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ARCHIVED DISCUSSION FROM 6/18/2000
All times are U.S. Mountain Time
(Yesterday's Discussion.)
Chris Powell
(06/18/00; 23:58:46MT - usagold.com msg#: 32586)
A reply to Ted Butler's suggestions for GATA
http://www.egroups.com/message/gata/490?
Ted Butler had some suggestions for GATA.
Here's GATA's reply.
Chris Powell
(06/18/00; 23:42:31MT - usagold.com msg#: 32585)
Report on IPMI conference with Fed economist
http://www.egroups.com/message/gata/489?
GATA's Wayne Wagner reports on the
International Precious Metals Institute
conference in Virginia last week, where
a Federal Reserve economist suggested
that all central banks should get rid of
all their gold.
To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:
gata-subscribe@eGroups.com
Chris Powell
(06/18/00; 23:28:41MT - usagold.com msg#: 32584)
GATA's Bill Murphy interviews
http://www.egroups.com/message/gata/488?
Sanders Research Associates interviews
GATA Chairman Bill Murphy for the firm's
Quarterly Commentary, which will be
distributed worldwide and read by some
people with influence over central banks
and markets.
ORO
(06/18/00; 23:10:47MT - usagold.com msg#: 32583)
Hill Billy Mitchell - first a clarification
I am very happy to see you giving a critical reading, and I thank you as well as Aristotle for poking at that post. So as not to be misunderstood as to my attitude towards FOA and ANOTHER, I must say that I appreciate their honest efforts at educating us. They have opened my eyes to quite a few things and each item I could check turned out to be as they have said it would - though all within the uncertainties of researching the opaque world of high powers and shadow government, as they are driven by economic and political realities.
With all that is great in their stimulating commentary and thought provoking renditions of the currency war behind the scenes, they rarely talk of plain economics, but of international politics and the political status of gold as well as oil. The statements by FOA regarding the lack of fear on the part of "officials" from a return of specie and title gold into common use for both trade and savings are accompanied by his implied agreement, as he does not post any argument to the contrary.
The high economic significance the two ascribe to oil is somewhat exagerated, as is the picture they paint of the oil interests having had a strong hold of the short end of the stick. They were exploited and cheated, and they exacted their retribution more than once, and shall do so again.
The view FOA/ANOTHER present of popular politics is rather disparaging of people: particularly the contention that the reality (as opposed to the imagined benefits) of loose credit enjoys popular support and the implication that this support would remain standing even if people were aware of its heavy price. They are also quite certain of the ability of these powers to move politicos towards the "required" direction, as well as their belief that those politicos will manage to sell the absurd provisions of the deal to the voters as they see the damage these provisions bring.
Though FOA and ANOTHER present honest views, there are some things they are not touching on:
1. Persons involved by name
2. Who is supposed to "get the message" they are proclaiming. Though we are beneficiaries, we are not the only targets for these messages, there is a message being sent to another faction through their postings.
3. That the Bullion Bankers we desparage will be beneficiaries of the deal just as much as the Oil interests because the conditions that oil interests require (no further lending and derivatives) also mean that current gold obligations will not be enforced either.
4. What the legal tender status of gold would be, and that of the other precious metals. FOA has indicated that the legal tender status seems a cut and dry issue in the EU, but has not indicated what is going on in the US.
5. The mechanics of the iredeemable gold reserve system ANOTHER suggests are not discussed in detail. Some of this is obviously being worked out now.
6. The significance of silver's disproportionate fix in the ratio of the Dirham and the Dinar is not discussed as a possible future source for silver demand - that for the Saudi and Dubai program to work, the natural long term pricing of the silver relative to gold must be replaced by a religion driven mandate and that silver supplies must be reduced relative to gold supplies in order for the Koran's Dirham/Dinar price ratios to come into reality. If the program succeeds, it will make silver the better investment. It is indeed possible that the silver ratio was abandoned, but ANOTHER does not discuss this with us, nor, it seems, with FOA.
I will continue addressing your very well reasoned questions as time permits.
Marius
(06/18/00; 22:33:10MT - usagold.com msg#: 32582)
Journeyman (anarchists), & Farfel (Salsman interview)
Journeyman,
I think the author Java Man quoted dislikes anarchists because, according to my trusty Webster (def. #3) anarchism involves: "Rejection of all forms of coercive control and authority." That includes, one presumes, ecclesiastical authority. Perhaps it would have been more honest intellectually for him to decry heretics. Plus, they're so much easier to burn!
Farfel,
The other thing I found fishy with the Salsman interview were his comments about how wonderful fiat money has performed over the last 3 decades. His views seem more in line with a robber baron wannabe than with a Capitalist. He's as deluded as the Keynesians and goldbugs he criticizes, if he genuinely believes that tripe. I think he's a shill for Goldman Sachs, and he'll be screaming bloody murder with the rest of the gold shorts in the not-too-distant future.
M
(P.S. Oro--you never cease to amaze!)
Journeyman
(06/18/00; 18:18:33MT - usagold.com msg#: 32578)
Re: attitude adjustments @msg#: 32564
Turnaround msg#: 32564
attitude adjustments
I think I see where you're coming from! Interesting approach, highly applicable to Austrian econ - - - and understanding of crack-up booms!
Looking forward to your next post!
Regards,
Journeyman
Leland
(06/18/00; 16:20:15MT - usagold.com msg#: 32577)
OIL & GAS JOURNAL ONLINE, Some Articles are Free
http://ogj.pennnet.com/cd_anchor_home/0,1044,,00.html
No, there won't be any "gold" news...<grin>
Mr Gresham
(06/18/00; 16:01:24MT - usagold.com msg#: 32576)
Prolific!
You guys (and Leigh) -- on these long summer days of fighting back vegetation and playing outside with a 4-year-old there's only time to check in and refresh my USAGold window 2 or 3 times a day -- 30+ new messages everytime! How will I ever catch up?
Friday, I did get to sit out on the back step in the morning sun with a printout of ORO's #32319 and a big steaming mocha espresso my wife left me before going off to work and my child still asleep. And she slept through me reading the whole thing and finishing the coffee -- uninterrupted! Now that's LUXURY!
jinx44
(06/18/00; 15:46:19MT - usagold.com msg#: 32575)
Java Man --- your 32555
I like what you said. Since we always talk about earthly treasures here, it was nice to hear about the heavenly treasures. For as regards physical gold, I do not want it as "my reward in full". I like the wisdom and understanding of Job 28 and it's gold analogy. Thank you for your thoughts.
JavaMan
(06/18/00; 15:36:25MT - usagold.com msg#: 32574)
Lady Leigh...
You are most welcome, and thank you.
Leigh
(06/18/00; 15:12:19MT - usagold.com msg#: 32573)
JavaMan
Dear JavaMan: I loved your post this morning! I have copied it out and will never forget its wise message.
goldhunter
(06/18/00; 14:03:21MT - usagold.com msg#: 32571)
Oil and Gold correlation chart
http://www.usagold.com
http://www.gold-eagle.com/editorials_00/wanniski061900.html
This link from Gold-Eagle shows that oil and gold have an amazing relationship...
Get ready folks...the gold-bull is coming...
The oil folks wanted more, and got it...We'll be getting more soon...
goldhunter
(06/18/00; 13:39:08MT - usagold.com msg#: 32570)
Pardon me: Mr. Salsman (not Mr. Salsburg)
Very sorry for the wrong name...Again: regrets.
goldhunter
(06/18/00; 13:36:31MT - usagold.com msg#: 32569)
Salsburg Falicy
http://www.usagold.com
The Post Today of an interview in The Economist of a Mr. Salsburg, economist, starts off with at best a mis-truth, and at worst, non-sense...
He says: Central bank sales are not causing gold to decline...Central banks are selling because gold is going lower...
Oh really...Try this one team-mates...
Let's equate our little group of central banks with another group of supply "barons" that we'll call the OPEC Cartel...
Both groups have mega-supply and "willing buyers"...
One of the groups wasn't very satisfied with the price they were getting last year (in an increasing demand environment) so they held back alittle and WOW...$32...
So this "economist" will have us believe that a few "poor central banks" are tired of gold going down, and they're dumping...don't believe it...they're the supply (supply that is for sale vs other supply that won't be for sale until the price rallies significantly or ever, according to some at this site)...
Some genius has decided they want dollars or yen or other and they are trading central bank gold for it...and the amount of gold being dumped at one time (over these months) has certainly caused gold to decrease in price...look at the chart...
And now the challenge...Mr Salsburg...I'll offer proof for you...but you have to do something for us first...
Please CALL EACH Central Banker and have them STOP selling IMMEDIATELY...NOW...TODAY...and have them say so in public...in the press, or have them send GATA a telegraph or E-mail...
If You are right...there will be ABSOLUTELY NO effect on the price of gold...
If my premise is true, we'll see a NICE move up...
Sir, are you up for the test??? GOLDBUGS want to know???
Your opinion seems carelessly stated at best and utter nonsense to me...
Sir ORO, your opinion please? Sir FOA yours please? (if you have electronic access on vacation?)
ORO
(06/18/00; 13:31:25MT - usagold.com msg#: 32568)
Aristotle - borrowing and cornering the gold market - leverage
I just lost a longish post because of a system crash. Being as frustrated as can be, I am making a 3rd attempt, and I'll make it short.
Borrowing by consumers is a necessarilly correct choice because of the unreasonably low return on savings. Purchasing power in savings is under constant threat of dilution by others purchasing on credit. Since savings come as a result of past income, but credit is available through sale of future income, it is generally sensible in our thinking to buy with debt. If both debt and savings are one day liquidated into goods, then we will have hyperinflation and the pay-down of debt would become much easier.
The monetary/banking system is forcing the choice on the consumer. It is not necessarilly an "evil" act on bank's part so much as it is a response to the realities of the rules as they stand.
--------------------
Concentration of gold exclusively in a small number of hands would push the markets to respond with the use of "the next best thing" to replace gold. What that thing will be is surely not fiat money. Once the "next best thing" is established, the gold will not be usable as money for decades until liquidity in gold and its fiduciary substitutes is reestablished. You are right in saying that gold would be viewed with scorn by the public (particularly the Eastern public) if its use were denied because all were taken by a few. The point of accumulation is to get as much as one can, not to get it all. Much less of a threat to the use of gold.
In the final dissolution of Rome, silver and gold were hoarded privately and the funny money issued by the Emperors was refused. Barter took over and the economy shrank as a result of the regression to far less efficient barter. Gold and silver were not let go but for the need to avoid starvation. Whole estates were abandoned as tax men were trying to take the gold and silver gained in trade of estate produce and accumulated in these hoards, as well as taking away the produce of the fields and the contents of the storehouses. The estates were abandoned, and the specie was kept.
The common folk and the rich both perished but for small enclaves in Gaul and in the Germanic areas, where the tax man's troops were not powerful enough to overcome resistance by well armed knights.
Trade degenerated and came to a halt. Gold and silver remained burried as succeeding generations found it useless since there was nowhere to trade, nothing to trade the gold for and no one to trade it with.
------------------------
The desired function of government is protection of person and property, but government's income from the provision of this service under monopoly conditions relates only to the limits of its power to extort. i.e. the ability of government to "grab" is limited by the choices of people to (1) not make the "it" that the government wants to "grab", (2) the availability of alternative jurisdiction where "it" can be made, (3) the cost of transfering "it" and "it" production to the land where government does not "grab".
Governments usually try to respond to these choices by expanding jurisdiction over "citizens" (i.e. what government views as its property - a.k.a. slaves) by mutual arrangements with other governments. The IRS attempts at cutting off the offshore banking centers from US investment opportunities if these do not let our "grabit" to have access to their share of the "citizen's" property and income is just such a case in point.
The government is constantly trying to maneuver to gain the upper hand over private capital that does not pay its "dues". The high income individual that pays 50% income taxes on the federal, state, and local levels gives 2/3 of the accumulated savings from the remaining income at his death. This leaves him at best 17% of his cumulative income to pass on to his progeny, and when sales and excise taxes are subtracted, this comes to 5% to 10%. Government claims all for itself.
Think about the consequences.
Think of why it is that business can now cut deals with state governments for tax abatements despite it being extremely unpopular with the voters - the cost of abandoning and moving to a different jurisdiction are dropping, and jurisdictions are responding by competing for the tax income on the employees and local contractors if not from the business with the special tax treatment.
-----------
Mises points out that governments have been "economizing" on the ammounts of gold needed in monetary transaction in their economies for all of the mid to late industrial period.
The history of leverage of gold is like this:
40%-60% reserves,
1.5:1 to 2.5:1 leverage
Banks fail at different spots at different times when leverage goes beyond 2.5:1.
Government responds by occasionally letting banks get away without redeeming deposits in gold.
Moral hazard grows and governments want more money in return for this privelege:
Banks come to 25% reserves and produce a government backed currency.
25% reserves
4:1 leverage to gold
Under new rules, banks reduce reserves and lend to government as it increases its own leverage. Resulting in:
5% reserves
20:1 leverage to gold.
Enormous collapse of money banks and economy follows. Banks are completely released from their gold obligations and the government confiscates gold. A new system starts:
25% external reserves (for foreign obligations)
4:1 external leverage
2.5% total reserve
40:1 total leverage
The desired expansion of monetary obligations occurs reaching:
8% external reserves
12:1 external leverage
0.7% total reserve
120:1 total leverage
System collapses in slow motion despite international attempts at keeping it going.
A new system starts where paper gold is leveraged against gold and currency is leveraged against paper gold. At the start:
40% reserves in paper gold
2.5:1 leverage
Total currency ratios:
2.5% reserves
40:1 leverage
Now we have grown to:
3% reserves (?) in paper gold banking
30 to 40:1 leverage
Currencies are leveraged to this for a total leverage of
0.06% reserve
1700:1 leverage
Needless to say, all gold bugs await the collapse of this edifice.
Farfel
(06/18/00; 12:41:36MT - usagold.com msg#: 32566)
Mr. Salsman: Contradictions, contradictions.....
I read the Salsman interview and I took note of this particular paragraph where he states the following at the end of the interview:
------
Richard Salsman: I'm have neither a predilection toward pessimism or optimism. Instead I try to look at facts
objectively. Today, the economic news is generally good - but, of course, our lives would be far better still if we
were moving more aggressively toward full, laissez-faire capitalism.
------------------
Of course, the hallmark of ALL anti-gold spokespersons is their unyielding assertions that they are cool, dispassionate, objective, scientific analysts whereas gold investors act on their faith and passions. Hence Mr. Salsman's declaration that he is neither a pessimist nor an optimist but a good member in standing of the scientific rational economists who make decisions solely based upon empiricial evidence.
Alas and alack, we must then examine the following paragraph from the same interview by the former employee of Citibank and various other fine American financial Establishment institutions:
----------------------------------------
Richard Salsman: I'm not--emphatically not. I find that most of them are an utter disgrace to scientific procedure,
economic analysis and the virtues of gold. They give gold a bad name. A gold bug is someone who buys gold on
faith, not facts, who believes the world's coming to an end and that the gold price will sky-rocket. I'm no "gold
bug," and I urge others not to fall for their scare tactics and rationalizations. Many "gold bugs" are still trying to
recover from their purchases of gold at $800/oz in 1980 (they predicted then, as did Pepperdine economist George
Reisman, that the price would go as high as $4000/oz). When the gold price doesn't rise, or falls, gold bugs blame
miniscule dealings in the gold market. Hence their rationalizations. For all his virtues, the late Jim Blanchard did,
unfortunately, shade toward being a gold bug. He is often called "the first gold bug."
--------------
Now the preceding paragraph is certainly not the declarations of an objectivist nor an empiricist nor any practitioner of the scientific method.
It is anti-goldbugism in the most virulent form. Salsman declares gold investors to be people "who believe the world is coming to an end" and then mocks their purchases of gold at $800 an ounce.
I know many goldbugs/gold investors and I have found few if any believe the world is coming to an end. They may believe that the current global financial status quo will be altered in a potentially radical manner. However a change in status quo does not necessitate the end of the world. Most gold investors I know live their lives quite optimistically, have families, and do NOT live in bomb shelters, in fact do NOT even own them.
Simply by purveying that cliched, disparaging, single-sentence description of gold investors, Salsman significantly undermines all his arguments against gold investment.
For a self-proclaimed unemotional practitioner of the scientific method, Mr. Salsman engages in some fairly nasty, very emotional, ad hominem descriptions of goldbugs. In the end analysis, the man's Establishment pedigree goes a long way to explaining/defending today's bubble market investments.
After all, would we ever expect Robert Rubin or his ilk to espouse gold investments and steer people away from stocks and bonds? Hardly.
Thanks
F*
Turnaround
(06/18/00; 12:06:58MT - usagold.com msg#: 32564)
attitude adjustments
My Dear HBM,
I do understand your feelings, I have them as well.
They come and go in waves, don't they?
It has been a frustrating period in history for anyone of
sound money persuasion.
I have tried to talk to people about the stock market,
for example, for the past couple years. As you undoubtedly
know, it has been a dangerous place to be vested in for
much longer than that.
But it just kept going up and up, reinforcing the belief
system of the "investor". Further reinforcement of that worldview
came from the investor's friends, associates, financial advisors
and the hallucinogenic experience known as CNBC- the social
<network and hierarchy> I wrote a little about previously.
So it has been like talking to a wall, hasn't it? I've talked to a lot
of walls lately, beaten my head against them, even. So now I
have a bruised forehead to show for it. But I do think it will
become much easier to hold these views and find receptive
minds for them in the future, the very near future.
Consider:
The "mood of the people", or "group worldview" undergoes
a cyclic process, not unlike the business cycle (closely related,
I think). In one language (language is part of the 'map' of a culture's
worldview) , it is like "punctuated equilibrium", a term borrowed
from evolutionary theory. An 'ecosystem' of individual and group
(meaning every group from the two-person "dyad" to the whole
wide world) worldviews ("meme sets") has various "memes"
(roughly, ideas) that continuously compete with one another
for dominance.
The 'environmental' conditions (economic conditions in particular)
favor some memes over others, they provide a fertile
breeding ground for some, and a hostile environment for others.
When those conditions change, whether it is the 'rising of sea levels'
or an 'asteroid strike', the 'ecosystem' is thrown out of balance,
and has to move towards a new equilibrium by either evolving
new memes (like let's give everybody an electrodollar implant)
or, in our case, memes that were previously relegated to
'ecological niches' find less competition amongst the fertile
fields out there.
(I am still evolving on these things myself, so please pardon
the mixed metaphors.)
The upcoming economic problems are going to profoundly
affect very many people's lives, as you know. It is one thing to
discuss the academics of economics, but it can never be a substitute
for the greatest university of all- the school of hard knocks.
When Joe Sixpack loses his house because his 125% re-fi that he
invested into Microstrategy and DrKoop.com blew away just before
his employer went bankrupt, don't you think he might be re-assessing
the situation a wee bit? As he get around his social network, he
discovers that he is not alone- hmmm. Other people have their sad
stories too. This process is now underway, as you know.
Later, as the dollar does its swan dive, Joe's dad isn't doing so
well on his SSI, is he? Maybe Joe won't be having as secure a
retirement as he once thought. Those unemployment benefits aren't
really keeping up with the price of dog food, either. Joe's family
is in danger. Maybe they move into a single house and start a
garden, for instance. Notice that Joe might be a cop, a teacher,
a federal employee, etc.
At the same time, there are all kinds of stories coming out about
fraud of all sorts. Again, we see these processes are getting
underway now- the bubble has burst, the ball is motion, the
equilibrium has been punctuated.
And so we have the additional process of *discrediting* of existing
institutions- including propaganda mills like CNBC- going on
simultaneously with Joe's attitude adjustment toward the
fundamentals of day-to-day existence.
When a system is in transition from one state of equilibrium there
are many possible "final" states.
( I have been using the term "equilibrium" loosely, as there
is never such a perfect state. Engineers prefer the term
"quasi-static equilibrium.)
Think of it as a ball that has been sitting on a hill for awhile (or on
top of an inflating bubble, hmmm?). Trying to move the ball while
it is sitting still is difficult, it's like beating you head against a wall.
When the ball is disturbed, it begins to roll down the hill. Its
trajectory and ultimate "resting" place cannot be predicted (chaos
theory, butterfly effect). But it is during that transition that tiny "nudges"
have their greatest effect on the ultimate outcome.
Maybe it's a letter to a journalist that ends up sparking a long overdue
national debate over central banking. Or perhaps the gold rocket's
red glare directs interested people to websites on the subject, like this one.
Does this mean it has to be blood in the streets or an electrodollar
police state? Not necessarily. Sure, there are going to be, or rather
there are, various unpleasantries, but there are also many fine things
in people as well, you know, hiding in those little niches.
Hope this helps.
Sierra Madre
(06/18/00; 11:46:45MT - usagold.com msg#: 32561)
for Wide Awake re U.S. citizenship; about R. Salsman;and a suspicion
1. About not being able to give up U.S. citizenship. I can tell you for a fact it is possible, as I gave up mine many years ago. No regrets, either.
2.About Mr. Salsman: he is talking absolute nonsense. We must "learn to suffer fools gladly". This article in my opinion, is a demonstration of the intense worry of the Bullion Banks and the U.S. Establishment, with regard to the future status of the dollar. They need not worry, for the outcome is certain: no country, not even the almighty U.S., can run trade deficits of $400 billion a year, and not have its currency plummet in value.
3.Just a day or two ago I was wondering what those who aspire to be World Controllers would do about India having about 1/4 of all the gold in existence, and buying 1/3 of world production every year.
Alas, perhaps we have the answer in the report of yesterday or day before, that a group of higher caste individuals massacred 20 "untouchables", in retaliation for their prior assasination of 13 higher caste individuals.
Question: am I really too suspicious, or is this a covert machination of the Powers That Be, to instigate a caste war in India, and totally disrupt their national life? Am I imagining things, or is this the beginning of a thorough subversion of India? Too much gold? I ask readers to remember this post, if possible, in the light of further events.
Journeyman
(06/18/00; 11:15:10MT - usagold.com msg#: 32560)
Citizenship @WAC, msg#: 32547, HBM
"Correct me if I am wrong, but I don't believe
there's a process in place to give up your US
citizenship.' Once an american, always an american.
Yes, you can take up 2nd citizenship, but you
can never un-americanise. Write to your congressman
for clarification." -WAC, msg#: 32547
Your national affiliation is mostly a product of your own mind. You can indeed renounce U.S. citizenship -- you could even arrange to have USA Inc. revoke it for you by publically joining a foreign military. There are formal proceedures to do it other ways as well. Some claim you can renounce your national (USA Corp.) citizenship and still remain a state citizen in one of the united States but outside Federal jurisdiction. There is legal basis to such claims, but in practice there are often problems -- sort of like Colombus telling his teacher the world was round -- and making it stick.
But no one, no government owns you, unless you accept such a claim. None-the-less, the U.S. is one of the few countries in the world that claims it owns a piece of your productive life even after you've renounced your citizenship and moved off shore. They claim, in fact, you owe them taxes for ten years after such renunciation. Last time I looked only the Philippines was in U.S. company in this regard.
Regards,
Journeyman
PH in LA
(06/18/00; 10:49:50MT - usagold.com msg#: 32559)
Parsifal and the Holy Grail.
Lafisrap:
The wording in your memory of Another's remark is not quite accurate. As I remember it, it went more like: "the reason the price of gold is falling is because so many are buying".
This caused much merriment at the time among those who made it their stupid mission to misunderstand everything Another said. Those of us willing to "think long and hard" about his words concluded that he was referring to the futures market. In other words: "The reason prices were falling was because so many short contracts were being bought (and sold)."
Another always seemed to make an effort to veil his thoughts in phrases that could be interpretted in more than one way. Many concluded that this was his way of forcing us to think and draw our own conclusions... rather than the more "western" way of having everything handed to us on a silver platter (as it were). Perhaps he would have called this way of expressing himself as if on a "golden platter", since the seemingly simple, supply/demand driven gold market that we always believed in quickly disolves into layer after layer of complexity when one delves further into it.
Sort of like a quest for the holy grail...
Lafisrap
(06/18/00; 09:51:49MT - usagold.com msg#: 32558)
Why is the price of gold falling?
Answer: Because so many people are buying so much of it. That's what Another said, isn't it?
Or, have I invented this answer and I am misremembering?
Can we connect all the dots and make Another's explanation abundantly clear? Many of you generously post your thoughts, thanks.
Lafisrap
Journeyman
(06/18/00; 08:44:11MT - usagold.com msg#: 32557)
Goldbugs vs. capitalism @Black Blade's post of Salsman interview, msg#: 32550
I think this guy has much too much faith in the short-term market place. He tends to look at gold as the solid indicator of what paper money was doing as it used to be before it became possible to mess with its price because the extreme apparent "buying power" of fiats rose so much that, if cashed in, they could buy the world ten times over. This apparent liquidity gave market players the power, temporarily I believe, to use this tremendous fiat buying power to manipulate all sorts of things they couldn't before.
When I was working with the "computer [sports betting] gang," we became so well-known that when any of us placed bets on a particular game, it would change the line, change the number of points the Las Vegas books would give people as a handicap. Toward the last we used this fact. One of us would place a bet counter to the one we really wanted, wait till word got around and the other books changed their line, then the rest of us would bet on the other side, the bet we really wanted to make in the first place. This way, we got a better handicap on our really big bets. We used a few relatively small bets to give us a bigger edge on the really big bets. We "distorted" the market place. The point isn't what we did, it's that we WANTED to, and once we could we DID.
The question is, are there any interests that WANT to distort the gold market and are there any of them big enough to do so? Or alternatively, is there some process that could evolve naturally, (gold leasing) the consequences of which no one considered ahead of time that could distort the gold market?
If not, how do you explain a POG below the costs of production while world-wide demand tops mined supplies every year by a substantial margin AND central bank inventories show they still hold way too much of their gold to account for the difference?
"We've had paper money for nearly three decades now, and although the dollar almost dissolved in the crisis of 1978-80, the dollar's value has risen enormously (vs. gold) since then. The stock market (S&P 500) has risen from
160 in 1983 to 1340 in 1999. That's an annual appreciation
of 14%. There were only a few bad years in that stretch.
That's an awful lot of wealth creation for a bug to miss."
BUT there's a BIG difference in saying that the dollar rose against gold from claiming the dollar's value has risen. The dollar itself has depreciated (been inflated) every year like clock-work since the 1930s, actually, since around 1920. If you didn't hold the "correct" (in retrospect) dollar denominated vehicles, each at the right time during that period, you lost out to inflation and taxes. Most economic analysts leave out the assumption (that an "investor" indeed always held the right vehicle) from their figures. Mr. Salsman cites 14% gains in the STOCK MARKET since 1983. Salsman assumes you knew to be in the the stock market beginning in 1983 because he certainly wouldn't make the mistake of assuming the dollar itself is rising in value - - - can you buy more for a set number of dollars today than you could even in his time frame beginning in 1983?
"Many gold bugs cite Mises, who wrote that all fiat paper
monies end up in complete dissolution and worthlessness.
But 'end-up' is a quite ambiguous date to attach to any
forecast; people can crack-up and go broke waiting for
the exact 'end up.'"
He's absolutely right there. "Prediction is very difficult, especially of timing," and apologies to Yogi.
Apparently Mr. Salsman over-looks or discounts big-float. If so, he isn't alone. Kudlow, etc. also are apparently oblivious. Greenspan isn't; he's said so numerous times. The dollar is sound on the surface, but this soundness depends on "foreigners" keeping their dollars where they are, which requires apparent dollar stability.
Any analyst that doesn't understand big float (the 70% or 80% of the US money supply that exists overseas and presently doesn't compete here for goods and services) as potential BIG inflation simply can't understand the actions of the FED. Or that those who want the appearance of stability count a stable or falling gold price as essential to keep those who still look to gold as an inflation indicator happy keeping their dollars where they are.
The price of gold (and for that matter, most other things) was relatively stable in Korea, Thailand, Indonesia, Russia, Turkey, etc. - - - until after their crack-up booms. That's how crack-up booms work.
This all goes to prove that just because you believe in gold and have read Greenspan's essays in Rand's "Capitalism; The Unknown Ideal" doesn't make you an expert in gold as it's manipulated and/or traded today.
Ceavat: This COULD be a "new paradigm." Such things do happen occasionally. There might not be an dollar crack-up boom, or it might not happen in our lifetime. I think it's imminent, but then I've been expecting the crack-up boom for over a decade.
Regards,
Journeyman
JavaMan
(06/18/00; 08:29:51MT - usagold.com msg#: 32556)
Hello Journeyman...
Yes, I agree with your msg ID 32544. In my response to Sir HBM's item #3, I said...
"On the other hand, if the state doesn't like the message coming from a particular church, (note lower case "c") it may pull its tax exemption status but this is nothing compared to the persecution of Christians in other parts of the world. Furthermore, given sufficient incentive, the state could probably be successful in shutting down a troublesome church altogether but that would have no impact on the survival of the Church."
Journeyman: What does such a voluntary agreement do to the church's status in the eyes of God?
JavaMan: The Old and New Testaments are full of examples where the state demanded tribute in the form of money and worship (Daniel is a personal favorite) from God's children. In terms of the demand for money, the well known, (hopefully) "Render therefore unto Caesar the things which are Caesar's" is clear enough.
In terms of worship, sufficient examples are given to demonstrate the power of God against the misguided impotency of the state.
Tax-free status of a church is unimportant to me as God's plan for the Church is not contingent on acquisition of FRNs. However, Jesus also said "and unto God the things that are God's." This, is a serious matter. I believe the Apocalypse will come about precisely because of the attempt of nations to violate this directive on a massive scale. The ultimate demonstration of man's arrogance and his final folly.
JavaMan
(06/18/00; 07:56:15MT - usagold.com msg#: 32555)
ORO, Aristotle, Journeyman, All Warning: Governments may be hazardous to your health...
The whole subject is one of sovereignty... "The kingdoms of the world" are represented as wild beasts, knowing no master and having no owner. This is God's view of all earthly governments. Government in the world, committed, for the present, to man, has never yet been exercised for God. Not only is His sovereignty not recognized, but even His suzerainty is rejected. It is folly to talk about "Christian kingdoms" or Christian nations;" and it is worse than folly for ministers of the Gospel to occupy themselves with the taming of these wild beasts, instead of warning all of the coming judgements, which will destroy them altogether; and meantime witnessing of the "grace of God" to lost and helpless sinners. We are not referring to any lawful acts which we may do (as it were, in passing) to improve the condition of things, or to remove crying evils; but we are speaking of laying ourselves out for these things and of making them our great aim; and especially of ministers of the Gospel so doing. What is wanted is, not a "Citizen Sunday," but a Sunday for God, when men will be told of what God's verdict is on all these things; of what His remedy for them is; and of what means He is going to take to set right all that is so wrong. A Sunday when men will be told that there can be no Millennium without Christ; and that there is no hope for the world until it comes under the direct sovereignty of God and of His Anointed.
The very laws which God gave on Sinai, and the Divine Ritual of the Tabernacle and the Temple did not keep Israel from Religious Apostasy and political ruin. It ought therefore to be perfectly clear that there is no hope for the world in human laws or religions.
Righteous government is the one great want of the whole world. The obtaining of this is the mighty spring of all political movements for Reform; and of all national conspiracies, and revolutions. It is this that gives Anarchists the motive for their crimes. But man does not know or see (and there are so few to tell him) that there can be no righteous government for the world until the Righteous one shall come "whose right it is" (Ezek. xxi. 27) to rule in righteousness: and no peace for the earth until the Prince of Peace, whom man hath foully murdered, shall return to establish it. When he came, His object was angelically heralded as "Peace on earth" (Luke ii. 14); but when He had been rejected, His disciples knew there could be no "peace on earth" while the blood of the Prince of Peace cried for vengeance, and hence they sang of "peace in heaven" (Luke xix. 38).
I wish I could take credit for these words but, in fact, they were written by E. W. Bullinger 1837-1913 in his Commentary on Revelation.
And now for an example of the conspiracy and treachery government is capable of under the pretense of what is in the "best interests of the state." The Sanhedrin was the supreme national court and they called a meeting to consider the issue that something must be done as Jesus had just raised Lazarus from the dead, the third of three incredible miracles. As a result, many were becoming believers in Jesus and the Sanhedrin were totally exasperated. This last miracle pushed them over the edge.
Then gathered the chief priests and the
Pharisees a council, and said,
"What do we? for this man doeth many
miracles.
If we let Him thus alone, all men will
believe on Him: and the Romans shall come
and take away both our place and nation."
And one of them, named Caiaphas, being
the high priest that same year, said unto them,
"Ye know nothing at all,
Nor consider that it is expedient for us,
that one man should die for the people, and
that the whole nation perish not."
And this spake he not of himself: but
being high priest that year, he prophesied
that Jesus should die for that nation;
And not for that nation only, but that
also He should gather together in one the
children of God that were scattered abroad.
Then from that day forth they took
counsel together for to put Him to death.
"our place and nation" place (Gr. topos) = temple, the center and source of all of their influence and power. They claimed the nation which they ruled as their own, a dispute of sovereignty. They were claiming for themselves what belonged to God.
John xi. 47-53
Got God?
SteveH
(06/18/00; 07:48:05MT - usagold.com msg#: 32554)
Interesting interview with Mr. Salsman
Just because Mr. Salsman believes gold isn't manipulated and reflects a deflationary scenario doesn't mean that he views the facts correctly. Nor do it mean that gold isn't being manipulated. Gold is such a small market compared to bonds and stocks that if it were targeted for manipulation as we believe it to be, Mr.Salsman's theory of the gold market being a better barometer of the economy than the CPI would actually prove that manipulating the market could prove an effective way of controlling the best indicator of the economy for whatever purpose the gold market manipulator(s) had in mind.
His quote, "...Central banks--in total-- hold only about 22% of the world gold stock, down from 68% in WWII..." might just actually support the popular USAGOLD forum contention that gold has moved from the banks to the peoples of the world and that this loss of gold from the central banks was likely lost to oil countries and India and perhaps others to actually keep the dollar strong and oil cheap.
Mr. Salsman also may have counterindicated that in the new fiat scheme of three decades age the stockmarket is actually the baromter of inflation that gold once used to be. This wouldn't be suprising if gold was sold to oil interests in order to keep oil cheap, the dollar strong. Excess petro dollars and trade defecit dollars most certainly could have found their way into the stock market and invariably did. These profits then could have been and likely were used to hold all sorts of commodities in check through the paper-based commodity exchanges -- all of this at the expense of going from 68% of the world's gold to just 22% today.
It follows that at some level either 22% or lower the central banks will need to cap these losses and reestablish the traditional value of gold assets in order to start the whole process over.
A charted posted a while back that showed gold spiked 6 times in the last 100 years to a 2:1 or less ratio of the the price of one ounce of gold divided into the value of the stock market. That we are witnesses the highest counter ratio of the gold into the dow today of over 30:1 should give one cause to ponder how much longer this unstable ratio can be maintained, especially in light of all that is going on.
No, Mr.Salsman is an astute observer but fails to see some of the trees in the forest because he stands in front of some others that we may not see. In all, we talk around the same truths and facts, but we conclude differently because we choose to focus on what is directly in front of us.
Gold is being manipulated, Murphy et al have pointed this out. It is plain for all to see. They have motive, tools, and opportunity. Guilty as charged, those bullion banks are.
Leigh
(06/18/00; 06:07:20MT - usagold.com msg#: 32552)
One More Question
(4) Do you think at least some of these people are mistakenly using "paper gold" instead of buying bullion?
Thanks again.
Leigh
(06/18/00; 06:01:58MT - usagold.com msg#: 32551)
Aristotle
Welcome back, Aristotle! I'm not writing to beat up on you, though you so kindly invited debate. I have some questions.
(1) Trail Guide said that a lot of politicians and billionaires are secretly accumulating gold. Have you noticed this to be true? Do they talk about it among themselves, or is this a private thing that they don't ever mention?
(2) Would this accumulation be a recent thing, or do you think they've been accumulating all along? In other words, are people "in the know" getting scared about the fate of the economy?
(3) Do you think these people believe that gold has a future in the economy to come? Are they buying because they think gold will go up in relation to the dollar, or just as a way to stash away some wealth?
Please forgive me for these direct questions. Of course, if you don't want to answer them, don't feel obligated to. Thank you.
Black Blade
(06/18/00; 05:23:58MT - usagold.com msg#: 32550)
Very interesting interview. This weekends reading assignment!
http://www.capitalismmagazine.com/1999/november/gold.htm
Snippits:
Capitalism Magazine: So what determines the price of gold?
Richard Salsman: The main determinant of the gold price --in any country's currency-- is the confidence (or lack thereof) markets place in the future value of each respective currency. Paper money depreciates when a central bank issues more than is demanded by holders or whenever a Treasury official advocates a drop in the foreign exchange value of paper money (thereby lowering the demand for it)...
Capitalism Magazine: I take it you're not a "gold bug"?
Richard Salsman: I'm not--emphatically not. I find that most of them are an utter disgrace to scientific procedure, economic analysis and the virtues of gold. They give gold a bad name....
Capitalism Magazine: Do "gold bugs" damage gold's reputation more than Kenysians do?
Richard Salsman: I don't know which group does more damage. The Keynesians, we know, always dismiss gold as a "barbarous relic." But they're a dying breed. Their criticisms have been irrelevant. More gold has been mined, stored, and invested in, since Keynes, than before him. Today, the subjectivist gold bugs are probably the main impediment to rational gold analysis...
Capitalism Magazine: What about the great Austrian economist Ludwig Von Mises who wrote that fiat paper money will eventually become worthless?
Richard Salsman: In the case of the "gold bugs," they keep saying the gold price will skyrocket because fiat paper money -- and the world -- will go to Hell. Many gold bugs cite Mises, who wrote that all fiat paper monies end up in complete dissolution and worthlessness. But "end-up" is a quite ambiguous date to attach to any forecast; people can crack-up and go broke waiting for the exact "end up." When the gold price falls, the anti-gold pundits claim gold's irrelevant, because it defied the wild speculations of gold bugs.
------
Black Blade: I don't agree with everything here, but he has it partly right. The dollar has weakened a bit against other currencies, and the volatility in Au has reflected that. I think that maybe this guy is a closet goldbug in denial;-)
I'll throw this one out for discussion, any takers?
WAC (Wide Awake Club)
(06/18/00; 03:30:53MT - usagold.com msg#: 32549)
@HBM - American Citizenship
Correct me if I am wrong, but I don't believe there's a process in place to 'give up your US citizenship'. Once an american, always an american. Yes, you can take up 2nd citizenship, but you can never un-americanise. Write to your congressman for clarification.
Black Blade
(06/18/00; 02:53:29MT - usagold.com msg#: 32546)
Where's "Another"? Can Trail Guide (FOA) congure up a missing voice?
We haven't heard from "Another" in several months. I would've thought that at least he would stop by just to say hello occasionally. With the excitement in the petroleum industry and minor moves in Au, he must have plenty to say, or at least some thoughts on where this all leads. Maybe Trail Guide (FOA) can stir him up from his "slumber" and get some opinions from him, or even "drag" him to the table for a brief discussion with the members of the Round Table. I know it's a bit late and I have read over some of the last few days posts, yet with all the activity in the petroleum markets, it suddenly seems that there is no one other than "Another" who might put some of this into a very interesting perspective. What about it?
Journeyman
(06/18/00; 00:19:13MT - usagold.com msg#: 32543)
Re: Subsidies @Aristotle, Hill Billy Mitchell, ALL
Sir A,
HBM was trying to avoid all subsidies and asked me for some examples of some of the "subtle subsidies that are difficult to avoid." I never claimed I avoided these subtle subsidies, and was trying to think of an example or two of some of them and why they are so hard to avoid.
With the currrent accounts dollar shipments, you've come up with a really good example - - - and by gosh, tied it to gold!! Darn good!! (And TC and MK will appreciate you tying all this back "on topic" too!)
Thanks for relieving my poor brain from the task of coming up with examples of such "subtle subsidies." I am in your debt, sir.
Sir Hill Billy, Aristotle's example is the sort of thing I had in mind. There are others, like highway use or purchasing anything with a lower price because it is shipped on the highways. Not the best example, though, because higway taxes pay for the highways and are collected largely from highway users through fuel taxes and licensing fees. Worse, the federal highway trust funds have been regularly raided by congress to fund other government boondoggles, so highway users actually subsidize other government activities.
This all gets extremely complex and difficult to untangle, as you can see. That's why I suggested they were subtle and difficult to avoid.
Regards,
Journeyman
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