE go. It has to be done right the first time. frankly, in light of IT history, it is ridiculous on it's face to think that it will be anywhere NEAR adequately done the first crack out of the chute.)At the outset, we asked ourselves, "what will happen if we adopt a wait and see approach?" As much as we all like flexible deadlines, we quickly realised that the Millenium Bug doesn't give us that luxury!( Again, reiterating that not having it doen right the first time is tantamount to overall failure. Only someone utterly ignorant of IT history could POSSIBLY conclude that it will be adequately accomplished the first time.)There is an old saying that no man is an island. We cannot insulate ourselves from what's happening outside Shell. We must ensure that critical supply chains are not broken and that the basic infrastructure on which our business depends is not affected.( A complete admission that their own compliance is MOOT. It is MEANINGLESS if their dependencies fail. )A typical offshore platform or onshore gas plant uses 50-100 "embedded systems." These are sets of electronic code used to control equipment which are effectively sealed, and cannot be altered by the users. These systems contain anything up to 10,000 individual microchips. We have found that up to half of these systems are critical in terms of production and the impact of our activities on the environment.( Up to 5000 of the 10,000 are CRITCAL. There is no way on this green earth that in the time they had, they were able to remediate *enough* of those CRITICAL embedded systems. Not physically possible. They admit that in at least some of the cases they are relying on vendor 'assurances' for CRITICAL systems. We have seen time and time again over the course of the last two years when vendor assurances have not only been wrong but out-and-out lies. Additionally, it is infantile to believe that of the systems that DID need to be replaced, that the necessary chips were all available and that they had the ability to replace them in time. Absolutely INFANTILE to believe that.)This is perhaps the least discussed aspect of the Millenium Bug problem. In Upstream oil and gas we are particularly vulnerable to third parties' Year 2000 problems because so many of our operations are contracted out. Mobile drilling, Subsea Engineering, Seismic Operations and Platform Maintenance are all services which we, and many large oil and gas companies, no longer provide internally.( What don't people understand about this admission to a particular vulnerability. There is no overall leadership or guidance. 100's of entities upon which Shell is dependent ALL have to be up to snuff at the same time. It is a no-brainer to see that this is impossible in light of the history of Infromation technology results.) ============================================================Anybody with even a modicum of intellectual honesty and common sense understands that at a BARE MINIMUM the potential results of a failure would be catastrophic. Please note that people like alan dechert have repeatedly said that Y2K is a myth, a hoax, that nothing significant can possibly go wrong and that anyone who says so not only knows that it is a lie but they are intentionally lying. It should be plain that people like dechert are unquestionably 'insane'. Not mistaken. Not of a different opinion based upon the evidence, flat out stark raving INSANE. It is incomprehensible to read this report from Shell and even contemplate that there could be no economic impact because enough is going to get done. It is going down and it is going down hard. People like alan dechert and bks can mumble all they want. They are totally irrational and intentionally ignorant of the FACTS and the EVIDENCE. And this is just ONE Oil company. Most of them are in the same shape with a myriad of dependencies out of their control. Keep on thinking that all is well. All is not well. We are going down in a big big way. Kiss your asses good-bye. -- Paul Milne "If you live within 5 miles of a 7-11, you're toast" TownCrier (12/17/99; 21:09:56MDT - Msg ID:21235) Connecting the dots... It dawn on me that I laid out the various points but completely failed to connect the dots.The reason the final price of the SUV isn't affected by speculators in an ORDERLY market is that the price of the whole is comprised of the sum of its parts, of of which have been rightly determined. And because futures are a zero-sum market, it doesn't matter to the SUV buyer whether the component price-fluctuation gains or losses are absorbed by the part manufacturer or by a speculator as a result of the prices moving rightly higher or rightly lower from where they were a year ago.But when speculators gain an extended upper hand such that they influence price discovery of the physical asset, a disorderly market as such could in fact adversly effect the price you pay for the whole SUV because, for example, the speculators alone could drive up the price of the aluminum far beyond where it would otherwise be.Gold buyers, on the other hand, can rejoice that this preponderance of speculators (and the host of off-market gold deals that do not support the spot market such as gold loans) has handed us freakishly low gold prices. It is temporary, to be sure, however the duration of "temporary" remains to be seen. Those of us here at The Tower are very thankful for much more than our business relations with MK at Centennial Precious Metals. We are also a steady customer, with intentions to continue acquiring gold throughout the duration of such a rare moment in a lifetime when fortune smiles broadly upon you with adequate awareness required to act upon the opportunity. Cheap gold is not an "oppportunity" to those who remain unaware of the conditions discussed at this round table as casually as one might discuss the weather. Without action, there is no opportunity...only history to reflect upon. TownCrier (12/17/99; 20:34:36MDT - Msg ID:21234) Additional comment for Sir RossL... Unlike transactions with stocks or physical gold, the futures markets (the domain of the speculators we have been discussing--NOT to be confused with the generic use of the term speculators (gamblers?) who buy stocks (or any physical item for that matter) with stars in their eyes) are zero sum markets.Gads, that sentence became unwieldy. Pared down, the Futures Markets are distinctly different than the stock markets or physical gold market in the respect that the furtures markets are zero sum markets.Every dollar of pure loss is offset exactly by a dollar of pure gain. ASSUMING that a degree of order IS maintained, and a prepnderance of speculators DO NOT overwhelm the mechanism of price discovery, the final price of the SUV will not be altered by either the presence or absence of speculators participating anywhere within the components pricing. (And what holds true for the whole SUV in relation to its component parts, also holds true for the various whole components in relation to their raw material commodity-parts such as copper, aluminum, etc.) Please note the big assumption necessary to say the price of the whole would not be affected under the above-stated conditions.Surely you agree that pricing of the SUV does not depend upon the presence of speculators bidding on some derivative of that whole, do you? The same holds true for the parts, all the way down to the raw materials.On the issue of a zero sum market, it doesn't matter whether the participation occurs in an orderly or disorderly market (as I've tried to define it.) The fact that the markets in question are futures markets which are based on contracts rather than assets, the result is zero-sum. The two sides agree on a particular price in their contract, and whatever is gained by one side is exactly equal to what is lost by the other side. So even if a preponderance of speculators feel that aluminum will reach $10,000 per tonne, and by their own actions manage to drive the price up to that level from $1,600 currently, if the losses of one side equal the gains of the other. Absent the speculators, the physical market may or may not ever have on its own brought prices to that level. If an argument is speculation serves to dampen wild price swings due to physical conditions, I would counter by saying that the same ability to effect price changes that dampen swings is the exactly what may AMPLIFY such price swings, too. Price discovery does not require speculators, and neither do orderly markets.Just a small voice from a large, now empty, Tower. Time to go below and warm some soup on the fire. Number Six (12/17/99; 20:30:56MDT - Msg ID:21233) Saddam and OIL http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=0022Ou This from Timebomb2000, Gordon Gecko works in the oil indistry and is usually remarkably accurate with his analysis...Well, old Sadamm has us by the short hairs and he know's it! This morning there were many blustery headlines about the UN vote which was certain to pass, blah blah blah. All of these stories were misleading in that Iraq has clearly stated previously that they were done with sanctions and arms inspections. It is particularly telling that the US and British positions were flexible enough here at the end to offer to completely lift any cap on oil sales. Believe me, Bill Clinton and Bill Richardson would love to see prices come off the nine year highs we hit this week. So much jawboning took place in the form of bullshit headlines this morning that WTI was down over 80cts and brent over 50cts in response. However some stories surfaced that as I had suspected last week, there is big trouble in UN land these days for us. By the time the dust cleared, China, France, Russia and Malaysia all had decided to abstain. So....basically the US and Brits were looking for approval all by their lonesomes. And that's just what they got. Incidentally, during the choppy midmorning trade, a blurb surfaced on Platt's that said that there were rumors of delays at the Iraqi load ports. Once the vote was in, the positive spin started flying. Then about an hour or two after, headlines started showing up from the Boys in Bagdad saying the UN could go stuff itself. The one I saw was Iraq " categorically" rejects UN sanctions. Look people, it's pretty simple. If Saddy doesn't want to pump he doesn't have to. And as I suspect this is all part of his grand plan to really stick it to us. The headlines should read "Lack of Coherent US Foreign Policy Cost's US billions and adds to inflation". By the time i left for the day, TI was only down 20 or so and brent was almost flat or positive. How bout them apples? Also, I saw that the German Bourse was closed this morning due to a computer problem. This is about the third time in two weeks as best I can remember. Not much time for preps now...those of you who've bought the spin, best of luck. Those of you who've endured the taunts of many regarding your "paranoia" take heart. NO ONE can fault you for trying to protect your family. Anyone who tries to tell you that crude oil isn't reflecting Y2K concerns at this point is smoking crack. TownCrier (12/17/99; 19:59:20MDT - Msg ID:21232) The GOLDEN VIEW from The Tower Welcome to the weekend, one and all. Here it is, short and sweet for a change, just the way you like it.The only thing more attractive than the shiny, warm yellow glow of well-tended gold, is the vision of your own smiling face being reflected back at you...filled with the wisdom necessary to obtain such an out-of-fashion make-shift mirrored. All in good time, my friends...NEWS BULLETIN! It turns out that there IS something even more attractive than that...today's price of gold. You can get your desired quantity based upon the speculator-dominated market price...currently giving us spot prices as last quoted in NY at $283.30, up $2.00 from yesterday. Those clever little monkeys at COMEX traded their derivatives $1.70 higher to lift the February futures to $285.50...settling at the midpoint of its four-dollar trading range.In yesterday's COMEX activity, the number of December contracts still outstanding dropped to 80, with delivery intentions for the month increasing by 12 today to 8,153 contracts. (At 100 oz per each, that's 815,300 ounces due to change hands before the month comes to a close.) Taking a peek in the COMEX gold depository reveals that concerned parties have pulled 29,938 registered ounces out of COMEX guardianship (mostly from the Republic National vault), while 193 ounces of Eligible gold inventory found a new home elsewhere. At day's end, Eligible inventory stood at 62,026 ounces, while Registered gold weighed in at 1,166,056 ounces. (We wonder how much of that is at risk to recieve new owners? Back in August, Goldman Sachs was on the receiving end of what was the equivalent of half of the COMEX inventory, and they are once again a substantial receiver. Gold already registered in their name obviously can't be the source of the gold needed to fill their latest call for gold delivery.)OILWe already wrote up earlier in the day the significant devleopment in the oil market. Please scroll down if you have interest in reviewing those details. Essentially the UN Security Council passed a resolution to get weapons inspectors into Iraq under different terms than Unscom, and also lifted the limits to Iraqi oil exports. Although Iraq was already producing a near capacity, the potiential for this lifting of limits to weigh against market sentiment was certainly present, and in fact the price temporarily plunged to $25.90. Properly confusing the traders into an appropriate recovery in price was Iraq categorically rejecting the notion of weapons inspectors. The production ceiling is gone however, though the supply...well, where's more oil gonna come from? No net change should have been the result of the news, and by the end of the day that's exactly what we had. January crude ended off only 9¢ at $26.74.And that's the view from here...after the close. RossL (12/17/99; 19:49:40MDT - Msg ID:21231) Townie TownCrier (12/17/99; 19:17:57MDT - Msg ID:21229)I appreciate your long response to my short post. You have raised many good points, and I shall try to get to more of them all this weekend. My highest critisism of your post is contained in the following:QUOTE"When GM is buying in bulk from suppliers...speedometers, windshield wipers, door hinges, paint, etc, they probably have some ability to negotiate the final price with the supplier. (Again, no carnival atmosphere of speculators participating in this deal.) Likewise, when the speedometer manufacturer is negotiating with his own supplier for plastics and metals, why must we be led to think that speculators need to have a hand in the pricing routine? As a zero sum game, there should ideally be no difference made by speculation at this component level to the final price paid for the SUV."UNQUOTEHow do you come to the conclusion that this base level competition of raw material suppliers entails "a zero sum game" ? My observation is that it is anything but that. Yes, it may be a low margin business, but not zero-sum. If there were no speculators, there would be no low cost raw materials. TownCrier (12/17/99; 19:25:23MDT - Msg ID:21230) For clarification, I should say that the last paragraph in my preceding post was in reference to the gold market. Using an example where a preponderance of shorters of all types have gained the upper hand. Remove the speculative arena...and watch the physical market give the world a stunning reality check! TownCrier (12/17/99; 19:17:57MDT - Msg ID:21229) RossL, I appreciate your (12/17/99; 17:32:10MDT) concept on speculation, but... I don't believe either Goldfan or I were making any kind of commentary about the benefits or evils of speculation. It was a neutral conversation about money put into play through various possible avenues. But in regard to the point you've raise about the NECESSITY of speculation in free markets, let's take a look at your car for a minute. No wait, let's not personalize this at all (for all I know you could be a devoted pedestrian, biker, or trucker,) let's take a look at your NEIGHBOR's car...we'll pretend it's a Sports Utility Vehicle, and thereby firmly establish that this conversation is taking place in the 1990's.When he walked onto the dealer's lot to buy that SUV, where was the vital presence of the speculators in the striking of the deal in which your neighbor looked at the sticker price and eventually drove off the lot in his new SUV? There probably wasn't an on-lot or (even a behind-the-scenes) carnival atmosphere in which speculators stood around a trading pit bidding on that SUV's future price being higher or lower.Let's say he blows out a tire on the way home. He puts on the wimpy spare and drives to a Goodyear outlet to buy a new tire. Again, no carnival atmosphere when he pays the fair price and then leaves with the tire. In like manner, every part on that SUV could have been puchased seperately by your neighbor, and assembled into an SUV in his garage, or likewise by General Motors at a factory. When GM is buying in bulk from suppliers...speedometers, windshield wipers, door hinges, paint, etc, they probably have some ability to negotiate the final price with the supplier. (Again, no carnival atmosphere of speculators participating in this deal.) Likewise, when the speedometer manufacturer is negotiating with his own supplier for plastics and metals, why must we be led to think that speculators need to have a hand in the pricing routine? As a zero sum game, there should ideally be no difference made by speculation at this component level to the final price paid for the SUV. All it would be doing is transferring risk from one party who choses to lock in a guaranteed price with another party who hopes to profit by his speculation that the price will move in his direction. However, when the volume of speculator activity outweighs the activity of the primary producers or users, then you have the potential for an unacceptible temporary condition of pricing imbalances caused by a predonderance of speculators all taking the same sided of the gamble in what becomes a self-fulfilling movement in price. This my friend is an unnecessary and unacceptible disruption to what could otherwise be a well ordered balance based on the physical market conditions of supply and demand. In the absence of speculators, my hunch is that the free market system would somehow find a way to survive...just as your neighbor and the SUV salesman currently do.If the various implements of the speculators art (derivatives) were abolished, leaving only the physical market to satisfy the financial needs of all those who have themselves come to rely on this arena as a surrogate, you would then see the price explode as the reality of the market returned. As you can see, even the "temporary" pricing imbalances brought upon by a preponderance of pure speculators can reach levels and last for a period of time that causes unacceptible pain to the parties you claim are the benificiaries of the speculators who absorb their risk. I certainly welcome anyone to clearly show where I have erred in my judgement. lamprey_65 (12/17/99; 19:06:21MDT - Msg ID:21228) A few observations and a question CNBC has learned that promoting tech and i-net stocks brings higher ratings, and pumping a rallying bull really gets viewers. Of course, it does nothing to promote quality analysis of the dangerous water we are now in. I will give Ron Insana credit...he at least tries to shed light on the bubble (placing the market's run-up in historical context). He mentioned the 80's Japanese bubble today and asked why WE are not in one when our valuations have surpassed that bubble's just before its collapse. The guest had a soothing answer, of course (oh, big tech is undervalued compared to the rest of the market and our situation is different than the Japanese bubble!!!).Question:In a fast and severe sell-off in the market, is it possible that put options might not find buyers? Could it be that gains might not be realized with puts in a market crash? Any thoughts?(Weighing shorting the QQQ vs. buying puts sometime in the future).Oh, just one more comment...I really hope gold spikes to high heaven and Barrick gets their arrogant head handed to them!Lamprey beesting (12/17/99; 18:51:57MDT - Msg ID:21227) Britan writes off debt. http://news.bbc.co.uk/hi/english/uk/newsid_570000/570564.stm Does anyone think this noble act has anything to do with the IMF accepting loan payments in Gold today? I do!....beesting. Peter Asher (12/17/99; 18:40:54MDT - Msg ID:21226) Goldfan, Town Crier You know they're gambling and I know they're gambling, but they think they are buying into a money machine. The CNNFN brain washing has convinced them that unless they slip up and get the wrong stock, this show will run forever. So far it has been a self fulfilling forecast pulling itself up by it's own boot straps. The Money Supply can be stretched like a rubber band to multiples of its static state, but neither can approach infinity. Per my ongoing litany, there is no money in the market, and for that matter there is none in a bond and only a small fraction in a CD, money market fund or bank account. All these rosy retirement futures tantalizing everyone on the TV commercials, are dependent on future income earners buying up these stocks or servicing the debt instruments with future interest payments. This wealth entitlement is predicated on an incredibly naive assumption that there will be an astronomical amount of excess production in the future to hand over.At every given moment, all the production of Planet Earth is being distributed to all the people of planet earth, with all this wealth transfer paper determining who gets what.--- **--Today may turnout to be a classic one day reversal top. Gap opening, Record volume Record price, and virtually all gains erased in the closing hour. The opening ten minute volume today was a new record for the whole session a few months back. Triple witching and year end squaring were not invented today. This is unique!----**----Goldfan, re- options as collateral. The in the money value can disappear in a heartbeat. Forget the concept. It wouldn't even work as a loan-shark vehicle covered by a stop loss order. beesting (12/17/99; 18:26:39MDT - Msg ID:21225) Should be a comma after----rose, less and less post # 21224 ......beesting beesting (12/17/99; 18:12:25MDT - Msg ID:21224) rsjacksr#21214 & TownCrier#21217 IMF accepts loan repayment in-GOLD! I hope someone in the Government of Ghana reads this post.A precedent has now been set,and that is the IMF has accepted Gold(at market price) as payment for a Nations debt in lieu of U.S. dollars.The developing countries that produce Gold and owe dollar denominated debt to the IMF should now be able to pay off that debt in Gold valued at market "spot" Gold.But you say,the Gold mines owe all their present and future production to the Bullion Bankers of the world.Yes they do,but Government debt would take priority over corporate debt,therefore mines(Ashanti) could default to the Bullion Banks and pay in Gold their own Governments international debts.But you say, the Bullion Bankers will seize ownership of the mines.They may try, and bluff a lot,but the underdevoloped countries could say; thats an act of war and refuse to give up ownership.Did France declare war on the United States in August of 1971,when the U.S. defaulted on Gold payments?Did the rest of the world? NO!IMHO,the underdevoloped countries can now sell their exports for Gold in lieu of dollars,and pay ALL IMF loans in Gold,at market price.What affect would that have on the"spot" price of Gold?Again in my opinion,if only a few mines(again Ashanti)defaulted the paper Gold markets would collapse because the players would realize that delivery of physical Gold would be impossible.Gold would skyrocket to its true value in all currencies,and a new Gold market would be born,and as the price of Gold rose less and less Gold would have to be paid on existing loans because they were written in dollars.Everyone in the world would be rushing to buy Gold.Sooner or later some-thing like this has to happen.Those in the know....buy Gold.....beesting. Cavan Man (12/17/99; 18:07:54MDT - Msg ID:21223) Sir Towne Crier 21171 Thank you for a most excellent response to my question although I do not understand the principles behind "arbitrage" very much. You know, before I joined the discussion here, I always wondered why so many imported products were SO cheap yet when I travelled to the UK or Ireland, it was SO expensive (still is). By paying attention here, I never had to ask that particular (dumb) question. Thanks again. Netking (12/17/99; 17:41:50MDT - Msg ID:21222) Comex Gold - Traders Commitments From G.M.O;As of December 14, 1999, released at 3:30 p.m. on December 17, 1999, the commitments for COMEX gold futures showed commercial insiders long99,201, short 82,783; speculators long 10,261, short 30,814. Small traders were long 30,721, short 26,586. The average historic ratio for commercials is2:3 long to short; for speculators, 2:1 long to short. Commercials were thus net long 16,418 while speculators were net short 20,553, which represents asignificant improvement from two weeks earlier. This indicator has climbed to SIGNIFICANTLY BULLISH. RossL (12/17/99; 17:32:10MDT - Msg ID:21221) Gambling? Legitimate investing? Speculation and arbitrage do have a legitimate and necessary function in a free market. No sirs, they are not necessarily bad news no markets. I believe they are very important in price determination. Freedom in markets means the ability to succeed or fail on one's own merits . Speculation has a self-limiting mode where excesses are punished in the long run. A much worse addition to a market is a mechanism that would limit speculation or failure. (as in PPT). Netking (12/17/99; 17:31:20MDT - Msg ID:21220) BARRICK VS. THE GOLD BUGS (GATA) 12:45a EST Friday, December 17, 1999Dear Friend of GATA and Gold:Reginald H. Howe, Harvard-trained lawyer and former mining company executive, explains in detail here the hedging situation of Barrick Gold. Howe argues that Barrick's hedge is twice as risky as an ordinary hedge, that the big move in gold that is the dream of the gold bugs is really Barrick's worst nightmare, and that such a move has happened before in this century.CHRIS POWELL, SecretaryGold Anti-Trust Action Committee Inc.* * * YOU BET YOUR LIFE: BARRICK VS. THE GOLD BUGSBy Reginald H. Howe www.goldensextant.com December 17, 1999 The hedge book debate has produced another strange twist: Barrick Gold disparaging its natural shareholders, the gold bugs. Arthur Hailey, the well-known author and former Barrick shareholder, is trying to instigate a shareholder revolt against Barrick's gold hedging program. Vince Borg, Barrick's point man for investor relations, accuses Hailey and other gold bugs of being irrational extremists blinded by conspiracy theories about the gold market. (See P. Kaihla, "Gold bugged," Canadian Business, Nov. 26, 1999 -- www.canadian business.com/magazine_items/nov26_99_gold.html.) Barrick, a major gold producer, expects to produce more than 3.5 million ounces of gold in 1999 at a total cash cost of $137/oz. and total cost, including depreciation, of $240/oz. It has 51.5 million ounces of proven and probable reserves and an "A" credit rating. As currently set forth at its web site (www.barrick.com/financial_data/premium_gold/content_qa.cfm), Barrick's hedge book includes 14 million ounces (435 metric tons) sold forward under spot deferred contracts as well as written call options for another 4 million ounces. Two critical points emerge from an analysis of Barrick's hedge book: 1) Its forward contracts are not simple forward contracts but rather gold loans combined with forward contracts; and 2) Its spot deferred program is predicated on the assumption that "gold has never consistently risen in price and stayed there." The latter assumption is demonstrably false, and the practice of combining forward contracts with gold loans is much more risky than a program of simple forward contracts. Twice in this century the gold price moved quickly to a new, permanently higher level as a result of disruptions in the international monetary system. In 1933-34, gold moved in about nine months from $20.67/oz. to $35/oz., which became the official price for the next 37 years. Within two years from the closing of the gold window in 1971, gold moved over $100/oz., never again to fall significantly below this level, although it would rise much higher. More generally, the history of all paper currencies is one of long-term depreciation against gold until the paper eventually expires worthless. Barrick asserts that it would not be subject to any margin calls on its hedge book unless gold rises to more than $600/oz. This figure represents slightly more than a doubling of the gold price from current levels, or a rate of appreciation between that of 1933-34 (about 70 percent) and 1971-73 (more than 150 percent). Spot deferred contracts at $385/oz., the price Barrick claims to have locked in through 2001, will not look so smart if gold moves to $600 quickly and stays there. What is more, $600/oz. is not far from the price that some claim is even now about the equilibrium price for gold in a truly free physical market. Fundamentally, Barrick's spot deferred contracts are a bet on continued stability of the dollar and the existing international monetary order. And so sure is Barrick of this relatively benign future that it has effectively doubled its bet by combining its spot deferred contracts with gold loans. That is, Barrick has not simply sold future gold production forward, thereby locking in a future price and capturing the contango. Rather, it has BORROWED the gold that it has sold forward, effectively doubling the contango that it earns, but seriously reducing its ability to close out its forward contracts should future market developments so warrant. An example will help. Assume spot gold at $300/oz., one-year gold lease rates at 2 percent, and one-year dollar interest rates at 6 percent. The one-year forward rate, or contango, will be 4 percent, and gold for delivery one year forward will be about $312/oz. A producer can lock in this price by entering into a simple or spot deferred forward contract and earn the contango. But what Barrick typically does contains an extra wrinkle. Assume the same facts. Barrick not only sells an amount of future production forward but also simultaneously borrows the same amount of gold and sells it at spot. Thus for each ounce sold forward, Barrick has $300 cash to invest. It pays the 2 percent lease rate and, assuming it matches maturities, earns the 6 percent interest rate, giving it a positive spread of 4 percent, the amount of the contango. At the same time, it earns the contango on its forward contract. Thus, by borrowing the gold it sells forward, Barrick can effectively double the amount of contango earned. But the price of this extra return is additional risk and reduced flexibility. Suppose in the example given that spot gold declines to $250/oz. after six months. With the same forward rate, gold for delivery six months out would be $255. Thus both a company with a simple forward contract and Barrick would be showing a paper gain equal to $57/oz. ($312-$255) on forward contracts. Now suppose that something happens to suggest that the price of gold will not go much lower and might well rise sharply. The company with the simple forward contract can go to its counterparty and offer to close out the forward contract for cash, perhaps even offering a small incentive such as being willing to take an amount slightly less than $57/oz. In short, its paper gain is likely to be realizable. On the other hand, Barrick has no such simple means of realizing its paper gain. It has borrowed physical gold, which it must repay. Thus to close out its forward contract it must go into the market and buy gold, which is not difficult in a physical gold market with good liquidity or for small forward positions. But for large positions in an illiquid physical market, the situation is quite different. Any effort to buy gold to cover is likely to drive up the price and reduce (or eliminate) the paper gain. In short, Barrick's approach runs a much higher risk of being locked into a deteriorating forward position than a simple forward sale. This is, of course, the position that Barrick is in today. With 435 metric tons borrowed and sold forward, an amount in excess of the Bank of England's total gold sales program of 415 tons, Barrick cannot cover its short position in today's tight physical market without driving gold much higher. A position that the company claims is a paper gain is in fact a huge potential liability, exacerbated by written call options covering another almost 125 tons. If Barrick KNEW that within one year gold would move to a new, permanently higher level with $600/oz. as its floor, almost anything that it might do to defend itself would just accelerate gold's rise. There is no mystery to the falling out between Barrick and the gold bugs. Fulfilment of the gold bugs' sweetest dreams represents Barrick's worst nightmare. -END- Cavan Man (12/17/99; 17:22:50MDT - Msg ID:21219) Something profound, relevant and timeless: .....It can never be too often repeated, that the time for fixing every essential right on a legal basis is while our rulers are honest, and ourselves united. From the conclusion of this war we shall be going downhill. It will not then be necessary to resort every moment to the people for support. They will be forgotten therefore, and their rights disregarded. They will forget themselves, but in the sole faculty of making money, and will never think of uniting to effect a due respect of their rights. The shackles, therefore, which shall not be knocked off at the conclusion of this war, will remain on us long, will be made heavier and heavier, till our rights shall revive or expire in convulsion.Thomas JeffersonNotes On VirginiaProphetic? Ominous? Reality check?Awaken slumberers! It ain't over till it's over. Enjoy.....CM TownCrier (12/17/99; 16:51:04MDT - Msg ID:21218) Goldfan, nice post. Glad to have your company. "...would like some feedback on whether anyone else thinks gambling by and of itself, is perhaps a reason for a large part of what we're seeing in these markets"No question about it. We wonder how many billions of dollars slosh around every day for the sole purpose of chasing profits on fractional-cent arbitrage opportunities. That would be money movement in addition to "standard" investments and also the outright gambling you refer to. But when you come down to splitting hairs, what's the real difference between a "standard" investment and gambling in regard to the stock market?Contrast that notion with legitimate investing which is done on every occasion in which you spend time to do something productive...you *invest* your time and energy for the near certain expectation of some good in return. Sending money to strangers on Wall St. with the hope of a return of yet more cash could by a stretch be called an investment, but when compared to my simple example, it seems more akin to sophisticated gambling, doesn't it? TownCrier (12/17/99; 16:36:43MDT - Msg ID:21217) IMPORTANT! (Thanks for providing the text on that article, rsjacksr) I've got to offer a comment on this seemingly witty phrase that Reuters dredged up for use again as it was first uttered this summer when the whole issue was still being hotly contested:>>>One monetary source described the procedure as "reverse alchemy.'' "We are taking gold and turning it into something useful, like cash," he said.<<<Yes, very funny. But we should recognize the truth of the matter. This "useful cash" that the speaker holds so dear literally materialized out of the value of gold itself, and in that regard it is quite unique from most similar dollars in existence. Why? Because usually dollars have to be borrowed into existence, and therefore must ultimately be repaid into oblivion, along with extra dollars as interest that may be kept by the bank which issued the loan. These IMF dollars that have been born of gold parentage carry no such obligation for repayment. Although these new dollars are but a weak offspring, and bear the same purchasing-power fate of their trillions of look-alike brethren dollars (and in adding to their supply, they further add to the inflationary devaluation suffered by them all alike,) at the very least, this offspring bears a resemblance to its physical golden parent in that it is nobody's liability.But wait...something doesn't quite square, here. The gold was carried on the IMF books at SDR35 (about $48). In this first operation of the revaluation scheme, Brazil paid market value for 7 million ounces in the course of repaying existing loans that were outstanding with the IMF. Except for the interest portion of this cash payment, the principle should be sent to money heaven. But instead of following that standard process, the cash is viewed as the purchase price paid for 7 million gold ounces, and then the gold is accepted in remittance of the loan payment. How does the IMF then meet its obligation to strike out the same dollar units that were created upon the writing of the original loan to Brazil? Sure, the gold value would be viewed as the equivalent value necessary for payment on their loan, but there would still remain the lender's obligation to remove the principle quantity of dollars from existance.Instead, what we see happening is that these dollars aren't written off, but that the dollars that were destined for oblivion (Brazil's funds that "purchased" the gold) are instead deposited with the Bank for International Settlements where they will miraculously continue to earn interest. [Reuters reports: "The IMF is expected to revalue up to 9 million ounces of its 103 million ounce gold stockpile in the months to March, although the gold will never leave IMF vaults. The profits will be invested at the Bank for International Settlements in Basle and which will transfer interest payments back to the IMF."] So seemingly, we have value existing in two places at once...the IMF holds onto its gold which has now been "laundered" so that it can be carried at current market valuation, and we also see this same value increase put on deposit with the BIS. And nowhere do we see Brazil's principle written off the ledgers.Are we to assume that Brazil's payment was pure interest, and that the IMF is effectively donating what would have been pure "profit" toward the cause of debt-relief to the qualified Heavily Indebted Poor Countries...but only to the extent that these "useful cash" profits can earn interest in the hands of the BIS??? Gimme a break!However that bit of le(d)gerdemain (means "sleight of hand with the books") shakes out, The Tower can't quite say for sure. But we can say the the jokester's comment about "reverse alchemy" was off the mark. The "usefulness" isn't manifested in the paper cash, but is actually found in the immutible existence and value of the gold itself. The notion of "cash" in this bit of sleight-of-hand is actually just a tool to tap into this value held within the gold.Don't let yourself be duped by propaganda. Gold is the only real money banks hold (as Congressman Ron Paul said Mr. Greenspan and his banking counterparts readily admit.) Don't you owe it to yourself to build your own fortune upon the solid foundation of real money? goldfan (12/17/99; 16:00:57MDT - Msg ID:21216) Futures, Stocks and Gambling http://www.usagold.com Futures, Stocks and GamblingI wonder how much of the current market mania, and how much of the on-going activity in futures markets, is a function of gambling, pure and simple. To me, it's obvious that the international currency trading activity which amounts to $5 trillion per day, when only $20 billion per day is required to facilitate international goods and services trading, is largely a gambling activity. Maybe the stuff that goes on at LBMA and Comex with respect to gold has the same ratio of "purity"?I don't know much about forms of gambling other than poker, which I have some acquaintance with. In poker, the cards are needed to make the game work. They have no intrinsic value, only the paper they're printed on. They don't have any backing either, can't be exchanged for anything. Settlement occurs in cash or IOU's. So the "backing" for a large pot comes from the willingness of players to extend credit when someone's available cash runs out. Often, the credit will be there, because the players want the game to continue, even when the person asking for it might be considered to be broke. They risk his winning, against the the idea that whoever else wins will be able to get something out of him later, to settle his debt. Expert poker players, although they may be honest themselves, may not mind if someone else puts a marked deck into play. They just use it without the originator knowing they are doing so, to increase their own chance of winning. I recall an acquaintance in my University days, who made his stake for his yearly studying by traveling the logging camps of the Pacific Northwest playing poker. He could bring any card you named to the top in two shuffles, and you couldn't see him do it. He claimed to be delighted when a marked deck came into the game. He could always spot it and it gave him another "edge".People doing momentum trades for 100's of thousands based on internet chat group rumours and the response of the market to the same, aren't interested in the "worth" of what they're betting on. They are just like those players at the craps table who bet on whatever the hot roller seems to be playing. If there is enough of them, they could keep the NASDAQ game going for a long time, couldn't they? Some form of poker has been going for millennia. So if the futures markets are something like this, where an appreciable portion of the play originates with the gambling instinct, then it may be a long time before they collapse. The players don't mind if someone is rigging the game, they just play along understanding how much to adjust for the rigging that's taking place. To them, gold certs, calls and puts in electronic records, may just be like cards in a poker deck.They don't have to be backed by anything real, as long as settlement takes place in cash. I wonder if one can use an in-the-money option as collateral for a loan, or margin? If so, maybe this is the way they can feel safe about getting cash when it's time to "settle". A bullion bank that is writing calls to hold down the POG, is hardly going to refuse margin to someone who is holding similar paper as collateral, otherwise they would be declaring their own paper worthless.I realize my thinking on this is fuzzy. It's the best I can do now and would like some feedback on whether anyone else thinks gambling by and of itself, is perhaps a reason for a large part of what we're seeing in these markets, and so is yet another factor in maintaining the apparent "insanity". FOA, Nickle62, Galearis, Aristotle, anyone?Goldfan TownCrier (12/17/99; 15:31:36MDT - Msg ID:21215) Sir ORO, thanks for yesterday's expansion on the discussion of commodity prices and indebted nations http://biz.yahoo.com/rf/991217/8n.html In related news, Argentina really needs to find itself some solid footing. They have been the most aggressive to date in pursuing the idea of adopting the US dollar as their official currency after several years of getting along with a direct currency peg where each issue of a new peso requires a US dollar in reserves. This article shows the level of their woes (or should we say complete failure) in attempting to climb out of debt. No matter how good your currency is, at the end of the day you've simply got to balance your books or you're still doomed. Its a merely a double whammy when your currency blows and books are written in red ink. As written in this Reuters report, "For two years running Argentina has borrowed about $12 billion from foreign and domestic lenders to pay back interest on existing debt, cover a bulging budget deficit and meet other financial needs.Perez [a specialist with Barclays Capital] said extra IMF support was not automatic and the IMF would likely read Argentina the riot act for consistently missing deficit targets it needs to hit to get access to IMF cash."When a country continues to run a budget deficit, and must borrow to pay interest on its dollar-denominated debt...woof. Sounds like America, except we are in the enviable (??) position of being able to ultimately borrow from ourselves to make payments on our own Treasuries-based interest obligations. The overthrow of this one-sided farce will not be gentle to those clinging to the tenuous yet completely fictional wealth value of dollar savings. Oh sure, the dollar as a unit of account will even in the aftermath still be quite useful in paying off the various outstanding loan obligations that might be held against you. But those same dollars would lose their ability to purchase real goods and services...something that we all presently enjoy, but that too many have taken for granted. Plan your escape routes in advance, folks. Here's a hint...it doesn't get better than gold. rsjacksr (12/17/99; 13:20:11MDT - Msg ID:21214) IMF UP TO IT'S OLD TRICKS i.e. "FOCUS-IMF sells, buys gold to fund debt relief" http://live.av.com/scripts/editorial.dll?bfromind=926&eeid=1256552&eetype=article&render=y&ck=&userid=156608124&userpw=.&uh=156608124,2, FOCUS-IMF sells, buys gold to fund debt relief Janet Guttsman 12/17/99 WASHINGTON, Dec 17 (Reuters) - The International Monetary Fund, raising cash to pay for debt relief, sold gold to Brazil this week and bought it back in a complicated deal which revalues reserves and leaves the volatile market unmoved. An IMF statement released on Friday said big borrower Brazil had bought some 7 million ounces of IMF gold and used that gold to repay debts falling due on Tuesday. ``We sold slightly more than 7 million ounces of gold to Brazil and accepted it back immediately from Brazil for payment of an obligation due the same day,'' IMF Treasurer Eduard Brau said in a statement. ``Thus the gold did not enter the market.'' The off-market transaction was part of an unwieldy agreement to fund the IMF's share of an international programme of debt relief for some of the world's poorest countries. The IMF is selling its gold -- at market prices -- to countries which owe it cash and these states are using that gold to repay their debts to the fund. The deal creates windfall profits for the IMF because, under a quirk of international finances, IMF gold is valued at some $48 per ounce, while the market price is around $285. The IMF invests these profits and uses the interest income to pay its share of the debt relief, which is helping reformist economies like Uganda, Mozambique and Bolivia. One monetary source described the procedure as ``reverse alchemy.'' ``We are taking gold and turning it into something useful, like cash,'' he said. The IMF said its next off-market gold sale, for 655,000 ounces, would take place on Friday. But officials declined to say which country would be involved in the new sale and it is not clear if details will emerge before the weekend. The IMF said earlier said that Mexico would also participate in the revaluation. The idea of off-market gold sales was floated as a way to placate those who feared that direct sales of IMF gold could drive prices lower and hurt the very countries the debt relief is designed to help. Some poor debtor countries are also gold producers. The IMF is expected to revalue up to 9 million ounces of its 103 million ounce gold stockpile in the months to March, although the gold will never leave IMF vaults. The profits will be invested at the Bank for International Settlements in Basle and which will transfer interest payments back to the IMF. The debt relief scheme, coupled with pledges from the Paris Club creditor nations, aims to cut the debts of 33 of the world's poorest nations to about $45 billion from $90 billion. To qualify for debt relief, poor countries must meet economic conditions and promise to pump more resources into social programmes such as hospitals and schools. Netking (12/17/99; 12:39:29MDT - Msg ID:21213) Simply Me Re: Crash alert update. Simply Me (21208) looks like we jumped to -7 on the way from -6 through to -8 I think.It could be one more move to -10 "maybe", at which point all long positions are removed & replaced by short selling - interesting days indeed, with big ramifications for Gold. Farfel (12/17/99; 12:28:39MDT - Msg ID:21212) The Great RJ Debate @ The OTHER Gold Forum Michael, apologies for an off-topic post related to "the competition," but I cannot help but comment.Today's ongoing debate at the other gold forum is truly a joke. Various posters are agonizing over the diminution of free speech by B Kitner's decision to expel RJ.First, it is impossible to expel RJ. He holds at least six or seven multiple handles (plus personalities) and probably can obtain another seven with the wave of a hand. RJ simply CHOOSES to stay silent today and is no doubt enjoying the focus of attention, the wails and groans from his various buddies.Second, RJ's expulsion from the other gold forum does not reflect a sudden diminution of free speech rights there. Rather it is simply the maintenance of the status quo. Numerous posters have been expelled (including myself) and that is B Kitner's right since he pays for the website and handles all administrative matters.Third, RJ has never been a champion of free speech rights, ONLY his personal free speech rights. For example, he urged/demanded B Kitner numerous times to remove my posting rights, then finally threatened to pull business away from his site if I were allowed to continue posting. Last night, he hurled "verbal stones" at Bill Murphy in order to intimidate him from posting his ideas. In the end analysis, it is all much ado about nothing. B Kitner has the right to do as he sees fit, just as Michael Kosares has the right to do as he sees fit. It is censorship but the administrator puts invests a good deal of time-capital and pays the bills WITHOUT public contributions or support. Until such time as these gold websites receive public contributions, then allow the administrators their rights to run their businesses as they see fit. As I told B Kitner regarding my own expulsion, I understand his rationale, I empathize with his perspectives, and I wish him the best.IMHO.ThanksF* TownCrier (12/17/99; 12:25:46MDT - Msg ID:21211) An interesting article on Russia ahead of Sunday's parliamentary election http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20World%20News&s1=blk&tp=ad_topright_topworld&T=markets_bfgcgi_content99.ht&s2=blk&bt=blk&s=f6541e67e4966c355bce341a86c1719c In addition to being of general interest regarding the state of politics in Russia, you get a small glimpse of what can happen when governments meddle in the natural order of civilized commerce. When they fiddle with the quality of natural money (we're talking about gold here, folks) and fiddle with the free-market economy, they wreak havoc upon a person's ability to be productive and to acheive meaningful savings to provide for themselves.A sad commentary on the state of affairs by a 72-year old grandmother "How can you live on 360 rubles ($13) a month? I need work on my teeth but I can't afford it."For as long a you find yourself living in a country that facilitates your ability to acquire meaningful savings (we're talkin' about gold again, folks) it behooves you to do so. Had this gentle-lady obtained gold for her efforts throughout 50 of her 72 years, she may have more easily perservered through the 99% ruble devaluation over recent months...barring additional adverse governmental meddling. TownCrier (12/17/99; 11:54:20MDT - Msg ID:21210) A clear sign the world is desparate for more oil...the UN has suddenly become very agreeable http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20World%20News&s1=blk&tp=ad_topright_topworld&T=markets_bfgcgi_content99.ht&s2=blk&bt=blk&s=d74a4d9d986e673700274ac9e22423e1 Bloomberg reports that the UN Security Council has approved by an 11-0 vote to provide for an alternative weapons inspection agency for Iraq instead of Unscom, and more importantly, to remove the limits on Iraq's oil exports WHETHER OR NOT Iraq accepts the new disarmament agency's inspectors.The UN continues to control how Iraq's oil revenue is spent, and further sanctions are said to remain until inspectors are allowed to return and Iraq is confirmed to be rid of any weapons of mass destruction. Up until now, Iraq has been limited to exporting $5.26 billion during each new six-month phase of the UN's oil-for-food program. Under that program, Iraq had been providing the world with over two million barrels per day.In truth, this new development will affect the oil market pricing sentiment more than it will affect the supply reality because Iraq was already producing at close to its capacity. Ahhh....politics. TownCrier (12/17/99; 11:25:14MDT - Msg ID:21209) Fed commits to providing yet another $4.537 billion to the nation's banks. http://biz.yahoo.com/rf/991217/s4.html Following yesterday's addition to banking reserves by the Fed (totaling $7.010 billion through 14-day fixed-system repos,) the Fed has said today that it has has structured yet another forward repo deal (their third this week) for $3.5 billion with a December 31st settlement and January 3rd maturity.After their regular morning warm-up, the Fed then added an additional $1.037 billion in permanent reserves through the outright purchase of Treasuries having maturity dates between July 2000 - February 2001. Simply Me (12/17/99; 11:01:36MDT - Msg ID:21208) US Stock Market Crash Alert Now -8 http://www.wwfn.com/crashupdate.html To All: Thanks for marvelous information and opinions on gold, Y2k, et al. USAGOLD (12/17/99; 9:31:27MDT - Msg ID:21207) Today's Gold Market Report: Gold Zooms Higher; Armstrong Closet Gold Bug (Literally) MARKET REPORT(12/17/99): Gold zoomed higher at the New York open after a solid $4 advance in London. The strong advance caught traders who thought it would be a quiet year end by surprise, though Bridge News' and Reuters' reporters failed to adjust their standard anti-gold copy to reflect the change in sentiment. From our perspective in this hinterland outpost in the Colorado territory, we would attribute the advance to last minute Y2K shopping by some pretty big buyers who aren't as sanguine about the year 2000 prospects as those in government and the press would like them to be. At least that's what buyers are telling us. In addition, there is a noticeable shift in gold buyer sentiment away from Y2K to inflationary concerns and worries about the over-valued stock market. To these buyers, hedging simply seems like the right thing to do at this juncture and no amount of anti-gold financial press rhetoric is going to stop them. Whether or not this filters into a higher gold price remains to be seen. There are reports almost daily of J Aron -- the commodity arm of Goldman Sachs -- being a heavy buyer. Also there was a fairly significant drawdown at the COMEX warehouse yesterday. We expect the drawdowns to continue since most of the recent build-up was associated with delivery demands on the December contract with Goldman and Deutsch Bank being the two biggest buyers. I can't close this report today without at least a mention of the gold-related developments surrounding Princeton Economics' Martin Armstrong. He was arrested on charges of defrauding Japanese investors of over $1 billion in a bond scheme. Martin Armstrong spent a good portion of his time bad-mouthing gold in his widely disseminated reports and claiming it would fall drastically in price to unheard of low levels. Now AP reports that Armstrong has stashed nearly $16 million worth of gold bars and rare gold coins. According to the AP report "Prosecutors believe Armstrong still has the valuables, which he kept in an upstairs hallway closet of the home in Maple Shade, N.J., where he lives with his mother and two children, court documents say. 'I observed Mr. Armstrong sit for hours in the hallway outside his bedroom studying the coins,' according to a sworn statement by Tina Mustra, who was Armstrong's executive assistant and live-in girlfriend." I'll let that report speak for itself. That's it for the week, fellow goldmeisters. I hope you have a restful weekend. YGM (12/17/99; 9:16:25MDT - Msg ID:21206) Some Good Y2K Articles at Rense 'Sightings Page" Today http://www.sightings.com Pretty easy to separate the nuggets from the pyrite here, at Jeffs pages.........like most sites......YGM YGM (12/17/99; 9:08:51MDT - Msg ID:21205) Kitco, GATA and USA Gold Just My 2 bit Comments....... I've read alot of collective wisdom over time at Kitco and can appreciate the literary freedom, not to mention some of my best links have come from there over the last year and a half, thanks to posters like Tolerant and many others....What is always very obvious is that the level of anger by many posters there is usually very near the surface and ready to explode....we all vent occasionly even here and at Gold Eagle, but the content of discussion and respect is far superior at the latter two and that is what draws me personally to this board....GATA criticism is and has been welcomed by its executives, but in my opinion you should put up some financial support and then if you don't like what's happening you have the right try and offer constructive criticism...(did you send money RJ??) ......IMO Gata and Bill Murphy have been unbelievably tireless in expounding and informing the world on the unseen or unknown side of the bullion trade and all the sleeze like GS that are involved. GATA has drawn into it's ranks some incredibly well known and respected supporters and in the end WILL help win the day....Who gives a hoot where the credit lies, WHEN not IF, Gold is freed from this insidious Cabal of money mongers.....Personally I like being in the company of the great minds here and also consider it a priviledge to follow the lead of Bill Murphy who just may be (in due time) "recognized as the true advocate for Gold and free markets that he is...." My adage is----Lead, Follow or get the F#!&*% Out of the Way" cause Goldhearts have a goal in sight and do-ers, not whiners will win the day......YGM. Aggie (12/17/99; 8:58:52MDT - Msg ID:21204) Gold price http://www.blanchardonline.com/daily.shtml sorry try this Aggie (12/17/99; 8:54:45MDT - Msg ID:21203) Gold price www.blanchardonline.com/daily.shtml see this link tedw (12/17/99; 8:53:34MDT - Msg ID:21202) y2K and welfare http://www.usagold.com This is an unverifed report as I did not actually hear the .broadcast A friend of mine told me he was listening to the radio (a local station considered mainstream) and they said there was acknowledgement that many of the states are admitting their welfare systems are not going to function. A list of states were read and one of them was California.Did anybody else out there here reports like this?If the welfare systems dont function, I think its a safe bet you are going to see rioting of the magnitude of the last LA riots. The permanent welfare underclass degenerate parasites will attempt to take what "rightfully" belongs to them,if the government fails to provide it.Gold has always been a haven in times of trouble. tedw (12/17/99; 8:53:32MDT - Msg ID:21201) y2K and welfare http://www.usagold.com This is an unverifed report as I did not actually hear the .broadcast A friend of mine told me he was listening to the radio (a local station considered mainstream) and they said there was acknowledgement that many of the states are admitting their welfare systems are not going to function. A list of states were read and one of them was California.Did anybody else out there here reports like this?If the welfare systems dont function, I think its a safe bet you are going to see rioting of the magnitude of the last LA riots. The permanent welfare underclass degenerate parasites will attempt to take what "rightfully" belongs to them,if the government fails to provide it.Gold has always been a haven in times of trouble. tedw (12/17/99; 8:53:30MDT - Msg ID:21200) y2K and welfare http://www.usagold.com This is an unverifed report as I did not actually hear the .broadcast A friend of mine told me he was listening to the radio (a local station considered mainstream) and they said there was acknowledgement that many of the states are admitting their welfare systems are not going to function. A list of states were read and one of them was California.Did anybody else out there here reports like this?If the welfare systems dont function, I think its a safe bet you are going to see rioting of the magnitude of the last LA riots. The permanent welfare underclass degenerate parasites will attempt to take what "rightfully" belongs to them,if the government fails to provide it.Gold has always been a haven in times of trouble. Golden Calf (12/17/99; 8:45:12MDT - Msg ID:21199) gold Aggie (12/17/99; 8:28:08MDT - Msg ID:21198)Gold priceBe a good fellow and tell us where to find this info!TIA Aggie (12/17/99; 8:28:08MDT - Msg ID:21198) Gold price anyone notice: Wed. paper gold up $2.60 but gold coins up over $7. Thurs paper price down $1.10 but coins down $5-6. Is this physical price moving away from paper price as FOA talked about The Invisible Hand (12/17/99; 7:32:08MDT - Msg ID:21197) Belgium abolishes VAT of 1 % on gold http://www.tijd.be Gold bought for investment purposes is currently subjected to a 1 % VAT in Belgium.De Financieel Econonomische Tijd reports on December 17, 1999 that this VAT will be abolished from 01.01.2000 onwards in order to comply with EU investment legislation .This may at least make the introduction of a post Y2K tax a little more difficult, although for a government the introduction of a tax is never a problem. Confiscation, you said. ORO (12/17/99; 5:43:02MDT - Msg ID:21196) THC - It ain't St Petersburg thats' kept afloat You see it right.The $ just move among the banks on Russia's debit side. It collects more interest that will never be collected, just as the pricipal will be unlikely to reenter the bank's ledgers.This is a Japanese style banking farce par excelance.It is already assumed by the Russian debt holders that the funds will never be seen, and they have loss reserves to cover it. Besides, now that the IMF owns so much of the debt nobody gives a hoot.It can't be a trigger.ORO RossL (12/17/99; 5:40:45MDT - Msg ID:21195) FED Reserve data from the Friday WSJ Change from week ending Dec. 8, in millions of dollarsUS Govt securities bought outright +1736Borrowings from FED, total reserve bank credit +9572Currency in circulation +6869 THC (12/17/99; 3:57:12MDT - Msg ID:21194) To Oro Hi Oro! Just in case you missed my question yesterday....-------------------------------------------------------To Oro re **End game for $**As always, many many thanks for the well thought out and detailed answer!!!!!>>Gotta go, sorry I had to rush the answer.It was much more than I could hope for, thanks again!**End game for $**I would like to consider another possible trigger. RUSSIA!For quite some time, it has been clear that Russia has neither the capability nor